<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1999
REGISTRATION NO. 333-89997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TERRA NETWORKS, S.A.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TERRA NETWORKS, INC.
(TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)
<TABLE>
<S> <C>
KINGDOM OF SPAIN 7375
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
<S> <C>
KINGDOM OF SPAIN NONE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
VIA DE LAS DOS CASTILLAS, 33
COMPLEJO ATICA
EDIFICIO 1
POZUELO DE ALARCON
28223 MADRID
SPAIN
(34) 91-452-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
CT CORPORATION SYSTEM
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 664-1666
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
JOSEPH A. HALL WILLIAM A. PLAPINGER
DAVIS POLK & WARDWELL WILLIAM J. WILLIAMS, JR.
450 LEXINGTON AVENUE SULLIVAN & CROMWELL
NEW YORK, NEW YORK 10017 ST. OLAVE'S HOUSE
(212) 450-4000 9a IRONMONGER LANE
LONDON, EC2V 8EY
UNITED KINGDOM
(44-207) 710-6525
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
------------
<S> <C>
Registration fee............................................ US$ 123,015
NASD filing fee............................................. 30,500
Nasdaq National Market entry and annual fees................ 107,000
Printing and engraving expenses............................. 730,000
Legal fees and expenses..................................... 1,500,000
Accounting fees and expenses................................ 1,500,000
Miscellaneous............................................... 200,000
------------
Total.................................................. US$4,190,515
============
</TABLE>
Each of the amounts set forth above, other than the registration fee and
the NASD filing fee, is an estimate. These amounts do not reflect US$12 million
of estimated advertising expenses in connection with the Spanish offering.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Terra Networks maintains an insurance policy that protects its officers and
the members of its Board of Directors from liabilities incurred as a result of
actions taken in their official capacity.
Reference is made to Section 9 of the form of International Underwriting
Agreement filed as Exhibit 1 to the Registration Statement which sets forth the
registrant's and underwriters' respective agreement to indemnify each other and
to provide contribution in circumstances where indemnification is unavailable.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since December 4, 1998, the date of its incorporation, the registrant has
sold the following ordinary shares. Each transaction was exempt from
registration in reliance upon Section 4(2) of and Regulation S under the
Securities Act of 1933.
<TABLE>
<CAPTION>
NO. OF AGGREGATE
PURCHASER DATE ORDINARY SHARES CONSIDERATION
--------- ----------------- --------------- --------------
<S> <C> <C> <C>
Telefonica, S.A....................... September 9, 1999 133,394,375 E266.8 million
Telefonica, S.A....................... September 9, 1999 60,101,210 E120.2 million
Terra Networks Employee Stock Option
Plan................................ October 1, 1999 14,000,000 E 30.2 million
Shareholders of Ole................... October 1, 1999 4,928,000 E 20.4 million
</TABLE>
II-1
<PAGE> 3
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this registration statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1 Form of Underwriting Agreement
2.1 English translation of the Purchase and Sale Agreement for
the Stock of Infovia S.A. dated July 21, 1999 between
Infovia International Inc., Infovia S.A., Tecnologia
Empresarial S.A. and Telefonica Interactiva, S.A.
2.2 English translation of the Purchase and Sale Agreement for
the Stock of Proveedora de Servicios de Conectividad S.A.
dated October 4, 1999 between Compania de Telefonos de
Chile -- Transmisiones Regionales S.A. and Telefonica
Interactiva Chile Limitada(+)
2.3 English translation of the Option Agreement for the
Subscription for Shares dated October 4, 1999 between
Compania de Telefonos de Chile -- Transmisiones Regionales
S.A. and Terra Networks, S.A.*
2.4 English translation of the Shareholders Agreement dated
October 4, 1999 between Compania de Telecomunicaciones de
Chile, S.A., Compania de Telefonos de Chile -- Transmisiones
Regionales S.A. and Terra Networks, S.A.
2.5 English translation of the Purchase and Sale Agreement for
the Stock of Informacion Selectiva, S.A. de C.V. dated
October 5, 1999 between Inversiones Grupo Reforma, S.A. de
C.V., Consorcio Interamericano de Comunicacion, S.A. de
C.V., Terra Networks Mexico, S.A. de C.V. and Editora El
Sol, S.A. de C.V.
2.6 English translation of the Non-compete and Cooperation
Agreement dated October 5, 1999 between Mr. Alejandro Junco
de la Vega, Editora El Sol, S.A. de C.V., Ediciones del
Norte, S.A. de C.V., Servicios Motociclistas, S.A. de C.V.,
Immobilaria Macro, S.A. de C.V., Consorcio Interamericano de
Comunicacion, S.A. de C.V., Apoyo Aereo, S.A. de C.V.,
Comunicacion Integrada de Occidente, S.A. de C.V.,
Inversiones Grupo Reforma, S.A. de C.V. and Terra Networks
Mexico, S.A. de C.V.
2.7 English translation of the Purchase and Sale Agreement for a
25% interest in Terra Networks Mexico, S.A. de C.V. dated
October 5, 1999 between Bidasoa, B.V., Telefonica Servicios
y Contenidos por la Red, S.A. and Terra Networks, S.A.
2.8 English translation of the Share Option Agreement dated
October 5, 1999 between Bidasoa, B.V. and Telefonica, S.A.,
together with the English translation of the letter for the
exercise of the share option dated October 11, 1999 between
Bidasoa, B.V. and Telefonica, S.A.
2.9 English translation of the Nutec Informatica S.A. Share
Subscription Agreement dated June 15, 1999 between RBS
Administracao e Cobranca Ltda., MLSP -- Comercio e
Participacoes Ltda., Mr. Alfonso Antunes da Motta, Mr. Luiz
Alberto Barichello, Mrs. Silvia Nora Berno de Jesus and
Telefonica Interactiva Brasil Ltda.
2.10 English translation of the Nutec Informatica S.A.'s
Shareholders Agreement dated June 15, 1999 between RBS
Administracao e Cobranca Ltda., Mr. Alfonso Antunes da
Motta, Mr. Luiz Alberto Barichello, MLSP -- Comercio e
Participacoes Ltda., Mrs. Silvia Nora Berno de Jesus and
Telefonica Interactiva Brasil Ltda., as partially rescinded
by the Rescission Agreement dated August 5, 1999
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.11 English translation of the Nutec Informatica S.A.
Shareholders' Agreement dated June 15, 1999 between
MLSP -- Comercio e Participacoes Ltda., Mrs. Silvia Nora
Berno de Jesus and Telefonica Interactiva Brasil Ltda., as
supplemented by Additional Agreement dated August 5, 1999
2.12 English translation of the Purchase and Sale Agreement for
the Stock of Nutec Informatica S.A. dated August 5, 1999
between MSLP -- Comercio e Participacoes Ltda. and
Telefonica Interactiva Brasil Ltda.
2.13 English translation of the Agreement for the Purchase and
Sale of Stock of Nutec Informatica S.A. dated August 5, 1999
between Telefonica Interactiva Brasil Ltda. and Mrs. Silvia
Berno de Jesus
2.14 English translation of the Memorandum of Understanding dated
October 22, 1999 between Taetel S.L., MLSP-Comercio e
Participacoes Ltda. and Mrs. Silvia Nora Berno de Jesus
2.15 English translation of the Purchase and Sale Agreement for
the Stock of Netgocios S.A. dated September 9, 1999 between
Mr. Gonzalo Roberto Arzuaga, Mr. Fernando Martin Arzuaga and
Telefonica Interactiva Argentina S.A.(+)
2.16 English translation of the Purchase and Sale Agreement for
the Stock of Donde Latinoamerica S.A. dated September 21,
1999 between Mr. Francisco Matio Piantoni, Mr. Cesar Augusto
Planas and Telefonica Interactiva Argentina S.A.(+)
2.17 English translation of the Purchase and Sale Agreement for a
25% interest in the Teknoland Group dated June 14, 1999
between Mr. Enrique Colman Lopez Cantolla, Jesus Angel
Suarez Gil, Ricardo Conde Muntadas -- Prim, David Lopez
Cantolla, Luis Cifuentes Muntadas and Telefonica
Interactiva, S.A.
2.18 English translation of the Purchase and Sale Agreement for
the Stock of Centro de Investigacion y Experimentacion de
Realidad Virtual, S.L. dated July 29, 1999 between Mr.
Enrique Colman Lopez Cantolla, Jesus Angel Suarez Gil,
Ricardo Conde Muntadas-Prim, David Lopez Cantolla, Luis
Cifuentes Muntadas and Telefonica Interactiva, S.A.
2.19 English translation of the Purchase and Sale Agreement for
Stock of Ordenamientos de Links Especializados, S.L. (Ole)
dated March 10, 1999 between Telefonica Interactiva, S.A.
and InfoSearch Holdings
2.20 English translation of the Master Agreement dated September
13, 1999 between Telefonica Interactiva, S.A., Infosearch
Holdings and Telefonica, S.A., in connection with the
acquisition of Ordenamientos de Links Especializados, S.L.
(Ole)
2.21 English translation of the Purchase and Sale Agreement for
the Stock of Ordenamientos de Links Especializados, S.L.
(Ole) dated April 15, 1999 between Telefonica Interactiva,
and InfoSearch Holdings
2.22 English translation of the Option Agreement for the
Subscription for Shares dated October 20, 1999 between
Telefonica del Peru S.A.A. and Terra Networks, S.A.
2.23 English translation of the Asset Purchase Agreement dated
October 20, 1999, between Telefonica Servicios Internet
S.A.C. and Terra Networks Peru S.A.
3.1 Certificate of Incorporation and bylaws
3.2 Amended and restated bylaws as amended
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Deposit Agreement (incorporated by reference into the
Registration Statement on Form F-6 filed by Terra Networks,
S.A. (Registration No. 333-11078))
5.1 Opinion of Uria & Menendez
8.1 Opinion of Davis Polk & Wardwell as to certain tax matters
included in the Prospectus
8.2 Opinion of Uria & Menendez as to certain tax matters
included in the Prospectus
10.1 Master Agreement dated July 23, 1999 between Terra Networks,
S.A. and Amadeus Global Travel Distribution, S.A., as
amended by letters dated October 6 and 20, 1999
10.2 English translation of the Traffic Inducement Fee Contract
dated September 15, 1999 between Terra Networks, S.A. and
Telefonica Data Espana, S.A.*
10.3 Form of Limited Liability Company Agreement of Terra
Networks Access Services USA, LLC dated October 5, 1999
between Telefonica Interactiva USA, Inc. and IDT
Corporation*
10.4 Internet Colocation Services Agreement dated October 5, 1999
between Terra Networks Interactive Services USA, LLC and IDT
Corporation*
10.5 Form of Limited Liability Company Agreement of Terra
Networks Interactive Services USA, LLC dated October 5, 1999
between Telefonica Interactiva USA, Inc. and IDT
Corporation*
10.6 Internet Service Provisioning and Marketing Agreement dated
October 5, 1999 between Terra Networks Access Services USA,
LLC and IDT Corporation*
10.7 Joint Venture Agreement dated October 5, 1999 between Terra
Networks, S.A. and IDT Corporation*
10.8 English translation of the Services Agreement dated October
20, 1999 between Telefonica del Peru S.A.A., Terra Networks
Peru S.A., Telefonica Servicios Internet S.A.C. and Terra
Networks, S.A.
21.1 Subsidiaries of Terra Networks, S.A.
23.1 Consent of Arthur Andersen y Cia., S. Com.*
23.2 Consent of PricewaterhouseCoopers Auditores, S.L.*
23.3 Consent of BDO Audiberia*
23.4 Consent of Arthur Andersen S/C*
23.5 Consent of Ruiz, Urquiza y Cia, S.C.*
23.6 Consent of Uria & Menendez (included in Exhibit 5.1)
99.1 Certificate of the general counsel of Terra Networks, S.A.,
certifying fairness and accuracy of the English translations
of the exhibits filed on October 29, 1999.*
99.2 Certificate of the general counsel of Terra Networks, S.A.
certifying fairness and accuracy of the English translations
of the exhibits included herein.
</TABLE>
- ---------------
* Previously filed.
+ Previously filed and refiled here to reflect exhibits.
ITEM 17. UNDERTAKINGS
The undersigned hereby undertakes:
(a) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required
by the underwriter to permit prompt delivery to each purchaser.
II-4
<PAGE> 6
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person against the registrant in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(d) The undersigned hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in
such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
II-5
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for the filing on Form F-1 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Madrid, Kingdom of Spain, on this 12th day of November, 1999.
TERRA NETWORKS, S.A.
/s/ JUAN PEREA SAENZ DE BURUAGA
By:
--------------------------------------
Juan Perea Saenz de Buruaga
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has been signed by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<C> <S> <C>
/s/ JUAN PEREA SAENZ DE BURUAGA Chief Executive Officer and November 12, 1999
- --------------------------------------------- Director (Principal Executive
Juan Perea Saenz de Buruaga Officer)
/s/ JUAN VILLALONGA NAVARRO President of the Board of November 12, 1999
- --------------------------------------------- Directors
Juan Villalonga Navarro
/s/ ANTONIO DE ESTEBAN QUINTANA Chief Financial Officer November 12, 1999
- --------------------------------------------- (Principal Financial and
Antonio de Esteban Quintana Accounting Officer)
/s/ CESAREO ALIERTA IZUEL Director November 12, 1999
- ---------------------------------------------
Cesareo Alierta Izuel
/s/ ALBERTO CORTINA DE ALCOCER Director November 12, 1999
- ---------------------------------------------
Alberto Cortina de Alcocer
/s/ JOSE MARiA MAS MILLET Secretary and Director November 12, 1999
- ---------------------------------------------
Jose Maria Mas Millet
Director
- ---------------------------------------------
Alejandro Junco de la Vega
</TABLE>
II-6
<PAGE> 8
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<C> <S> <C>
Director
- ---------------------------------------------
Francisco Morena de Alboran
/s/ NELSON P. SIROTSKY Director November 12, 1999
- ---------------------------------------------
Nelson P. Sirotsky
/s/ JUAN ROVIRA DE OSSO Authorized Representative in the November 12, 1999
- --------------------------------------------- United States of America
Juan Rovira de Osso
</TABLE>
II-7
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
<C> <S> <C>
1 Form of Underwriting Agreement
2.1 English translation of the Purchase and Sale Agreement for
the Stock of Infovia S.A. dated July 21, 1999 between
Infovia International Inc., Infovia S.A., Tecnologia
Empresarial S.A. and Telefonica Interactiva, S.A.
2.2 English translation of the Purchase and Sale Agreement for
the Stock of Proveedora de Servicios de Conectividad S.A.
dated October 4, 1999 between Compania de Telefonos de
Chile -- Transmisiones Regionales S.A. and Telefonica
Interactiva Chile Limitada(+)
2.3 English translation of the Option Agreement for the
Subscription for Shares dated October 4, 1999 between
Compania de Telefonos de Chile -- Transmisiones Regionales
S.A. and Terra Networks, S.A.*
2.4 English translation of the Shareholders Agreement dated
October 4, 1999 between Compania de Telecomunicaciones de
Chile, S.A., Compania de Telefonos de Chile -- Transmisiones
Regionales S.A. and Terra Networks, S.A.
2.5 English translation of the Purchase and Sale Agreement for
the Stock of Informacion Selectiva, S.A. de C.V. dated
October 5, 1999 between Inversiones Grupo Reforma, S.A. de
C.V., Consorcio Interamericano de Comunicacion, S.A. de
C.V., Terra Networks Mexico, S.A. de C.V. and Editora El
Sol, S.A. de C.V.
2.6 English translation of the Non-compete and Cooperation
Agreement dated October 5, 1999 between Mr. Alejandro Junco
de la Vega, Editora El Sol, S.A. de C.V., Ediciones del
Norte, S.A. de C.V., Servicios Motociclistas, S.A. de C.V.,
Immobilaria Macro, S.A. de C.V., Consorcio Interamericano de
Comunicacion, S.A. de C.V., Apoyo Aereo, S.A. de C.V.,
Comunicacion Integrada de Occidente, S.A. de C.V.,
Inversiones Grupo Reforma, S.A. de C.V. and Terra Networks
Mexico, S.A. de C.V.
2.7 English translation of the Purchase and Sale Agreement for a
25% interest in Terra Networks Mexico, S.A. de C.V. dated
October 5, 1999 between Bidasoa, B.V., Telefonica Servicios
y Contenidos por la Red, S.A. and Terra Networks, S.A.
2.8 English translation of the Share Option Agreement dated
October 5, 1999 between Bidasoa, B.V. and Telefonica, S.A.,
together with the English translation of the letter for the
exercise of the share option dated October 11, 1999 between
Bidasoa, B.V. and Telefonica, S.A.
2.9 English translation of the Nutec Informatica S.A. Share
Subscription Agreement dated June 15, 1999 between RBS
Administracao e Cobranca Ltda., MLSP -- Comercio e
Participacoes Ltda., Mr. Alfonso Antunes da Motta, Mr. Luiz
Alberto Barichello, Mrs. Silvia Nora Berno de Jesus and
Telefonica Interactiva Brasil Ltda.
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
<C> <S> <C>
2.10 English translation of the Nutec Informatica S.A.'s
Shareholders Agreement dated June 15, 1999 between RBS
Administracao e Cobranca Ltda., Mr. Alfonso Antunes da
Motta, Mr. Luiz Alberto Barichello, MLSP -- Comercio e
Participacoes Ltda., Mrs. Silvia Nora Berno de Jesus and
Telefonica Interactiva Brasil Ltda., as partially rescinded
by the Rescission Agreement dated August 5, 1999
2.11 English translation of the Nutec Informatica S.A.
Shareholders' Agreement dated June 15, 1999 between
MLSP -- Comercio e Participacoes Ltda., Mrs. Silvia Nora
Berno de Jesus and Telefonica Interactiva Brasil Ltda., as
supplemented by Additional Agreement dated August 5, 1999
2.12 English translation of the Purchase and Sale Agreement for
the Stock of Nutec Informatica S.A. dated August 5, 1999
between MSLP -- Comercio e Participacoes Ltda. and
Telefonica Interactiva Brasil Ltda.
2.13 English translation of the Agreement for the Purchase and
Sale of Stock of Nutec Informatica S.A. dated August 5, 1999
between Telefonica Interactiva Brasil Ltda. and Mrs. Silvia
Berno de Jesus
2.14 English translation of the Memorandum of Understanding dated
October 22, 1999 between Taetel S.L., MLSP-Comercio e
Participacoes Ltda. and Mrs. Silvia Nora Berno de Jesus
2.15 English translation of the Purchase and Sale Agreement for
the Stock of Netgocios S.A. dated September 9, 1999 between
Mr. Gonzalo Roberto Arzuaga, Mr. Fernando Martin Arzuaga and
Telefonica Interactiva Argentina S.A.(+)
2.16 English translation of the Purchase and Sale Agreement for
the Stock of Donde Latinoamerica S.A. dated September 21,
1999 between Mr. Francisco Matio Piantoni, Mr. Cesar Augusto
Planas and Telefonica Interactiva Argentina S.A.(+)
2.17 English translation of the Purchase and Sale Agreement for a
25% interest in the Teknoland Group dated June 14, 1999
between Mr. Enrique Colman Lopez Cantolla, Jesus Angel
Suarez Gil, Ricardo Conde Muntadas -- Prim, David Lopez
Cantolla, Luis Cifuentes Muntadas and Telefonica
Interactiva, S.A.
2.18 English translation of the Purchase and Sale Agreement for
the Stock of Centro de Investigacion y Experimentacion de
Realidad Virtual, S.L. dated July 29, 1999 between Mr.
Enrique Colman Lopez Cantolla, Jesus Angel Suarez Gil,
Ricardo Conde Muntadas-Prim, David Lopez Cantolla, Luis
Cifuentes Muntadas and Telefonica Interactiva, S.A.
2.19 English translation of the Purchase and Sale Agreement for
Stock of Ordenamientos de Links Especializados, S.L. (Ole)
dated March 10, 1999 between Telefonica Interactiva, S.A.
and InfoSearch Holdings
2.20 English translation of the Master Agreement dated September
13, 1999 between Telefonica Interactiva, S.A., Infosearch
Holdings and Telefonica, S.A., in connection with the
acquisition of Ordenamientos de Links Especializados, S.L.
(Ole)
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
<C> <S> <C>
2.21 English translation of the Purchase and Sale Agreement for
the Stock of Ordenamientos de Links Especializados, S.L.
(Ole) dated April 15, 1999 between Telefonica Interactiva,
and InfoSearch Holdings
2.22 English translation of the Option Agreement for the
Subscription for Shares dated October 20, 1999 between
Telefonica del Peru S.A.A. and Terra Networks, S.A.
2.23 English translation of the Asset Purchase Agreement dated
October 20, 1999, between Telefonica Servicios Internet
S.A.C. and Terra Networks Peru S.A.
3.1 Certificate of Incorporation and bylaws
3.2 Amended and restated bylaws as amended
4.1 Deposit Agreement (incorporated by reference into the
Registration Statement on Form F-6 filed by Terra Networks,
S.A. (Registration No. 333-11078))
5.1 Opinion of Uria & Menendez
8.1 Opinion of Davis Polk & Wardwell as to certain tax matters
included in the Prospectus
8.2 Opinion of Uria & Menendez as to certain tax matters
included in the Prospectus
10.1 Master Agreement dated July 23, 1999 between Terra Networks,
S.A. and Amadeus Global Travel Distribution, S.A., as
amended by letters dated October 6 and 20, 1999
10.2 English translation of the Traffic Inducement Fee Contract
dated September 15, 1999 between Terra Networks, S.A. and
Telefonica Data Espana, S.A.*
10.3 Form of Limited Liability Company Agreement of Terra
Networks Access Services USA, LLC dated October 5, 1999
between Telefonica Interactiva USA, Inc. and IDT
Corporation*
10.4 Internet Colocation Services Agreement dated October 5, 1999
between Terra Networks Interactive Services USA, LLC and IDT
Corporation*
10.5 Form of Limited Liability Company Agreement of Terra
Networks Interactive Services USA, LLC dated October 5, 1999
between Telefonica Interactiva USA, Inc. and IDT
Corporation*
10.6 Internet Service Provisioning and Marketing Agreement dated
October 5, 1999 between Terra Networks Access Services USA,
LLC and IDT Corporation*
10.7 Joint Venture Agreement dated October 5, 1999 between Terra
Networks, S.A. and IDT Corporation*
10.8 English translation of the Services Agreement dated October
20, 1999 between Telefonica del Peru S.A.A., Terra Networks
Peru S.A., Telefonica Servicios Internet S.A. C. and Terra
Networks, S.A.
21.1 Subsidiaries of Terra Networks, S.A.
23.1 Consent of Arthur Andersen y Cia., S. Com.*
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
<C> <S> <C>
23.2 Consent of PricewaterhouseCoopers Auditores, S.L.*
23.3 Consent of BDO Audiberia*
23.4 Consent of Arthur Andersen S/C*
23.5 Consent of Ruiz, Urquiza y Cia, S.C.*
23.6 Consent of Uria & Menendez (included in Exhibit 5.1)
99.1 Certificate of the general counsel of Terra Networks, S.A.,
certifying fairness and accuracy of the English translations
of the exhibits filed on October 29, 1999.*
99.2 Certificate of the general counsel of Terra Networks, S.A.,
certifying fairness and accuracy of the English translations
of the exhibits included herein.
</TABLE>
- ---------------
* Previously filed.
(+) Previously filed and refiled here to reflect exhibits.
<PAGE> 1
EXHIBIT 1
S&C Draft of November 10, 1999
TERRA NETWORKS, S.A.
ORDINARY SHARES
IN THE FORM OF SHARES OR AMERICAN DEPOSITARY SHARES
---------------------------
INTERNATIONAL UNDERWRITING AGREEMENT
November -, 1999
Banco de Negocios Argentaria S.A.
BBV Interactivos, S.A., S.V.B.
Goldman Sachs International,
InverCaixa Valores, S.V.B., S.A.,
As representatives of the several International Underwriters
named in Schedule I hereto (the "Representatives"),
c/o Goldman Sachs International,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB.
Ladies and Gentlemen:
Terra Networks, S.A., a corporation (sociedad anonima)
organized under the laws of Spain (the "Company"), proposes, subject to the
terms and conditions stated herein, to issue and sell to the underwriters named
in Schedule I hereto (the "International Underwriters") an aggregate of -
ordinary shares, nominal value of [euro]2 each (the "Firm International
Shares"), directly or in the form of American Depositary Shares (the "ADSs"),
each ADS representing the right to receive one ordinary share. The ADSs will
represent International Shares (as defined herein) to be deposited by the
Company pursuant to the Deposit Agreement (as defined herein). In addition, the
Company proposes to sell to the International Underwriters up to an aggregate of
- - additional ordinary shares (the "Optional International Shares"), if and to
the extent that you shall have determined to exercise on behalf of the
International Underwriters the right to subscribe for Optional International
Shares granted in Section 2 hereof (together with the offering of the Firm
International Shares, the "International Offering"). The ordinary shares
(including the ordinary shares in respect of the ADSs) delivered to the
International Underwriters pursuant to this Agreement are hereinafter called the
"International Shares", and the ordinary shares to be delivered to the Spanish
Underwriters pursuant to the Spanish Underwriting Agreements (as defined herein)
are hereinafter called the "Spanish Shares". The Spanish Shares
<PAGE> 2
and the International Shares are hereinafter collectively called the "Shares".
The International Shares in respect of the ADSs to be delivered at each Time of
Delivery of ADSs (as defined in Section 4(d) hereof) are to be deposited by the
Company with the Depositary (as defined herein) or a custodian thereof pursuant
to the Deposit Agreement prior to such Time of Delivery against issuance of ADRs
(as defined herein) evidencing such ADSs.
The ADSs will be issued in accordance with the Deposit
Agreement, dated as of -, 1999 (the "Deposit Agreement"), among the Company,
Citibank N.A., as depositary (the "Depositary"), and the holders from time to
time of American Depositary Receipts (the "ADRs") issued thereunder and
evidencing ADSs, which ADRs shall be substantially in the form filed as an
exhibit to the ADS Registration Statement (as defined herein).
The Company is a 91.2%-owned subsidiary of Telefonica, S.A.
("Telefonica"), a corporation with limited liability (sociedad anonima)
organized under the laws of Spain.
Prior to the consummation of the transactions contemplated by
this Agreement, the Company (a) recapitalized [euro]266.8 million of short-term
liabilities in exchange for 133.4 million ordinary shares issued to Telefonica,
(b) entered into agreements to acquire: (i) 100% of Ordenamientos de Links
Especializados S.L. ("Ole"), a corporation organized under the laws of Spain,
Nutec Informatica S.A. ("Nutec"), a corporation organized under the laws of
Brazil and Informacion Selectiva, S.A. de C.V. ("Infosel"), a corporation
organized under the laws of Mexico and Netgocios S.A. and Donde Latinoamerica
S.A., corporations organized under the laws of Argentina; (ii) 100% of the
assets of Telefonica Services Internet S.A.C., a subsidiary of Telefonica del
Peru S.A., (iii) a 95% equity interest in the Internet subsidiary of Compania de
Telecomunicaciones de Chile S.A., and (iv) a 51% stake in a joint venture with
International Discount Telecommunications Corp. ("IDT"); and (c) engaged in
other related transactions, including the incorporation of Terra Networks Brazil
S.A. ("Terra Networks Brazil"), a corporation organized under the laws of
Brazil, Telefonica Chile Ltda ("Terra Networks Chile"), a corporation organized
under the laws of Chile, Terra Networks (Peru) S.A. ("Terra Networks Peru"), a
corporation organized under the laws of Peru, Terra Networks (Argentina) S.A.
("Terra Networks Argentina"), a corporation organized under the laws of
Argentina and Telefonica Interactiva USA, Inc. ("Telefonica Interactiva USA"), a
corporation organized under the laws of the State of Florida, to hold the assets
acquired in Chile, Peru, Argentina and the United States, respectively. Nutec,
Terra Networks Brazil, Infosel, Terra Networks Chile, Terra Networks Peru, Terra
Networks Argentina and Telefonica Interactiva USA are hereinafter collectively
referred to as the "Foreign Subsidiaries". The acquisitions and other
transactions described above will have been completed prior to the execution of
this Agreement. The transactions referred to above, as more fully described
under "The Company" in the Prospectus, and any other transactions necessary or
incidental to the consummation of such transactions, are hereinafter
collectively referred to as the "Transactions", and the contracts, agreements
and deeds executed and delivered or to be executed and delivered by the Company
and its subsidiaries in connection with the Transactions are hereinafter
collectively referred to as the "Transaction Documents", an indicative list of
which is set forth in Annex A hereto.
It is understood and agreed by all parties hereto that the
Company has entered or is concurrently entering into a Spanish retail
underwriting agreement and a Spanish institutional underwriting agreement
(together, the "Spanish Underwriting Agreements") with certain Spanish
underwriters (the "Spanish
-2-
<PAGE> 3
Underwriters") providing for the sale by the Company of a total of - Spanish
Shares to Spanish institutional investors (the "Spanish Institutional Offering")
and a total of - Spanish Shares to retail investors in Spain and in the European
Economic Area and Andorra who have current and custody accounts in Spain (the
"Spanish Retail Offering" and together with the Spanish Institutional Offering,
the "Spanish Offering", and the Spanish Offering together with the International
Offering, the "Global Offering").
All sales in the United States by the International
Underwriters will be made through their U.S. broker-dealer affiliates (the
"Selling Agents") listed in Schedule I hereto, which Selling Agents shall be
registered as broker-dealers under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act").
Four forms of prospectus are to be used in connection with the
offering and sale of Shares as part of the Global Offering: the U.S. Prospectus
(as defined herein) relating to the offering and sale of International Shares
and ADSs by the Selling Agents in the United States; one relating to the
offering and sale of International Shares and ADSs by the International
Underwriters outside the United States, Canada and Spain (the "International
Prospectus"); one relating to the offering and sale of International Shares and
ADSs by the International Underwriters in Canada (the "Canadian Prospectus");
and one in the form of a Folleto Informativo Completo in the Spanish language
relating to the Spanish Shares to be offered and sold to institutional and
retail purchasers in Spain. The International Prospectus contains substantially
identical information to the U.S. Prospectus except for certain or additional
substitute pages. Unless the context otherwise requires, references herein to
any prospectus (the "Prospectus") whether in preliminary or final form and
whether as amended or supplemented, shall include the U.S. and International
versions thereof.
The International Underwriters and the Spanish Underwriters
are hereinafter collectively called the "Underwriters", and this Agreement and
the Spanish Underwriting Agreements are hereinafter collectively called the
"Underwriting Agreements".
You have advised us that the Underwriters are concurrently
entering into an Agreement among the Spanish and International underwriting
syndicates (the "Agreement among Syndicates"), which provides, among other
things, that Goldman Sachs International, Banco de Negocios Argentaria, S.A.,
BBV Interactivos, S.A., S.V.B. and InverCaixa Valores, S.V.B., S.A. shall act as
the joint global coordinators for the Global Offering. Anything herein or
therein to the contrary notwithstanding, the respective closings under this
Agreement and the Spanish Underwriting Agreements are hereby made expressly
conditional on one another.
1. (a) The Company represents and warrants to, and agrees with, each of
the International Underwriters that:
(i) A registration statement on Form F-1 (File No. 333-89997), and
as part thereof of a preliminary prospectus and Amendment No.
1 to such registration statement, and as part of such
Amendment, a preliminary prospectus (collectively, the
"Initial Registration Statement"), in respect of the
International Shares being offered in the United States, has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-
-3-
<PAGE> 4
effective amendment thereto, each in the form heretofore
delivered to you, and excluding exhibits thereto, to you for
each of the other International Underwriters, have been
declared effective by the Commission in such form; other than
a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as
amended (the "Act"), which became effective upon filing, no
other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto
or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated
or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with
the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter
called a "Preliminary U.S. Prospectus"); the various parts of
the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto
and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the
Initial Registration Statement became effective or such part
of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, are hereinafter collectively
called the "Registration Statement", and such final
prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "U.S. Prospectus";
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each
Preliminary U.S. Prospectus, at the time of filing thereof
with the Commission, conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder; each Preliminary Prospectus did not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company by an International Underwriter through Goldman Sachs
International expressly for use in any Preliminary Prospectus;
(iii) The Registration Statement conforms, and the U.S. Prospectus
and any further amendments or supplements to the Registration
Statement or the U.S. Prospectus will conform, in all material
respects to the requirements of the Act and the rules and
regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the
Registration Statement and any amendment
-4-
<PAGE> 5
thereto and as of the applicable filing date as to the U.S.
Prospectus and any amendment or supplement thereto, contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading; the U.S.
Prospectus and the International Prospectus and any further
amendments or supplements thereto do not and will not, as of
their respective dates, contain an untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company by an International Underwriter through Goldman Sachs
International expressly for use in the U.S. Prospectus or the
International Prospectus, as the case may be, or any amendment
or supplement to either of them;
(iv) The Spanish "Folleto Informativo Completo" filed with the
Spanish Comision Nacional del Mercado de Valores (the "CNMV")
on October 29, 1999 (the "Spanish Folleto"), conforms, and any
further amendments or supplements thereto will conform, in all
material respects to the requirements of Spanish law and the
rules and regulations of the CNMV, and does not and will not,
as of its applicable effective or filing date, contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading;
(v) A registration statement on Form F-6 (File No. 333-11078) in
respect of the ADSs has been filed with the Commission; such
registration statement in the form heretofore delivered to you
and, excluding exhibits, to you for each of the other
International Underwriters, has been declared effective by the
Commission in such form; no other document with respect to
such registration statement has heretofore been filed with the
Commission; no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for
that purpose has been initiated or threatened by the
Commission (the various parts of such registration statement,
including all exhibits thereto, each as amended at the time
such part of the registration statement became effective,
being hereinafter called the "ADS Registration Statement");
and the ADS Registration Statement when it became effective
conformed, and any further amendments thereto will conform, in
all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder, and did
not, as of the applicable effective date, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading;
(vi) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements of
the Company included in the Prospectus any loss or
interference with its business from fire, explosion, flood or
other calamity,
-5-
<PAGE> 6
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree that
otherwise in any such case is material to the Company and its
subsidiaries taken as a whole, than as set forth or
contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in
the capital stock (other than pursuant to the grant or
exercise of options described in the Prospectus), short-term
or long-term debt of the Company or any of its subsidiaries,
or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(vii) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and
marketable title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such
as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries; and any
real property and buildings held under lease by the Company
and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company and
its subsidiaries;
(viii) The Company has been duly incorporated and is validly existing
as a corporation with limited liability (sociedad anonima) in
good standing under the laws of Spain, with full power and
authority (corporate and other) to own or lease and operate
its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the
Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its
jurisdiction of incorporation;
(ix) The Company has an authorized capitalization as set forth in
the Prospectus, and all the issued shares of capital stock of
the Company have been duly and validly authorized and issued,
and are fully paid and non-assessable and conform to the
description of the capital stock of the Company contained in
the Prospectus; and all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and
(except for directors' qualifying shares and except as set
forth in the Prospectus) are
-6-
<PAGE> 7
owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims; the holders of
outstanding shares of capital stock of the Company or any
other person, including parties to any of the Transaction
Documents, are not entitled to preemptive or other rights to
acquire the Shares or the ADSs which have not been complied
with; except as described in the Prospectus, there are no
outstanding securities convertible or exchangeable for, or
warrants, rights or options to purchase from the Company or
obligations of the Company to issue, ordinary shares or any
other class of capital stock of the Company; the International
Shares may be freely deposited by the Company with the
Depositary against issuance of ADRs evidencing the ADSs; the
Shares and ADSs are freely transferable by the Company to or
for the account of the several Underwriters in the manner
contemplated in the Underwriting Agreements; and there are no
restrictions on subsequent transfers of the Shares or the ADSs
except as described in the Prospectus under "Description of
Ordinary Shares - Foreign Investment and Exchange Control
Regulations";
(x) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder and under the Spanish Underwriting
Agreements have been duly and validly authorized and, when
issued and delivered against payment therefor as provided
herein, and therein, will be duly and validly issued and fully
paid and non-assessable and will conform to the description of
the capital stock contained in the Prospectus;
(xi) The Deposit Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization,
execution and delivery by the Depositary, constitutes a valid
and legally binding agreement of the Company, enforceable in
accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, fraudulent transfer,
suspension of payments or other laws of general applicability
relating to or affecting the enforcement of creditors' rights
generally and to general equity principles and provided that
detailed information relating to any payment by the Company
pursuant to Section 5.08 thereof will be required to be given
to the Spanish Registry Entity (as defined under Spanish
Exchange Control legislation (the "Spanish Registry Entity"))
through which such payment is made; upon due issuance by the
Depositary of ADRs evidencing ADSs against the deposit of
International Shares in respect thereof in accordance with the
provisions of the Deposit Agreement, such ADRs will be duly
and validly issued and the persons in whose names the ADRs are
registered will be entitled to the rights specified therein
and in the Deposit Agreement; and the Deposit Agreement and
the ADRs conform in all material respects to the descriptions
thereof contained in the Prospectus;
(xii) All consents, approvals, authorizations, orders,
registrations, clearances and qualifications of or with any
court or governmental agency or body or any stock
-7-
<PAGE> 8
exchange authorities (hereinafter referred to as a
"Governmental Agency") having jurisdiction over the Company or
any of its subsidiaries or any of their properties or any
stock exchange authorities (hereinafter referred to as
"Governmental Authorizations") required for the deposit of
Shares, the issuance of ADSs in respect thereof and for the
execution and delivery by the Company of this Agreement, the
Spanish Underwriting Agreements, the Agency Agreement (the
"Agency Agreement"), dated as of October 28, 1999 between the
Company, on the one hand, and Argentaria, Caja Postal y Banco
Hipotecario, S.A. and Banco Bilbao Vizcaya as agents, on the
other hand, and the Deposit Agreement to be duly and validly
authorized have been obtained or made and are in full force
and effect;
(xiii) All dividends and other distributions declared and payable on
the shares of capital stock of the Company may under the
current laws and regulations of Spain be paid to the
Depositary in euro and may be converted into foreign currency
that may be freely transferred out of Spain, and all such
dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of
Spain and are otherwise free and clear of any other tax,
withholding or deduction in Spain and without the necessity of
obtaining any Governmental Authorization in Spain, except that
the remittance to foreign investors of dividends with respect
to the Shares will require registration thereof with the
Spanish Registry of Foreign Investments;
(xiv) The issue and sale of the Shares to be sold by the Company
hereunder and under the Spanish Underwriting Agreements, the
deposit of the International Shares with the Depositary
against issuance of ADRs evidencing the ADSs, the compliance
by the Company with all of the provisions of this Agreement,
each of the Spanish Underwriting Agreements, the Agency
Agreement and the Deposit Agreement and the consummation of
the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
Transaction Document, indenture, mortgage, deed of trust,
acquisition, merger or joint venture agreement, lease, loan
agreement or other agreement or instrument to which the
Company or any of its subsidiaries is subject or by which the
Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any
violation of the provisions of the Estatutos of the Company or
any statute or any order, rule or regulation of any
Governmental Agency having jurisdiction over the Company or
any of its subsidiaries or any of their properties; no holders
of securities of the Company or any other person, including
parties to any of the Transaction Documents, have or will have
rights, pursuant to any agreement with the Company,
Telefonica, or any subsidiary of either, to the registration
of such securities under the Registration Statement or the ADS
Registration Statement; and no consent, approval,
authorization, order, registration, qualification or clearance
of or with any such Governmental Agency is required for the
issue and sale of the
-8-
<PAGE> 9
International Shares or the ADSs, for the deposit of the
International Shares being deposited with the Depositary
against issuance of ADRs evidencing ADSs to be delivered or
for the consummation by the Company of the transactions
contemplated by this Agreement, the Spanish Underwriting
Agreements, the Agency Agreement and the Deposit Agreement,
except (A) (i) the registration under the Act of the
International Shares and the ADSs and the qualification of the
ADSs for quotation on the Nasdaq National Market, (ii) such
consents, approvals, authorizations, orders, registrations,
qualifications or clearances as have been duly obtained, are
in full force and effect and copies of which have been
furnished to you and (iii) such Governmental Authorizations as
may be required under securities laws in connection with the
subscription and distribution of the International Shares and
the ADSs by or for the account of the International
Underwriters, (B) that the Spanish Offering will be required
to be registered with the CNMV, (C) that the capital increase
relating to the Shares will be required to be registered with
the Registro Mercantil de Madrid (the "Mercantile Registry"),
(D) that the listing of the Shares will need to be approved by
the CNMV and the relevant managing entities ("sociedades
rectoras") of each of the Madrid, Barcelona, Bilbao and
Valencia Stock Exchanges (collectively, the "Spanish Stock
Exchanges"), (E) that detailed information relating to any
payment for the Shares or ADSs will be required to be given to
the Spanish Registry Entity through which payment is made by
the Company and similar information will be required to be
given in respect of any payment made by the Company pursuant
to Section 9 hereof or by the Company pursuant to Section 5.08
of the Deposit Agreement and (F) that remittance to foreign
investors of dividends, other benefits, or sale proceeds with
respect to shares of capital stock (including the Shares) will
require registration thereof with the Spanish Registry of
Foreign Investments;
(xv) (A) the Company is not in violation of its Estatutos and (B)
no subsidiary of the Company is in violation of its
constitutive documents, and neither the Company nor any of its
subsidiaries is in default in the performance or observance of
any obligation, agreement, covenant or condition contained in
any Transaction Document, indenture, mortgage, deed of trust,
loan agreement, acquisition, merger or joint venture
agreement, lease or other agreement or instrument to which it
is a party or by which it or any of its properties may be
bound, except in each case described in clause (B), as
described in the Prospectus, and except in each case as would
not have a material adverse effect on the business, results of
operations or financial condition of the Company and its
subsidiaries considered as a whole (a "Material Adverse
Effect");
(xvi) No stamp or other issuance or transfer taxes or duties, and no
capital gains, income, withholding or other taxes, are payable
to Spain or any political subdivision or taxing authority
thereof or therein by or on behalf of the International
Underwriters (other than any tax which the Company has agreed
to pay pursuant to Section 6(viii) hereof) in connection with
(A) the sale and delivery of the Shares and ADSs to or for
-9-
<PAGE> 10
the respective accounts of the International Underwriters, (B)
the sale and delivery by the International Underwriters of the
International Shares or ADSs to the initial subscribers and
purchasers, respectively, thereof in the manner contemplated
herein or (C) the deposit of International Shares with the
Depositary against the issuance of ADRs evidencing ADSs;
(xvii) Neither the Company nor any of its subsidiaries has taken
directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to
cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or
resale of the Shares or ADSs;
(xviii) The statements set forth in the Prospectus under the captions
"Description of Ordinary Shares" and "Description of American
Depositary Receipts", insofar as they purport to constitute a
summary of the terms of the Shares and the ADSs, respectively,
are accurate, complete and fair in all material respects;
(xix) Other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of
the Company or any of its subsidiaries is the subject which,
if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
material adverse effect on the consolidated financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries, considered as a whole; and, to
the best of the Company's knowledge, no such proceedings are
threatened or contemplated by any Governmental Agency or
threatened by others;
(xx) Other than as set forth in the Prospectus, the Company and its
subsidiaries own or have the right to use pursuant to license,
sublicense, agreement or permission all patents, patent
applications, trademarks, service marks, trade names,
copyrights, trade secrets, confidential information,
proprietary rights and processes ("Intellectual Property")
necessary for the operation of the business of the Company and
its subsidiaries as described in the Prospectus and have taken
all steps reasonably necessary to secure assignments of such
Intellectual Property from their employees and contractors; to
the Company's knowledge, none of the technology employed by
the Company or any of its subsidiaries has been obtained or is
being used by the Company or any of its subsidiaries in
violation of any contractual or fiduciary obligation binding
upon the Company, any of its subsidiaries or any of their
respective directors or executive officers or any of their
respective employees or consultants, except in each case as
would not have a Material Adverse Effect; and the Company and
its subsidiaries have taken and will maintain reasonable
measures to prevent the unauthorized dissemination or
publication of its confidential information. To the Company's
knowledge, neither the Company nor any of its subsidiaries
have interfered with, infringed upon, misappropriated or
otherwise come
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<PAGE> 11
into conflict with any Intellectual Property rights of third
parties, and except as described in the Prospectus, the
Company and its subsidiaries have not received any charge,
complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation or violation
(including any claim that the Company or any of its
subsidiaries must license or refrain from using any
intellectual property rights of any third party) which, if the
subject of any unfavorable decision, ruling or finding would,
individually or in the aggregate, have a material adverse
effect on the business, financial condition, shareholders'
equity or results of operations of the Company and its
subsidiaries;
(xxi) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company",
as such term is defined in the U.S. Investment Company Act of
1940, as amended (the "Investment Company Act");
(xxii) Arthur Andersen y Cia, S. Com., who have certified certain
financial statements of the Company and its subsidiaries and
of Ole, Arthur Andersen S/C and Ruiz, Urquiza y Cia., S.C.
(Arthur Andersen) who have certified certain financial
statements of Nutec and Infosel, respectively, Price
Waterhouse Auditores, S.A. and BDO Audiberia, who have
certified certain financial statements of Servicios y
Contenidos por la Red S.A.U., are each independent public
accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(xxiii) The unaudited pro forma condensed balance sheet as of June 30,
1999 (the "pro forma balance sheet"), and the pro forma
condensed statements of operations for the year ended December
31, 1998 and the six months ended June 30, 1999 (together, the
"pro forma statements of operation" and, together with the pro
forma balance sheet, the "pro forma financial statements")
comply as to form in all material respects with the applicable
rules and regulations of the Commission; the pro forma
financial statements accurately, completely and fairly present
the significant effects attributable to the transactions
described under the caption "Pro Forma Financial Data" in the
Prospectus; and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of the
pro forma financial statements;
(xxiv) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or
any of its subsidiaries has a material relationship to
evaluate the extent to which the business or operations of the
Company or any of its subsidiaries will be affected by the
Year 2000 Problem. As a result of such review, the Company has
no reason to believe, and does not believe, that the Year 2000
Problem will have a material adverse effect on the general
affairs, management, the current or future consolidated
financial position, business prospects, shareholders' equity
or results of operations of the Company and its subsidiaries
or result in any material loss or interference with the
Company's business or operations. The "Year 2000 Problem" as
used herein means any
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<PAGE> 12
significant risk that computer hardware or software used in
the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in
the operation of mechanical or electrical systems of any kind
will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to that date;
(xxv) The Transaction Documents to which the Company or any of its
subsidiaries is a party have been duly authorized, executed
and delivered by the Company and its subsidiaries, as
applicable; each Transaction Document to which the Company or
any of its subsidiaries is a party constitutes a valid and
legally binding agreement of the Company or such subsidiary,
enforceable in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, fraudulent
transfer, suspension of payments or other laws of general
applicability relating to or affecting the enforcement of
creditors' rights generally and to general equity principles;
by the date of this Agreement all required corporate actions
and Governmental Authorizations by the Company and its
subsidiaries, as applicable, will have been taken or obtained
to effect and complete the Transactions, including all
issuances, transfers, exchanges or acquisitions of capital
stock; and the Transactions will have closed prior to the date
of this Agreement and will not result and have not resulted in
the Company or its subsidiaries, as applicable, assuming or
becoming subject to any material obligation or liability not
disclosed in the Prospectus; and
(xxvi) This Agreement has been duly authorized, executed and
delivered by the Company.
2. (a) Subject to the terms and conditions herein set forth, (i) the
Company agrees to offer for subscription to each of the International
Underwriters, and each of the International Underwriters agrees,
severally and not jointly, to subscribe from the Company on the date of
the Time of Payment (as defined in Section 4(d) hereof), at the initial
public offering price per International Share set forth in the
Prospectus the number of Firm International Shares set forth opposite
the name of such International Underwriter in Schedule I hereto, and
(ii) in the event and to the extent that the International Underwriters
shall exercise the election to subscribe for Optional International
Shares as provided below, the Company agrees to offer for subscription
to each of the International Underwriters, and each of the
International Underwriters agrees, severally and not jointly, to
subscribe from the Company, at the price per International Share set
forth in clause (a)(i) of this Section 2, that portion of the number of
Optional International Shares as to which such election shall have been
exercised (to be adjusted by you so as to eliminate fractional
International Shares) determined by multiplying such number of Optional
International Shares by a fraction the numerator of which is the
maximum number of Optional International Shares for which each
International Underwriter is entitled to subscribe as set forth
opposite the name of such International Underwriter in Schedule I
hereto and the denominator of which is the maximum number of Optional
International Shares for which all of the International Underwriters
are entitled to subscribe hereunder.
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<PAGE> 13
(b) The Company hereby grants to the International
Underwriters the right to subscribe at their election for up to - Optional
International Shares at the price per Share set forth in clause (a)(i) of this
Section 2, for the sole purpose of covering overallotments in the sale of Firm
International Shares. Any such election to subscribe for Optional International
Shares may be exercised once only by written notice from you to the Company,
given within a period of 30 calendar days after the date on which the
International Shares subscribed for by you are admitted to trading on the Madrid
Stock Exchange (the "Trade Date"), which is expected to occur on November -,
1999, and setting forth the aggregate number of Optional International Shares to
be subscribed for and the date on which such Optional International Shares are
to be delivered, as determined by you, but in no event earlier than the First
Time of Delivery of International Shares (as defined in Section 4(d) hereof) or,
unless you and the Company otherwise agree in writing, earlier than two or later
than ten Business Days (as defined in Section 15 below) after the date of such
notice.
(c) As compensation to the International Underwriters for
their commitments hereunder, the Company will pay at each Time of Delivery to
Goldman Sachs International, for the accounts of the several International
Underwriters, an underwriting commission of [euro]- per Share or Optional
International Share (including Shares and Optional Shares in the form of ADSs),
as the case may be. Any reference herein to underwriting discount shall be
deemed to include such underwriting commission. In addition, the Company may in
its sole discretion pay to the International Underwriters and Selling Agents an
additional discretionary performance-based fee of up to [euro]- per Share, which
fee shall be paid to the several International Underwriters in proportion to
their respective underwriting obligations.
3. Upon the authorization by you of the release of the Firm
International Shares, the several International Underwriters propose to offer
the Firm International Shares to be severally subscribed by them for sale upon
such terms and conditions as shall be set forth in the Prospectus.
4. (a) With respect to all or any portion of the International
Shares to be subscribed for and sold hereunder at each Time of Payment, Goldman
Sachs International, on behalf of the several International Underwriters
pursuant to the Agreement among Syndicates, may elect to have ADSs delivered and
paid for hereunder in lieu of, and in satisfaction of, the Company's obligation
to sell to the several International Underwriters and the several International
Underwriters' obligations to subscribe for, such International Shares. Not later
than the Notification Time (as defined below) with respect to each Time of
Delivery, Goldman Sachs International, on behalf of the International
Underwriters, will notify the Company of the portion of the International Shares
to be delivered in the form of ADSs.
(b) The Company agrees that with respect to each Time of
Payment, owing to operational reasons relating to the need to have the Shares
admitted to trading on the Madrid Stock Exchange as soon as possible: (i) Banco
de Negocios Argentaria S.A., BBV Interactivos, S.A., S.V.B., Goldman Sachs
International and InverCaixa Valores S.V.B., S.A., as prefunding banks (the
"Prefunding Banks"), acting on behalf of the International Underwriters for the
benefit of investors, or the International Underwriters acting in their own name
but for the benefit of investors, as the case may be, will subscribe and pay for
the Shares to be subscribed for at such Time of Payment at the time specified in
Section 4(c) below; (ii) immediately after receiving payment from the Prefunding
Banks or the International Underwriters, as the case may be, expected
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<PAGE> 14
to be no later than 10:30 a.m., Madrid time, on the date of each Time of
Payment, the Company will take all steps necessary to register the capital
increase with respect to such Shares with the Mercantile Registry in accordance
with the terms described in the Folleto Informativo Completo registered with the
CNMV on October 29, 1999; and (iii) the Prefunding Banks or the International
Underwriters, as the case may be, will effect a special transaction on the
Madrid Stock Exchange transferring such Shares to the accounts designated by
investors, expected to be no later than 6:30 p.m., Madrid time, on the date of
each Time of Payment. It is further agreed that the prefunding to the Company by
the Prefunding Banks acting on behalf of the International Underwriters for the
benefit of investors, or the International Underwriters acting in their own name
but for the benefit of investors, as the case may be, with respect to the Shares
to be subscribed for at such Time of Payment will remain in the account of the
Company at insert bank for Company designated by the Company pursuant to Section
4(c) below until the amount paid by the Prefunding Banks to the Company pursuant
to this Section has been reimbursed to the Prefunding Banks or the International
Underwriters, as the case may be, by or on behalf of investors at the applicable
Time of Delivery of International Shares, which in the case of the First Time of
Delivery, is expected to occur on November -, 1999; provided that this sentence
shall not affect the obligation of the International Underwriters to subscribe
for the International Shares and ADSs and to pay the Company therefor as
otherwise provided in this Agreement. It is understood and agreed by the parties
hereto, that no delivery or transfer of International Shares to be subscribed
for and purchased hereunder shall be effective unless and until payment therefor
has been made pursuant to this paragraph (b) and Section 4(c) below and the
capital increase with respect to such International Shares has been registered
with the Mercantile Registry.
(c) The time and date of the payment for the International
Shares by the Prefunding Banks to the Company shall be, with respect to the Firm
International Shares, prior to 10:00 a.m., Madrid time, on the date of the First
Time of Payment (as defined herein), or at such other time and date as you and
the Company may agree upon in writing, and, with respect to the Optional
International Shares, prior to 10:00 a.m., Madrid time, on the date specified by
you in the written notice given by you of the International Underwriters'
election to subscribe for such Optional International Shares in accordance with
the second paragraph of Section 2, or at such other time and date as you and the
Company may agree upon in writing. Payment for International Shares will be made
by transfer of immediately available funds in euro to the account of the Company
at -, as the Company shall have designated upon notice to Goldman Sachs
International given not less than 24 hours prior to the each Time of Payment.
(d) The time and date for delivery of the Firm International
Shares to the Prefunding Banks or the International Underwriters, as the case
may be, in each case for the benefit of investors, shall be the time at which
such Shares are registered with the Mercantile Registry, which is expected to
occur on November -, 1999 (the "First Time of Payment"), or at such other time
and date as you and the Company may agree upon in writing, and with respect to
the Optional International Shares, the time at which such Shares are registered
with the Mercantile Registry, Madrid time, on the date specified by you (the
"Second Time of Payment") in the written notice given by you of the
International Underwriters' election to subscribe for such Optional
International Shares in accordance with Section 2(b), or at such other time and
date as you and the Company may agree upon in writing. Each such time and date
for delivery are herein called a "Time of Payment".
The time and date of delivery of the International Shares to
investors against payment therefor shall be, with respect to the Firm
International Shares, prior to 10:00a.m., Madrid time, on November
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<PAGE> 15
- -, 1999 (the "First Time of Delivery of International Shares"), or at such other
time and date as you and the Company may agree upon in writing, and with respect
to the Optional International Shares, prior to 10:00 a.m., Madrid time, on the
date specified by you in the written notice given by you of the International
Underwriters' election to subscribe for such Optional International Shares (the
"Second Time of Delivery of International Shares"), or at such other time and
date as you and the Company may agree upon in writing. Each such time and date
for delivery to investors is herein called a "Time of Delivery of International
Shares". Payment to the Prefunding Banks through the Agent Bank or to the
International Underwriters, as the case may be, for the International Shares
will be made by transfer in immediately available funds in euro, through the
liquidation system of the Servicio de Compensacion y Liquidacion de Valores,
S.A. ("SCLV"). The term "Notification Time", with respect to any Time of
Delivery of International Shares or any Time of Delivery of ADSs (as defined
below), shall mean 4:00 p.m., Madrid time, on the second Business Day prior to
such Time of Delivery of International Shares or Time of Delivery of ADSs, as
the case may be.
(e) The time and date for delivery of the ADSs relating to the
Firm International Shares to the International Underwriters against payment
therefor shall be prior to 9:00 a.m., New York time, on November -, 1999 (the
"First Time of Delivery of ADSs"), or at such other time and date as you and the
Company may agree upon in writing, and with respect to the ADSs relating to the
Optional International Shares, prior to 9:00 a.m., New York time, on the date
specified by you in the written notice given by you of the International
Underwriters' election to subscribe for such Optional International Shares (the
"Second Time of Delivery of ADSs"), or at such other time and date as you and
the Company may agree upon in writing. Each such time and date for delivery of
ADSs is herein called a "Time of Delivery of ADSs". Payment to the Prefunding
Banks or the International Underwriters, as the case may be, for the ADSs will
be made by transfer in immediately available funds in euro to accounts of the
Prefunding Banks at -, as the Prefunding Banks shall have designated upon notice
to the Agent given not less than 24 hours prior to the First Time of Payment.
(f) Any International Shares to be delivered at each Time of
Delivery of International Shares shall be delivered by book-entry transfer
(transferencia contable de las anotaciones en cuenta) to the accounts specified
by the Prefunding Banks at accredited Spanish financial institutions (entidades
adheridas), in such respective portions as the Prefunding Banks may designate by
notice given at or prior to the Notification Time with respect to such Time of
Delivery of International Shares. If an election has been made to acquire ADSs,
the ADRs evidencing the ADSs to be acquired by each International Underwriter
hereunder at each Time of Delivery of ADSs, in such denominations and registered
in such names as Goldman Sachs International may request not later than the
Notification Time with respect to such Time of Delivery of ADSs, by notice to
the Depositary and the Company, shall be delivered to you for the account of
such International Underwriter through the book entry facilities of DTC.
(g) ADR certificates evidencing ADSs to be delivered at each
Time of Delivery of ADSs will be made available for checking and packaging at
least 24 hours prior to each Time of Delivery of ADSs at the office of the
Depositary in New York. Such ADR certificates will be available for release at
each Time of Delivery of ADSs at said office of the Depositary.
(h) The documents to be delivered at each Time of Payment or
Time of Delivery, as the case may be, by or on behalf of the parties hereto
pursuant to Section 7 or Section 8 hereof, and any
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<PAGE> 16
additional documents requested by the International Underwriters pursuant to
Section 7(m) or Section 8(g) hereof, will be delivered at the offices of
Sullivan & Cromwell, St. Olave's House, 9a Ironmonger Lane, London EC2V 8EY (the
"Closing Location"), at such Time of Payment or Time of Delivery, as the case
may be, and the International Shares will be delivered as specified above at
such Time of Payment and the ADSs will be delivered as specified above at such
Time of Delivery of ADSs. A meeting will be held at Sullivan & Cromwell at 4:00
p.m., London time, on the Business Day prior to date of each Time of Payment or
Time of Delivery of ADSs, as the case may be, at which meeting the final drafts
of the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties thereto.
5. (a) The Company agrees with each of the International Underwriters:
(i) To prepare the Prospectus in a form approved by you and to
file the U.S. Prospectus pursuant to Rule 424(b) under the Act
not later than the Commission's close of business on the
second Business Day after the date hereof or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under
the Act; to make no further amendment or supplement to the
Registration Statement, the Prospectus or the ADS Registration
Statement prior to the last Time of Delivery of International
Shares or ADSs, whichever is later, which shall be disapproved
by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement or the ADS
Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has
been filed and to furnish you copies thereof; to advise you,
promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the
International Shares or ADSs for offering or sale in any
jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the
Registration Statement, the Prospectus or the ADS Registration
Statement or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus
or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;
(ii) Promptly from time to time to take such action as you may
reasonably request to qualify the International Shares and the
ADSs for offering and sale under the state securities or Blue
Sky laws of such jurisdictions in the United States as you may
request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the International Shares and the ADSs,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
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<PAGE> 17
(iii) To furnish the International Underwriters with copies of the
Prospectus in such quantities as you may from time to time
reasonably request and, if the delivery of a prospectus is
required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with
the offering or sale of the International Shares or the ADSs
and if at such time any events shall have occurred as a result
of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus
in order to comply with the Act, to notify you and upon your
request to prepare and furnish without charge to each
International Underwriter, to each Selling Agent and to any
dealer in securities as many copies as you may from time to
time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement
or omission or effect such compliance; and in case any
International Underwriter is required to deliver a prospectus
in connection with sales of any International Shares or ADSs
at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such
International Underwriter, to prepare and deliver to such
International Underwriter as many copies as you may request of
an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(iv) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act), an earning statement of
the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(v) During the period beginning at the Trade Date and continuing
to and including the date which is 180 days thereafter, not to
issue, offer, sell, contract to sell or otherwise dispose of,
except as provided hereunder and under the Spanish
Underwriting Agreements and except in connection with the
Transactions contemplated in the Transactions Documents or
pursuant to the Company's employee benefit plan described in
the Prospectus, any securities of the Company that are
substantially similar to the Shares or ADSs, including but not
limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive
capital stock or any such substantially similar securities
(other than pursuant to employee stock option plans existing
on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this
Agreement), without your prior written consent. The foregoing
restriction is expressly agreed to preclude the Company from
engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result
in a sale or
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<PAGE> 18
disposition of the Company's Shares, even if such Shares would
be disposed of by someone other than the Company. Such
prohibited hedging or other transaction would include without
limitation any short sale or any purchase, sale or grant of
any right (including without limitation any put or call
option) with respect to any of the Company's Shares or with
respect to any security that includes, relates to, or derives
any significant part of its value from such Shares;
(vi) To furnish to its shareholders as soon as practicable after
the end of each fiscal year an annual report (in English)
(including a consolidated balance sheet and consolidated
statements of operations and shareholders' equity of the
Company and its consolidated subsidiaries certified by
independent public accountants and prepared in conformity with
generally accepted accounting principles in Spain ("Spanish
GAAP") together with a reconciliation of net income and total
shareholders' equity to generally accepted accounting
principles in the U.S. ("U.S. GAAP")) and, as soon as
practicable after the end of each of the first three quarters
of each fiscal year prepared in accordance with Spanish GAAP
(beginning with the fiscal quarter ending after the effective
date of the Registration Statement), to make available to its
shareholders consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable
detail;
(vii) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all
reports or other communications (financial or other) furnished
to shareholders, and to deliver to you (A) as soon as they are
available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities
exchange on which any class of securities of the Company is
listed; and (B) during a period of three years from the
effective date of the Registration Statement, to deliver such
additional information concerning the business and financial
condition of the Company as you may from time to time
reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company
and its subsidiaries are consolidated in reports furnished to
its shareholders generally or to the Commission);
(viii) For so long as the Shares or ADSs are outstanding, to file
with the CNMV or the Spanish Stock Exchanges or any other
Governmental Agency such reports, documents, agreements and
other information which may from time to time be required to
be so filed by the Company, including filings with respect to
the ownership of Shares or ADSs and the implementation and
payment of dividends or other distributions on the Shares or
ADSs;
(ix) To comply with the Deposit Agreement so that ADRs evidencing
ADSs to be delivered to the International Underwriters at each
Time of Delivery of ADSs are executed (and, if applicable,
countersigned);
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<PAGE> 19
(x) To use the net proceeds received by it from the sale of the
Shares and ADSs pursuant to this Agreement and the Spanish
Underwriting Agreements in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(xi) Not to (and to cause its subsidiaries not to) take, directly
or indirectly, any action which is designed to or which
constitutes or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any
security of the Company or facilitate the sale or resale of
the Shares and the ADSs;
(xii) To use its best efforts to effect the listing of the Shares on
the Spanish Stock Exchanges and to list for quotation the ADSs
on the National Association of Securities Dealers Automated
Quotations National Market System ("NASDAQ"); and
(xiii) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement, and the
Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of
such fee pursuant to Rule 111(b) under the Act.
6. The Company covenants and agrees with the several International
Underwriters that it will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the International
Shares under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, the ADS
Registration Statement, any Preliminary Prospectus, the Prospectus and
amendments and supplements thereto and any amendments to the ADS
Registration Statement and the mailing and delivering of copies thereof
to the International Underwriters, the Selling Agents and dealers; (ii)
the cost of printing or producing this Agreement, the Spanish
Underwriting Agreements, the Deposit Agreement, the Blue Sky
Memorandum, and any other documents in connection with the offering,
subscription, purchase, sale and delivery of the International Shares
and the ADSs; (iii) all expenses in connection with any qualification
of the ADSs and the International Shares for offering and sale under
state securities or Blue Sky laws as provided in Section 5(a)(ii)
hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection
with the Blue Sky surveys; (iv) all fees and expenses in connection
with listing the Shares on the Spanish Stock Exchanges and the
quotation of the ADSs on NASDAQ; (v) the filing fees incident to, and
the fees and disbursements of counsel for the International
Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the
sale of the International Shares and the ADSs; (vi) the cost of
preparing ADR certificates evidencing the ADSs; (vii) to Goldman Sachs
International, for the account of the several International
Underwriters, up to U.S.$- in respect of reasonable out-of-pocket
expenses (including fees, disbursements and expenses of counsel to the
International Underwriters) incurred by the International Underwriters
in connection with the transactions contemplated hereby, other than the
fees, disbursements and expenses included in Clause (a)(iii) above;
(viii) all expenses and taxes arising as
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<PAGE> 20
a result of the deposit by the Company of the International Shares with
the Depositary and the issuance and delivery of ADRs evidencing ADSs in
exchange therefor by the Depositary, of the sale and delivery of the
ADSs and the International Shares by the Company to or for the account
of the International Underwriters, of the sale and delivery of the ADSs
and the International Shares by the International Underwriters to each
other and to the Selling Agents and to the sale and delivery outside
Spain of the ADSs and the International Shares by or on behalf of the
International Underwriters or the Selling Agents to the initial
subscribers and purchasers thereof in the manner contemplated in the
Underwriting Agreements and the Agreement among Syndicates, including,
in any such case, any Spanish income, capital gains, withholding,
transfer or other tax or any brokerage fee or any fee payable to the
securities brokerage companies or agencies in Spain in connection
therewith asserted against an International Underwriter by reason of
the subscription and sale of a Share or purchase and sale of an ADS
contemplated in the Underwriting Agreements, in the Agreement among
Syndicates and any selling agreements entered into with the
International Underwriters; (ix) the fees and expenses (including fees
and disbursements of counsel), if any, of the Depositary and any
custodian appointed under the Deposit Agreement, other than the fees
and expenses to be paid by holders of ADRs (other than the
International Underwriters in connection with the initial purchases of
ADSs and the International Shares); (x) the fees and expenses of the
Authorized Agent (as defined in Section 16 hereof); (xi) the cost and
charges of any transfer agent or registrar; (xii) all fees and expenses
in connection with quoting the ADSs on NASDAQ; (xiii) such costs and
expenses relating to the U.S. and International "roadshows" as may be
separately agreed; and (xiv) all other costs and expenses incident to
the performance of the obligations of the Company hereunder which are
not otherwise specifically provided for in this Section. It is
understood, however, that except as provided in this Section, Section 9
and Section 12 hereof, the International Underwriters will pay all
their own costs and expenses, including the fees of their counsel,
stock transfer taxes (other than any imposed by Spain or any political
subdivision or taxing authority thereof or therein) on the sale of any
of the International Shares or ADSs by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the International Underwriters hereunder as to the
International Shares to be delivered at each Time of Payment shall be
subject, in their discretion, to the condition that all representations
and warranties and other statements of the Company herein are, at and
as of such Time of Payment, true and correct, the condition that the
Company shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Registration Statement shall have become effective, not
later than 5:30 p.m., New York City time, on the date hereof;
the U.S. Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under
the Act and in accordance with Section 5 (a) hereof; if the
Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00
p.m., Washington, D.C. time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration
Statement or the ADS Registration Statement or any part
thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the
Commission; and all requests
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<PAGE> 21
for additional information on the part of the Commission shall
have been complied with to your satisfaction;
(b) Sullivan & Cromwell, United States counsel for the
International Underwriters, shall have furnished to you such
opinion or opinions, dated such Time of Payment, with respect
to the validity of the ADSs to be sold at each Time of
Delivery of ADSs, the Registration Statement, the Prospectus,
the ADS Registration Statement and other related matters as
you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably
request to enable them to pass upon such matters; in giving
such opinion or opinions, such counsel may state that they
have assumed that any documents referred to in such opinion or
opinions as executed by the Company have been duly authorized,
executed and delivered pursuant to Spanish law, and such
counsel may rely, without independent investigation, as to all
matters of Spanish law, upon the opinion of Spanish counsel
described in paragraph (d)(X) of this Section 7;
(c) Davis Polk & Wardwell, special United States counsel for the
Company, shall have furnished to you their written opinion
dated such Time of Payment, in form and substance satisfactory
to you, to the effect that:
(i) This Agreement has been duly executed and delivered
by the Company;
(ii) The Deposit Agreement has been duly executed and
delivered by the Company and, assuming the due
authorization, execution and delivery of the Deposit
Agreement by the Depositary and that each of the
Depositary and (under Spanish law) the Company has
full power, authority and legal right to enter into
and perform its obligations thereunder, constitutes a
valid and legally binding agreement of the Company,
enforceable in accordance with its terms, subject, as
to enforcement, to the effects of applicable
bankruptcy, insolvency, and similar laws affecting
creditors' rights generally and to equitable
principles of general applicability; and the
statements relating to legal matters or documents
included in the Prospectus under the caption
"Description of American Depositary Receipts", fairly
summarize, in all material respects, such matters or
documents;
(iii) Upon due issuance by the Depositary of ADRs
evidencing ADSs being delivered at each Time of
Delivery of ADSs against the deposit of International
Shares in respect thereof in accordance with the
provisions of the Deposit Agreement, such ADRs will
be duly and validly issued and the persons in whose
names the ADRs are registered will be entitled to the
rights specified therein and in the Deposit
Agreement;
(iv) Assuming the validity of such action under Spanish
Law, under the laws of the State of New York relating
to submission to jurisdiction, the Company has,
pursuant to Section 16 of this Agreement, validly and
irrevocably submitted to the
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<PAGE> 22
jurisdiction of any state or federal court located in
the Borough of Manhattan, the City of New York, New
York, in any action arising out of or with respect to
this Agreement, has validly and irrevocably waived
any objection to the venue of a proceeding in any
such court; and has validly and irrevocably appointed
CT Corporation as its authorized agent (the
"Authorized Agent") for the purpose described in
Section 16 hereof; and service of process effected in
the manner set forth in Section 16 hereof will be
effective to confer personal jurisdiction over the
Company in any such action;
(v) Assuming the validity of such action under Spanish
Law, under the laws of the State of New York relating
to submission to jurisdiction, the Company has,
pursuant to Section 16 of this Agreement, validly and
irrevocably submitted to the jurisdiction of any
state or federal court located in the Borough of
Manhattan, the City of New York, New York, in any
action arising out of or with respect to this
Agreement, has validly and irrevocably waived any
objection to the venue of a proceeding in any such
court; and has validly and irrevocably appointed CT
Corporation as its authorized agent (the "Authorized
Agent") for the purpose described in Section 16
hereof; and service of process effected in the manner
set forth in the Section 16 hereof will be effective
to confer personal jurisdiction over the Company in
any such action;
(vi) The statements set forth in the Prospectus under the
caption "Taxation United States Taxation", to the
extent that they constitute matters of U.S. federal
income tax laws or conclusions pertaining thereto,
fairly present the information therein in all
material respects;
(vii) The Company is not and, after giving effect to the
offering and sale of the International Shares and
ADSs and the application of the proceeds thereof, as
described in the Prospectus, will not be required to
register as an "investment company", as such term is
defined in the Investment Company Act;
(viii) Nothing has come to such counsel's attention that
causes such counsel to believe that (A) the ADS
Registration Statement, the Registration Statement or
the prospectus included therein (except for the
financial statements and related schedules therein,
as to which such counsel need express no belief) do
not comply as to form in all material respects with
the requirements of the Act and the applicable rules
and regulations of the Commission thereunder, or
(B)(1) either the Registration Statement and the
prospectus included therein (except for the financial
statements and related schedules included therein, as
to which such counsel need express no belief) or the
ADS Registration Statement, at the time the
Registration Statement or the ADS Registration
Statement, as the case may be, became effective,
contained an untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading or (2) the Prospectus (except
as stated) as of its date and as of the date of such
opinion
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<PAGE> 23
contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and such counsel do
not know of any amendments to the Registration Statement or the
ADS Registration Statement required to be filed or any
contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or the ADS
Registration Statement or required to be described in the
Registration Statement or the ADS Registration Statement or the
U.S. Prospectus which are not filed or incorporated by
reference or described as required; and
(ix) Such counsel has been informed by the Commission
that the Registration Statement and the ADS Registration
Statement have become effective under the Act, and, to the best
of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or the ADS
Registration Statement has been issued and no proceedings for
that purpose have been instituted or threatened.
In giving such opinion, such counsel may state that (w) they have assumed that
any documents referred to in their opinion and executed by the Company have been
duly authorized, executed and delivered pursuant to Spanish law; (x) to the
extent that the laws of Spain are relevant to such opinion, such counsel has
assumed the effect of the laws of Spain as stated therein and may rely with
respect thereto, without independent investigation, upon the opinions of Spanish
counsel described in paragraph (d)(Y) of this Section 7; and (y) they have not
themselves checked the accuracy or completeness of, or otherwise verified, the
information furnished with respect to matters in the Registration Statement, the
ADS Registration Statement or the Prospectus other than as specified above, but
have generally reviewed and discussed with representatives of the International
Underwriters and with certain officers and employees of, and counsel and
independent accountants for, the Company the information furnished, whether or
not subject to their check and verification, and that their opinion is rendered
on the basis of such consideration, review and discussion, but without
independent check or verification, except as so specified.
(d) (X) Garrigues & Andersen, Spanish counsel for the
Underwriters, and (Y) Uria y Menendez, Spanish counsel for the Company shall
have furnished to you their written opinions, dated such Time of Payment, in
form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation with limited liability
(sociedad anonima) in good standing under the laws of Spain,
with full power and authority (corporate and other) to own or
lease and operate its properties and conduct its business as
described in the Prospectus;
(ii) Such counsel has no reason to believe that the
Spanish "Folleto Informativo Completo" filed with the CNMV on
October 29, 1999, and any further amendments or supplements
thereto, did not conform in all material respects to the
requirements of Spanish law and the rules and regulations of
the CNMV or, as of its applicable
-23-
<PAGE> 24
effective or filing date, contained or contains an untrue
statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made not misleading;
(iii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued, and are fully paid and non-assessable
and conform in all material respects to the description of the
capital stock of the Company contained in the Prospectus; the
holders of outstanding shares of capital stock of the Company
or any other person, including parties to any of the
Transaction Documents, are not entitled to preemptive or other
rights to acquire the Shares or the ADSs which have not been
complied with; there are no outstanding securities convertible
or exchangeable for, or warrants, rights or options to purchase
from the Company or obligations of the Company to issue,
ordinary shares or any other class of capital stock of the
Company; the International Shares may be freely deposited by
the Company with the Depositary against issuance of ADRs
evidencing ADSs; the Shares and the ADSs are freely
transferable by the Company to or for the account of the
several International Underwriters and the initial purchasers
in the manner contemplated in the Underwriting Agreements; and
there are no restrictions on subsequent transfers of the ADSs
or the Shares except as described in the Prospectus under
"Description of Capital Stock --Restrictions on foreign
investment";
(iv) The Deposit Agreement has been duly authorized,
executed and delivered by the Company and, assuming the Deposit
Agreement constitutes a valid and legally binding agreement
under New York law, constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, fraudulent transfer, suspension of payments or
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; detailed
information relating to any payment by the Company pursuant to
Section 5.08 thereof will be required to be given to the
Spanish Registry Entity through which such payment is made;
(v) The Agency Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid
and legally binding agreement of the Company, enforceable in
accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, fraudulent transfer,
suspension of payments or other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles;
(vi) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other
-24-
<PAGE> 25
jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, or is subject
to no material liability or disability by reason of failure to
be so qualified in any such jurisdiction (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company, provided that
such counsel shall state that they believe that both you and
they are justified in relying upon such opinions and
certificates);
(vii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation;
and all of the issued shares of capital stock of each such
subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable, and (except for directors'
qualifying shares and except as otherwise set forth in the
Prospectus) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims
(such counsel being entitled to rely in respect of the opinion
in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company or
its subsidiaries, provided that such counsel shall state that
they believe that both you and they are justified in relying
upon such opinions and certificates);
(viii) The Company and its subsidiaries have good and
marketable title in fee simple to all real property owned by
them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries
(in giving the opinion in this clause, such counsel may state
that no examination of record titles for the purpose of such
opinion has been made, and that they are relying upon a general
review of the titles of the Company and its subsidiaries, upon
opinions of local counsel and abstracts, reports and policies
of title companies rendered or issued at or subsequent to the
time of acquisition of such property by the Company or its
subsidiaries, upon opinions of counsel to the lessors of such
property and, in respect of matters of fact, upon certificates
of officers of the Company or its subsidiaries, provided that
such counsel shall state that they believe that both you and
they are justified in relying upon such opinions, abstracts,
reports, policies and certificates);
(ix) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the
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<PAGE> 26
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the current or future consolidated financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries; and, to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by any Governmental Agency or threatened by
others;
(x) This Agreement has been duly authorized, executed
and delivered by the Company and, assuming that this Agreement
constitutes a valid and legally binding agreement of the
Company under New York law, this Agreement constitutes a valid
and legally binding agreement, enforceable in accordance with
its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency, fraudulent transfer, suspension of
payments or other laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(xi) The issue and sale of the Shares to be sold by the
Company hereunder and under the Spanish Underwriting
Agreements, the deposit of the International Shares with the
Depositary against issuance of ADRs evidencing the ADSs to be
delivered at each Time of Delivery, the sale and delivery of
the ADSs and the International Shares to be delivered at each
Time of Payment by the Company, the performance by the Company
of this Agreement, each of the Spanish Underwriting Agreements,
the Agency Agreement and the Deposit Agreement and the
consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of
the terms or provisions of, or constitute a default under any
Transaction Document, indenture, mortgage, deed of trust, loan
agreement, acquisition, merger or joint venture agreement,
lease or other agreement or instrument known to such counsel to
which the Company or any of its subsidiaries, is a party or by
which the Company or any of its subsidiaries, is bound or to
which any of the property or assets of the Company or any of
its subsidiaries is subject, nor will such action result in any
violation of the provisions of the charter or Estatutos of the
Company or any of its subsidiaries, or any statute or any
order, rule or regulation known to such counsel of any court or
Governmental Agency in Spain having jurisdiction over the
Company or any of its subsidiaries or any of its properties;
and no holders of securities of the Company or any other
person, including the parties to any of the Transaction
Documents, have or will have rights pursuant to any agreement
with the Company or any of its subsidiary;
(xii) No Governmental Authorization of or with any
Governmental Agency in Spain having jurisdiction over the
Company or any of its properties or of any stock exchange
authorities in Spain is required for the issue of the Shares
and the ADSs, to be sold by the Company hereunder or under the
Spanish Underwriting Agreements, the deposit of the
International Shares being deposited with the Depositary
against issuance of ADRs evidencing the ADSs to be delivered at
each
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<PAGE> 27
Time of Delivery, the sale and delivery of the International
Shares to be delivered at such Time of Payment by the Company
or the consummation by the Company of the other transactions
contemplated by this Agreement, each of the Spanish
Underwriting Agreements, the Agency Agreement and the Deposit
Agreement, as the case may be, except such consents, approvals,
authorizations, orders, registrations, qualifications or
clearances as have been duly obtained, are in full force and
effect and copies of which are delivered with such opinion,
including the registration of the public offering of the
Spanish Shares with the CNMV, and except that (A) detailed
information relating to any payment for the ADSs or
International Shares will be required to be given by the
Company to the Spanish Registry Entity through which payment is
made and similar information relating to any payment by the
Company pursuant to Section 9 hereof or by the Company pursuant
to Section 5.08 of the Deposit Agreement will be required to be
given to the Spanish Registry Entity through which such payment
is made; (B) remittance to foreign investors of dividends,
other benefits, or sale proceeds with respect to shares of
capital stock (including the Shares) will require registration
thereof with the Spanish Registry of Foreign Investments; and
(C) the capital increase relating to the International Shares
to be offered in the Global Offering will be required to be
registered with the Mercantile Registry;
(xiii) Insofar as matters of Spanish law are concerned,
the Registration Statement and the ADS Registration Statement
and the filing of such documents with the Commission have been
duly authorized by and on behalf of the Company; and the
Registration Statement and the ADS Registration Statement have
been duly executed pursuant to such authorization by and on
behalf of the Company;
(xiv) The statements in the Prospectus under
"Dividends", "Description of Ordinary Shares",
"Taxation-Spanish Taxation" "Business-Spanish Regulation" and
"Market Information", and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws,
regulations and documents referred to therein, are accurate,
complete and fair;
(xv) In the opinion of Uria y Menendez, their opinions
set forth in the Prospectus under "Risk Factors-Risks Related
to this Offering-It may be difficult to enforce judgments
against us in U.S. courts" are confirmed as of such Time of
Payment;
(xvi) No stamp or other issuance or transfer taxes or
duties, and no capital gains, income, withholding or other
taxes, are payable to Spain or any political subdivision or
taxing authority thereof or therein by or on behalf of the
International Underwriters (other than any tax which the
Company has agreed to pay pursuant to Section 6(viii) hereof)
in connection with (A) the sale and delivery of the Shares and
ADSs to or for the respective accounts of the International
Underwriters in the manner contemplated herein, (B) the sale
and delivery by the International Underwriters of the
International
-27-
<PAGE> 28
Shares or ADSs to the initial subscribers or purchasers,
respectively, thereof in the manner contemplated herein, or (C)
the deposit of International Shares with the Depositary against
the issuance of ADRs evidencing ADSs;
(xvii) The choice of law provisions set forth in
Section 18 hereof will be recognized by the Spanish courts; the
Company can sue and be sued in its own name; insofar as a New
York Court declares itself competent pursuant to the
irrevocable submission of the Company to the non-exclusive
jurisdiction of a New York Court, the Company may be sued in
such New York Court; the waiver by the Company of any objection
to the venue of a proceeding in a New York Court and the
agreement of the Company that this Agreement shall be governed
by and construed in accordance with the laws of New York are
legal, valid and binding; service of process effected in the
manner set forth in Section 16 hereof, assuming its validity
under New York law, will be effective; any judgment obtained in
a New York Court arising out of or in relation to the
obligations of the Company herein will be recognized in Spain
in accordance with and subject to the Ley de Enjuiciamiento
Civil (Law of Civil Procedure), the substantive provisions of
which are found in Articles 951 to 958, inclusive; the
aforementioned Articles provide, inter alia, that any judgment
rendered outside Spain may be enforced in Spain (A) if the
appropriate order (exequatur) would be obtainable according to
the provisions of any applicable treaty, (B) in the absence of
any such treaty, if it could be shown that the jurisdiction
where the foreign judgment was given would recognize Spanish
judgments on a reciprocal basis, provided that pursuant to the
case law of the jurisdiction in question such reciprocity has
not been denied, and (C) if the existence or non-existence of
reciprocity could not be proved, subject to the satisfaction of
certain conditions such as the defendant having entered a
personal appearance in the proceedings before the foreign
court; and since there is no treaty between Spain and the
United States, unless the conditions referred to in (C) above
were satisfied, in order to enforce in Spain a judgment of a
New York Court it would be necessary to prove that the New York
Courts would enforce judgments issued by Spanish courts;
(xviii) The Transaction Documents to which the Company
or any of its subsidiaries, as applicable, is a party have been
duly authorized, executed and delivered by the Company or its
subsidiaries, as applicable; each Transaction Document to which
the Company or any of its subsidiaries, is a party constitutes
a valid and binding agreement of the Company, or such
subsidiary, enforceable in accordance with its terms, subject,
as to enforcement, to applicable bankruptcy, insolvency,
fraudulent transfer, suspension of payments or other laws of
general applicability relating to or affecting the enforcement
of creditors' rights generally and to general equity
principles; by the date of this Agreement all required
corporate actions and Governmental Authorizations by the
Company or any of its subsidiaries, will have been taken or
obtained to effect and complete the Transactions including all
issuances, transfers, exchanges or acquisitions of capital
stock; and the Transactions
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<PAGE> 29
will have closed prior to the date of this Agreement and will
not result and have not resulted in the Company or any of its
subsidiaries, assuming or becoming subject to any material
obligation or liability not disclosed in the Prospectus;
(xix) The indemnification and contribution provisions
set forth in Section 9 hereof and the right of contribution
pursuant to Section 9(d) of the Act have been duly authorized
by the Company and constitute valid and binding obligations of
the Company enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, suspension of payments or other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles;
(xx) All dividends and other distributions declared and
payable on the shares of capital stock may under current
Spanish laws and regulations be paid to the Depositary in euro
that may be converted into foreign currency that may be freely
transferred out of Spain, subject only to a withholding tax of
25% on the amount of any such payment in euro, but otherwise
free and clear of any other tax, duty, withholding or deduction
in Spain and without the necessity of obtaining any
Governmental Authorization of any nature whatsoever in Spain;
(xxi) Neither the Company nor any of its subsidiaries
is in violation of its Estatutos or in default in the
performance or observance of any material obligation,
agreement, covenant or condition contained in any Transaction
Document, indenture, mortgage, deed of trust, loan agreement,
acquisition, merger or joint venture agreement, lease or other
agreement or instrument to which it is a party or by which it
or any of its properties may be bound; and
(xxii) Although they do not assume any responsibility
for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus,
except for those referred to in the opinion in subsection
(xiii) of this Section 7(d), such counsel have no reason to
believe that, as of the effective date of the Registration
Statement, either the Registration Statement or the Prospectus
(or, as of its date, any further amendment or supplement
thereto made by the Company prior to such Time of Payment)
(other than the financial statements and related schedules
therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
that, as of such Time of Payment, either the Registration
Statement or the Prospectus (or any such further amendment or
supplement thereto) (other than the financial statements and
related schedules therein, as to which such counsel need
express no opinion) contains an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading.
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<PAGE> 30
In giving the opinions specified in (X) and (Y) above, (I) Garrigues & Andersen
may rely without independent examination as to matters of United States federal
and New York law on the opinion of Sullivan & Cromwell, United States counsel
for the International Underwriters, described in paragraph (b) of this Section
7, and (II) Uria y Menendez may rely without independent investigation on the
opinion of Davis Polk & Wardwell, United States counsel for the Company
described in paragraph (c) of this Section 7, and as to matters of Argentine,
Brazilian, Chilean, Florida, Mexican and Peruvian law on the opinions of Baker &
McKenzie (Argentina), Machado Meyer, Sendacz & Opice (Brazil), Philippi,
Yrarrazaval, Pulido & Brunner (Chile), Greenberg Traurig (Florida), Baker &
McKenzie (Mexico) and Estudio Luis Echecopar Garcia (Peru) (the "foreign
counsel"), respectively; (III) Garrigues & Andersen and Uria y Menendez may: (A)
rely as to factual matters on certificates of directors and executive officers
of the Company and certificates of public officials and (B) state (1) that they
have not themselves checked the accuracy or completeness of, or otherwise
verified, the information furnished with respect to matters in the Registration
Statement or the Prospectus other than as specified above, but have generally
reviewed and discussed with representatives of the International Underwriters
and with certain officers and employees of, and United States and foreign
counsel and independent accountants for, the Company the relevant information
furnished, whether or not subject to their check and verification, and that
their opinion is rendered on the basis of such consideration, review and
discussion, but without independent check or verification, except as so
specified, and (2) that: (w) their opinion is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors' rights generally and to public policy considerations; (x)
the term "enforceable" means that the obligations assumed by the relevant party
under the relevant documents are of a type that the Spanish courts would enforce
and it does not mean that those obligations will be necessarily enforced in all
circumstances in accordance with their terms; and (z) there is doubt as to the
enforceability in Spain of original actions or in actions for enforcement of
judgments of United States courts of liabilities predicated solely upon the Act,
provided that such counsel further states that, as of the date of such opinion,
they are not aware of any public policy considerations that would affect the
obligations of the relevant parties under the relevant documents or of any
circumstances under which such obligations would not be enforced in accordance
with their terms other than the fact that there is doubt as to the
enforceability in Spain of punitive damages and of original actions or actions
for enforcement of judgments of United States courts of liabilities predicated
solely upon the Act;
(e) Cristina Lamana, General Director of Legal Affairs of the
Company, shall have furnished to you her written opinion, dated such
Time of Payment, in form and substance satisfactory to you, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation with limited liability
(sociedad anonima) in good standing under the laws of Spain,
with full power and authority (corporate and other) to own or
lease and operate its properties and conduct its business as
described in the Prospectus;
(ii) The Company and each of its subsidiaries have all
licenses, franchises, permits, authorizations, approvals and
orders of and from all governmental regulatory officials and
bodies that are necessary to own or lease and operate their
properties
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<PAGE> 31
and conduct their businesses as described in the Prospectus and
are material in relation to the business of the Company and its
subsidiaries taken as a whole;
(iii) To the best of her knowledge there are no legal
or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the consolidated financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries; and, to the best of her knowledge, no such
proceedings are threatened or contemplated by any Governmental
Agency or threatened by others, except as disclosed in the
Prospectus;
(iv) The issue and sale of the International Shares and
ADSs, the deposit of the International Shares being deposited
with the Depositary against issuance of ADRs evidencing the
ADSs to be delivered at each Time of Delivery of ADSs, the sale
and delivery of the International Shares to be delivered at
such Time of Payment and of the ADSs to be delivered at each
Time of Delivery of ADSs by the Company, the performance of
this Agreement, each of the Spanish Underwriting Agreements,
the Agency Agreement and the Deposit Agreement and the
consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of
the terms or provisions of, or constitute a default under any
Transaction Document, indenture, mortgage, deed of trust, loan
agreement, acquisition, merger or joint venture agreement,
lease or other agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of
its subsidiaries is subject, nor will such action result in any
violation of the provisions of the charter or Estatutos of the
Company or any of its subsidiaries or any statute or any order,
rule or regulation known to such counsel of any court or
Governmental Agency or body in Spain having jurisdiction over
the Company or any of its subsidiaries or any of its
properties;
(v) Each of Ole, Telefonica Servicios y Contenidos por
la Red S.A., Telefonica Interactiva de Contenidos, S.A., Nutec,
Infosel, Terra Networks Chile, Terra Networks Peru, Terra
Networks Argentina and Telefonica Interactiva USA
(collectively, the "Principal Subsidiaries") has been duly
incorporated and is validly existing as a corporation (sociedad
anonima) in good standing under the laws of Spain or: in the
case of Nutec, Brazil; in the case of Infosel, Mexico; in the
case of Terra Networks Chile, Chile; in the case of Terra
Networks Peru, Peru; in the case of Terra Networks Argentina,
Argentina; and in the case of Telefonica Interactiva USA, the
State of Florida; with full power and authority (corporate and
other) to own or lease and operate its properties and conduct
its business as described in the Prospectus; all of the issued
shares of capital stock of each of the Principal Subsidiaries
have been
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<PAGE> 32
duly and validly authorized and issued and are fully paid and
nonassessable; and the Company owns the shares of capital stock
representing its participation in each of the respective
Principal Subsidiaries as set forth in the Prospectus, in each
case free and clear of all liens, encumbrances, equities and
claims;
(vi) The Transaction Documents to which the Company or
any of its subsidiaries is a party have been duly authorized,
executed and delivered by the Company and its subsidiaries;
each Transaction Document to which the Company or any of its
subsidiaries is a party constitutes a valid and legally binding
agreement of the Company or such subsidiary, enforceable in
accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, fraudulent transfer,
suspension of payments or other laws of general applicability
relating to or affecting the enforcement of creditors' rights
generally and to general equity principles; by the date of this
Agreement all required corporate actions and Governmental
Authorizations by the Company and its subsidiaries will have
been taken or obtained to effect and complete the Transactions,
including all issuances, transfers, exchanges or acquisitions
of capital stock; and the Transactions will have closed prior
to the date of this Agreement and will not result and have not
resulted in the Company or its subsidiaries assuming or
becoming subject to any material obligation or liability not
disclosed in the Prospectus;
(vii) Such counsel has no reason to believe that either
of the Spanish Folletos, and all amendments and supplements
thereto, did not conform in all material respects to the
requirements of Spanish law and the rules and regulations of
the CNMV or, as of their applicable effective or filing dates,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(viii) Nothing has come to such counsel's attention
that causes such counsel to believe that (A) either the
Registration Statement or the prospectus included therein
(except for the financial statements and related schedules
included therein, as to which such counsel need express no
belief), at the time the Registration Statement became
effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or
(B) the Prospectus (except as stated) as of its date and as of
the date of such opinion contained or contains an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
In giving such opinion, such counsel may rely without independent examination as
to matters of Argentine, Brazilian, Chilean, Florida, Mexican and Peruvian law
on the opinions of foreign counsel for the Company
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<PAGE> 33
described in paragraph (f) of this Section 7 and as to factual matters on
certificates of directors and executive officers of the Company and certificates
of public officials;
(f) Each of Baker & McKenzie (Argentina), Machado Meyer,
Sendacz e Opice (Brazil), Philippi, Yrarrazaval, Pulido & Brunner
(Chile), Greenberg Traurig (Florida), Baker & McKenzie (Mexico) and
Estudio Luis Echecopar Garcia (Peru), Argentine, Brazilian, Chilean,
Florida, Mexican and Peruvian special foreign counsel to the Company,
respectively, shall have furnished to you their written opinion, dated
such Time of Payment, in form and substance satisfactory to you, to the
effect that:
(i) Terra Networks Brazil (formerly Nutec), Infosel,
Terra Networks Chile, Terra Networks Peru, Terra Networks
Argentina or Telefonica Interactiva USA, as applicable, (each a
"Foreign Subsidiary") has been duly incorporated or organized
and is validly existing as a corporation or other form of legal
entity in good standing under the laws of the jurisdiction of
its incorporation, and has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
(ii) The shares of capital stock acquired by the
Company or any of its subsidiaries in connection with the
relevant Transaction have been duly and validly authorized, are
fully paid and non-assessable; the shares of capital stock or
assets acquired by the Company in connection with the relevant
Transaction are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims;
and the Company's interest in the relevant Foreign Subsidiary
is as stated in the Prospectus;
(iii) The statements in the Prospectus under "Business
- Regulation", to the extent such statements relate to matters
of law in the jurisdiction of practice of such foreign counsel,
are accurate, complete and fair;
(iv) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there is no contract,
document, arrangement or understanding to which the Company or
any of its subsidiaries is a party that relates to the relevant
Foreign Subsidiary, its subsidiaries or its business that is
material to the conduct of the business of the relevant Foreign
Subsidiary and its subsidiaries;
(v) All consents, approvals, authorizations, orders,
registrations, clearances and qualifications of or with any
Governmental Agency having jurisdiction over the relevant
Foreign Subsidiary required for the consummation of the
relevant Transaction by the Company have been obtained; and
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<PAGE> 34
(vi) The relevant Transaction Documents have been duly
authorized, executed and delivered by the parties thereto and
constitute valid and legally binding agreements of the parties
thereto, enforceable in accordance with their terms, subject as
to enforcement to applicable bankruptcy, insolvency, fraudulent
transfer, suspension of payments or other laws of general
applicability relating to or affecting the enforcement of
creditors' rights generally and to general equity principles;
all required corporate actions and Governmental Authorizations
have been taken or obtained by the parties to the Transaction
Documents to effect and complete the Transactions including all
issuances, transfers and exchanges of share capital prior to
the date of this Agreement; and the relevant Transaction will
have closed prior to the date of this Agreement and will not
result and have not resulted in the Company or any of its
subsidiaries, or the relevant Foreign Subsidiary assuming or
becoming subject to any material obligation or liability not
disclosed in the Prospectus.
(g) Greenberg Traurig (New York), counsel for the Depositary,
shall have furnished to you their written opinion, dated such Time of Payment,
in form and substance satisfactory to you, to the effect that:
(i) the Deposit Agreement has been duly authorized,
executed and delivered by the Depositary and constitutes a
valid and legally binding obligation of the Depositary,
enforceable in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization and other laws of general
applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles; and
(ii) the ADRs issued under and in accordance with the
provisions of the Deposit Agreement to evidence ADSs will
entitle the holders thereof to the rights specified therein and
in the Deposit Agreement, assuming that (A) the International
Shares represented by the ADSs which are in turn evidenced by
the ADRs have been duly authorized and validly issued and are
fully paid and nonassessable and (B) such International Shares
have been duly deposited with |X| as Custodian;
(h) At 4:00 p.m., Madrid time, on the date hereof and at each
Time of Payment, each of Arthur Andersen y Cia, S. Com., Arthur Andersen S/C and
Ruiz, Urquiza y Cia, S.C. (Arthur Andersen) shall have furnished to you, acting
on behalf of the International Underwriters, letters, dated the date of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Schedules II(A) to (D) hereto;
(i) Each of Telefonica, InfoSearch Holdings, S.A. in connection
with the acquisition of Ole in Spain; MLSP-Comercio e Participacoes Ltda and Ms.
Silvia Nora Berno de Jesus in connection with the acquisition of Nutec in
Brazil; Bidasoa B.V. in connection with the acquisition of Infosel in Mexico,
Compania de Telefonos de Chile Transmisiones Regionales S.A. ("CTC Mundo") in
connection with the acquisitions of the Internet assets of CTC Mundo in Chile;
Telefonica del Peru, S.A.A. in connection with the acquisition of the Internet
assets of Telefonica Servicios Internet S.A.C. in Peru; and IDT Corporation in
connection with the formation of a joint venture with IDT shall have furnished
to you prior to the First Time of
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<PAGE> 35
Payment the "lock-up" agreement, substantially in the form of Schedule III(A) or
(B) hereto, between you and each of Telefonica, InfoSearch Holdings S.A,
MLSP-Comercio e Participacoes Ltda, Ms. Silvia Nora Berno de Jesus, Bidasoa
B.V., CTC Mundo, Telefonica del Peru S.A.A. and IDT Corporation relating to
sales and certain other dispositions of Shares or certain other securities of
the Company; and each such "lock-up" agreement shall be in full force and effect
at each Time of Payment;
(j) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the capital stock or short-term or long-term debt of the Company or
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is in the
sole judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the ADSs and International Shares being delivered hereunder at such Time of
Payment on the terms and in the manner contemplated in the Prospectus;
(k) On or after the date hereof and prior to 3:00 p.m. Madrid
time on the day on which the public deed in connection with the subscription and
sale of the Shares is granted, there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, NASDAQ, the London Stock Exchange or
the Madrid Stock Exchange; (ii) a suspension or material limitation in trading
in the Company's on NASDAQ, the London Stock Exchange, the New York Stock
Exchange or the Spanish Stock Exchanges; (iii) a general moratorium on
commercial banking activities in New York, London or Spain declared by the
relevant authorities; (iv) a change or development involving a prospective
change in Spanish taxation affecting the Company, the Shares or the ADSs or the
transfer thereof or the imposition of exchange controls by the United States or
Spain; or (v) the outbreak or escalation of hostilities involving the United
States, the United Kingdom or Spain or the declaration by the United States, the
United Kingdom or Spain of a national emergency or war, if the effect of any
such event specified in this clause (v) in the judgment of at least three of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of Payment
on the terms and in the manner contemplated in the Prospectus or (vi) the
occurrence of any change in the financial, political or economic conditions in
the United States, the United Kingdom, Spain or elsewhere which, in the judgment
of at least three of the Representatives would materially and adversely affect
the financial markets or the market for the Shares or ADSs and other equity
securities. This Agreement can be terminated by mutual agreement of the Company
and at least three of the Representatives if any of the events in (i) through
(vi) above occurs after 3:00p.m. on the day on which the Public Deed is granted
and prior to 2:00 a.m. on the day following the granting of the Public Deed;
(l) All steps necessary for the International Shares to be sold
at such Time of Payment to be duly listed and admitted for trading on the
Spanish Stock Exchanges, quoted on the AQS and settled
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<PAGE> 36
through the automatic book entry system (sistema de las anotaciones en cuenta)
at the close of business (Madrid time) on the date of such Time of Payment shall
have been taken; and all steps necessary for the ADSs to be duly quoted for
trading on NASDAQ at the open of business (New York time) on the date of such
Time of Payment shall have been taken;
(m) The Deposit Agreement and the Agency Agreement shall be in
full force and effect;
(n) The Company shall have furnished or caused to be furnished
to you at such Time of Payment, certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Payment, as to the performance by
the Company of all of its obligations hereunder and under the Spanish
Underwriting Agreements to be performed at or prior to such Time of Payment, and
as to such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (i) of this Section and as to such other matters as
you may reasonably request; and
(o) At such Time of Payment, the subscription and sale of the
Spanish Shares to be delivered by the Company pursuant to each of the Spanish
Underwriting Agreements at the corresponding Time of Payment thereunder shall
have occurred or shall be occurring simultaneously therewith.
8. The obligations of the International Underwriters hereunder as to
ADSs to be delivered at each Time of Delivery of ADSs shall be subject, in their
discretion, to the condition that the representations and warranties and other
statements of the Company in Section 1(a) are, at and as of such Time of
Delivery of ADSs, true and correct, the condition that each of the Company shall
have performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement or the ADS Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to your
satisfaction;
(b) Sullivan & Cromwell, United States counsel for the
International Underwriters, shall have furnished to you such opinion or
opinions, dated such Time of Delivery of ADSs, with respect to the validity of
the ADSs and the ADS Registration Statement and other related matters as you may
reasonably request, in form and substance based on Section 7(b) and otherwise
reasonably satisfactory to you;
(c) Davis Polk & Wardwell, United States counsel for the
Company, shall have furnished to you such opinion dated such Time of Delivery of
ADSs, with respect to the validity of the ADSs and the ADS Registration
Statement and other related matters as you may reasonably request, in form and
substance based on Section 7(c) and otherwise reasonably satisfactory to you;
(d) Greenberg Traurig, counsel for the Depositary, shall have
furnished to you their written opinion, dated such Time of Delivery of ADSs, in
form and substance satisfactory to you, to the effect
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<PAGE> 37
that (i) the Deposit Agreement has been duly authorized, executed and delivered
by the Depositary and constitutes a valid and legally binding obligation of the
Depositary, enforceable in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, fraudulent transfer,
suspension of payments or other laws of general applicability relating to or
affecting the enforcement of creditors' rights and to general equity principles
and (ii) the ADRs issued under and in accordance with the provisions of the
Deposit Agreement to evidence ADSs will entitle the holders thereof to the
rights specified therein and in the Deposit Agreement;
(e) All of the issued shares of capital stock of the Company
(including the International Shares) shall be duly listed and admitted for
trading on the Spanish Stock Exchanges, quoted on the AQS and settled through
the automatic book entry system (sistema de las anotaciones en cuenta); and the
ADSs shall be duly listed for quotation on NASDAQ;
(f) The Deposit Agreement shall be in full force and effect,
and the Depositary shall have furnished or caused to be furnished to you at each
Time of Delivery of ADSs, certificates, satisfactory to you evidencing the
deposit with it of the International Shares being so deposited against issuance
of the ADRs evidencing the ADSs to be delivered at such Time of Delivery of
ADSs, the execution in favor of the corresponding book-entry transfer
(transferencia contable de las anotaciones en cuenta) and the delivery to it of
other documents of transfer, and the execution, issuance, countersignature (if
applicable) and delivery of ADRs evidencing such ADSs pursuant to the Deposit
Agreement; and
(g) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery of ADSs, certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company at and as of such Time of Delivery of ADSs, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery of ADSs, and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to be
furnished certificates as to the matters set forth in subsection (a) of this
Section and as to such other matters as you may reasonably request.
9. (a) The Company will indemnify and hold harmless each
International Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such International Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the Spanish
Folletos or the ADS Registration Statement, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
International Underwriter for any legal or other expenses reasonably incurred by
such International Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement, the Prospectus or the ADS
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<PAGE> 38
Registration Statement, or any such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by any
International Underwriter through Goldman Sachs International expressly for use
therein.
(b) Each International Underwriter will indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or the ADS Registration Statement, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the Prospectus or the ADS Registration
Statement, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such
International Underwriter through Goldman Sachs International expressly for use
therein, and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company as such expenses are incurred in connection
with investigating or defending any such action or claim.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim, and (ii) does not include a
statement
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<PAGE> 39
as to or an admission of fault, culpability, or a failure to act by or on behalf
of any indemnified party.
(d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the International
Underwriters on the other from the offering of the International Shares and
ADSs. If, however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law or if the indemnified party failed to give
the notice required under subsection (c) above, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and the International
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the International
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering of International Shares and ADSs under this
Agreement (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the International
Underwriters with respect to the International Shares subscribed for and ADSs
purchased under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand, or the
International Underwriters, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the International Underwriters agree that
it would not be just and equitable if contribution pursuant to this subsection
(d) were determined by pro rata allocation (even if the International
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no
International Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the International Shares and
ADSs underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such International Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to
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<PAGE> 40
contribution from any person who was not guilty of such fraudulent
misrepresentation. The International Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 9 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any International Underwriter within the meaning of the Act; and the obligations
of the International Underwriters under this Section 9 shall be in addition to
any liability which the respective International Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company, to the Company's authorized representative in the
United States signing the Registration Statement and the ADS Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act.
10. (a) If any International Underwriter shall default in its
obligation to subscribe for the International Shares which it has agreed to
subscribe for hereunder at a Time of Payment, you may in your discretion arrange
for you or another party or other parties to subscribe for such International
Shares on the terms contained herein. If within 36 hours after such default by
any International Underwriter you do not arrange for the subscription for such
International Shares, then the Company shall be entitled to a further period of
36 hours within which to procure another party or other parties satisfactory to
you to subscribe for such International Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the subscription for such International Shares, or the Company
notifies you that it has so arranged for the subscription for such International
Shares, you or the Company shall have the right to postpone such Time of Payment
for a period of not more than seven days in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "International Underwriter" as used in
this Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such International Shares.
(b) If, after giving effect to any arrangements for the
subscription for the International Shares of a defaulting International
Underwriter or International Underwriters by you and the Company as provided in
subsection (a) above, the aggregate number of such International Shares which
remain unsubscribed does not exceed one-fifth of the aggregate number of all the
International Shares to be subscribed for at such Time of Payment, then the
Company shall have the right to require each non-defaulting International
Underwriter to subscribe for the number of International Shares which such
International Underwriter agreed to subscribe for hereunder at such Time of
Payment and, in addition, to require each non-defaulting International
Underwriter to subscribe for its pro rata share (based on the number of Firm
International Shares which such International Underwriter agreed to subscribe
for hereunder) of the International Shares of such defaulting International
Underwriter or International
-40-
<PAGE> 41
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting International Underwriter from liability for its
default.
(c) If after giving effect to any arrangements for the
subscription for International Shares of a defaulting International Underwriter
or International Underwriters by you and the Company as provided in subsection
(a) above, the aggregate number of such International Shares which remains
unsubscribed exceeds one-fifth of the aggregate number of all the International
Shares to be subscribed at such Time of Payment or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
International Underwriters to purchase International Shares of a defaulting
International Underwriter or International Underwriters, then this Agreement
(or, with respect to the Second Time of Payment, the obligations of the
International Underwriters to subscribe for and of the Company to sell the
Optional International Shares) shall thereupon terminate without liability on
the part of any non-defaulting International Underwriter or the Company, except
for the expenses to be borne by the Company and the International Underwriters,
as provided in Section 6 hereof, and the indemnity and contribution agreements
in Section 9 hereof; but nothing herein shall relieve a defaulting International
Underwriter from liability for its default.
11. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several International
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any International Underwriter or any controlling person
of any International Underwriter, or the Company, any officer or director or
controlling person of the Company, and shall survive delivery of and payment for
the International Shares and the ADSs hereunder.
12. If this Agreement shall be terminated pursuant to Section
10, the Company shall not then be under any liability to any International
Underwriter except as provided in Sections 6 and 9 hereof; but, if for any other
reason any Shares or ADSs are not delivered by or on behalf of the Company as
provided herein and in the Spanish Underwriting Agreements, the Company will
reimburse the International Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the International Underwriters in making
preparations for the subscription, purchase, sale and delivery of the
International Shares and/or ADSs not so delivered, but the Company shall then be
under no further liability to any International Underwriter except as provided
in Sections 6 and 9 hereof.
13. In all dealings hereunder, you shall act on behalf of each
of the International Underwriters, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of any
International Underwriter made or given by you jointly or by Goldman Sachs
International.
All statements, requests, notices and agreements hereunder
shall be in writing, and if to the International Underwriters shall be
sufficient in all respects if delivered or sent by registered mail, telex or
-41-
<PAGE> 42
facsimile transmission promptly confirmed by a writing delivered or sent by
registered mail, to Goldman Sachs International, Peterborough Court, 133 Fleet
Street, London EC4A 2BB, Attention: Equity Capital Markets; and if to the
Company, shall be sufficient in all respects if delivered or sent by registered
mail, telex or facsimile transmission promptly confirmed by a writing delivered
or sent by registered mail, to the Company at Via de las Dos Castillas, 33,
Complejo Atica, Edificio 1, 28224 Pozuelo de Alarcon, Spain, Attention: |X|
(Facsimile No. (34-91-452-|X|); provided, however, that any notice to an
International Underwriter pursuant to Section 9(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such International Underwriter
at its address to be supplied by you to the Company upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
14. This Agreement shall be binding upon, and inure solely to
the benefit of, the International Underwriters and the Company and, to the
extent provided in Sections 9 and 11 hereof, the officers and the directors of
the Company, the Company's authorized representative in the United States and
each person who controls the Company, or any International Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No party subscribing for or purchasing any of the International
Shares or ADSs from any International Underwriter shall be deemed a successor or
assign by reason merely of such subscription or purchase.
15. Time shall be of the essence of this Agreement. The term
"Business Day", as used herein, shall mean any day on which banks in Madrid and
New York City, the AQS of the Spanish Stock Exchanges and NASDAQ are open for
business and when the Commission's office in Washington, D.C. is normally open
for business.
16. Each of the parties hereto irrevocably agrees that any
legal suit, action or proceeding against the Company brought by any
International Underwriter or by any person who controls any International
Underwriter arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in any New York Court, irrevocably waives,
to the fullest extend it may effectively do so, any objection which it may now
or hereafter have to the laying of venue of any such proceeding, and irrevocably
submits to the nonexclusive jurisdiction of such New York Courts in any such
suit, action or proceeding. The Company has appointed CT Corporation System, New
York, New York, as its authorized agent (the "Authorized Agent") upon which
process may be served in any such action arising out of or based on this
Agreement or the transactions contemplated hereby which may be instituted in any
New York Court by any International Underwriter or by any person who controls
any International Underwriter, expressly consents to the jurisdiction of any
such court in respect of any such action, and waives any other requirements of
or objections to personal jurisdiction with respect thereto. Such appointment
shall be irrevocable. The Company represents and warrants that the Authorized
Agent has agreed to act as said agent for service of process, and the Company
agree to take any and all action, including the filing of any and all documents
and instruments, that may be necessary to continue such appointment in full
force and effect as aforesaid. Service of process upon the Authorized Agent and
written notice of such service to the Company shall be deemed, in every respect,
effective service of process upon the Company.
-42-
<PAGE> 43
Notwithstanding the foregoing, any action based on this Agreement may be
instituted by any International Underwriter in any competent court in Spain.
17. In respect of any judgment or order given or made for any
amount due hereunder that is expressed and paid in a currency (the "judgment
currency") other than United States dollars, the Company, will indemnify each
International Underwriter against any loss incurred by such International
Underwriter as a result of any variation as between (i) the rate of exchange at
which the United States dollar amount is converted into the judgment currency
for the purpose of such judgment or order and (ii) the rate of exchange at which
an International Underwriter is able to purchase United States dollars with the
amount of the judgment currency actually received by such International
Underwriter on the Business Day immediately following receipt of the judgment
currency. The foregoing indemnity shall constitute a separate and independent
obligation of the Company and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of or conversion into United States dollars.
18. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
19. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
-43-
<PAGE> 44
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you
on behalf of each of the International Underwriters, this letter and such
acceptance hereof shall constitute a binding agreement among each of the
International Underwriters and the Company. It is understood that your
acceptance of this letter on behalf of each of the International Underwriters is
pursuant to the authority set forth in an Agreement among International
Underwriters, the form of which shall be submitted to the Company for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
TERRA NETWORKS, S.A.
By:
Name:
Title:
Accepted as of the date hereof:
Banco de Negocios Argentaria S.A. BBV Interactivos, S.A., S.V.B.
By: __________________________ By: _________________________
Goldman Sachs International InverCaixa Valores, S.V.B., S.A.
By: __________________________ By: _________________________
On behalf of each of the International Underwriters
-44-
<PAGE> 45
SCHEDULE I
<TABLE>
<CAPTION>
Number of Optional
Number of International Shares
Firm International to be Subscribed If
Shares to be Subscribed Maximum Option Total Number of
International Underwriter for Exercised International Shares
------------------------- --- --------- --------------------
<S> <C> <C> <C>
Goldman Sachs International
Credit Suisse First Boston (Europe) Limited
J.P. Morgan Securities Ltd.
Lehman Brothers International (Europe)
Banco de Negocios Argentaria S.A.
BBV Interactivos, S.A., S.V.B.
InverCaixa Valores, S.V.B., S.A.
Bear, Stearns International Limited
Salomon Brothers International Limited
</TABLE>
I-1
<PAGE> 46
SELLING AGENTS IN THE U.S.
Goldman, Sachs & Co.
I-2
<PAGE> 47
SCHEDULE II(A)
FORM OF COMFORT LETTER TO BE DELIVERED BY
ARTHUR ANDERSEN Y CIA, S. COM. REGARDING THE COMPANY
Pursuant to Section 7(h) of the Underwriting Agreement, Arthur
Andersen y Cia, S. Com. shall furnish letters to the Underwriters to the effect
that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements
and financial statement schedules audited by them and included in the
Prospectus and the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder;
(iii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position and balance sheets of the Company for the three most recent
fiscal years and the six month period ended June 30, 1999 included in
the Prospectus and the Registration Statement agrees with the
corresponding amounts in the audited consolidated financial statements
for such three fiscal years and the six month period;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with Spanish generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading of the
latest available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its
subsidiaries and Telefonica, S.A. since June 30, 1999, inquiries of
officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) (i) the unaudited consolidated statements of
operations, consolidated balance sheets and changes in
financial position and shareholders' equity for the six month
period ended June 30, 1998 included in the Prospectus and the
Registration Statement and for the nine month period ended
September 30, 1999 attached to such letter do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations, or (ii) any material modifications should be made
to the unaudited consolidated statements of operations,
consolidated balance sheets and changes in financial position
and shareholders' equity included in the Prospectus and the
Registration Statement or attached to such letter for them to
be in conformity with generally accepted accounting principles
in Spain;
(B) as of September 30, 1999 and as of a specified
date not more than five days prior to the date of such letter,
there have been any changes in the consolidated capital stock
(other than issuances of ordinary shares upon exercise of
options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible
securities,
II(A)-1
<PAGE> 48
in each case since June 30, 1999) or any increase in the
consolidated long-term or short-term liabilities of the
Company and its subsidiaries, or any decrease in consolidated
net current assets or shareholders' equity since June 30,
1999, except in each case for changes, increases or decreases
which the Prospectus and the Registration Statement disclose
have occurred or may occur or which are described in such
letter; and
(C) for the period from June 30, 1999 to September
30, 1999 and to a date not more than 5 days prior to the date
of such letter there were any increases in consolidated net
loss or operating loss or the total or per share amounts of
consolidated net loss, in each case as compared with the
comparable period of the preceding year and in the case of the
period from June 30, 1999 to a date not more than 5 days prior
to the date of such letter, the comparable period in the
preceding six months, except in each case for decreases or
increases which the Prospectus and the Registration Statement
disclose have occurred or may occur or which are described in
such letter; and
(D) the unaudited pro forma financial statements
included in the Registration Statement and Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements;
(v) In addition to the examination referred to in their report
included in the Prospectus and the Registration Statement and the
limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraph (iv) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards in Spain, with
respect to certain amounts, percentages and financial information
specified by the Representatives, which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
II(A)-2
<PAGE> 49
SCHEDULE II(B)
FORM OF COMFORT LETTER TO BE DELIVERED BY ARTHUR ANDERSEN Y
CIA., S. COM. REGARDING ORDENAMIENTO DE LINKS
ESPECIALIZADOS, S.L.
Pursuant to Section 7(h) of the Underwriting Agreement, Arthur
Andersen y Cia, S. Com. shall furnish letters to the Underwriters to the effect
that:
(i) They are independent certified public accountants with
respect to Ordenamiento de Links Especializados, S.L. (OLE) within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and financial
statement schedules audited by them and included in the Prospectus and
the Registration Statement comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
examination in accordance with Spanish generally accepted auditing
standards, consisting of a reading of the unaudited consolidated
financial statements and other information referred to below, a reading
of the latest available interim financial statements of OLE and its
subsidiaries, inspection of the minute books of OLE and its
subsidiaries since June 30, 1999, inquiries of officials of OLE and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of
operations, consolidated balance sheets and changes in
financial position and shareholders' equity for the nine month
period ended September 30, 1999 attached to such letter do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
rules and regulations, or (ii) any material modifications
should be made to the unaudited consolidated statements of
operations, consolidated balance sheets and changes in
financial position and shareholders' equity attached to such
letter for them to be in conformity with generally accepted
accounting principles in Spain;
(B) as of September 30, 1999 and a specified date not
more than five days prior to the date of such letter, there
have been any changes in the consolidated capital stock (other
than issuances of ordinary shares upon exercise of options and
stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities in each
case since June 30, 1999) or any increase in the long-term or
short-term debt of OLE and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity
since June 30, 1999, except in each case for
II(B)-1
<PAGE> 50
changes, increases or decreases which the Prospectus and the
Registration Statement disclose have occurred or may occur or
which are described in such letter; and
(B) for the period from June 30, 1999 to September
30, 1999 and to a date not more than 5 days prior to the date
of such letter there were any increases in net loss or
operating loss or the total or per share amounts of net loss,
in each case as compared with the comparable period of the
preceding year and, in the case of the period from June 30,
1999 to a date not more than 5 days prior to the date of such
letter, the comparable period in the preceding six months,
except in each case for decreases or increases which the
Prospectus and the Registration Statement disclose have
occurred or may occur or which are described in such letter;
and
(iv) In addition to the examination referred to in their
report included in the Prospectus and the Registration Statement and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraph(iii) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards in Spain, with
respect to certain amounts, percentages and financial information
specified by the Representatives, which are derived from the general
accounting records of OLE and its subsidiaries, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of OLE and its subsidiaries and have found
them to be in agreement.
II(B)-2
<PAGE> 51
SCHEDULE II(C)
FORM OF COMFORT LETTER TO BE DELIVERED BY
RUIZ, URQUIZA Y CIA., S.C. REGARDING INFORMACION
SELECTIVA, S.A. DE C.V.
Pursuant to Section 7(h) of the Underwriting Agreement, Arthur
Andersen Mexico shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to Informacion Selectiva, S.A. de C.V. ("Infosel") within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and financial
statement schedules audited by them and included in the Prospectus and
the Registration Statement comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
examination in accordance with Mexican generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading of the
latest available interim financial statements of Infosel and its
subsidiaries, inspection of the minute books of Infosel and its
subsidiaries since June 30, 1999, inquiries of officials of Infosel and
its subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited balance sheets, statements of
income (loss), changes in shareholders' equity and in
financial position for the six month period ended June 30,
1998 included in the Prospectus and the Registration Statement
and the nine month period ended September 30, 1999 attached to
such letter do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited consolidated
statements of operations, consolidated balance sheets and
changes in financial position and shareholders' equity
included in the Prospectus and the Registration Statement or
attached to such letter for them to be in conformity with
generally accepted accounting principles in Mexico;
(B) as of September 30, 1999 and as of a specified
date not more than five days prior to the date of such letter,
there have been any changes in the consolidated capital stock
(other than issuances of ordinary shares upon exercise of
options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible
securities in each case since June 30, 1999) or any increase
in the long-term or short-term debt of Infosel and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity since June 30, 1999, except in
each case for
II(C)-1
<PAGE> 52
changes, increases or decreases which the Prospectus and the
Registration Statement disclose have occurred or may occur or
which are described in such letter; and
(C) for the period from June 30, 1999 to September
30, 1999 and to a date not more than 5 days prior to the date
of such letter there were any increases in net loss or
operating loss or the total or per share amounts of net loss,
in each case as compared with the comparable period of the
preceding year and, in the case of the of the period from June
30, 1999 to a date not more than 5 days prior to the date of
such letter, the comparable period in the preceding six
months, except in each case for decreases or increases which
the Prospectus and the Registration Statement disclose have
occurred or may occur or which are described in such letter;
and
(iv) In addition to the examination referred to in their
report included in the Prospectus and the Registration Statement and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraph(iii) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards in Mexico, with
respect to certain amounts, percentages and financial information
specified by the Representatives, which are derived from the general
accounting records of Infosel and its subsidiaries, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of Infosel and its subsidiaries and have
found them to be in agreement.
II(C)-2
<PAGE> 53
SCHEDULE II(D)
FORM OF COMFORT LETTER TO BE DELIVERED BY
ARTHUR ANDERSEN S/C REGARDING NUTEC INFORMATICA S.A.
Pursuant to Section 7(h) of the Underwriting Agreement, Arthur
Andersen Brazil shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to Nutec Informatica S.A. ("Nutec")within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements
and financial statement schedules audited by them and included in the
Prospectus and the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting an
examination in accordance with Brazilian generally accepted auditing
standards, consisting of a reading of the unaudited consolidated
financial statements and other information referred to below, a reading
of the latest available interim financial statements of Nutec and its
subsidiaries, inspection of the minute books of Nutec and its
subsidiaries since June 30, 1999, inquiries of officials of Nutec and
its subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited balance sheets, statements of
income (loss), changes in shareholders' equity and in
financial position for the six month period ended June 30,
1998 included in the Prospectus and the Registration Statement
and the nine month period ended September 30, 1999 attached to
such letter do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited consolidated
statements of operations, consolidated balance sheets and
changes in financial position and shareholders' equity
included in the Prospectus and the Registration Statement or
attached to such letter for them to be in conformity with
generally accepted accounting principles in Mexico;
(B) as of September 30, 1999 and as of a specified
date not more than five days prior to the date of such letter,
there have been any changes in the consolidated capital stock
(other than issuances of ordinary shares upon exercise of
options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible
securities in each case since June 30, 1999)or any increase in
the long-term or short-term debt of Nutec and its subsidiaries
or any decreases in consolidated net current assets or
stockholders' equity since June 30, 1999, except in each case
for changes,
II(D)-1
<PAGE> 54
increases or decreases which the Prospectus and the
Registration Statement disclose have occurred or may occur or
which are described in such letter; and
(C) for the period from June 30, 1999 to September
30, 1999 and to a date not more than 5 days prior to the date
of such letter there were any increases in net loss or
operating loss or the total or per share amounts of net loss,
in each case as compared with the comparable period of the
preceding year and, in the case of the period from June 30,
1999 to a date not more than 5 days prior to the date of such
letter, the comparable period in the preceding six months,
except in each case for decreases or increases which the
Prospectus and the Registration Statement disclose have
occurred or may occur or which are described in such letter;
and
(iv) In addition to the examination referred to in their
report included in the Prospectus and the Registration Statement and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraph(iii) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards in Brazil, with
respect to certain amounts, percentages and financial information
specified by the Representatives, which are derived from the general
accounting records of Nutec and its subsidiaries, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of Nutec and its subsidiaries and have
found them to be in agreement.
III(A)-1
<PAGE> 55
SCHEDULE III (A)
LOCK-UP AGREEMENT
_________________, 199_
Banco de Negocios Argentaria S.A.
BBV Interactivos, S.A., S.V.B.
Goldman Sachs International,
InverCaixa Valores, S.V.B., S.A.,
As representatives of the several International Underwriters
named in Schedule I to the International Underwriting Agreement,
c/o Goldman Sachs International,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB.
Ladies and Gentlemen:
The undersigned understands that you, as representatives of the several
International Underwriters (the "International Underwriters"), have entered into
an International Underwriting Agreement (the "International Underwriting
Agreement") with Terra Networks, S.A., a corporation with limited liability
(sociedad anonima) organized under the laws of Spain (the "Company"), providing
for the international offering (the "International Offering") by the several
International Underwriters named in Schedule I to the International Underwriting
Agreement, of ordinary shares, nominal value euro 2 each (the "Shares"),
directly or in the form of American depositary shares ("ADSs") evidenced by
American depositary receipts ("ADRs"), of the Company, pursuant to the
Registration Statement and the Prospectus. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the International
Underwriting Agreement. In addition, the undersigned understands that the
Company is concurrently entering into a Spanish retail underwriting agreement
and a Spanish institutional underwriting agreement with certain Spanish
underwriters providing for the sale by the Company of shares to institutional
investors in Spain and to retail investors in Spain, the European Economic Area
and Andorra.
In consideration of the International Underwriters' agreement to
purchase and make the International Offering of the Shares and ADSs, and for
other good and valuable consideration receipt of which is hereby acknowledged,
the undersigned hereby agrees that, without the prior written consent of the
Representatives on
III(A)-1
<PAGE> 56
behalf of the International Underwriters, the undersigned will not, during the
period 180 days after the date the Shares are admitted to trading on the Madrid
Stock Exchange, issue, offer, sell, contract to sell or otherwise dispose of any
securities of the Company that are substantially similar to the Shares or ADSs,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive capital stock or any
such substantially similar securities, without the prior written consent of the
Representatives.
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the undersigned's Shares, even if such Shares would be disposed
of by someone other than the undersigned. Such prohibited hedging or other
transaction would include without limitation any short sale or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to any of the undersigned's Shares or with respect to any security
that includes, relates to, or derives any significant part of its value from
such Shares.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the International Underwriting
Agreement does not become effective, or if the International Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares to be
sold thereunder, the undersigned shall be released from all obligations under
this Letter Agreement.
The undersigned understands that the International Underwriters are
entering into the International Underwriting Agreement and proceeding with the
International Offering in reliance upon this Letter Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
By: ______________________________
Name:
Title:
Accepted as of the date hereof:
III(A)-2
<PAGE> 57
Banco de Negocios Argentaria S.A. BBV Interactivos, S.A., S.V.B.
By: _________________________ By: ________________________
Goldman Sachs International InverCaixa Valores, S.V.B., S.A.
By: _________________________ By: ________________________
On behalf of each of the International Underwriters
III(A)-3
<PAGE> 58
SCHEDULE III (B)
LOCK-UP AGREEMENT FOR BIDASOA, B.V. (INFOSEL)
November -, 1999
Banco de Negocios Argentaria S.A.
BBV Interactivos, S.A., S.V.B.
Goldman Sachs International
InverCaixa Valores, S.V.B., S.A.
As representatives of the several International Underwriters
named in Schedule I to the International Underwriting Agreement,
c/o Goldman Sachs International,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB.
Ladies and Gentlemen:
The undersigned understands that you, as representatives of the several
International Underwriters (the "International Underwriters"), have entered into
an International Underwriting Agreement (the "International Underwriting
Agreement") with Terra Networks, S.A., a corporation with limited liability
(sociedad anonima) organized under the laws of Spain (the "Company") providing
for the international offering (the "International Offering") by the several
International Underwriters named in Schedule I to the International Underwriting
Agreement, of ordinary shares, nominal value (U)2.00 each (the "Shares"),
directly or in the form of American depositary shares ("ADSs") evidenced by
American depositary receipts ("ADRs"), of the Company, pursuant to the
Registration Statement and the Prospectus. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the International
Underwriting Agreement. In addition, the undersigned understands that the
Company is concurrently entering into a Spanish retail underwriting agreement
and a Spanish institutional underwriting agreement with certain Spanish
underwriters providing for the sale by the Company of shares to institutional
investors in Spain and to retail investors in Spain, the European Economic Area
and Andorra.
In consideration of the International Underwriters' agreement to
purchase and make the International Offering of the Shares and ADSs, and for
other good and valuable consideration receipt of which is hereby acknowledged,
the undersigned hereby agrees that, without the prior written consent of the
Representatives on behalf of the International Underwriters, the undersigned
will not, during the period ending 180 days after the date the Shares are
admitted to trading on the Madrid Stock Exchange, issue, offer, sell, contract
to sell or otherwise
III(B)-1
<PAGE> 59
dispose of any securities of the Company that are substantially similar to the
Shares or ADSs, including but not limited to any securities that are convertible
into or exchangeable for, or that represent the right to receive capital stock
or any such substantially similar securities, without the prior written consent
of the Representatives. The undersigned further agrees that during the period
between 180 days and one year after the date the Shares are admitted to trading
on the Madrid Stock Exchange, it will not issue, offer, sell, contract to sell
or otherwise dispose of more than 25% of the shares of the Company that it
acquires under the Share Option Agreement dated October 5, 1999 between the
undersigned and Telefonica, S.A. without the prior written consent of the
Representatives.
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the undersigned's Shares, even if such Shares would be disposed
of by someone other than the undersigned. Such prohibited hedging or other
transaction would include without limitation any short sale or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to any of the undersigned's Shares or with respect to any security
that includes, relates to, or derives any significant part of its value from
such Shares.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the International Underwriting
Agreement does not become effective, or if the International Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares to be
sold thereunder, the undersigned shall be released from all obligations under
this Letter Agreement.
The undersigned understands that the International Underwriters are
entering into the International Underwriting Agreement and proceeding with the
International Offering in reliance upon this Letter Agreement.
III(B)-2
<PAGE> 60
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
By: _____________________
Name:
Title:
Accepted as of the date hereof:
Banco de Negocios Argentaria S.A. BBV Interactivos, S.A., S.V.B.
By: _________________________ By: ________________________
Goldman Sachs International Invercaixa Valores, S.V.B., S.A.
By: _________________________ By: ________________________
On behalf of each of the International Underwriters
III(B)-3
<PAGE> 61
ANNEX A
TRANSACTION DOCUMENTS
1. Argentina
1.1. Purchase and Sale Agreement for the Stock of Netgocios S.A., dated
September 9, 1999 among Mr. Gonzalo Roberto Arzuaga, Mr. Fernando Martin
Arzuaga and Telefonica Interactiva Argentina S.A.
1.2. Purchase and Sale Agreement for the Stock of Donde Latinoamerica S.A.,
dated September 21, 1999 among Mr. Grancisco Matio Piantoni, Mr. Cesar
Augusto Planas and Telefonica Interativa Argentina S.A.
2. Brazil
2.1. Nutec Informatica S.A. Share Subscription Agreement, dated June 15, 1999
among RBS Administracao e Cobranca Ltda., MLSP - Comercio e Participacoes
Ltda., Mr. Alonso Antunes da Motta, Mr. Luiz Alberto Barichello,
Mrs.Silvia Nora Berno de Jesus and Telefonica Interactiva Brasil Ltda.
2.2. Nutec Informatica S.A.'s Shareholders Agreement, dated June 15, 1999 among
RBS Administracao e Cobranca Ltda., Mr. Alfonso Antunes da Motta, Mr. Luiz
Alberto Barichello, MLSP - Comercio e Participacoes Ltda., Mrs. Silvia
Nora Berno de Jesus and Telefonica Interactiva Brasil Ltda., as partially
rescinded by the Rescission Agreement dated August 5, 1999
2.3. Nutec Informatica S.A. Shareholders' Agreement, dated June 15, 1999 among
MLSP - Comercio e Participacoes Ltda., Mrs. Silvia Nora Berno de Jesus and
Telefonica Interactiva Brasil Ltda, as supplemented.
2.4. Purchase and Sale Agreement for the Stock of Nutec Informatica S.A., dated
August 5, 1999 between MLSP - Comercio e Participacoes Ltda. and
Telefonica Interactiva Brasil Ltda.
2.5. Agreement for the Purchase and Sale of Stock of Nutec Informatica S.A.,
dated August 5, 1999 between Telefonica Interactiva Brasil Ltda. and Mrs.
Silvia Berno de Jesus
2.6. Memorandum of Understanding, dated October 22, 1999 between Taetel S.L.,
MLSP - Comercio e Participacoes Ltda. and Mrs. Silvia Nora Berno de Jesus
3. Chile
3.1. Purchase and Sale Agreement for the Stock of Proveedora de Servicios de
Conectividad S.A., dated October 4, 1999 between Compania de Telefonos de
Chile-Transmisiones Regionales S.A. and Telefonica Interactiva Chile
Limitada
3.2. Option Agreement for the Subscription for Shares, dated October 4, 1999
between Compania de Telefonos de Chile - Transmisiones Regionales S.A. and
Terra Networks, S.A.
A-1
<PAGE> 62
4. Mexico
4.1. Purchase and Sale Agreement for the Stock of Informacion Selectiva, S.A.
de C.V., dated October 5, 1999 among Inversiones Grupo Reforma, S.A. de
C.V., Consorcio Interamericano de Comunicacion, S.A. de C.V., Terra
Networks Mexico, S.A. de C.V.and Editora El Sol, S.A. de C.V.
4.2. Non-compete and Cooperation Agreement, dated October 5, 1999 among Mr.
Alejandro Junco de la Vega, Editora El Sol, S.A. de C.V., Ediciones del
Norte, S.A. de C.V., Servicios Motociclistas, S.A. de C.V., Inmobialiaria
Macro, S.A. de C.V., Consorcio Interamericano de Comunicacion, S.A. de
C.V., Apoyo Aereo, S.A. de C.V., Comunicacion Integrada de Occidente, S.A.
de C.V., Inversiones Grupo Reforma, S.A. de C.V. and Terra Networks
Mexico, S.A. de C.V.
4.3. Purchase and Sale Agreement for a 25% interest in Terra Networks Mexico,
S.A. de C.V., dated October 5, 1999 among Bidasoa, B.V., Telefonica
Servicios y Contenidos por la Red, S.A. and Terra Networks, S.A.
4.4. Share Option Agreement, dated October 5, 1999 between Bidasoa, B.V. and
Telefonica, S.A., together with the letter for the exercise of the share
option, dated October 11, 1999 between Bidasoa, B.V. and Telefonica, S.A.
5. Peru
5.1 Option Agreement for the subscription for shares, dated October 20, 1999
between Telefonica del Peru S.A.A. and Terra Networks, S.A.
5.2 Asset Purchase Agreement, dated October 20, 1999 between Telefonica
Servicios Internet S.A.C. and Terra Networks Peru S.A.
5.3 Services Agreement, dated October 20, 1999 among Telefonica del Peru
S.A.A., Terra Networks Peru S.A., Telefonica Servicios de Internet S.A.C.
and Terra Networks, S.A.
6. Spain
6.1. Purchase and Sale Agreement for Stock of Ordenamientos de Links
Especializados, S.L. (Ole), dated March 10, 1999 between Telefonica
Interactiva, S.A. and InfoSearch Holdings
6.2. Master Agreement, dated September 13, 1999 among Telefonica Interactiva,
S.A., InfoSearch Holdings and Telefonica, S.A., in connection with the
acquisition of Ordanamientos de Links Especializados, S.L. (Ole)
7. United States
7.1. Limited Liability Company Agreement of Terra Networks Access Services USA,
LLC, dated October 5, 1999 between Telefonica Interactiva USA, Inc. and
IDT Corporation.
A-2
<PAGE> 63
7.2 Internet Colocation Services Agreement, dated October 5, 1999 between
Terra Networks Interactive Services USA, LLC and IDT Corporation.
7.3 Limited Liability Company Agreement of Terra Networks Interactives
Services USA, LLC, dated October 5, 1999 between Telefonica Interactiva
USA, Inc. and IDT Corporation.
7.4 Internet Service Provisioning and Marketing Agreement, dated October 5,
1999 between Terra Networks Access Services USA, LLC and IDT Corporation.
7.5 Joint Venture Agreement, dated October 5, 1999 between Terra Networks S.A.
and IDT Corporation.
A-3
<PAGE> 1
Exhibit 2.1
TRANSFER OF SHARES OF INFOVIA, SOCIEDAD ANONIMA
WE: (a) INFOVIA INTERNATIONAL INC., [ ] hereinafter known as the "SELLER,"
[ ] (b) INFOVIA, SOCIEDAD ANONIMA, a corporation formed, organized and
existing under the laws of the Republic of Guatemala, domiciled in Guatemala
City, hereinafter known as the "COMPANY," [ ] and (d) TELEFONICA INTERACTIVA,
SOCIEDAD ANONIMA, a corporation formed, organized and existing under the laws of
Spain, domiciled in the city of Madrid, Spain, represented by its President with
sufficient powers of legal representation for this document, Juan Perea Saenz de
Buruaga, right of representation contained in official notarial record number
5399, authorized by Notary Jose Antonio Escartin Ipiens on December fourteen,
nineteen hundred ninety-eight, hereinafter known as the "BUYER."
i. WHEREAS,
The COMPANY has an authorized capital stock of six thousand quetzals
(Q6,000.00), of which sixty (60) common shares are subscribed and paid-in, each
share of one hundred quetzals (Q100.00), which are distributed as follows:
Infovia International, Inc. owner of fifty-nine (59) shares, equal to
ninety-eight point thirty-three percent (98.33%) of the shares of the COMPANY;
the remaining share, equal to one point sixty-seven percent (1.67%) is issued to
the Bearer (one share). Said shares were issued, subscribed and paid-in pursuant
to the laws of the Republic of Guatemala. It is recorded that there are no other
types, classes and/or series of shares authorized and issued by the COMPANY
apart from those indicated, and neither are there options, encumbrances,
restrictions, etc., on said shares or on the rights integrated into the shares.
ii. WHEREAS,
The SELLER is the owner of ninety-eight point thirty-three percent (98.33%) of
the shares into which it is divided and represents the paid-in and subscribed
capital of the COMPANY.
<PAGE> 2
iii. WHEREAS,
The SELLER wishes to transfer to the BUYER, fifty-seven shares, equal to
ninety-five percent (95%) of the shares into which it is divided and represents
the subscribed and paid-in capital of the COMPANY, (hereafter, the "Shares").
iv. WHEREAS,
The BUYER wishes to acquire from the SELLER, all of the Shares, free of any
liability, contingent, encumbrance, debt, levy, tax, claim, interest,
litigation, obligation, civil complaint, criminal complaint, process,
proceedings, restriction, limitation, appropriation, lien, pledge, embargo,
request, condition precedent, condition subsequent and/or rights of third
parties of any kind (collectively and for purposes of this contract,
"Encumbrance") incumbent on the COMPANY or the SELLER, as the prior owner of the
Shares, prior to today's date, July twenty-one, nineteen hundred ninety-nine,
and, therefore, the BUYER assumes no Encumbrance, restriction, etc., with regard
to the Shares.
THEREFORE,
The parties hereby consent to enter into a share transfer and endorsement
contract, which will be governed by the following clauses and conventions:
CLAUSE ONE: The following declarations, authorizations, representations,
assertions, promises and guarantees that herein the COMPANY and SELLER formally,
expressly and irrevocably give and make in regard to the interests of each, are,
as of this day, complete, precise, exact and truthful, and their effects should
be maintained and extended over time, and, in the event that they are not, the
SELLER agrees to indemnify the BUYER pursuant to Clause Five of this instrument.
The SELLER and the COMPANY respectively, and jointly, as the case may be,
represent and warrant individually and collectively the following:
I. Legal capacity: The SELLER and COMPANY may legally acquire the rights and
assume the obligations derived from this agreement. The persons appearing
herein and representing the SELLER and the COMPANY have sufficient legal
capacity, powers and authority to appear, authorize and undertake, in the
capacity in which they are acting, the obligations acquired by their
principals because of this document. The COMPANY is a corporation
organized and existing under the laws of Guatemala with legal capacity to
be unconditional owner of all its assets; it is duly authorized and has
all authorizations, permits, licenses and industrial property rights,
etc., and they are completely valid, as conferred by law, for conducting
its business in any jurisdiction in which it holds or uses its assets or
does business and for legally carrying out its corporate purpose,
including but not limited to providing services in the telecommunications
and teleinformation industry (the "Business").
II. No liability: Neither the BUYER, as the future owner of the Shares, nor
the COMPANY will be liable to third parties for any encumbrance,
restriction, etc., incumbent on the COMPANY prior to today's date, that is
not reflected and contained in the FINANCIAL STATEMENTS of the COMPANY,
which are incorporated into this agreement as EXHIBIT 1, and in the event
that any expenditure is necessary in regard to any encumbrance,
restriction, etc., the SELLER will be exclusively liable for this
obligation. The provisions of this number are complemented by the
provisions of Clause Five of this instrument.
<PAGE> 3
III. Lack of restrictions: There are no options, promises or commitments of any
kind, either oral or written, conferred by the SELLER on the Shares, and
neither the COMPANY nor the SELLER has any other oral or written agreement
that gives any other person or entity a right to acquire shares or options
in order to acquire the Shares or other shares of the COMPANY. All the
Shares were acquired through completely legal transactions in observance
of applicable legal provisions and they are not subject to any condition
subsequent in terms of control. At the same time, there are no guarantees,
agreements, conventions, contracts, commitments, requests or claims of any
kind, pending or threatened, in which the COMPANY is involved or in which
the SELLER has limited the transfer and endorsement of the Shares, or that
affects the transfer and endorsement of the Shares in any way.
IV. Capital, right of ownership and right of sale: The SELLER is the owner,
with equal capacity, of all the shares that are the subject of this
agreement. The authorized, subscribed and paid-in capital of the COMPANY
is that previously indicated. All shares are fully paid-in and have been
legally issued pursuant to applicable Guatemalan law. The SELLER has the
right of full ownership over all the Shares, which are completely free of
Encumbrances, and the SELLER has the unrestricted right to sell, endorse
and transfer all the Shares and has, moreover, full and unrestricted title
to them, and will transfer to the BUYER legal and negotiable title to the
Shares of the COMPANY, unrestricted and unencumbered.
V. Unrestricted ownership: The COMPANY is the unrestricted holder and owner
with full title, and in accordance with the law, of all its property and
goods comprising its assets, including but not limited to all that are
listed in the FINANCIAL STATEMENTS previously mentioned. At the same time,
the assets of the COMPANY are completely free of Encumbrances except those
reflected and contained in the aforementioned FINANCIAL STATEMENTS of the
COMPANY, and it is duly authorized to own its property and assets and to
develop the Business and corporate purpose in the manner in which it does
so today and expects to do in the future.
VI. Financial statements: A copy signed by the parties of the Financial
Statements of the COMPANY, as of June thirty, nineteen hundred
ninety-nine, hereinafter known as the "FINANCIAL STATEMENTS," is an
integral part of this agreement as EXHIBIT 1. The FINANCIAL STATEMENTS
include the Balance Sheet as of June 30, nineteen hundred ninety-nine,
Income Statement and Notes to the financial statements, which are correct
and complete and have been prepared in accordance with accounting
principles generally accepted in Guatemala, using a base consistent with
prior years that provides a true and complete statement, as of this date,
of the financial condition of the COMPANY and its operations. The
FINANCIAL STATEMENTS faithfully reflect the assets, liabilities, worth,
operations, revenues, expenses, earnings, contingencies, accounts and
other items of the financial statements of the COMPANY, as of the closing
date, with no material omissions or defects in the accounting that could
adversely affect the properties, business, operations, earnings, assets,
goods, contingencies, obligations or the financial condition of the
COMPANY, its assets or any other account of the FINANCIAL STATEMENTS. As
of the closing date of the Financial Statements to today's date, there has
been no change in the financial condition of the COMPANY or of the SELLER
that could have a negative impact on the financial condition of the
COMPANY.
VII. Condition of the COMPANY'S assets. The COMPANY'S equipment, which forms a
part of the assets of the COMPANY is in perfect condition, well maintained
and in working order, and fit for use to carry out the activities and
business of the COMPANY, save for normal wear and tear caused by the
passage of time.
<PAGE> 4
VIII. No breach of contract resulting from the COMPANY'S contracts. Neither the
COMPANY nor the SELLER nor third parties with whom they have contractual
ties have breached the terms and conditions in favor of the COMPANY in
such a way as to raise the possibility or threat of any lawsuit, civil
complaint, criminal complaint, proceedings or liability for the COMPANY
and/or its assets.
IX. No breach of contract resulting from the SELLER'S contracts. Neither the
SELLER nor third parties with whom it has contractual ties have breached
the terms and conditions of the contracts in such a way as to raise the
possibility or threat of any lawsuit, civil complaint, criminal complaint,
proceedings or liability that could affect the Shares and/or their
transfer or endorsement as contemplated in this agreement and its
validity.
X. No breach of contract: The COMPANY and the SELLER have paid, inclusive as
of this date, all principle and interest with regard to their debts,
obligations, taxes and liabilities, or of any contract or agreement that
might carry with it the possibility or threat of any lawsuit, complaint,
accusation, procedure or liability that might affect the COMPANY and/or
its assets.
XI. Taxes: The COMPANY has submitted, without fail, all tax returns required
by law, and it has paid, without fail or any objection, all taxes, levies
and assessments of a federal, departmental and municipal nature that are
owed or affect its business, assets and activities resulting from such
returns or any levy, reclassification or request for taxes, moreover, it
has withheld and paid all taxes and sums as required by law, with regard
to any sum paid or incurred in favor of all its employees, contractors,
creditors, shareholders or any third party and neither the COMPANY nor the
SELLER knows of any obligation, levy, tax, request, reclassification or
adjustment with regard to periods covered by returns or communications
submitted before today inclusive, beyond those that appear on such returns
or communications. There is no audit, request, bill of indictment or any
other claim pending against the COMPANY. Neither the COMPANY nor the
SELLER have been notified by competent authorities of any defect, error or
reclassification of its tax and/or any other obligation. The COMPANY will
be liable for payment of Income Tax and the Tax on Commercial and
Agricultural Enterprises for the fiscal period ending June thirty,
nineteen hundred ninety-nine.
XII. Intermediaries and commission agents: The parties to this contract state
that they have not contracted for the services of any intermediary, broker
or commission agent, therefore, neither the COMPANY nor the BUYER will be
responsible for payment of fees, commissions or compensation of any kind,
for services as an intermediary, broker or commission agent or any other
kind for the transfer and endorsement of the Shares.
XIII. Labor contracts: The COMPANY is in compliance with all laws, regulations
and other provisions or rules with regard to employment and social
security. It has likewise complied with all obligations and requirements
that as an employer are required by Guatemalan law for its workers. There
is no union in the COMPANY; nor is it involved in illegal labor practices,
and the SELLER knows of no labor or union campaign or movement within the
COMPANY or any threat of such. Neither is there a threat of any strike
that could affect the normal operations and/or Business of the COMPANY.
XIV. In compliance with the Law: The COMPANY is in compliance with all laws,
regulations, decrees, provisions and/or contracts, including without
restriction on the general nature of the foregoing, any provision, rule,
temporary article, clause and/or convention related to any part of the
assets of the COMPANY, and likewise in terms of what the SELLER has done
with regard to the Shares.
<PAGE> 5
Neither the COMPANY nor the SELLER has reason to believe that any
authority will file a complaint that the COMPANY and/or the SELLER has
violated any law, regulation, decree or provision, rule and/or contract
that affects the COMPANY in any way or its assets, financial statements,
Business or the Shares. There is no legal action pending or imminent, and
neither the COMPANY nor the SELLER knows of any threat or has reason to
believe that anyone is going to initiate legal action in order to cancel,
suspend or revoke any authorization, permit, license or industrial
property right, as such terms are subsequently defined, which have been
issued to the COMPANY for the conduct of its business or to the SELLER
with regard to the Shares of the COMPANY that it owns. This agreement for
the transfer and endorsement of the Shares of the COMPANY, which are the
property of the SELLER, does not violate in whole or in part any law,
regulation, decree, provision, rule and/or contract that includes the
cancellation, suspension or revocation of any authorization, permit,
license or industrial property right that in any way would benefit or be
necessary to the conduct of the business of the COMPANY.
XV. No outstanding litigation against the COMPANY: Neither the COMPANY nor the
SELLER is aware of the existence of any claim against the COMPANY or
initiated or instituted for it before any judge or court nor before any
arbitrator or entity, commission, governmental office or agency or of any
kind, national or foreign, of civil, penal, labor, environmental actions
or of any other kind, lawsuits, administrative proceedings, arbitration or
investigations of any authority, that are pending, imminent or threatened,
that could affect the COMPANY in any way, or its assets or the Shares. The
COMPANY has made ample provisions for dealing with future adverse results
in accordance with the rules and principles of accounting generally
accepted in Guatemala and with sound business practices.
XVI. Other contracts and guarantees: Neither the COMPANY nor the SELLER is
committed or obligated to any contract, convention or agreement of any
kind, oral or written, that affects or could affect the COMPANY and its
assets or the Shares. Neither the COMPANY nor the SELLER has issued
guarantees or bonds of any kind that are not reflected and contained in
the COMPANY'S Financial Statements. The SELLER represents and warrants
that the COMPANY is not in breach of any agreement or contract related to
its assets, Business or operations and as far as the SELLER knows, after
thorough investigation, no event has occurred that over the course of time
or with service of process, or with both, could result in an action for
breach of contract by any of the parties to such agreements or contracts.
All of the COMPANY'S present contracts are in full force and are legal and
binding on the parties.
XVII. Taxes on goods comprising the COMPANY'S assets. The goods and services
comprising the COMPANY'S assets are current with regard to payment of
sales taxes, import taxes, federal taxes, municipal taxes and/or levies,
as well as any other tax, levy or fee that could affect them.
XVIII. Ownership rights over the COMPANY'S assets: There are no third parties
that are threatening or disputing the COMPANY as to the right of
ownership, possession, use, retention and full enjoyment of the goods
comprising its assets, and they are completely free of Encumbrances and
ownership of any other kind that are not reflected and contained in the
aforementioned FINANCIAL STATEMENTS of the COMPANY. The Government of the
Republic of Guatemala has not initiated nor threatens to take measures
toward partial or total expropriation that could affect the assets of the
COMPANY, and neither the COMPANY nor the SELLER knows of any measure or
threat in that regard nor has reason to believe that any measure or threat
exists.
<PAGE> 6
XIX. No existing restrictions on the COMPANY'S assets: Neither the COMPANY nor
the SELLER is committed or obligated by any contract, convention or
agreement of any kind, oral or written, that affects or could affect the
assets of the COMPANY, and the COMPANY and the SELLER have not issued
guarantees or bonds of any kind that affect or could affect the assets of
the COMPANY and that are not reflected and contained in the aforementioned
Financial Statements of the COMPANY. There are no options of any kind
granted by the COMPANY, nor guarantees, agreements, contract, requests,
commitments, promises or complaints of any kind pending or threatened, in
which the COMPANY is involved with regard to its assets, or that affects
them or could affect them, so that there is no condition or restriction
that prevents the authorization and signing of the relevant documents to
carry out the transfer and endorsement of the Shares.
XX. Eviction, clearing of title and free exercise: The SELLER warrants to the
BUYER the free exercise of property rights over the Shares, free of
Encumbrances, as well as over the assets of the COMPANY. Therefore, in the
event that the BUYER has concerns about the free, full and total exercise
of property rights that will be transmitted to it or the existence of this
appears threatened, or the BUYER is concerned about the possession, use,
retention and full enjoyment of the Shares it will acquire from the SELLER
and/or anything related to the assets of the COMPANY, the SELLER, at its
own expense and its exclusive risk, will defend the property rights
transmitted by it, as well as the possession, use, retention and full
enjoyment of the Shares and the assets of the COMPANY, warrants and
defenses that are extended to each and every judicial and administrative
proceeding as required. Should the defense be ineffective, the SELLER will
proceed to the required clearing of title, indemnification and payment of
damages and losses, the foregoing to the entire satisfaction of the BUYER,
provided that they originate from acts, incidents or events prior to
today's date, or that if they are in the future, they are directly related
to acts, incidents or events that occurred prior to today's date.
XXI. Relevant information furnished to the SELLER: All information, documents
and certificates furnished as of this date to the BUYER by the COMPANY and
the SELLER related to the COMPANY, including but not limited to its assets
and the Shares, are truthful, valid, correct, reliable and complete, and
so are the declarations, authorizations, representations, affirmations,
promises and warrants, oral or written, stipulated herein. Neither the
COMPANY nor the SELLER knows of any act, event, incident, condition or
circumstance, imminent or of any other kind, that has or could have an
adverse affect on the conduct of the Business of the COMPANY, on the
assets of the COMPANY, and/or on the Shares.
XXII. COMPANY'S corporate documents: The COMPANY will herewith submit to the
BUYER an authenticated copy of the articles of incorporation of the
COMPANY. At the same time, the COMPANY will deliver to the BUYER all legal
and accounting records of the COMPANY.
XXIII. Environmental and health issues: The SELLER represents and warrants that
(a) the COMPANY has at all times been in compliance with applicable
environmental and zoning laws; (b) the COMPANY has received no notice or
claim from any person or competent authority that alleges that the COMPANY
is not in compliance with applicable environmental and zoning laws; and
(c) there is no pending environmental action against the COMPANY, its
Business, the assets that the COMPANY owns and operates or with the
provision of its services.
XXIV. No outstanding liabilities and contingencies as of the closing date: The
SELLER represents and warrants that the COMPANY has no liabilities or
contingencies that are not duly reflected in the
<PAGE> 7
accounting and Financial Statements of the COMPANY, which are an integral
part of this agreement as EXHIBIT 1 and could adversely affect the
properties, business activities, operations, earnings, assets, obligations
or the financial condition of the COMPANY.
XXV. Portfolio and provisions: The SELLER represents and warrants that the
portfolio and other accounts receivable of the COMPANY: (i) are duly
recorded, evaluated and provided for in the respective amounts, in
accordance with said evaluation and the applicable legal and regulatory
provisions; (ii) they have arisen from good faith transactions and during
the normal course of business; (iii) they are legal and binding
obligations on the respective debtors and are not subject to compensation
or counterclaim; (iv) they do not represent obligations for goods
delivered on consignment or test sales nor are they subject to agreements
or arrangements of return, repurchase or buyback; and (v) they are fully
collectible with proper payment management in the ordinary course of
business, save in the amount for provisions recorded in the Financial
Statements. The SELLER likewise represents that with regard to the
remaining assets and liabilities incumbent on the COMPANY, the appropriate
and necessary provisions have been made in accordance with sound business
practices and applicable legal provisions.
XXVI. Inventory: The SELLER represents and warrants that the COMPANY has legal
and negotiable title to all its equipment and inventory, and the SELLER
will be liable for the existence and condition of the inventory of the
COMPANY. The inventory of the COMPANY is free of Encumbrances or ownership
restrictions. The COMPANY has made appropriate provisions for the
protection of its inventory, in accordance with the accounting rules and
principles applicable to the COMPANY in the Republic of Guatemala, and
such inventory is fit for use or sale by the COMPANY within the ordinary
course of its Business. With regard to the inventory, there are no
obligations incumbent on the COMPANY.
XXVII. Licenses: The COMPANY is the owner of any and all licenses, permits,
concessions, benefits, contracts, etc., including those that allow it to
use the operator networks of telecommunications services (Internet),
permissions or rights and sufficient or necessary authorizations for the
conduct of the Business of the COMPANY as a matter of law in order to
conduct its Business in all jurisdictions in which it owns and uses its
assets or performs its Business and to legally carry out its corporate
purpose (collectively "Licenses," the use of this term throughout the
contract does not imply a limitation under the prior definition, since any
other authorizations should be understood to be included, even though they
are not expressly mentioned, they are requisites legally necessary for the
performance of the Business of the COMPANY). Registration Licenses are in
full force and effect. A list of Licenses is attached to this contract as
EXHIBIT 2. The COMPANY has paid all required sums to the respective
administrative authorities in accordance with the Licenses and the
applicable regulatory framework. The COMPANY has not violated the terms
and conditions of the Licenses, and the COMPANY has not been investigated
or penalized by the respective administrative authorities, on account of
the use of the Licenses and the provision of services of its Business.
There is no conduct or behavior of the COMPANY or SELLER in the use of the
Licenses and in the provision of services of its Business that could give
rise to the imposition of penalties on the COMPANY, and there is no
administrative proceeding in progress with the respective administrative
authority that has as its purpose or could result in the imposition of
fines, sanctions, penalties or restrictions on the COMPANY with regard to
the use of the Licenses. The Licenses are sufficient for the COMPANY to
carry out its Business in the way it does at the present time.
XXVIII. No earnings pending or capital increases or decreases: The SELLER
represents and warrants that the COMPANY has declared no distribution of
earnings that remains unpaid, nor has it approved any capital increase or
decrease yet to be carried out, nor is there any
<PAGE> 8
capitalization order yet to be executed. In the event that a distribution
of earnings or payment of dividends is declared for the fiscal period
ending June thirty, nineteen hundred ninety-nine, said distribution or
payment will be to the shareholders of the COMPANY, in accordance with the
percentages of shareholder distribution resulting after the making of this
Share Transfer Contract of the COMPANY.
XXIX. Industrial property: The COMPANY has registered and is the owner or has
the right to use without any consideration, all trade and service marks,
trade names, advertising marks, patents and any other right of industrial
or intellectual property ("Industrial Property Rights") currently used in
the performance of its Business in the form in which such Business is
being carried out at the present time. A list of Industrial Property
Rights and right of ownership and rights of use that the COMPANY has and
exercises over the Industrial Property Rights is attached to this contract
as EXHIBIT 3, which are free of any Encumbrance or ownership restriction,
or litigation, legal action, claim, complaint or proceedings pending, and
there is no claim, action or civil complaint, criminal complaint or
proceedings filed by any person that could affect the ownership, the right
of use, the validity or execution of the Industrial Property Rights, and
neither the SELLER nor the COMPANY has reason to believe that such actions
could exist or be threatened.
XXX. Insurance: The COMPANY has policies issued by insurance companies duly
issued and authorized in order to operate against the usual risks of its
activity; all these insurance policies are in full force and effect, and
the COMPANY has paid all the respective premiums. The SELLER represents
and warrants that the values insured under the insurance policies are
adequate to cover the assets and usual risks of the COMPANY.
XXXI. List of customers: The SELLER represents and warrants that a list of
current customers of the COMPANY is incorporated into this agreement as
EXHIBIT 4. All customers listed there are active and the COMPANY is
providing the corresponding service. The provisions of number XXV above
complement this number.
XXXII. Affiliates: The SELLER and the COMPANY represent: (a) The SELLER has no
subordinate companies (affiliates or subsidiaries), nor is it the
possessor, owner, or actual beneficiary of shares, participation, interest
share, titles convertible to shares or shares of any corporation or legal
entity that competes with the corporate purpose of the COMPANY; (b) the
COMPANY is not a party to any contract of a consortium, temporary union,
joint venture, joint account, temporary or irregular association, nor does
it have subordinate companies (affiliates or subsidiaries), nor is it the
possessor, owner or actual beneficiary of shares, participation, interest
share, titles convertible to shares or shares in a corporation or legal
entity or other types of cooperative agreements, save the majority
shareholder stake the COMPANY has in the entity "Infovia, Sociedad Anonima
de Capital Variable," which is a corporation organized in the Republic of
El Salvador, shares that form a part of the assets of the COMPANY.
XXXIII. No restriction: The declarations, authorizations, representations,
assertions, promises and guarantees stated in prior numbers do not
restrict or exclude others that, while not being expressly indicated, are
herewith granted by the SELLER and the COMPANY, and with them they affirm
that there is no other Encumbrance not expressly included that could
adversely affect the properties, Business, operations, earnings, assets,
obligations or the financial condition of the COMPANY.
CLAUSE TWO: Transfer and endorsement of shares: Because the declarations,
authorizations, representations, assertions, promises and guarantees in this
agreement are truthful, valid, correct, reliable and complete, and the
information supplied verbally (supported by some
<PAGE> 9
documentary evidence) or in writing to the BUYER by the SELLER, and the COMPANY
with regard to the latter, to its assets, to the Shares, and because the
declarations, authorizations, representations, assertions, promises and
guarantees given and made by the SELLER and the COMPANY are truthful, valid,
correct, reliable and complete, the SELLER hereby transfers and endorses free of
Encumbrances to the BUYER, and the BUYER accepts all the Shares that are the
subject of this agreement, according to the following:
(i) Infovia International Inc., in its capacity as owner of fifty-seven (57)
common shares, each share of one hundred quetzals (Q100), which represents
ninety-five percent (95%) of all subscribed and paid-in capital of the
COMPANY, hereby transfers and endorses the respective shares, free of
Encumbrances of any kind, to the BUYER, and the BUYER for its part accepts
said transfer.
CLAUSE THREE: Total price of the transfer and endorsement of the shares of the
COMPANY and form of payment:
The price of the transfer and endorsement of the shares of the COMPANY is
the sum of four million dollars, legal tender of the United State of
America (US$4,000,000). [ ]
The aforementioned value or price is net price, therefore, it will be free
of any tax, charge, levy or assessment ("Taxes") that could be applicable,
in which case, should there be any Tax, it will be paid by the BUYER.
The transfer of Shares contained in this document is subject to the actual
crediting of funds and full availability in the account of the SELLER
identified above.
CLAUSE FOUR: Ownership and full possession: The BUYER hereby becomes the
exclusive and absolute owner of all the Shares that are the subject of this
agreement and takes full possession of them,
<PAGE> 10
thus exercising, as of today's date, all its rights including corporate and
financial. The COMPANY will immediately record in its Shareholders Register,
therefore, the Transfer and Endorsement of its Shares, with all their terms and
stipulations, thus, the BUYER will sign the corresponding notice addressed to
the COMPANY.
CLAUSE FIVE: Guarantee. [ ] hereby acts as unlimited and unconditional
guarantor of the BUYER, a guarantee that will remain in effect for a period of
five years counting from today's date. The purpose of this guarantee is to cover
the Encumbrances that could occur as a consequence or result of any Event of
Indemnification, even though the action, litigation or penalty may be initiated
after today's date. For purposes of this agreement "Events of Indemnification"
means (a) any inaccuracy, error, omission or breach of any of the declarations,
authorizations, assertions, representations, promises and guarantees made or
given by the SELLER and the COMPANY in this agreement, whether or not said
inaccuracy, error, omission or breach was known by the Indemnified Parties (as
will be subsequently defined in this same clause) before today's date and that
could produce adverse results; (b) the losses, expenses, costs, indemnification
or expenditure of any kind incurred by the Indemnified Parties (as will be
subsequently defined in this same clause), as a result of the existence of
concealed or contingent liabilities that are not recorded or provided for in the
Financial Statements in precise, exact or adequate form, or that have been
recorded or provided for at a lower value than the liabilities or contingencies
actually are; (c) the value of the obligations for payment of taxes, levies,
assessments, interest in arrears, penalties, fines, charges or adjustments that
were not sufficiently reflected or provided for in the Financial Statements or
on the books and records of the COMPANY; (d) the losses suffered by the
Indemnified Parties (as will be subsequently defined in this same clause)
resulting from the failure to reflect assets in the Financial Statements or on
the books and records of the COMPANY, including the nonexistence of customers of
the COMPANY as listed in EXHIBIT 4, which forms an integral part of this
agreement; (e) the losses suffered by the COMPANY resulting from the existence
of liabilities not reflected in the Financial Statements; (f) the losses,
expenses, costs, expenditures or indemnification incurred by the COMPANY as a
consequence of the COMPANY having failed to comply with any contract, agreement,
pact, law, decree, judgment, writ, decision or regulation that obliges the
COMPANY and any other party not listed here and that directly affects the
interests of the BUYER or the assets, goods, Licenses or Financial Statements of
the COMPANY for events or actions undertaken or occurring up to or before
today's date; and (g) the occurrence of any event that implies the use or
application of the "Objective Standard" defined in Clause Seven of this
agreement. In the aforementioned events:
The SELLER agrees to indemnify the BUYER and the COMPANY, its directors,
employees, shareholders, agents and advisers (collectively the "Indemnified
Parties") and maintain them indemnified against any cost, expense, loss, claim,
action, complaint, litigation, penalty, fine, injury or expenditure incurred or
created, as a consequence or result of any Encumbrance or loss suffered as a
result of an "Event of Indemnification." In the event that the guarantee issued
by [ ] is insufficient, the SELLER promises and agrees to immediately pay
without protest to the BUYER, in cash and in dollars, legal tender of the United
States of America, the resulting sum of money, and the BUYER will initiate the
appropriate legal action in order to claim payment from the SELLER.
In the event of any claim that constitutes an Event of Indemnification, the
BUYER will have the right, at its sole and absolute discretion, to immediately
collect any amount resulting from the Event of Indemnification of the guarantee
with a notice by the BUYER to [ ], listing the amount of the claim, and, at
the same time, [ ] will have no opportunity of any kind to reserve [a right]
or [make a] claim or defense. The BUYER will subrogate all rights related to the
Event of Indemnification to [ ], if applicable. The foregoing obligation on
the part of [ ] and the SELLER, whatever the case may be, are irrevocable
obligations under this agreement. Notwithstanding that, in the event of
collection
<PAGE> 11
of the guarantee by the BUYER, if the SELLER does not agree with the payment
made by [ ], it may follow the procedure contained in the Resolution of
Conflicts Clause of this agreement.
CLAUSE SIX: Reliability of the information furnished to the BUYER: The SELLER
agrees that the BUYER, in order to enter into this business and consent to this
agreement, has relied on all the declarations, authorizations, assertions,
representations, promises and guarantees made by the SELLER and the COMPANY,
according to this agreement and its EXHIBITS; all the information supplied
orally (with some supporting document) or in writing by the SELLER and the
COMPANY, regarding the latter, its assets, the Shares of the SELLER in the
COMPANY; and in addition on other stipulations contained in this agreement.
Therefore, if:
i. Said declarations, authorizations, assertions, representations, promises,
guarantees and information are incorrect or incomplete, in whole or in part,
and/or
ii. Any claim affecting the COMPANY, its assets and/or the shares of the
COMPANY, but not limited to that indicated in this agreement, were to be
established;
the BUYER will have the right, in addition to using other resources due to it
under this agreement and the law, to claim enforcement of the guarantee referred
to in Clause Five above. The SELLER promises and agrees to immediately pay
without protest to the BUYER, in cash and in dollars, legal tender of the United
States of America, the resulting sum of money, and the BUYER will initiate the
appropriate legal action in order to claim payment from the SELLER, if
necessary.
CLAUSE SEVEN: "Objective Standard." For purposes of this agreement, any
reference herein to: "negative impact, adverse results, adverse effect,
adversely affect," and other similar terms, will be interpreted as the existence
of a reduction of five percent (5%) from the Company and Business Plan as of
April 1999, with gross income of two million fifty-two thousand eight hundred
twenty four dollars (US$2,052,824), legal tender of the United States of
America, equal to the sum of thirteen million five hundred forty-nine thousand
six hundred eighty-three quetzals (Q13,549,683.87), at an exchange rate of six
point six zero zero five quetzals (Q6.6005) to the dollar (US$1.00), legal
tender of the United States of America, therefore, in any case, the amount
expressed in quetzals and thus converted to dollars at the rate of exchange
indicated, will always be the parameter for application of the "Objective
Standard," notwithstanding any fluctuation above or below the rate of exchange
for the quetzal with the dollar, legal tender of the United States of America.
Likewise, this "Objective Standard" is also considered to be a reduction of
percent (5%) in any of the categories of active customers of the COMPANY, which
appear in EXHIBIT 4, which forms an integral part of this agreement. This is
considered the "Objective Standard" for interpretation of such terms in the
clauses of this agreement, unless otherwise stipulated between the BUYER and the
SELLER.
CLAUSE EIGHT: BUYER'S declaration. The BUYER may legally acquire the rights and
assume the obligations derived from this agreement. The person appearing herein
to represent the BUYER has sufficient legal capacity, powers and authority to
appear, authorize and assume, acting in this capacity, the obligations acquired
by the BUYER by virtue of this agreement.
<PAGE> 12
CLAUSE NINE: Amendments: The parties expressly accept that this agreement
represents the complete and reliable form in which they wish to consent to the
terms of the share transfer and endorsement contract, and that therefore it may
not be modified either presumptively or tacitly on account of the sporadic or
repeated conduct of one of the parties, on account of tolerance by one of the
parties amid a breach by the other or for any other reason. Thus, this agreement
may not be altered, modified, revised or amended except by written consent of
the parties to the contract.
CLAUSE TEN: Tolerance: The potential tolerance of the BUYER as to exercising its
rights pursuant to this agreement or to any document EXHIBIT or result of all of
them, amid a potential breach by the SELLER, will in no way modify, alter or
diminish them, so that the BUYER may exercise them at any time it deems
appropriate.
CLAUSE ELEVEN: Special obligations of the parties to this contract. The SELLER,
the BUYER, the COMPANY and [ ] agree to, in accordance with the interests of
each, the following:
i. Labor restrictions. The BUYER and the COMPANY, on the one hand, and the
SELLER and [ ], on the other hand, in the form of a reciprocal
obligation not to do for a period of two years counting from today's date,
agree not to enter into any contract or subcontract with any employee,
worker or executive of the other party, save by written authorization by
the other party.
ii. Not to compete.
o The SELLER and [ ], as well as the shareholders of the latter, their
representatives, managers and members of their boards of directors, and
any other person, individual or legal entity affiliated on today's date
with the SELLER, [ ], and the COMPANY, for a period of four years
counting from today's date, will not directly or indirectly participate,
within the territory of the Republic of Guatemala, in any association of
persons or capital that does business within the COMPANY'S principal line
of business, particularly as it relates to access to Internet services,
including Web TV, Info TV, Cable Modems and info devices and home
appliances.
o In the event that the SELLER or [ ] (or its shareholders), as well as
persons, individuals or legal entities mentioned in the above number,
become involved in the development of local content services, electronic
commerce and other similar services, but apart from the services mentioned
in the previous paragraph, the BUYER (or any of its affiliates) will have
the right to be considered as the preferred provider of those services and
to submit offers, as well as the right to be the preferred option in the
event that the SELLER or [ ] receives a better offer to provide or
develop those services, in which case a record or evidence of that better
offer must be sent to the BUYER in writing. In any event, the BUYER (or
any of its affiliates) and the SELLER or [ ] agree to enter into
agreements to their mutual benefit.
iii. Confidentiality. The SELLER, [ ] and the BUYER agree to safeguard and
maintain the confidentiality of all information of a legal, accounting or
administrative nature that they could have obtained by reciprocity from
the other party, resulting from the negotiation contemplated in this
agreement or with regard to the inspections realized or to be realized,
save all information to become public knowledge. No press release, oral or
written, from the negotiation contemplated here may be published without
the prior written consent of the other party.
iv. TEMSA for its part agrees to lease to the BUYER the premises where the
offices of the COMPANY are located, which are owned by the COMPANY,
pursuant to the terms and conditions that will be agreed to in a
subsequent document and based on prevailing market prices.
<PAGE> 13
CLAUSE TWELVE: Mutual benefit: The parties expressly state that this agreement
is the result of negotiations and mutual concessions between them, which are to
their mutual benefit.
CLAUSE THIRTEEN: Titles: The titles of the clauses or other titles contained in
this agreement have been placed there for reference purposes only, but they in
no way affect the meaning or interpretation of the agreement.
CLAUSE FOURTEEN: Official notarial record and evaluation: The parties reserve
the right to officially register this agreement with a notary.
CLAUSE FIFTEEN: Partial invalidity: The invalidity or illegality declared by
competent authority of any of the stipulations of this agreement will not affect
the validity, legality and enforceability of the remaining stipulations that may
be separated from those declared null and void.
CLAUSE SIXTEEN: Applicable law: The parties are subject to the laws of the
Republic of Guatemala for the interpretation of this Share Transfer and
Endorsement Contract.
CLAUSE SEVENTEEN: Resolution of conflicts: All conflicts, differences, disputes
or claims that might arise from this agreement, from its execution, breach,
liquidation, interpretation or validity, will be resolved as follows: (a) First
of all, the parties will meet within ten business days following written
application made by any of the parties in order to try to resolve it directly;
(b) In the event that they are unable to resolve it in this manner, it will be
resolved according to the Rules of Arbitration and Conciliation of the "AMERICAN
ARBITRATION ASSOCIATION (AAA)," whose rules and jurisdiction the parties are
unconditionally subject to. Said arbitration will be conducted according to the
regulations of the "AAA" in effect at the time of the arbitration, save where
the rules have been modified by this agreement or by mutual future agreement
among the parties. The place of arbitration will be the city of Miami, state of
Florida, in the United States of America, and will be administered in the
Spanish language. The arbitration will be directed by an arbitration panel
comprised of three arbitrators. Each one of the parties (the SELLER on the one
hand and the BUYER on the other hand) will appoint one of them and the
arbitrators so appointed will choose the third arbitrator, who will preside as
chairman of the panel. The arbitrators will be named in accordance with the
appropriate rules. The decision of the arbitrators will be delivered in writing,
which will be final and binding on the parties and not subject to appeal, save
an appeal for review. Once the decision has been handed down, it will produce
the effects of res judicata, and the parties will have to comply with it without
delay. The administrative expenses related to the arbitration and the
compensation of the arbitrators will be assumed by the SELLER and the BUYER in
equal parts. Nevertheless, compensation of their respective attorneys and/or
advisers will be paid separately by each one. By signing and authorizing this
agreement, each one of the parties accepts and is subject to the jurisdiction of
the aforementioned arbitrators and solely to the effects of an arbitration
decision executed according to the provisions of this clause, [as well as
subject] to any competent jurisdictional entity, with regard to its person and
assets and waives in regard to its person and assets any defense that it could
have had such as diplomatic immunity, lack of jurisdiction or inappropriate
forum. Each one of the parties irrevocably accepts that the notice of any
judicial procedure or any other documents will be carried out by using any of
the methods contemplated for process of notification established in the ensuing
clause and that said notices will be sent to the domiciles indicated therein.
CLAUSE EIGHTEEN: Notices and communications among the parties: Any communication
relating to this contract will be done in writing, the original copy duly signed
by the issuing person or entity as follows:
<PAGE> 14
To the SELLER; the COMPANY and [ ]:
To the BUYER: Gran Via 28 (28013)
Madrid,
Spain
Attention: Director, Legal Services
CLAUSE NINETEEN: Cooperation. Each party, especially the SELLER and the COMPANY,
agrees to the following: (a) to submit any information to the other party, (b)
to sign any document, (c) to furnish any certificate to the other party and (d)
to take any action requested by the other party (at its reasonable discretion)
to put this agreement into effect, whenever legally necessary or appropriate.
CLAUSE TWENTY: Expenses. Each party will be exclusively liable for any expense
or expenditure incurred with regard to the negotiation and issuance of this
agreement and any other necessary expense to execute and transfer the Shares,
including but not limited to the foregoing in terms of payment of fees to its
respective advisers.
In witness whereof, we the parties hereby sign four copies of the same original
of this contract, one for each party, in the city of Madrid, Spain, July
twenty-one, nineteen hundred ninety-nine.
[ ]
s/Juan Perea Saenz De Buruaga
President
TELEFONIA INTERACTIVA, S.A.
<PAGE> 15
The following annexes to this agreement have not been included:
- Appendix 2 - Licences and permits necessary for the operation
of Infovia S.A.
- Appendix 3 - Industrial and intellectual property
- Appendix 4 - List of active customers
Copies of the annexes not included herein will be provided upon request.
<PAGE> 16
APPENDIX 1
FINANCIAL STATEMENTS
Please note, some numbers may be inaccurate due to illegibility of source
document.
[illegible] handwritten signature
<PAGE> 17
1/2 INFOVIA, S.A. 7/16/1999
GENERAL BALANCE SHEET
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
1.1 CURRENT 6,366,511.82 0.00 46,783.87 6,319,727.95
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.1 CASH AND BANKS 1,019,508.53 0.00 0.00 1,019,508.53
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.1.01 CASH 600.00 0.00 0.00 600.00
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.1.02 BANKS 1,019,200.63 0.00 0.00 1,019,200.63
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2 ACCOUNTS RECEIVABLE 5,211,466.28 0.00 46,783.87 5,164,682.42
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.01 CUSTOMERS 5,066,768.01 0.00 0.00 5,066,768.01
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.01.01 INTERNET SERVICES 4,370,071.64 0.00 0.00 4,370,071.64
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.01.02 PUBLICATION 54,084.34 0.00 0.00 54,084.34
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.01.03 DEVELOPMENT 49,425.50 0.00 0.00 49,425.50
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.01.04 EDUCATION 54,517.05 0.00 0.00 54,517.05
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.01.05 TECHNICAL SERVICES 24,936.93 0.00 0.00 24,936.93
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.01.06 OTHER SERVICES 483,732.55 0.00 0.00 483,732.55
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.02 OTHER ACCOUNTS RECEIVABLE 194,271.28 0.00 0.00 194,271.28
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.03 AFFILIATED ACCOUNTS RECEIVABLE 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.2.04 UNCOLLECTIBLE ACCOUNTS RESERVE (48,573.00) 0.00 46,783.87 (96,358.87)
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.3 INVENTORIES 135,236.90 0.00 0.00 135,236.90
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.3.01 COMMUNICATIONS EQUIPMENT 83,601.63 0.00 0.00 83,601.63
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.3.02 SOFTWARE 51,635.27 0.00 0.00 51,635.27
- ----------------------------------------------------------------------------------------------------------------------------------
1.1.3.03 MERCHANDISE IN TRANSIT 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
1.2 FIXED ASSETS 1,737,176.26 0.00 0.00 1,737,176.26
- ----------------------------------------------------------------------------------------------------------------------------------
1.2.1 FURNITURE AND EQUIPMENT 182,278.06 0.00 0.00 182,278.06
- ----------------------------------------------------------------------------------------------------------------------------------
1.2.2 COMPUTER EQUIPMENT 1,328,518.28 0.00 0.00 1,328,518.28
- ----------------------------------------------------------------------------------------------------------------------------------
1.2.3 BUILDING 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
1.2.4 PROPERTY IMPROVEMENTS 226,349.92 0.00 0.00 226,349.92
- ----------------------------------------------------------------------------------------------------------------------------------
1.3 DEFERRED ASSETS 76,845.06 0.00 0.00 76,845.06
- ----------------------------------------------------------------------------------------------------------------------------------
1.3.1 INSTALLATION EXPENSES 16,713.54 0.00 0.00 16,713.54
- ----------------------------------------------------------------------------------------------------------------------------------
1.3.2 ORGANIZ4ATION EXPENSES 1,629.02 0.00 0.00 1,629.02
- ----------------------------------------------------------------------------------------------------------------------------------
1.3.3 EXPENSES PAID IN ADVANCE 58,502.50 0.00 0.00 58,502.50
- ----------------------------------------------------------------------------------------------------------------------------------
1.4 OTHER ASSETS 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
1.4.1 INVESTMENTS 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 8,160,533.14 0.00 46,783.98 8,133,749.27
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please note, some numbers may be inaccurate due to illegibility of source
document.
[illegible] handwritten signature
<PAGE> 18
2/2 INFOVIA, S.A. 7/16/1999
GENERAL BALANCE SHEET
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2 LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------------
2.1 SHORT-TERM 5,716,855.40 3,418,151.70 310,741.07 2,609,244.77
- ---------------------------------------------------------------------------------------------------------------------------------
2.1.1 SUPPLIERS 1,394,145.89 0.00 0.00 1,394,145.89
- ---------------------------------------------------------------------------------------------------------------------------------
2.1.2 ACCOUNTS PAYABLE LABOR 695,753.97 0.00 0.00 695,753.97
- ---------------------------------------------------------------------------------------------------------------------------------
2.1.3 ACCOUNTS PAYABLE TAX 32,882.48 0.00 310,741.07 343,623.55
- ---------------------------------------------------------------------------------------------------------------------------------
2.1.4 OTHER LIABILITIES 3,593,872.28 3,416,151.70 0.00 175,729.58
- ---------------------------------------------------------------------------------------------------------------------------------
2.2 LONG-TERM LIABILITIES 1,280,091.99 0.00 0.00 1,280,091.99
- ---------------------------------------------------------------------------------------------------------------------------------
2.2.1 AFFILIATED ACCOUNTS PAYABLE 804,539.21 0.00 0.00 804,539.21
- ---------------------------------------------------------------------------------------------------------------------------------
2.2.2 CONTRIBUTIONS TO BE CAPITALIZED (0.00) 0.00 0.00 (0.00)
- ---------------------------------------------------------------------------------------------------------------------------------
2.2.3 VARIOUS CREDITORS 475,552.76 0.00 0.00 475,552.76
- ---------------------------------------------------------------------------------------------------------------------------------
2.2.4 BANK LOANS 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
2.2.5 OTHER ACCOUNTS PAYABLE 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 6,996,747.39 3,418,151.70 310,741.07 3,889,338.78
- ---------------------------------------------------------------------------------------------------------------------------------
3 CAPITAL, RESERVES, AND EARNINGS 1,183,785.75 2,305,450.34 5,366,077.18 4,244,412.51
- ---------------------------------------------------------------------------------------------------------------------------------
3.1 CAPITAL STOCK 6,000.00 0.00 0.00 6,000.00
- ---------------------------------------------------------------------------------------------------------------------------------
3.1.1 AUTHORIZED 6,000.00 0.00 0.00 6,000.00
- ---------------------------------------------------------------------------------------------------------------------------------
3.1.2 CONTRIBUTIONS TO BE CAPITALIZED 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
3.2 RESERVES 20,612,.86 0.00 0.00 20,612,.86
- ---------------------------------------------------------------------------------------------------------------------------------
3.3 RETAINED NET EARNINGS (832,300.90) 402,831.66 1,950,750.07 715,647.52
- ---------------------------------------------------------------------------------------------------------------------------------
3.4 PROFIT (LOSS) BEFORE TAXES 1,989,473.79 1,902,618.09 3,415,287.03 3,502,192.13
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES PLUS CAPITAL 6,190,533.14 5,723,502.04 5,676,818.17 8,133,749.27
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please note, some numbers may be inaccurate due to illegibility of source
document.
[illegible] handwritten signature
<PAGE> 19
1/1 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4.1 SALES
- ----------------------------------------------------------------------------------------------------------------------------------
4.1.1 SALES OF SERVICES 15,667,510.60 1,865,634.82 3,415,297.03 17,426,972.71
- ----------------------------------------------------------------------------------------------------------------------------------
4.1.1.01 INTERNET SERVICES 14,168,359.38 1,865,634.82 3,415,297.03 15,727,821.59
- ----------------------------------------------------------------------------------------------------------------------------------
4.1.1.02 PUBLICATION 302,557.82 0.00 0.00 302,557.82
- ----------------------------------------------------------------------------------------------------------------------------------
4.1.1.03 DEVELOPMENT 176,286.47 0.00 0.00 176,286.47
- ----------------------------------------------------------------------------------------------------------------------------------
4.1.1.04 EDUCATION 266,270.83 0.00 0.00 266,270.83
- ----------------------------------------------------------------------------------------------------------------------------------
4.1.1.05 TECHNICAL SERVICES 72,682.96 0.00 0.00 72,682.96
- ----------------------------------------------------------------------------------------------------------------------------------
4.1.1.06 OTHER SERVICES 881,374.04 0.00 0.00 881,374.04
- ----------------------------------------------------------------------------------------------------------------------------------
4.2 DEV. AND [ILLEGIBLE] OVER SALES 422,354.15 0.00 0.00 422,354.15
- ----------------------------------------------------------------------------------------------------------------------------------
4.2.1 DEV. AND [ILLEGIBLE] OVER SALES OF 422,354.15 0.00 0.00 422,354.15
SERVICES
- ----------------------------------------------------------------------------------------------------------------------------------
4.2.1.01 INTERNET SERVICES 422,354.15 0.00 0.00 422,354.15
- ----------------------------------------------------------------------------------------------------------------------------------
NET SALES 15,445,154.35 1,855,834.82 3,415,297.03 17,004,618.58
- ----------------------------------------------------------------------------------------------------------------------------------
5 COST OF SALES 7,703,784.74 0.00 0.00 7,703,784.74
- ----------------------------------------------------------------------------------------------------------------------------------
5.1 COSTS OF SALES 7,703,784.74 0.00 0.00 7,703,784.74
- ----------------------------------------------------------------------------------------------------------------------------------
5.1.1 INTERNET COSTS 6,748,095.96 0.00 0.00 6,748,095.96
- ----------------------------------------------------------------------------------------------------------------------------------
5.1.2 PUBLICATION 279,090.43 0.00 0.00 279,090.43
- ----------------------------------------------------------------------------------------------------------------------------------
5.1.3 DEVELOPMENT 121,451.07 0.00 0.00 121,451.07
- ----------------------------------------------------------------------------------------------------------------------------------
5.1.4 EDUCATION 228,887.84 0.00 0.00 228,887.84
- ----------------------------------------------------------------------------------------------------------------------------------
5.1.5 OTHER SERVICES 326,259.44 0.00 0.00 326,259.44
- ----------------------------------------------------------------------------------------------------------------------------------
6 OPERATING EXPENSES 5,673,809.60 46,783.87 0.00 5,720,693.47
- ----------------------------------------------------------------------------------------------------------------------------------
6.1 OPERATING EXPENSES 5,673,809.60 46,783.87 0.00 5,720,693.47
- ----------------------------------------------------------------------------------------------------------------------------------
6.1.1 SALES EXPENSES 1,804,800.60 0.00 0.00 1,804,800.60
- ----------------------------------------------------------------------------------------------------------------------------------
6.1.2 ADMINISTRATIVE EXPENSES 1,842,384.74 46,783.87 0.00 1,689,166.61
- ----------------------------------------------------------------------------------------------------------------------------------
6.1.3 CUSTOMER SERVICE 1,174,984.54 0.00 0.00 1,174,984.54
- ----------------------------------------------------------------------------------------------------------------------------------
6.1.4 ENGINEERING EXPENSES 551,739.72 0.00 0.00 551,739.72
- ----------------------------------------------------------------------------------------------------------------------------------
7 FINANCE CHARGES 128,703.48 0.00 0.00 129,703.48
- ----------------------------------------------------------------------------------------------------------------------------------
8 FINANCIAL INCOME 51,715.24 0.00 0.00 51,715.24
- ----------------------------------------------------------------------------------------------------------------------------------
PROFIT (LOSS) BEFORE TAXES 1,889,473.79 1,902,616.69 3,415,297.03 3,502,152.13
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please note, some numbers may be inaccurate due to illegibility of source
document.
[illegible] handwritten signature
<PAGE> 20
1/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4 INCOME 15,445,156.35 1,855,834.82 3,415,297.03 17,064,618.56
- ---------------------------------------------------------------------------------------------------------------------------------
4.1 SALES 15,867,510.50 1,855,834.82 3,415,297.03 17,426,972.71
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1 SALES OF SERVICES 15,867,510.50 1,855,834.82 3,415,297.03 17,426,972.71
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01 INTERNET SERVICES 14,168,359.38 1,855,834.82 3,415,297.03 15,727,821.59
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.01 SWITCHED ACCESS 4,621,010.40 1,855,834.82 3,415,297.03 6,180,472.61
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.02 1-801 SWITCHED ACCESS 4,729,568.04 4,729,568.04
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.03 CORPORATE DEDICATED ACCESS 2,149,079.97 2,149,079.97
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.04 PREMIUM DEDICATED ACCESS 536,706.60 536,706.60
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.05 POINT TO POINT LINKS 166,490.99 166,490.99
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.06 DOMAINS 162,304.62 162,304.62
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.07 IPs 5,688.18 5,688.18
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.08 HOSTING 42,563.51 42,563.51
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.09 SKYTEL NOTIFICATION 2,873.15 2,873.15
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.10 I-PASS 21,262.53 21,262.53
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.11 FIRST FEES 1,685,758.37 1,685,758.37
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.12 LONG-STANDING ARREARS 17,175.75 17,175.75
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.13 SUPPORT CONTRACTS 27,877.27 27,877.27
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.14 FARM SERVER 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.01.15 ELECTRONIC COMMERCE 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.02 PUBLICATION 302,557.82 0.00 0.00 302,557.82
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.02.01 SITE DESIGNS 56,752.92 56,752.92
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.02.02 ADVERTISING 54,270.89 54,270.89
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.02.03 RECORDERS 4,645.81 4,645.81
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.02.04 SITE MAINTENANCE 14,950.00 14,950.00
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.02.05 CHANNEL LEASING 15,177.27 15,177.27
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.02.06 MICROSOFT CHANNEL FEE 156,760.93 0.00 0.00 156,760.93
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.03 DEVELOPMENT 176,285.45 176,285.47
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.03.01 INTRANETS 2,872.73 2,872.73
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.03.02 EXTRANETS 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.03.03 APPLICATIONS 141,329.09 141,329.09
- ---------------------------------------------------------------------------------------------------------------------------------
4.1.1.03.04 CONFIGURATIONS 32,083.65 32,083.65
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please note, some numbers may be inaccurate due to illegibility of source
document.
[illegible] handwritten signature
<PAGE> 21
2/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>0
4.1.1.04 EDUCATION 266,270.83 0.00 0.00 266,270.83
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.04.01 CLASSROOM COURSES 123,416.77 123,416.77
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.04.02 PRIVATE COURSES 50,370.48 50,370.48
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.04.03 CONFERENCES 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.04.04 SALES OF BOOKS AND CDs 92,483.58 92,483.58
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.05 TECHNICAL SERVICES 72,662.96 0.00 0.00 72,662.96
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.05.01 RE-INSTALLATIONS 72,662.96 72,662.96
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.06 OTHER SERVICES 881,374.04 0.00 0.00 881,374.04
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.06.02 EQUIPMENT SALES 479,998.95 479,998.95
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.06.03 FIRST FEES 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.06.04 LONG-STANDING ARREARS 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.06.05 RE-CONNECTIONS 14,045.47 14,045.47
- -----------------------------------------------------------------------------------------------------------------------------------
4.1.1.06.06 VARIOUS INCOME 387,329.62 387,329.62
- -----------------------------------------------------------------------------------------------------------------------------------
4.2 DEV. AND [ILLEGIBLE] OVER SALES 422,354.15 0.00 0.00 422,354.15
- -----------------------------------------------------------------------------------------------------------------------------------
4.2.1 DEV. AND [ILLEGIBLE] OVER SALES OF 422,354.15 0.00 0.00 422,354.15
SERVICES
- -----------------------------------------------------------------------------------------------------------------------------------
4.2.1.01 INTERNET SERVICES 422,354.15 0.00 0.00 422,354.15
- -----------------------------------------------------------------------------------------------------------------------------------
4.2.1.01.01 SWITCHED ACCESS 422,354.15 422,354.15
- -----------------------------------------------------------------------------------------------------------------------------------
NET SALES 15,445,156.35 1,855,834.82 3,415,297.03 17,004,618.56
- -----------------------------------------------------------------------------------------------------------------------------------
5 COST OF SALES 7,703,784.74 0.00 0.00 7,703,784.74
- -----------------------------------------------------------------------------------------------------------------------------------
5.1 COSTS OF SALES 7,703,784.74 0.00 0.00 7,703,784.74
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1 INTERNET COSTS 6,748,095.96 0.00 0.00 6,748,095.96
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.01 ORDINARY SALARIES 276,707.26 276,707.26
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.02 EXTRAORDINARY SALARIES 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.03 BONUSES 78 - 89 3,259.40 3,259.40
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.04 COMMISSIONS 258,309.27 258,309.27
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.04.01 CREDIT CARD COMMISSION 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.05 EMPLOYMENT BENEFITS 83,680.80 83,680.80
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.06 EMPLOYER'S CONTRIBUTIONS 33,921.68 33,921.68
- -----------------------------------------------------------------------------------------------------------------------------------
5.1.1.07 EQUIPMENT DEPRECIATION 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please note, some numbers may be inaccurate due to illegibility of source
document.
[illegible] handwritten signature
<PAGE> 22
3/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5.1.1.08 SWITCHED ACCESS 680,125.59 0.00 0.00 680,125.59
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.08.01 SATELLITE 821,532.62 821,532.62
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.08.02 MODEM LEASING 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.08.03 PORTMASTER LEASING 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.08.04 TELEPHONE FEE 34,681.43 34,681.43
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.08.05 I-PASS SERVICE 1,777.76 1,777.76
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.08.06 FEES AND SUBSCRIPTIONS 22,133.78 22,133.78
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.09 1-801 SWITCHED ACCESS 2,434,022.01 0.00 0.00 2,434,022.01
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.09.01 SATELLITE 501,581.78 501,581.78
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.09.02 MODEM LEASING 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.09.03 PORTMASTER LEASING 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.09.04 TELEPHONE FEE 1,930,662.47 1,930,662.47
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.09.05 I-PASS SERVICE 1,777.76 1,777.76
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.10 CORPORATE DEDICATED ACCESS 2,409,325.62 0.00 0.00 2,409,325.62
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.10.01 SATELLITE 907,887.20 907,887.20
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.10.02 DATALINK 1,501,438.42 1,501,438.42
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.10.03 ROUTER LEASING 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.11 PREMIUM DEDICATED ACCESS 196,709.19 196,709.19
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.11.01 GROUND LINK 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.11.02 DATALINK 99,164.74 99,164.74
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.11.03 ROUTER LEASING 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.11.04 SATELLITE 97,544.45 97,544.45
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.12 POINT TO POINT LINKS 98,391.50 0.00 0.00 98,391.50
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.12.01 DATALINK 98,391.50 98,391.50
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.13 DOMAINS 67,413.86 0.00 0.00 67,413.86
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.13.01 CONCYT1 67,413.86 67,413.86
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.14 IPs 6,229.78 0.00 0.00 6,229.78
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.1.14.01 CONCYT 6,229.78 6,229.78
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.2 PUBLICATION 279,090.43 0.00 0.00 279,090.43
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.2.01 ORDINARY SALARIES 144,608.00 144,608.00
- ---------------------------------------------------------------------------------------------------------------------------------
5.1.2.02 EXTRAORDINARY SALARIES 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------
1 TR.: National Science and Technology Council
Please note, some numbers may be inaccurate due to illegibility of source
document.
[illegible] handwritten signature
<PAGE> 23
4/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5.1.2.03 BONUSES 78-89 3,842.00 3,842.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.04 COMMISSIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.05 EMPLOYMENT BENEFITS 44,715.02 44,715.02
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.06 EMPLOYER'S CONTRIBUTIONS 18,003.18 18,003.18
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.07 EQUIPMENT DEPRECIATION 57,226.86 57,226.86
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.08 PARKING SPACE[S] 227.93 227.93
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.09 EQUIPMENT MAINTENANCE 350.00 350.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.10 FEES AND SUBSCRIPTIONS 9,154.14 9,154.14
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.2.14 STATIONERY AND MATERIALS 963.30 963.30
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3 DEVELOPMENT 121,451.07 0.00 0.00 121,451.07
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.01 ORDINARY SALARIES 84,636.40 84,636.40
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.03 BONUSES 78-89 813.60 813.60
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.04 COMMISSIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.05 EMPLOYMENT BENEFITS 25,844.70 25,844.70
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.06 EMPLOYER'S CONTRIBUTIONS 10,156.37 10,156.37
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.07 EQUIPMENT DEPRECIATION 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.08 PERSONNEL TRAINING 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.3.09 EQUIPMENT MAINTENANCE 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4 EDUCATION 228,887.84 0.00 0.00 228,887.84
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.01 ORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.03 BONUSES 78-89 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.04 COMMISSIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.05 EMPLOYMENT BENEFITS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.06 EMPLOYER'S CONTRIBUTIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.07 STATIONERY AND MATERIALS 3,299.77 3,299.77
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08 CLASSROOM COURSES 77,889.76 0.00 0.00 77,889.76
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.01 ORDINARY SALARIES 38,280.00 38,280.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.03 BONUSES 78-89 2,422.00 2,422.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible] handwritten signature
Please note, some numbers may be inaccurate due to illegibility of source
document.
<PAGE> 24
5/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5.1.4.08.04 COMMISSIONS 1,044.30 1,044.30
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.05 EMPLOYMENT BENEFITS 12,501.53 12,501.53
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.06 EMPLOYER'S CONTRIBUTIONS 4,718.92 4,718.92
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.07 EQUIPMENT DEPRECIATION 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.08 PARKING 7,146.00 7,146.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.09 1,277.01 1,277.01
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.08.10 CONSULTING 10,500.00 10,500.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09 PRIVATE COURSES 30,689.53 0.00 0.00 30,689.53
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09.01 ORDINARY SALARIES 20,736.00 20,736.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09.03 BONUSES 78-89 924.00 924.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09.04 COMMISSIONS 18.19 18.19
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09.05 EMPLOYMENT BENEFITS 6,520.83 6,520.83
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09.06 EMPLOYER'S CONTRIBUTIONS 2,490.51 2,490.51
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.09.07 PER DIEM 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.10 CONFERENCES 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.10.01 STRIKERS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.10.02 PER DIEM 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.11 BOOKS AND CDs 117,008.78 117,008.78
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.4.27 COURSES AND TRAINING 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.5 OTHER SERVICES 326,259.44 0.00 0.00 326,259.44
- ------------------------------------------------------------------------------------------------------------------------------------
5.1.5.01 EQUIPMENT 326,259.44 326,259.44
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
6 OPERATING EXPENSES 5,673,909.60 46,783.87 0.00 5,720,693.47
- ------------------------------------------------------------------------------------------------------------------------------------
6.1 OPERATING EXPENSES 5,673,909.60 46,783.87 0.00 5,720,693.47
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1 COSTS OF SALES 1,604,800.60 0.00 0.00 1,604,800.60
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.01 SALARIES 184,307.01 184,307.01
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.03 BONUSES 78-89 80,396.21 80,396.21
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.04 COMMISSIONS 208,071.14 208,071.14
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible] handwritten signature
Please note, some numbers may be inaccurate due to illegibility of source
document.
<PAGE> 25
6/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6.1.1.05 EMPLOYMENT BENEFITS 114,957.90 114,957.90
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.06 EMPLOYER'S CONTRIBUTIONS 39,383.30 39,383.30
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.07 LEASING 282,891.80 282,891.80
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.08 ELECTRICITY 15,054.05 15,054.05
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.09 COMMUNICATIONS 63,160.48 63,160.48
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.10 PARKING SPACE[S] 4,252.69 4,252.69
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.11 DEPRECIATION 28,613.45 28,613.45
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.12 FEES AND SUBSCRIPTIONS 4,050.51 4,050.51
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.13 EQUIPMENT MAINTENANCE 394.81 394.81
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.14 STATIONERY AND MATERIALS 28,047.09 28,047.09
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.15 FUEL AND LUBRICANTS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.16 PROFESSIONAL FEES 6,790.91 6,790.91
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.17 BUSINESS EXPENSES 9,288.41 9,288.41
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.18 INSURANCE 3,393.60 3,393.60
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.19 TAXES AND CONTRIBUTIONS 31.28 31.28
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.20 TRAVEL EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.21 CREDIT CARD AND BA[NK CARD] COMMISSIONS 2,202.46 2,202.46
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.22 TAXI SERVICE 33.18 33.18
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.23 ADVERTISING 459,051.98 459,051.98
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.24 UNCOLLECTIBLE ACCOUNTS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.25 SUBSISTENCE ALLOWANCES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.26 CAFETERIA AND CLEANING 10,159.00 10,159.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.27 COURSES AND TRAINING 10,480.00 10,480.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.28 OTHER GENERAL 1,843.42 1,843.42
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.29 CONSULTING 196,663.85 196,663.85
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.30 PENALTIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.31 OFFICE MAINTENANCE 6,535.98 6,535.98
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.32 EVENTS AND CONFERENCES 38,383.43 38,383.43
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.33 PERSONNEL SERVICES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.34 CHRISTMAS EXPENSES 4,362.66 4,362.66
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.1.99 VARIOUS EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible] handwritten signature
Please note, some numbers may be inaccurate due to illegibility of source
document.
<PAGE> 26
7/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6.1.2 ADMINISTRATIVE EXPENSES 1,842,384.74 46,783.87 0.00 1,889,168.61
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.01 ORDINARY SALARIES 348,861.35 348,861.35
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.03 BONUSES 78-89 333,035.27 333,035.27
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.04 COMMISSIONS 49,610.05 49,610.05
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.05 EMPLOYMENT BENEFITS 116,838.63 116,838.63
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.06 EMPLOYER'S CONTRIBUTIONS 39,012.41 39,012.41
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.07 LEASING 292,821.40 292,821.40
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.08 ELECTRICITY 15,054.05 15,054.05
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.09 COMMUNICATIONS 70,327.37 70,327.37
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.10 PARKING SPACE[S] 5,842.90 5,842.90
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.11 DEPRECIATION 57,226.86 57,226.86
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.12 FEES AND SUBSCRIPTIONS 6,728.32 6,728.32
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.13 EQUIPMENT MAINTENANCE 1,575.48 1,575.48
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.14 STATIONERY AND MATERIALS 40,470.45 40,470.45
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.15 FUEL AND LUBRICANTS 3,823.60 3,823.60
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.16 PROFESSIONAL FEES 38,050.00 38,050.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.17 BUSINESS EXPENSES 6,884.57 6,884.57
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.18 INSURANCE 2,732.36 2,732.36
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.19 TAXES AND CONTRIBUTIONS 1,272.07 1,272.07
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.20 TRAVEL EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.21 CREDIT CARD COMMISSIONS 3,369.46 3,369.46
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.22 TAXI EXPENSES 8,072.07 8,072.07
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.23 ADVERTISING 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.24 UNCOLLECTIBLE ACCOUNTS 35,881.86 46,783.87 82,665.73
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.25 SUBSISTENCE ALLOWANCES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.26 CAFETERIA AND CLEANING 13,243.95 13,243.95
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.27 COURSES AND TRAINING 6,656.67 6,656.67
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.28 OTHER GENERAL 7,121.04 7,121.04
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.29 CONSULTING 210,468.75 210,468.75
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.30 PENALTIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible] handwritten signature
Please note, some numbers may be inaccurate due to illegibility of source
document.
<PAGE> 27
8/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.31 OFFICE MAINTENANCE 9,862.80 9,862.80
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.32 EVENTS AND CONFERENCES 113,179.37 113,179.37
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.33 PERSONNEL SERVICES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.34 CHRISTMAS EXPENSES 4,362.63 4,362.63
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.2.35 VARIOUS EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3 CUSTOMER SERVICE 1,174,964.54 0.00 0.00 1,174,964.54
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.01 ORDINARY SALARIES 264,157.93 264,157.93
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.03 BONUSES 78-89 43,620.57 43,620.57
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.04 COMMISSIONS 120,885.00 120,885.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.05 EMPLOYMENT BENEFITS 118,273.75 118,273.75
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.06 EMPLOYER'S CONTRIBUTIONS 47,332.38 47,332.38
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.07 LEASING 283,645.91 283,645.91
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.08 ELECTRICITY 15,054.08 15,054.08
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.09 COMMUNICATIONS 41,189.68 41,189.68
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.10 PARKING SPACE[S] 4,836.50 4,836.50
- ------------------------------------------------------------------------------------------------------------------------------------
6 .1.3.11 DEPRECIATION 57,226.86 57,226.86
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.12 FEES AND SUBSCRIPTIONS 4,380.24 4,380.24
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.13 EQUIPMENT MAINTENANCE 2,820.01 2,820.01
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.14 STATIONERY AND MATERIALS 15,763.03 15,763.03
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.15 FUEL AND LUBRICANTS 30,386.88 30,386.88
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.16 PROFESSIONAL FEES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.17 BUSINESS EXPENSES 3,922.41 3,922.41
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.18 INSURANCE 2,732.39 2,732.39
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.19 TAXES AND CONTRIBUTIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.20 TRAVEL EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.21 CREDIT CARD COMMISSIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.22 TAXI EXPENSES 12,683.97 12,683.97
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.23 ADVERTISING 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.24 UNCOLLECTIBLE ACCOUNTS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.25 SUBSISTENCE ALLOWANCES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible] handwritten signature
Please note, some numbers may be inaccurate due to illegibility of source
document.
<PAGE> 28
9/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.26 CAFETERIA AND CLEANING 10,934.64 10,934.64
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.27 COURSES AND TRAINING 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.28 OTHER GENERAL 1,277.67 1,277.67
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.29 CONSULTING 81,227.98 81,227.98
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.31 OFFICE MAINTENANCE 8,269.98 8,269.98
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.33 PERSONNEL SERVICES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.34 CHRISTMAS EXPENSES 4,362.68 4,362.68
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.3.35 VARIOUS EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4 ENGINEERING EXPENSES 851,739.72 0.00 0.00 851,739.72
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.01 ORDINARY SALARIES 88,180.00 88,180.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.02 EXTRAORDINARY SALARIES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.03 BONUSES 78-89 12,496.96 12,496.96
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.04 COMMISSIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.05 EMPLOYMENT BENEFITS 29,324.02 29,324.02
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.06 EMPLOYER'S CONTRIBUTIONS 10,907.90 10,907.90
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.07 LEASING 428,272.81 428,272.81
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.08 ELECTRICITY 15,054.10 15,054.10
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.09 COMMUNICATIONS 30,985.01 30,985.01
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.10 PARKING SPACE[S] 1,999.69 1,999.69
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.11 DEPRECIATION 85,840.30 85,840.30
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.12 FEES AND SUBSCRIPTIONS 3,146.16 3,146.16
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.13 EQUIPMENT MAINTENANCE 11,468.69 11,468.69
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.14 STATIONERY AND MATERIALS 9,576.89 9,576.89
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.15 FUEL AND LUBRICANTS 301.44 301.44
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.16 PROFESSIONAL FEES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.17 BUSINESS EXPENSES 3,922.42 3,922.42
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.18 INSURANCE 2,732.27 2,732.27
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.19 TAXES AND CONTRIBUTIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.20 TRAVEL EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.21 CREDIT CARD EXPENSES 1,408.61 1,408.61
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.22 TAXI EXPENSES 1,258.65 1,258.65
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible] handwritten signature
Please note, some numbers may be inaccurate due to illegibility of source
document.
<PAGE> 29
10/10 INFOVIA, S.A. 7/16/1999
INCOME STATEMENT
In Quetzals
JULY 1, 1998 TO JUNE 30, 1999
PRELIMINARY (CONFIDENTIAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECLASSIFICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
ACCOUNT DESCRIPTION BALANCE DEBITS CREDITS ADJUSTED BALANCES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.23 ADVERTISING 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.24 UNCOLLECTIBLE ACCOUNTS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.25 SUBSISTENCE ALLOWANCES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.26 CAFETERIA AND CLEANING 9,671.27 9,671.27
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.27 COURSES AND TRAINING 3,333.33 3,333.33
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.28 OTHER GENERAL 510.93 510.93
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.29 CONSULTING 88,509.24 88,509.24
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.31 OFFICE MAINTENANCE 8,330.89 8,330.89
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.33 PERSONNEL SERVICES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.34 CHRISTMAS EXPENSES 4,508.14 4,508.14
- ------------------------------------------------------------------------------------------------------------------------------------
6.1.4.35 VARIOUS EXPENSES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
7 FINANCIAL EXPENSES 129,703.46 0.00 0.00 129,703.46
- ------------------------------------------------------------------------------------------------------------------------------------
7.01 BANK EXPENSES 2,713.67 2,713.67
- ------------------------------------------------------------------------------------------------------------------------------------
7.02 EXCHANGE DISCOUNT 171.84 171.84
- ------------------------------------------------------------------------------------------------------------------------------------
7.03 INTEREST 71.49 71.49
- ------------------------------------------------------------------------------------------------------------------------------------
7.04 COMMISSIONS 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
7.05 NON-DEDUCTIBLE EXPENSES 126,746.46 126,746.46
- ------------------------------------------------------------------------------------------------------------------------------------
8 FINANCIAL INCOME 51,715.24 0.00 0.00 51,715.24
- ------------------------------------------------------------------------------------------------------------------------------------
8.01 INTEREST 28,182.81 28,182.81
- ------------------------------------------------------------------------------------------------------------------------------------
8.02 EXCHANGE PROFIT 20,786.08 20,786.08
- ------------------------------------------------------------------------------------------------------------------------------------
8.03 PROFIT ON EQUIPMENT SALES 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
8.04 OTHER INCOME 2,156.74 2,156.74
- ------------------------------------------------------------------------------------------------------------------------------------
8.05 DIFFERENCES IN CASH STATEMENTS 589.61 589.61
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PROFITS (LOSSES) BEFORE TAXES 1,989,473.79 1,902,618.69 3,415,297.03 3,502,152.13
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible] handwritten signature
Please note, some numbers may be inaccurate due to illegibility of source
document.
<PAGE> 1
Exhibit 2.2
STOCK PURCHASE AGREEMENT
"COMPANIA DE TELEFONOS DE CHILE
TRANSMISIONES REGIONALES S.A."
AND
"TELEFONICA INTERACTIVA CHILE LIMITADA"
In Santiago de Chile, on October 4, 7 [4 circled, handwritten 7], 1999, appear:
Velko Petric Cabrales, representing COMPANIA DE TELEFONOS DE CHILE S.A.
TRANSMISIONES REGIONALES S.A., hereinafter referred to as "CTC Mundo" or the
"Seller", a telecommunications company, both domiciled for purposes hereof at
Nueva de Lyon 72, 11th Floor, district of Providencia, in this city, and Jorge
Martina Aste, representing Telefonica Interactiva Chile Limitada, hereinafter
referred to as the "Buyer", an investment company, both domiciled for purposes
hereof at Calle Moneda No. 970, 12th Floor, in the district and city of
Santiago, who state as follows:
ONE: The Seller owns shares, hereinafter referred to as the "Shares", in
"Proveedora de Servicios de Conectividad S.A.", hereinafter also referred to as
the "Company", corresponding to 95% of the validly issued shares of the Company.
Furthermore, according to a shareholder agreement executed on June 18, 1997, the
Seller shall have, from July 1, 2000 until June 30, 2001, an option to purchase
the remaining 5% of the shares of the Company owned by Red Universitaria
Nacional (the "Reuna Shares").
If the Seller should purchase the 5% Reuna Shares prior to July 1, 2000, the
Seller agrees to notify the Buyer in writing on the day following the purchase.
The Seller agrees to transfer the Reuna Shares to the Buyer within no more than
two business days following the date of the
<PAGE> 2
notification, without this stock transfer conferring the right to any additional
price whatsoever in favor of the seller, as agreed in clause THREE of this
Agreement.
TWO: The Seller, represented as indicated in the recitals above, hereby sells,
assigns and transfers the Shares to the Buyer which buys, accepts and acquires
such shares through its representative, Jorge Martina Aste, who states that he
received it [sic] to his entire satisfaction. Furthermore, the Seller must
transfer the Reuna Shares to the Buyer by no later than July 15, 2000.
THREE: The Buyer acquires the shares of the Company at the price of US$
40,000,000 (forty million U.S. dollars) (hereinafter referred to as the
"Price"), which includes the price of the Reuna Shares that the Seller promised
to transfer in accordance with the previous clause. The Price shall be paid
within sixty days from today, in the equivalent in domestic current at the
dollar exchange rate in effect on the date of actual payment. This price shall
accrue interest at 8% per annum between today and the actual payment date. In
the event of delay in payment, the maximum interest allowed by law for this type
of obligation shall accrue.
If there is a public offering to subscribe shares of Terra Networks (hereinafter
the "Public Offering") prior to the expiration of said term, the payment shall
be accelerated and made on the same day as such offering.
In order to guarantee the above-mentioned payment, the buyer pledges in favor of
the seller, which accepts, all of the shares covered by this transaction; actual
delivery of the pledge is made herein, symbolically, by means of signing this
agreement and delivering a copy hereof. The pledge shall end by means of
payment, without requiring an express statement of termination.
2
<PAGE> 3
FOUR: The parties agree that the sale does not include corporate customers of
Proveedora de Servicios de Conectividad S.A., which the buyer must assign, at no
cost, to the seller or the company or the person appointed by the company within
the term of sixty days from today.
FIVE: The Buyer agrees to contribute to the Company, within the term of 60 days
from the date of this agreement, either as a capital contribution or as a loan,
sufficient funds all of the net debt existing between the Company and Compania
de Telecomunicaciones de Chile S.A. and its subsidiaries, which amounts to US$
9,691,485 as of today.
SIX: Representations and Warranties of the Seller. Today the Seller represents
and warrants to the Buyer the following:
The Company is a corporation, duly organized and existing under the laws of the
Republic of Chile, with the necessary legal standing to own and hold its assets
and engage in its business as it does herein.
The Company groups together the Internet activities that the Seller has been
developing, in the past and present, and the elements and assets pertaining
thereto, currently used to provide its services, remain with the company; such
assets and the value thereof are detailed in the inventory attached as Appendix
5 (b).
The Seller is the owner of the Shares, which are not subject to any encumbrance
or lien, and there are no pending lawsuits, litigation, actions or proceedings
which affect them or may affect them, except the requests of other CTC
shareholders indicated in order to request a General Shareholders Meeting and/or
exercise other actions with respect to this transaction, of which the buyer
states that it is aware. The Shares constitute 95% of the validly issued stock
of the Company. Except for the exchange right that the Seller is entitled to
request with respect to
3
<PAGE> 4
Reuna, by which the remaining 5% of the shares of the Company owned by Reuna may
be acquired by the Seller or the person appointed by the Seller, there is no
option, guarantee, convertible amount, agreement or commitment that the Company
or its shareholders may have granted by which a person or entity is absolutely
or conditionally entitled to acquire any of the shares of the Company.
The Seller has full authority and power to enter into this Agreement and perform
the transactions stipulated herein. The performance and granting of this
Agreement and the consummation of the transactions stipulated herein have been
duly and validly authorized by the Board of Directors of the Seller. This
Agreement constitutes a legal, valid and binding agreement for the Seller, which
may be enforced according to its terms and conditions. It is not necessary to
present nor obtain any permit, authorization, consent or approval from any
public agency or authority for the Seller to perform the transactions stipulated
in this Agreement.
Except for those cases indicated in Appendix 5 (e) and as indicated in this
Agreement, there are no pending actions, lawsuits, claims or investigations, to
the best of the knowledge of the Seller, which are threatened against or with
respect to the Company or any of its goods or assets, which may jeopardize the
capacity of the Company to do business.
The Company has submitted all tax declarations required by applicable Chilean
law and has paid all taxes it owes according to such declarations, as well as
all property taxes, and all municipal charges due pursuant to the Law on
Municipal Revenue. Furthermore, the provisions existing for payment of taxes due
as of today are adequate. There are no actions underway by any authority with
regard to taxes or duties, nor grounds to do so.
4
<PAGE> 5
The Company is not party to contracts, agreements or commitments exceeding US$
1,000,000 or with a term of more than 2 years from today, with the exception of
those indicated in Appendix 5 (h).
Except as indicated in Appendix 5 (h), there are no contracts with related
parties for an amount exceeding US$ 100,000.
Labor benefits and compensation for severance for workers of the Company are
stipulated in their labor agreements and contracts and in the law.
The Company has insurance to cover its property and employees for the amounts
and under the conditions which are customary for companies of the same size and
in similar businesses.
The title of the Company to all property which it owns is clear of any
encumbrance, lien or litigation.
The Seller has delivered to the Buyer the financial statements of the Company as
at July 31, 1999 (the "Financial Statements"), which are complete and correct in
all important aspects and which accurately reflect the financial situation of
the Company on the date indicated therein (subject to normal auditing
adjustments). Since the date of these Financial Statements, there have been no
significant adverse changes in business, the financial situation, earnings from
operations or the projections of the Company, nor has the Company declared,
made, paid or reserved, directly or indirectly, any amount or other assets to
distribute dividends or make other distributions to its shareholders, has not
purchased or redeemed shares of its capital stock nor has granted any option,
guarantee or right to purchase such shares of capital stock. The Company does
not have any commitments or obligations of any type whatsoever, whether due,
existing, continent or otherwise, other than those indicated in the Financial
Statements.
5
<PAGE> 6
The Company has all permits and authorizations required in order to engage in
its business. No licenses or concessions of any type whatsoever are required for
providing Internet services.
SEVEN: Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller as follows:
The Buyer is a corporation, duly organized and existing under the laws of the
Republic of Chile, with the necessary legal standing to own and hold its assets
and engage in its business as it does herein.
The Buyer has the authority and power to enter into this Agreement and to
perform its obligations. This Agreement was duly granted by the Buyer and
constitutes a valid, legal contract which may be enforced according to its terms
and conditions.
EIGHT: Actions in relation to Representations and Warranties
Action regarding Representations and Warranties. The parties represent that the
representations and warranties provided were determining and essential factors
in the execution of this agreement and, by signing, they indicate their trust in
such representations and warranties and indicate that they may suffer damages if
such declarations and warranties are incorrect or are not properly performed.
Consequently, the parties agree that any damages resulting from misstatement of
such representations and warranties or from nonperformance or partial
performance of any obligation as required by this Agreement must be indemnified
in favor of the party suffering such damages, and that such indemnification
shall include all court costs and legal or other fees which may arise out of the
investigation of any claim, notwithstanding the additional right of the affected
party to demand the nonperforming party to hold it harmless from
6
<PAGE> 7
third party claims that may be filed against the diligent party, based upon a
fact constituting a violation of the representations and warranties made in this
Agreement.
Standards and procedures. The right of one of the parties to file actions for
damages as indicated in this clause or to defend itself against actions filed,
notwithstanding any investigation made in representation or known by either of
the parties hereto, shall be subject to the following rules: (i) The
representations and warranties of the parties contained in the clauses shall
remain in full force for a term of three (3) years from today, except if any of
such representations and warranties are fraudulent, in which case the term for
collection shall be extended until expiration of the latest statute of
limitations according to general rules; and (ii) the representations and
warranties of the Seller relative to the tax liability of the company as
provided by Clause Six shall remain in full force in favor of the Buyer until
expiration of the latest statute of limitations for collection of the tax or
taxes due, which are application in tax matters, as declared and warranted in
the same clause.
NINE: Arbitration. In the event of any dispute which may arise concerning the
validity, interpretation or performance of this Agreement, the validity or
interpretation of this Clause Nine relative to the competence of the arbitrator
appointed pursuant to this clause, or concerning the rights or obligations of
the parties arising out of this Agreement, such disputes shall be settled by an
arbitrator, who shall be Raul Varela Morgan or, if he is unable or unwilling to
perform this duty, the arbitrator shall be Ricardo Rivandeneira Monreal or, if
he is unable or unwilling to perform this duty, then the arbitrator shall be
Juan Carlos Dorr Zegers or, if he is unable or unwilling to perform this duty,
the arbitrator shall be selected by the Representatives. If the Representatives
are unable to reach an agreement on the arbitrator within twenty-five (25) days
from a determination that none of the arbitrators listed above are willing or
able to perform the duty, the arbitrator shall then be appointed by the Ordinary
Civil Court of Santiago, and the
7
<PAGE> 8
arbitrator appointed shall be a person who has been a tenured professor in a
commercial or civil law school of the Universidad Catolica de Santiago [Santiago
Catholic University] or the University of Chile in Santiago, Chile, for at least
five consecutive years, or a like period over the past ten years. Any of these
arbitrators shall act ex aequo et bono with regard to matters of procedure and
grounds and shall render a decision within no more than 180 days from the date
of appointment. The decision of the arbitrator shall be definitive and not
subject to appeal, and the parties hereto waive any other recourse that may
apply. Enforcement of the arbitration award may be requested before any
competent court.
TEN: Notices
All notifications, requests, demands and other communications between the
parties to this agreement shall be in writing and addressed to the party at the
following address (or another address which has been advised in a similar
manner), and must be delivered in person, by certified or registered mail, with
pre-paid postage or with return receipt requested or by fax, with a certified
mail confirmation.
For the Seller:
Compania de Telefonos de Chile S.A.
Transmisiones Regionales S.A.
Ricardo Lyon No. 72, 12th Floor, Santiago
Att: Velko Petric Cabrales
Fax: 3309700
8
<PAGE> 9
For the Buyer:
Telefonica Interactiva Chile Limitada Added [handwritten]
Moneda 970, 12th Floor, Santiago
Att: Jorge Martina Aste
Fax: (562) 364 37 96
with copy to:
TERRA NETWORKS, S.A.
Edificio Atica, No. 1
Via de las Dos Castillas 33
Pozuelo de Alarcon 28224 Madrid (Spain)
Att: Cristina Lamana
with copy to: Juan Francisco Gutierrez (Estudio [Law Firm of] Philipi
Yrarrazaval Pulido & Bruner)
Fax: (562) 364 37 96
ELEVEN: For all purposes of this Agreement, the parties select special domicile
in the city and district of Santiago. This Agreement is governed by Chilean law.
TWELVE: This Agreement and the appendices hereto constitute the entire agreement
between the parties and supersede any other prior agreement between the parties
regarding the same matter.
THIRTEEN: This agreement is signed in two exact copies with the same date, each
party retaining one copy.
[signed] -----------------------------------------
Velko Petric Cabrales Jorge Martina Aste
for CTC Mundo S.A. for Telefonica Interactiva Chile Limitada
9
<PAGE> 10
The following annexes to this agreement have not been included:
- Annex 5(b) - Inventory of Assets
- Annex 5(e) - Pending Litigation
- Annex 5(h) - Contracts with related parties in an amount
exceeding $100,000
Copies of the annexes not included herein will be provided upon request.
<PAGE> 1
Exhibit 2.4
AGREEMENT
In Santiago, Chile, on October 4, 1999, between COMPANIA DE TELECOMUNICACIONES
DE CHILE S.A. ("CTC"), a Chilean corporation operating in the telecommunications
industry, represented by its General Manager Mr. Claudio Munoz Zuniga, both
domiciled for these purposes at Providencia 111; COMPANIA DE TELEFONOS DE CHILE
- - TRANSMISIONES REGIONALES S.A. ("CTC Mundo"), a Chilean corporation operating
in the telecommunications industry, represented by its General Manager Mr. Velko
Petric Cabrales, both domiciled for these purposes at Providencia 111, Santiago;
and TERRA NETWORKS S.A. ("TN"), a Spanish corporation operating in the
telecommunications industry, with domicile at Edificio Atica No. 1, Via de las
Dos Castillas 33, Pozuelo de Alarcon 28224, Madrid, Spain, represented, as shall
be set forth, by Mr. Juan Perea Saenz de Buruaga, of the same domicile as above,
who state the following:
ONE: Pursuant to a private document of this date signed by CTC Mundo and
Telefonica Interactiva Chile Ltda. (hereinafter to be referred to as "TI
Chile"), the former sold the latter its entire ownership interest, which to date
totaled 95% of the outstanding shares (while promising to sell the remaining 5%)
in the Chilean telecommunications firm known as "Proveedora de Servicios de
Conectividad S.A." ("CTC Internet"), which is dedicated to providing internet
access services and other complementary and related services. CTC Mundo will
also have an option to invest the proceeds from the sale of its CTC Internet
shares in shares of TN.
TWO: As a consequence of TN's interest in incorporating into its property CTC
Internet S.A. in order to expand its strategy of developing the Internet
business in South America, and of CTC's correlating interest in receiving a
portion of the benefits that will result in the event that it participates in
such strategy in its capacity as shareholder of TN, each party assumes the
following commitments:
<PAGE> 2
ONE. CTC.
CTC and CTC Mundo will provide CTC Internet with all telecommunications
services, as well as those complementary and related services (such as billing
and collection services, commercial distribution and other similar services)
that they are currently providing or that they will provide in the future,
subject to market terms and in any case under conditions at least equal to the
most favorable terms at which they are providing them to third parties at such
time as those services are requested by CTC Internet. This obligation of CTC and
of CTC Mundo will also be extended to the services they provide through their
subsidiaries. Finally, any corporations affiliated with CTC and CTC Mundo shall
act diligently and in good faith in ensuring that such companies provide the
services required by CTC Internet under the same terms as they would be required
to do so themselves had they been the direct service providers.
CTC Mundo and CTC promise to give preference to the services of CTC Internet in
carrying out their business activities relating to Internet products and
services to residential customers. The commitment by CTC and CTC Mundo to give
preference to CTC Internet in providing the aforementioned services will be
subject to such services' being provided by CTC Internet under the same market
terms and in any case, under conditions at least equal to the most favorable
terms at which it is providing them to third parties at the time they are
requested by CTC, CTC Mundo, or the corporations controlled thereby.
TWO. TN.
TN promises to ensure that its Chilean subsidiary, CTC Internet, gives
preference to the telecommunications services provided by CTC, CTC Mundo, and
their respective subsidiaries, to the extent that they are provided to CTC
Internet under the terms mentioned in number One above.
2
<PAGE> 3
THREE: Duration. This Agreement shall apply for a period of ten (10) years
counting from this date, provided that TN remains as direct or indirect majority
shareholder of CTC Internet.
FOUR: Breach of contract. Failure to fulfill the obligations provided for in
this Agreement shall not entitle any party to request its cancellation, but
rather only the right to require enforcement of compliance and the respective
indemnification of losses.
FIVE: Arbitration. In the event of any dispute relating to the validity,
interpretation or fulfillment of this Agreement, the validity or interpretation
of this clause Five, the jurisdiction of the arbitrator appointed in accordance
with this clause, or the rights or obligations of the parties originating
therefrom, such dispute must be resolved by an arbitrator, who shall be Mr. Raul
Varela Morgan, or in the event that he is disqualified or does not wish to
undertake the assignment, then the arbitrator shall be Ricardo Rivadeneira
Monreal, or in the event that he is disqualified or does not wish to undertake
the assignment, then the arbitrator shall be Mr. Juan Carlos Dorr Zegera, or in
the event that he is disqualified or does not wish to undertake the assignment,
then the arbitrator shall be selected by the parties. If the parties are unable
to come to an agreement as to the appointment of the arbitrator within
twenty-five (25) days of determining that none of the arbitrators appointed
above are qualified or wish to undertake the assignment, the arbitrator shall be
appointed by the Ordinary Civil Courts of Santiago and the appointment must
correspond to an individual who has served for at least five consecutive years,
or for a similar period within the past ten years, as full professor in a chair
of commercial or civil law at the Catholic University of Santiago or at the
University of Chile in Santiago, Chile. Any such arbitrator must act as
arbitrating arbitrator with respect to matters of procedure and grounds and must
hand down a decision within a period not to exceed 180 days from the date of his
appointment. The arbitrator's decision shall be final and not subject to appeal,
with the disputing parties hereby waiving any other recourse they may have.
Enforcement of the arbitration award may be requested from any court with
jurisdiction.
3
<PAGE> 4
SIX: Notifications: Any notifications, requests, demands or other communications
that must be issued to any of the contracting parties must be set forth in
writing, sent to the following addresses (or to such other addresses as may have
been communicated in similar fashion) and be personally delivered, or be sent by
certified or registered mail, with prepaid postage or return receipt requested,
or by fax confirmed by certified mail:
If to CTC:
Compania de Telecomunicaciones de Chile S.A.
Avenida Providencia 111, piso 29, Santiago
Attn.: Claudio Munoz Zuniga
Fax: 691 2009
If to CTC Mundo:
Compania de Telefonos de Chile S.A.
Transmisiones Regionales S.A.
Ricardo Lyon No. 72, piso 12, Santiago
Attn.: Velko Petric Cabrales
Fax: 330 9700
TERRA NETWORKS, S.A.
Edificio Atica, No. 1
Via de las Dos Castillas 33
Pozuelo de Alarcon 28224 Madrid (Spain).
Attn.: Mrs. Cristina Lamana
With copy to: Juan Francisco Gutierrez (Law Offices of Philipi Yrarrazaval
Pulido & Bruner)
Fax: (562) 364 37 96
SEVEN: For all purposes of this Agreement, the parties hereby establish special
domicile in the city and commune of Santiago. This agreement shall be governed
by Chilean law.
4
<PAGE> 5
EIGHT: This Agreement and its related documents constitute the complete
agreement between the parties, and shall replace any other prior agreement
between the parties on the same matters, with the exception of the Agreement of
Intent entered into on June 21, 1999 between TN and CTC Mundo.
NINE: This agreement is hereby signed in duplicate, with one copy to remain in
the possession of each party.
[signature] [signature]
Claudio Munoz Zuniga Velko Petric Cabrales
for CTC S.A. for CTC Mundo S.A.
[signature]
Juan Perea Saenz de Buruaga
for Terra Networks S.A.
5
<PAGE> 1
Exhibit 2.5
ACQUISITION OF INFOSEL
AGREEMENT FOR THE PURCHASE/SALE OF CORPORATE STOCK
Pursuant to the following recitals and clauses, this Agreement (hereinafter
referred to as "the Agreement") has been entered into this 5th day of October
1999, between the following parties:
Inversiones Grupo Reforma, S.A. de C.V., a corporation formed and existing in
accordance with the laws of Mexico (hereinafter referred to as "Inversiones")
and Consorcio Interamericano de Comunicacion, S.A. de C.V., a corporation formed
and existing in accordance with the laws of Mexico (hereinafter referred to as
"CICSA"). Both of these corporations are represented hereunder by the attorney
Alejandro Junco de la Vega Gonzalez, a Mexican citizen, who also appears here on
his own behalf (hereinafter referred to as "Mr. Junco"), the attorney Ramon
Alberto Garza Garcia, a Mexican citizen (hereinafter referred to as "Mr.
Garza"), and Ricardo Junco Garza, also a Mexican citizen (hereinafter referred
to as "Mr. Junco Garza") (hereinafter, Inversiones, CICSA, Mr. Junco, Mr. Garza,
and Mr. Junco Garza shall be referred to collectively as the "Sellers"); and
Terra Networks Mexico, S.A. de C.V., a corporation formed and existing in
accordance with the laws of Mexico (hereinafter referred to as the "Purchaser"),
represented by Arturo de Jesus Galvan Contreras.
Also appearing here is Editora El Sol, S.A. de C.V., a corporation formed and
existing in accordance with the laws of Mexico (hereinafter referred to as
"Editora El Sol") and represented by Alejandro Junco De la Vega Gonzalez for the
purposes mentioned subsequently herein.
RECITALS
1. The Sellers hereby declare that:
A. They are the rightful and registered owners of fully paid-up shares of common
stock with a par value of 1.00 peso (one peso of national currency),
representing the capital stock of Informacion Selectiva, S.A. de C.V.
("INFOSEL"), in accordance with the number of shares and characteristics
described below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Shareholders Series "A" Series "B" Capital Stock Par Value Percentage
Shares Shares (in pesos)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inversiones Grupo Reforma,
S.A. de C.V 2,502,550 20,180,000 22,682,550.00 93.9540
- -------------------------------------------------------------------------------------------
Consorcio Interamericano
de Comunicacion, S.A. de
C.V 1,457,195 1,457,195.00 6.0359
- -------------------------------------------------------------------------------------------
Alejandro Junco de la Vega
Gonzalez 1450 1,450.00 0.0060
- -------------------------------------------------------------------------------------------
Ramon Alberto Garza Garcia 500 500.00 0.0021
- -------------------------------------------------------------------------------------------
Ricardo Junco Garza 500 500.00 0.0021
- -------------------------------------------------------------------------------------------
Total: 2,505,000 21,637,195 24,142,195.00 100.00
- -------------------------------------------------------------------------------------------
</TABLE>
B. They wish to enter into this Agreement for the purpose of transferring all of
the Shares, as defined in the Chapter on Definitions hereof, to the Purchaser,
subject to the terms and conditions provided herein.
[Initials and signatures illegible]
1
<PAGE> 2
II. Through its legal representative, Inversiones hereby declares that:
A. Inversiones is a Mexican corporation formed in accordance with Notarial
Document No. 2,128, executed before Carlos H. Suarez Garza, Notary Public No. 19
for the City of Monterrey, Nuevo Leon, on September 21, 1999. The first
certified copy of that notarial document was duly recorded in the Public
Registry of Real Estate and Commerce of the City of Monterrey, Nuevo Leon, under
No. 2,526, Vol. 431, Book No. 3, Second Ledger, Documents of Commercial
Associations, Commercial Section, on September 30, 1999.
B. Inversiones' legal representative has the necessary and sufficient authority
to enter into this Agreement, and such authority has not been revoked or limited
as of the date of the execution hereof.
III. Through its legal representative, CICSA hereby declares that:
A. CICSA is a Mexican corporation formed in accordance with Notarial Document
No. 38,775, executed before Manuel Garcia Cirilo, Notary Public No. 62 for the
City of Garza Garcia, Nuevo Leon, on October 5, 1992. The first certified copy
of that notarial document was duly recorded in the Public Registry of Real
Estate and Commerce of the City of Monterrey, Nuevo Leon, under No. 2796, Page
67, Vol. 386, Book No. 3, Second Ledger, Documents of Commercial Associations,
Commercial Section, on October 15, 1992.
B. CICSA's legal representative has the necessary and sufficient authority to
enter into this Agreement, and such authority has not been revoked or limited as
of the date of the execution hereof.
IV. Through its legal representative, Editora El Sol hereby declares that:
A. Editora El Sol is a Mexican corporation formed in accordance with Notarial
Document No. 49, executed before Ignacio H. Valdez on March 15, 1937. The first
certified copy of that notarial document was duly recorded in the Public
Registry of Real Estate and Commerce of the City of Monterrey under No. 75, Page
59, Vol. 87, Book No. 3, Second Ledger, Commercial Section, on April 27, 1937.
B. Editora El Sol's legal representative has the necessary and sufficient
authority to enter into this Agreement, and such authority has not been revoked
or limited as of the date of the execution hereof.
[Initials and signatures illegible]
2
<PAGE> 3
V. Mr. Junco hereby declares on his own behalf that:
A. He has the legal personality and capacity to contract that are
necessary in order to enter into this Agreement.
VI. Mr. Garza hereby declares on his own behalf that:
A. He has the legal personality and capacity to contract that are
necessary in order to enter into this Agreement.
VII. Mr. Junco Garza hereby declares on his own behalf that:
A. He has the legal personality and capacity to contract that are
necessary in order to enter into this Agreement.
VIII. Through its legal representative, the Purchaser hereby declares that:
A. The Purchaser is a Mexican corporation formed in accordance with Notarial
Document No.6,232, executed before Eduardo Manautou Ayala, Notary Public No. 123
for the City of Monterrey, Nuevo Leon, on September 10, 1999. The first
certified copy of that notarial document was duly recorded in the Public
Registry of Real Estate and Commerce of the City of Monterrey, Nuevo Leon, under
No. 2468, Page (no number), Vol. 431, Book No. 3, Second Ledger, Documents of
Commercial Associations, Commercial Section, on September 23, 1999.
B. On this date, the special meeting of shareholders of the corporation resolved
to change the corporation's name from Terra Network, S.A. de C.V. to Terra
Networks Mexico, S.A. de C.V. On this date, the special meeting was duly reduced
to writing by means of Notarial Document 6,290, executed before Eduardo Manautou
Ayala, Notary Public No. 123 for the City of Monterrey, Nuevo Leon. The first
certified copy of that notarial document is pending registration in the Public
Registry of Real Estate and Commerce of the City of Monterrey, Nuevo Leon.
C. The Purchaser wishes to acquire all of the Shares as defined in the Chapter
on Definitions hereof, to the Purchaser, subject to the terms and conditions
provided herein.
D. The Purchaser's legal representative has the necessary and sufficient
authority to enter into this Agreement, and such authority has not been revoked
or limited as of the date of the execution hereof.
[Initials and signatures illegible]
3
<PAGE> 4
DEFINITIONS
For the purposes of this Agreement, unless otherwise expressly provided herein,
the terms, phrases, and words listed below shall have the meaning indicated:
"Shares" refers to the 2,504,999 registered shares of Series "A" common stock
and the 21,637,195 registered shares of Series "B" common stock collectively
representing the capital stock of INFOSEL, each of which has a par value of 1.00
peso (one peso of national currency), and all of which have been fully
subscribed and paid up by the Sellers and shall be sold to the Purchaser subject
to the terms and conditions hereof.
"Necessary Assets" shall include any and all assets owned by INFOSEL as of June
30, 1999 as well as those held as of this date, which are necessary for the
fulfillment of INFOSEL's corporate purpose as INFOSEL has fulfilled it to date,
including but not limited to the following assets:
Exhibit 1: Contracts, agreements, commitments, and proposals pending as of this
date, including but not limited to standing purchase orders with
providers, as well as pending purchase orders; leases; sureties for
leases; licenses; franchises; content contracts, distribution,
commercial agency, services, agency, or any other contract; and,
with respect to each and every one of the items contained in each
category mentioned above, a specification [shall be included] as to
whether the consent of any third party is required in order to carry
out the transactions envisioned hereby;
Exhibit 2: Tangible assets, property of INFOSEL (other than those indicated in
Exhibit 6), including the real estate, inventories, equipment,
tools, chattel, furniture, improvements, vehicles, buildings, and
accessories, specifying the location of such assets;
Exhibit 3: (a) Insurance policies in force and without limiting the scope
thereof, any and all insurance policies that cover the civil
liability of INFOSEL, its properties, buildings, machinery,
furniture, accessories, and operations, indicating for each policy
the name of the insurer, type of coverage, term of the policy,
liability limits, and annual premium, and (b) surety bonds executed
by INFOSEL, and (c) any and all claims pending for INFOSEL
concerning any damages or losses with respect to goods or revenues
that have been communicated to the insurers.
Exhibit 4: Reimbursable deposits, prepaid expenses, and deferred expenses
pertaining to INFOSEL;
Exhibit 5: Any and all loans or advance payments executed by INFOSEL to any
person;
Exhibit 6: Any and all of the real estate leased by INFOSEL.
4
<PAGE> 5
Exhibit 7: "Intellectual Property," which shall refer to any and all title
deeds, rights of use and/or exploitation of any and all:
7.1 Inventions, patents, utility patents, industrial designs that have
been obtained or are in progress, as well as any and all
improvements that have been made on the same or are in progress
until the date of execution hereof and that are the property of
INFOSEL or to which INFOSEL has some type of right, including but
not limited to all of the improvements listed in Exhibit 7.1, which
forms an integral part hereof.
7.2 Trademarks, names, and commercial slogans, domain names, whether
registered or not, as well as all pending applications for the
registration of any of these, including but not limited to all of
those listed in Exhibit 7.2, which forms an integral part hereof.
7.3 Copyrights on any type of creative work, fictional character,
drawing, image, computer interface, database, etc., whether
registered or not, to which INFOSEL has any property right, whether
direct or indirect, including but not limited to all of those listed
in Exhibit 7.3, which forms an integral part hereof.
7.4 Computer programs, including all computer programs owned by INFOSEL,
regardless of form, language, or code, including but not limited to
all of those listed in Exhibit 7.4, which forms an integral part
hereof.
7.5 Trade Secrets: This term shall include all information that is
confidential and valuable for the purpose of fulfilling INFOSEL's
corporate purpose and is owned by INFOSEL, whether developed
directly by INFOSEL or acquired through any legal means, as well as
all know-how necessary for the operation thereof. Trade secrets
shall include, but shall not be limited to, strategic business
information; financial, market, and promotional information;
business plans and information; processes and technical information;
administrative information; price, supplier, and customer lists;
among others, including but not limited to all of those listed in
Exhibit 7.5, which forms an integral part hereof.
Exhibit 8: All federal, state, and local licenses and permits, as well as those
from foreign governments, that are necessary in order to fulfill
INFOSEL's corporate purpose or for the purposes of using and
occupying the real estate owned by INFOSEL or the properties leased
thereby ("Permits"); all authorizations, orders, federal, state, and
local, foreign, and court decrees that relate to INFOSEL, pursuant
to which INFOSEL operates or is bound; all inspection reports
concerning INFOSEL and its properties as of this date, in accordance
with all applicable laws and regulations, whether federal, state, or
local, regarding health and safety; as well as copies of everything
mentioned above and the corresponding applications;
[Initials and signatures illegible]
5
<PAGE> 6
"Business-to-business" refers to electronic business transactions that are
carried out between companies over the Internet.
"Business-to-consumer" refers to electronic business transactions that are
carried out between companies and consumers over the Internet.
"CICSA" shall have the meaning indicated in the introductory paragraph hereof.
"Purchaser" shall have the meaning indicated in the introductory paragraph
hereof.
"Consumer-to-consumer" refers to electronic business transactions that are
carried out between consumers over the Internet.
"Agreement" shall have the meaning indicated in the introductory paragraph
hereof.
"Necessary Agreements" refers to all agreements, contracts, and other
proceedings that have been duly executed by INFOSEL, as well as any other
agreements, contracts, and other proceedings that have been carried out by
INFOSEL as of June 30, 1999 and as of this date, that are necessary in order to
fulfill the corporate purpose of INFOSEL as INFOSEL has fulfilled it to date and
are fully in force on the execution date hereof, all of which are described by
way of enumeration and not limitation in Exhibit "1," which is attached hereto.
"Indemnified Damages" shall have the meaning assigned to that term in point 6.5
of Clause Six hereof.
"Income Tax Returns" refers to all statements, reports, calculations,
informational statements, and statements of any nature which INFOSEL must submit
to any governmental agency or office with respect to the revenues, properties,
or operations of INFOSEL's Subsidiary.
"Business Day" or "Business Days" refers to any day other than Saturday, Sunday,
or a day on which the banks are permitted to close in the City of Monterrey,
Nuevo Leon, Mexico.
"Incorporation Papers," with respect to INFOSEL, Inversiones, or CICSA, refers
to their respective certificates of incorporation or articles of incorporation,
as amended, as well as their respective corporate bylaws and any other
incorporation documents.
"Dollar" or "dollars" shall refer to the legal tender of the United States of
America.
"Financial Statements" shall refer to the financial statements of INFOSEL
referred to by Clause 4.15 and the following provisions hereof.
"GAAP" refers to the Generally Accepted Accounting Principles in Mexico.
[Initials and signatures illegible]
6
<PAGE> 7
"Lien" or "Liens," with respect to INFOSEL's Shares or necessary assets, where
applicable, refers to any mortgage, claim, option, encumbrance, pledge, burden,
guarantee, shareholders' agreement, assignment, obligation to pay money, or any
other consideration, subordination to any right or claim of any other person,
encumbrance, limitation on ownership, or any other right of any kind that
restricts the ownership of the Shares or the Necessary Assets of INFOSEL.
"INFOSEL" refers to Informacion Selectiva, S.A. de C.V., a Mexican corporation
duly incorporated in accordance with the laws of Mexico.
"Internet" refers to the network formed by millions of computers or servers that
are interconnected worldwide by means of telephone cables or by other means and
that purchase compatible digital communication protocols and constitute a
bi-directional and interactive mode of electronic exchange and distribution of
digital materials, such as text and hypertext, sound, video, animation, and
software, as well as electronic mail services, access to information databases,
electronic commerce, consulting services, and communication services in general,
among other applications.
"Investments" shall have the meaning indicated in the introductory paragraph
hereof.
"Mr. Garza" shall have the meaning indicated in the introductory paragraph
hereof.
"Mr. Junco" shall have the meaning indicated in the introductory paragraph
hereof.
"Mexico" refers to the United States of Mexico.
"Corporate purpose of INFOSEL" refers to Internet services for the residential
and "Small Office, Home Office" ("SOHO") segments, known as "ISP's" (Internet
service providers), and a "portal" (Internet site with integrated content,
communication, community, and electronic commerce services, including both
"business-to-consumer" and "consumer-to-consumer" services), Financial
Information Services via Electronic Media (which shall be defined below) and
"business-to-business" electronic commerce services; all such services that
focus on residential, SOHO, financial, and corporate markets in Mexico.
"Parties" refers to the Sellers and the Purchaser.
"Peso" or "pesos" refers to the legal tender of Mexico.
"Portal" refers to an integral Internet site that functions to provide Internet
users with integrated content, communication, community, and electronic commerce
services in the form of business-to-consumer or consumer-to-consumer services.
[Initials and signatures illegible]
7
<PAGE> 8
"Purchase price" refers to the amount of US $60,000,000.00 (sixty million
dollars) of United States legal tender.
"Judicial Proceedings" shall have the meaning defined in Clause 4.11 hereof.
"Financial Information Services via Electronic Media" refers to information
services (especially but not limited to news, prices and quotes, analyses and
commentaries, tools, and databases) pertaining to the financial markets in which
such information is gathered directly from the sources that generate it (stock
exchanges, financial intermediaries, news agencies, etc.), which are processed
and distributed via telecommunication networks and computer equipment.
"SOHO" or "Small Office, Home Office" refers to the segment of Internet users
consisting of small offices or offices located in private homes.
"Mr. Junco Garza" shall have the meaning indicated in the introductory paragraph
hereof.
"Subsidiaries." INFOSEL owns all or part of the shares representing the capital
stock of Infoshare Communications, Inc., Interdata Infosel, S.A. de C.V.,
Seguridata Privada, S.A. de C.V., in accordance with the number of shares and
percentages indicated below, which shares are totally subscribed, paid up, and
free of any lien or encumbrance. With the exception of the Subsidiaries, INFOSEL
has no other subsidiaries, does not own shares in any other corporation, and is
not a partner in or associate of any professional partnership,
charitable/non-profit organization, or joint venture.
- --------------------------------------------------------------------------------
Issuing Corporation Number of Shares Percentage of Capital Stock
- --------------------------------------------------------------------------------
Infoshare
Communications, S.A. 10 100%
- --------------------------------------------------------------------------------
Interdata Infosel, S.A.
de C.V. 1000 50%
- --------------------------------------------------------------------------------
Seguridata Privada,
S.A.de C.V. 100 10%
- --------------------------------------------------------------------------------
"Sellers" shall have the meaning indicated in the introductory paragraph hereof.
By virtue of the foregoing recitals and definitions, the parties have agreed to
execute this Agreement subject to the following:
CLAUSES
ONE: Sale
On this date, the Sellers hereby sell, assign, and transfer to the Purchaser,
and the Purchaser hereby acquires from the Sellers, all of the Shares duly
defined in the Chapter on Definitions hereof, in accordance with the following
share distribution:
[Initials and signatures illegible]
8
<PAGE> 9
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Shareholders Series "A" Series "B" Capital Stock Par Value Percentage
Shares Shares (in pesos)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inversiones Grupo Reforma,
S.A. de C.V 2,502,549 20,180,000 22,682,549.00 93.9540
- -------------------------------------------------------------------------------------------
Consorcio Interamericano
de Comunicacion, S.A. de
C.V 1,457,195 1,457,195.00 6.0359
- -------------------------------------------------------------------------------------------
Alejandro Junco de la Vega
Gonzalez 1450 1,450.00 0.0060
- -------------------------------------------------------------------------------------------
Ramon Alberto Garza Garcia 500 500.00 0.0021
- -------------------------------------------------------------------------------------------
Ricardo Junco Garza 500 500.00 0.0021
- -------------------------------------------------------------------------------------------
Total: 2,504,999 21,637,195 24,142,194.00 100.00
- -------------------------------------------------------------------------------------------
</TABLE>
TWO: Purchase Price
The total purchase price of the Shares is US $60,000,000.00 (sixty million
dollars) in legal tender of the USA. The price is hereby distributed to each
Seller based on the percentage of his shareholdings in INFOSEL and is hereby
paid to them in the amounts indicated below:
- --------------------------------------------------------------------------------
Seller Price Received by each Seller
- --------------------------------------------------------------------------------
Inversiones Grupo Reforma, S.A. de
C.V. US $56,372,380.37
- --------------------------------------------------------------------------------
Consorcio Interamericano de
Comunicacion, S.A. de C.V. US $3,621,530.68
- --------------------------------------------------------------------------------
Alejandro Junco de la Vega Gonzalez US $3,603.65
- --------------------------------------------------------------------------------
Ramon Alberto Garza Garcia US $1,242.64
- --------------------------------------------------------------------------------
Ricardo Junco Garza US $1,242.64
- --------------------------------------------------------------------------------
Total US $60,000,000.00
- --------------------------------------------------------------------------------
The Purchaser hereby delivers to each Seller the purchase price corresponding to
each Seller in accordance with the above diagram, and the Sellers hereby accept
the price to their full satisfaction. This Agreement serves as the most
sufficient receipt permissible by law.
In accordance with the provisions of Article 103 of the Income Tax Law, the
amounts delivered to Mr. Junco, Mr. Garza, and Mr. Junco Garza for the
aforementioned purchase are subject to withholding by the Purchaser at a rate of
20% of the purchase price corresponding to the Sellers. The Purchaser hereby
delivers to Mr. Junco, Mr. Garza, and Mr. Junco Garza proof of the respective
withholding.
THREE: Endorsement of Shares
On this date, the Sellers simultaneously execute the endorsements transferring
title to the definitive certificates representing the Shares, as applicable, in
favor of the Purchaser.
Likewise, Inversiones hereby executes the endorsement transferring title to
definitive share certificate No. 5-A, which represents one registered share
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of Series "A" common stock with a par value of 1.00 peso (one peso) and
represents INFOSEL's minimum equity invested in fixed assets, in favor of the
company Terra Networks, S.A., and hereby transfers that share free of any and
all Liens.
FOUR: Sellers' Representations and Warranties
The Sellers hereby represent and warrant the following:
4.1 Ownership of the Shares. The Sellers are the sole legitimate owners of their
respective Shares, which are free of any and all encumbrances, and the Sellers
are recognized as the holders of title of such Shares in INFOSEL's Register of
Shares.
4.2 Subscription and Effect. This Agreement constitutes valid and enforceable
obligations for the Sellers. Neither the subscription hereof nor the fulfillment
by the Sellers of any of the provisions contained herein shall (i) violate,
result in a conflict with or the nonperformance, early termination, or
rescission of any contract, commitment, or obligation, or any other contract to
which INFOSEL or its Subsidiaries are a party or by which INFOSEL, its
Subsidiaries, properties, or assets are bound; (ii) violate, result in a
conflict with or the nonperformance, early termination, or rescission of any
contract, commitment, or obligation, or any other contract to which the Sellers
are a party or by which their properties or assets are bound, the violation or
nonperformance of which might give rise to a right of any third party to the
Shares; (iii) violate any law or regulatory provision to which INFOSEL or the
activities it engages in as part of its business and corporate purpose are
subject, or violate, result in a conflict with or the nonperformance of owing to
the revocation or early termination of any license, authorization, concession,
or permit under which INFOSEL carries out its corporate purpose; (iv) violate
any provision of the Incorporation Papers of INFOSEL, Inversiones, or CICSA; or
(v) result in the creation of any Lien (or any obligation to create any Liens)
on the properties or Necessary Assets of INFOSEL.
4.3 Outstanding Shares. Any and all Shares that have been issued and are
outstanding and represent the capital stock of INFOSEL have been duly paid up
and are free of any and all Liens. Moreover, said shares have not been issued or
transferred in the past so as to infringe on any preferential right or other
applicable right under the provisions of any law or agreement. There is no call
option, guarantee, other obligation, or other contract that grants any rights to
any third parties with respect to said shares. Furthermore, INFOSEL has no
convertible or exchangeable securities that upon conversion or exchange would
require the issuance of additional shares of or the assumption of debts for
INFOSEL or the issuance of other securities that could be converted into shares
of INFOSEL.
4.4 Warranty of Title. The Sellers, as applicable, assume joint and several
liability for defending, totally indemnifying, and holding
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harmless the Purchaser for and on account of any and all actions, demands,
proceedings, claims, liabilities, lawsuits, expenses and costs, including
reasonable attorneys' fees and expenses that might result if any person or
corporation were to provide conclusive evidence of that person or corporation's
interest in or right to the shares.
4.5 Ownership of the Necessary Assets to Carry out INFOSEL's Corporate Purpose.
INFOSEL is the legal owner of the Necessary Assets, which are free of any and
all types of Liens, encumbrances, and restrictions. Said assets are in good
order and repair and the property of INFOSEL as of the date hereof.
4.6 Formation. INFOSEL is a corporation that was duly formed, exists
legitimately, and complies with the laws of Mexico and the state and county in
which it is domiciled.
4.7 Powers, Authorizations, and Licenses. INFOSEL and its Subsidiaries have all
of the powers, authorizations, licenses, concessions, and permits that are
necessary in order to fulfill its corporate purpose legally and complete the
proceedings provided for herein. Moreover, INFOSEL and its Subsidiaries are in
compliance with the terms, conditions, duties, and obligations to which they are
subject in accordance therewith.
4.8 Necessary Agreements to Carry out INFOSEL's Corporate Purpose. INFOSEL duly
executed all Necessary Agreements for the purpose of carrying out its activities
as it has carried them out to date, without breaching or defaulting on any of
them.
4.9 Corporate Power. INFOSEL has the powers and authorities that are necessary
in order to execute and perform each and every one of the Necessary Agreements
described in Exhibit 1, as well as to carry out the transactions provided for
thereby. The execution, completion of the legal formalities of, and performance
of said Agreements have been duly authorized by all of the corporate resolutions
that may be required.
4.10 Subsidiaries. The Subsidiaries are corporations that have been duly formed
in accordance with the laws of the place of formation, and INFOSEL is the sole
owner and registered holder of title of the shares described in the definition
of Subsidiaries provided for herein.
4.11 Ongoing Litigation. With the exception of those cases indicated in List
4.11, no actions, claims, demands, lawsuits, or governmental, judicial,
employment-related, tax, administrative, or arbitration proceedings ("Judicial
Proceedings") are in progress or have been threatened against or regarding
INFOSEL, the Shares, or INFOSEL's Subsidiaries.
4.12 Delivery of the Exhibits and Lists Mentioned In this Agreement. The Sellers
have delivered or made available to the Purchaser the Exhibits and Lists
referred to in
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this Agreement in a complete, correct, and detailed manner, as well as true and
complete copies of the documents and other materials that are necessary to
describe all of the Necessary Assets and Necessary Agreements that are duly
described and defined in the chapter of definitions hereof, in addition to the
following:
List "4.12": (A) The name, current annual compensation (including bonuses and
commissions), position, current base-salary wage scale, bonuses received,
workers' compensation calculations, leave pay, INFOSEL organizational charts,
format of contracts for individual employment or administrative, legal, or
consulting services.
(B) every employee benefit plan, bonus plan, and any other agreement, plan, or
arrangement for deferred compensation, whether sponsored or maintained by
INFOSEL or to which INFOSEL makes contributions;
(C) the value of retirement liabilities that are not covered, including health
protection, insurance for medical expenses, and that are derived from any plan,
fund, or arrangement pertaining to those indicated in subsections (A), (B), or
(C) of this Clause; and
(D) copies of all collective bargaining agreements.
(E) insurance policies for the personnel and partners.
(F) ongoing legal actions, lawsuits, or claims.
4.13 There are no encumbrances. Except as indicated in List 4.13, INFOSEL is the
lawful owner of all of its properties, Necessary Assets, and Necessary
Agreements, as well as all other rights that do not constitute real estate, free
and clear of any Liens and encumbrances.
4.14 Real Estate. Except as indicated in List 4.14, all buildings,
constructions, improvements, and accessories that are used in order to fulfill
INFOSEL's Corporate Purpose and are owned or leased by INFOSEL are in
sufficiently good order and repair to allow the business constituting said
Corporate Purpose to continue to be carried out in a manner consistent with past
practices. Moreover, with the exception of normal wear and tear, there are no
defects in said buildings, constructions, improvements, and accessories that
would hinder their daily use by the Purchaser or subject the Purchaser to any
liability under the applicable laws.
4.15 Financial Statements.
4.15.1 The Sellers have provided the Purchaser with copies of the
most recent audited balance sheets, income statements,
shareholders' equity
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statements and cash flow statements of INFOSEL as of June 30,
1999 (collectively referred to as the "Financial Statements"),
which are attached hereto as List 4.15.1. Each of said
financial statements forms an integral part hereof on a
consolidated basis. Unless otherwise indicated therein, said
financial statements are complete and correct, were developed
in accordance with the GAAP, were used consistently during the
periods indicated, and fairly reflect the financial situation
of INFOSEL on said dates;
4.15.2 There are no liabilities, debts, obligations, or claims of any
kind against INFOSEL, whether absolute or contingent, which
involve or relate to the Necessary Assets and Necessary
Agreements, with the exception of (i) to the extent indicated
or for which liabilities, debts, obligations, or claims there
is a reserve in the balance sheet on June 30, 1999; (ii) any
liabilities, debts, obligations, or claims specifically
described and identified as an exception to this section in
any of the Exhibits and Lists delivered to the Purchaser in
accordance herewith; (iii) any liabilities, debts,
obligations, or claims that have been incurred as of June 30,
1999 in INFOSEL's normal course of business and that are
consistent with past practices; or (iv) pending purchase or
sale orders or contracts for the delivery of services in the
normal course of business, provided that INFOSEL is not in
breach of any of them.
4.15.3 [The Seller has provided the Purchaser with a copy of
INFOSEL's balance sheet as of the date of the execution
hereof. Said balance sheet was duly certified by INFOSEL's
Manager of Finance and accurately reflects INFOSEL's financial
status immediately prior to the execution hereof.]
4.16 Tax Matters. For the purposes of this Agreement, "Tax or Taxes" shall refer
to any income, gross revenue, profit, franchise, license, transfer, sales, use,
ad valorem, payroll, withholding, employment, occupation, property (real estate
or chattels), use or value-added tax, as well as other taxes, rights, fees,
contributions, or withholdings, including but not limited to Social Security
taxes, Retirement Savings System, and Infonavit [National Institute for Workers'
Housing] (including interest, penalties, and additions to such items).
4.17 Except as indicated in List 4.17:
4.17.1 All Income Tax Returns have been submitted timely;
4.17.2 All Taxes indicated on the Income Tax Returns have been paid
timely;
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4.17.3 The Income Tax Returns accurately and completely reflect the
facts regarding the revenues, properties, operations, and
status of any entity that must appear thereon;
4.17.4 The charges, accumulations, and reserves for Taxes owed or
accrued but not yet payable with respect to INFOSEL's
revenues, properties, or operations as indicated in INFOSEL's
records are sufficient to cover said taxes;
4.17.5 Concerning Taxes on INFOSEL's revenues, properties, or
operations, there are no actions, lawsuits, proceedings,
audits, or claims in progress; nor are there, to the best of
the Sellers' knowledge and belief, any investigations in
progress concerning such taxes.
4.17.6 There are no agreements to extend the period for imposing the
taxes affecting INFOSEL's revenues, properties, or operations.
4.17.7 All Income Tax Returns corresponding to the fiscal years
ending on or before December 31, 1999 have been audited for
tax purposes or are Statements with respect to which the
statute of limitations has expired once the applicable
extensions and waivers have been asserted;
4.17.8 All Taxes pertaining to INFOSEL have been covered or paid, and
no situation has arisen as a result of the audits for which
the application of similar principles would lead one to
consider the possibility of any tax claim for any year that
has not been audited.
4.18 Employment-related Matters. Each of the following facts is true for each of
the plans, funds, or arrangements that are indicated or are to be indicated in
List 4.12:
4.18.1 INFOSEL's financial statements reflect all employment-related
liabilities derived from each of said plans, funds, or schemes
in accordance with the applicable laws and regulations;
4.18.2 All plans and schemes have been accorded a favorable
resolution under the applicable laws;
4.18.3 No actions, lawsuits, or claims are ongoing, nor, to the best
of the Sellers' knowledge and belief, have any been
threatened. Moreover, the Sellers have no knowledge of any
facts that might give rise to such actions, lawsuits, or
claims.
4.18.4 The execution and performance of this Agreement by the
Sellers, and the completion of the transactions provided for
hereunder, shall not give rise to any
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obligations or liabilities (concerning benefits accrued or
otherwise) under such plans, funds, or schemes, vis-a-vis the
employees or former employees of INFOSEL;
4.18.5 INFOSEL has fulfilled all of its employment-related
obligations to its employees and the authorities, as well as
all applicable laws, individual employment contracts, and
collective bargaining agreements concerning employment matters
and practices, terms and conditions of employment, as well as
workplace safety and health. INFOSEL does not engage in any
improper employment practices. There are no actions, lawsuits,
or legal, administrative, arbitration, or other proceedings in
progress; nor, to the best of the Sellers' knowledge and
belief, have any been threatened. To the best of the Sellers'
knowledge and belief, no investigations are ongoing or have
been threatened against INFOSEL concerning the foregoing, nor
do any grounds exist for any action, lawsuit, or legal,
administrative, arbitration, or other proceeding or
governmental investigation;
4.18.6 Currently, there are no workers' strikes, labor disputes,
go-slows, or work stoppages, nor, to the best of the Sellers'
knowledge and belief, have any been threatened against
INFOSEL;
4.18.7 Currently, no grievance or arbitration proceedings derived
from or in accordance with any collective bargaining
agreements exist against INFOSEL, nor are there any grounds
for any such claims.;
4.18.8 INFOSEL has not experienced any organized work stoppages in
the past three years.
4.19 Intellectual Property. Except as indicated in List 4.19:
4.19.1 The patents, registered trademarks, business slogans,
copyrights, licenses, business names, assignments, deeds,
agreements, contracts, and other items indicated in Exhibit 7
are the property of INFOSEL, are in force, valid, and have not
been canceled, abandoned, or terminated in any other manner;
nor are they being contested or are they in conflict with any
patents, trademarks, copyrights, or business names that have
been effectively registered by any third parties;
4.19.2 The trademark and business slogan applications, pending
copyright registrations, patent applications, and other items
indicated in Exhibit 7 have been duly submitted. They have not
been rejected by any relevant authority, and they are going
through the normal registration process;
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4.19.3 INFOSEL is not in breach of any license, concession,
authorization, or agreement whereby INFOSEL has been granted a
gratuitous or onerous use of any trademarks, business slogans,
software, copyrights, confidential information, or any other
type of intellectual property, and there is no current or
imminent proceeding against INFOSEL because of any breach or
irregular compliance therewith.
4.19.4 INFOSEL has complied with the duties of secrecy and
confidentiality imposed by the various licensing, concession,
authorization, and other agreements it has executed. These
agreements are in force, and there is no current or imminent
claim because of the divulgement of any trade secrets that are
the property of any third parties or that INFOSEL or its
employees, partners, executives, or officers have used
improperly;
4.19.5 The licenses and agreements mentioned in Exhibit 7 are binding
subject to the terms thereof. None of the processes that are
currently used by INFOSEL, nor any of the properties,
products, or services contracted for, sold, or provided by
INFOSEL, nor any of the trademarks, business slogans, labels,
or other marks or copyrights used by INFOSEL, nor any of the
other items mentioned in Exhibit 7 violate the rights of any
other person or entity. Moreover, INFOSEL has not received
notice of any such violation, and the Purchaser may continue
to use such licenses and agreements in the same manner as
INFOSEL has used them.
4.20 Accounts Receivable. The accounts receivable that appear on INFOSEL's
consolidated balance sheet on June 30, 1999, as well as all accounts receivable
created as of said date, represent and shall continue to represent valid
liabilities in favor of INFOSEL, to the extent established in List 4.20 hereof.
4.21 Inventory. Except as indicated in List 4.21, INFOSEL's inventories are in
good condition and conform to the applicable specifications and warranties in
every way.
4.22 Equipment. INFOSEL's equipment and other tangible physical assets are in
good functioning order. Normal wear and tear excepted, they are in use and are
useful to INFOSEL's business at its currently activity level. Moreover, they are
in sufficiently good functioning condition to carry out INFOSEL's Corporate
Purpose as INFOSEL is carrying it out currently.
4.23 No Significant Changes. Except as indicated in List 4.23, between June 30,
1999 and the execution date hereof, there has not been any significant adverse
change in INFOSEL's financial situation, Necessary Assets and Necessary
Agreements, liabilities (fixed, contingent, or otherwise), operating results,
business, or business prospects that would cause
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INFOSEL to assume different liabilities or liabilities other than those INFOSEL
has vis-a-vis the Purchaser or Telefonica, S.A.
4.24 Absence of Changes or Events. Except as indicated in List 4.24, between
June 30, 1999 and the execution date hereof, INFOSEL has complied with its
corporate purpose exclusively in the normal course of business. Furthermore,
INFOSEL has not:
4.24.1 Incurred any absolute, accrued, contingent, or other
obligations or liabilities, whether owing now or in the
future, for a total amount exceeding US $1,000,000.00 (one
million dollars), except for liabilities or obligations that
have been incurred in the normal course of business and are
consistent with INFOSEL's usual practices, unless otherwise
agreed upon by the Parties in a faxed message confirmed in
writing.
4.24.2 Mortgaged or pledged its assets or subjected them to any
Liens, charges, guarantees, or other encumbrances or
restrictions;
4.24.3 Sold, transferred, or leased its assets to any third parties
or otherwise alienated said assets;
4.24.4 Suffered any damages, destruction, or losses (whether covered
by insurance or not) that have adversely affected INFOSEL's
business or prospects;
4.24.5 Effected any capital expenditures or capital additions or
improvements, or committed to effecting any of the foregoing,
in an amount exceeding US $1,000,000.00 (one million dollars),
unless otherwise agreed upon by the Parties in a faxed message
confirmed in writing.
4.24.6 Suffered or been threatened with the possibility of being
affected by any strikes, work stoppages, go-slows, or
lockouts;
4.24.7 Initiated any lawsuits, actions, or proceedings before any
courts or governmental offices with respect to the Assets, nor
has INFOSEL waived or handed over any rights that are valuable
to INFOSEL, with the exception of the lawsuits initiated and
the waivers and commitments granted in fulfillment of its
corporate purpose and in a manner consistent with its usual
practices;
4.24.8 Increased the compensation of its officers, employees, or
agents, either directly or indirectly, through bonuses,
pension plans, distributions of dividends, deferred
compensation, savings, insurance, retirement, or any other
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employee compensation plan, aside from reasonable amounts in
the normal course of business.
4.24.9 Declared or paid any dividends or made any capital or capital
surplus payments, nor has INFOSEL redeemed, purchased, or
acquired any shares of its own capital stock, either directly
or indirectly;
4.25 No Breach. Except as indicated in List 4.25, all of the Necessary
Agreements specified in Exhibit 1 and executed by INFOSEL, as well as all
agreements or contracts executed by INFOSEL's Subsidiaries, were duly executed
in the normal course of business. None of the following exist under any
contract:
4.25.1 Breach by INFOSEL, its Subsidiaries, or, to the best of the
Sellers' knowledge and belief, by any other party thereto; or
4.25.2 Any event which, after notice thereof has been provided or the
time has lapsed or both, would constitute a breach by INFOSEL
or its Subsidiaries, or, to the best of the Sellers' knowledge
and belief, by any other party, which would result in a right
of acceleration or would result in the loss of the rights
against the Sellers;
4.26 Suspension of Business. INFOSEL has not been subjected to suspension of
business or work.
4.27 Insurance and Sureties. All of INFOSEL's insurance policies and sureties
that are indicated in Exhibit 3 are in full force and are producing results. All
premiums pertaining to such policies and sureties corresponding to all periods
up until the execution of this contract, inclusively, have been paid. No
cancellation or termination notice has been received regarding any of those
policies. Said policies are sufficient to comply with all of the legal
requirements and all contracts to which INFOSEL is a party. Said policies are
valid, in force, and enforceable; they shall continue in full force and
producing results on the respective dates indicated in List 4.27 without any
additional premium payments. Moreover, said policies shall not be affected nor
terminate or lapse, except as indicated in List 4.27, as a result of the
transactions provided for herein. INFOSEL has not been refused any insurance
with respect to its assets or operations, nor has INFOSEL's coverage been
limited by any insurers from which INFOSEL has applied for such insurance or
with which INFOSEL has contracted for insurance in the last three years.
4.28 Consent. Except as indicated in List 4.28, no consent is required from any
person in order to carry out the transactions provided for herein, including but
not limited to consent from any parties involved in loans, contracts, leases, or
any other agreements.
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4.29 Specific Interests. Except as indicated in List 4.29, neither the members
of the Board nor the officers or managers of INFOSEL have any significant
interests in the Necessary Assets.
4.30 Compliance with Laws. Except as indicated in List 4.30.1, INFOSEL has all
of the Permits that are necessary in order to fulfill its corporate purpose, all
of which are in full force and are producing effects. INFOSEL is in compliance
with the respective terms and conditions of such permits. INFOSEL has complied
with all applicable laws, statutes, rules, regulations, judgments, orders,
bills, exemptions, and decrees, whether state or local, from the governmental,
judicial, or administrative authorities having jurisdiction over INFOSEL or its
Assets (referred to collectively as "Legal Requirements"). Except as indicated
in List 4.30.2, on the execution date of this Agreement, the transactions
provided for hereby shall not infringe on the Legal Requirements or require the
consent, approval, authorization order of the states or the governmental or
public authorities or registration or notice by INFOSEL or the Sellers with or
to the states or the governmental or public authorities.
4.31 INFOSEL's Articles of Incorporation, Bylaws, Books, and Registers. The
Purchaser has been provided with true and complete copies of INFOSEL's Articles
of Incorporation, along with proof of the necessary registrations, and INFOSEL's
Bylaws. INFOSEL's books and registers have been kept in accordance with the
applicable laws and are hereby delivered to the Purchaser.
4.32 Statements and Warranties. The statements and warranties made by the
Sellers in this Agreement, including the attached Exhibits and Lists and the
statements made in the documents (including but not limited to certifications or
other writings that the Sellers have delivered or will deliver to the Purchaser
or any of its representatives in accordance with the provisions hereof or in
connection with the transactions provided for hereby) do not and shall not
include any false statements, nor do they or shall they omit any important and
necessary facts in light of the circumstances under which they were
accomplished, so that the statements contained herein or in said documents are
not deceptive, and they shall continue to be true until the date hereof.
FIVE: Delivery of Documents
On this date, the Purchaser receives from the Sellers the following, except as
otherwise provided herein or in a written agreement by the parties:
5.1 Any other documents or copies thereof or other evidence and/or information
requested by the Purchaser. If such items exist, then they shall be issued by an
INFOSEL representative.
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5.2 Satisfactory certificates, signed by an authorized representative of
Inversiones, CICSA, Mr. Junco, Mr. Garza, and Mr. Junco Garza, dated today, for
the purposes of certifying that the Sellers warrant the following:
5.3.1 Absolute, valid, and rightful ownership of the Necessary Assets;
5.3.2 Quiet enjoyment of the Necessary Assets by the Purchaser.
5.3.3 The existence and validity of the credits referred to in the
accounts receivable.
5.3 All instruments, endorsements, proceedings, and actions taken on or prior to
the execution date hereof, documents or information connected with or relating
to the execution, delivery, and performance of this Agreement, as well as
transactions forming the subject matter thereof, shall bear the form and shall
contain the requirements requested by the Purchaser, with the understanding that
if the form or requirements requested by the Purchaser are in addition to or
different from those that are required by law, then the Purchaser shall bear the
cost thereof.
5.4 All proxies, attendance lists, and published notices of meetings, if any, as
well as any other documentation connected with the shareholders' meetings held
by INFOSEL from the date of its formation to the date of this Agreement,
including entries in INFOSEL's corporate books, with the autograph signatures of
the officers, statutory auditors, representatives, shareholders, or
shareholders' representatives, or the Sole Administrator and C.E.O. of INFOSEL,
where applicable, if such signatures are required by INFOSEL's corporate bylaws,
the applicable provisions of the General Law on Commercial Associations, or by
law.
5.5 An original, signed copy of the minutes of INFOSEL's Extraordinary
Shareholders' Meeting of October 5, 1999, in which the shareholders approve,
among other matters, a complete revision of the corporation's bylaws, including
the change in the rules governing the foreign character of the corporation by
admitting foreigners; the exclusion of stock issued for services; the
cancellation of the shares of stock that INFOSEL issued for services and were
delivered to Ramon Alberto Garza Garcia, Arturo de Jesus Galvan Contreras, and
Ricardo Junco Garza, as well as those shares of stock issued for services that
remain at the disposal of the Sole Administrator and C.E.O. for any future
issues; Alejandro Junco de la Vega's resignation of his position as Sole
Administrator and C.E.O., and the appointment of the board of directors; the
revocation of all general and special powers of attorney conferred by INFOSEL
(except for certain powers of attorney) and the granting of special powers of
attorney to new representatives; as well as the cancellation of all of the
certificates representing outstanding shares, and the issue of new certificates.
5.6 A full release signed by the Sole Administrator and C.E.O., by means of
which he submitted his resignation of said position.
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5.7 The written consent granted by Mrs. Rosa Laura Elizondo Garza T. for the
sale of the Shares owned by her husband, Alejandro Junco de la Vega.
5.8 The written consent granted by Mrs. Silvia Barba for the sale of the Shares
owned by her husband, Ramon Alberto Garza Garcia.
5.9 All certificates representing the common shares of stock and the stock that
has INFOSEL issued for services, all duly cancelled.
5.10 All other documents requested by the Purchaser, whether delivered on or
before the execution date hereof, in accordance therewith.
5.11 The advisory opinion of the Seller's legal consultants under the terms of
Exhibit 9, which forms an integral part hereof.
SIX: Indemnification by the Sellers.
Inversiones, CICSA, and Editora El Sol hereby jointly and severally agree to
defend, indemnify, and hold harmless the Purchaser and its successors and
assigns on account of:
6.1 Any and all losses, costs, liabilities, damages, or deficiencies resulting
from any:
6.1.1 False statement or violation made by the Sellers regarding any
warranties, agreements, or covenants hereunder;
6.1.2 The Sellers' breach of any covenant or other agreement or obligation
hereunder;
6.2 Any and all obligations, claims, judgments, damages, legal actions, causes
of action, injuries, liabilities or losses, sanctions, costs and expenses of any
kind, loss of life, injuries to persons or property, or damage to natural
resources caused by any acts or omissions by INFOSEL or the Sellers until the
execution date hereof.
6.3 Claims based on services rendered before the execution date hereof, to the
extent that the amounts exceed the reserves indicated in INFOSEL's books until
that time;
6.4 The impossibility of collecting the accounts receivable to the extent
provided for in List 4.20 hereof within 120 days beginning as of the execution
date hereof.
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6.5 Any and all of INFOSEL's obligations created anytime until the execution
date hereof and not stated in INFOSEL's books, whether or not known on this
date, with the understanding, however, that if any claim, liability, demand,
assessment of damages, legal action, lawsuit, or proceeding is brought against
the Purchaser or any of its successors or assigns for which the Purchaser or any
of its successors or assigns intends to request indemnification ("Indemnified
Claims"), then the Purchaser shall notify the Sellers thereof. Immediately upon
receiving such notice, the Sellers shall be entitled to assume control of the
defense, settlement, or resolution of such Indemnified Claims, including, at the
Sellers' cost and expense, contracting for reasonably satisfactory legal counsel
for the Purchaser; with the understanding, however, that if the Sellers have
exercised their right to assume such control, then the Purchaser shall be
entitled, at its sole discretion, to contract for legal counsel to represent it
(in addition to the legal counsel contracted for by the Sellers, and in this
case, at their sole cost and expense) in any of said cases, and in the latter
event, the legal counsel appointed by the Sellers shall be obligated to
cooperate with the Purchaser's legal counsel in that defense, settlement, or
resolution; and with the further understanding that the Sellers' obligation to
provide indemnification under Clause Seven hereof shall only arise for the
Sellers if the total of such losses, damages, deficiencies, debts, liabilities,
costs and expenses arising hereunder with respect to the items specified in
Clause Six shall exceed US $75,000.00 (seventy-five thousand dollars), and the
Purchaser shall then be entitled to recover the full amount of any of the
Purchaser's damages that exceed said amount ("Indemnified Damages").
6.6 The Sellers' indemnifications as specified in this Clause shall not be
affected in any way by any reference made herein to the statements and
warranties made "to the Seller's knowledge and belief " or "to the best of the
Seller's knowledge and belief."
SEVEN: Indemnification by the Purchaser.
The Purchaser hereby agrees to defend, indemnify, and hold harmless the Sellers
and their assigns on account of any costs, liabilities, and damages resulting
from:
7.1 Any and all losses, costs, liabilities, damages, or deficiencies resulting
from any:
7.1.1 False declaration or violation made by the Purchaser regarding any
warranties, agreements, or covenants hereunder;
7.1.2 The Purchaser's breach of any covenant or other agreement or
obligation hereunder;
[Initials and signatures illegible]
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7.2 Any and all legal actions, lawsuits, proceedings, claims, liabilities,
demands, assessments of damages, judgments, costs and expenses, including
reasonable attorneys' fees, incidental to any of the foregoing or such
indemnification; with the understanding, however, that if any claim, liability,
demand, assessment of damages, legal action, lawsuit, or proceeding is brought
against the Sellers or any of their successors or assigns for which the Sellers
or any of their successors or assigns intends to request indemnification
("Indemnified Claims"), then the Sellers shall notify the Purchaser thereof.
Immediately upon receiving such notice, the Purchaser shall be entitled to
assume control of the defense, settlement, or resolution of such Indemnified
Claims, including, at the Purchaser's cost and expense, contracting for
reasonably satisfactory legal counsel for the Sellers; with the understanding,
however, that if the Purchaser has exercised its right to assume such control,
then the Seller shall be entitled, solely at its own discretion, to contract for
legal counsel to represent it (in addition to the legal counsel contracted for
by the Purchaser, and in the latter case, at its sole cost and expense) in any
of said cases, and in this event, the legal counsel appointed by the Purchaser
shall be obligated to cooperate with the Seller's legal counsel in that defense,
settlement, or resolution.
EIGHT: Expenses.
For their respective parts, the Purchaser and the Sellers shall defray their own
expenses related to the negotiation, revision, signing, delivery, and
performance of this Agreement. For their respective parts, the Sellers and the
Purchaser hereby declare and state to the other party that the negotiations
involved in this Agreement and the transactions provided for hereby have been
carried out so as not to allow for any valid claim against the other Party for
brokerage fees, intermediary's fees, or any other similar payments.
NINE. Statements, Unconditional Warranties, and Warranties.
The warranties stated herein shall survive the execution date hereof. The
statements and unconditional warranties shall be deemed to have been made until
the date hereof, inclusively. Any claim or action based on the violation of any
statement, unconditional warranty, or warranty, shall survive the execution date
hereof for three (3) years or the period applicable under the relevant statutes
of limitation, whichever lasts longer.
TEN. Confidentiality.
No press release shall be issued, nor shall the terms of this Agreement be
disclosed to any third parties, without the mutual authorization of the Sellers
and the Purchaser. The Purchaser and the Sellers shall agree on the time and
manner in which INFOSEL's employees shall be notified of the transaction.
ELEVEN. General Provisions.
12.1 Cooperation. Each of the Parties hereto shall make its best effort
to do or cause to be done, and to cooperate with the other Party to
the necessary extent concerning all actions, and to do or cause to
be done, conforming to
[Initials and signatures illegible]
23
<PAGE> 24
the applicable laws, everything that is necessary, appropriate, or
proper in order to render effective the transactions provided for
hereby.
12.2 Waivers. The Sellers' failure to comply with any of their
obligations or covenants stated herein may only be waived by the
Purchaser in writing. The Purchaser's failure to comply with any of
its obligations or covenants stated herein may only be waived by the
Sellers in writing.
12.3 Notices. All notices and other correspondence required or permitted
hereunder shall be issued in writing, sent to the addressee by fax,
and confirmed by means of a written original signed by a
representative that is authorized by the Party issuing the notice or
correspondence and sent via DHL, Federal Express, or any other
global courier service that offers delivery times that are the same
as or better than those of the companies mentioned, with the
understanding that the correspondence or notice shall take effect as
of the date the fax is sent but only if the original, signed notice
or correspondence is delivered to the addressee within two (2)
Business Days following the date the fax was sent. If the original
notice or correspondence is not received during that time, then it
shall not take effect until the Business Day on which the original
notice or correspondence is delivered. In any case, such notices or
correspondence shall be sent to the following business addresses:
(i) If sent to the Sellers:
Inversiones:
Inversiones Grupo Reforma, S.A. de C.V.
Washington 629 Oriente, Centro
Monterrey, N.L. C.P. 64000 Mexico
Fax #: 318-8022
CICSA:
Ave. Mexico Coyoacan 40
Colonia Santa Cruz Atoyac
Delegacion Benito Juarez
Mexico, D.F. C.P. 03310 Mexico
Fax #: 318-8022
Lic. Junco:
Cipreses No. 73
Fraccionamiento La Cima
San Pedro Garza Garcia, N.L., Mexico
Fax #: 318-8022
[Initials and signatures illegible]
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<PAGE> 25
Lic. Garza Garcia:
Sierra Nevada No. 109
Colonia Villa Montana
San Pedro Garza Garcia, N.L., Mexico
Fax #: 318-8022
Sr. Junco Garza:
Rio Rhin No. 703
Colonia Del Valle
San Pedro Garza Garcia, N.L., Mexico
Fax #: 318-8022
with a copy to:
Atencion: Lic. Luis Santos Theriot
Santos-Elizondo-Cantu-Rivera-Garcia-Gonzalez-De la Garza, S.C.
Edificio Losoles--Despacho B-33
Ave. Lazaro Cardenas 2400 Poniente
Garza Garcia, N.L., Mexico
Fax: (52-8) 363-3684
(ii) If sent to the Purchaser:
Edificio Oficinas en el Parque--Piso 10
Blvd. Antonio L. Rodriguez 1884 Poniente
Monterrey, Nuevo Leon, Mexico
Fax #: (52-8) 399-1399
with a copy to:
Atencion: Lic. Andres Ochoa Bunsow
Baker & McKenzie Abogados, S.C.
Edificio Oficinas en el Parque--Piso 10
Blvd. Antonio L. Rodriguez 1884 Poniente
Monterrey, Nuevo Leon, Mexico
Fax #: (52-8) 399-1399
(iii) If sent to Editora El Sol:
Washington 629 Oriente, Centro
Monterrey, N.L. C.P. 64000 Mexico
Fax #: 318-8022
[Initials and signatures illegible]
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with a copy to:
Atencion: Lic. Luis Santos Theriot
Santos-Elizondo-Cantu-Rivera-Garcia-Gonzalez-De la Garza, S.C.
Edificio Losoles--Despacho B-33
Ave. Lazaro Cardenas 2400 Poniente
Garza Garcia, N.L., Mexico
Fax: (52-8) 363-3684
The above names and addresses may be changed via written notice to each person
indicated above.
Without prejudice to the foregoing provisions of this Clause, the Parties may
opt to issue any notice or correspondence via personal delivery of the
corresponding writing to the applicable business address as shown above, in
which case such notice or correspondence shall take effect on the delivery date
thereof. A delivery confirmation receipt must be requested from the proper
employee or representative of the addressee.
12.4 Governing Law and Dispute Resolution. This Agreement shall be governed and
interpreted in accordance with the laws of Mexico.
12.4.1 Any dispute, claim, or controversy arising from this Agreement
or relating thereto or arising from the interpretation or
violation thereof shall be submitted for arbitration in
accordance with the rules of the International Chamber of
Commerce of Paris, to the extent that such rules are
incompatible with this subsection. A ruling on the
arbitrators' award may be approved by any court that is
competent to do so; alternatively, depending on the
circumstances, said court may be requested to approve the
award so that it may be enforced. The application for
arbitration shall be filed within a reasonable time after the
claim, dispute, or other issue in controversy has arisen. In
no event shall the application be filed after the date set by
the institution of law or equity, depending on the claim,
dispute, or other issue in controversy, in accordance with the
applicable statute of limitation.
12.4.2 The arbitration board shall consist of three arbitrators, one
of which shall be designated by each of the Parties hereto.
The two arbitrators thus designated shall designate a third
arbitrator, with the understanding, however, that if the two
arbitrators do not agree on the designation of the third
arbitrator, then either of the arbitrators may petition the
International Chamber of Commerce of Paris to make the
designation.
[Initials and signatures illegible]
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<PAGE> 27
12.4.3 The place of arbitration shall be the City of Dallas, Texas,
and the arbitration shall be carried out in English and/or
Spanish; either language shall suffice.
12.4.4 Each of the Parties hereby waives the requirement of a
hand-delivered notice of arbitration and agrees that notices
of arbitration may be delivered in writing, by certified or
registered mail, return receipt requested, to the address
indicated herein, and any petition made in this manner shall
be deemed to have been made on the tenth Business Day
following the date on which it was deposited in the mail.
12.4.5 Any judicial proceeding initiated in support of the
arbitration concerning this Agreement, including precautionary
measures, shall be submitted to the competent judicial
authority. Each of the Parties hereto (a) fully and
unconditionally accepts the exclusive jurisdiction of that
court and that of any related appeals court and hereby
irrevocably waives any objection that such Party may have now
or in the future concerning the forum of any lawsuit, legal
action, or proceeding initiated in said courts, and any
objection to the effect that such courts are a forum non
conveniens.
12.5 Copies. This Agreement may be signed simultaneously in three or more
copies, each of which shall be considered an original, but together they shall
be considered one and the same document.
12.6 Headings. The headings of the various clauses contained herein are solely
for purposes of reference and shall not affect the meaning or interpretation of
this Agreement in any way.
12.7 Entire Agreement. This Agreement, including its exhibits and the documents
mentioned herein, constitutes the entire Agreement and covenants of the parties
hereto concerning the subject matter contained herein. There are no
restrictions, promises, statements, absolute warranties, other warranties, or
commitments other than those expressly specified or mentioned herein. This
Agreement supersedes any and all other agreements and covenants previously made
between the Parties concerning said subject matter.
12.8 Amendments and Modifications. This Agreement may only be amended or
modified by a written agreement between the Parties hereto.
12.9 Binding Force. This Agreement shall inure to the Parties hereto and their
respective successors and assigns and shall be binding on all of them. Nothing
included expressly or implicitly in this Agreement shall be construed to confer
any right, remedy, obligation, or liability under this Agreement on any party
other than the Parties hereto or their respective successors and assigns.
[Initials and signatures illegible]
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12.10 Assignment. None of the Parties to this Agreement may assign the Agreement
without first obtaining the express written consent of the other Parties hereto.
12.11 Taxes Resulting from the Transfer. The Income Tax resulting from this
transaction or from the sale, transfer, or delivery of the Shares shall be
payable at the Sellers' cost and expense.
12.12 Antitrust. On October 4, 1999, the Parties submitted notice of this merger
to the Federal Antitrust Commission in order to comply with Article 20 of the
Federal Antitrust Law.
12.13 Best Knowledge and Belief. For purposes of this Agreement, the phrase "to
the Sellers' knowledge and belief" or "to the best of the Seller's knowledge and
belief," when applied to a statement or warranty made by the Sellers, shall be
deemed to mean "to the best of the Sellers' knowledge and belief after due
verification"; moreover, "knowledge and belief," as used in that phrase, shall
be considered to include all of the matters that the Sellers or any officer
thereof actually took notice of or should have taken notice of after due
verification.
IN WITNESS WHEREOF, the Parties hereto have signed this Agreement on the date
first shown above.
Purchaser:
Terra Networks Mexico, S.A. de C.V.
[Signature illegible]
By: [handwritten:] ARTURO DE J. GALVAN CONTRERAS
Position: [handwritten:] CHIEF EXECUTIVE OFFICER
Sellers:
Inversiones Grupo Reforma, S.A. de C.V.
[Signature illegible]
By: [handwritten:] Alejandro Junco
Position: [handwritten:] Sole Director and Chief Executive
Officer
[Initials and signatures illegible]
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<PAGE> 29
[handwritten:] Consorcio Interamericano de Comunicacion, S.A.
de C.V.
[crossed through:] Comunicacion Integrada de Occidente, S.A.
de C.V.
[Signature illegible]
By: [handwritten:] Alejandro Junco
Position: [handwritten:] Sole Director and Chief Executive
Officer
Editora El Sol, S.A. de C.V.
[Signature illegible]
By: [handwritten:] Alejandro Junco
Position: [handwritten:] Sole Director and Chief Executive
Officer
Alejandro Junco de la Vega Gonzalez
[Signature illegible]
By: [handwritten:] Alejandro Junco
Ramon Alberto Garza Garcia
By: [Signature illegible]
Ricardo Junco Garza
By: [Signature illegible]
[Initials and signatures illegible]
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<PAGE> 30
The following annexes to this agreement have not been included:
- Exhibit 1 - List of contracts and agreements in effect
- Exhibit 2 - Inventory of assets
- Exhibit 3 - List of insurance policies, surety bonds, and
claims submitted to insurers
- Exhibit 4 - Reimbursable deposits, prepaid expenses, and
deferred expenses
- Exhibit 5 - Loans or advance payments given by Infosel
- Exhibit 6 - List of leased real estate
- Exhibit 7 - List of title deeds, rights of use and/or
exploitation of inventions, trademarks, copyrights, computer
programs and trade secrets
- Exhibit 8 - Federal, state, local and foreign governments
permits and licenses required to carry out business
- Exhibit 9 - Opinion of the Seller's legal counselor
- List 4.11 - Pending or threatened judicial proceedings
- List 4.12 - List of current employees
- List 4.13 - Encumbrances on assets and property
- List 4.14 - Defects in buildings, constructions, improvements,
and accessories
- List 4.15 - Audited financial statements of Infosel as of June
30, 1999
- List 4.17 - Overdue taxes
- List 4.19 - Defects in patents, registered trademarks and
other intellectual property
- List 4.21 - Defects in inventory
<PAGE> 31
- List 4.23 - Changes in Infosel's financial situation between
June 30, 1999 and October 5, 1999
- List 4.24 - Changes or events between June 30, 1999 and
October 5, 1999
- List 4.25 - List of breached agreements as of September 10,
1999
- List 4.17 - Insurance policies in force
- List 4.28 - List of persons from whom consent is required to
carry out the Purchase and Sale Agreement
- List 4.29 - Certain interests
Copies of the annexes not included herein will be provided upon request.
2
<PAGE> 1
Exhibit 2.6
NON-COMPETITION AND COOPERATION AGREEMENT
Non-Competition and Cooperation Agreement, entered into on this fifth day of
October of 1999, [by] Mr. Alejandro Junco De la Vega, in his own right and
representing the companies listed in Appendix A which, signed by the Parties, is
attached to this Agreement (hereinafter "Grupo Reforma") and Terra Networks
Mexico, S.A. de C.V., a Mexican corporation represented by Mr. Arturo de Jesus
Galvan Contreras (hereinafter "Terra") in accordance with the following
declarations and clauses.
DECLARATIONS
I. Grupo Reforma and Terra declare, personally or through their representatives:
A. That on October 5, 1999, Terra entered into a Stock Purchase
Agreement through which Terra acquired from the different companies
of Grupo Reforma and individuals who are shareholders of Informacion
Selectiva S.A. de C.V., a Mexican corporation (hereinafter the
"Subsidiary"), all but one of the shares issued by the Subsidiary.
B. That the Subsidiary carries out, in Mexico and the United States,
activities related to Internet businesses such as "Internet Service
Provider" ("ISP" or Internet access provider)," "Portal" (Internet
site with comprehensive electronic content, communication,
community, and business services, both "Business to Consumer" and
"Consumer to Consumer"), Electronic Financial Information Services
(defined later), and electronic "Business to Business" services, all
focused on residential, "Small Office, Home Office" ("SOHO"),
financial and corporate markets.
C. That they wish to enter into this Agreement to define the
obligations with respect to non-competition, confidentiality, and
cooperation among Terra, its shareholders or subsidiaries, and Grupo
Reforma, stemming from or related to the different transactions
recently entered into between Grupo Reforma and Terra, pursuant to
the following Definitions and Clauses.
II. Terra declares, through its representative:
A. That it is a Mexican corporation whose line of business includes,
but is not limited to, Internet businesses for residential and
"Small Office, Home Office" ("SOHO") segments, known as "ISP"
(Internet access provision), and "Portal" (Internet site with
comprehensive electronic content, communication, community, and
business services, both "Business to Consumer" and "Consumer to
Consumer"), Electronic Financial Information Services (defined
later), and electronic
[handwritten] illegible
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"Business to Business" services, all focused on residential, SOHO,
financial, and corporate markets in Mexico and the United States.
B. That it is interested in formalizing this Agreement (hereinafter the
"Agreement") to govern the non-competition of the previous owners of
Infosel, pursuant to the terms and conditions specified herein.
III. Grupo Reforma declares through its representative:
A. That Mr. Alejandro Junco de la Vega owns the majority of shares of,
or exercises control by different methods over, the corporations
identified on the list which, signed by the Parties, is attached as
Appendix A.
B. That he wishes to enter into this Agreement to ensure that during
its term it [Grupo Reforma] shall not compete with Terra, its
shareholders or subsidiaries in the Business which is the
Subsidiary's [Corporate] Purpose.
DEFINITIONS
For purposes of this Agreement, barring express indications to the contrary, the
terms, phrases, and words listed below shall have the meanings given:
"ASC" means ASC Asociados en Consultoria, S.C., a Mexican professional
partnership currently providing services to the Subsidiary.
"Business to Business" means electronic business activities conducted between
companies through the Internet.
"Business to Consumer" means electronic business activities conducted between
companies and consumers through the Internet.
"Agreement" means this Non-Competition and Cooperation Agreement.
"Consumer to Consumer" means electronic business activities conducted between
consumers through the Internet.
"Controlling Company" shall mean any company that owns the majority of the
shares of another company to which this term refers [sic].
"Affiliates" [means] any companies with a common Controlling Company.
"Grupo Reforma" is used in this contract to jointly designate (i) Mr. Alejandro
Junco de la Vega, (ii) the companies controlled by him and identified in the
[handwritten] illegible
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list attached as Appendix A, and (iii) the professional partnerships,
corporations, or legal entities of any nature and nationality over which Mr.
Alejandro Junco de la Vega exercises control by any means during the term of
this Agreement.
"Confidential Information" shall have the meaning set forth in Clause 3.1 of
this Agreement.
"Internet" means the network comprised of millions of computers or servers
interconnected at the worldwide level by telephonic or other cabling, including
compatible digital communication protocols, and constituting a bidirectional and
interactive medium of electronic interchange and distribution of digital
materials such as text and hypertext, sound, video, animation, and software, as
well as electronic mail services, access to information databases, electronic
business, inquiry services, and general communication services, among other
applications.
"Mexico" means the United Mexican States.
"Excluded Businesses" means the businesses carried out by the current or future
Grupo Reforma newspapers, consisting of offering, on their Internet sites,
various news and business content, including that relative to world news and
editorials regarding politics, the economy, finance, sports, entertainment,
business, culture and the arts, classified notices, display ads, and those that
are published in said newspapers.
"Business which is the Subsidiary's [Corporate] Purpose" means the Internet
businesses for the residential and "Small Office, Home Office" ("SOHO")
segments, known as "ISP" (Internet access provision), and "Portal" (Internet
site with comprehensive electronic content, communication, community, and
business services, both "Business to Consumer" and "Consumer to Consumer"),
Electronic Financial Information Services (defined later), and electronic
business services, "Business to Business," all focused on residential, SOHO,
financial and corporate markets in Mexico and the United States.
"Parties" means Terra and Grupo Reforma.
"Portal" means an integrating Internet site whose function is to provide
comprehensive electronic content, communication, community, and business
services to Internet users under the Business to Consumer or Consumer to
Consumer modalities.
"Electronic Financial Information Services" means information services
(especially news, prices and quotes, analyses and commentaries, tools and
databases) from the financial markets, collected directly from the sources that
generate them (securities exchanges, brokers, news agencies, etc.), processed
and distributed through telecommunication networks and computer equipment.
[handwritten] illegible
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"SOHO" or "Small Office, Home Office" refers to the segment of Internet users
consisting of small offices or offices in private residences.
"Subsidiary" means Informacion Selectiva, S.A. de C.V., a corporation
established under Mexican law.
"Direct Subsidiary" shall mean any Corporation whose shares are owned by another
corporation to which this term refers [sic].
"Terra" means Terra Networks Mexico, S.A. de C.V., a Mexican corporation,
established pursuant to public document number 6232, executed before Mr. Eduardo
Manautou Ayala, Notary Public Number 123 for the City of Monterrey, Nuevo Leon,
on September 10, 1999, the first certified copy of which is duly entered in the
Public Registry of Property and Commerce of the City of Monterrey, Nuevo Leon,
under Number 2468, unnumbered page, Volume 431, Book No. 3, Second Ledger of
Corporate Documents, Business Section.
"TI" shall have the meaning set forth in the introductory paragraph of this
contract [sic].
CLAUSES
Pursuant to the agreements and pacts set forth herein, the Parties express their
will in the following terms:
First clause. Non-competition agreement.
Each member of Grupo Reforma hereby agrees to not compete with Terra, its
Controlling Company and Subsidiaries with respect to the Business which is
Subsidiary's [Corporate] Purpose for a period of four (4) years in Mexico and
three (3) years in the United States, counting from the date of this Contract.
In accordance with the above, Grupo Reforma jointly and each of its members,
directly or indirectly through any Affiliate, Direct Subsidiary, Controlling
Company, or intermediary shall not, during the aforementioned period, engage in
any of the following actions:
1.1 Business which is the [Corporate] Purpose of Terra and the Subsidiary. Any
activity of a commercial, professional, or any other nature, which is
comparable to any of the activities included as part of the Business which
is the Subsidiary's [Corporate] Purpose.
1.2 Hiring of Personnel. Make work offers [to] or hire as employees, service
providers, or consultants, the people who are currently employees of the
Subsidiary or employees, shareholders, or members of ASC, absent an
agreement to the contrary between the Parties.
[handwritten] illegible
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1.3 Consultancy to Third Parties. Provide advice, consulting, or services of
any kind, paid or unpaid, to any third party that participates directly or
indirectly in activities comparable to any of the activities included as
part of the Business which is the Subsidiary's [Corporate] Purpose, in
Mexico or abroad.
1.4. Shareholdings: Acquire, directly or indirectly, share holdings or capital
of any legal entity, Mexican or foreign, that performs activities
comparable to any of the activities included as part of the Business which
is the Subsidiary's [Corporate] Purpose, except for the acquisition of (i)
shares on stock exchanges when the shareholding does not exceed 5% of the
corporation's capital, or (ii) the case of a Controlling Company or
Affiliate of Terra or the Subsidiary.
The non-competition agreement to which this clause refers is not applicable to
the Excluded Businesses.
Second Clause. Consequences of Competition.
Grupo Reforma acknowledges that the consideration paid by Terra for acquisition
of its interest in the Subsidiary was based in large part on the non-competition
agreement which Grupo Reforma undertakes under the terms of the preceding
Clause. Therefore, the members of Grupo Reforma, jointly and severally, agree to
compensate Terra for any and all damages suffered by Terra as a result of
non-compliance by any member of Grupo Reforma with its non-competition
obligations under the terms of the First Clause of this Agreement.
Third Clause. Confidentiality.
3.1 Confidential Information. Each member of Grupo Reforma acknowledges that
on the basis of its direct relationship in the past with the Subsidiary,
they acquired or could [have] acquired from it: (i) confidential or secret
information, (ii) business information, (iii) technical knowledge, (iv)
information regarding procedures, (v) operating manuals, (vi) software,
(vii) source codes, (viii) systems, (ix) confidential reports, (x) client
lists, (xi) financial information, (xii) business plans, and (xiii) other
information that could be valuable to the Subsidiary (this knowledge and
information shall hereinafter be jointly referred to as the "Confidential
Information").
3.2 Disclosure of Confidential Information. Each member of Grupo Reforma
agrees, jointly and severally, to not disclose, disseminate, communicate,
transmit, or in any other way make Confidential Information available to
third parties. If any of the members of Grupo Reforma fails to comply with
this obligation in any way, the members of Grupo Reforma shall be jointly
and severally liable to Terra for the damages suffered by Terra, its
Controlling Company, or Subsidiaries resulting from such non-compliance.
[handwritten] illegible
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Fourth Clause. Cooperation.
Given the experience of Mr. Alejandro Junco de la Vega in connection with the
Business which is the Subsidiary's [Corporate] Purpose, Mr. Alejandro Junco de
la Vega agrees to cooperate with Terra and its Controlling Company [by
providing] his recommendations and advice, if necessary, to facilitate the
startup of activities of the Subsidiary under its new management.
Fifth Clause. General Provisions.
5.1 Cooperation. Each of the Parties to this agreement shall make its
best effort to perform or ensure the performance of all actions, and
to cooperate with the other Party to this agreement as necessary
therefor; and to execute or ensure the execution, in accordance with
the applicable laws, of whatever is necessary, appropriate, or
advisable to perform and ensure the performance of the operations
provided for by this Contract.
5.2 Waivers. Failure of Grupo Reforma to comply with any of its
obligations or [any of the] agreements set forth herein may be
waived only by Terra in writing. Failure of Terra to comply with its
obligations or [the] agreements set forth herein may be waived only
by Grupo Reforma in writing. Waiver of the obligations of each Party
may only be made with the written consent of the other Party.
5.3 Notifications. All notifications and other communications that are
required or permitted in accordance with this Contract shall be made
in writing and sent to the addressee by telefax, which shall be
confirmed by means of the original document signed by an authorized
representative of the Party making the notification or
communication. These shall be sent by DHL, Federal Express, or
another worldwide express messenger service that offers delivery
times equal to or better than those of the aforementioned companies,
with the understanding that the communication or notification shall
become effective on the date the telefax is sent, but only if the
original signed notification or communication is delivered to the
addressee within two (2) Business Days of the date it is telefaxed.
If the original notification or communication is not received within
said time period, it shall become effective on the Business Day on
which such original notification or communication is delivered. Such
notifications or communications shall in all cases be sent to the
following domiciles:
(i) If addressed to Grupo Reforma:
Lic. Alejandro Junco de la Vega
Washington No. 629 Ote.
64000 Monterrey, N.L.
[handwritten] illegible
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(ii) If addressed to Terra:
Terra Networks Mexico S.A. de C.V.
Oficinas en el Parque - Piso 10
Blvd. Antonio L. Rodriguez 1884 Pte.
64650 Monterrey, Nuevo Leon
Atencion: Secretario del Consejo [Attention: Secretary of the
Board of Directors]
Said names and addresses may be changed by written notification to each of the
above individuals.
The above notwithstanding, the Parties may choose to make any notification or
communication by personal delivery of the respective document to the appropriate
domicile, in which case such communication or notification shall become
effective on the date of its delivery. A signature acknowledging receipt shall
be obtained from the addressee's receiving employee or representative.
5.4 Applicable Laws and Conflict Resolution. This Contract shall be governed
[by] and interpreted under the laws of Mexico.
5.4.1 Any dispute, complaint, or controversy arising as a result of this
Contract or related thereto, or regarding the interpretation or
violation thereof, shall be submitted to arbitration pursuant to the
regulations of the International Chamber of Commerce of Paris, to
the extent that said regulations are not incompatible with this
paragraph. The decision on the arbitrators' award may be approved by
any competent court, or it may be requested that said court approve
the award so that it may be implemented, as appropriate. The request
for arbitration shall be made within a reasonable time counted from
the time the complaint, dispute, or any other question arises, and
in no case shall it be made after the date on which the institution
[addressing] the legal or equity proceedings based on such
complaint, dispute, or any other question, has prescribed under the
applicable statute of limitations.
5.4.2 The panel shall be comprised of three arbitrators. Each of the
Parties to this Contract shall name one of said arbitrators, and the
two arbitrators so named shall designate a third: with the
understanding, however, that if the two arbitrators fail to reach
agreement regarding naming the third arbitrator, either of the
arbitrators may request that the International Chamber of Commerce
of Paris make the designation;
[handwritten] illegible
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5.4.3 The place of arbitration shall be Dallas, Texas, and it shall be
conducted in Spanish and/or English.
5.4.4 For the present, each Party waives the requirement for
hand-delivered notification of arbitration, and agrees that
notification may be made in writing, by registered mail, with
acknowledgement of receipt, to the address provided in this
Contract, and any request made in this manner shall be considered
effected on the tenth Business Day after such request has been
mailed.
5.4.5 Any judicial proceeding brought as support for the arbitration with
respect to this Contract, including precautionary measures, shall be
submitted to the competent judicial authority. Each Party to this
Contract (a) accepts, generally and unconditionally, the exclusive
competence of said court and any related appeals court, and
irrevocably waives any objection it may have, now or in the future,
with respect to the forum of any litigation, legal action, or
proceeding brought in said courts, or [objection with respect to]
said courts being an inappropriate forum.
5.5 Copies. This contract may be signed simultaneously in one or more copies,
each of which shall be considered an original, but all together they shall
constitute a single unique instrument.
5.6 Headings. The headings of this Contract's different clauses are for
reference purposes only, and shall not affect the meaning or
interpretation of this Contract in any way.
5.7 Indivisible Contract. This Contract, including its appendices and the
documents mentioned herein, constitute the entire Contract and the
agreements of the Parties thereto with respect to its purpose. There are
no restrictions, promises, declarations, absolute warranties, guarantees,
or commitments other than those expressly stipulated or mentioned herein.
This Contract replaces all previous contracts and agreements between the
Parties with respect to said purpose.
5.8 Amendments and Modifications. This Contract may only be amended or
modified by written agreement of the Parties.
5.9 Mandatory nature: Benefits. This Contract shall be to the benefit of the
Parties thereto and their respective successors and assignees, and shall
be obligatory for them; nothing expressly or implicitly included in this
Contract is intended to confer on any person other than the Parties
thereto
[handwritten] illegible
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or their respective successors and assignees, any right, option,
obligation, or responsibility under or resulting from this Contract.
5.10 Transfer. This Contract may not be transferred by any of the Parties
thereto, except with the prior written agreement of the other Parties
thereto.
IN WITNESS WHEREOF, the Parties have signed this Contract on the date shown at
the beginning hereof.
[handwritten: TERRA NETWORKS MEXICO, S.A. de C.V.]
[illegible signature]
Mr. Arturo de Jesus Galvan Contreras
General Director
GRUPO REFORMA:
[illegible signature]
Mr. Alejandro Junco de la Vega
As an individual and representing the companies
comprising Grupo Reforma, as defined herein.
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APPENDIX A
Appendix A of the Non-Competition and Cooperation Agreement, entered into on
this fifth day of October of 1999, by Mr. Alejandro Junco De la Vega, in his own
right and representing the companies listed below as members of Grupo Reforma
and Terra Networks Mexico, S.A. de C.V.
Editora El Sol, S.A. de C.V.
Ediciones Del Norte, S.A. de C.V.
Servicios Motociclistas, S.A. de C.V.
Inmobiliaria Macro, S.A. de C.V.
Consorcio Interamericano de Comunicacion, S.A. de C.V.
Apoyo Aereo, S.A. de C.V.
Comunicacion Integrada de Occidente, S.A. de C.V.
Inversiones Grupo Reforma, S.A. de C.V.
[handwritten] illegible
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Exhibit 2.7
Final Version
AGREEMENT FOR THE PURCHASE/SALE OF CORPORATE STOCK
In accordance with the following recitals, definitions, and clauses, this
Agreement for the Purchase/Sale of Corporate Stock has been entered into this
5th day of October, 1999, between the following parties: Bidasoa, B.V., a Dutch
corporation, represented by ATC Management B.V., a Dutch corporation,
represented by Guido Nieuwenhuizen and Dirk Stolp (hereinafter referred to as
the "Seller") and Telefonica Servicios y Contenidos por la Red, S.A., a Spanish
corporation, represented by Juan Perea Saenz de Buruaga and Jose Antonio Sanchez
(Sole Administrator and CEO) (hereinafter referred to as "Teleline" or the
"Purchaser"). Also appearing here is Terra Networks, S.A., formerly named
Telefonica Interactiva, S.A. (hereinafter referred to as "Terra Networks" or
"TN"), a Spanish corporation, represented by Juan Perea Saenz de Buruaga.
RECITALS
I. Through their representatives, Teleline, the Seller, and TN hereby declare
that:
A. On September 10, 1999, the Seller and TN, the holding company of the
Purchaser, joined together as founding stockholders to form a
Mexican business corporation called Terra Network, S.A. de C.V.
(hereinafter referred to as "Terra"), for the purpose of
participating jointly in Internet business activities as an
"Internet Service Provider" ("ISP" or Internet access provider) and
as a "Portal" (Internet site with integrated content, communication,
community, and electronic commerce services, including both
"Business-to-Consumer" and "Consumer-to-Consumer" services),
Financial Information Services via Electronic Media (which shall be
defined below) and "Business-to-Business" electronic commerce
services, all of which services focus on residential, "Small Office,
Home Office" ("SOHO"), financial, and corporate markets, through
Informacion Selectiva, S.A. de C.V. (hereinafter referred to as the
"Subsidiary"), a corporation whose shares, except for one, are owned
by Terra Network, S.A. de C.V.
B. On the same date, TN and the Seller held an extraordinary and
ordinary shareholders' meeting for the shareholders of Terra, in
which the shareholders resolved, among other things, to change the
name of the corporation to Terra Networks Mexico, S.A. de C.V. A
capital increase was ordered in the amount of 564,378,000.00 pesos
(five hundred and sixty-four million, three hundred and
seventy-eight thousand pesos), an amount equivalent to
US$60,000,000.00 (sixty million dollars) at the exchange rate of
9.4063 pesos per US$1.00, as published in the Official Gazette of
Mexico,
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and paid the 25% (twenty-five percent) of said increase that was
represented by all of the Series A shares, which had full voting
rights and were issued for the purpose of said increase, and (ii) by
TN, which subscribed and paid the 75% (seventy-five percent) of said
increase that was represented by all of the Series B shares, which
had restricted voting rights and were issued for the purpose of the
increase.
II. Through its legal representatives, the Purchaser hereby declares that:
A. Teleline is a Spanish corporation whose line of business includes
but is not limited to providing Internet access services, Portal
services, Financial Information Services via Electronic Media (which
shall be defined below) and "Business-to-Business" electronic
commerce services, all of which services focus on residential,
"Small Office, Home Office" ("SOHO"), financial, and corporate
markets. Teleline wishes to increase its share in said market within
Mexico for the purpose of combining the aforementioned businesses
with similar ones worldwide in the near future.
B. Teleline is a 100% subsidiary corporation of TN and TN is in the
process of effectuating an initial public offering and sale of its
shares (IPO) and the subsequent listing of said shares on the
Spanish stock exchanges, NASDAQ, and the stock exchanges of other
countries.
C. The Purchaser wishes to complete the legal formalities of this
Agreement for the Purchase/Sale of Corporate Shares (hereinafter
referred to as the "Agreement") in order to acquire all of the
Series A shares of common stock of Terra in accordance with the
terms and conditions specified herein.
III. Through its legal representative, TN hereby declares that:
A. TN is a Spanish corporation whose line of business includes but is
not limited to providing Internet access services, Portal services,
Financial Information Services via Electronic Media (which shall be
defined below) and "Business-to-Business" electronic commerce
services, all of which services focus on residential, "Small Office,
Home Office" ("SOHO"), financial, and corporate markets. Teleline
wishes to increase its share in said market within Mexico for the
purpose of combining the aforementioned businesses with similar ones
worldwide in the near future and effectuating an initial public
offering and sale of its shares (IPO), as well as the subsequent
listing of said shares on the Spanish stock exchanges, NASDAQ, and
the stock exchanges of other countries.
B. TN is the registered owner and holder of all of the Series B
registered preferred shares having limited voting rights and
representing 75% of the capital stock of Terra.
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C. TN wishes to enter into this Agreement in order to join with
Teleline in warranting each and every obligation that Teleline shall
assume under the terms and conditions hereof.
D. TN's representative has sufficient legal powers to bind TN to the
terms and conditions hereof.
IV. Through its legal representative, the Seller hereby declares that:
A. The Seller is a Dutch corporation duly formed in accordance with the
laws of the Netherlands.
B. The Seller is the registered owner and bearer of all of the Series A
registered shares of common stock having full voting rights and
representing 25% of the capital stock of Terra (hereinafter referred
to as the "Shares").
C. As owner of 100% of Terra's Shares having full voting rights, the
Seller has confirmed that (i) on this date, Terra is the owner of
all but one of the shares representing the capital stock of the
Subsidiary; and (ii) on this date, the Subsidiary has all of the
qualities that are necessary in order to efficiently and effectively
carry out the business forming the Corporate Purpose of Terra and
the Subsidiary, which shall be defined below.
D. The Seller wishes to enter into this Agreement with the Purchaser in
order to transfer all of the Shares to the Purchaser once the
conditions specified herein have been met.
V. Through their legal representatives, the parties hereby declare that this
Agreement contains the terms and conditions under which the Seller shall
sell, and the Purchaser shall acquire from the Seller on the Closing Date (as
defined below), 100% (one hundred percent) of the Series A registered shares
of common stock having full voting rights, which as a whole represent 25% of
the capital stock of Terra.
DEFINITIONS
For the purposes of this Agreement, unless otherwise expressly provided herein,
the terms, phrases, and words listed below shall have the meaning indicated:
"Shares" refers to all of the registered shares of Series "A" common stock
issued by Terra, having a par value of 10.00 pesos each (ten pesos) and full
voting rights, represented by Stock Certificates numbers 1-A, 2-A, and 3-A,
issued by Terra. Said shares have been fully subscribed and paid up by the
Seller and represent 25% of the capital stock of Terra.
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"Necessary Assets" shall have the meaning specified in Clause 3.4 of this
Agreement.
"Advance Payment" refers to the amount of US$15,000,000.00 (fifteen million
dollars) in cash that the Purchaser pays to the Seller on the terms and
conditions of Clause 1.2 hereof.
"Spanish Stock Exchanges" refers to the financial markets on which listed
securities are purchased and sold in Spain and are controlled by the Spanish
Securities and Exchange Commission.
"Business-to-business" refers to electronic business transactions that are
carried out between companies over the Internet.
"Business-to-consumer" refers to electronic business transactions that are
carried out between companies and consumers over the Internet.
"Closing" refers to the transaction through which the Seller transfers full
ownership of the Shares, free and clear of any and all liens and encumbrances on
ownership, to the Purchaser, and the transaction through which the Purchaser
pays the Remaining Price (which shall be defined below).
"Purchaser" shall have the meaning indicated in the introductory paragraph
hereof.
"Agreement" shall have the meaning indicated in the introductory paragraph
hereof.
"Necessary Agreements" shall have the meaning specified in Clause 3.5 hereof.
"Consumer-to-consumer" refers to electronic business transactions that are
carried out between consumers over the Internet.
"Share Management Deposit Agreement" refers to the Share Management Deposit
Agreement which, on the terms and conditions of the document marked Exhibit A,
is attached hereto as provided in Clause 2.4.5 hereof.
"Share Escrow Agreement" refers to the Share Escrow Agreement executed by the
Parties on the date of the signing hereof and in accordance with the terms and
conditions of Clause 2.6.
"Holding Company" shall refer to any corporation owning at least ninety-nine
percent (99%) of the shares of another corporation than the one to which this
term refers.
"Income Tax Returns" refers to all statements, reports, calculations,
informational statements, and statements of any nature which the Subsidiary must
submit
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to any governmental agency or office with respect to the revenues, properties,
or operations of the Subsidiary.
"Depository" refers to Banco Argentaria, a Spanish financial institution.
"Business Day" or "Business Days" refers to any day other than Saturday, Sunday,
or a day on which the banks are permitted to close in any of the following
cities: Madrid, Spain; Monterrey, Nuevo Leon, Mexico; or Amsterdam, Netherlands.
"Dollar" or "dollars" shall refer to the legal tender of the United States of
America.
"Euro" or "Euros" refers to the legal tender of Spain and the European Economic
Community.
"Financial Statements" shall refer to the financial statements of Terra and the
Subsidiary as referred to in Clause 3.14.1 and the following provisions hereof.
"Closing Date" refers to the date on which the Closing is completed in
accordance with the provisions of Clause Five hereof.
"Subsidiary Corporation" shall refer to any corporation whose shares are owned
in at least ninety-nine percent (99%) of another corporation, which in turn owns
at least ninety-nine percent (99%) of the shares of the corporation to which
this term refers.
"Internet" refers to the network formed by millions of computers or servers that
are interconnected worldwide by means of telephone cables or by other means and
that share compatible digital communication protocols and constitute a
bi-directional and interactive mode of electronic exchange and distribution of
digital materials, such as text and hypertext, sound, video, animation, and
software, as well as electronic mail services, access to information databases,
electronic commerce, consulting services, and communication services in general,
among other applications.
"IPO" or "Initial Public Offering" refers to the initial public offering and
sale, whether primary or secondary, of TN's shares, and their subsequent listing
on any of the securities markets or exchanges of Spain, the United States of
America, or any other country, as well as on NASDAQ.
"Mexico" refers to the United States of Mexico.
"NASDAQ" refers to the National Association of Securities Dealers Automated
Quotations, an information system operated by the National Association of
Securities Dealers of the United States of America, which provides listings of
the prices of securities that are traded outside of established securities
exchanges (over-the-counter) by securities dealers.
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Final Version
"Corporate purpose of Terra and the Subsidiary" refers to Internet services for
the residential and "Small Office, Home Office" ("SOHO") segments, known as
"ISP's" (Internet service providers), and a "Portal" (Internet site with
integrated content, communication, community, and electronic commerce services,
including both "business-to-consumer" and "consumer-to-consumer" services),
Financial Information Services via Electronic Media (which shall be defined
below) and "business-to-business" electronic commerce services, all of which
services focus on residential, SOHO, financial, and corporate markets in Mexico.
"Parties" refers to the Seller and the Purchaser.
"Peso" or "pesos" refers to the legal tender of Mexico.
"Business Plan" refers to any plan or plans that have been or will be agreed to
by Terra and TN concerning investments and the implementation of the Corporate
Purpose of Terra and the Subsidiary. Said plan or plans shall include but shall
not be limited to (i) the operating aspects of the business, (ii) publicity
campaigns, (iii) the acquisition of the accounts of customers and other
companies, and (iv) the financial requirements of the foregoing.
"Portal" refers to an integral Internet site that functions to provide Internet
users with integrated content, communication, community, and electronic commerce
services in the form of business-to-consumer or consumer-to-consumer services.
"Remaining Price" refers to the amount of US$220,000,000.00 (two hundred and
twenty million dollars).
"Judicial Proceedings" shall have the meaning specified in Clause 3.10 hereof.
"Financial Information Services via Electronic Media" refers to information
services (especially but not limited to news, prices and quotes, analyses and
commentaries, tools, and databases) pertaining to the financial markets in which
such information is gathered directly from the sources that generate them (stock
exchanges, financial intermediaries, news agencies, etc.), which are processed
and distributed via telecommunication networks and computer equipment.
"SOHO" or "Small Office, Home Office" refers to the segment of Internet users
consisting of small offices or offices located in private homes.
"Subsidiary" shall have the meaning indicated in Statement I.A hereof.
"Direct Subsidiary" shall refer to any corporation whose shares are owned in at
least ninety-nine percent (99%) by another corporation than the one to which
this term refers.
"LIBOR Rate" refers to a simple annual interest rate equivalent to (i) the
annual rate appearing on page 3750 of Telerate's screen (or on any page
substituted therefor), as the compound rate offered for inter-bank deposits in
London for the period of
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Final Version
time closest to the period for which the rate is to be applied as shown below
the heading "USD" at 11:00 AM (London time), two (2) Business Days before the
date on which the New Remaining Price is to be paid; or (ii) if the rate
specified in section (i) cannot be determined, then the annual rate equivalent
to the arithmetic mean of the rates shown on the page called the "LIBO" page on
the Reuters Money Rates Services Monitor (or any page substituted therefor) at
approximately 11:00 AM (London time) two (2) Business Days before the date on
which the New Remaining Price is to be paid.
"Telefonica, S.A." refers to Telefonica, S.A., a Spanish corporation, any
subsidiary corporation or other subsidiary thereof, or any corporation held by
Telefonica, S.A., the holder of shares representing the capital stock of TN.
"Terra" refers to Terra Networks Mexico, S.A. de C.V., a Mexican corporation
formed in accordance with Notarial Document No. 6,232, which was executed before
Eduardo Manautou Ayala, Notary Public No. 123 for the City of Monterrey, Nuevo
Leon, on September 10, 1999. The first certified copy of that notarial document
was duly recorded in the Public Registry of Real Estate and Commerce of the City
of Monterrey, Nuevo Leon, under No. 2468, Page (no number), Vol. 431, Book No.
3, Second Ledger, Documents of Commercial Associations, Commercial Section.
"TN" and "Terra Networks" refers to Terra Networks S.A., a Spanish corporation
whose line of business includes but is not limited to providing Internet access
services (ISP), Portal services, Financial Information Services via Electronic
Media (which shall be defined below) and "Business-to-Business" electronic
commerce services, all of which focus on the residential, SOHO, financial, and
corporate markets. This corporation seeks to effectuate an initial public
offering and sale of its shares (IPO) and the subsequent listing of said shares
on the Spanish Stock Exchanges, NASDAQ, or the stock exchanges of other
countries.
"Dollar/Euro Exchange Rate" refers to the rate of exchange between the Dollar
and the Euro, as published by the Banco de Espana [Bank of Spain] for any
particular Business Day.
"Seller" shall have the meaning specified in the introductory paragraph hereof.
CLAUSES
By virtue of the agreements and covenants set forth herein, the parties have
agreed to the following terms and conditions:
FIRST CLAUSE: Purchase/Sale of Shares
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1.1 Sale of the Shares. Subject to the conditions precedent provided for in
Clauses Seven and Eight hereof and the condition that the IPO occur
during 1999, the Seller agrees to sell and the Purchaser agrees to buy
100% (one hundred percent) of the Shares, free and clear of any and all
liens, encumbrances, or other burdens, along with each and every
corporate and financial right inherent in said Shares.
1.2 Purchase Price of the Shares. The Purchaser agrees to pay the amount of
US$235,000,000.00 (two hundred and thirty-five million dollars) in
consideration of the Shares to be transferred to the Purchaser on the
terms and conditions stated in the foregoing paragraph. The Purchaser
agrees to pay said consideration by means of (i) delivery of the Advance
Payment by the Purchaser, or for the Purchaser's account, to the Seller,
at the same time as the signing of this Agreement, and by signing this
Agreement, the Seller declares to have received to the Seller's complete
satisfaction; and (ii) the delivery of the Remaining Price to the Seller
on the terms and conditions hereof and at the same time as the transfer
of the ownership of the Shares to the Purchaser, said Shares being free
and clear of any and all liens, encumbrances, or other restriction on
ownership, and once the conditions precedent to which the purchase/sale
of the Shares are subject have been met.
SECOND CLAUSE: Form of Payment of the Purchase Price and Seller's Obligations
In consideration of the transfer of the ownership of the Shares on the terms and
conditions hereof, besides having made the Advance Payment to the Seller's
complete satisfaction, the Purchaser hereby agrees to pay the Seller the
Remaining Price in the following manner:
2.1 Term for Effectuating the Payment. The Purchaser agrees to pay the
Remaining Price, on the terms and conditions hereof, on the Closing Date
and at the same time that the ownership of the Shares is transferred to
the Purchaser as provided for in Clause Five hereof.
2.2 Remaining Price to be Paid. The Purchaser agrees to pay the Remaining
Price on the Closing Date by transferring to the Seller immediately
available funds in Dollars. Said payment shall be made to the account
designated by the Seller in writing for this purpose.
2.3 Shares in Escrow as Warranty of Performance. In order to warrant the
Seller's performance of (i) the Seller's obligation to transfer
ownership of the Shares to the Purchaser upon the Closing in accordance
with the terms and conditions hereof, and (ii) the Seller's obligation
to reimburse the Advance Payment to the Purchaser in the event provided
for in the last paragraph of Clause Seven hereof, the Parties are
executing the Share Escrow Agreement at the same time that they execute
this Agreement. By means of the Share Escrow Agreement, stock
certificate
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Final Version
no. 2-A is being delivered to the Purchaser in escrow. Said stock
certificate represents fifty percent (50%) of the Series A shares issued
by Terra for the purpose of the capital increase described in Recital I
B hereof and was duly endorsed as a warranty to the Purchaser or TN.
Thus, said shares are in escrow for the purpose of warranting the
obligations specified herein until the Closing Date, on which the
ownership of said shares shall be delivered to the Purchaser. The escrow
arrangement agreed to herein shall in no way limit any other right of
the Purchaser to demand the Seller's performance of Seller's obligations
in accordance herewith and subject to the applicable laws.
2.4 Delay in Closing. If the Closing is not effectuated during the period
specified in Clause 5.1 hereof for any reason attributable to the
Purchaser, then the Purchaser shall pay the Seller default interest
calculated on the basis of the Remaining Price and determined by
applying the LIBOR Rate plus six (6) points during the default period.
If the Closing is not effectuated during the period specified in Clause
5.1 for any reason attributable to the Seller, then the Seller shall
reimburse the Purchaser for any and all damages the Purchaser incurs as
a result of said default.
THIRD CLAUSE: Sellers' Representations and Warranties
On this date, the Seller hereby represents and warrants the following:
3.1 Ownership of the Shares. The Seller is and until the Closing Date shall
be the sole lawful owner of the Shares, which the Seller has subscribed
and fully paid up and are free of any and all liens, encumbrances, or
restrictions, except the restrictions imposed on the terms and
conditions hereof. Furthermore, at the moment in which the Shares are
delivered in the manner provided for herein, the Purchaser shall acquire
the full and irrevocable ownership of said Shares, free and clear of any
and all liens, encumbrances, or restrictions.
3.2 Formation. Terra and the Subsidiary are duly formed corporations
existing validly and in compliance with the laws of the Republic of
Mexico and the state and county in which they are domiciled.
3.3 Powers, Authorizations, and Licenses. The Subsidiary has all of the
powers, authorizations, and licenses that are necessary in order to
carry out the business forming the Corporate Purpose of Terra and the
Subsidiary.
3.4 Necessary Assets to Carry out the Business Forming the Corporate Purpose
of Terra and the Subsidiary. The Subsidiary has full ownership; free and
clear of any liens, of all of the tangible and intangible assets
specified in List 3.4, which is attached hereto, as well as all other
tangible and intangible assets that are necessary in order to carry out
the business forming the Corporate Purpose of Terra and the Subsidiary
(hereinafter referred to as the "Necessary Assets"). The Subsidiary has
said ownership as of the date hereof.
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3.5 Necessary Agreements to Carry out the Corporate Purpose of Terra and the
Subsidiary. The Subsidiary has duly completed the legal formalities
pertaining to the execution of all of the agreements, contracts, and
other proceedings described in List 3.5, which is attached hereto, as
well as all other agreements, contracts, and other proceedings that are
necessary for the purpose of carrying out the Corporate Purpose of Terra
and the Subsidiary (hereinafter referred to as the "Necessary
Agreements"). All such agreements are in full force and effect as of the
date of the signing hereof, and the Subsidiary has not breached or
defaulted on any of them.
3.6 Corporate Power. The Subsidiary has the powers and authorities that are
necessary in order to execute and perform each and every one of the
Necessary Agreements, as well as to carry out the transactions provided
for thereby. The Subsidiary's execution, completion of the legal
formalities, and performance of each and every one of the Necessary
Agreements have been duly authorized by all of the corporate resolutions
that may be required.
3.7 Capital Stock. The shares of Terra and the Subsidiary that have been
issued and are outstanding are solely those specified in List 3.7
hereof. Moreover, said shares have been issued effectively, are fully
subscribed and paid up, and are free of any and all liens. Except for
the rights created in accordance herewith, there are no pending options,
warranties, other rights (including rights of conversion or first
refusal), or any agreements for the purchase or acquisition of the
Shares.
3.8 Registered Holders of the Shares. As evidenced in the Shareholders'
Register of Terra on the date hereof and on the Closing Date, all of
Terra's shares are the property of and are registered in the name of the
Purchaser and The Seller in the amounts indicated beside the name of
each of these parties in List 3.8 hereof.
3.9 Subsidiaries. Terra is the owner of all but one of the shares
representing the capital stock of the Subsidiary. Said shares are fully
subscribed and paid up and are free and clear of any and all liens and
encumbrances. Except for the corporations identified in List 3.9 hereof,
the Subsidiary has no other subsidiaries, does not own shares in any
other corporation, and is not a partner or associate of any professional
partnership, charitable or non-profit organization, or joint venture
entity.
3.10 Ongoing Litigation. With the exception of those cases indicated in List
3.10, no actions, lawsuits, or governmental, judicial,
employment-related, tax, administrative, or arbitration proceedings
("Judicial Proceedings") are in progress or have been threatened against
or regarding Terra or the Subsidiary.
3.11 Lists Concerning the Business Forming the Corporate Purpose of Terra and
the Subsidiary. On the date hereof, the Seller has delivered or made
available to the Purchaser (a) complete, correct, and detailed
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lists in a manner and format that the Purchaser finds reasonably
acceptable, describing--with respect to the Business Forming the
Corporate Purpose of Terra and the Subsidiary--the property, assets, and
liabilities of Terra and the Subsidiary, as well as each and every one
of the items in the categories mentioned below, and (b) true and
complete copies of the documents and other materials referred to in said
lists:
3.11.1 List 3.11.1 Agreements, contracts, commitments, and offers pending as of
this date (other than those specified in List 3.11.4), including but not
limited to standing purchase orders with suppliers, as well as pending
purchase orders; leases (other than those specified in List 3.11.8),
sureties for leases; licenses, franchises, distribution contracts,
commercial agency contracts, service contracts, agency contracts, or any
other contract; and furthermore including, with respect to each and
every one of the items contained in each category mentioned above, a
specification as to whether the consent of any third party is required
in order to carry out the transactions envisioned hereby;
3.11.2 List 3.11.2 List of the tangible assets that are the property of Terra
and the Subsidiary (other than those specified in List 3.11.8),
including equipment, tools, furnishings and fittings, furniture,
improvements, vehicles, as well as buildings and accessories, with a
description of the location of said assets;
3.11.3 List 3.11.3 A summary of (a) any and all insurance policies in force
(other than those to be specified in List 3.11.4) and without limiting
the scope thereof, any and all insurance policies that cover the civil
liability of the Subsidiary, its personnel, properties, buildings,
machinery, furniture, accessories, and operations, indicating for each
policy the name of the insurer, type of coverage, term of the policy,
liability limits, and annual premium, and (b) any and all claims pending
for Terra and the Subsidiary concerning any damages or losses with
respect to goods or revenues of which notice has been given to the
insurers.
3.11.4 List 3.11.4 Regarding the Subsidiary's employees:
A. The name, current annual compensation (including bonuses and
commissions), position, current base-salary wage scale, bonuses
received, separation payments received, and leave pay for each and
every one of the Subsidiary's current employees; organizational
charts pertaining to the Subsidiary; collective bargaining
agreements, or contracts involving any other employment
relationship, whether oral or written; service contracts, management
contracts, consulting contracts, as well as confidentiality
agreements or other agreements that protect the Subsidiary's
systems, procedures, or data, whether oral or
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written; any and all employee manuals; and any and all reports
and/or plans that have been developed or adopted in accordance with
the applicable labor laws.
B. Any employee benefit plan, profit-sharing plan, stock acquisition
plan, stock option plan, benefit plan, bonus plan, retirement plan,
and any other agreement, plan, or arrangement for deferred
compensation, whether sponsored or maintained by the Subsidiary or
to which the Subsidiary makes contributions;
C. The value of the Subsidiary's retirement liabilities that are not
covered, including health protection, and that are derived from any
plan, fund, or arrangement pertaining to those indicated in
subsections (A), (B), or (C) of this Clause; and
D. Copies of all collective bargaining agreements to which the
Subsidiary is a party.
3.11.5 List 3.11.5 Reimbursable deposits, prepaid expenses, and deferred
charges pertaining to the Subsidiary.
3.11.6 List 3.11.6 Any and all loans or advance payments granted by the
Subsidiary to any person;
3.11.7 List 3.11.7 Liens, encumbrances, restrictions, claims, and warranties
regarding the business, assets, and property of the Subsidiary.
3.11.8 List 3.11.8 Each and every piece of real estate leased by the
Subsidiary.
3.11.9 List 3.11.9 Trademark registrations, applications, and notices of
violations thereof, service mark registrations (the list shall include
but shall not be limited to an indication of the period of use of each
trademark and service mark, identification of the product or products on
which each of the trademarks and service marks are used, as well as the
registration numbers, recording and renewal dates, and dates of
declaration of use), patents and patent applications, copyrights and
copyright applications (including information on the expiration dates of
all of the above, if applicable), currently constituting the property,
in whole or in part, of the Subsidiary; as well as all trademark
licenses, service mark licenses, copyright licenses, royalty agreements,
patent licenses, assignments, conferrals, and agreements with employees
or third parties related in whole or in part to the disclosure,
assignment, registration, or granting of trademarks, service marks,
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copyrights, inventions, discoveries, improvements, processes, formulas,
trade secrets, or other information pertaining to the Subsidiary.
3.11.10 List 3.11.10 Any and all ongoing lawsuits, governmental or regulatory
proceedings, or labor disputes involve or might involve the Subsidiary's
board members or officers.
3.11.11 List 3.11.11 All federal, state, and local licenses and permits, as well
as those from foreign governments, that are necessary in order to carry
out the business forming the Subsidiary's Corporate Purpose or for the
purposes of using and occupying the real estate owned by the Subsidiary
or the properties leased thereby ("Permits"); all authorizations,
orders, federal, state, and local, foreign, and court decrees that
relate to the Subsidiary, pursuant to which the Subsidiary operates or
is bound; all inspection reports concerning the Subsidiary and its
properties as of this date, in accordance with all applicable laws and
regulations, whether federal, state, or local, regarding health and
safety; as well as copies of everything mentioned above and the
corresponding applications;
3.11.12 List 3.11.12 Any and all loans or credits extended to the Subsidiary by
any national or foreign lending institution or any other third party,
along with a specification as to whether the consent of any third party
is required in order to carry out the transactions envisioned hereby;
3.12 There are no liens. Except as indicated in List 3.12, the Subsidiary is
the lawful owner of all of its properties (other than Real Estate),
assets, and other entitlements that do not constitute real estate, free
and clear of any liens and encumbrances.
3.13 Real Estate. Except as indicated in List 3.13, all buildings,
constructions, improvements, and accessories that are used in order to
carry out the business forming the Subsidiary's Corporate Purpose and
are owned or leased by the Subsidiary are in sufficiently good order and
repair to allow the business forming said Corporate Purpose to continue
to be carried out in a manner consistent with past practices. Moreover,
normal wear and tear excepted, there are no defects in said buildings,
constructions, improvements, and accessories that would hinder their
daily use by the Purchaser or subject the Purchaser to any liability
under the applicable laws.
3.14 Financial Statements.
3.14.1 The Seller has provided the Purchaser with a copy of the most recent
audited balance sheets, income statements, shareholders' equity
statements and cash flow statements of the Subsidiary (collectively
referred to as the "Financial Statements"), on a consolidated basis with
respect to each of said Financial Statements. Unless otherwise indicated
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therein, said financial statements were complete and correct, were
developed in accordance with the generally accepted accounting
principles in Mexico, were used consistently during the periods
indicated, and fairly reflect the financial situation of the Subsidiary
on said dates;
3.14.2 There are no liabilities, debts, obligations, or claims of any kind
against the Subsidiary, whether absolute or contingent, with the
exception of (i) to the extent indicated or for which there is a reserve
in the Subsidiary's balance sheet on June 30, 1999; (ii) any
liabilities, debts, obligations, or claims specifically described and
identified as an exception to this section in any of the Lists delivered
to the Purchaser in accordance herewith; (iii) any liabilities, debts,
obligations, or claims that have been incurred as of June 30, 1999 in
the Subsidiary 's normal course of business and that are consistent with
past practices; or (iv) pending purchase or sale orders or contracts for
the delivery of services in the normal course of business, provided that
Terra or Subsidiary is not in breach of any of them.
3.14.3 The Seller has provided the Purchaser with a copy of Terra's balance
sheet as of the date of the execution hereof. Said balance sheet was
duly certified by the Subsidiary's Manager of Finance and accurately
reflects Terra's financial status immediately prior to the execution
hereof.
3.15 Tax Issues. For purposes of this Agreement, "Tax or Taxes" shall refer
to any income, gross revenue, profit, franchise, license, transfer,
sales, use, ad valorem, customs, payroll, withholding, employment,
occupation, property (real estate or chattels), use or value-added tax,
as well as other taxes, rights, fees, contributions, or withholdings,
including but not limited to Social Security taxes, Retirement Savings
System, and Infonavit [National Institute for Workers' Housing]
(including interest, penalties, and additions to such items).
3.16 Except as indicated in List 3.16:
3.16.1 All Income Tax Returns have been submitted timely;
3.16.2 All Taxes indicated on the Income Tax Returns have been paid
timely;
3.16.3 The Income Tax Returns accurately and completely reflect the facts
regarding the revenues, properties, operations, and status of any
entity that must appear thereon;
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3.16.4 The charges, accumulations, and reserves for Taxes owed or accrued
but not yet payable with respect to the Subsidiary's revenues,
properties, or operations as indicated in the Subsidiary's records
are sufficient to cover said Taxes;
3.16.5 Concerning Taxes on the Subsidiary 's revenues, properties, or
operations, there are no actions, lawsuits, proceedings, audits, or
claims in progress; nor are there, to the best of the Seller's
knowledge and belief, any investigations in progress concerning
such Taxes.
3.16.6 There are no agreements to extend the period for imposing the Taxes
affecting the Subsidiary's revenues, properties, or operations.
3.16.7 All Income Tax Returns corresponding to the fiscal years ending on
or before December 31, 1998 have been audited for tax purposes or
are Statements with respect to which the statute of limitations has
expired once the applicable extensions and waivers have been
rendered effective;
3.16.8 All Taxes pertaining to the Subsidiary have been covered or paid,
and no situation has arisen as a result of the audits for which the
application of similar principles would lead one to consider the
possibility of any tax claim for any year that has not been
audited.
3.17 Employment-related Matters. Each of the following facts is true for each
of the plans, funds, or arrangements that are indicated or are to be
indicated in List 3.11.4:
3.17.1 The Financial Statements reflect all employment-related liabilities
derived from each of said plans, funds, or schemes in accordance
with the applicable laws and regulations;
3.17.2 All plans and schemes have been accorded a favorable resolution
under the applicable laws;
3.17.3 No actions, lawsuits, or claims against the Subsidiary (other than
normal benefit-related claims that arise in the normal course of
business) are ongoing, nor, to the best of the Seller's knowledge
and belief, have any been threatened. Moreover, the Seller has no
knowledge of any facts that might give rise to such actions,
lawsuits, or claims (other than normal benefit-related claims that
arise in the normal course of business).
3.17.4 The execution and performance of this Agreement by the Seller, and
the completion of the transactions provided for hereunder, shall
not give rise to any obligations or liabilities (concerning
benefits
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received or otherwise) under such plans, funds, or schemes,
vis-a-vis the employees or former employees of the Subsidiary;
3.17.5 The Subsidiary has complied with all applicable laws and collective
bargaining agreements concerning employment-related matters and
practices, terms and conditions of employment, salaries, hours of
work, as well as workplace safety and health. The Subsidiary does
not engage in any improper employment practices within the meaning
of the Federal Labor Act in its amended form. Moreover, there are
no actions, lawsuits, or legal, administrative, arbitration, or
other proceedings in progress; nor, to the best of the Seller's
knowledge and belief, have any been threatened. To the best of the
Seller's knowledge and belief, no investigations are ongoing or
have been threatened against the Subsidiary concerning the
foregoing, nor, to the best of the Seller's knowledge and belief,
do any grounds exist for any action, lawsuit, or legal,
administrative, arbitration, or other proceeding or governmental
investigation;
3.17.6 Currently, there are no workers' strikes, labor disputes, go-slows,
or work stoppages, nor, to the best of the Sellers' knowledge and
belief, have any been threatened against the Subsidiary;
3.17.7 Currently, no grievance or arbitration proceedings derived from or
in accordance with any collective bargaining agreements exist
against the Subsidiary, nor are there any grounds for any such
claims;
3.17.8 The Subsidiary has not experienced any organized work stoppages in
the past three years.
3.18 Intellectual Property. Except as indicated in List 3.18:
3.18.1 The patents, trademarks, service marks, copyrights, licenses,
business names, assignments, conferrals, agreements, and contracts
indicated in List 3.11.9 are valid;
3.18.2 Said trademark registrations, service mark registrations, copyright
registrations, and patents have been duly issued and have not been
canceled, abandoned, or terminated in any other manner;
3.18.3 Said trademark applications, service mark applications, copyrights,
and patent applications have been duly submitted. The Subsidiary is
not in breach of any licenses or agreements; and
3.18.4 Said licenses and agreements are binding subject to the terms
thereof. Except as indicated in List 3.11.9, none of the processes
that are currently used by the Subsidiary, nor any of the
properties, or products
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contracted for or sold by the Subsidiary, nor any of the
trademarks, business slogans, labels, or other designations or
copyrights used by the Subsidiary violate the rights of any other
person or entity. Moreover, the Subsidiary has not received notice
to the contrary.
3.19 Accounts Receivable. The accounts receivable that appear on the
Subsidiary's consolidated balance sheet on June 30, 1999, as well as all
accounts receivable created as of said date, represent and shall continue
to represent valid liabilities in favor of the Subsidiary, to the extent
established in List 3.19 hereof.
3.20 Inventory. Except as indicated in List 3.20, the Subsidiary's inventories
of work materials or otherwise are in good condition and conform to the
applicable specifications and warranties in every way.
3.21 Equipment. The Subsidiary's equipment and other tangible physical assets
are in good functioning order. Normal wear and tear excepted, they are in
use and are useful to the Subsidiary's business at its current activity
level. Moreover, they are in sufficiently good functioning condition to
carry out the business forming the Subsidiary's Corporate Purpose as the
Subsidiary is carrying it out currently.
3.22 No Significant Changes. Except as indicated in List 3.22, between June 30,
1999 and the execution date hereof, there has not been any significant
adverse change in the Subsidiary's financial situation, assets,
liabilities (fixed, contingent, or otherwise), operating results,
business, or business prospects that would cause the Subsidiary to assume
different liabilities or liabilities other than those the Subsidiary has
vis-a-vis the Purchaser or Telefonica, S.A.
3.23 Absence of Changes or Events. Except as indicated in List 3.23, between
June 30, 1999 and the execution date hereof, the Subsidiary has complied
with its corporate purpose exclusively in the normal course of business.
Furthermore, the Subsidiary has not:
3.23.1 Incurred any absolute, accrued, contingent, or other obligations
or liabilities, whether owing now or in the future, for a total
amount exceeding US$1,000,000.00 (one million dollars), except for
liabilities or obligations that have been incurred in the normal
course of business and are consistent with the Subsidiary's usual
practices, unless otherwise agreed upon by the Parties in a faxed
message confirmed in writing.
3.23.2 Mortgaged or pledged the Subsidiary's property, businesses, or
assets, whether tangible or intangible, or subjected them to any
liens, charges, guarantees, or other encumbrances or restrictions;
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3.23.3 Sold, transferred, or leased its assets to any third parties or
otherwise alienated any of the Subsidiary's Necessary Assets;
3.23.4 Suffered any damages, destruction, or losses (whether covered by
insurance or not) that have adversely affected the Subsidiary's
business or prospects;
3.23.5 Effected any capital expenditures or capital additions or
improvements, or committed to effecting any of the foregoing, in
an amount exceeding US $1,000,000.00 (one million dollars), unless
otherwise agreed upon by the Parties in a faxed message confirmed
in writing.
3.23.6 Suffered or been threatened with the possibility of being
adversely affected by any strikes, work stoppages, go-slows, or
lockouts;
3.23.7 Initiated any lawsuits, actions, or proceedings before any courts
or governmental offices with respect to its property, nor has the
Subsidiary waived or given up any rights that are valuable to the
Subsidiary, with the exception of the lawsuits initiated and the
waivers and commitments granted in the normal course of business
and in a manner consistent with its usual practices;
3.23.8 Declared or paid any dividends or made any capital or capital
surplus payments, nor has the Subsidiary redeemed, purchased, or
acquired any shares of its own capital stock, either directly or
indirectly;
3.23.9 Increased the compensation of the Subsidiary's officers,
employees, or agents, either directly or indirectly, through
bonuses, pension plans, distributions of dividends, deferred
compensation, savings, insurance, retirement, or any other
employee compensation plan, aside from reasonable amounts in the
normal course of business.
3.23.10 Hired any employee, officer, agent, or clerk from Terra.
3.24 No Breach. Except as indicated in List 3.24, all of the Necessary
Agreements were duly executed in the normal course of business. None of
the following exist under any contract:
3.24.1 Material breach by the Subsidiary, or, to the best of the Seller's
knowledge and belief, by any other party thereto; or
3.24.2 Any event which, after notice thereof has been provided or the
time has lapsed or both, would constitute a breach by the
Subsidiary, or, to the best of the Seller's knowledge and belief,
by any other party, which
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would result in a right of acceleration or would result in the
loss of the rights against the Subsidiary;
3.25 Suspension of Business. The Subsidiary has not been subjected to any
suspension of business or work.
3.26 Consent. Except as indicated in Clause 5.6 and List 3.26, no consent,
approval, or authorization from any governmental or regulatory agency, nor
any statement, registration, or record with any such agency is required
for purposes of executing , delivering, and performing this Agreement or
carrying out the transactions provided for herein. Except as indicated in
List 3.26, no consent is required from any person in order to carry out
the transactions provided for herein, including but not limited to consent
from any parties involved in loans, contracts, leases, or any other
agreements.
3.27 Specific Interests. Except as indicated in List 3.27, neither the members
of the Board nor the officers or managers of the Subsidiary have any
rights to the Subsidiary's chattel or real estate or other tangible or
intangible property, including but not limited to the Subsidiary's
inventions, patents, trademarks, or business slogans.
3.28 Compliance with Laws. Except as indicated in List 3.28, the Subsidiary has
all of the Permits that are necessary in order to carry out its business
as it carries out said business currently or in the manner planned for the
future. All of said Permits are in full force and are producing effects.
The Subsidiary is in compliance with the respective terms and conditions
of such Permits. The Subsidiary has complied with all applicable laws,
statutes, rules, regulations, judgments, orders, bills, exemptions, and
decrees, whether state or local, from the governmental, judicial, or
administrative authorities having jurisdiction over the Subsidiary, its
property, assets or business (referred to collectively as "Legal
Requirements"). The transactions provided for herein shall not infringe on
the Legal Requirements or require the consent, approval, authorization
order of the states or the governmental or public authorities, except for
any notice, consent, or approval that has already been obtained or shall
be obtained before the Closing Date and is indicated in List 3.28.
3.29 Payment of Dividends. From June 30, 1999 until the date hereof, there has
not been nor shall there be any announcement or payment of dividends or
distribution of any kind to the Subsidiary's shareholders.
3.30 Articles of Incorporation, Bylaws, Books, and Registers of the Subsidiary
and Terra. The Purchaser has been provided with true and complete copies
of the Articles of Incorporation, along with proof of the necessary
registrations, and the Bylaws of the Subsidiary and Terra. The
Subsidiary's books and registers have been kept in accordance with the
applicable laws.
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3.31 Declarations and Warranties. The declarations and warranties made by the
Seller in this Agreement, including the attached Lists and the declarations made
in the documents (including but not limited to financial statements,
certifications, or other writings that the Seller or Terra has delivered or will
deliver to the Purchaser or any of its representatives in accordance with the
provisions hereof or in connection with the transactions provided for hereby) do
not and shall not include any false declarations, nor do they or shall they omit
any important and necessary facts in light of the circumstances under which they
were accomplished, so that the declarations contained herein or in said
documents are not deceptive, and they shall continue to be true until the date
hereof.
FOURTH CLAUSE: Declarations and Warranties of the Purchaser and TN
The Purchaser and TN hereby declare and warrant that on the date hereof and on
the Closing Date:
4.1 Formation. The Purchaser is a duly formed corporation existing validly and
in compliance with the laws of Spain.
4.2 Corporate Power. The Purchaser has the corporate powers and authorities
that are necessary in order to execute and perform each and every one of
the agreements to which the Purchaser is a party, as well as to carry out
the transactions provided for by this Agreement and those mentioned above
in this paragraph. The Purchaser's signing, delivery, and performance of
each and every one of the agreements have been duly authorized by all of
the corporate resolutions that were required on the part of the Purchaser.
Each and every one of the agreements has been duly signed and delivered by
the Purchaser and constitutes a valid and legally binding obligation on
the Purchaser that is enforceable in accordance with its terms, unless
said enforceability were to be limited by bankruptcy, insolvency,
restructuring, or similar rights that would generally affect the rights of
creditors, or by principles of equity in general.
4.3 No Restrictions. The Purchaser is not a party to any significant agreement
or any judgment, award, order, bill, exemption, or decree, nor is the
Purchaser subject to or bound by any of the foregoing, from any court or
governmental or arbitration body, which might come into conflict with or
be violated by the Purchaser's signing, delivery, or performance of the
agreements, or which might hinder the fulfillment thereof. If applicable,
any consent required from any third party shall be obtained before the
Closing Date.
4.4 Best Efforts for IPO. TN has made its best efforts to carry out the IPO.
FIFTH CLAUSE: Closing Date
For purposes of this Agreement, the Closing Date shall be understood to be the
Business Day on which the Closing is carried out as set forth below:
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5.1 Closing Date. If the Purchaser is of the opinion that TN shall reasonably
carry out the IPO before December 31, 1999, and provided that the other
conditions precedent to which the obligations of the Purchaser and the
Seller are subject in accordance with Clauses Seven and Eight hereof,
respectively, have also been met before December 31, 1999, then the
Purchaser shall notify the Seller of the tentative date on which the IPO
is to be carried out so that the Closing is carried out at the same time
as the IPO, provided that the IPO is effectively carried out before
December 31, 1999.
5.2 Termination of the Agreement and the Purchase/Sale. If the IPO is canceled
for any reason and the Closing is not carried out on the terms and
conditions hereof, then regardless of whether the Purchaser receives
notice, the Agreement and the purchase/sale shall be terminated
automatically. Said termination shall not result in any liability for the
parties.
If the Closing fails to occur as provided for in the prior paragraph, then the
parties shall be relieved of their obligations and shall return any and all
benefits that they have received from one another in connection with the
execution hereof, except for the Advance Payment, which the Seller shall keep.
5.3 Place of Closing. The Closing shall take place at the Purchaser's offices
in Madrid, Spain, or at any other location agreed upon by the Purchaser
and the Seller in writing.
5.4 Documents to be Delivered by the Seller. On the Closing Date, the Seller
shall deliver to the Purchaser:
5.4.1 The certificates representing the Shares, which shall be duly
endorsed to the Purchaser's name, provided that the Purchaser pays
any Remaining Price at the same time;
5.4.2 A certified copy of the corresponding entry in the Shareholders'
Register of Terra, which shall reflect the ownership and
registration of the Shares in the Purchaser's name;
5.4.3 Any and all other documents that must be delivered to the Purchaser
in accordance with the terms and conditions hereof; and
5.4.4 The advisory opinion of the Seller's legal consultants on the terms
of Exhibit B, which, having been signed by the parties, is now
attached hereto.
5.5 Documents to be Delivered by the Purchaser. On the Closing Date, the
Purchaser shall deliver to the Seller or shall see to it that the Seller
receives:
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5.5.1 Proof of payment of any part of the Remaining Price, which, if
applicable, shall be paid in cash on the terms and conditions
specified in Clause Two hereof.
5.5.2 Any and all other documents that must be delivered by the Purchaser
on or before the Closing Date in accordance with the terms and
conditions hereof; and
5.5.3 The advisory opinion of the Purchaser's legal consultants on the
terms of Exhibit C, which, having been signed by the parties, is now
attached hereto.
5.6 Mexican Federal Antitrust Commission. On the Closing Date, the application
addressed to the Mexican Federal Antitrust Commission shall be submitted
to that Commission. Said application shall request that the Commission not
object to the purchase/sale of the shares forming the subject of this
Agreement. The Seller and the Purchaser shall cooperate in making said
application and dealing with the formalities thereof. Both parties hereby
agree to make their best efforts for this purpose.
SIXTH CLAUSE - Conducting Business before the Closing Date
The Seller, TN, and the Buyer agree that, between the date of this document and
the Closing Date, they will make their best efforts and fully cooperate to
jointly ensure that the Business which is the [corporate] Purpose of Terra and
the Subsidiary continues in operation, thrives, and is carried out in the best
possible manner. The Buyer agrees to ensure that TN complies with the above
obligation as if it were an obligation of TN itself, and to ensure that TN
and/or Telefonica, S.A. grant the loans required by Terra and the Subsidiary to
fund the Business Plan agreed to by TN and Terra; the Buyer declares that TN is
aware of and has internally approved the actions and loans in question.
SEVENTH CLAUSE. - Conditions that Suspend the Buyer's Obligations
The Buyer shall not be required to carry out the transactions provided for by
this Contract if the following conditions are not satisfied:
7.1 All steps taken in connection with the transactions provided for
herein, and all instruments and documents required in connection
with or incidental to them, are executed, in manner and substance,
[in a way that is] satisfactory to the Buyer.
7.2 Except for the changes that are provided for or permitted in some
other way by this Contract, it will have been determined on the
Closing date that the Seller's declarations and guarantees contained
in this Contract or in any certification or document provided to the
Buyer pursuant to it, were essentially true on the date this
Contract was signed, and the Seller and an authorized official of
Terra and of the Subsidiary have signed and provided certifications
to that effect.
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7.3 The Seller has executed and complied with all the agreements and
conditions that this contract requires were executed or complied
with by it [sic] not later than the Closing date, and an authorized
official of the Seller has signed and turned over a certification to
that effect.
7.4 The Buyer has been provided an opinion, dated on the date this
document is signed, by the Seller's legal advisors, substantially in
the format attached to this Contract as Exhibit B.
7.5 There is no judicial action, lawsuit, or proceeding pending before
any court or governmental or regulatory authority; no governmental
or regulatory authority has initiated any investigation, nor has
there been a threat of any judicial action, lawsuit, or proceeding
by any governmental or regulatory authority against the Buyer, TN,
Terra, the Subsidiary, or any of the managers, officials, or
advisors of any of them, seeking to restrict, prevent, or change the
transactions covered under this document or to question the legality
or validity of any of such transactions or attempt to petition for
damages in connection with any of said transactions.
7.6 Except the routine notifications and registrations that must be made
after the Closing Date, all the third party consents, including, but
not limited to, [those of] governmental authorities, and all the
registrations and notifications of governmental authorities,
regulatory agencies, or other entities that govern the businesses of
the Buyer, TN, Terra, and the Subsidiary that are necessary on the
part of the Buyer, TN, Terra, and the Subsidiary for the signing and
performance of this Contract and to carry out the transactions
provided for by it and so that, after the date this document is
signed, operation of the businesses of Terra and the Subsidiary
would continue substantially the same as before, have been obtained
or executed.
7.7 On or before the Closing Date, it will be verified that between June
30, 1999, and the date this document is signed:
7.7.1 There have been no significant adverse changes in the
financial status of the Subsidiary, assets, liabilities other
than those held with the Buyer or the affiliate or subsidiary
the Buyer designates (contingent or other), results of
operations, transactions, or prospects for the Subsidiary's
transactions.
7.7.2 There have been no significant adverse changes in relations
between the Subsidiary and that of its clients in general for
reasons imputable to the Seller.
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7.8 On the Closing Date, it shall be verified that on the date of this
document:
7.8.1 The Subsidiary has the rights to a minimum of between 35,000
and 45,000 subscriber accounts, with the understanding that
between 20,000 and 25,000 will be its own and between 15,000
and 20,000 will be subscribers of franchise holders.
7.8.2 The Subsidiary has a monthly volume of between 25,000,000 and
30,000,000 page views through its portal known as
"www.infosel.com."
If, for reasons imputable to the Seller, any of the suspensive conditions
referred to in this Clause are not fulfilled, and as a result, Closing or the
forced closing provided for in Clause 5.7 [sic] of this Contract cannot be
accomplished, the Seller shall be required to refund the Advance to the Buyer
within five (5) Business Days of the date on which Terra repays or reimburses
the Seller for the Shares in an amount equivalent to the amount of the Advance.
EIGHTH CLAUSE - Conditions that Suspend the Seller's Obligations
The Seller shall not be obligated to carry out the transactions provided for by
this document if the following conditions are not satisfied:
8.1 Steps. All steps taken in connection with the transactions provided
for herein, and all the instruments and documents required in
connection with or incidental to them, are executed, in form and
substance, [in a way that is] satisfactory to the Seller.
8.2 Truth of Declarations and Guarantees. Except for the changes that
are provided for or permitted in some other way by this Contract,
the declarations and guarantees of the Buyer and TN contained in
this Contract or in any other certification or document provided to
the Seller in accordance with it, shall be, essentially, equally
valid and applicable on the Closing Date, inclusive [sic], and
shall, at that time, be essentially true; the Buyer shall have
executed and complied with all agreements and conditions this
Contract requires were executed or complied with by it [sic] on or
before the Closing Date; and an authorized official of the Buyer has
signed and turned over a certification to that effect.
8.3 Consents. All third party consents, including but not limited to
[those of] governmental authorities, plus all the registrations with
and notifications of governmental authorities, regulatory agencies,
or other entities that govern the businesses of the Buyer and TN,
necessary on the part of the Buyer and TN for the signing and
performance of this Contract and to carry out the transactions
provided for by it, have been obtained or executed.
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8.4 On the Closing Date, TN's capital stock and issue premium are in the
range of $400,000,000 to $450,000,000, as certified in writing by an
authorized TM official.
8.5 The Seller has been provided an opinion dated on the date this
document is signed, by the Buyer's legal advisors, substantially in
the format attached to this Contract as Exhibit C.
NINTH CLAUSE - Indemnification by the Seller.
The Seller, by means of this document, agrees to defend, indemnify, and hold the
Buyer and its successors and assignees harmless with respect to:
9.1 Each and every one of the losses, costs, liabilities, damages, or
deficiencies resulting from any:
9.1.1. False declaration or violation of guarantees, agreements, or
commitments under this document by the Seller;
9.1.2. Non-compliance by the Seller or the Subsidiary with any
commitment or other agreement or obligation under this
Contract;
9.2 Each and every one of the obligations, petitions, decisions,
damages, legal actions, causes of action, injuries, liabilities, or
losses, penalties, costs and expenses, regardless of their nature,
losses of life, injuries to persons and property or damages to
natural resources caused by the Seller's acts or omissions.
9.3 Claims for services rendered before the date of this document, to
the extent that the amounts exceed the reserves reflected in the
Subsidiary's books up until that time;
9.4 Inability to cover the accounts receivable to the extent established
in List 3.19 of this Contract within 120 days of the signing date.
9.5 All obligations of the Subsidiary that are not set forth in the
Subsidiary's books, whether known on this date or not; with the
understanding, however, that if any claim, liability, petition,
establishment of damages, legal action, lawsuit, or proceeding is
enforced against the Buyer or any of its successors or assignees
with respect to which the Buyer or any of its successors or
assignees intends to seek indemnification ("Indemnified Claims"),
the Buyer shall notify the Seller thereof. As soon as it receives
such notice, the Seller shall have the right to assume control of
the challenge, settlement, or resolution of
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Final Version
any of such Indemnified Claims, including costs and expenses, hiring
legal advisors that are reasonably satisfactory to the Buyer, with
the understanding, however, that if the Seller has exercised its
right to assume such control, the Buyer may, at its sole discretion,
hire legal advisors to represent it (in addition to the legal
advisors hired by the Seller and, in this case, at its sole expense)
in any of said cases, and in that case, the legal advisors
designated by the Seller shall be obligated to cooperate with the
Buyer's legal advisors in such challenge, settlement, or resolution;
and with the further understanding that the Seller's obligation to
indemnify pursuant to Clause 10 of this Contract shall only be
effective if all those losses, damages, deficiencies, debts,
liabilities, costs, and expenses which arise under this Contract
with respect to the items stipulated in the Ninth Clause exceed
US$ 75,000.00 (seventy-five thousand dollars), and then the Buyer
would have the right to recover the entire amount of the damages
suffered by the Buyer exceeding that amount ("Indemnified Damages").
9.6 Indemnifications of the Seller, as stipulated in this Clause, shall
not be affected in any way by any reference made in this Contract to
the declarations and guarantees made "to the Seller's knowledge and
belief" or "to the best of the Seller's knowledge and belief."
TENTH CLAUSE - Indemnification by the Buyer.
The Buyer, by means of this document, agrees to defend, indemnify, and hold the
Seller and its [successors] and assignees harmless with respect to and against
any costs, liabilities, and damages resulting from:
10.1 Each and every one of the losses, costs, liabilities, damages, or
deficiencies resulting from any:
10.1.1 False declaration or violation of guarantees, agreements, or
commitments under this Contract, by the Buyer or TN; and
10.1.2 Non-compliance by the Buyer with any commitment or other
agreement or obligation under this Contract;
10.2 Each and every one of the legal actions, lawsuits, proceedings,
claims, liabilities, petitions, establishment of damages, decisions,
costs and expenses, including reasonable attorneys fees, incidental
to any of the above or such indemnification; with the understanding,
however, that if any claim, liability, petition, establishment of
damages, judicial action, lawsuit, or proceeding is enforced against
the Seller or any of
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Final Version
its assignees with respect to which the Seller or any of its
assignees intends to seek indemnification ("Indemnified Claims"),
the Seller shall notify the Buyer thereof. As soon as it receives
such notice, the Buyer shall have the right to assume control of the
challenge, settlement, or resolution of any of such Indemnified
Claims including, at its own expense, hiring legal advisors that are
reasonably satisfactory to the Sellers, with the understanding,
however, that if the Buyer has exercised its right to assume such
control, the Seller may, at its sole discretion, hire legal advisors
to represent them (in addition to the legal advisors hired by the
Buyer and, in this case, at their sole expense) in any of said
areas, and, in that case, the legal advisors designated by the Buyer
shall be obligated to cooperate with the Seller's legal advisors in
such challenge, settlement, or resolution.
ELEVENTH CLAUSE - Expenses
The Buyer and the Seller shall each defray their own expenses in relation to the
negotiation, drawing up, signing, delivery of, and compliance with this Contract
and the contracts provided for by this document. The Seller and the Buyer each
declare and guarantee to the other party that the negotiations related to this
Contract and the transactions provided for by it have been carried out in such a
way as to not give rise to any valid claim against the other Party, Terra, or
the Subsidiary because of brokerage commissions, dealers' commissions, or other
similar payments.
TWELFTH CLAUSE - Declarations. Unconditional Guarantees and Warrantees.
12.1 The guarantees set forth in this Contract shall extend beyond the Closing
Date. It shall be deemed that the declarations and unconditional
guarantees are made on the date of this document and any claim or action
based on a violation of any declaration or unconditional guarantee or
warranty shall extend beyond the Closing Date for a period of three (3)
years or until the statute of limitations expires, whichever is longer.
12.2 TN guarantees to the Seller, solidarily with the Buyer, payment of the
balance of the price and compliance with each and every one of the
obligations which are the Buyer's responsibility under this Contract.
Therefore, the Seller, at its option, may require payment of the balance
of the price and/or the other obligations, from either or both of the
Buyer and TN.
THIRTEENTH CLAUSE . - Confidentiality.
No press release shall be issued, nor shall the terms of this Contract be
disclosed to third parties, without the authorization of the Seller and the
Buyer. The Buyer and the Seller shall reach agreement with respect to the time
and nature of the announcement of the transaction to the Subsidiary's employees.
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FOURTEENTH CLAUSE - General Provisions.
14.1 Cooperation. Each of the Parties to this document shall make its
best effort to perform or ensure performance, and to cooperate with
the other Party to this document, as necessary, with respect to all
actions, and to perform or ensure the performance, in accordance
with the applicable laws, of whatever is necessary, appropriate, or
advisable in order to execute and ensure the execution of the
transactions provided for by this Contract.
14.2 Waivers. Failure of the Seller to comply with any of its obligations
or [any of the] agreements set forth herein may be waived only by
the Buyer in writing. Failure of the Buyer to comply with its
obligations or [the] agreements set forth herein may be waived only
by the Seller in writing.
14.3 Notifications. All notifications and other communications that are
required or permitted in accordance with this Contract shall be made
in writing and sent to the addressee by telefax, which shall be
confirmed by means of the original document signed by an authorized
representative of the Party making the notification or
communication. These shall be sent by DHL, Federal Express, or
another worldwide express messenger service that offers delivery
times equal to or better than those of the aforementioned companies,
with the understanding that the communication or notification shall
become effective on the date the telefax is sent, but only if the
original signed notification or communication is delivered to the
addressee within two (2) Business Days of the date it is telefaxed.
If the original notification or communication is not received within
said time period, it shall become effective on the Business Day on
which such original notification or communication is delivered. Such
notifications or communications shall in all cases be sent to the
following domiciles:
(i) If addressed to the Seller:
Olympic Plaza
Fred Roeskstraat 123
Amsterdam 1076EE
Atencion: Guido Nieuwenhuizen
Fax #: (31) 20-577-1188
With a copy for:
Fernando Elizondo O.
Coral 108
Colonia Villa del Pedregal
66280 San Pedro Garza Garcia, N.L.
Mexico
Fax#: (52-8) 303-4784
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Final Version
and a copy for:
Wenceslao Renovales
Moliere 39, Piso 7
Polanco Chapultepec,
11560 Mexico D.F.
(ii) If addressed to the Buyer or TN:
Telefonica Servicios y Contenidos por la Red, S.A.
Edificio Atica
Via de las Dos Europas No. 33
28223 Madrid, Espana
Atencion: Cristina Lomana
Fax # (34) 91-452-3147
Terra Networks, S.A.
Edificio Atica
Via de las Dos Europas No. 33
28223 Madrid, Espana
Atencion: Cristina Lomana
Fax # (34) 91-452-3147
Telefonica, S.A.
Gran Via, 28
28013 Madrid, Espana
Atencion: Secretario General
with copies to:
Baker & McKenzie Abogados, S.C.
Oficinas en el Parque - piso 10
Blvd. Antonio L. Rodriguez 1884 Pte.
64650 Monterrey, Nuevo Leon
Atencion: Lic. Andres Ochoa Bunsow
Fax # (8) 399-1399
Said names and addresses may be changed by written notification to each of the
above individuals.
The above notwithstanding, the Parties may choose to make any notification or
communication by personal delivery of the respective document to the appropriate
domicile, in which case such communication or notification shall become
effective on the date of its delivery.
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A signature acknowledging receipt shall be obtained from the addressee's
employee or representative who performs said function.
14.4 Applicable Laws and Conflict Resolution. This Contract shall be governed
[by] and interpreted under the laws of Mexico.
14.4.1 Any dispute, claim, or controversy arising as a result of this
Contract or related thereto, or regarding the interpretation or
violation thereof, shall be submitted to arbitration pursuant to
the regulations of the International Chamber of Commerce of Paris,
to the extent that said regulations are not incompatible with this
paragraph. The decision on the arbitrators' award may be finalized
before any competent court, or it may be requested that said court
finalize the award so that it may be implemented, as appropriate.
The request for arbitration shall be made within a reasonable
period counted from the time the claim, dispute, or any other
question arises, and in no case shall it be made after the date on
which the institution of the legal or equity proceedings based on
such claim, dispute, or any other question, has been barred under
the applicable statute of limitations.
14.4.1 The panel shall be comprised of three arbitrators. Each of the
Parties to this Contract shall name one of said arbitrators, and
the two arbitrators so named shall designate a third: with the
understanding, however, that if the two arbitrators fail to reach
agreement regarding the naming of the third arbitrator, either of
the arbitrators may request that the International Chamber of
Commerce of Paris make the designation;
14.4.1 The arbitration shall be conducted in Dallas, Texas, in Spanish
and/or English.
14.4.1 For the present, each Party waives the requirement for
hand-delivered notification of arbitration, and agrees that
notification may be made in writing, by registered mail, with
acknowledgement of receipt, to the address provided in this
Contract, and any request made in this manner shall be considered
effected on the tenth Business Day after such request has been
mailed.
14.4.1 Any judicial proceeding brought as support for the arbitration with
respect to this Contract, including precautionary measures, shall
be submitted to the competent judicial authority. Each Party to
this document (a) accepts, generally and unconditionally, the
exclusive competence of said court and any related appeals court,
and irrevocably waives any objection it may have, now or in the
future, with respect to the forum of any lawsuit, legal action, or
proceeding
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brought in said courts, or [objection with respect to] said courts
being an inappropriate forum.
14.4.1 Copies. This Contract may be signed simultaneously in one or more
copies, each of which shall be considered an original, but all
together they shall constitute a single, unique instrument.
14.4.1 Headings. The headings of this Contract's different clauses are for
reference purposes only, and shall not affect the meaning or
interpretation of this Contract in any way.
14.4.1 Indivisible Contract. This Contract, including its appendices and
the documents mentioned herein, constitute the entire Contract and
the agreements of the parties thereto with respect to its purpose.
There are no restrictions, promises, declarations, absolute
warranties, guarantees, or commitments other than those expressly
stipulated or mentioned herein. This Contract replaces all previous
contracts and agreements between the Parties with respect to said
purpose.
14.4.1 Amendments and Modifications. This Contract may only be amended or
modified by written agreement of the Parties.
14.4.1 Mandatory nature: Benefits. This Contract shall be to the benefit
of the Parties thereto and their respective successors and
assignees, and shall be mandatory for them; nothing expressly or
implicitly included in this Contract is intended to confer on any
person other than the Parties thereto or their respective
successors and assignees, any right, option, obligation, or
responsibility under or resulting from this Contract.
14.4.1 Transfer. This Contract may not be transferred by any of the
Parties thereto, except with the prior written agreement of the
other Parties thereto.
14.4.1 Transfer Taxes. The Income Tax with respect to this transaction or
the sale, transfer, or delivery of the Shares shall be payable by
the Seller.
14.5 Best of Knowledge and Belief. For purposes of this Contract, the phrase,
"to the best of the Seller's knowledge and belief," in reference to a
declaration or guarantee made by the Seller, shall be considered to mean
"to the best of the Seller's knowledge and belief" after due inquiry; and
"knowledge and belief," as used in said phrase, shall be considered to
include all the matters which the Seller or any official of the Subsidiary
in fact knows or should have known after due inquiry.
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Final Version
14.6 Language. The Parties agree that this Contract may also be signed in
English, with the understanding that, in case of any difference of opinion
of any of the parties about the content of either version, this Spanish
version shall prevail in all cases.
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Final Version
IN WITNESS WHEREOF, the Parties have signed this Contract on the date shown at
the beginning thereof.
Buyer:
TELEFONICA SERVICIOS Y CONTENIDOS
POR LA RED, S.A.
[illegible signature]
Mr. Juan Perea Saenz de Buruaga and
Mr. Jose Antonio Sanchez (Sole Administrator)
Seller:
BIDASOA, B.V.
[illegible signature] [illegible signature]
Mr. Guido Nieuwenhuizen Mr. Dirk Stolp
Representative Representative
As Guarantor:
TERRA NETWORKS, S.A.
[illegible signature]
Juan Perea Saenz de Buruaga
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The following annexes to this agreement have not been included:
- Annex B - Opinion of seller's legal counsel
- Annex C - Opinion of buyer's legal counsel
- List 3.4 - List of Necessary Assets for the development of the
business of Terra and its subsidiaries
- List 3.5 - List of Necessary Agreements
- List 3.7 - Outstanding capital stock
- List 3.8 - Registered shareholders
- List 3.9 - Subsidiaries
- List 3.10 - Pending litigation
- List 3.11.1 - Agreements, contracts, commitments and offers
- List 3.11.2 - Tangible assets
- List 3.11.3 - Insurance policies in force
- List 3.11.4 - List of employees
- List 3.11.5 - Reimbursable deposits, prepaid expenses and
deferred charges
- List 3.11.6 - Loans to third parties
- List 3.11.7 - Liens, encumbrances, restrictions, claims and
warranties
- List 3.11.8 - Leased real estate
- List 3.11.9 - Trademark registrations, applications and
notices of violations thereof
- List 3.11.10 - Pending litigation
- List 3.11.11 - Permits required to carry out business
<PAGE> 35
- List 3.11.12 - Outstanding loans
- List 3.11.13 - Condition of real estate
- List 3.16 - Taxes filed and paid
- List 3.18 - Abandoned trademarks
- List 3.19 - Accounts receivable
- List 3.22 - Significant changes
- List 3.23 - Absence of changes or events
- List 3.24 - Breach of contract
- List 3.26 - Consent of regulatory and governmental authorities
- List 3.27 - Certain interests
- List 3.28 - Compliance with laws
Copies of the annexes not included herein will be provided upon request.
2
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Exhibit 2.8
Final Version
STOCK PURCHASE OPTION CONTRACT
Stock Purchase Option Contract which is entered into on this 5th day of October,
1999, by Bidasoa, B.V., a Dutch-registered company, represented by ATC
Management B.V., a Dutch-registered company, represented by Mr. Guido
Nieuwenhuizen and Mr. Dirk Stolp (hereinafter Bidasoa), and Telefonica, S.A., a
Spanish-registered company, represented by Mr. Diego Lozano Romeral (hereinafter
"Telefonica, S.A.").
REPRESENTATIONS
I. Telefonica, S.A. represents, through its agent:
1. It is a Spanish-registered company, duly organized pursuant to the
laws of Spain.
2. It is interested in formalizing this Stock Purchase Option Contract
(hereinafter the "Contract") to grant Bidasoa the option of
acquiring TN Shares (defined below) pursuant to the terms and
conditions specified herein.
3. It is the majority shareholder of Terra Networks, S.A., a Spanish
company ("TN") whose line of business includes but is not limited to
providing services of Internet access (ISP) and Portal, Services of
Financial Information by electronic Media and "Business to Business"
e-commerce service, all focused on the residential, SOHO, financial
and corporate market, and that it is interested in expanding its
share of that market in Mexico, with the intention, in the near
future, of pooling the aforementioned businesses with other similar
businesses at the world level and making a placement and initial
public offering of its shares (IPO) and subsequent admission of such
shares to trading on the Spanish Stock Exchanges, the NASDAQ or on
stock exchanges of other countries.
II. Bidasoa represents through its agent:
1. It is a Dutch-registered company, duly organized pursuant to the
laws of The Netherlands.
2. It has an interest in entering into this Contract with Telefonica,
S.A., for the purpose of having the option to acquire the "TN
Shares" that are defined below and
<PAGE> 2
Final Version
that are the subject of this contract, once the conditions specified
herein have been met.
This Contract contains the terms and conditions pursuant to which Bidasoa shall
have the right to purchase, if it exercises the option that is provided in this
contract, and Telefonica, S.A. shall have the obligation to sell to Bidasoa, on
the Closing Date (as defined below), the TN Shares.
DEFINITIONS
For the purposes of this contract, unless expressly indicated herein to the
contrary, the words, terms and phrases listed below shall have the indicated
meaning:
"TN Shares" shall mean common shares issued or to be issued by the company Terra
Networks S.A., fully subscribed, paid in and free of any encumbrance, charge or
allocation, that are registered so that, observing the restrictions that are
established in this Contract with respect to said shares, they will have the
characteristics necessary to be sold as of the Closing Date (which is defined
below) on the Spanish Stock Exchanges (which is defined below) or on the NASDAQ
(which is defined below), at Bidasoa's discretion, having an offering value
pursuant to the subscription offering price of the institutional tranche of the
IPO equal to US$220,000,000 (two hundred twenty million dollars).
"Spanish Stock Exchanges" shall mean the financial markets for buying and
selling securities admitted to stock exchange listing, located in Spain and
controlled by the Spanish National Commission on the Securities Market.
"Bidasoa" shall have the meaning that is indicated in the introductory paragraph
of this contract.
"Closing" shall mean the act by means of which Telefonica, S.A. transfers the
full ownership of the TN Shares, free of any encumbrance and limitation of
ownership, to Bidasoa, and the act by means of which Bidasoa pays the Price of
the TN Shares.
"Contract" shall mean this Stock Purchase Option Contract.
"Purchase Contract" shall mean the Purchase Contract signed today between
Bidasoa, party of the first part, as seller, and Telefonica Servicios y
Contenidos por la Red, S.A., party of the second part, as buyer (hereinafter
Telefonica SCR" or "Teleline") which is for the purpose of transferring in the
year 1999 all Terra shares with voting right representing 25% of its capital.
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Final Version
"Stock Administration Deposit Contract" shall mean the Stock Administration
Deposit Contract that is attached to this contract, marked as Exhibit A.
"Controller" shall mean any company that owns at least ninety-nine percent (99%)
of the shares of another company to which this term refers.
"Depository" shall mean Banco Argentaria, a Spanish-registered financial
institution.
"Business day" or "Business Days" shall mean any day that is not a Saturday,
Sunday or a day on which banks are permitted to close in any of the cities of
Madrid, Spain, Monterrey, Nuevo Leon, Mexico, or Amsterdam, Holland.
"Dollar" or "Dollars" shall mean the currency of legal tender in the United
States of America.
"Euro" or "Euros" shall mean the currency of legal tender in Spain and the
European Community.
"Closing Date" shall mean the date on which the Closing occurs pursuant to the
provisions of Clause Five of this Contract.
"Subsidiary" shall mean any company whose shares are owned for at least
ninety-nine percent (99%) by another company that in turn owns at least
ninety-nine percent (99%) of the shares of the company to which this term
refers.
"IPO" or "Initial Public Offering" shall mean the primary or secondary placement
and initial public offering of TN shares, and their subsequent admission to
listing on any of the stock markets or exchanges of Spain, the United States of
America or any other country, and on NASDAQ.
"Mexico" shall mean the United Mexican States.
"NASDAQ" shall mean National Association of Securities Dealers Automated
Quotations, an information system operated by the National Association of
Securities Dealers of the United States of America, which provides quotations of
prices of securities that are traded outside of established securities exchanges
(over-the-counter) by securities dealers.
"Parties" shall mean Bidasoa and Telefonica, S.A.
"Peso" or "Pesos" shall mean the currency of legal tender in Mexico.
"Price" shall mean the sum of US$220,000,000.00 (Two hundred twenty million
dollars 00/100), which Bidasoa must pay as consideration for the TN shares
pursuant to
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Final Version
Clause 2.2 of this Contract if it exercises the purchase option covered under
this Contract on the TN Shares.
"Institutional Price per Share" shall mean the price accepted by TN as the
offering price per share of the shares issued by it that are offered to
institutional investors as part of the IPO that is being conducted, as
applicable, on the Spanish Stock Exchanges, the NASDAQ, or the securities
exchanges of any other countries, on the date on which the IPO is conducted.
"Direct Subsidiary" shall mean any company whose shares are owned for at least
ninety-nine percent (99%) by another company to which this term refers.
"Telefonica, S.A." shall mean Telefonica, S.A., a Spanish-registered company
with head office at Gran Via, 28, or any affiliate or subsidiary thereof or
company controlled by it, holding shares of stock in TN.
"Terra Networks," "Terra Networks, S.A." and "TN" shall mean Terra Networks
S.A., a Spanish corporation, owning 100% minus one of the Terra shares.
"Terra" shall mean Terra Networks Mexico, S.A. de C.V., a Mexican-registered
company, organized pursuant to public instrument number 6,232, the execution of
which was witnessed by Eduardo Manautou Ayala, Esq., Notary Public Number 123
for the City of Monterrey, Nuevo Leon, on September 10, 1999, the first
certified copy of which is duly recorded in the Public Register of Property and
Commerce of the City of Monterrey, Nuevo Leon, under Number 2468, no page
number, Volume 431, Book No. 3, Second Auxiliary, Instruments of Commercial
Companies, Commerce Section.
"Dollar/Euro Exchange Rate" shall mean the exchange rate between the Dollar and
the Euro, published by Banco de Espana for a specific Business Day.
CLAUSES
By virtue of the agreements and covenants set forth herein, the parties express
their intent as follows:
Clause One. TN Stock Purchase Option.
1.1. TN Stock Purchase Option. Subject to the suspensive condition that the IPO
occur within 1999 and within this same year the purchase be consummated
and the price be paid as stipulated in the Purchase Contract, Telefonica,
S.A. grants to Bidasoa a purchase option over the TN Shares, and Bidasoa
acquires the option to purchase if it so decides and exercises its right
pursuant to the provisions of this
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contract and pays the price [ILLEGIBLE] the TN Shares, which will be
transferred, free of encumbrances, charges and allocations, and including
each and every one of the corporate and economic rights inherent in them.
1.2. Gratuitous Nature of Option Right. The parties expressly state that the
option right that Telefonica, S.A. grants to Bidasoa is free of charge,
and the granting of it shall not engender any consideration.
1.3. Exercise of Option Right and Price of Purchase of TN Shares. The purchase
price to be paid by Bidasoa if its option is exercised shall be the sum of
US$220,000,000.00 (two hundred twenty million dollars) as consideration
for the TN Shares that are to be transferred to it. Bidasoa agrees to pay
such consideration simultaneously with the transfer of ownership of the TN
Shares to Bidasoa, free of any encumbrance, allocation or limitation of
ownership. Bidasoa's obligation to pay the purchase price of the TN Shares
shall be subject to the suspensive condition that it receives from
Teleline the full payment of the price that, in the amount of
US$220,000,000.00 (Two hundred twenty million dollars), Teleline is to pay
to it under the Purchase Contract.
1.4. Number of Shares. The number of TN Shares that Bidasoa is to receive if it
exercises the TN stock purchase option shall be determined by dividing the
sum of US$220,000,000.00 (Two hundred twenty million dollars 00/100) in
currency of legal tender of the United States of America by the
Institutional Price per Share, using the Dollar/Euro Exchange Rate on the
date on which the IPO is conducted. Bidasoa's acquisition and holding of
TN Shares shall conform to the provisions of Clause Two of this Contract.
Clause Two. Bidasoa Obligations derived from Stock Subscription
Bidasoa shall assume the following obligations, with respect to Telefonica,
S.A., as to the TN Shares for which it subscribes in the event that it exercises
the option granted through this Contract.
2.1. Restrictions on Sale of TN Shares. Bidasoa shall be prevented from
transferring any of the TN Shares that it acquires under this Contract, on
Spanish Stock Exchanges, on the NASDAQ or on any other capital markets,
for six (6) months following the date of the IPO or the date on which
Bidasoa acquires the TN Shares, whichever happens first. After that time
period, Bidasoa may transfer TN Shares that it acquires under this
Contract in the following amounts: (i) from the seventh to the twelfth
months following the IPO or the Closing Date, whichever occurs first, it
may have transferred up to 25% (Twenty-five percent) of those TN Shares;
(ii) from the thirteenth to the eighteenth months following the IPO or the
Closing Date, whichever occurs first, it may have transferred up to 50%
(Fifty percent) of those TN Shares; (iii) from the nineteenth to the
twenty-fourth months following the IPO or the Closing Date, whichever
occurs first, it may have transferred up to 75%
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(Seventy-five percent) of those TN Shares; and (iv) after the
twenty-fourth month following the IPO or the Closing Date, whichever
occurs first, it may have transferred all of those TN Shares;
2.2 Preemptive Right. At any time as of the Closing Date on which Bidasoa
acquires TN Shares, Telefonica, S.A. shall have a preemptive right for
acquiring any TN Shares that Bidasoa offers for sale. Such right may be
exercised through Telefonica, S.A. or by any third party that is
designated, with respect to all TN Shares that Bidasoa offers for sale.
Before transferring any TN Share, Bidasoa must notify Telefonica, S.A. of
its desire to transfer them, including the terms and conditions to which
such transfer would be subject. In such event, Telefonica, S.A., shall
have five (5) Business Days in which to notify Bidasoa as to whether or
not it wishes to exercise its preemptive right. After that time period,
with no response from Telefonica, S.A. or if Telefonica, S.A. declines to
exercise its right, Bidasoa shall be at liberty to transfer its TN Shares
for thirty (30) Business Days after any of these eventualities occurs,
under terms and conditions no less favorable for Bidasoa than those
established in the original offering. Should it exercise its preemptive
right to acquire such TN Shares, Telefonica, S.A. shall have the same
period of thirty (30) Business Days in which to formalize the acquisition,
pursuant to the terms and conditions established in the Bidasoa offering.
2.3. Exception to Preemptive Right. Notwithstanding the provisions of Clause
2.2 above, Bidasoa may at any time transfer the TN Shares or any portion
thereof that Bidasoa acquires under this Contract to any Subsidiary,
Direct Subsidiary or Controller of Bidasoa, on the understanding that such
Subsidiary, Direct Subsidiary or Controller must expressly and with
advance notice to Telefonica, S.A., assume each and every one of the
obligations that correspond to Bidasoa under this Contract and the rights
of Telefonica, S.A. derived from this Contract shall not be adversely
affected by virtue of such transfer.
2.4. Exercise of Voting Right. Bidasoa agrees to exercise the voting right that
it has as a holder of the TN Shares that it acquires under this Contract
pursuant to the instructions that it receives from Telefonica, S.A., on
the understanding that in resolutions that in a discriminate fashion
adversely affect only the interests of Bidasoa as a holder of the TN
Shares, Bidasoa shall not be required to vote pursuant to the instructions
that it receives from Telefonica, S.A.
2.5. TN Stock Administration Deposit Contract. To guaranty performance of the
various obligations that Bidasoa assumes under this Contract, Bidasoa
agrees to deliver any TN Shares that it comes to acquire under this
Contract to the Depository, pledging them in the manner stipulated in the
Stock Administration Deposit Contract.
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2.6. Payments. The payment that Bidasoa is to make to Telefonica, S.A. in cash
shall be made through transfer of funds immediately available in Dollars,
in the amount designated by Telefonica, S.A. in writing for that purpose.
Clause Three. Representations and Warranties of Bidasoa.
Bidasoa represents and warrants that, as of today's date:
3.1. Formation. Bidasoa is a company duly organized, with valid existence
pursuant to the laws of the Kingdom of The Netherlands.
3.2. Company Authorization. Bidasoa has powers and the proper corporate
authorizations to enter into this contract and to conduct the transactions
stipulated in it; Bidasoa's signing, delivery and performance of this
contract has been duly authorized by all necessary corporate authorities;
this contract has been duly signed and delivered by Bidasoa and, should it
exercise the option, shall constitute a valid and legally binding
obligation for Bidasoa, enforceable pursuant to its terms, unless such
enforceability is limited by bankruptcy, insolvency, reorganization or
similar rights that generally affect the rights of the creditors, or by
general equity principles.
3.3. There are no Restrictions. Bidasoa is not a party to any major contract or
any judgment, award, mandate, document, relief or decree, nor is it
subject to or bound by them, from any court of law, government agency or
arbitrator, that might conflict with or be infringed by its signing,
delivery or performance of this contract and the acquisition of the TN
Shares if it exercises its option. All required third-party consents shall
be obtained before the Closing Date.
Clause Four. Representations and Warranties of Telefonica, S.A.
Telefonica, S.A. represents that it warrants, on today's date and on the Closing
Date:
4.1. Formation. Telefonica, S.A. is a company duly organized, with valid
existence pursuant to the laws of Spain.
4.2. Company Authorization. Telefonica, S.A. has powers and the corporate
authorizations to enter into this contract and to conduct the transactions
stipulated in it; Telefonica, S.A.'s signing, delivery and performance of
this contract has been duly authorized by all necessary corporate
authorities for Telefonica, S.A.; has been duly signed and delivered by
Telefonica, S.A. and, should Bidasoa exercise its option, shall bind
Telefonica, S.A. to transfer the TN Shares pursuant to this contract,
enforceable pursuant to its terms, unless such enforceability is limited
by bankruptcy, insolvency, reorganization or
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similar rights that generally affect the rights of the creditors, or by
general equity principles.
4.3. There are no Restrictions. Bidasoa is not a party to any major contract or
any judgment, award, mandate, document, relief or decree, nor is it
subject to or bound by them, from any court of law, government agency or
arbitrator, that might conflict with or be infringed by its signing,
delivery or performance of the agreements or that might obstruct the
realization thereof. All required third-party consents shall be obtained
before the Closing Date.
4.4. Best Effort for IPO. TN has made its best effort to conduct the IPO.
Clause Five. Exercise of Purchase Option and Closing Date.
5.1. Bidasoa may exercise its purchase option as of the date of this Contract
and until the fifth Business Day prior to the date indicated in the IPO
for confirmation of purchase orders by the institutional investors. The
option shall be exercised by delivering to Telefonica, S.A. a document
written pursuant to the model in Exhibit B, signed by a duly accredited
agent of Bidasoa. The exercise of the Option shall constitute for Bidasoa
the obligation to purchase the TN Shares and to pay the price agreed in
this contract and for, Telefonica, S.A., the obligation to sell the TN
Shares to Bidasoa for that price established in clause 1.3 of this
Contract on the Closing Date.
5.2. The Closing Date shall coincide with the closing date of the Purchase
Contract.
5.3. Location of Closing. The Closing shall take place in the TN offices in
Madrid, Spain, or at any other location that Telefonica, S.A. and Bidasoa
agree to in writing.
5.4. Documents to be Delivered by Telefonica, S.A. On the Closing Date,
Telefonica, S.A. shall deliver the following to Bidasoa or cause the
following to be delivered to Bidasoa on its behalf:
5.4.1. The certificates representing the TN Shares to be transferred,
which delivery shall be accomplished directly to the Depository
pursuant to the Stock Administration Deposit Contract.
5.4.2. The Opinion of Telefonica's legal advisors pursuant to Exhibit C
which, signed by the parties, is attached to this contract.
Clause Six. Resolutory Condition.
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Extinction of purchase option and sale obligation once the option is exercised,
if the Closing does not take place in 1999: Notwithstanding the prior
notification of exercise of the option by Bidasoa, if for any reason the IPO
does not occur in 1999, or the purchase/sale of the Terra Shares between
Teleline and Bidasoa pursuant to the Purchase Contract is not consummated in
1999, this option shall terminate and become void, and the parties shall be
released from any purchase/sale obligation and payment for the TN Shares, with
no liability for it.
Clause Seven. Effects of Exercise of Option and Specific Performance of Delivery
Obligation.
Subject to the fulfillment of the conditions stipulated in Clause One of this
Contract, Bidasoa's exercise of the option shall presuppose formalization of the
Purchase Contract over the TN Shares, and Telefonica, S.A. shall be required, in
the capacity of seller, to deliver the TN Shares and to consummate the transfer
of their ownership at the Closing, pursuant to the provisions of this Contract.
Telefonica, S.A. expressly accepts the possibility of the specific performance
of its delivery obligation in the event of nonperformance on its part.
Clause Eight. Expenses.
Telefonica, S.A., as party of the first part, and Bidasoa, as party of the
second part, shall assume their own expenses connected with the negotiation,
drafting, signing, delivery and performance of this Contract and the contracts
stipulated hereby. Bidasoa, as party of the first part, and Telefonica, S.A., as
party of the second part, represent and warrant to the other party that the
negotiations connected with this Contract and the transactions stipulated herein
have been carried out in such fashion that they shall not give rise to any valid
claim against the other Party, Terra, TN or Teleline for brokerage commissions,
intermediation commissions or other similar payments.
Clause Nine. Confidentiality.
No press release shall be issued, nor shall the terms of this Contract be
disclosed to third parties without the mutual authorization of Bidasoa and
Telefonica, S.A., except for any information that is necessary or appropriate to
disclose in connection with TN's IPO. Telefonica, S.A. and Bidasoa may agree as
to the time and nature of the announcement of the transaction that will be made
to the employees of each party.
Clause Ten. General Provisions.
10.1. Cooperation. Each Party hereto shall make its best effort to make or cause
to be made, and to cooperate with the other Party hereto, to the extent
necessary, as to all the shares, and to make or cause to be made, pursuant
to applicable laws, all
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things necessary, appropriate or advisable for conducting or exercising
the transactions stipulated by this Contract.
10.2. Waivers. Bidasoa's nonperformance of any of its obligations or agreements
set forth herein may be waived only by Telefonica, S.A., in writing.
Nonperformance of Telefonica, S.A., of its obligations or agreements set
forth in herein may be waived only by Bidasoa, in writing.
10.3. Notices. All notices and other communications that are required or
permitted under this Contract shall be made in writing and sent to their
addressee by fax, which must be confirmed by original document signed by
an authorized agent of the Party giving the notice or communication, that
is sent by DHL, Federal Express or other global express courier service
that offers delivery times equal to or better than those of the companies
mentioned, on the understanding that the communication or notice shall be
effective as of the faxing date but only if the signed original
communication or notice is delivered to its recipient within two (2)
Business Days following the faxing date. If the original notice or
communication is not received within that time period, it shall be
effective until the Business Day on which such original notice or
communication is delivered.
Such notices or communications must in all cases be sent to the following
addresses:
(i) If addressed to Bidasoa:
Olympic Plaza
Fred Roeskstraat 123
Amsterdam: Guido Nieuwenhuizen
Fax #: (31) 20-577-1188
With copy for:
Fernando Elizondo O.
Coral 108
Colonia Villa del Pedregal
66280 San Pedro Garza Garcia, N.L.
Mexico
Fax #: (52-8) 303-4784
and also copy for:
Wenceslao Renovables
Moliere 39, Piso 7
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Polanco Chapultepec
11560 Mexico, D.F.
(ii) If addressed to Telefonica, S.A. or to TN:
Telefonica, S.A.
Gran Via, 28
28013 Madrid, Spain
Attention: Assistant Secretary General
with copies to: Terra Networks, S.A.
Edificio Atica No. 1
Avenida de Europa No. 33
28224 Pozuelo de Alarcon (Madrid), Spain
Attention: Ms. Cristina Lomana
and to
Baker & McKenzie Abogados, S.C.
Oficinas en el Parque - piso 10
Blvd. Antonio L. Rodriguez 1884 Pte.
64650 Monterrey, Nuevo Leon
Attention: Mr. Andres Ochoa Bunsow
Fax # (8) 399-1399
Such names and addresses may be changed by written notice to each person
indicated above.
Notwithstanding the foregoing provisions in this Clause, the Parties may choose
to give any notice or communication by personally delivering the corresponding
document to the appropriate address pursuant to the above, in which case such
communication or notice shall be effective on the date of delivery thereof, and
the signature in acknowledgment of receipt of the employee or agent of the
recipient performing such function must be obtained.
10.4. Applicable Laws and Dispute Resolution. This Contract shall be governed
and interpreted pursuant to the laws of Mexico.
10.5. Any dispute, claim or conflict arising from this Contract or connected
with it, or with the interpretation or violation of it, shall be submitted
to arbitration pursuant to the rules of the International Chamber of
Commerce in Paris insofar as such rules are not incompatible with this
paragraph. The decision on the award of the arbitrators may be confirmed
in any court of law that has jurisdiction for it or such court of law
confirming the award may be asked to enforce it, if necessary. The
arbitration petition shall be made within a reasonable time period
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calculated as of the onset of the claim, the dispute or any other matter
in doubt, and under no circumstances shall it be done after the date on
which the filing of the equity or legal actions, based on such claim,
dispute or any other matter in doubt, is time-barred under the applicable
statute of limitations.
10.6. The arbitral tribunal shall be composed of three arbitrators, one of whom
shall be appointed by each one of the Parties hereto. The two arbitrators
appointed in this manner shall designate a third arbitrator, on the
understanding, however, that if the two arbitrators fail to reach an
agreement as to the appointment of the third arbitrator, either
arbitrator may ask the International Chamber of Commerce in Paris to make
the appointment.
10.7. The location of the arbitration shall be the City of Dallas, Texas, and
it shall be conducted in the English and/or Spanish languages, without
distinction.
10.8. Each Party hereby waives the requirement of a hand-delivered notice of
arbitration, and agrees that it may be done in writing, by certified or
registered mail, with confirmation of receipt, to the address indicated
in this Contract, and any petition made in such manner shall be
considered made on the tenth Business Day following, calculated as of
when such petition has been placed in the mail.
10.9. Any legal action filed as support for the arbitration regarding this
Contract, including precautionary measures, shall be submitted to the
appropriate judicial authority. Each one of the Parties hereto (a)
accepts, generally and unconditionally, the exclusive jurisdiction of
said court and any related court of appeals, and irrevocably waives any
objection that now or in the future it might have as to the venue of any
dispute, legal action or lawsuit filed in such courts, or as to such
courts' being an inappropriate venue.
10.10. Counterparts. This Contract may be signed simultaneously in one or more
counterparts, each one of which shall be considered an original, but all
of them together shall constitute one and the same instrument.
10.11. Headings. The headings of the various clauses that this Contract contains
are solely for reference purposes and shall not in any way affect the
meaning or interpretation of this Contract.
10.12. Indivisible Contract. This Contract, including its exhibits and the
documents indicated herein, shall constitute the entire Contract and the
agreements of the parties hereto as to the subject contained herein.
There are no restrictions, undertakings, representations, absolute
warranties, warranties or commitments other than the ones expressly
stipulated or indicated herein. This Contract replaces all previous
contracts and agreements made between the Parties as to said subject.
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10.13. Amendments and Changes. This Contract may be amended or changed only with
the written agreement of the Parties hereto.
10.14. Binding Nature: Benefits. This Contract shall benefit the Parties hereto
and their respective successors and assignees, and shall be binding on
them; nothing included in this Contract expressly or implicitly has the
intent of granting any person other than the Parties hereto or their
respective successors and assignees any right, recourse, obligation or
liability under this Contract or by reason of it.
10.15. Transfer. This Contract may not be transferred by any of the Parties
hereto, except with the advance written consent of the other Parties
hereto.
10.16. Transfer Taxes. Income Tax by reason of this transaction or the sale,
transfer or delivery of the Shares, shall be payable and shall be assumed
by Bidasoa.
10.17. Best Knowledge and Belief. For the purposes of this Contract, the phrase
"to the best of Bidasoa's best knowledge and belief" when applied to a
representation or warranty made by Bidasoa, shall be considered as
meaning "to the best of Bidasoa's knowledge and belief" after proper
investigation; and "knowledge and belief" as used in that phrase shall be
considered as including all matters that Bidasoa or any officer of the
Subsidiary in actuality were familiar with or should have been familiar
with after a proper investigation.
10.18. Language. The Parties agree that this Contract may also be signed in the
English language, on the understanding that, in the event of any
difference, in the opinion of any of the parties, as to the content or
one or the other version, in all cases this version in Spanish shall
prevail.
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IN WITNESS WHEREOF, the Parties hereto have signed this Contract on the
date indicated
TELEFONICA, S.A.
[signature]
Mr. Diego Lozano Romeral
Assistant General Manager
Assistant Secretary General and
Secretary of the Board of Telefonica, S.A.
BIDASOA, B.V.
[signature] [signature]
By: ATC Management BV By: ATC Management BV
Mr. Guido Nieuwenhuizen Mr. Dirk Stolp
Agent Agent
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EXHIBIT A
Subject to Change by the Trustee
AGREEMENT ON DEPOSIT OF SHARES FOR PURPOSES OF ADMINISTRATION
Agreement on Deposit of Shares for Purposes of Administration entered into this
___ day of ___________________ of _______ by Bidasoa, B.V., a Dutch company,
represented by Mr. ________________________ and Mr. ________________________,
(herein after "Bidasoa") and Terra Networks, S.A., a Spanish company represented
by Mr. ________________________, (hereinafter "TN-Espana"), and
________________________, represented in this act by its
________________________, Mr. ________________________ (hereinafter the
"Trustee"), in accordance with the following recitals, definitions, and clauses.
RECITALS
I. The Trustee states that it is a financial institution duly established
and in existence in accordance with the laws of the kingdom of Spain,
and that it has the appropriate authorization from the Banco de Espana
to carry out operations involving the custody of securities. The
Trustee agrees to participate as a trustee in this Agreement.
II. Bidasoa states that it is a Dutch company, duly established in
accordance with the laws of Holland, and that it is the owner and
registered stockholder of the totality of the common, registered Class
A shares (hereinafter "Class A Shares of TN-Mexico"), with full voting
rights, representing 25 % of the capital stock of Terra Networks
Mexico, S.A. de C.V., a Mexican company (hereinafter "TN-Mexico").
III. TN-Espana declares that it is a Spanish company, and that it is the
owner and registered stockholder of the totality of the Class B
preferred, registered shares, with limited voting rights, representing
75% of the total capital stock of TN-Mexico.
IV. Bidasoa and TN-Espana jointly state that:
A. On September 10, 1999 they incorporated, as founding
shareholders, a Mexican corporation named Terra Network, S.A.
de C.V., pursuant to Public Recording No. 6,232, granted
before Atty. Eduardo Manautou Ayala, Notary Public Number 123
in and for the city of Monterrey, Nuevo Leon, whose first
official copy is duly recorded with the Public Registry of
Property and Commerce in the city of Monterrey, Nuevo Leon,
under No. 2468, with no Page No., Volume 431, Second Auxiliary
Book No. 3 for Public Recordings of Commercial Companies,
Commercial Section.
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B. That Terra Network, S.A. de C.V. was incorporated with a
capital stock of 50,000.00 pesos (Fifty Thousand pesos), legal
currency of the United Mexican States, subscribed and paid up
in full by (i) Bidasoa, which subscribed and paid up the
totality of the 1,250 Common, Registered Class A Shares of
TN-Mexico, with a par value of 10.00 pesos (ten pesos 00/100)
each and full voting rights, represented by No. 1-A stock
certificates, which shares represented 25% of the
corporation's total capital stock, and (ii) TN-Espana, which
subscribed and paid up the totality of the 3,750 Preferred,
Registered Class B Shares, with a par value of 10.00 pesos
(ten pesos 00/100) each and limited voting rights, represented
by No. 1-B stock certificates, which shares represented 75% of
the corporation's total capital stock.
C. That Bidasoa and TN-Espana held a Special and Regular General
Shareholders' Meeting of Terra Network, S.A. de C.V., where,
among the other resolutions, a resolution was approved
changing the company's name to Terra Networks Mexico, S.A. de
C.V. (hereinafter "TN-Mexico"), and the company's capital
stock was increased by the sum of 564,378,000.00 pesos (Five
Hundred Sixty-Four Million, Three Hundred Seventy-Eight
Thousand pesos 00/100), equivalent on that date to the sum of
U. S. $60,000,000.00 (Sixty Million dollars 00/100). This
increase was subscribed by (i) Bidasoa, which subscribed and
paid up 25% (twenty-five percent) of said increase, that is,
the totality of the Class A Shares of TN-Mexico, with full
voting rights, issued in relation to the increase and
represented by No. 2-A and 3-A share certificates, each
representing half of the Class A shares issued in relation to
the capital increase, and (ii) TN-Espana, which subscribed and
paid up 75% (seventy-five percent) of said increase, that is,
the totality of the Class B shares, with limited voting
rights, issued in relation to the increase, represented by No.
2-B share certificates.
D. On October 5, 1999, Bidasoa and TN-Espana entered into a
Agreement for the Sale of Shares (hereinafter the "Agreement
for the Sale of Class A Shares of TN-Mexico"), a copy of which
is attached to this Deposit Agreement, signed by the parties
and marked as Attachment A, which forms an integral part of
this Deposit Agreement. Thereunder, TN-Espana is to acquire
from Bidasoa the totality of the Class A Shares issued by
TN-Mexico at the time of its incorporation and in relation to
the capital increase approved at the Special and Regular
General Shareholders' Meeting referred to in the preceding
paragraph (hereinafter the "Class A Shares of TN-Mexico"),
once certain suspensive conditions have been met, which are
set forth in the Agreement for the Sale of Class A Shares of
TN-Mexico.
E. In accordance with the Agreement for the Sale of Class A
Shares of TN-Mexico, as consideration for the purchase of the
Class A Shares of TN-Mexico, TN-Espana agrees to pay Bidasoa:
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1. The sum of US$15,000,000.00 (Fifteen Million Dollars
00/100) in ready money as an advance, and Bidasoa in
this act acknowledges that it has received said sum
on today's date to its full satisfaction (hereinafter
the "Advance"), and
2. Once the suspensive conditions for the sale of the
Class A Shares of TN-Mexico have been met, and
simultaneous to conveyance of the ownership thereof
to TN-Espana, free of any encumbrance, reservation,
or restriction of dominion whatsoever, the Remaining
Price (defined below) or the New Remaining Price
(defined below), as applicable, may be paid by
TN-Espana to Bidasoa using shares issued by TN-Espana
(hereinafter the "TN-Espana Shares") provided that
this is appropriate pursuant to Clause Two of the
Agreement for the Sale of Class A Shares of
TN-Mexico.
F. Clauses 2.4.5 and 2.6 of the Agreement for the Sale of Class A
Shares of TN-Mexico set forth that a Conditional Deposit shall
be established on the TN-Espana Shares, in order to secure
performance of the obligations assumed by Bidasoa in the
above-mentioned Agreement.
DEFINITIONS
For effects hereof, unless expressly set forth to the contrary in this
agreement, the terms, phases, and words listed below shall have the following
meanings:
"Class A Shares of TN-Mexico" means the totality of the common, registered Class
A shares issued by TN-Mexico with a par value of 10.00 pesos (ten pesos 00/100)
each and full voting rights, represented by No. 1-A, 2-A, and 3-A stock
certificates issued by TN-Mexico. These shares are fully subscribed and paid up
by Bidasoa, and represent 25% of the capital stock of TN-Mexico.
"Deposited Shares" shall have meaning defined under Clause 1.1 hereof.
"Class A Shares of TN-Espana" shall mean the common shares issued in the past,
present, or future by TN-Espana, fully subscribed, paid up, free of any
encumbrance, charge, or reservation, and registered in such a way that, while
observing the restrictions set forth herein on the sales of said shares, they
are entitled to be sold as of the Date of Closing (defined below) on Spanish
Stock Markets (defined below), or on NASDAQ (defined below), at Bidasoa's
option.
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"Advance" means the amount of US$15,000,000.00 (Fifteen Million Dollars 00/100)
in ready money, which shall be paid to Bidasoa by TN-Espana in accordance with
the terms of Clause 1.2 of the Agreement for the Sale of Class A Shares of
TN-Mexico.
"Arbitrators" refers to arbitrators designated to decide such controversies as
may arise in relation to the Agreement for the Sale of Class A Shares of
TN-Mexico, pursuant to Clause 14.4 of said agreement.
"Investment Bank" means a world-class investment bank selected by Bidasoa and
TN-Espana in accordance with the Agreement for the Sale of Class A Shares of
TN-Mexico.
"Spanish Stock Markets" means finance markets for the purchase and sale of
securities accepted for trade, located in Spain and controlled by the National
Securities Market Commission of Spain.
"Closing" means the act through which Bidasoa conveys full ownership over the
Class A Shares of TN-Mexico, free of any encumbrance or restriction of dominion,
to TN-Espana, and the act through which TN-Espana makes payment of the Remaining
Price (defined below) or the New Remaining Price (defined below), as applicable,
to Bidasoa.
"Agreement" means this Agreement on Deposit of Shares for Purposes of
Administration.
"Agreement for the Sale of Class A Shares of TN-Mexico" shall have the meaning
defined in Recital IV.D hereof.
"Share Lien Agreement" means the Share Lien Agreement entered into on October 5,
1999 between the Parties, in accordance with the terms of Clause 2.6 of the
Agreement for the Sale of Class A Shares of TN-Mexico.
"Controlling Company" shall mean any company owning at least ninety-nine percent
(99%) of the shares of another company to which said term refers.
"Trustee" means ________________________, a Spanish financial institution.
"Banking Day" or "Banking Days" means any day other than a Saturday, a Sunday,
or a day on which banks are permitted to close in one or more of the cities of
Madrid, Spain; Monterrey, Nuevo Leon, Mexico; or Amsterdam, Holland.
"Dollar" or "Dollars" means the legal currency of the United States of America.
"Date of Closing" means the date on which the Closing takes place in accordance
with the terms of Clause Five of the Agreement for the Sale of Class A Shares of
TN-Mexico.
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"Affiliate" shall mean any company whose shares are at least ninety-nine percent
(99%) owned by another company, which, in turn, owns at least ninety-nine
percent (99%) of the shares of the company to which said term refers.
"IPO" or "Initial Public Offering" means the initial primary or secondary offer
and placement of the shares of TN-Espana, and their subsequent acceptance for
trade on any of the securities markets or exchanges of Spain, the United States
of America or any other country, as well as NASDAQ.
"Mexico" means the United Mexican States.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotations, a computerized system operated by the National Association of
Securities Dealers of the United States of America, that provides price
quotations for securities traded over-the-counter by securities dealers.
"New Remaining Price" means the price, beyond the Advance, that TN-Espana shall
pay Bidasoa in accordance with the terms of Clause 2.3 of the Agreement for the
Sale of Class A Shares of TN-Mexico, which would be applicable should the
Closing occur after December 31, 1999, including, if applicable, TN-Espana
Shares.
"Parties" means Bidasoa and TN-Espana.
"Peso" or "Pesos" means the legal currency of Mexico.
"Remaining Price" means TN-Espana Shares whose Institutional Price per Share
(defined below) in the aggregate is the sum of US$220,000,000.00 (Two Hundred
and Twenty Million Dollars 00/100), which TN-Espana shall pay, beyond the
Advance, as consideration for the Class A Shares of TN-Mexico in accordance with
the terms of Clause 2.2 of the Agreement for the Sale of Class A Shares of
TN-Mexico.
"Institutional Price per Share" means the price accepted by TN-Espana as the
price per share of the stock it issues, offered to institutional investors as
part of the IPO conducted, if applicable, on Spanish Stock Markets, NASDAQ, or
stock exchanges of any other country on the date of the IPO.
"Direct Subsidiary" means any company whose shares are at least ninety-nine
percent (99%) owned by another company to whom said term refers.
"LIBOR Rate" means a simple annual interest rate equivalent to (i) the annual
rate appearing on Page 3750 of the Telerate screen (or of any page replacing it)
as the compound rate offered for interbank deposits in London, for the time
period closest to the one for which the rate is applicable, shown under the
heading "USD" at 11:00 a.m. (London time) two (2) banking days before the date
on which payment of the New Remaining Price is scheduled; or (ii) if the rate
specified in Clause (i) cannot be determined, the annual rate equivalent to the
arithmetic mean of the rates appearing on the page known as the "LIBO" page of
Reuters Monitor Money Rates Services (or any page replacing it) at approximately
11:00 a.m. (London time) two (2) banking days before the date on which payment
of the New Remaining Price is scheduled.
5 [initials]
<PAGE> 20
"Telefonica, S.A." means Telefonica, S.A., a Spanish company, or any affiliate
or subsidiary thereof, which is a stockholder of shares representing the capital
stock of TN-Espana.
"TN-Mexico" means Terra Networks Mexico, S.A. de C.V., a Mexican company,
incorporated pursuant to Public Recording Number 6,232 granted before Atty.
Eduardo Manautou Ayala, Notary Public Number 123 in and for the city of
Monterrey, Nuevo Leon on September 10, 1999, whose first official copy is duly
recorded with the Public Registry of Property and Commerce in the city of
Monterrey, Nuevo Leon, under No. 2468, with no Page No., Volume 431, Second
Auxiliary Book No. 3 for Public Recordings of Commercial Companies, Commercial
Section.
CLAUSES
Based on the agreements and covenants set forth herein, the parties express
their will in the following terms:
CLAUSE ONE. ESTABLISHMENT OF DEPOSIT
1.1 Pursuant to Clause 2.4.5 of the Agreement for the Sale of Class A
Shares of TN-Mexico, Bidasoa hereby delivers, in deposit to the
Trustee's administration, the TN-Espana Shares that it receives on
today's date from TN-Espana in payment of the Remaining Price or the
New Remaining Price, as applicable (hereinafter the "Deposited
Shares"), so that the Trustee may administer them in accordance with
the instructions and purposes set forth herein. The signing of this
Agreement formally constitutes a receipt granted by the Trustee in
favor of Bidasoa for the Deposited Shares.
1.2 Bidasoa expressly states that all fruits of any nature generated in
favor of Bidasoa as registered stockholder of the Deposited Shares,
including any dividends or bonus stock issued, also form a part of the
deposit.
1.3 The Parties agree that the Deposited Shares shall remain on deposit to
secure compliance with (i) any obligations arising from the Agreement
for the Sale of Class A Shares of TN-Mexico that are the responsibility
of Bidasoa and that subsist subsequent to the Closing under the terms
thereof, and (ii) the restrictions set forth in Clause 2.4 of the
Agreement for the Sale of Class A Shares of TN-Mexico with respect to
the holding of the Deposited Shares, including but not limited to:
6 [initials]
<PAGE> 21
1.3.1 Restrictions on the sale of the Deposited Shares set forth in
Clause 2.4.1 of the Agreement for the Sale of Class A Shares
of TN-Mexico;
1.3.2 Preemptive rights granted on the Deposited Shares under Clause
2.4.2 of the Agreement for the Sale of Class A Shares of
TN-Mexico; and
1.3.3 The obligation to exercise voting rights derived from the
Deposited Shares so long as Bidasoa is their owner, in
accordance with the instructions received from Telefonica,
S.A. in accordance with the terms of Clause 2.4.4 of the
Agreement for the Sale of Class A Shares of TN-Mexico.
CLAUSE TWO. RELEASE OF DEPOSITED SHARES
The parties agree that the Deposited Shares shall be automatically released from
the deposit established hereunder upon compliance with the terms for lifting the
restrictions on the sale of the Deposited Shares referred to in Clause 1.3.1
hereof, and only in the proportion in which said restrictions are lifted, unless
prior to said date the Arbitrators, as interim equitable relief, have notified
the Trustee that TN-Espana has a well-founded claim with respect to Bidasoa's
performance of its obligations under the Agreement for the Sale of Class A
Shares of TN-Mexico. The trustee shall only release and deliver the Deposited
Shares to Bidasoa to the extent that (i) the Arbitrators notify the Trustee that
TN-Espana's claim is well-founded, without need for said claim at that time to
be fully proven by TN-Espana and (ii) that said claim is for an amount exceeding
the value at that time of the shares that shall remain subsequent to the
corresponding release.
In the event that there are shares whose release is pending and a claim of the
type mentioned herein is received from the Arbitrators, the Trustee may only
retain the portion of the shares pending release whose value corresponds to the
amount claimed.
Even if the Arbitrators have provided notice of a claim, the Trustee, at
Bidasoa's request, shall authorize the sale of shares on which restrictions have
been lifted, but that have been retained by the Trustee in the cases mentioned
herein, provided that the Trustee is ensured that the net proceeds of the sale,
after applicable taxes, shall form part of the Deposit for the effects set forth
herein.
7 [initials]
<PAGE> 22
In the event that as a result of one or more TN-Espana claims filed with the
Trustee by the Arbitrators, the Trustee retains shares after the sales
restrictions have been lifted that are referred to in Clause 2.4.1 of the
Agreement for the Sale of Class A Shares of TN-Mexico, and a final determination
is later made that said claim is not well-founded, TN-Espana shall be obligated
to indemnify Bidasoa through the payment of interest at the LIBOR Rate plus six
(6) percentage points. Said rate shall be applied to the value of the retained
shares or retained amount, as applicable, plus any expenses and/or costs
incurred by Bidasoa in relation to said unfounded retention. The interest
mentioned herein shall be calculated as of the date on which the Trustee placed
the hold on the shares or cash, and up until the same have been delivered to
Bidasoa.
CLAUSE THREE. ENFORCEMENT OF DEPOSIT IN THE EVENT OF A BREACH
The Deposited Shares shall form a part of Bidasoa's net worth, despite being
subject to the deposit established hereunder. Thus, the Deposited Shares shall
at all times be subject to satisfying any obligations that Bidasoa has failed to
perform pursuant to this Agreement or pursuant to the Agreement for the Sale of
Class A Shares of TN-Mexico or applicable law. The Trustee shall abide by all
final orders pronounced by the Arbitrators or by any court that has competent
jurisdiction with respect to the Deposited Shares. The release of the Deposited
Shares shall not limit any right that TN-Espana may have over the same pursuant
to applicable law.
CLAUSE FOUR. TRUSTEE'S AUTHORITY AND OBLIGATIONS
For purposes of performing the role assumed by the Trustee hereunder, the
Trustee is empowered to exercise the following authority:
4.1 Receive the Deposited Shares on deposit, keep them, and deliver them to
whom they correspond pursuant hereto and pursuant to the Agreement for
the Sale of Class A Shares of TN-Mexico, provided that the terms of
Clause Two hereof are met.
4.2 So long as this agreement remains in effect, Bidasoa expressly grants
the Trustee the right to exercise all corporate rights corresponding to
it as the registered stockholder of the Deposited Shares.
4.3 The Trustee shall cast its vote on the deposited shares in the same way
as the votes are cast on the shares of TN-Espana that belong to
Telefonica, S.A. For said purpose, it shall make a prior request to
Telefonica, S.A. for written instructions as indicated in Clause 6.3
hereof. If for any reason the Trustee should fail to receive voting
instructions, it must necessarily cast its vote in the same way as
Telefonica, S.A. does, so as to comply with the terms of Clause 2.4.4
of the Agreement for the Sale of Class A Shares of TN-Mexico. It is
nonetheless understood that on resolutions that particularly and
adversely affect the interests of Bidasoa alone as the stockholder of
the TN Shares [sic], the Trustee shall not be obligated to vote in
accordance with the instructions it receives from Telefonica, S.A.
8 [initials]
<PAGE> 23
4.4 So long as this Agreement remains in effect, Bidasoa recognizes that
the deposit includes all economic rights to which it is entitled as the
registered stockholder of the Deposited Shares, especially the right to
dividends. All economic risks generated for Bidasoa on the Deposited
Shares as a TN-Espana stockholder shall be turned over to the party
entitled thereto once the terms of Clause Two hereof have been met.
4.5 The deposit established hereunder shall be extended to and shall
include any certificates of title, securities, tangible or intangible
assets, or funds substituting or corresponding to the deposited shares
in the event of a merger, dissolution, increase or decrease in capital,
share conversion or share swap, transformation, spin-off, or anything
else of a similar nature affecting TN-Espana. For said effects, the
parties agree to grant, when applicable, any and all publicly recorded
and/or non-recorded instruments as may be necessary or beneficial to
formalize the increase in the assets that are the subject of the
previously established deposit.
4.6 Furthermore, the Trustee shall deliver the deposited shares to Bidasoa
as the sales restrictions are lifted that are referred to in Clause
2.4.1 of the Agreement for the Sale of Class A Shares of TN-Mexico.
Said deliveries shall be made upon written request from Bidasoa once
the time periods indicated in the above-referenced Clause 2.4.1 of the
Agreement for the Sale of Class A Shares of TN-Mexico have lapsed,
without need for instructions from TN-Espana.
4.7 To grant such powers of attorney as it deems necessary in favor of the
individuals indicated in writing by TN-Espana, so that they may
represent the shares at the General Shareholders' Meetings of
TN-Espana, and, when necessary, so that they may exercise any other
Corporate and Property Rights inherent to the deposited shares, for
such time as they are included in this deposit.
4.8 The Trustee shall exercise preemptive and preferential rights on the
deposited shares on behalf of the party entitled thereto in accordance
with instructions in said regard received from TN-Espana, pursuant to
Clause 2.4.2 of the Agreement for the Sale of Class A Shares of
TN-Mexico.
4.9 To engage in any other act entrusted to it by TN-Espana and/or Bidasoa,
as corresponds to them, pursuant to the terms of this Agreement, that
are necessary to achieve the objectives hereof.
9 [initials]
<PAGE> 24
4.10 The Trustee shall notify the parties of any request it receives from
either of them.
CLAUSE FIVE. COMMUNICATION TO THE COMPANY
As of the date of the signing of this contract, TN-Espana shall be kept informed
on the deposit of shares established hereunder.
CLAUSE SIX. AUTHORITY OF TN-ESPANA
TN-Espana is authorized to:
6.1 Instruct the Trustee as to the individual or individuals in whose favor
the respective powers of attorney shall be granted for exercising the
Rights over the deposited Shares.
6.2 Engage in all other acts that are consistent and necessary, without any
limitation whatsoever, for carrying out the objectives hereof.
6.3 The parties agree that all instructions given to the Trustee by
TN-Espana through the Secretary of the Board of Directors or such
person as he or she may designate in relation hereto, shall necessarily
be made in writing. The Trustee shall be released from all liability
vis-a-vis the parties hereto and third parties, provided that it acts
in good faith and in accordance with the instructions it is to receive
from TN-Espana pursuant to the terms hereof.
CLAUSE SEVEN. RENDERING OF ACCOUNTS
The Trustee, on a monthly basis, shall prepare a written report to TN-Espana and
Bidasoa on the state of the deposit during the corresponding period, and shall
send said report to the domiciles referred to below within the first five (5)
Banking Days of each month. The parties agree that TN-Espana and Bidasoa shall
have a period of fifteen calendar days counting as of the date of receipt of
said report to make such observations as it sees fit, if any. In the event that
no observation is made within the above-indicated period, their rights to make
any observation thereafter shall be precluded.
CLAUSE EIGHT. TERM
The term hereof shall be as necessary for compliance with its objectives, and it
shall be extinguished once all the TN-Espana Shares have been released in favor
of Bidasoa, and once the applicable time periods have concluded.
CLAUSE NINE. FEES
10 [initials]
<PAGE> 25
Bidasoa and TN-Espana shall pay the following fees to the Trustee:
CLAUSE TEN. DEFENSE OF THE DEPOSITED SHARES
10.1 The Trustee shall not be responsible for activities, acts, or omissions
of the parties or of third parties that impede or hinder compliance
with the objectives hereof. In the event that Bidasoa and/or TN-Espana
should become aware of said circumstance, they shall be obligated to
provide written notice to the Trustee of any situation that could
affect the Deposit of the shares established hereunder. Furthermore,
the Trustee shall not be obligated to defend the deposited shares, but
shall solely be obligated to grant power of attorney to such person or
persons as are indicated in writing for said effects by TN-Espana or
Bidasoa, as applicable, for administrative, court, or any other
proceedings. The Trustee, shall under no circumstance be responsible
for the acts of said attorneys in fact, nor shall it be obligated to
pay the professional fees or expenses arising from their activities.
10.2 In the event of an emergency, the Trustee may engage in such acts as
are indispensable to maintain the deposited shares and the rights
derived from them, without prejudice to the authority referred to in
the immediately preceding paragraph to indicate to the Trustee a
designation of one or more legal agents.
CLAUSE ELEVEN. GENERAL PROVISIONS
11.1 Cooperation. Each of the parties hereto shall make its best efforts
with respect to all the shares to do or have done and to cooperate with
the other party hereto, in the degree necessary, to do or have done, in
keeping with applicable law, anything necessary, appropriate, or
beneficial to carry out and implement the operations indicated
hereunder.
11.2 Waivers. Failure by Bidasoa to comply with one or more of its
obligations or covenants as set forth herein may only be waived by
TN-Espana in writing. Failure by TN-Espana to comply with its
obligations or covenants as set forth herein may only be waived by
Bidasoa in writing.
11 [initials]
<PAGE> 26
11.3 Notifications: All notifications and other communications required or
permitted pursuant hereto shall be made in writing, and shall be sent
to their recipients by fax. The fax shall be confirmed by having the
original writing signed by an authorized representative of the party
making the notification or communication, and sending it via DHL,
Federal Express, or another world express messenger service offering
delivery times better than or equal to those of the above-mentioned
companies. It is understood that the communication or notification
shall go into effect on the date of the sending of the fax, but only if
the original signed notification or communication is delivered to its
recipient within two (2) banking days following the date of the sending
of the fax. In the event that the original notification or
communication is not received within said time period, the same shall
not go into effect until the banking date on which said original
notification or communication is delivered. Said notifications or
communications shall in all cases be sent to the following addresses:
(i) If addressed to Bidasoa:
Olympic Plaza
Fred Roeskstraat 123
Amsterdam 1076EE
Attention: Guido Nieuwenhuizen
Fax #: (31) 20-577-1188
With a copy to:
Fernando Elizondo O.
Coral 108
Colonia Villa del Pedregal
66280 San Pedro Garza Garcia, Nuevo Leon
Mexico
Fax #: (52-8) 303-4784
And also copy to:
Wenceslao Renovales
Moliere 39, Piso 7,
Polanco Chapultepec,
11560 Mexico, D. F.
(ii) If addressed to TN-Espana:
Terra Networks, S. A.
Gran Via, 28
28013 Madrid, Spain
Atencion: Secretario General
Fax #:
12 [initials]
<PAGE> 27
With copies to:
Baker & McKenzie Attorneys, S.C.
Oficinas en el Parque - piso 10
Blvd. Antonio L. Rodriguez 1884 Pte.
64650 Monterrey, Nuevo Leon
Attention: Lic. Andres Ochoa Bunsow
Fax # (8) 399-1399
(iii) If addressed to the Trustee:
----------------------------------
----------------------------------
----------------------------------
Said names and addresses may be changed through written notification to each of
the above-indicated persons.
Notwithstanding anything set forth above in this clause, the parties may opt to
make any notification or communication through personal delivery of the
corresponding writing to the appropriate domicile pursuant to the above. In said
case, the communication or notification shall go into effect on the date of
delivery of the same, and a signature to acknowledge receipt shall be taken from
employee or representative of the recipient who has said function.
10.4 *Applicable Law and Dispute Resolution. This Agreement shall be
governed and interpreted in accordance with the laws of Mexico.
10.4.1 Any dispute, claim, or controversy arising from this Agreement
or related thereto, or over the interpretation or violation
thereof, shall be submitted to arbitration in accordance with
the rules of the International Chamber of Commerce of Paris in
the extent to which said laws are not incompatible with this
paragraph. The judgment ratifying the award of the arbitrators
may be pronounced by any court with competent jurisdiction
therefor, or said court may be petitioned to ratify the award
for its execution, as applicable. The arbitration petition
shall be made within a reasonable time period, counting as of
the time that the claim, dispute, or any other question in
doubt arises, but in no case after the date on which the
matter in law or in equity, on the basis of said claim,
dispute, or other question in doubt, would have lapsed under
the applicable statute of limitations.
- ----------
* Translator's Note: Numbering error reproduced in accordance with the
Spanish original of this document.
13 [initials]
<PAGE> 28
10.4.2 The arbitration panel shall be comprised by three arbitrators,
one of whom shall be designated by each Party hereto. The two
arbitrators so designated shall in turn designate a third
arbitrator, with the understanding, nonetheless, that if the
two arbitrators do not reach an agreement with respect to the
designation of the third arbitrator, either of the arbitrators
may request that the International Chamber of Commerce of
Paris make the designation.
10.4.3 The venue of the arbitration shall be the city of Dallas,
Texas, and the arbitration shall be conducted indistinctly in
English and/or Spanish.
10.4.4 Each of the Parties hereby waives the requirement of a
hand-delivered arbitration notice and agrees that notice may
be made in writing by certified or registered mail, return
receipt requested, to the address indicated in this Agreement.
The Parties further agree that any petition handled in such a
manner shall be deemed made on the tenth following Banking
Day, counting as of the date that it was deposited in the
mail.
10.4.5 Any court proceeding brought in support of the arbitration
with respect to this Agreement, including interim equitable
relief, shall be filed with the competent court authority.
Each of the Parties hereto (a) generally and unconditionally
accepts the exclusive competency of said court and any related
Court of Appeals, and irrevocably waives any objection it
might have now or in the future regarding jurisdiction for any
litigation, court action, or procedure brought in said courts,
or any objection claiming that said courts lack proper
jurisdiction.
10.4.6 Copies. This Agreement may be simultaneously signed in one or
more copies, each of which shall be considered an original,
but all of which together shall constitute one and the same
instrument.
10.4.7 Headings. The headings to the various clauses contained in
this Agreement are for purposes of reference only, and shall
in no way whatsoever effect its meaning or interpretation.
10.4.8 Indivisible Agreement. This Agreement, including its
attachments and the documents mentioned herein, constitute the
entire Agreement and the covenants between the parties hereto
with respect to the objective contained in this Agreement.
There are no other restrictions, promises, representations,
absolute guaranties, warranties, or commitments other than
those expressly set forth or mentioned herein. This Agreement
replaces all contracts and agreements previously made between
the Parties with respect to said objective.
14 [initials]
<PAGE> 29
10.4.9 Amendments and Modifications. This Agreement may only be
amended or modified through a written agreement between the
Parties hereto.
10.4.10 Binding Nature. Benefits. This agreement shall enure to the
benefit of the Parties hereof and their respective successors
and assigns, and shall be binding upon them. Nothing expressly
or implicitly included in this Agreement is intended to grant
any person other than the Parties hereto, or their respective
successors and assigns, any right, remedy, obligation, or
liability under this Agreement or arising from it.
10.4.11 Assignment. This Agreement may not be assigned by any of the
parties hereto, except with written consent from its other
Parties.
IN WITNESS WHEREOF, the Parties hereto have signed this Agreement on the date
set forth in the opening hereof.
TRUSTEE
By: _______________________________
Position: _________________________
TN-Espana
TERRA NETWORKS, S.A.
By: _______________________________
Position: _________________________
BIDASOA
BIDASOA, B.V.
By: _______________________________
Position: _________________________
15 [initials]
<PAGE> 30
Final Version
Exhibit B
Model of Letter Exercising Option Right
October [ ], 1999
Telefonica, S.A.
Gran Via, 28
28006 Madrid
Attn.: Assistant Secretary General
Dear Sirs:
This is to inform you that, exercising our option right born of the Option
Contract that we signed with you on October 5, 1999 (hereinafter the
"Contract"), we have hereby decided to purchase the "TN Shares" covered under
the Contract for the total price of US$220,000,000.00 (Two hundred twenty
million dollars), at the Institutional Price per Share, using the Dollar/Euro
Exchange Rate on the date on which the IPO is conducted, pursuant to the
conditions agreed in said Contract.
Sincerely,
BIDASOA, B.V.
by proxy
Signed [ ]
15
<PAGE> 31
Final Version
BIDASOA B.V.
Olympic Plaza
Fred Roeskstraat 123
Amsterdam 1076EE
Amsterdam, October 11, 1999
Telefonica, S.A.
Gran Via, 28
28006 Madrid
Attn.: Assistant Secretary General
Dear Sirs:
This is to inform you that, exercising our option right born of the Option
Contract that we signed with you on October 5, 1999 (hereinafter the
"Contract"), we have hereby decided to purchase the "TN Shares" covered under
the Contract for the total price of US$220,000,000.00 (Two hundred twenty
million dollars), at the Institutional Price per Share, using the Dollar/Euro
Exchange Rate on the date on which the IPO is conducted, pursuant to the
conditions agreed in said Contract.
Sincerely,
BIDASOA, B.V.
by proxy
[signature] [signature]
By: ATC Management BV By: ATC Management BV
Signed Guido Nieuwenhuizen Signed Dirk Stolp
Received and agreed.
TELEFONICA, S.A.
by proxy
[signature]
-------------------------
Signed Diego Lozano Romer
16
<PAGE> 1
Exhibit 2.9
SHARE SUBSCRIPTION AGREEMENT
Agreement for the Subscription of Shares ("Agreement") entered into on June 15,
1999 between the following parties, to wit, the party of the first part:
RBS Administracao e Cobrancas Ltda., a limited-liability joint-stock corporation
with head office at Avenida Erico Verissimo, 400, in the City of Porto Alegre,
State of Rio Grande do Sul, registered with the CNPJ/MP under No.
94.995.693/0001-43, herein represented by its directors, Messrs. Nelson Pacheco
Sirotsky and Carlos Schneider Melzer ("RBS");
MLSP -- Comercio e Participacoes Ltda., a limited-liability joint-stock
corporation, duly organized and existing in accordance with the laws of the
Federative Republic of Brazil, with head office at Rua Coronel Camisao,
237/601, Bairro Higienopolis, in the City of Porto Alegre, State of Rio Grande
do Sul, registered with the CNPJ under No. 02.429.422/0001-02, with its
Corporate Charter duly recorded at the Rio Grande do Sul State Trade Board on
March 24, 1998, under No. 43.203.726.761, herein represented by its managing
partners Messrs. Sergio Cristovao Pretto, a Brazilian citizen, married, an
electronics engineer, holder of RG Identification Card No. 8000873409 SSP-RS
and registered with the CPF/MF under No. 250.408.980-53, residing and domiciled
in the City of Porto Alegre, State of Rio Grande do Sul at Rua Coronel Camisao,
237, apto. 601, and Marcelo Pavao Lacerda, a Brazilian citizen, divorced, an
electronics engineer, holder of RG Identification Card No. 4007554423 SSP-RS
and registered with the CPF/MF under No. 333.979.450-20, residing and domiciled
in the City of Porto Alegre, State of Rio Grande do Sul at Rua Dr. Vale, 605,
apto. 202-B ("MLSP");
Afonso Antunes da Motta, a Brazilian citizen, divorced, an attorney, holder of
RG Identification Card No. 1006824658 SSP-RS and registered with the CPF/MF
under No. 107.772.960-04, residing and domiciled in the City of Porto Alegre,
State of Rio Grande do Sul at Rua Engenheiro Antonio Reboucas, 164, apto. 301
("Afonso");
Luiz Alberto Barichello, a Brazilian citizen, single, a business manager, holder
of RG Identification Card No. 2006515817 SSP-RS and registered with the CPF/MF
under No. 009.039.140-34, residing and domiciled in the City of Porto Alegre,
State of Rio Grande do Sul at Avenida Belem Velho, 3610 ("Barichello"); and
<PAGE> 2
Silvia Nora Berno de Jesus, a Brazilian citizen, married, a systems analyst,
holder of RG Identification Card No. 5002912995 SSP-RS and registered with the
CPF/MF under No. 164.176.400-78, residing and domiciled in the City of Porto
Alegre, State of Rio Grande do Sul, at Rua Felicissimo Azevedo, 423, apto. 401
("Silvia");
RBS, MLSP, Barichello, Afonso and Silvia shall herein be referred to jointly as
"Current Controlling Parties;" and the party of the second part,
Telefonica Interactiva Brasil Ltda., a limited-liability joint-stock corporation
with head office at Rua da Consolacao 247, 6(degree) andar, sala 28-A, in the
City of Sao Paulo, State of Sao Paulo, registered with the CNPJ under No.
03.185.736/0001-70, herein represented by its representative, Mr. Juan Peres
Saena de Buruage and by its Manager Representative Mr. Moshe B. Sendacz
("Telefonica Interactiva Brasil");
and as Consenting Mediator:
Nutec Informatica S.A., a joint-stock corporation with head office in the City
of Porto Alegre, State of Rio Grande do Sul at Rua Silveiro, 1,111, sub-solo,
Morro de Santa Tereza, registered with the CNPJ under No. 91.088.328/0001-67,
herein represented by its Directors, Messrs. Nelson Pacheco Sirotsky and Silvia
Nora Berno de Jesus ("NUTEC");
RBS, MLSP, Barichello, Afonso, Silvia and Telefonica Interactiva Brasil are
henceforth to be referred to jointly as "Parties."
WHEREAS the Current Controlling Parties are joint holders of 16,613,504 (sixteen
million, six hundred thirteen thousand, five hundred four) shares of the total
capital of Nutec, a privately held company identified above, with 14,538,349
(fourteen million, five hundred thirty-eight thousand, three hundred forty-nine)
being common shares (the "Common Shares"), and 2,075,155 (two million,
seventy-five thousand, one hundred fifty-five) being preferred shares, classes A
and B (the "Preferred Shares");
WHEREAS Nutec is one of the leading companies in the market for the supply of
Internet access, production, development and distribution of content by
Internet, and also includes among its principal activities the development,
production, installation and maintenance of information systems, as well as
consulting, operational assistance, training and the holding of courses and
seminars in information services, as well as the marketing and representation of
information service systems.
WHEREAS Nutec holds as its principal asset the brand name "ZAZ" and the
technical know-how of the members of its staff, and also holds
<PAGE> 3
representative interests in the control of other corporations which also provide
Internet access;
WHEREAS Telefonica Interactiva Brazil is a subsidiary company of Telefonica
Interactiva S.A., a Spanish corporation active in the market for the supply of
Internet access in Spain and in other countries, and which has long experience
in this area, having an interest in developing that activity in Brazil through a
controlling shareholder interest in Nutec, through Telefonica Interactiva
Brasil;
WHEREAS the Current Controlling Parties have an interest in transferring control
of Nutec to a strategic partner, and consequently agree that Telefonica
Interactiva Brazil will subscribe new shares in the capital of Nutec that will
ensure corporate control.
the Parties have duly agreed among themselves to enter into this Subscription
Agreement, pursuant to the following terms and conditions:
CLAUSE I - SUBSCRIPTION OF SHARES
1.1. Subscription. The Current Controlling Parties will, on this date, hold the
Nutec extraordinary general assembly, on which occasion they may decide on the
issuance of 3,323,498 (three million, three hundred twenty-three thousand, four
hundred ninety-eight) new common shares, representing an interest equivalent to
16.67% of the total capital stock and representing control of Nutec
("Controlling Shares"). Such Controlling Shares shall be completely subscribed
by Telefonica Interactiva Brazil. RBS, MLSP, Barichello, Afonso and Silvia
expressly waive their right of first refusal to subscribe the Controlling
Shares.
1.2 Subscription Price. The Controlling Shares shall be paid-in by Telefonica
Interactiva Brasil at the time of the subscription, in the country's current
legal tender currency. In exchange for the Controlling Shares, Telefonica
Interactiva Brasil shall pay the total subscription price of R$ 411,847,872,16,
equivalent on this date to US$ 233,077,460.20, which corresponds to the
subscription price of R$ 123.92 / US$ 20.13 per share.
CLAUSE 2. WARRANTS AND REPRESENTATIONS BY THE CONTROLLING PARTIES
The Current Controlling Parties provide and give to Telefonica Interactiva
Brasil, jointly and individually, the following warrants and representations.
<PAGE> 4
2.1. Capital Stock of Nutec. The capital stock of Nutec on this date is R$
4,638,764.16, represented solely by 16,613,504 registered shares without par
value, 14,538,349 of them being common shares and 2,075,155 being preferred
shares of classes A and B, validly issued, completely subscribed and paid-in.
There are no other shares in Nutec's capital, whether authorized, issued or
outstanding, nor have any subscriptions been agreed to as of this date, nor
options or other obligations of any kind (whether or not represented by
certificates) which impose on Nutec the obligation to issue shares of its own
capital, except for the subscription of shares mentioned in Clause 1.1 above.
2.2. Ownership of the Shares. The Current Controlling Parties are, as a whole,
the legal owners of 100% (one hundred percent) of the Common and Preferred
Shares, completely paid-in and free and clear of encumbrances, pledges, liens,
options, rights of refusal or priority for the purchase, and other claims of any
nature, and they have full right, power and authority under their respective
corporate charters, as the case may be, to participate in and vote in the Nutec
extraordinary general shareholders assembly. The number of Common Shares and
Preferred Shares which each Current Controlling Party owns on the date of this
Agreement is specified in Annex 2.2 to this Agreement. As of this date, there
are no court orders, administrative proceedings or other facts or circumstances
pending which might prevent or interfere with consummation of the transaction as
provided for in Clause 1 of this Agreement.
2.3. Existence and Compliance of Status. Nutec (a) is a corporation duly
organized, in valid existence and with compliant status in accordance with the
laws of the Federative Republic of Brazil; (b) it has full power and corporate
authority to own or maintain, under lease or similar agreement, the properties
and assets that it currently owns or maintains, as well as to engage in its
activities and business as it currently does; (c) it owns all necessary licenses
and authorizations issued by federal, state and municipal agencies to engage in
its activities, and the exercise of these activities is not in violation of any
administrative standard or regulation. The Current Controlling Parties have
previously submitted to Telefonica Interactiva Brasil copies of the corporate
charter, the Nutec Corporate Bylaws and those of the corporations mentioned in
Clause 2.4 of this Agreement, currently valid and recorded with the respective
Trade Boards. These copies submitted to Telefonica Interactiva Brasil represent
the entire and actual status of the documents of the respective corporations.
2.4. Investments in Other Corporations. Annex 2.4 to this Agreement contains a
complete and accurate list of each corporation, association or other entity in
which Nutec holds shares, quotas or other interests (the corporations on this
list in which Nutec holds an interest in the capital stock representing control
are hereinafter to be referred to as "Subsidiaries"), showing in each case the
following: (a) the number of shares or quotas, or of other interests held by
Nutec; and (b) Nutec's total
<PAGE> 5
investment in each of these corporations or entities. All shares, quotas or
other interests in such corporations owned by Nutec were validly issued,
completely subscribed and paid-in, and Nutec holds good title to each such
share, quota or other interest in each such entity. As of this date no
subscriptions, options or other obligations of any kind (whether or not
represented by certificates) have been engaged which might impose on Nutec the
obligation to issue shares, quotas or other capital interests of the
corporations listed in Annex 2.4, nor the obligation to sell, transfer or
alienate any shares, quotas or other interests owned by Nutec.
2.5. Employees. Annex 2.5 of this instrument contains a complete and accurate
list of all advisers, directors, managers and other employees of Nutec and its
subsidiaries, as well as their respective compensation and of all unions with
which they are affiliated and collective agreements signed by Nutec. All
employees of Nutec and the subsidiaries are properly recorded in the
appropriate corporate books, along with the respective compensation due to each,
at all times in accordance with the applicable laws and regulations. Both Nutec
and its subsidiaries have completed all records and filings and have taken all
necessary measures in accordance with the laws and regulations, with respect to
retirement contributions, labor laws and social contributions. All retirement
contributions and social contributions due have been completely paid or
appropriate reserves have been made on the respective balance sheets for the
fiscal year ending December 31, 1998. Except as shown in Annex 2.5A, Nutec and
the Subsidiaries are not involved in any other labor disputes. Telefonica
Interactiva Brasil and Nutec may, at their free discretion, choose the private
retirement plan for the Nutec employees.
2.6. Nutec Financial Statements and Ledgers. The Current Controlling Parties
provided Telefonica Interactiva Brasil with the balance sheet and financial
statements, accompanied by Explanatory Notes and the opinion of Nutec's
independent auditors, for the fiscal years ending December 31, 1994, December
31, 1995, December 31, 1996, December 31, 1997, December 31, 1998, as well as
the audited balance sheet corresponding to the first quarter of 1999, with all
such documents being attached to this instrument as Annex 2.6. Except with
respect to the facts indicated in the reports prepared by the independent
auditors "Chameski & Associados Auditores," which form an integral part of this
Agreement, those balance sheets and financial statements (a) are complete and
accurate in all relevant aspects; (b) are consistent with Nutec's books and
ledgers and of those of the Subsidiaries; (c) were prepared in a manner
consistent with generally accepted accounting principles in the Federative
Republic of Brazil; and (d) accurately reflect Nutec's financial status and that
of its Subsidiaries on the specified date, and correctly show the results of
their operations during the
<PAGE> 6
fiscal years to which they refer. Except where shown in Annex 2.6.A to this
instrument, as of this date Nutec has no obligation or liability (absolute,
contingent or of any other nature, due or to become due) other than those
obligations and liabilities assumed thereby during the normal and regular course
of its activities or as disclosed in the financial statements provided or in the
notes thereto which are attached or in the reports forming part of Annex 2.6 of
this Agreement. There shall be no compensation to Telefonica Interactiva Brasil
and/or to Nutec as a consequence of any accounting adjustments, in particular
those mentioned in the correspondence of the audit firm Arthur Andersen dated
June 11, 1999.
2.7. Financial Statements of the Subsidiaries. The Current Controlling Parties
have provided to Telefonica Interactiva Brasil the unaudited balance sheet and
financial statements of the Nutec Subsidiaries for the base years ending on
December 31, 1994, December 31, 1995, December 31, 1996, December 31, 1997 and
December 31, 1998, with all those documents being attached to this instrument as
Annex 2.7. Those balance sheets and financial statements (a) are complete and
accurate in all relevant aspects, (b) are consistent with the books and ledgers
of the respective Subsidiaries, (c) were prepared in a fashion consistent with
generally accepted accounting principles in Brazil, and (d) faithfully reflect
the Subsidiaries' financial status on the specified date, and correctly show the
results of their operations during the referenced fiscal years. Except with
respect to the statements made in Annex 2.7.A of this instrument, as of this
date the Subsidiaries owe no obligation or liability (absolute, contingent or of
another nature, due or to become due) other than the obligations and liabilities
assumed thereby during the normal and regular course of their activities or as
disclosed in the financial statements provided for in the notes attached hereto,
as well as in the reports comprising Annex 2.7 of this instrument.
2.8. Tax Issues. The Current Controlling Parties have provided to Telefonica
Interactiva Brasil copies of all income tax returns submitted by Nutec and its
Subsidiaries for the base years ending December 31, 1994, December 31, 1995,
December 31, 1996 and December 31, 1997, all of them attached to this instrument
as Annex 2.8. Nutec and its Subsidiaries submitted within the respective
deadlines all required federal, state and municipal tax returns. Except as set
forth in Annex 2.8.A of this instrument, all taxes, duties, fees and fiscal and
para-fiscal contributions specified as being due and payable with respect to
such declarations, and any and all taxes posted, fees and fiscal and para-fiscal
contributions on their respective activities, as well as taxes on real and
movable assets for which payment is required, except taxes not yet due, were
paid within the respective deadlines. Except with respect to the items listed
on the respective balance sheets
<PAGE> 7
of December 31, 1998 and pending items listed in Annex 2.8, Nutec and its
Subsidiaries have no debt relative to any federal, state, municipal or other
taxes corresponding to any fiscal year prior to that date, and adequate
provisions have been made on the balance sheets mentioned in Clauses 2.6 and 2.7
above for payment, by Nutec and its Subsidiaries, for all federal, state and
municipal taxes pending and unpaid, whether or not due and whether or not in
dispute. Based on its auditors' recommendations, adequate provisions had been
made on the books and ledgers of Nutec and its subsidiaries, as of December 31,
1998, relative to all such taxes existing on that date.
2.9. Dial-Up Access Clients. The minimum number of dial-up access clients as of
May 31, 1999 is 170,000, and there was no significant change which reduced the
number of Nutec subscribers by 3% (three percent) or more. The access agreement
models are represented in Annex 2.9.
2.10. Audience. The audience to the portal www.zaz.com.br represented
approximately 200,000,000 (two hundred million) pages visited ("Page View") per
month, in May 1999. As of June 1, 1999, there were no significant changes which
reduced the number of visits to the www.zaz.com.br portal by 10% (ten percent)
or more, as Telefonica Interactiva Brasil has already performed a good and
sufficient audience audit for purposes of this Clause.
2.11. Accounts Receivable. Except with respect to the reserves shown on the
respective balance sheets of December 31, 1998, and with the exception of the
statement in Annex 2.11 of this Agreement, as well as an estimate of 12% (twelve
percent) of the total billings for doubtful collections, all accounts receivable
(including trade bills for invoices), credit instruments and other obligations
corresponding to cash payments to Nutec and/or its Subsidiaries shall constitute
valid and legally enforceable obligations (except those issued as uncollectable
debts prior to December 31, 1998). As of the date of the aforementioned balance
sheet, there have been no changes to the accounts receivable, credit instruments
or other obligations, except for changes resulting from the normal and regular
course of business.
2.12. Bank Accounts. Annex 2.12 of this Agreement is an accurate list of all
bank accounts and bank balances existing on June 11, 1999, as well as bank
lines of credit maintained by Nutec and its Subsidiaries on that date, with an
indication of the names of the individuals authorized to manage them in each
case.
2.13. Insurance. Annex 2.13 of this instrument contains an accurate list of all
insurance policies maintained by Nutec and/or its subsidiaries, against risks
<PAGE> 8
usually covered by companies in the same area of activity, identifying, in each
case, the respective insurer, the value of the premium and coverage, the type of
insurance, the policy number and claims pending thereon. Each policy specified
in Annex 2.13 is currently in full force and effect, and neither Nutec nor its
subsidiaries have failed to provide notification or submit any relevant claim
relating to any insurance policy.
2.14. Geographic Coverage and Legality of Nutec Operations. Annex 2.14 to this
Agreement presents a list containing all the cities in which Nutec directly or
indirectly offers Internet access supply services and services relating to its
corporate objective. The exercise of these activities by Nutec is not in
violation of any current rule or regulation or with its relationship to any
principal or accessory contractual obligation assumed by Nutec or by the
Current Controlling Parties.
2.15. Franchise Agreements. Annex 2.15 to this Agreement contains a list of all
franchise agreements signed by Nutec by which Nutec indirectly offers Internet
access supply services. These franchise agreements have been duly signed and are
legally valid and enforceable and the exercise of these activities by the
franchisees and/or by Nutec is not in violation with any current rule or
regulation or with any principal or accessory contractual obligation assumed by
Nutec or by the Current Controlling Parties.
2.16. Labor Agreements. There is no labor agreement relating to any employee of
Nutec or its Subsidiaries which cannot be rescinded without obligation,
compensation or penalty subject to up to 30 (thirty) days prior notice, except
in cases in which there is a specific legal provision or collective labor
agreement to the contrary.
2.17. Commercial Agreements. Except with respect to the provision of Annex 2.17
to this Agreement, there are no agreements relating to licensing operations or
distribution, marketing, representation, agency, commission, publicity or
brokerage agreements signed between Nutec or its Subsidiaries, which cannot be
canceled without obligation, compensation or penalty subject to up to 30
(thirty) days prior notice.
2.18. Supply Agreements. Except with respect to the provisions of Annex 2.18 to
this Agreement, there are no agreements assigned by Nutec or its Subsidiaries
for the future purchase of materials, supplies, services, merchandise or
equipment involving disbursements, for the remaining period of validity, of
amounts equivalent on this date to US$ 50,000.00 (fifty thousand U.S. dollars)
or for which the validity period is greater than 12 (twelve) months or
<PAGE> 9
which, if considered along with all other agreements of the same nature, involve
disbursements in excess of a sum equivalent on this date to a total of US$
50,000.00.
2.19. Purchase Option. There are no agreements, contracts or commitments signed
by Nutec, the Subsidiaries or the Current Controlling Parties, pursuant to which
any shareholder, quota holder, director, manager or employee of Nutec or its
Subsidiaries has or may acquire in the future a right to any property or right
of Nutec or its Subsidiaries, or to the revenue deriving from its respective
activities.
2.20. Right of First Refusal. There are no agreements, commitments or accords
signed by Nutec, its Subsidiaries or its Current Controlling Parties aimed at a
transfer, or which contains any concession of preferential rights to third
parties, for the purchase of any asset, property or right of Nutec and/or of its
Subsidiaries.
2.21. Loans. Except with respect to the guarantees signed on this date, there
are no agreements, contracts or documents signed by Nutec, its Subsidiaries or
its Current Controlling Parties with respect to a cash loan or for which Nutec
or its Subsidiaries have any current line of credit or have assumed any
obligations with respect thereto.
2.22. Assets. The assets listed in Annex 2.22 of this Agreement are in good
maintenance and use condition, and are all capable of being satisfactorily used
in the activities for which they were designed. Nutec is the legitimate owner
and holder thereof, maintaining good and negotiable title to all assets listed
in Annex 2.22, free and clear of any encumbrances, restrictions or any other
right of guarantee. All Assets are the sole property of Nutec or its
Subsidiaries, which hold rights to them corresponding from good and negotiable
title.
2.23. Intellectual and Industrial Property. Annex 2.23 contains a complete list
of all commercial names, trademarks, logos, domains, software, copyrights and
other elements of industrial and intellectual property used by Nutec and its
Subsidiaries in their operations, on which Nutec owns all rights in its capacity
as holder thereof as recorded in its name with the National Industrial Property
Institute, at the National Library, and/or with any other body or entity, except
where disclosed otherwise in Annex 2.23, and it is hereby stated that Telefonica
Interactiva Brasil has full knowledge of pending items referring to the
administrative procedures mentioned in Annex 2.23. and there is no compensation
or future payment
<PAGE> 10
due for denial, opposition or failure to obtain final recording of the
aforementioned trademarks and in particular of the trademark ZAZ.
2.24. Rental and Leasing Agreements. Annex 2.24 contains a complete list of the
equipment and facility rental and leasing agreements signed by Nutec and its
Subsidiaries. These agreements have been duly signed and are legally valid and
enforceable and are not in violation of any current rule or regulation with
respect to any principal or accessory contractual obligations assumed by Nutec
or by the Current Controlling Parties.
2.24.1. All real properties occupied by Nutec or its Subsidiaries, as well as
all machinery equipment, tools, offices, accessories, vehicles, facilities and
other assets and properties held or used by Nutec and its Subsidiaries are in
good maintenance condition and in good operation and repair, with the exception
of normal wear and tear. None of the facilities, buildings or other assets and
properties of Nutec and its Subsidiaries, or the operation and maintenance
thereof as occurs currently, are in violation of any current zoning law, order
or administrative regulation, nor violate any restrictive clause or any legal
provision, the exception of which might, in any relevant aspect, interfere with
or impede the ongoing use thereof for the purposes for which they are currently
being used, or would considerably affect the value of such assets and
properties. No notification issued by any body, office or government authority
has been submitted to Nutec or to the Subsidiaries or to the Current Controlling
Parties, either with respect to any of the assets and properties of Nutec and
the Subsidiaries, claiming any violation of any law, order or regulation, or
demanding or warning it of the need to perform any work, repair, construction or
installation with respect to such assets and properties, without having failed
to have fulfilled them. Nutec and Subsidiaries have good and negotiable title to
all their properties and assets, including the properties and assets disclosed
on the respective balance sheets of December 31, 1998 and in Annex 2.24, free
and clear of guarantees, liens, encumbrances, mortgages, pledges, commitments,
restrictions, reserves or other obligations or charges of any kind.
2.25. Compliance with Laws, Regulations and Agreements. Except as stated to
Telefonica Interactiva Brasil in Annex 2.25 to this Agreement, neither Nutec nor
the Current Controlling Parties nor the Subsidiaries have violated any relevant
provisions, or are in breach of any term of any agreement, accord, plan,
leasing or licensing agreement, the violation or breach of fulfillment of which
<PAGE> 11
could have a significant adverse effect on Nutec's business or financial status.
2.26. Non-Violation. With the exception of other annexes already listed in this
Agreement, the entering into of this Agreement, and the issuance and
subscription of the Controlling Shares pursuant to the terms provided for
herein, did not violate any legal provision known to the Current Controlling
Parties, or any agreements or instruments to which Nutec, the Current
Controlling Parties or the Subsidiaries are party, nor will result in the early
expiration of any obligation provided for in the aforementioned agreements or
instruments, or in the filing of any lien or charge on any assets of Nutec or
the Subsidiaries; similarly, there are no existing circumstances, facts or
commitments with respect to Nutec or the Subsidiaries, or to their respective
businesses, by virtue of which, according to the terms of the applicable laws
current on this date, any change in the ownership of its shares or quotas, as
the case may be, will result in any change in the powers, rights, prerogatives
or authority of Nutec or other Subsidiaries in carrying out their businesses or
with respect to the ownership or possession of the assets used in their
respective activities.
2.27. Litigation. Except where described in Annex 2.27 of this Agreement. there
is no litigation, legal or administrative proceeding, labor claim or government
investigation pending or imminent against Nutec or against its Subsidiaries.
2.28. Liability Accounts. No shareholder, quota holder, director, manager or
employee of Nutec or its Subsidiaries, or any corporation in which any such
individual has a significant interest, is currently, directly or indirectly,
party to a transaction with Nutec or the Subsidiaries which would require
payment to such shareholder, quota holder, director, employee or corporation, or
any one thereof.
2.29. Surety and Avals. With the exception of guarantees granted to banking
institutions on this date with the knowledge of Telefonica Interactiva Brasil,
neither Nutec nor the Subsidiaries are guarantors, surety holders or, in any
other way guarantors of any third party obligations, nor are party, to any
agreement or accord by virtue of which they are required to honor any such
obligations.
2.30. Powers of Attorney. Annex 2.30 contains a true and accurate copy of all
power of attorney instruments granted by Nutec and the Subsidiaries, appointing
"ad negotia" attorneys.
<PAGE> 12
CLAUSE 3. ADDITIONAL WARRANTS AND REPRESENTATIONS BY THE CURRENT CONTROLLING
PARTIES
Each of the Current Controlling Parties, considered individually, also warrants
and represents the following to Telefonica Interactiva Brasil:
3.1. Existence and Regularity of Status of the Current Controlling Parties as
Legal Entities. That RBS and MLSP are organizations that are duly organized and
in valid existence and in regular compliance, with full power and corporate
authority to engage in business as they are currently doing and to own the
properties and assets that they currently own.
3.2. Authorization to Sign the Agreement and Anticipated Transactions. That RBS
and MLSP have full power and corporate authority to enter into this Agreement
and to consummate the transactions provided for herein. That also in the case of
RBS and MLSP, the signing and fulfillment of this Agreement and of the other
instruments provided for herein were duly authorized for all necessary corporate
measures, and that it is not necessary to have any additional corporate
authorization on their part or on the part of their shareholders to consummate
the transactions provided for herein. That this Agreement and the other
instruments provided for herein constitute and shall constitute legal, valid and
binding obligations on them, enforceable against the Current Controlling Party
in accordance with its terms and conditions.
3.3. Non-Violation. That consummation of the transactions provided for in this
Agreement shall not constitute or result in the violation of any term. condition
or provision, nor shall constitute breach pursuant to the terms thereof, nor
shall result in the creation of any encumbrance, charge or lien on any of its
properties or assets, in the case of Barichello, Afonso and Silvia, in
accordance with any agreement or other instrument to which it is party or to
which any of its assets are bound, and in the case of RBS and MLSP, in
accordance with (a) their Corporate Bylaws; (b) any agreement or other
instrument to which they might be party or by which any of their assets might be
bound. Nor shall any law, regulation, judgment, order or court order which is
binding thereon violate such consummation, nor result in the loss of any
license, authorization, certificate, approval or right which they enjoy or have,
nor shall give the right of cancellation to any party of any relevant agreement
to which it is party.
<PAGE> 13
CLAUSE 4. WARRANTS AND REPRESENTATIONS OF TELEFONICA INTERACTIVA BRASIL
Telefonica Interactiva Brasil warrants and represents the following to the
Current Controlling Parties:
4.1. Existence and Regularity of Situation. Telefonica Interactiva Brasil is a
corporation duly organized and in valid existence in accordance with the laws of
the Federative Republic of Brazil and has all necessary power and authority to
conduct its business, as well as to sign this Agreement.
4.2. Non-Violation. The signing of this Agreement and the fulfillment of the
transactions included herein were duly and validly authorized by all necessary
corporate acts. Telefonica Interactiva Brasil has full right, authority and
legal capacity to assume the obligations provided for in this Agreement. This
Agreement constitutes a valid obligation by Telefonica Interactiva Brasil, and
is binding thereon in accordance with its respective terms and conditions,
Telefonica Interactiva Brasil's signing of this Agreement, the execution of the
transactions provided for therein and the fulfillment by Telefonica Interactiva
Brasil of its respective obligations by virtue of this Agreement shall not be in
conflict or result in a violation of any provision of:
(a) its corporate bylaws;
(b) any agreement, contract, mortgage, lease, license or other contract to
which Telefonica Interactiva Brasil is party or in which it or any of its
assets are involved;
(c) any governmental concession or license, or any permit or authorization, or
any ruling or order by any government court or body applying to Telefonica
Interactiva Brasil or to any of its assets:
(d) any law, provision, decree, rule or regulation of any jurisdiction.
CLAUSE 5. LIABILITY OF THE CURRENT CONTROLLING PARTIES
5.1. The Current Controlling Parties shall be individually, jointly and
severally liable to Telefonica Interactiva Brasil and to Nutec for the
following:
<PAGE> 14
(a) any and all taxes, fiscal contributions or retirement contributions,
including legal increases, fines and adjustments, which may fail to be
paid or collected by Nutec or by any of its Subsidiaries on the dates
required by Law and with respect to causes occurring up to this date
inclusive, as well as any pecuniary obligation of any nature, including,
but not limited to, obligations of a civil, commercial, labor, fiscal or
retirement nature of Nutec and/or its Subsidiaries and with respect to
acts or events occurring or practiced up to this date, including,
independently of the time when they were verified by Telefonica
Interactiva Brasil and/or Nutec and/or by the Subsidiaries, or demanded
and/or claimed by Nutec and/or by its Subsidiaries not reflected in the
respective balance sheet of December 31, 1998, as having been identified
by the auditors or revealed to Telefonica Interactiva Brasil by the
Current Controlling Parties and/or by Nutec and/or by its Subsidiaries,
pursuant to the provision contained in the final section of clause 2.6
above;
(b) any and all harm, loss, damage, expense or cost duly incurred by
Telefonica Interactiva Brasil and/or by Nutec and/or by the Subsidiaries
resulting in the inaccuracy or untruthfulness of any declaration made or
guaranteed, given by the Current Controlling Parties pursuant to the terms
of Clauses 2 and 3 above or of the failure to comply with any other
commitments assumed therein in this Agreement or in documents and/or
instruments relating to this Agreement; and
(c) any and all expenses or costs (including legal fees and fees of other
professionals required for the calculation of values) which Telefonica
Interactiva Brasil and/or Nutec and/or its Subsidiaries may incur by
reason of the occurrence of any of the events provided for in letters (a)
and (b) above.
5.2. The liability of the Current Controlling Parties with respect to the
elements mentioned in Clause 5.1 above shall be subject to the following
limitations:
(a) with respect to those contingencies which result from administrative and
judicial proceedings under way, as set forth in Annex 2.27 to this
Agreement, the Current Controlling Parties shall be liable only for such
amount as exceeds the global value equivalent to US$ 300,000.00 (three
hundred thousand U.S. dollars);
<PAGE> 15
(b) with respect to unknown contingencies up to an individual amount
equivalent to US$ 5,000.00 (five thousand U.S. dollars), the Current
Controlling Parties shall be subject to no liability for payment; unknown
contingencies in amounts greater than US$ 5,000.00 (five thousand dollars)
shall be the liability of the Current Controlling Parties, which shall
undertake actual disbursement when the cumulative value owed attains a
value equivalent to US$ 150,000.00 (one hundred fifty thousand U.S.
dollars).
(c) The liability of the Current Controlling Parties vis-a-vis Telefonica
Interactiva Brasil and/or Nutec and/or its Subsidiaries shall not exceed a
period of 6 years, as of the signing date of this Agreement, except in the
event of any act or notification by the authorities with jurisdiction
within the aforementioned period, in which case the liability of the
Current Controlling Parties shall not cease, even if resolution of the
issues covered by such findings or notifications occurs on a subsequent
date.
5.3. With respect to directing the proceedings, legal or administrative, as well
as labor claims involving debts and/or obligations, the payment of which is the
liability of the Current Controlling Parties pursuant to this Clause 5, the
following procedure shall be carried out:
(i) With respect to the legal and administrative proceedings and the labor
claims under way as specified in Annex 2.27 which are being handled by
outside attorneys, they shall continue to be handled in the same way,
pursuant to the provision contained in Clause 5.2 (a) above with respect
to payment liability.
(ii) With respect to the legal or administrative processes, and to labor claims
underway as specified in Annex 5.3 to this Agreement, which are being
handled by the internal legal department of RBS or its parent companies,
affiliates or subsidiaries, the Current Controlling Parties, within 90
(ninety) days subsequent to this date, shall notify Nutec and/or the
Subsidiaries to provide for substitution of the professional or
professionals specified by the Current Controlling Parties, informing them
that the progress of the proceeding shall fall to the Current Controlling
Parties, in accordance with the provision contained in Clause 5.2 (a)
above with respect to the liability for payment.
(iii) With respect to proceedings of any nature that are currently existing and
have not been disclosed to Telefonica Interactiva Brasil, they shall
continue
<PAGE> 16
to be handled in the same fashion, although under the responsibility of
the Current Controlling Parties, in accordance with the provision
contained in item 5.2. (b) above. With respect to those occurring after
this date, the provisions contained in the remainder of this Clause 5
shall be followed.
5.4. It shall be agreed that Telefonica Interactiva Brasil and Nutec promise to
inform the Current Controlling Parties about any auditing of Nutec and/or the
Subsidiaries, in order to give the Current Controlling Parties the opportunity
to appropriately clarify the matter.
5.5. Taking the knowledge of any debtor obligation, the payment or fulfillment
of which is the liability of the Current Controlling Parties according to this
Clause 5, Telefonica Interactiva Brasil must immediately notify the Current
Controlling Parties of this requirement in writing, and such notification shall
be required to set forth the details of the effective liability attributed to
it, and the respective supporting documentation.
5.5.1. In any event, the notification from Telefonica Interactiva Brasil must
be issued and received by the Current Controlling Parties within a period of at
least half the period established to present defenses or appeals, or to adopt
other applicable procedural measures, under penalty of Telefonica Interactiva
Brasil's being subject to the provision contained in Clause 5.5.2 below.
5.5.2. In the event that Telefonica Interactiva Brasil for any reason fails to
notify the Current Controlling Parties within the legal period for the
presentation of defenses, appeals for the adoption of applicable procedural
measures, with respect to any debt or obligation for which the Current
Controlling Parties are liable, Telefonica Interactiva Brasil and/or Nutec
and/or its Subsidiaries shall remain as the sole and exclusive parties liable
for such debtor obligations, including with respect to professional legal fees,
costs and procedural expenses. However, in the event that Telefonica Interactiva
Brasil notifies the Current Controlling Parties after the period established in
clause 5.5.1 above, although still with sufficient time for the Current
Controlling Parties to take the applicable legal and/or procedural measures in
the case, Telefonica Interactiva Brasil must assume 20% (twenty percent) of
the judgment, to the extent that it resulted from the delay.
5.6. Pursuant to the other provisions of this Clause 5, the Current Controlling
Parties, once notified on a timely basis of the existence of an administrative
and/or judicial proceeding, may resort to such administrative or legal defenses
as they deem applicable, assuming complete liability for all expenses deriving
therefrom, including professional fees for attorneys, costs and procedural
expenses, with Telefonica Interactiva Brasil promising to ensure that Nutec
and or its Subsidiaries grant the necessary powers of attorney for this purpose
to the attorneys
<PAGE> 17
specified by the Current Controlling Parties, exempting Telefonica Interactiva
Brasil, Nutec and the Subsidiaries, as the case may be, from any liability and
compensating them for any harm deriving therefrom, also in accordance with the
provisions of clause 5.8 below.
5.6.1. If, upon being notified by Telefonica Interactiva Brasil in the form set
forth in Clauses 5.5.1 and 5.5.2 above, the Current Controlling Parties fail,
for any reason, to assume the defense of any obligation, debt, claim and/or
process for which they are responsible pursuant to the terms of this Clause 5,
Telefonica Interactiva Brasil and/or Nutec and/or the Subsidiaries shall defend
the case diligently, with the Current Controlling Parties being required to
reimburse all costs incurred by Nutec and/or by the Subsidiaries and/or by
Telefonica Interactiva Brasil in the respective defense, plus a compensatory
fine of 20% (twenty percent) of the total expense, even in the event that the
defense is successful, and the Current Controlling Parties must, after the
defense, assume direction and control of the cases.
5.7. The Current Controlling Parties shall keep Telefonica Interactiva Brasil
and Nutec or the Subsidiaries, as the case may be, periodically and fully
informed as to progress and all occurrences, facts, measures or steps that are
relevant to the proceedings and claims over which direction and control are its
responsibility pursuant to this Agreement.
5.8. It is henceforth agreed that Telefonica Interactiva Brasil, Nutec and the
Subsidiaries, as the case may be, shall cooperate (including in the delivery of
the documents needed for undertaking the corresponding proceeding) provided that
they have been requested along with the Current Controlling Parties and the
attorneys selected thereby for undertaking the proceedings for which the former
are liable, and control pursuant to the terms of this Clause 5, at all times
avoiding engaging in acts which may hamper the responsibility of the Current
Controlling Parties. In the same way, the Current Controlling Parties promise to
not engage in any act nor to permit the practice of any act or the occurrence of
any event, with respect to the proceedings which may result in an adverse
effect, or may harm the interests of Telefonica Interactiva Brasil, Nutec and
the Subsidiaries or constitute a negative precedent, contrary to the interests
thereof. The Parties agree to make their best efforts to cooperate with each
other in order to close out all proceedings in a fashion both definitive and
satisfactory to the Parties, at all times in compliance with the right of the
Current Controlling Parties to exhaust all procedural and administrative levels
and to resort to the parceling of debts, the only exception being that
Telefonica Interactiva Brasil shall be entitled to require that the Current
Controlling Parties close the cases in question with a significant likelihood of
loss, based on an opinion from the law offices of Pinheiro Neto Advogados or a
law office of a similar reputation, and which basically are or will be causing
it harm.
<PAGE> 18
CLAUSE 6. GUARANTEE
6.1. As a guarantee of timely payment of the obligations and contingencies of
Nutec and or its subsidiaries which are to be assumed by the Current Controlling
Parties pursuant to Clause 5 above, RBS shall irrevocably and unconditionally
guarantee Telefonica Interactiva Brasil, Nutec and the Subsidiaries, for a
period of 2 years, the credits held thereby against Nutec, resulting from loan
transactions engaged through Loan Agreements entered into on that date, the
values of which are R$ 10,602,000.00 and R$ 7,068,000.00 (the "Credits"). To
this end, RBS henceforth irrevocably and unconditionally authorizes Telefonica
Interactiva Brasil and/or Nutec to deduct from such Credits any amounts paid
thereby as a result of the obligations for which the Current Controlling Parties
are liable pursuant to the terms of this Agreement and in accordance with the
procedures agreed to in Clause 5.
6.2. RBS shall also irrevocably and unconditionally guarantee in favor of
Telefonica Interactiva Brasil, Nutec and the Subsidiaries, for a period of 180
days as of the subscription date of the Controlling Shares, a sum equivalent to
5% of the total value of the Subscription Price, which amount shall be
formalized through a loan agreement. To that end, RBS henceforth irrevocably and
unconditionally authorizes Telefonica Interactiva Brasil and/or Nutec and/or its
Subsidiaries to deduct from the loan amounts any sums paid thereby as a
consequence of obligations for which the Current Controlling Parties are liable
pursuant to the terms of this Agreement, and in accordance with the procedures
agreed to in Clause 5.
6.3. Interest and an inflation adjustment shall apply to all loan amounts
pursuant to the terms of clauses 6.1 and 6.2 above, as well as delinquent
interest and fines in the event of a delay or improper withholding of any sums.
CLAUSE 7. EXPENSES THAT ARE THE LIABILITY AND IN THE INTEREST OF THE CURRENT
CONTROLLING PARTIES
7.1. It shall be henceforth agreed that the following expenses shall be assumed
solely by the Current Controlling Parties:
(a) any and all expenses incurred and/or paid by Nutec and/or by its
Subsidiaries by reason of issues relating to the transaction
governed by this Agreement, including, but not limited to, payments
made and/or to be made by Nutec and/or by the Subsidiaries to
consultants,
<PAGE> 19
attorneys, appraisers, bankers and others for services relating to
this Agreement;
(b) expenses, costs and expenditures incurred and/or paid by Nutec
and/or by the Subsidiaries involving debts and/or obligations, the
payment of which is the responsibility of the Current Controlling
Parties pursuant to the terms of Clause 5.1 above, and/or related to
operations outside the normal and regular course of business of
Nutec and the Subsidiaries.
CLAUSE 8. SHAREHOLDER AGREEMENT
The Parties shall enter into a Shareholder Agreement on this date, to govern
certain rights and obligations deriving from their capacity as shareholders of
Nutec.
CLAUSE 9. RESOLUTION OF DISPUTES
Any dispute as may arise relating to the application of the provisions of this
Agreement shall be resolved through an arbitration proceeding pursuant to the
terms of this Clause 10 and in accordance with the following provisions.
9.1. In the event of a dispute. any of the Parties may provide written notice
to the others that it intends to resort to the dispute resolution procedures
provided for herein ("Dispute Resolution Notice"). In the event that one of the
Parties issues a Dispute Resolution Notice to the other Party, the Parties agree
to attempt to amicably resolve the issue, complaint, dispute or controversy that
has arisen between them, for a period of 30 (thirty) days counting from the date
of receipt of the Dispute Resolution Notice. In the event that the Parties are
unable to come to an agreement within the anticipated period, the issue,
complaint, dispute or controversy shall be settled through binding and final
arbitration by the Sao Paulo State Federation of Industries (FIESP) in Sao
Paulo, in accordance with the arbitration rules established by the "United
Nations Commission on International Trade Law" ("UNCITRAL").
9.2. The Arbitration Panel shall consist of 3 (three) arbitrators. I (one) of
which shall be appointed by Telefonica Interactiva Brasil and I (one) of which
shall be appointed by RBS. The third arbitrator, who shall act as chairman of
the Arbitration Panel, shall be appointed by the arbitrators appointed by
Telefonica Interactiva Brasil and by RBS. All the arbitrators shall be fluent in
Portuguese and, upon handing down their decision, they shall conform to the law.
The costs of the arbitration and execution of the decision shall be an issue to
be determined by the Arbitration Panel, in accordance with this Agreement and
the laws of the Federative Republic of Brazil.
<PAGE> 20
CLAUSE 10. FINAL PROVISIONS
10.1. Assignment and Transfer. None of the Parties may assign or transfer its
rights and obligations resulting from this Agreement without the express written
consent of all the other Parties.
10.2. Change. No Clauses of this Agreement may be changed or amended, except
subject to mutual written agreement of all the Parties.
10.3. Expenses. Each of the Parties shall be liable for the expenses incurred
thereby with respect to the negotiation, preparation and closing of the
transaction covered by this Agreement, including omissions of any nature and
professional fees (brokerage, intermediation, advising, auditing, attorney and
any other). Each of the Parties to this Agreement agrees to compensate the other
party and hold the other party harmless of any liability vis-a-vis any
individual, firm or corporation for brokerage fees, commissions, intermediation
or other similar charges relating to this transaction, for which such party, its
employees or representatives are liable.
10.4. Waiver. The waiver by any of the Parties with respect to any requirement
or right deriving from this Agreement shall only be valid if submitted in
writing and signed. No tolerance or delay by any of the Parties in ensuring
fulfillment of the obligations provided for in this Agreement shall constitute a
novation, nor shall harm or restrict the rights of such Party, nor exempt the
other Party from complete fulfillment of its obligations as provided for herein.
10.5. Confidentiality. The terms of this Agreement and the information provided
or obtained by the Parties, their administrators, agents, technicians and
consultants with respect to the objective of this Agreement or as a consequence
thereof must be Confidential, and may not be disclosed by any of the Parties in
any form, unless such information must be provided by virtue of the law or
applicable regulation to either of the Parties. Any information to be provided
by legal or regulatory requirement must be previously communicated to the other
Party.
10.6. Notification. Any notification or communication which is required or
permitted in accordance with this Agreement must be made in writing and shall be
considered as being delivered and carried out if sent by telex, fax, messenger
or mail with notice of receipt ("NR") to the address specified in writing by the
Party to which
<PAGE> 21
it must be sent, and it shall be considered as having been received on the date
of its receipt. Notwithstanding the above provision, all changes sent by fax
must be confirmed by mail sent with an NR. For purposes of this Clause, RBS,
Barichello and Afonso shall be considered as being a single party, and a
notification and/or communication made to RBS only, as set forth herein, shall
constitute notification and/or communication to RBS, Barichello and Afonso.
Unless the Parties have received a communication in conflict with the others,
the aforementioned communications and notifications must be sent to the
following addresses:
For RBS, Barichello, Afonso:
RBS Administracao e Cobrancas Ltda.
Av. Erico Verissimo, 400, 6o andar
Porto Alegre / RS
Attn.: Afonso Antunes da Motta
Fax: (051) 218 6140
For Silvia Nora Berno de Jesus:
Rua Felicissimo de Azevedo, No. 423, Ap. 401
Porto Alegre / RS
Attn.: Silvia Nora Berno de Jesus
Fax: (051) 218 8203
For MLSP:
MLSP Comercio e Participacoes Ltda.
Attn. Nutec Informatica S.A.
Rua Florida, 1821, 11(degree) andar, Brooklin
04565-001 Sao Paulo, SP
Attn.: Marcelo Lacerda
Fax: (011)5505-1918
<PAGE> 22
The following annexes to this agreement have not been included:
- Annex 2.2 - List of shareholders
- Annex 2.4 - Investments in other corporations
- Annex 2.5 - List of employees
- Annex 2.5.A - Labor disputes
- Annex 2.6 - Financial statements and ledgers of Nutec
- Annex 2.6.A - List of liabilities
- Annex 2.7 - Financial statements of subsidiaries
- Annex 2.7.A - List of subsidiaries' liabilities
- Annex 2.8 - Income tax returns submitted by Nutec and its
subsidiaries
- Annex 2.8.A - Overdue taxes
- Annex 2.9 - List of dial-up access clients
- Annex 2.11 - Allowances for doubtful accounts
- Annex 2.12 - List of bank accounts
- Annex 2.13 - List of insurance policies
- Annex 2.14 - Geographic coverage of Nutec Operations
- Annex 2.16 - List of franchise agreements
- Annex 2.17 - List of commercial agreements with penalty
provisions for early termination
- Annex 2.18 - List of supply agreements in excess of US$ 50,000
or with a term greater than 12 months
3
<PAGE> 23
- Annex 2.22 - List of assets
- Annex 2.23 - List of commercial names, trademarks and other
intellectual and industrial property
- Annex 2.24 - List of rental and leasing agreements
- Annex 2.25 - Violations of laws, regulations or agreements
- Annex 2.27 - Pending judicial proceedings
- Annex 2.30 - List of powers of attorney granted
- Annex 5.2 - List of legal, administrative or labor proceedings
addressed internally by RBS or its parent company.
Copies of the annexes not included herein will be provided upon request.
4
<PAGE> 1
Exhibit 2.10
SHAREHOLDER AGREEMENT
By virtue of this private instrument entered into between the following parties,
the party of the first part:
* Telefonica Interactiva Brasil Ltda., a limited-liability joint-stock
corporation, duly organized and in existence pursuant to the laws of the
Federative Republic of Brazil, with head office at Rua da Consolacao 247,
6o andar, in the City of Sao Paulo, State of Sao Paulo, registered with
the CNPJ under No. 03.185.736/0001-70, with its Corporate Charter duly
registered with the Sao Paulo State Trade Board on May 31, 1999 under No.
35.215.714.384, herein represented by its Manager-Representative Mr. Moshe
B. Sendacz, hereinafter to be referred to as "INTERACTIVA;"
and the parties of the second part:
* RBS Administracao e Cobrancas Ltda., a limited-liability joint-stock
corporation duly organized and existing in accordance with the laws of the
Federative Republic of Brazil, with head office at Avenida [ILLEGIBLE]
rico Verissimo, 400, in the City of Porto Alegre, State of Rio Grande do
Sul, registered with the CNPJ under No. 94.995.693/0001-43, herein
represented by its directors, Messrs. Nelson Pacheco Sirotsky and Carlos
Schneider Melzer, and hereinafter to be referred to as "RBS;"
* MLSP -- Comercio e Participacoes Ltda., a limited-liability joint-stock
corporation, duly organized and existing in accordance with the laws of
the Federative Republic of Brazil, with head office at Rua Coronel
Camisao, 237/601, Bairro Higienopolis, in the City of Porto Alegre, State
of Rio Grande do Sul, registered with the CNPJ under No.
02.429.422/0001-02, with its Corporate Charter duly recorded at the Rio
Grande do Sul State Trade Board on March 24, 1998, under No.
43.203.726.761, herein represented by its managing partners Messrs. Sergio
Cristovao Pretto, a Brazilian citizen, married, an electronics engineer,
holder of RG Identification Card No. 8000873409 SSP-RS and registered with
the CPF/MF under No. 250.408.980-53, residing and domiciled in the City of
Porto Alegre, State of Rio Grande do Sul at Rua Coronel Camisao, 237,
apto. 601, and Marcelo Pavao Lacerda, a Brazilian citizen, divorced, an
electronics engineer, holder of RG Identification Card No.
<PAGE> 2
4007554423 SSP-RS and registered with the CPF/MF under No. 333.979.450-20,
residing and domiciled in the City of Porto Alegre, State of Rio Grande do
Sul at Rua Dr. Vale, 605, apto. 202-B, hereinafter to be referred to as
"MLSP;"
* Afonso Antunes da Motta, a Brazilian citizen, divorced, an attorney,
holder of RG Identification Card No. 1006824658 SSP-RS and registered with
the CPF/MF under No. 107.772.960-04, residing and domiciled in the City of
Porto Alegre, State of Rio Grande do Sul at Rua Engenheiro Antonio
Reboucas, 164, apto. 301, hereinafter to be referred to as "AAM;"
* Luiz Alberto Barichello, a Brazilian citizen, single, a business manager,
holder of RG Identification Card No. 2006515817 SSP-RS and registered with
the CPF/MF under No. 009.039.140-34, residing and domiciled in the City of
Porto Alegre, State of Rio Grande do Sul at Avenida Belem Velho, 3610,
hereinafter to be referred to as "LAB;" and
* Silvia Nora Berno de Jesus, a Brazilian citizen, married, a systems
analyst, holder of RG Identification Card No. 5002912995 SSP-RS and
registered with the CPF/MF under No. 164.176.400-78, residing and
domiciled in the City of Porto Alegre, State of Rio Grande do Sul, at Rua
Felicissimo Azevedo, 423, apto. 401, hereinafter to be referred to as
"SBJ;"
and as Consenting Mediator:
* Nutec Informatica S.A., a corporation duly organized and existing in
accordance with the laws of the Federative Republic of Brazil, with head
office at Rua Silveiro, 1111, sub-solo, Morro de Santa Tereza, in the City
of Porto Alegre, State of Rio Grande do Sul, registered with the CNPJ
under No. 91.088.328/0001-67, herein represented by its Directors, Messrs.
Nelson Pacheco Sirotsky and Silvia Nova Berno de Jesus, hereinafter to be
referred to as "NUTEC."
Each of the parties, hereinafter individually to be referred to as "Party," and
jointly as "Parties," i.e., RBS, MLSP, AAM, LAB and SBJ, and jointly to be
referred to as "Non-Controlling Shareholders," have henceforth agreed to the
following:
WHEREAS on this date INTERACTIVA became shareholder of NUTEC, through the
subscription of common stock of NUTEC representing the majority of NUTEC's
voting capital, thereby obtaining control of NUTEC;
<PAGE> 3
WHEREAS the Non-Controlling Shareholders jointly hold 83.33% (eighty-three point
three three percent) of the capital stock of NUTEC, thereby representing a
significant proportion of its capital stock;
WHEREAS the Parties are currently the sole shareholders of NUTEC;
WHEREAS the Parties wish to establish and formalize certain terms and conditions
that shall govern their participation and relationship in NUTEC;
the Parties have duly agreed to sign this Shareholder Agreement ("Shareholder
Agreement") pursuant to the following terms and conditions:
1. The Non-Controlling Shareholders expressly acknowledge that as of the
subscription and effective paying-in of the shares by INTERACTIVA, pursuant to
the terms of the Minutes of the Extraordinary General Shareholders Assembly of
NUTEC held on this date, and the respective Subscription Notice ("ESA"),
INTERACTIVA assumes the capacity of controlling shareholder of NUTEC, thereby
holding the majority vote in the corporate resolutions and the power to direct
the corporate activities and to elect all members of its administrative bodies.
At the General Assemblies the Non-Controlling Shareholders therefore promise to
vote their common shares in uniform fashion, at all times in accordance with the
INTERACTIVA's, and to not oppose it.
2. The Non-Controlling Shareholders are henceforth guaranteed at all times,
subject to written notification to be made to NUTEC and INTERACTIVA, the right
to request the redemption of all their respective shares. To this end,
INTERACTIVA and the other Non-Controlling Shareholders irrevocably promise to
vote, at the NUTEC Extraordinary General Assembly to be held on a date to be
determined by the Non-Controlling Shareholders in the notification, to remove
the Non-Controlling Shareholders by means of a redemption of all their shares,
by payment thereto of funds or securities, in proportion to their respective
redeemed shares.
<PAGE> 4
3. Receipt of the notification provided for in Clause 2 shall constitute a
convocation to the NUTEC Extraordinary General Shareholders Assembly mentioned
in Clause 2 supra, thereby dispensing with any other convocation procedure
provided for by law.
4. During the validity period of this Shareholder Agreement, the Non-Controlling
Shareholders may not assign, sell, transfer, donate or in any form encumber any
of their shares representing the capital of NUTEC.
5. The Non-Controlling Shareholders, on their own behalf and on that of their
subsidiary corporations, controlled firms or affiliates, direct or indirect, as
well as their partners, directors and employees, irrevocably and unconditionally
promise to not compete with Nutec so long as they are shareholders of Nutec and
for a period of 2 (two) years after their withdrawal from Nutec, solely with
respect to the activities currently performed by Nutec.
5.1. In the same way, Non-Controlling Shareholders, on their own behalf and on
that of their subsidiary corporations, controlled companies or affiliates,
direct or indirect, as well as their partners, directors and employees
unconditionally and irrevocably promise, directly and indirectly, by means of
any other individual or legal entity,
(a) [not?] to request, attract, persuade or induce any Employee,
pursuant to the definition thereof below in this letter (a), to: (i)
cancel or fail to renew or expand his employment relationship with
Nutec or its Subsidiaries; or (ii) establish any contractual
relationship with any Competing Business. For the purposes provided
for herein, "Employee" shall mean and include parties employed by
Nutec and its Subsidiaries on this date or during the time of the
execution of any actions prohibited by this item (a), in any
position or function, even in management. The obligation assumed
herein shall remain in force for a period of 12 months as of this
date with respect to Employees, except with respect to the Employees
mentioned in Annex 1, with respect to which the obligation shall
remain in force for 24 months after this date.
(b) insofar as they are shareholders of Nutec and for a period of 2
years after their withdrawal from Nutec, [not?] to request, attract,
persuade or induce any Client or Supplier, in accordance with the
definitions provided herein, to cancel, reduce or fail to renew or
expand its agreements or other relationships with Nutec or any of
its Subsidiaries, to become a client thereof or to formalize any
agreement or any other relationship of this type with a competing
business. For the purposes set forth herein, "Client" shall mean and
shall include all clients of Nutec and/or its Subsidiaries during a
period of 12 (twelve)
<PAGE> 5
months immediately prior to the date this Agreement is entered into;
"Supplier" shall mean and shall include all entities from which
Nutec and/or its Subsidiaries acquire goods and other materials
during the 12 (twelve)-month period immediately prior to the date
this Agreement is entered into, with the exception of clients and
suppliers of RBS as provided for in clauses 4(a) and (c).
5.2. The Non-Controlling Shareholders promise also, on their own behalf, and on
that of their subsidiary corporations, parent companies, controlled companies or
affiliates, during the validity period of the Agreement, to ensure that their
partners, directors and employees act in the same form, to persuade any
Employees seeking to be placed in a job or independent contracting to remain at
Nutec or at the Subsidiaries for a minimum period of 6 months prior to the
intended engagement.
5.3. With respect to the joint development of future processes and preferential
treatment in hiring, so long as they are shareholders of Nutec and for a period
of 2 (two) years after the withdrawal of RBS of Nutec, the Parties agree to the
following:
(a) The restriction contained in item 1 above shall not extend to projects
or activities, current or future, related to the Internet, which are
developed or performed by RBS through its newspapers, television or radio.
Subject to satisfactory conditions and normal market practice, NUTEC shall
have exclusive rights for two years for the publication, by means of what
is known as a "portal" in the Internet world, of RBS content and that of
companies of the RBS group. After two years of the aforementioned
exclusive right, RBS shall continue to give NUTEC right of first refusal
in the publication of its content, although not exclusive access;
(b) Subject to joint agreement, NUTEC may use the content produced and
owned by RBS to develop exclusive channels via Internet, publishing the
respective author credits, establishing prices by joint agreement
consistent with the revenue earned on the aforementioned channels; RBS
agrees that for a period of 3 (three) months after that date, NUTEC may
use the RBS content gratis;
(c) NUTEC shall have the non-exclusive and non-discriminatory right to
develop joint projects for the access, processing and distribution of
content through companies of the RBS television group as of that date. In
addition, RBS shall make its best efforts to involve NUTEC in any and all
negotiations that it may undertake with third parties with respect to such
projects as involve access, processing and distribution of content, as
well as in order that companies
<PAGE> 6
affiliated with, related to or associated with RBS grant NUTEC the
aforementioned right;
(d) With respect to future developments (i) of interactive services by RBS
of open television channels; and (ii) developments such as Web TV, Info
TV, Web casting, RBS shall hold conversations with NUTEC to involve it in
the offering that RBS shall make in the businesses relating to these new
activities.
6. This Shareholders Agreement shall remain in force for a period of 1 (one)
year after this date, and may be extended by means of a written instrument
signed by all the Parties. The rights and obligations provided for in Clause 5
and sub-items supra, shall remain after recission, termination or cancellation
of this Shareholder Agreement, pursuant to the conditions set forth in the
aforementioned Clause.
7. For purposes of Article 118 of the Corporations Law, one copy of this
Shareholder Agreement was filed at the corporate head office of NUTEC. In
addition, the rights conferred on the NUTEC shareholders and their respective
obligations shall be recorded in all the NUTEC corporate books and share
certificates, if issued.
8. All notifications, solicitations, requests and other communications provided
for herein or with respect to this Shareholder Agreement shall be made in
writing to the Parties at the address specified in the preamble to this
Shareholder Agreement and shall be considered as having been received when
accompanied by a notice of receipt or when made by telex, telegram or confirmed
fax, or at any other address that the Parties may specify periodically in
writing, in accordance with the provisions of this Clause.
9. The terms and conditions of this Shareholders Agreement shall be
unconditional, irrevocable and binding on the Parties, their legal
representatives, successors or assignees under any circumstances, any creditors
holding guarantees, usufructuaries, acquiring third parties or subscribers of
shares in NUTEC.
<PAGE> 7
10. Notwithstanding any of the rights attributed to the Parties in this
Shareholder Agreement, in the event that any of the obligations contained herein
fail to be fulfilled by either of the Parties, the harmed Party may file for
specific execution of this Shareholder Agreement, pursuant to Article 118,
paragraph 3 of the Corporations Law and Articles 461, 639, 640 and 641 of the
Brazilian Civil Procedures Code, and applicable legal provisions.
11. Notwithstanding the provisions contained in Clause 10 above, each of the
Parties promises to compensate the other party for any loss, damage, cost or
expense resulting from the breach of any of the obligations agreed to in this
Shareholder Agreement.
12. NUTEC expressly agrees with all the terms and conditions contained in this
Shareholder Agreement. In addition, NUTEC promises to fulfill and to take all
necessary measures to ensure the fulfillment of all the terms and conditions
established in this Shareholder Agreement, including by third parties. The
Parties authorize NUTEC to sign this Shareholder Agreement and to undertake such
other actions as result therefrom.
13. Any changes or amendments to this Shareholder Agreement shall be made in
writing through an instrument entered into by the authorized representatives of
all Parties. Tolerance by any of the Parties, at any time, in demanding
fulfillment of any provision of this Shareholder Agreement shall not be
interpreted as a waiver of such right, nor shall affect the validity of this
Shareholder Agreement or any part thereof, or of the right of such party to
demand fulfillment of the aforementioned provision. No tolerance of any
violation of this Shareholder Agreement shall constitute a waiver of the
exercise of rights with respect to any subsequent violation.
<PAGE> 8
14. Neither Party shall make any disclosures, press releases or public
announcements with respect to the content of this Shareholder Agreement, without
the prior written consent of the other Parties.
15. This Shareholder Agreement shall be governed by Brazilian law. The Parties
hereby elect the central forum of the City of Sao Paulo, State of Sao Paulo, to
resolve any disputes as may arise from this Shareholder Agreement, waiving any
other regardless of such privileges as may correspond thereto.
Being therefore in due agreement, the Parties hereby sign this Shareholders
Agreement in 6 (six) identical copies, in the presence of 2 (two) witnesses.
Porto Alegre, June 15, 1999
[signature]
Telefonica Interactiva Brasil Ltda.
[signature]
RBS Administracao e Cobrancas Ltda.
[signature]
MLSP Comercio e Participacoes Ltda.
[signature]
Afonso Antunes da Motta
[signature]
Luiz Alberto Barichello
<PAGE> 9
[two lines of illeg. text]
[signature]
Silvia Nora Berno de Jesus
Consenting Mediator
[signature]
Nutec Informatica S.A.
Witnesses:
1. [signature] 2. [signature]
GUSTAVO LAGE NOMAN Danilo Marques Dias Lombardi
RG. No. [illeg.] RG: 27.068.059-8 SSP/SP
For purposes of Article 118 of Law No.6,404/76, one copy of this Shareholder
Agreement was filed on this date at the NUTEC head office.
Porto Alegre, June 15, 1999
[signature]
Nutec Informatica S.A.
<PAGE> 10
The following annex to this agreement has not been included:
- Annex 1 - List of employees
Copies of the annex not included herein will be provided upon request.
<PAGE> 11
AGREEMENT TO REVOKE SHAREHOLDER AGREEMENT
The undersigned:
o Telefonica Interactiva Brasil Ltda., a limited liability stock company,
duly organized and existing under the laws of the Federative Republic of
Brazil, with registered office at Rua da Consolacao, 247, 6th Floor, Room
28-A, in Sao Paulo, State of Sao Paulo, tax identification No.
03.185.736/0001-70, withits articles of organization duly recorded with
the Commercial Board of the State of Sao Paulo on May 31, 1999 under No.
35.215.714.384, represented herein by its General Manager, Mr. Moshe B.
Sendacz, Brazilian, married, attorney, identification card No. RG
3.333.998 (SSP/SP), taxpayer identification No. 365.994.768-72, residing
and domiciled in Sao Paulo, with offices at Rua da Consolacao, 247, 4th
Floor, hereinafter referred to as "Interactiva";
and
o RBS Administracao e Cobrancas Ltda., a limited liability stock company,
duly organized and existing under the laws of the Federative Republic of
Brazil, with registered office at Avenida Erico Verissimo, 400, in the
city of Porto Alegre, State of Rio Grande do Sul, tax identification No.
94.995.693/0001-43, represented herein by its director, Nelson Pacheco
Sirotsky, Brazilian, married, business manager, identification card No. RG
9001913491, taxpayer identification No. 147.576.050-72, residing and
domiciled in Porto Alegre - RS, at Rua Iracema, 75, together with his
attorney-in-fact, according to the publicly recorded power of attorney on
file with the 7th Notary Office of the Jurisdiction of Porto Alegre - RS,
Ibanor Polesso, Brazilian, married, accountant, identification card No. RG
1003416557, taxpayer identification No. 221.648.630-20, residing and
domiciled in Montenegro - RS at Rua Paulo Ribeiro Campos, 330, hereinafter
"RBS";
o Afonso Antunes da Motta, Brazilian, divorced, attorney, identification
card No. RG 1006824658 SSP-RS, taxpayer identification No. 107.772.960-04,
residing and domiciled in the city of Porto Alegre, State of Rio Grande do
Sul, at Rua Engenheiro Antonio
<PAGE> 12
Reboucas, 164, apt. 301, hereinafter "AAM";
o Luiz Alberto Barichello, Brazilian, unmarried, business manager,
identification card No. RG 2006515817 SSP-RS, taxpayer identification No.
009.039.140-34, residing and domiciled in the city of Porto Alegre, State
of Rio Grande do Sul, at Avenida Belem Velho, 3610, hereinafter "LAB", and
o MLSP - Comercio e Participacoes Ltda., a limited liability stock company,
duly organized and existing under the laws of the Federative Republic of
Brazil, with registered office at Rua Coronel Camisao, 237/601, Bairro
Higienopolis, Porto Alegre, State of Rio Grande do Sul, tax identification
No. 02.429.422/0001-02, with its articles of organization duly recorded
with the Commercial Board of the State of Rio Grande do Sul on March 24,
1998 under No. 43.203.726.761, represented herein by its managing
partners, Marcelo Pavao Lacerda, Brazilian, divorced, electrical engineer,
identification card No. RG 4007554423 SSP-RS, taxpayer identification No.
333.979.450-20, residing and domiciled in the city of Porto Alegre, State
of Rio Grande do Sul, at Rua Dr. Vale, 605, apto. 202-B, and Sergio
Cristovao Pretto, Brazilian, married, electrical engineer, identification
card No. RG 8000873409 SSP-RS, taxpayer identification No. 250.408.980-53,
residing and domiciled in the city of Porto Alegre, State of Rio Grande do
Sul, at Rua Coronel Camisao, 237, apto. 601, represented herein by his
attorney-in-fact, Jose Olinto de Toledo Ridolfo, Brazilian, married,
attorney, OAB/SP [Sao Paulo Bar Association] number 129.136, with offices
at Av. Sao Gabriel, 333, suite 132, 13th Floor, hereinafter referred to as
"MLSP"
and, as consenting party,
o Nutec Informatica S.A., a corporation duly organized and existing under
the laws of the Federative Republic of Brazil, with registered office in
the city of Porto Alegre, State of Rio Grande do Sul, at Rua Silveiro,
1111, lower level, Morro Santa Tereza, tax identification No.
91.088.328/0001-67, represented herein by its directors, Marcelo Pavao
Lacerda and Silvia Nora Berno de Jesus, hereinafter referred to as
"Nutec".
<PAGE> 13
Each of the parties, hereinafter individually referred to as "Party" and jointly
referred to as "Parties", have concurred and agreed to the following:
WHEREAS:
The Parties, together with others, executed an Agreement of Shareholders of
Nutec ("Shareholder Agreement") on June 15, 1999;
The Parties were unable to reach an agreement regarding several fundamental
issues for the continuity of the association among them; and
Because of the existing discrepancies, RBS, AAM, LAB and MLSP are no longer
shareholders of Nutec, as described in the Special Shareholders Meeting of Nutec
held today;
The Parties have therefore agreed to sign this Agreement to Revoke Shareholder
Agreement, as follows:
1. The Parties resolve, by mutual agreement, to terminate this association and
revoke the Shareholder Agreement, which is legally rescinded as of today.
2. Nevertheless, RBS, AAM and LAB reiterate herein: (i) the terms and conditions
of Clause 5 (sub-items) of the Shareholder Agreement; (ii) that the
representations and warranties in Clause 2 (and the corresponding sub-items) and
Clause 3 (and the corresponding sub-items) of the Stock Subscription Agreement
executed on June 15, 1999 between the Parties ("Subscription Agreement") were
true in their entirety as of said date; (iii) the obligations assumed under the
Subscription Agreement (clause 5 and the corresponding sub-items); and (iv) all
other undertakings and obligations in other instruments or related
correspondence, signed on June 15, 1999.
2.1. MLSP hereby reiterates all of the representations in Clauses 2 and 3 (and
the corresponding sub-items) of the Subscription Agreement that are applicable;
3. Interactiva, on its own behalf and on behalf of Nutec, hereby reiterates: (i)
all of the undertakings and obligations assumed with RBS, AAM, LAB and MLSP in
clauses 4 and 5 (and the corresponding sub-items) of the Subscription Agreement;
and (ii) all other undertakings and obligations in other instruments or related
correspondence, signed on June 15, 1999.
<PAGE> 14
The parties, being in agreement, sign this instrument in 6 (six) exact copies
issued for the same purpose.
Porto Alegre, August 5, 1999
for: Telefonica Interactiva Brasil Ltda.
[signed]
Moshe B. Sendacz
for: RBS Administracao e Cobrancas Ltda.
[signed]
Nelson Pacheco Sirotsky - by Ibanor Polesso
[signed]
Afonso Antunes da Motta
[signed]
Luiz Alberto Barichello
for: MLSP Comercio e Representacoes Ltda.
[signed]
Marcelo Pavao Lacerda/ Jose Olinto de Toledo Ridolfo,
for Sergio Cristovao Pretto
Consenting party: for: Nutec Informatica S.A.
[signed]
Silvia Nora Berno de Jesus/Marcelo Pavao Lacerda
WITNESSES:
1. [signed] Andrea Jimenez 2. [signed] Gustavo Lage Noman
RG 23.682.884-7 SSP/SP RG 25.865.869-7/SSP/SP
(Continuation of Agreement to Revoke Shareholder Agreement executed by
Telefonica Interactiva Brasil Ltda., RBS Administracao e Cobrancas Ltda., Afonso
Antunes da Motta, Luiz Alberto Barichello and Nutec Informatica S.A. on August
5, 1999)
<PAGE> 1
Exhibit 2.11
SHAREHOLDER AGREEMENT
NUTEC INFORMATICA S/A
By virtue of this private instrument, the undersigned parties:
1. TELEFONICA INTERACTIVA BRASIL LTDA., a limited-liability joint-stock
corporation with head office in the City of Sao Paulo, State of Sao Paulo,
at Rua da Consolacao, 247, 6(degree) andar, sala 28-A, with its corporate
charter duly filed and recorded with the Trade Board of the State of Sao
Paulo, registered with the CNPJ/MF under No. 03.185.736/0001-70, herein
represented by its Manager Representative Mr. Moshe D. Sendacz,
hereinafter to be referred to simply as "TIB,"
2. MLSP COMERCIO E PARTICIPACOES LTDA., a limited liability joint-stock
corporation with head office in the City of Porto Alegre, State of Rio
Grande do Sul, at Rua Cel. Camisao, 237/601, Bairro Higienopolis, with its
corporate charter duly filed and recorded with the Trade Board of the
state of Rio Grande do Sul under NIRC No. 43.203.726.761 at its meeting of
March 24, 1998, registered with the CNPJ/MF under No. 02.429.422/0001-02,
herein represented by its Directors Messrs. Marcelo Pavao Lacerda and
Sergio Cristovao Pretto, hereinafter to be referred to simply as "MLSP;"
and
3. SILVIA NORA BERNO DE JESUS, a Brazilian citizen, married, a systems
analyst, residing and domiciled in the City of Porto Alegre, State of Rio
Grande do Sul, at Rua Felicissimo de Azevedo, 423, Apto. 401, holder of RG
identification card No. 5002912995-SSP/RS, and registered with the CPF/MF
under No. 164.176.400-78. hereinafter to be referred to simply as
"Silvia;"
hereinafter to be referred to jointly as "Shareholders" or "Parties;" and in
addition.
4. NUTEC INFORMATICA S/A, a joint-stock corporation with head office in the
City of Porto Alegre, at Rua Silveiro, 1111, with its corporate charter
duly filed and recorded with the Trade Board of the State of Rio Grande do
Sul, registered with the CNPJ/MF under No. 91.089.328/0001-67, herein
represented by its
<PAGE> 2
Directors, and hereinafter to be referred to simply as the "Corporation;"
5. SERGIO CRISTOVAO PRETTO, a Brazilian citizen, married, an electronics
engineer, residing and domiciled in the City of Porto Alegre, State of Rio
Grande do Sul, at Rua Coronel Camisao, 237, apto. 601, holder of RG
identification card No. 8000873409-SSP/RS and registered with the CPF/MF
under No. 250.408.980-53, hereinafter to be referred to simply as
"Sergio;" and
6. MARCELO PAVAO LACERDA, a Brazilian citizen, divorced, a systems analyst,
residing and domiciled in the City of Sao Paulo, State of Sao Paulo at Rua
Adalivia de Toledo, 325, apto. 31, Morumbi, holder of RG identification
card No. 4007554423-SSP/RS and registered with the CPF/MF under No.
333.979 450-20, hereinafter to be referred to simply as "Marcelo," and
jointly with the Corporation and Sergio, "Consenting Mediators."
WHEREAS by virtue of a Subscription Agreement on this date TIB shall become
corporate shareholder, holder and legitimate owner of shares representing 96%
(ninety-six percent) of the corporation's total capital stock, and MLSP shall
become shareholder, holder and legitimate owner of shares representing 3% (three
percent) of the Corporation's total capital stock;
WHEREAS by virtue of a Share Purchase and Sale Agreement on this date, Silvia
shall become corporate shareholder, holder and legitimate owner of shares
representing 1% (one percent) of the corporation's total capital stock;
WHEREAS it is the absolute will of the parties and a business principle that in
any legal situations the minority shareholders shall at all times be guaranteed
the equivalent of 4% of the Corporation's value;
WHEREAS the Parties henceforth wish to establish certain rules for joint
existence between them and applicable conditions with respect to the transfer of
their corporate interests in the Corporation;
they have between themselves duly agreed to enter into this Corporate
Shareholder Agreement, henceforth to be referred to as "Agreement," which shall
be governed by the terms and conditions stipulated below:
<PAGE> 3
1. CORPORATE INTERESTS SUBJECT TO THE AGREEMENT
All shares issued by the Corporation representing its capital stock owned
by the Parties, ("Shares," and individually "Share") shall be subject to this
Agreement on the date that such Agreement enters into force, i.e., on August 5,
1999, or on such other date as may be agreed to by the Parties in writing (the
"Validity Date"), as well as such as may be agreed to in the future.
2. SHARES
2.1 On the Validity Date, the Shares shall be held and owned by the
Parties, in the following percentages of capital stock:
<TABLE>
<CAPTION>
---------------------------------------------
Partner Interest in the
Corporation's
Capital
Stock -- Total %
---------------------------------------------
<S> <C>
TIB 96.00
---------------------------------------------
MLSP 3.00
---------------------------------------------
SILVIA 1.00
---------------------------------------------
Total: 100.00
---------------------------------------------
</TABLE>
2.2 Each of the Parties warrants and represents that on the Validity Date
it shall be a holder and legitimate owner of its Shares, free and clear of any
and all encumbrances, liens, restrictions, rights of refusal or other burdens of
any kind.
3. RESTRICTIONS AS TO THE CIRCULATION OF SHARES
3.1 General Conditions
The Shares owned by the Parties representing the Corporation's
capital stock, bound to this Agreement pursuant to the terms of Clause 1 above,
the right to subscribe the aforementioned Shares, and the securities supporting
such right or which are convertible into Shares (equivalent to the Shares
themselves for purposes of this Agreement) may not be sold, assigned,
transferred, pledged, given in usufruct or trust, conferred to the capital of
another corporation or in any other way alienated or encumbered, except as
provided for in this Agreement.
<PAGE> 4
3.2 Minority Shareholder Sale Option
At any time after the Validity Date, Sylvia and MLSP (hereinafter to
be referred to simply as the "Minority Shareholders") may exercise the option to
sell their Shares to TIB, which in turn hereby promises to acquire the
aforementioned shares ("Sale Option"). The Sale Option may be validly exercised
by the Minority Shareholders singly or jointly.
3.2.1 Acquisition Price
For purposes of this clause, the reference price shall be
considered as being the total value paid by TIB for subscribing its Shares in
the Corporation, pursuant to the terms provided for in the Subscription
Agreement of this date signed with RBS Administracao e Cobrancas Ltda. et al,
i.e., the value in the current legal tender currency of Brazil equivalent to US$
200 million (two hundred million U.S. dollars), in exchange for 100% (one
hundred percent) of the shares issued by the Corporation on this date
(hereinafter to be referred to simply as "Base Value").
(a) In the event that the Minority Shareholders exercise the Sale
Option within the period between the Validity Date and July 30, 2001
(inclusive), pursuant to the condition set forth in Clause 3.2.2 below, TIB
shall pay the equivalent of 30% (thirty percent) of the Base Value, for the
entire number of Shares it shall acquire from the Minority Shareholders. In the
event that the Minority Shareholders exercise the Sale Option at any time after
July 30, 2001, pursuant to the condition set forth in Clause 3.2.2 below, TIB
shall pay the equivalent of 100% (one hundred percent) of the Base Value, in
addition to the change in the six-month LIBOR ("London Interbank Offered Rate")
for the period, for all the Shares that it shall acquire from the Minority
Shareholders.
(b) In the event of an increase in the value of the shares after
July 30, 2001 and in the event that the Minority Shareholders exercise the Sale
Option, TIB shall be required to conform to the value resulting from the
increase, assuming at all times that the Minority Shareholders jointly hold
rights to 4% of the total value of the Corporation's capital stock, in the form
described below.
(c) For purposes of verifying the increased value of the Shares, the
parties may, in the event that they are unable to come to a consensus with
respect to the price, choose among three investment banks and among three
independent auditing firms, one from each sector, which may undertake a
definitive appraisal of the Shares and in particular of the
<PAGE> 5
rights representing 4% of the value of the Corporation's capital stock.
3.2.2 Guarantee of Non-Dilution
(a) In the event of any acquisition of the Minority Shareholders'
Shares by TIB, the acquisition price to be paid by TIB shall assume, under all
circumstances, 4% (four percent) of the value of the Corporation's total capital
stock as being the actual corporate interest of the Corporation's Minority
Shareholders, even if, on the occasion of such acquisition, such percentage does
not hold by virtue of the dilution of the Minority Shareholders' corporate
interests as a consequence of the Corporation's capital increases after that
date, which were subscribed by TIB only, in view of the Minority Shareholders'
waiver of their right of first refusal to subscribe. Of the total 4% (four
percent) referring to the value of the capital stock, 1% (one percent) shall be
paid to Silvia, and the remaining 3% (three percent) to MLSP.
This commitment shall henceforth be binding on TIB, and shall remain
binding in the event of any assignment or transfer of any portion of the Shares
from TIB to a third party which does not assume it on the occasion of the
aforementioned assignment and transfer, such that it be henceforth set forth
that such commitment shall retain in full effect the right of the Minority
Shareholders to securities representing 4% of the value of the Corporation's
capital stock, in the form already described above, which right is
unconditionally and irrevocably guaranteed by TIB to the Minority Shareholders,
thereby reflecting the Parties' global understanding and the spirit of the
transaction.
(b) The Parties recognize that in the near future, in accordance
with the strategic plans of the controlling shareholder's control group, (x) the
Corporation may be subjected to the process of opening its capital to the public
distribution of shares in a country to be defined, which process shall be known
as "IPO (Initial Public Offering)", or (y) also, by contrast with the
Corporation, any entity which indirectly controls it, and which operates within
an economic group, may be subject to such process. In either of these events,
the above terms and conditions in this Clause 3.2.2 shall apply, i.e., it shall
be assumed that the Minority Shareholders hold total rights equivalent to 4% of
the shares representing the entire capital stock of the Corporation, with the
consequences resulting from this definition of the volume of shares placed into
an "IPO" and that, in the event mentioned in item (y) of this paragraph, any
positive increase in the value of the Corporation's shares which may have
indirectly occurred through its control having passed through the process of an
IPO shall be taken into consideration. The parties acknowledge that in the case
of
<PAGE> 6
an offering of capital through the "IPO" process, the Minority Shareholders
shall at all times be entitled to the real values attributed to and obtained
through this transaction, at all times equivalent to 4% of the shares
representing the Corporation's total capital stock.
3.3 Right of First Refusal
(a) No Party may sell or in any form transfer or guarantee to third
parties or to any other Party to this Agreement any or all of its Shares without
first offering them, in the capacity of "Offering Party," to all other Parties,
who shall have right of first refusal to acquire them in proportion to the
number of Shares which they hold on the date this offering was made, under
identical conditions as those of the interested third party (shareholder or
not), and the exercise of the right of first refusal mentioned herein must occur
within a maximum of 30 (thirty) days after the date of issuance of the
notification from the Offering Party. (b) With respect to the subscription of
new Shares, in the event of a waiver by any of the Shareholders, such others as
wish may completely exercise their right of first refusal on the portion covered
by the waiver.
3.4 Permitted Transfers
The restrictions of this Clause shall not apply to transfers of
Shares to corporations controlled by the Parties, for the case of Minority
Shareholders, and to subsidiary corporations, parent companies or those under
the same control, for the case of TIB, provided that such subsidiary
corporations of the Parties become, in turn, integral parties to this Agreement.
4. NON-COMPETE
4.1 The Minority Shareholders, on their own behalf and on that of their
subsidiary corporations, controlled companies or affiliates, direct or indirect,
as well as their partners, directors, employees and representatives, promise
irrevocably and unconditionally to not compete with the Corporation so long as
they are shareholders of the Corporation and for a period of 12 months after
their withdrawal from the Corporation, solely with respect to the activities
currently engaged in by the Corporation.
4.2 In the same way. Non-Controlling Shareholders, on their own behalf and
on that of their subsidiary corporations, controlled companies or affiliates,
direct or indirect, as well as their partners,
<PAGE> 7
directors, employees and representatives unconditionally and irrevocably
promise, directly and indirectly, by means of any other individual or legal
entity,
(a) [not?] to request, attract, persuade or induce any Employee, pursuant
to the definition thereof below in this letter (a), to: (i) cancel or fail to
renew or expand his employment relationship with the Corporation or its
Subsidiaries; or (ii) establish any contractual relationship with any Competing
Business. For the purposes provided for herein, "Employee" shall mean and
include parties employed by the Corporation and its Subsidiaries on this date or
during the time of the execution of any actions prohibited by this item (a), in
any position or function, even in management. The obligation assumed herein
shall remain in force for a period of 18 months as of this date with respect to
Employees, except with respect to the Employees mentioned in Annex 1, with
respect to which the obligation shall remain in force for 18 months after this
date.
(b) insofar as they are shareholders of the Corporation and for a period
of 18 months after their withdrawal from the Corporation, [not?] to request,
attract, persuade or induce any Client or Supplier, in accordance with the
definitions provided herein, to cancel, reduce or fail to renew or expand its
agreements or other relationships with the Corporation or any of its
Subsidiaries, to become a client thereof or to formalize any agreement or any
other relationship of this type with a competing business. For the purposes set
forth herein, "Client" shall mean and shall include all clients of the
Corporation and/or its Subsidiaries during a period of 18 months immediately
prior to the date this Agreement is entered into or those which may be clients
of the Corporation and/or of its Subsidiaries, at any time; "Supplier" shall
mean and shall include all entities from which the Corporation and/or its
Subsidiaries acquire goods and other materials during the 18-month period
immediately prior to the date this Agreement is entered into or from which the
Corporation and/or its Subsidiaries purchased goods and other materials at any
time.
4.3 The Non-Controlling Shareholders promise also, on their own behalf and
on that of their subsidiary corporations, parent companies, controlled companies
or affiliates, to ensure that their partners, directors, employees and
representatives act in the same form, to persuade any Employees seeking to be
placed in a job or independent service to remain in the Corporation or in the
subsidiaries for a minimum period of 6 months prior to the intended engagement.
<PAGE> 8
4.4 With respect to the joint development of future processes and
preferential treatment in hiring, the Parties agree to the following: in the
event that the Minority Shareholders are invited to participate as investors in
projects for the development of content sites or other sites of a commercial
nature, the Minority Shareholders hereby promise to offer the opportunity to the
majority shareholder such that the latter, if it so wishes and at its sole
discretion, may also have access to participation in the project, under
conditions to be established at the time by the interested parties.
5. DIVISION OF PROVISIONS
In the event that any provision of this Agreement is or becomes invalid or
unenforceable, the other provisions thereof shall remain in full force and
effect, and in such case, the Parties shall enter into good faith negotiations,
with a view to replacing the invalid or unenforceable provision by another
which, insofar as is possible and in reasonable fashion, fulfills the same
objective and has the desired effect.
6. COMMUNICATIONS
Any notice or communication deriving from this Agreement shall be in
writing, and may be made solely by fax, sent to the address of the recipient as
stated in the preamble of this Agreement or to another address which may be
communicated thereby to the other Parties of this Agreement, which must receive
an immediate written notice of its receipt.
7. SPECIFIC EXECUTION
A breach or failure by the Parties to comply with any of the terms and
conditions stipulated herein shall entitle the other harmed Party to demand in
court fulfillment of the specific obligation, pursuant to Article 118 of Law No.
6,404 of December 15, 1976.
8. GENERAL PROVISIONS
8.1 No change to this Agreement shall be valid unless made in writing and
signed by all Parties.
8.2 No grace period or tolerance granted by any of the Parties to the
other, with respect to the terms of this
<PAGE> 9
instrument, shall affect this Agreement or any other the rights or
responsibilities of the Parties deriving therefrom, in any form, except strictly
pursuant to the terms of the tolerance that has been granted.
8.3 This Agreement is signed irrevocably and unconditionally and shall
enter into force on the Validity Date, to remain valid for a period of 12
(twelve) years. In the event that neither of the parties provides written
communication to the other of its lack of interest in extending the Agreement, a
minimum of 4 (four) months prior to its termination, it shall be extended for a
period of 5 (five) years, and so on successively.
8.4 This Agreement shall prevail over any other prior agreement in force
between the Parties, whether verbally or in writing.
9. AGREEMENT OF THE CONSENTING MEDIATORS
The Consenting Mediators hereby sign this Agreement to demonstrate their
complete accord with all its conditions, and promise insofar as they are able,
to ensure that it is fulfilled in its entirety.
10. RECORDING OF THE AGREEMENT
This Agreement shall be filed at the Corporation's head office and must be
accessible to all its shareholders, and in the Registered Shares Registration
Book, on the margin of the Share Record corresponding to this Agreement, and in
the respective Share Certificates, if issued, the following text shall be set
forth:
"The shares represented by this Certificate (or Record), including their
transfer or encumbrance to any kind, shall be subject to the requirements
of the Shareholders Agreement regime signed between TIB Interactiva S/A,
MLSP Comercio e Participacoes Ltda. and Silvia Nora Berno de Jesus, under
penalty of annulment of the transfer or encumbrance."
11. SUCCESSORS
This Agreement shall be binding on the Parties and the Consenting
Mediators, on their own behalf and on that of their successors of any kind.
12. COURT DISTRICT
<PAGE> 10
The Parties elect the court district of Porto Alegre as having
jurisdiction to settle any dispute as may arise in this Agreement, waiving any
other regardless of such privilege as may correspond thereto.
And being in due agreement, the Parties hereby sign this Agreement on 4 (four)
identical copies for an identical purpose, duly signed in the presence of 2
(two) witnesses, who also signed this.
Sao Paulo, June 15, 1999
[signature] [signature]
TELEFONICA INTERACTIVA BRASIL LTDA. MLSP COMERCIO E PARTICIPACOES LTDA.
Moshe B. Sendacz Sergio Cristovao Pretto
Manager-Representative Marcelo Pavao Lacerda
Directors
[signature]
SILVIA NORA BERNO DE JESUS
Consenting Mediators:
[signature] [signature]
NUTEC INFORMATICA S/A.
Silvia Nora Berno de Jesus
Afonso Antunes de Mona
Directors
Witnesses:
1. [signature and illeg. name stamp] [signature]
SERGIO CRISTOVAO PRETTO
2. [signature] [signature]
Danilo [illeg.] Dias [illeg.] MARCELO PAVAO LACERDA
RG: 27.066.059-S SSP/SP
<PAGE> 11
The following annex to this agreement has not been included:
- Annex 1 - List of employees
Copies of the annex not included herein will be provided upon request.
<PAGE> 12
ADDENDUM TO SHAREHOLDERS' AGREEMENT
NUTEC INFORMATICA S/A
By this private instrument, the undersigned:
1. TELEFONICA INTERACTIVA BRASIL LTDA., a company with limited-liability
quotas of capital stock [sociedade por quotas de responsabilidade
limitada], with head office in the City of Sao Paulo, State of Sao Paulo,
at Rua da Consolacao, 247, 6th floor, suite 28-A, having its articles of
association duly filed and registered at the Commercial Registry for the
State of Sao Paulo, enrolled in the CNPJ/MF [National File of Corporate
Entities / Ministry of Finance] under No. 03.185.736/0001-70, herein
represented by its Delegate Manager, Mr. Moshe B. Sendacz, [name repeated
in the original], Brazilian citizen, married, lawyer, holder of Identity
Card RG [General Registry] No. 3.333.998 (SSP/SP) [Sao Paulo State
Department of Public Safety], enrolled in the CPF/MF [Individual Taxpayers
File / Ministry of Finance] under No. 365.994.768-72, resident and
domiciled in the Capital City of the State of Sao Paulo, with his office
at Rua da Consolacao, 247, 4th floor, hereinafter simply "TIB;"
2. MLSP COMERCIO E PARTICIPACOES LTDA., a business company with
limited-liability quotas of capital stock [sociedade comercial por quotas
de responsabilidade limitada], with head office in the City of Porto
Alegre, State of Rio Grande do Sul, at Rua Cel. Camisao, 237/601, Bairro
Higienopolis [district], having its articles of association duly filed and
registered at the Commercial Registry for the State of Rio Grande do Sul
under NIRE [State Registration] No. 43.203.726.761, in session on March
24, 1998, enrolled in the CNPJ/MF under No. 02.429.422/0001-02, herein
represented by its managing partners Messrs. Marcelo Pavao Lacerda,
Brazilian citizen, divorced, electronics engineer, holder of Identity Card
RG No. 4007554423 SSP-RS [Rio Grande do Sul State Department of Public
Safety] and enrolled in the CPF/MF under No. 333.979.450-20, resident and
domiciled in the City of Porto Alegre, State of Rio Grande do Sul, at Rua
Dr. Vale, 605, apt. 202-B, and Sergio Cristovao Pretto, Brazilian citizen,
married, electronics engineer, holder of Identity Card RG No. 8000873409
SSP-RS and enrolled in the CPF/MF under No. 250.408.980-53, resident and
domiciled in the City of Porto Alegre, State of Rio Grande do Sul, at Rua
Coronel Camisao, 237, apt. 601, herein represented by his attorney in
fact, Mr. Jose Olinto de Toledo Ridolfo, Brazilian citizen, married,
lawyer, enrolled in the OAB/SP [Sao Paulo Chapter of the Brazilian Bar
Association] under No. 129.136, with his office at Av. Sao Gabriel, 333 -
suite 132, 13th floor, hereinafter referred to as "MLSP;" and
<PAGE> 13
3. SILVIA NORA BERNO DE JESUS, Brazilian citizen, married, systems analyst,
resident and domiciled in the City of Porto Alegre, State of Rio Grande do
Sul, at Rua Felicissimo de Azevedo, 423, apt. 401, holder of identity card
RG No. 5002912995-SSP/RS and enrolled in the CPF/MF under No.
164.176.400-78, hereinafter simply "Silvia,"
hereinafter referred to jointly as "Shareholders" or "Parties;" and further,
4. NUTEC INFORMATICA S/A, a corporation [sociedade por acoes] with head
office in the City of Porto Alegre, State of Rio Grande do Sul, at Rua
Silveiro, 1111, having its articles of incorporation duly filed and
registered at the Commercial Registry for the State of Rio Grande do Sul,
enrolled in the CNPJ/MF under No. 91.088.328/0001-67, herein represented
by its [executive] Directors, hereinafter referred to simply as
"Corporation;"
5. SERGIO CRISTOVAO PRETTO, Brazilian citizen, married, electronics engineer,
resident and domiciled in the City of Porto Alegre, State of Rio Grande do
Sul, at Rua Coronel Camisao, 237, apt. 601, holder of identity card RG No.
8000873409-SSP/RS and enrolled in the CPF/MF under No. 250.408.980-53,
hereinafter simply "Sergio;" and
6. MARCELO PAVAO LACERDA, Brazilian citizen, divorced, systems analyst,
resident and domiciled in the City of Sao Paulo, State of Sao Paulo, at
Rua Adalivia de Toledo, 325, apt. 31, Morumbi [district], holder of
identity card RG No. 4007554423-SSP/RS and enrolled in the CPF/MF under
No. 333.979.450-20, hereinafter simply "Marcelo" and, jointly with the
Corporation and Sergio, "Intervening and Consenting Parties,"
WHEREAS, pursuant to a Stock Subscription Agreement dated June 15, 1999, to the
Corporation's Special Meeting of Shareholders held on August 5, 1999, and to the
sale and purchase of shares made between TIB and MLSP, TIB became a shareholder
in the Corporation, as holder and lawful owner of shares representing ninety-six
percent (96%) of the total capital stock of the Corporation, and MLSP became a
shareholder and lawful owner of shares representing three percent (3%) of the
total capital stock of the Corporation;
2
<PAGE> 14
WHEREAS, pursuant to a Commitment to Stock Sale and Purchase dated as of the
date hereof, Silvia became a shareholder in the Corporation, as holder and
lawful owner of shares representing one percent (1%) of the total capital stock
of the Corporation;
WHEREAS, it is the absolute will of the parties and a business principle that in
any legal situation the minority shareholders shall at all times be assured the
equivalent to 4% of the Corporation's worth;
WHEREAS, furthermore, any entity directly or indirectly controlling the
Corporation may implement, by November 1999, a process of public offering of
capital pursuant to an "Initial Public Offering" ("IPO"); and
WHEREAS, it is the parties' desire to restate the rights and obligations
relating to such public offering of capital pursuant to the IPO process,
establishing mechanisms such as shall enable MLSP and Silvia to hold an interest
in the company that shall implement such IPO process;
they have mutually agreed to enter into this Addendum to the Corporation's
Shareholders' Agreement dated June 15, 1999 ("Shareholders' Agreement"),
hereinafter referred to as "Addendum to the Agreement," pursuant to the
conditions set forth hereunder:
1. Section 3.2.2 (b) of the Shareholders' Agreement shall cease to be in effect
and the Parties agree to introduce into said Shareholders' Agreement Section
3.2.3, in the manner indicated below:
3.2.3. IPO-related Obligations:
(a) The Parties acknowledge that, by November 30, 1999, according to the
strategic plans of the controlling group of the controlling shareholder,
any entity indirectly controlling it and relevant within the same business
group may implement a process of public offering of capital and public
distribution of its shares in a country yet to be defined, a process known
as IPO (the corporation in question hereinafter referred to as "IPO
Corporation").
(b) Upon such public offering of capital and public distribution of the
IPO Corporation's shares, TIB's controlling shareholder undertakes to
remit to Brazil such funds as shall be capitalized in a company with
specific purpose ("SPE"), which shall be obligated to acquire for the
equivalent to ten million U.S. dollars (US$ 10,000,000), based on the
institutional price thereof converted from the
3
<PAGE> 15
Euro into U.S. dollars at the average rate of the day prior to that of the
IPO, either old shares or new shares originating from the IPO process such
as issued by the IPO Corporation. MLSP and Silvia, in turn, agree to
purchase immediately all said shares which the SPE shall hold in the IPO
Corporation by virtue of the aforesaid acquisition, paying for them with
the total amount of their shares held in the Corporation.
(c) If the IPO process is not implemented by the IPO Corporation by
November 30, 1999, the terms previously agreed upon pursuant to Section
3.2.2 (b) of the Shareholders' Agreement shall remain valid among the
Parties, and this Addendum to the Agreement shall be disregarded.
(d) MLSP and Silvia acknowledge that once the stock exchange process under
Section 3.2.3 (b) above is implemented, the rights and obligations under
Sections 3.1, 3.3, 3.4, and 4 (including the clauses thereunder) of the
Shareholders' Agreement shall remain fully in effect.
(e) In any circumstances, MLSP managing partners, Sergio and Marcello, and
Silvia agree, if so required by the IPO Corporation, to remain as
administrative officers of the Corporation for a term of at least 24
months from the execution of the Shareholders' Agreement hereunder on June
15, 1999.
(f) After six (6) months from the placement date of the IPO Corporation's
shares and for up to twenty-four (24) months from the execution date of
the Shareholders' Agreement hereunder, MLSP and Silvia have the right to
sell to TIB, which in turn is obligated to purchase, for the average price
quoted on the stock exchange over the six (6) months prior to date on
which the sale option is exercised by MLSP and Silvia.
(g) Once such twenty four (24)-month term shall have elapsed from the
execution of the Shareholders' Agreement, MLSP and Silvia may not sell or
otherwise transfer or pledge to third parties, whether wholly or in part,
their shares held in the IPO Corporation without first offering them, as
"Offering Party," to TIB, which shall have a first-refusal right to the
acquisition of such shares at the average price of the IPO Corporation's
shares as quoted on the day prior to the exercise of the sale option by
MLSP and/or Silvia, such first-refusal right as referred to hereunder to
be exercised no later than within twenty four (24) hours from the time of
delivery of a written communication notice to the Offering Party.
4
<PAGE> 16
2. All other Sections and conditions of the Shareholders' Agreement which have
not been provided for hereunder shall remain valid and fully in effect.
In Witness Whereof, the Parties have entered into this Addendum to the
Agreement in four (4) counterparts of identical contents and for a sole effect,
duly executed in the presence of the two (2) undersigned witnesses.
Sao Paulo, August 5, 1999
[Signed] MLSP COMERCIO E
TELEFONICA INTERACTIVA PARTICIPACOES LTDA.
BRASIL LTDA. Sergio Cristovao Pretto
Moshe B. Sendacz (by proxy, Jose Olinto de Toledo
Delegate Manager Ridolfo)
Marcelo Pavao Lacerda
Managing Partners
[Signed]
SILVIA NORA BERNO DE JESUS
Intervening and Consenting Parties:
[Signed twice]
NUTEC INFORMATICA S/A
Silvia Nora Berno de Jesus
Marcelo Pavao Lacerda
Directors
Witnesses:
1. [Signed]
[Stamped] [Signed]
Andrea Jimenez For SERGIO CRISTOVAO PRETTO
RG 23.662.884-7 SSP/SP (Jose Olinto de Toledo Ridolfo)
2. [Signed] [Signed]
[Stamped] MARCELO PAVAO LACERDA
GUSTAVO LAGE NOMAN
RG 25.865.889-7 SSP/SP
5
<PAGE> 1
Exhibit 2.12
STOCK PURCHASE AGREEMENT
The undersigned:
(a) TELEFONICA INTERACTIVA BRASIL LTDA., a limited liability stock company, duly
organized and existing under the laws of the Federative Republic of Brazil, with
registered office at Rua da Consolacao, 247, 6th Floor, Room 28-A, in Sao Paulo,
State of Sao Paulo, tax identification No. 03.185.736/0001-70, represented
herein by its General Manager, Mr. Moshe B. Sendacz, Brazilian, married,
attorney, identification card No. RG 3.333.998 (SSP/SP), taxpayer identification
No. 365.994.768-72, residing and domiciled in Sao Paulo, with offices at Rua da
Consolacao, 247, 4th Floor, hereinafter referred to as "INTERACTIVA" or the
"Seller";
(b) MLSP - Comercio e Participacoes Ltda., a limited liability stock company,
duly organized and existing under the laws of the Federative Republic of Brazil,
with registered office at Rua Coronel Camisao, 237/601, Bairro Higienopolis,
Porto Alegre, State of Rio Grande do Sul, tax identification No.
02.429.422/0001-02, with its articles of organization duly recorded with the
Commercial Board of the State of Rio Grande do Sul on March 24, 1998 under No.
43.203.726.761, represented herein by its managing partners, Marcelo Pavao
Lacerda, Brazilian, divorced, electrical engineer, identification card No. RG
4007554423 SSP-RS, taxpayer identification No. 333.979.450-20, residing and
domiciled in the city of Porto Alegre, State of Rio Grande do Sul, at Rua Dr.
Vale, 605, apto. 202-B, and Sergio Cristovao Pretto, Brazilian, married,
electrical engineer, identification card No. RG 8000873409 SSP-RS, taxpayer
identification No. 250.408.980-53, residing and domiciled in the city of Porto
Alegre, State of Rio Grande do Sul, at Rua Coronel Camisao, 237, apto. 601,
represented herein by his attorney-in-fact, Jose Olinto de Toledo Ridolfo,
Brazilian, married, attorney, OAB/SP [Sao Paulo Bar
<PAGE> 2
2
Association] number 129.136, with offices at Av. Sao Gabriel, 333, suite 132,
13th Floor, hereinafter referred to as "MLSP" or the "Buyer";
WHEREAS:
INTERACTIVA holds and is the legitimate owner of 3,372,500 (three million three
hundred seventy-two thousand five hundred) shares, of which 3,323,498 (three
million three hundred twenty-three thousand four hundred ninety-eight) are
common shares and 40,002 (forty-nine [sic] thousand and two) are preferred
shares, which today represent 99% of the current capital stock of Nutec
Informatica S.A., a corporation with registered office in the city of Porto
Alegre, State of Rio Grande do Sul, at Rua Silveiro, 1111, lower level, Morro
Santa Tereza, tax identification No. 91.088.328/0001-67 ("Nutec"), the capital
stock of which is represented by 3,406,566 shares, of which 3,323,498 are common
and 83,068 are preferred;
It is the intent of INTERACTIVA that MLSP remains a shareholder of Nutec, in
consideration for the interest of MLSP to maintain its shareholding in Nutec;
IN VIEW OF the foregoing recitals, the parties agree to execute this Stock
Purchase Agreement ("Agreement"), to be governed by the following terms and
conditions:
1. PURCHASE AND SALE
According to the terms of this Agreement and in the most proper form of law, the
Buyer hereby purchases 102,197 (one hundred and two thousand one hundred and
ninety-seven) common shares issued by Nutec, owned by the Seller, and the Seller
hereby sells 102,197 (one hundred and two thousand one hundred and ninety-seven)
common shares issued by Nutec to the Buyer, with all rights inherent thereto,
free and clear of any encumbrance, pledge, lien, option, objection, debt, doubt,
dispute, litigation, pre-emptive rights or other claims of any type whatsoever
that may invalidate or impede the transaction contemplated by the parties
herein.
<PAGE> 3
3
2. PURCHASE PRICE
The parties hereby agree that the total purchase price of the 102,197 (one
hundred and two thousand one hundred and ninety-seven) common shares issued by
Nutec ("Purchase Price") is R$ 10,244,861.03 (ten million two hundred forty-four
thousand eight hundred sixty-one Brazilian reais and 03/100) to be paid by MLSP
to INTERACTIVA in domestic currency, today, by means of a credit to the current
account of INTERACTIVA.
3. FORMALIZATION OF ASSIGNMENT AND TRANSFER
Immediately after the purchase of the shares described in Clauses 1 and 2 above,
and only when the credit to the current account of INTERACTIVA has been
confirmed, INTERACTIVA shall formalize the assignment and transfer of its shares
to MLSP by signing the share transfer instrument in the "Registered Share
Transfer Book" of Nutec.
4. REPRESENTATIONS AND WARRANTIES
4.1. Seller:
The Seller represents and warrants to MLSP that (a) it has full legal standing
to execute this Agreement, which constitutes a valid and binding obligation for
the Seller, enforceable according to the terms contained herein, which remains
valid until receipt of the Purchase Price and the transfer of shares under the
Agreement to MLSP; (b) signing this Agreement constitutes a legal, valid and
binding obligations of the parties, enforceable according to the terms herein;
and (c) consummation of the operations provided herein shall not constitute nor
result in the violation of any terms, conditions or provisions, nor shall
constitute any default nor shall result in the creation of any encumbrance or
lien on any property or asset of the Seller or according to any agreement to
which the Seller is a party or by which any of its assets are pledged, nor shall
it violate any law, regulation, ruling, order or obligation that binds the
Seller.
<PAGE> 4
4
4.2. Seller:
MLSP represents and warrants to the Seller that: (a) it is a company that is
duly organized and existing under normal conditions, according to the laws of
its jurisdiction; (b) that it has full power and authorization to execute this
agreement and to consummate the operations provided herein, constituting a
legal, valid and binding obligation of the parties, enforceable according to the
terms herein; and (c) the representations and warranties provided herein remain
in effect.
5. MISCELLANEOUS PROVISIONS
5.1. This Agreement is irrevocable and binding on the parties themselves and any
of their successors . Neither of the parties may assign or transfer any rights
or obligations arising out of this Agreement without the express consent of the
other party, until the definitive transfer of shares from INTERACTIVA to MLSP.
5.2. Any and all communications between the parties shall be in writing and sent
to the address indicated by the Parties in the preface of this Agreement.
5.3. This Agreement may only be amended by written agreement of the parties.
5.4. The parties select the jurisdiction of the courts of Sao Paulo, State of
Sao Paulo, to settle any disputes or controversies which may arise out of this
instrument.
The parties, being in agreement, sign this instrument in three (3) exact copies
issued for the same purpose, in the presence of the 2 (two) witnesses below who
were present .
<PAGE> 5
5
(continuation of the Stock Purchase Agreement between Telefonica Interactiva
Brasil Ltda. and MLSP Comercio e Representacoes Ltda.)
Sao Paulo, August 5, 1999
Telefonica Interactiva Brasil Ltda.
[signed]
Name: Moshe B. Sendacz
Title: General Manager
MLSP Comercio e Representacoes Ltda.
[signed]
Name: Marcelo Pavao Lacerda
Title: Managing Partner
[signed]
Name: Sergio Cristovao Pretto
Title: Managing Partner
for: Jose Olinto de Toledo Ridolfo
WITNESSES:
1. [signed] Andrea Jimenez
RG 23.682.884-7 SSP/SP
2. [signed] Gustavo Lage Noman
RG 25.865.889/SSP/SP
<PAGE> 1
Exhibit 2.13
SHARE PURCHASE AGREEMENT
By virtue of this private instrument, the undersigned parties:
(a) TELEFONICA INTERACTIVA BRASIL LTDA., a limited-liability joint-stock
corporation, duly organized and in existence pursuant to the laws of the
Federative Republic of Brazil, with head office at Rua da Consolacao 247,
6(Degree) andar, sala 28-A, in the City of Sao Paulo, State of Sao Paulo,
registered with the CNPJ under No. 03.185.736/0001-70, through its
Manager-Representative Mr. Moshe B. Sendacz, a Brazilian citizen, married, an
attorney, holder of RG Identification Card No. 3.333.998 (SSP/SP), registered
with the CPF/MF [Ministry of Finance Individual Tax Roll] under No.
365.994.768-72, residing and domiciled in the Capital of the State of Sao Paulo,
with office at Rua da Consolacao, 247, 4(Degree) andar, hereinafter to be
referred to as "INTERACTIVA" or "Committed Buyer";
(b) SILVIA NORA BERNO DE JESUS, a Brazilian citizen, married, a systems analyst,
holder of RG Identification Card No. 5002912995 SSP-RS and registered with the
CPF/MF under No. 164-176.400-78, residing and domiciled in the City of Porto
Alegre, State of Rio Grande do Sul, at Rua Felicissimo Azevedo, 423, apto. 401
("Silvia" or "Committed Seller");
WHEREAS Silvia is the holder and legitimate owner of 83,068 (eighty-three
thousand, sixty-eight) preferred shares ("Shares"), which on this date represent
0.5% of the current capital stock of Nutec Informatica S.A., a joint stock
corporation with head office in the City of Porto Alegre, State of Rio Grande do
Sul at Rua Silveiro, 1,111, Sub-solo, Morro Santa Tereza, registered with the
CNPJ under No. 91.086.328/0001-67 ("Nutec"), which capital is represented by
16,613,504 shares, 14,538,349 of them being common and 2,075,155 being
preferred;
<PAGE> 2
2
WHEREAS by virtue of the Share Subscription Agreement entered into on this date
between the current controllers and Interactiva (the "Subscription Agreement"),
the latter shall subscribe 3,323,498 (three million, three hundred twenty-three
thousand, four hundred ninety-eight) new common shares, representing an interest
equivalent to 16.57% of the total capital stock and controlling interest in
Nutec, which is to be issued, pursuant to the terms of the subscription
agreement;
WHEREAS by virtue of other agreements and conditions contained in the
Subscription Agreement and its annexes, Silvia will remain at Nutec as a
shareholder, it being in the interest of Silvia and Interactiva that in the
event that Silvia's interest in Nutec's total capital increases by a percentage
greater than 1%, Interactiva would acquire Silvia's shares;
IN CONSIDERATION of the above premises, the parties hereby resolve to enter into
this Share Purchase and Sale Agreement, which shall be governed by the terms and
conditions stipulated below:
1. SALE AND PURCHASE
By virtue of this instrument, subject to the terms and conditions
established herein, Silvia promises to sell and transfer to Interactiva such
number of shares as exceed 1% of Nutec's total capital ("Additional Shares'), as
soon as such Shares come to represent a percentage in excess of the one
mentioned above, and at the request of Interactiva, but in any event within a
period not to exceed 45 (forty-five) days after the signing date of this
instrument ("Acquisition Date").
1.2 In view of the provisions of clause 1 above, Silvia promises to maintain the
Shares, until the effective transfer to Interactiva, free and clear of any and
all encumbrances, charges, options, liens, rights of guarantee or rights of
refusal of any kind.
<PAGE> 3
3
2. PURCHASE PRICE
The parties to this agreement hereby agree that the total purchase price
of the Additional Shares ("Purchase Price') on the Acquisition Date shall be
R$1,713,990.00 (one million, seven hundred thirteen thousand, nine hundred
ninety Brazilian reais), in addition to the change in the General Price Index -
Domestic Availability (IGP-DI) as reported by the Getulio Vargas Foundation
(FGV), and interest at the rate of 1% per month, calculated from the signing
date of this Agreement until the Acquisition Date, which must be paid by
Interactiva to Silvia through a credit to a bank current account to be indicated
by Silvia within 48 (forty-eight) hours prior to the actual date of the transfer
of the Shares to Interactiva.
3. FORMALIZATION OF THE ASSIGNMENT AND TRANSFER
Immediately after purchase of the Shares on the Acquisition Date, Silvia
must formalize the assignment and transfer of her Shares to Interactiva, by
signing the share transfer document in the book "Record of the Transfer of
Registered Nutec Shares."
4. WARRANTIES AND REPRESENTATIONS
4.1 Of the Seller:
The Committed Seller warrants and represents to Interactiva that (a) she
has full capacity to enter into this Agreement and that it constitutes a valid
and binding obligation thereon, enforceable pursuant to its terms, and that on
the Acquisition Date she will confirm that the statement contained herein
remains valid through receipt of the Purchase Price and the transfer of the
Shares to Interactiva; (b) the signing of this agreement constitutes a legal,
valid and binding obligation on the parties, enforceable pursuant to its terms;
and (c) the consummation of the transactions provided for herein shall not
constitute nor result in the violation of any term, condition or provision, nor
shall constitute breach or result in the creation of any encumbrance, charge or
lien on any property or asset of the Committed Seller or in accordance with any
agreement to which the Committed Seller may be party or that any of her assets
be bound, nor shall such consummation violate any law, regulation, ruling, order
or decree binding on the Committed Seller.
<PAGE> 4
4
4.2 Of the Buyer:
Interactiva declares and warrants to the Committed Seller (a) that is a
corporation duly organized and in valid existence and in complete compliance
with the laws of its jurisdiction; (b) that it has full power and authority to
enter into this Agreement and to consummate the transactions provided for
herein, and that it constitutes a legal, valid and binding obligation on the
parties, enforceable in accordance with its terms; and (c) that the statements
and guarantees provided herein shall remain valid and shall be confirmed on the
Acquisition Date upon acquisition of the Shares and payment of the Purchase
Price by Interactiva.
5. SUNDRY PROVISIONS
5.1 This Agreement is entered into on an irrevocable and unconditional basis,
binding on the parties themselves and their successors of any kind. Neither of
the parties may assign or transfer any rights or obligations deriving from this
Agreement without the express consent of the other, until the final transfer of
Silvia's Shares to Interactiva.
5.2 Any and all communications between the parties must be made in writing and
sent to the addresses of the Parties specified in the preamble to this
instrument.
5.3 This Agreement may only be changed by agreement of the parties and in
writing.
5.4 The parties hereby elect the forum of the court district of Porto Alegre,
State of Porto Alegre, to settle any disputes or litigation as may arise with
respect to this instrument.
<PAGE> 5
5
Being therefore in due agreement, the parties hereby sign this instrument in 2
(two) identical copies, in the presence of the two undersigned witnesses, by
virtue of these presents.
Porto Alegre, June 15, 1999
TELEFONICA INTERACTIVA BRASIL LTDA.
[signature]
Name: Moshe B. Sendacz
Title: Manager-Representative
SILVIA NORA BERNO DE JESUS
[signature]
WITNESSES:
1. [signature]
2. [signature]
<PAGE> 1
Exhibit 2.14
MEMORANDUM OF UNDERSTANDING
By this Memorandum of Understanding ("the Memorandum"), prepared on October 22,
1999,
the party of the first part,
TAETEL, S.L. a company established and operating according to the laws of Spain,
with principal place of business at Calle Beatriz de Bobadilla 3, Madrid, Spain,
herein represented by Mr. Rafael Garcia Diez de Lastre ("Taetel");
and the party of the second part,
MLSP - Comercio e Participacoes Ltda., a limited-liability company duly
organized and operating pursuant to the laws of the Federative Republic of
Brazil, with principal place of business at Rua Coronel Camisao 237/601 in the
Higienopolis district of the city of Porto Alegre, State of Rio Grande do Sul,
Corporate Taxpayer Identification No. 02.429.422/0001-02, with Articles of
Association duly recorded with the Commercial Registry of the State of Rio
Grande do Sul on March 24, 1998 under No. 43.203.726.761, herein represented by
its managing partners Sergio Cristovao Pretto, a Brazilian citizen, married, an
electronic engineer, holder of Identity Card RG No. 8000873409 SSP-RS,
Individual Taxpayer No. 250.408.980-53, residing and domiciled in the city of
Porto Alegre, Rio Grande do Sul at Rua Coronel Camisao 237, Apt. 601, and
Marcelo Pavao Lacerda, a Brazilian citizen, divorced, an electronic engineer,
holder of Identity Card RG No. 4007554423 SSP-RS, Individual Taxpayer No.
333.979.450-20, residing and domiciled in the city of Porto Alegre, Rio Grande
do Sul, at Rua Dr. Vale, 605, Apt. 202-B ("MLSP").
SILVIA NORA BERNO DE JESUS, a Brazilian citizen, married, a systems analyst,
holder of Identity Card RG No. 5002912995 SSP-RS, Individual Taxpayer No.
164.176.400-78, residing and domiciled in the city of Porto Alegre, Rio Grande
do Sul at Rua Felicissimo Azevedo 423, Apt. 401 ("Silvia");
MARCELO PAVAO LACERDA, a Brazilian citizen, divorced, an electronic engineer,
holder of Identity Card RG No. 4007554423 SSP-RS, Individual Taxpayer No.
333.979.450-20, residing and domiciled in the city of Porto Alegre, Rio Grande
do Sul, at Rua Dr. Vale, 605, Apt. 202-B ("Marcelo"); and
<PAGE> 2
SERGIO CRISTOVAO PRETTO, a Brazilian citizen, married, an electronic engineer,
holder of Identity Card RG No. 8000873409 SSP-RS, Individual Taxpayer No.
250.408.980-53, residing and domiciled in the city of Porto Alegre, Rio Grande
do Sul at Rua Coronel Camisao 237, Apt. 601, ("Sergio");
Taetel, MLSP, and Silvia are each hereinafter designated individually as a
"Party" and together as "Parties," and Marcelo and Sergio are hereinafter
designated as "Consenting Intervenors;"
(i) WHEREAS MLSP and Silvia are shareholders in Terra Networks Brasil S.A. (the
new corporate name of Nutec Informatica S.A.), a corporation with principal
place of business in Porto Alegre, state of Rio Grande do Sul, at Rua Silverio
1111, Corporate Taxpayer Identification No. 91.088.328/0001-67 (hereinafter
"Terra Brasil"), MLSP owning 102,197 shares of common stock, presently
representing approximately 3 percent of the total capital of Terra Brasil, and
Silvia owning 34,066 shares of preferred stock, presently representing
approximately 1 percent of the total capital of Terra Brasil;
(ii) WHEREAS Telefonica Interactiva Brasil Ltda., a limited-liability company
whose principal place of business is in the city and state of Sao Paulo at Rua
da Consolacao, 247, 6th floor, Room 28-A, Corporate Taxpayer Identification No.
03.185.736/0001-70 ("TIB") owns 3,270,303 shares of Terra Brasil, of which
3,221,301 are shares of common stock and 49,002 are shares of preferred stock,
presently representing approximately 96 percent of the total capital of Terra
Brasil;
(iii) WHEREAS on June 15, 1999, TIB, MLSP, and Silvia signed a Shareholders
Agreement that entered into force on August 5, 1999, establishing rules
governing their mutual relationships as shareholders of Terra Brasil and
conditions related to the transfer of their respective holdings in Terra Brasil
(hereinafter "Shareholders Agreement");
(iv) WHEREAS, furthermore, any entity that directly or indirectly controls Terra
Brasil could, between now and December 31, 1999, implement a process of public
distribution of shares through an Initial Public Offering ("IPO").
2
<PAGE> 3
(v) WHEREAS, taking into consideration the possibility mentioned in WHEREAS (iv)
above, on August 5, 1999, TIB, MLSP and Silvia signed an Addendum to the
Shareholders' Agreement ("Addendum"), a document used to reformulate the rights
and obligations relating to the issuance and public distribution of shares
through an IPO, on which occasion mechanisms were established to make it
feasible for MLSP and Silvia to acquire an interest in whatever company
participates in the IPO process;
(vi) WHEREAS the Parties wish to stipulate the mechanisms to be used to
implement the operation provided for in the Addendum;
NOW, THEREFORE the parties execute this Memorandum of Understanding according to
the terms and conditions stipulated below:
1. The Agreed Transaction. The Parties acknowledge that between now and December
31, 1999, any company that directly or indirectly controls Terra Brasil, notably
a company within the economic group of Terra Networks, S.A. (new corporate name
of Telefonica Interactiva S.A.), could implement a process of issuance and
public distribution of its shares in a country to be determined (hereinafter the
"IPO Company").
1.1 The Parties further acknowledge that at the time of the execution of the
Addendum, MLSP and Silvia agreed irrevocably and irreversibly to purchase shares
in the IPO Company at the institutional price of the shares issued via the IPO,
and in accordance with Clause 3 of this Memorandum.
1.2 In order that MLSP and Silvia may use the shares they hold in Terra Brasil
to effectively purchase shares in the IPO Company, it was agreed in the Addendum
that the controlling shareholder of TIB, or a company designated by same, would
remit ten million United States dollars (US$10,000,000) for direct investment in
a Brazilian company, which company would be obliged to purchase shares of the
IPO Company with the intention of effecting a purchase and sale of shares with
MLSP and Silvia. It is hereby agreed that for purposes of executing the
transaction here agreed to, the Brazilian company to be used for the purposes
described in this Clause 1.2 shall be Segovia Participacoes Ltda., a
limited-liability company whose principal place of business is at Rua da
Consolacao 247, 6th floor, Room 27-A, Corporate Taxpayer Identification No.
03.199.518/0001-94 ("Segovia").
3
<PAGE> 4
2. Rights and Obligations of Taetel
2.1 Under the terms of this Memorandum, Taetel agrees to remit to Brazil the sum
of ten million United States dollars (US$10,000,000.00), which sum shall be used
for direct investment in Segovia. Taetel further agrees to cause Segovia to
obtain from the Central Bank of Brazil the necessary authorizations for purchase
of shares in the IPO Company at the agreed price pursuant to Clause 3.2.3(b) of
the Shareholders Agreement.
2.2 The shares acquired by Segovia in the IPO Company shall subsequently be sold
to MLSP and Silvia for the equivalent of US$10,000,000.00 as provided in Clause
2.3 of this Memorandum, with due regard for compliance with the provision of
Clause 3 of this Memorandum.
2.3 MLSP and Silvia acknowledge that Taetel, acting either directly or through
Segovia, has the right to elect, at its sole discretion, to perform its
obligations under this Memorandum, in return for actual payment of the
contracted price, using new shares, i.e., shares distributed to the public
through the IPO process, or old shares of the IPO Company already existing prior
to the IPO process.
2.3.1 At any rate, Taetel's obligation to deliver shares in the IPO
Company, through Segovia, can be deemed enforceable only after the
necessary authorizations have been obtained, both from the Central Bank of
Brazil and from the Brazilian securities and exchange commission or
similar body, to negotiate shares of the IPO Company that are traded
privately on the exchanges, and said obligation will only be implemented
simultaneously with the delivery of the shares that MLSP and Silvia hold
in Terra Brasil.
3. Rights and Obligations of MLSP and Silvia
3.1 Under this Memorandum, MLSP and Silvia agree to purchase the shares in the
IPO Company that are acquired by Segovia pursuant to Clause 2.1 of this
Memorandum, for the equivalent of ten million United States dollars
(US$10,000,000.00), using as base the institutional offer price of the shares in
the IPO process, converted from the Euro to United States dollars at the average
exchange rate prevailing on the day prior to the date of the IPO. That sum shall
be paid to Segovia using the shares that MLSP and Silvia hold in Terra Brasil.
4. Voting Agreement The Parties agree that the purchase and sale agreement will
provide that MLSP and Silvia be required to exercise their respective voting
rights on all IPO Company matters put for decision in a uniform manner and
always in harmony with the vote cast by the controlling shareholder of the IPO
Company, or a company it designates.
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<PAGE> 5
5. The Parties agree that all the terms and conditions agreed to in this
Memorandum link the payment of the price by MLSP and Silvia for purchase of
shares in the IPO Company to the completion of the IPO process and to the
full-fledged admission of the shares in the IPO Company for trading on Spanish
stock exchanges and on the NASDAQ.
6. The Parties agree that if the IPO process is not implemented by the IPO
Company by December 31, 1999, the terms previously agreed to in the Shareholders
Agreement will remain in force between TIB, MLSP and Silvia, and the terms and
conditions assumed under this Memorandum will be disregarded.
7. The Parties hereby commit themselves to signing all the instruments,
applications, forms, powers of attorney or any other document necessary to the
accomplishment of the Agreed Transaction.
8. The Parties acknowledge that this Memorandum does not represent consummation
of the Agreed Transaction or any other arrangement contemplated herein, but that
the Parties are mutually bound to comply with what is stipulated in this
Memorandum.
9. The Parties further commit not to disclose any of the terms and conditions
contained in this Memorandum, and not to reveal any other information pertaining
to the IPO Company or Terra Brasil that they may have learned by virtue of their
compliance with the provisions of this Memorandum without prior written consent
of Taetel, except for publicity essential to implementing the IPO process.
10. All notices, notifications, correspondence, requests and communications
related to this Memorandum shall be deemed valid and effective only if made in
writing and delivered in person against receipt, or sent by mail with return
receipt provided, or by fax, to the addresses and telephone numbers given below,
as well as to the individuals whose names appear below:
5
<PAGE> 6
For TAETEL:
TAETEL, S.L.
Attn: Mr. Rafael Garcia Diez de Lastre
Address: Calle Beatriz de Bobadilla 3, Madrid, Spain
Fax: (34-91) 452-3147
cc: Machado, Meyer, Sendacz and Opice Attorneys
Attn: Moshe B. Sendacz
Address: Rua da Consolacao 247, 4th floor, Sao Paulo, Brazil
Fax: (11) 3150 7071
For Silvia Nora Berno de Jesus:
Rua Felicissimo Azevedo 423, Apt. 401
Porto Alegre/RS
Attn: Silvia Nora Berno de Jesus
Fax: (051) 218-8203
For MLSP:
MLSP - Comercio e Participacoes Ltda.
c/o Terra Networks Brasil S.A.
Rua Florida, 1821, 12th floor, Brooklin
04565-001 Sao Paulo, SP
Attn: Marcelo Lacerda
Fax: (011) 5505-1918
11. The Parties elect the Central Court of the Judicial District of the capital
of the State of Sao Paulo to resolve any and all questions arising out of this
Memorandum, being favored over any other, however privileged.
12. The Parties hereby represent that they have been properly authorized to
execute this Memorandum, pursuant to their company documents.
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<PAGE> 7
13. No change to this Memorandum shall be considered valid and enforceable
unless it is made in writing and contains the signatures of all the Parties.
This Memorandum is executed in four (4) counterparts of equal tenor and for the
same purpose, each of which being considered as an original, but all of them
together constituting a single document for all intents and purposes of law.
Sao Paulo, October 22, 1999
TAETEL Silvia Nora Bueno de Jesus
________________________________ [s] ______________________________
Rafael Garcia Diez de Lastre
MLSP COMERCIO E PARTICIPACOES LTDA.
[s] _________________________________ [s] ______________________________
Marcelo Pavao Lacerda Sergio Cristovao Pretto
Managing Partner Managing Partner
AS CONSENTING INTERVENORS:
[s] _________________________________ [s] ______________________________
Marcelo Pavao Lacerda Sergio Cristovao Pretto
WITNESSES:
[s] _____________________________________ [s] ______________________________
Name: Marco Armonio B. Disani Name: Danilo Marques Dias Lombardi
RG: 25.269.770-9 SSP/SP RG: 27.066.059-8 SSP/SP
7
<PAGE> 1
Exhibit 2.15
STOCK PURCHASE AGREEMENT
This agreement is executed on September 9, 1999 (together with the Appendices
attached hereto hereinafter referred to as the "Agreement") between Gonzalo
Roberto Arzuaga, Federal Identification No. 21.697.798, born on February 2,
1971, unmarried, domiciled at Junin 658 Torre B, 13th Floor, Apartment "D",
Buenos Aires, Argentina (hereinafter "Gonzalo Arzuaga"), and Fernando Martin
Arzuaga, Federal Identification No. 20.668.976, born on February 18, 1969,
unmarried, domiciled at Junin 658 Torre B, 13th Floor, Apartment "D", Buenos
Aires, Argentina (hereinafter jointly referred to as the "Sellers"), and
Telefonica Interactiva Argentina S.A., a company organized and existing under
the laws of the Republic of Argentina, domiciled at Tucuman 1, 17th Floor,
Buenos Aires, Argentina (hereinafter the "Buyer") (hereinafter jointly referred
to as the "Parties").
WHEREAS
The Sellers are the legal owners and beneficiaries and have perfect title to
100% of the shares issued, subscribed, paid in and in circulation of the capital
stock and rights thereto (hereinafter referred to as the "Shares") of Netgocios
S.A., a company duly organized and existing under the laws of the Republic of
Argentina, registered on December 3, 1998 under No. 14.571, in Book 3,
Corporations Volume, entry No. 422, of the Corporate Records Office of the
Public Trade Register, legally operating under the laws of the Republic of
Argentina (hereinafter referred to as the "Company").
The Company owns the trademarks GauchoNet, which includes a distinctive,
identifying logo, and Netgocios; and the NIC-Argentina registered domain name
www.gauchonet.com.ar and the INTERNIC registered domain name www.gauchonet.com;
The Sellers wish to sell, and the Buyer wishes to buy, the Shares issued by the
company, subject to the terms and conditions of this Agreement;
THEREFORE, based upon the representations and warranties herein and as agreed
herein, the Parties covenant as follows:
ARTICLE 1
DEFINITIONS
<PAGE> 2
2
1.1. Certain Definitions. In addition to the terms defined in other parts of
this Agreement, the terms indicated below, written with the first letter
capitalized, as used in this Agreement shall be defined as follows:
"Accord": With respect to any Person, any agreement, contract, negotiable
instrument, legally binding and enforceable commitment, arrangement or
understanding, to which said Person is a party or by which it is bound, either
written or oral, including each and all of the amendments thereto.
"Deletion of a Person": The action of eliminating the information on a Person
from the records maintained by NIC-Argentina.
"Banner": A unit of measurement of advertising space on the Internet.
"Change a Person": Replacement by transferring one registered Person to another
registered Person.
"Number of Banners Displayed per Page in a Domain": The number of Banners on a
page in the Domain.
"Number of Pages Displayed Per Day by a Domain": The number of pages displayed
by a domain in one day, resulting from the number of pages viewed according to
the log-file analysis.
"Number of Pages Viewed Per User": The number of pages that are consulted on the
average by the Users when they successfully access the Domain in question.
"Number of Hits per Day": The number of times per day a given Domain is
successfully accessed.
"Total Number of Banners Displayed Per Day by a Domain": The number of banners
displayed per day by a Domain, derived by multiplying the Number of Pages
Displayed Per Day by a Domain by the Number of Banners Displayed Per Page in a
Domain.
"Content": Certain content transmitted by the Internet, including but not
limited to movies, music, games, on-line books, information, etc. Content
Providers may be, among others, motion picture studios, editors, periodical
publishers (such as La Nacion, Clarin, etc.) and music composers.
"Content Contracts": All contracts executed by a Domain owner with Content
Providers in order to obtain a profit (either by performing an exchange that is
profitable or by any other method) by incorporating in the domain the Content
that may be of interest to the Users.
<PAGE> 3
3
"Cost per Thousand": The manner of charging advertisers instituted globally on
the Internet. A price is determined for every thousand hits and then is
multiplied by the number of hits received by the corresponding Banner. Banners
located on the first page, home pages or preferred locations have a higher Cost
per Thousand than the others.
"Domain Name": The complete identifier of a Domain. It consists of the
concatenation of the name and the Subdomain, separated by a dot.
"E-mail address": The only means by which Applicants may submit Requests for
Domain Names.
"Dollars" or "US$": The legal tender of the United States of America.
"Domain": The Internet address expressed in a simple manner for the ease of the
User. The primary function of the Domain is to facilitate Net surfing for Users.
"Internet": A/The network of networks. It is an autopoietic phenomenon. It
consists of services that, supported by networks, links and/or
telecommunications systems, offer facilities that differentiate them from the
basic service, applying processes that make information available, act on it and
even allow the User to interact with the system.
"Log-file": The file that records all server activity, including but not limited
to pages viewed, hits, file transfers, source of hits or server errors.
"LSC": The Law on Commercial Companies No. 19550 and amendments thereto.
"NIC-Argentina": The abbreviation that identifies the Ministry of Foreign
Relations, International Trade and Culture of the Republic of Argentina in its
capacity as administrator of the Argentine Internet Domain.
"Registered Domain Name": The name that appears in the lists of Domains
maintained by NIC-Argentina.
"Person": Any individual or legal entity, including but not limited to any
company, association, joint venture, trust, de facto corporation, or any other
entity or organization, including government or departmental organizations or
agencies of any government.
"Registrant": The person benefiting from registration of a name.
<PAGE> 4
4
"Responsible Person": The contact person designated by the Registrant who will
responds to all issues regarding the Domain Name. This person must have a valid
and reachable E-mail Address.
"Pesos" or "$": The legal tender of the Republic of Argentina.
"Percentage of Inventory Sold by a Site": The percentage of banners displayed by
a Domain that generate a cash flow. It is common in any communications media to
exchange advertising space, for which no money is exchanged but rather another
service is provided.
"Internet Portal": A means of communications. An Internet Portal offers an
Internet that is much better organized and much easier to search. Each Internet
Portal provides more functionality to the network and more productive usage. An
Internet Portal offers, in addition to a search engine, among others, services
such as e-mail, chat, news, shopping, personal pages, communities and games.
"Horizontal Portal": A Portal that does not have a specific subject, but instead
is general. A Horizontal Portal is aimed at a general community and not
necessarily a community interested in searching for a specific subject.
"Registration Procedure": The registration procedure used by NIC-Argentina,
consisting of the possibility of Persons filing an Application or Change of
Registration, for which interactive forms are available for the different
Applications. Communications regarding the receipt and results of each
Registration Procedure are sent to the E-mail Address of the contacts of each
Domain.
"Readership": The number of Users that use the same Internet account. This
occurs in cases, especially in companies rather than in homes, in which a single
Internet account is used by various Users.
"Application": The application submitted on a NIC-Argentina form in order to
initiate a Registration Procedure. The purpose of the application may be to
register a Domain or Change the Registrant or Person Responsible.
"Applicant": The Person submitting an application to NIC-Argentina.
"Subdomain": A subdivision of the domain AR (Argentina), under which
NIC-Argentina registers the names.
"User": Those who access the Internet from residential or business, private or
public, computer equipment.
<PAGE> 5
5
1.2. Other terms. Other terms may be defined in another provision in the text of
this Agreement and, unless otherwise indicated, shall be defined as in the
definition, for any application under this Agreement.
1.3. Other definitions: The words "herein," "contained herein," and "established
below" are words that are similar in meaning, when used in this Agreement, and
refer to this Agreement in its entirety. The terms defined in the singular shall
have a comparable meaning when used in the plural and vice-versa, according to
the context.
ARTICLE 2
PURCHASE OF SHARES
2.1. Purchase of Shares: (i) The Sellers hereby sell and transfer to the Buyer,
and the Buyer purchases from the Sellers, subject to the terms and conditions of
this Agreement, all of the Shares for the purchase price established in Article
3 herein.
(ii) For purposes of this Agreement, the term "Shares" means all of the shares
of the Company issued and in circulation, which currently amount to 12,000
(twelve thousand) common registered shares with a par value of $ 1 (one peso),
each share entitling the owner to 1 (one) vote, with all political, economic and
other rights corresponding thereto, including but not limited to: (i) all rights
to uncapitalized capital contributions made, and the stock premiums paid, in
effect as of the date of this Agreement; (ii) all rights to dividends payable in
cash, shares or otherwise declared by the Company up to the date of this
Agreement which are unpaid to date; (iii) all rights to subscribe shares of
stock of the Company corresponding to subscriptions offered by the Company up to
the date of this Agreement; (iv) all rights to receive shares of the Company
subscribed prior to the date of this Agreement; (v) all other distributions
declared by the Company, whether capital reductions, distributions of stock
premiums or other concepts.
2.2. Transfer of Shares and delivery of documentation: The Sellers hereby
transfer the Shares to the Buyer, free of all encumbrances, and the Parties
deliver all of the documentation and execute all of the acts necessary to
perfect the transfer of the Shares, and the Buyers assume the unrestricted
administration and disposition of the Company, including but not limited to the
documents and acts listed below:
(i) The Sellers deliver to the Buyer the stock certificates representing the
Shares, in a suitable manner for the transfer, together with the corresponding
transfer notices addressed to the Company, signed by the Sellers, in compliance
with all requirements of the LSC;
<PAGE> 6
6
(ii) The Sellers deliver to the Buyer all of the books, documentation and
accounting and corporate background of the Company, as well as all of the deeds
and other property records of the Company;
(iii) The Permanent and Alternate Directors of the Company submit and deliver
their unconditional resignations and waiver of fees and compensation for any
other reason that may be applicable, indicating that they have nothing to claim
from the Company for any reason whatsoever;
(iv) The Chairman of the Company, who resigns as provided in Article 2.2 (iii),
signs all of the necessary documents prior to resigning, in accordance with
applicable legislation, in order to perfect the transfer of the Shares and the
unrestricted administration of the Company by the Buyer;
(v) After duly registering the transfer of Shares, the Buyer convenes a General
Shareholders Meeting of the Company to, among others, accept the resignation of
the departing Directors and their waiver of any fees that may apply, and to
appoint new members of the Board of Directors of the Company;
(vi) The Buyer delivers the following checks to the Sellers: (i) Check No.
01009834 drawn on Citibank, dated September 9, 1999, for US$ 3,000 (three
thousand Dollars), to the order of Fernando Martin Arzuaga, and (ii) Check No.
01009837 drawn on Citibank, dated September 9, 1999, for US$ 57,000 (three
thousand Dollars), to the order of Gonzalo Roberto Arzuaga, in payment of a
portion of the price of the Shares to begin performance of this Agreement,
pursuant to the provisions of Article 3 herein, the Agreement being sufficient
receipt for such payment.
ARTICLE 3
PRICE AND FORM OF PAYMENT
3.1. The total purchase price of the Shares is US$ 4,586,000 (four million five
hundred eighty-six thousand Dollars). This amount is subject to all downward
adjustments and/or deductions that may apply pursuant to Article 6 herein.
The Sellers hold the Buyer harmless from all liability that may result or arise
out of any dispute between the Sellers with regard to distribution of the Price,
adjustments and/or deductions thereto, or indemnifications that they may be
required to sustain as a result of this Agreement.
3.2. The Price shall be paid as follows:
<PAGE> 7
7
(i) US$ 60,000 (sixty thousand Dollars), as established in Article 2.2 (vi)
herein, to begin performance of this Agreement, paid herewith;
(ii) Furthermore, the Buyer hereby credits the Sellers in the amount of US$
200,000 (two hundred thousand Dollars), of which US$ 80,000 (eighty thousand
Dollars) shall be used for payment as indicated in Article 3.1 herein, and US$
120,000 (one hundred twenty thousand Dollars) shall be used for the Security
Deposit as provided in Articles 6 and 7 herein. The Sellers hereby deliver to
the Buyer the above-mentioned amounts so that the Buyer, in the name of the
Company, may pay back wages and severance pay to the employees of the Company
pursuant to Article 4.13 herein, and so the Buyer may take the necessary
measures for the Security Deposit.
(iii) The balance of the Price (hereinafter the "Balance of the Price"), i.e.,
US$ 4,326,000 (four million three hundred twenty-six thousand Dollars), shall be
paid by the Buyer to the Sellers as follows:
(iii.1.) US$ 1,500,000 (one million five hundred thousand Dollars) shall be paid
by the Buyer to the Sellers within five (5) calendar days from the date of
definitive legal registration, in due form, of the domains www.gauchonet.com.ar
and www.gauchonet.com in the name of the Company, and registration with
NIC-Argentina and INTERNIC, respectively. Payment shall be made as follows: US$
1,425,000 (one million four hundred twenty-five thousand Dollars) to Gonzalo
Roberto Arzuaga, and US$ 75,000 (seventy-five thousand Dollars) in favor of
Fernando Martin Arzuaga. Payment shall be made at the place and time that the
Buyer reliably advises the Sellers, or at the place and time agreed by the
Parties. Furthermore, the Parties may agree that payment be deposited in a bank
account, in which case the Sellers shall advise the Buyer of the account number,
the name of the Bank and other necessary information.
(iii.2) US$ 2,826,000 (two million eight hundred twenty-six thousand Dollars)
shall be paid by the Buyer to the Sellers within five (5) calendar days from the
date on which the Company executes and signs the Content Contracts with the
parties indicated in Appendix 3.2 (ii.2) herein. Payment shall be made as
follows: US$ 2,684,700 (two million six hundred eighty-four thousand seven
hundred Dollars) to Gonzalo Roberto Arzuaga, and US$ 141,300 (one hundred
forty-one thousand three hundred Dollars) in favor of Fernando Martin Arzuaga.
Payment shall be made at the place and time that the Buyer reliably advises the
Sellers, or at the place and time agreed by the Parties. Furthermore, the
Parties may agree that payment be deposited in a bank account, in which case the
Sellers shall advise the Buyer of the account number, the name of the Bank and
other necessary information.
<PAGE> 8
8
The Balance of the Price shall not accrue interest of any type whatsoever in
favor of the Sellers.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer that as of the date of this
Agreement:
4.1. Legal Standing of the Sellers. The Sellers have the right and full legal
standing to enter into this Agreement and execute the transactions provided
herein, and are not subject to any legal, judicial or contractual restriction
with respect to the disposal of their assets in general or the Shares in
particular. This Agreement was duly executed and granted by the Sellers and
constitutes a valid and binding obligation for the Sellers, enforceable
according to the terms and conditions hereof.
4.2. Non-violation. Execution of the operations provided herein and performance
by the Sellers of this Agreement according to the terms and conditions hereof
(i) shall not require the approval, consent or adoption of any measure by any
other person, nor any submission or representation to or sending any
notification to any person, and (ii) shall not be in conflict with, nor imply
nonperformance or violation of, any of the terms and conditions, nor constitute
a fact that may end or accelerate the terms, or impose any pledge or encumbrance
on the assets of the Company, of any of the following instruments:
(a) The bylaws of the Company;
(b) Any other agreement, instrument or contract (hereinafter "Contract") to
which the Company or the Sellers are a party or by which they are otherwise
bound or subject;
(c) Any ruling, decision, order, mandate, measure to not change or resolution
(hereinafter "Order") of any court, government or administrative agency or
arbitrator applicable to the Company, Sellers, any of the Shares in the
possession of the Sellers or any of the assets of the Company that may impede
the transaction instrumented by this Agreement; or
(d) Any law, legal provision, standard or regulation (hereinafter "Law")
applicable to Company, Sellers, any of the Shares in the possession of the
Sellers or any of the assets of the Company that may impede or have a
significant adverse effect on the transaction instrumented by this Agreement.
4.3. Corporate Structure and Standing. The Company is a duly organized
corporation that operates validly and is in existence under the laws of the
Republic of Argentina. The Company
<PAGE> 9
9
has all power necessary to conduct the business in which it is engaged and to
own, rent, lease and operate the assets it owns, leases or operates. The Sellers
have delivered to the Buyer a complete and correct copy of the bylaws
(hereinafter "Bylaws") of the Company, with amendments and according to the
current text, which is included in Appendix 4.3 herein.
4.4. Ownership of Shares. The Sellers are the sole and unlimited owners and sole
beneficiaries of the Shares. The Sellers have a valid, perfect title to the
Shares, free and clear of all types of pledges, restrictions, encumbrances,
mortgages, legal or administrative attachments, liens, easements, defects,
collateral property rights, claims, usufructs, third party contractual rights,
options and restrictions of any type, including any limitation or restriction to
ownership, transfer and availability of the Shares and/or assets, accordingly
(hereinafter "Encumbrances"). Against delivery of the Shares as provided in
Article 2.2, the Sellers shall transfer to the Buyer the valid, negotiable and
absolute title to the Shares, free and clear of any type of Encumbrance.
4.5. Internet Domain and Trademark. Notwithstanding the representations and
warranties in Article 4.7 herein, Gonzalo Arzuaga represents and warrants that
he sold to the company, with clean title and in compliance with all legal
provisions:
(i) The domain www.gauchonet.com.ar, registered with NIC-Argentina.
Gonzalo Arzuaga represents that he is currently taking the necessary measures to
register the Domain in the name of the Company. Furthermore, Gonzalo Arzuaga
ensures the legitimacy and satisfactory results of the procedure and further
ensures that the Company will owe nothing for this procedure nor will lose any
rights as a result thereof.
The contract to transfer the Domain www.gauchonet.com.ar and the registration
procedure that was initiated are attached hereto in Appendix 4.5 (i).
(ii) The Domain www.gauchonet.com, a registered domain name with INTERNIC,
United States of America.
Gonzalo Arzuaga represents that he is currently taking the necessary measures to
register the Domain in the name of the Company. Furthermore, Gonzalo Arzuaga
ensures the legitimacy and satisfactory results of the procedure and further
ensures that the Company will owe nothing for this procedure nor will lose any
rights as a result thereof.
The contract to transfer the Domain www.gauchonet.com and the registration
procedure that was initiated are attached hereto in Appendix 4.5 (ii).
(iii) The trademarks GauchoNet and the distinctive, identifying logo, and
Netgocios, the transfer forms, duly and legally signed, are attached Appendix
4.5 (iii).
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Gonzalo Arzuaga represents that there have been no objections filed against the
transferred trademarks in the Trademark Register to date.
4.6. Capitalization. The capital stock of the Company is $12,000 (twelve
thousand Pesos), represented by common registered shares with a par value of $1
(one Peso) (hereinafter the "Capital Stock") There is no other type or class of
capital stock of the company or other ownership of its capital stock. All of the
shares of Capital Stock issued and in circulation have been validly issued and
are fully paid in, and not subject to additional contributions. There are no
options, subscription rights or other rights of any type to acquire additional
shares of Capital Stock of the Company or other ownership of its capital, nor
securities which are convertible to or exchangeable for, or otherwise grant the
holder any right to acquire, any of such additional shares or ownership of
capital stock, and the Company is not bound to issue any options, subscription
rights, rights or certificates. There are no agreements with regard to voting,
redemption, purchase or sale of the Capital Stock. The Company has no pending
(i) capital increases or decreases, (ii) subscriptions, issuances or redemptions
of shares, (iii) amendments to the Bylaws of the Company, (iv) mergers,
spin-offs or transfers of businesses, or (v) other corporate acts of similar
magnitude, with the exception of the sale of Shares in favor of the Buyer
pursuant to this Agreement.
4.7. Assets of the Company. The Company has perfect title to all of the tangible
or intangible property listed in the Financial Statements, including such assets
that were acquired subsequent to the last balance sheet corresponding to the
normal course of business. None of the assets of the Company are subject to
encumbrances, pledges or claims of any type whatsoever. The assets currently
used by the Company in its operations are in good condition and have been
maintained and cared for according to their intended use. Appendix 4.7 herein
lists the assets owned by the Company.
4.8. Legal Proceedings. There are no: (i) outstanding rulings issued by any
court, government, regulatory agency or arbitral tribunal against or involving
the Company or any of its assets; (ii) actions, lawsuits, disputes or
proceedings of any type whatsoever underway or imminent at any time since
November 27, 1998 against or involving the Company or any of its assets, and
(iii) investigation underway or imminent at any time since November 27, 1998
against or involving the Company or any of its assets (jointly referred to as
"Proceedings"). There are no facts, events or circumstances that may be
reasonably assumed to entail Proceedings against or involving the Company or any
of its assets.
4.9. Lease. Appendix 4.9 herein contains a copy of the only lease executed by
the Company. The lease is valid, binding, and was granted regularly and
legitimately and is in full force, and the Company is current in all rent
payments and any other amounts payable. The Company has
<PAGE> 11
11
complied with all of the terms and conditions of the lease, and there is no
assumption of termination or default. The Company has quiet enjoyment of the
property covered by such lease.
4.10. Financial Statements. (i) the Financial Statements for the fiscal year
ending on December 31, 1998, together with the notes to said financial
statements (hereinafter jointly referred to as "Financial Statements") were
prepared in accordance with generally accepted accounting procedures in
Argentina, and are complete, correct and properly reflect the financial
situation and operating earnings of the Company.
(ii) There are no liabilities, debts, obligations or claims of any type
whatsoever against the Company, whether absolute or contingent, with the
exception of those reflected or provided in the Financial Statements, as
explained therein.
4.11. Books and Records. The books of the Company have been maintained in a
legal, all-inclusive, adequate and accurate manner, and contain accurate,
complete and exact details of all of the issues that must be recorded in such
books, according to applicable regulations.
4.12. Tax Issues: Other Payments or Declarations to Government Agencies. For
purposes of this Agreement, the term Taxes shall include any type of tax, levy,
contribution, tariff, duty, determination, withholding, assessment or government
charge of any type, including but not limited to any and all taxes or levies of
this type that must be collected and paid to any government agency on behalf of
third parties (including but not limited to obligations derived from acting as
withholding agent, assessment agent, substitute, agent or intermediary, etc.),
including, with regard to each item, all interest, adjustments, punitive charges
or additional amounts, etc., fines and other penalties.
(i) All Sworn Tax Declarations of the Company have been submitted in a timely
manner when due, according to applicable Law, and all significant aspects of
such Sworn Tax Declarations are true, complete and accurate;
(ii) All of the Taxes reflected in such Tax Declarations and all other Taxes
relating to the Company (including all Tax shortages or determinations) have
been paid in a timely manner;
(iii) The charges, amounts due and reserved for Taxes relating to the Company
reflected in the books of the Company (including but not limited to the
Financial Statements) are sufficient to cover all Taxes payable, or which may
become payable, for periods prior to the date of
<PAGE> 12
12
execution of this Agreement;
(iv) There are no agreements or covenants currently in effect or any pending
requests with regard to the extension or waiver of terms for (a) submitting any
Sworn Tax Declaration for the Company, or (b) the determination or collection of
any type of Tax relating to the Company;
(v) Except as listed in Appendix 4.12 (v) herein, all Taxes that the Company is
bound by any Law to withhold or collect have been duly withheld or collected,
and have been paid in a timely manner to the pertinent government authorities as
they became due and payable;
(vi) There are no actions, lawsuits, proceedings, investigations, examinations,
inspections, claims or deficiencies currently pending or imminent in relation to
Taxes applicable to the Company;
(vii) There are no Tax liens against any assets of the Company;
(viii) The Company is not and has never been party to any agreements or
covenants for sharing Taxes, and
(ix) Since its inception, the Company has never been subject to audits by the
Tax Authorities that would entail additional Tax payments by the Company.
4.13. Labor Issues. (i) According to preliminary estimates, the Company is
currently confronting a contingency for personnel and insurance accounts
payable. Appendix 4.13 (i) herein contains the name, hire date, job and gross
monthly salary of all employees of the Company.
(ii) The Sellers assume and agree to confront all consequences derived form this
contingency (hereinafter the "Contingency"), thus releasing and holding the
Buyer harmless from any claim and payment that the Company must confront in the
future, for any reason arising out of this Contingency.
(iii) The Parties agree that in order to facilitate payment of the Contingency,
they shall establish a security deposit, pursuant to Article 7 herein, for a
total of US$ 120,000 (one hundred twenty thousand Dollars). If the definitive
amount that must be paid exceeds the amount of the Security Deposit, the Sellers
shall pay the balance within five (5) business days from notification by the
Buyer. The Security Deposit provided in Articles 6 and 7 herein is not limited
only to the Contingency.
<PAGE> 13
13
(iv) The Sellers shall also cover the costs derived from severing the employment
relationship and adjusting the compensation situation for the employees listed
in Appendix 4.13 (i), authorizing the Buyer to process the severance of Andres
Irmer, Mariana Mallie, Delfina Caderossa, Cecilia Bassi and Laura Morales, and
to adjust the compensation situation of Diego Benchuya, Alfredo Fornaso and
Yanina Canosa with the Ministry of Labor, and to credit them in an amount not
exceeding US$ 80,000 (eight thousand Dollars), as detailed in Appendix 4.13
(iv).
(v) The reintegration of any of these people in the Company, regardless of the
legal form adopted, does not release the Sellers from their obligation for
indemnity for prior employment.
4.14. Compliance with Laws: Permits and Authorization. (i) The Company has
conducted all of its business in accordance with all applicable federal,
provincial or municipal regulations and with all orders issued by any federal,
provincial or local government, or government, regulatory or administrative
agency, ministry, organization or commission (hereinafter "Government
Regulations") applicable to the Company or any of its assets or activities.
(ii) The Company has full written authorization, in accordance with applicable
Law, to operate and continue to engage in its activities, in the manner and at
the place(s) where it currently does so. The Company has not received any
notification and there is no reasonable basis to assume that other permits,
authorizations and/or licenses will be required. The Company is not under
investigation, the subject of a report or imminent legal or administrative
action or proceeding in relation to the violation of any standard, regulation or
ruling that may entail a request or order for temporary or definitive closure.
4.15. Nonexistence of Contingent or Hidden Liabilities. The Company does not
have any liabilities or obligations of any type (absolute, due, registered,
hidden, simulated, contingent or others) including but not limited to loans, tax
liability, labor and benefit liabilities, which are not fully and duly recorded
in the Financial Statements or for which a reserve or provision is not
established therein. such provisions, records or reserves are adequate,
appropriate, sufficient and reasonable.
4.16. Agreements and Commitments. (i) Appendix 4.16 herein lists all of the
agreements and commitments signed by the Company which are in effect and being
performed as of the date of this Agreement to which the Company is a party.
(ii) The Company has regularly complied with all standards, contracts or
agreements, in accordance with applicable legal provisions in each case, and has
not performed any action or failed to take any measure that may result in the
possibility of a lawsuit or liability or which may have a significant adverse
effect on its business, property, assets or financial condition.
<PAGE> 14
14
4.17. Accuracy of Information. No representation or warranty of the Sellers in
this Agreement, including the Appendices hereto, or any representation contained
in any document (including but not limited to the Financial Statements,
certificates or other writings submitted or to be submitted by the Sellers to
the Buyer or any of its representatives pursuant to the provisions of this
Agreement or in relation to the operations provided herein) contains or shall
contain any misrepresentation of a key event nor shall fail to state any fact as
necessary, in view of the circumstances, to ensure that the representations
contained herein or in such other documents are not misleading. There is no fact
known by the Sellers or which may be determined by reasonable investigation that
there was or may be a significant adverse change for the Company that has not
been indicated in this Agreement. "Significant Adverse Change" is understood to
be any fact, circumstance or event which significantly affects or may affect the
situation (financial or otherwise), activity, assets, liabilities (contingent or
otherwise), cash flow, operating earnings, capital stock, economic, commercial,
legal and/or financial situation or projections of the Company.
4.18. Insurance Policies. There is no insurance of any type whatsoever carried
by the Company.
4.19. Powers of Attorney. There are currently no powers of attorney granted by
the Company.
4.20. Bank accounts. All bank accounts of the Company are listed in Appendix
4.20, which also lists the balances and names of all persons authorized to sign
for an draw on such accounts. It is understood that the authorizations granted
to such persons shall be revoked at the time of signature of this Agreement.
4.21. Accounts Receivable and Payable. Appendix 4.21 herein contains current
details of the accounts payable (including the amount, account, due date and
supporting documentation) and accounts receivable (including the amount,
account, due date and supporting documentation).
4.22. Backups of Documentation and Programs. The Sellers represent and warrant
to the Buyer that each and all of the programs and information necessary for
normal development of the activities of the Company and all documentation,
whether in hard copy or on magnetic media, necessary to access the history
records and/or to maintain the activities of the Company at the same level are
backed upon on magnetic media. No damage and/or unforeseen circumstances and/or
force majeure will prevent the Sellers from delivering to the Buyer a backup
copy on magnetic media of all of the updated data and information of the
Company.
4.23. Inventory. The Company has no inventory.
<PAGE> 15
15
4.24. The Sellers represent that the commercial activity of the Company has
resulted in the following averages in August 1999:
(i) Number of unique hits per day: 12,000
(ii) Number of pages viewed by Users: 4
(iii) Number of pages displayed per day in a Domain: 48,000
[sic] (v) Number of registered users: 30,000
(vi) Number of pages viewed in the month: 1,440,000
(vii) Average sales income from March through August: US$ 17,000
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that as of the date of this
Agreement:
5.1. Organization. The Buyer is a company organized under the laws of the
Republic of Argentina on July 28, 1999, and was duly registered with the
Corporate Records Office under No. 11778, Book VI - Corporations Volume, on
August 17, 1999, and is validly existing and operating under the laws of
Argentina.
5.2. Corporate Authority. The Buyer has full corporate power and authority to
enter into this Agreement and perform the transactions contemplated herein. The
execution, granting and performance of this Agreement by the Buyer have been
duly authorized by all required corporate means. This Agreement was duly
executed and granted by the Sellers and constitutes a valid and binding
obligation for the Sellers, enforceable according to the terms and conditions
hereof
ARTICLE 6
INDEMNIFICATION
6.1. Indemnification for the Buyer. The Sellers jointly and severally agree to
indemnify, protect and hold the Buyer and/or the Company harmless, at the
discretion of the Buyer, for all
<PAGE> 16
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losses, liability, claims, damages, obligations, costs and charges (including
but not limited to reasonable attorney fees) that may be directly or indirectly
caused by or arising out of:
(i) Any inaccuracy, misrepresentation or nonperformance of any of the
representations, warranties or clauses agreed by the Sellers in this Agreement
or in any document or information delivered by the Sellers pursuant to this
Agreement;
(ii) Any nonperformance by the Sellers in implementing or complying with any or
all of this Agreement;
(iii) Each and all of the past, present or future tax liabilities derived from
any violation of laws, regulations or decrees or which result from rulings or
judgments that may affect or be imposed against the Company, its employees or
any of its assets, arising out of measures prior to the date of this Agreement
(hereinafter "Tax Losses");
(iv) Any nonperformance by the Sellers and the Company in payment of labor,
benefit and social security obligations (including but not limited to payment of
the Contingency as defined in Article 4.13 herein) in relation to the employees
of the Company.
(v) Any Contingent Liabilities. For purposes of this Agreement, "Contingent
Liabilities" are defined as any liability or obligation assumed by or imposed
upon the Company, or obligations of the Company that have not been duly reported
in the records or Financial Statements of the Company prior to the date of this
Agreement, or which have been reported but the information does not sufficiently
represent or cover the amount corresponding to the obligation or liability; and
(vi) Any Hidden Liabilities. For purposes of this Agreement, "Hidden
Liabilities" are defined as: (i) any unreported liability or obligation assumed
negligently or fraudulently; or (ii) any unreported liability or obligation of
which the Sellers or the management, executives, employees or representatives of
the Company were aware or should have been aware, in order to take customary
care during the normal course of business; or (iii) any liability or obligation
determined or imposed by any authority, including judges, that was not reported
in the Financial Statements; or (iv) any failure to indicate in the Financial
Statements any liabilities that should have been indicated in accordance with
current legal provisions.
The Sellers shall not be released from their liability if the Buyer could have
known of the existence of the contingency, loss, expense or cost by means of
authenticated documents submitted by the Sellers or the results of the Audit;
<PAGE> 17
17
The facts included in this Article 6.1 for which the Sellers agree to indemnify
the Buyer shall be called "Indemnifiable Facts".
6.2. Terms. The indemnifications established in this Agreement shall remain in
effect for a term of 5 (five) years from the date of this Agreement, except in
the following cases: (i) taxes (except social security), in which case the term
of indemnification shall be 7 (seven) years from the date of this Agreement,
(ii) social security, for 10 (ten) years from the date of this Agreement, and
(iii) Contingent or Hidden Liabilities, until the corresponding statutes of
limitations have elapsed.
6.3. Defense. The Sellers may be entitled to defense against a claim filed
against the Company, together with the actions of the Buyer and/or the Company,
at the discretion of the Buyer. In order to enforce the right to defense, the
Sellers must be notified by the Buyer of any claim sufficiently in advance, in
the event that there is a legal term in which to respond to the claim. This
obligation shall only remain in effect if the Buyer is duly notified of an
actual claim that is indemnifiable. The Sellers do not need to be advised of
notifications of warnings or threats.
6.4. Actions for Damages. If the Sellers must pay an amount pursuant to Article
6.1 herein, the payment shall be made by the Sellers to the Buyer or to the
Company, at the discretion of the Buyer. Once the payment is made, it shall
automatically be deducted from the Security Deposit pursuant to the provisions
of Article 7 herein.
ARTICLE 7
INDEMNIFICATION PROCEDURE - SECURITY DEPOSIT
7.1. The Buyer is expressly and irrevocably authorized by the Sellers to deduct
and/or compensate from the amount of US$ 120,000 (one hundred twenty thousand
Dollars) indicated in Article 3.2 herein, any amount corresponding to an
Indemnifiable Fact. For this purpose, the amount of US$ 120,000 (one hundred
twenty thousand Dollars) is deposited as a security deposit with a bank in
Argentina at the selection of the Buyer, under terms and conditions
substantially similar to those in the Deposit Agreement attached hereto as
Appendix 7.1 (the "Security Deposit"). The Security Deposit shall have the terms
and conditions and term as provided in the Deposit Agreement attached hereto as
Appendix 7.1.
7.2. The Buyer shall deduct from the Security Deposit the amounts derived from
Indemnifiable Facts in the following cases:
<PAGE> 18
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(i) in the event of an administrative resolution or firm ruling on a claim
relating to an Indemnifiable Fact, and/or;
(ii) in the event that the Sellers have signed an agreement regarding the
determination and amount of an Indemnifiable Fact, or if there is an arbitration
award regarding this issue, as provided by Article 9.12 herein, and/or;
(iii) in the event that the Buyer is authorized to compensate according to legal
provisions, and/or;
(iv) in the event of any default on labor obligations by the Sellers and/or the
Company (including but not limited to the payment of wages, insurance and social
security), in which case the amounts necessary to cover the costs of severing
the employment relationship and adjusting the compensation situation of
employees of the Company following a ruling, resolution or arbitration award.
The Parties clarify that, if the Sellers assume the obligation of covering the
payment of severing the employment relationship and adjusting the compensation
situation of certain employees as established in Article 4.13 herein, this does
not release them from any default on labor obligations by the Company.
In these cases, the Buyer shall deduct the amounts necessary to cover the
Indemnifiable Fact from the Security Deposit, and shall notify the Sellers of
the amount deducted.
ARTICLE 8
OBLIGATIONS
8.1. Gonzalo Arzuaga agrees to continue to perform the activities of consultant
as requested by the Buyer for the Company for a term of six (6) calendar months
from the date of execution of this Agreement. Gonzalo Arzuaga shall earn the
total and definitive amount of US$ 18,000 (eighteen thousand Dollars) for these
services, subject to any taxes that are applicable. The Buyer shall pay this
amount to Gonzalo Arzuaga in six (6) equal consecutive monthly installments of
US$ 3,000 (three thousand Dollars) + value added tax.
After the six (6) months have elapsed, Gonzalo Arzuaga shall not disparage the
operating capacity of the Company to the Buyer.
8.2. Non-Competition. The Sellers agree that for a term of 24 (twenty-four)
months from the date of execution of this Agreement:
<PAGE> 19
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(i) they shall not initiate, for their own account or for the account of others,
either directly or indirectly, or through family members, nor shall participate
in any activity directly or indirectly involving the operation of a Horizontal
Portal either in Spanish or in Portuguese, or any other activity that may
compete with the activity developed at the time of signing this Agreement by the
Company, with respect to Horizontal Portals.
(ii) they shall not develop or participate, as principal, agent, partner,
co-participant, lender, guarantor, owner, operator, manager, executive,
director, shareholder, consultant, contractor, employee, sponsor or in any other
capacity, in any location in Argentina or abroad, in any of the businesses or
activities developed at the time of execution of this Agreement by the Company,
as described in Article 8.2. (i).
(iii) they shall not compete through shareholding, positions on Boards of
Directors, employment contracts or any other type of contractual or commercial
relationship, in any type of legal entity that is controlled by, parent of,
related to, affiliated with, either directly or indirectly, through one or more
companies and other legal entities, other companies that provide and/or engage
in the activities developed by the Company at the time of execution of this
Agreement, as described in Article 8.2. (i).
(iv) they shall not have any relationship whatsoever, pursuant to the terms
indicated in the previous paragraphs, with Persons who develop, have agreements
with other Persons, are associated with, operate and or provide the services
indicated in Article 8.2. (i).
As total and definitive payment in full for non-competition as established in
Article 8.2 herein, the Sellers shall receive, together with the Buyer, a
monthly payment of US$ 4,000, subject to payment of taxes that may be
applicable. Taking into account that non-competition was agreed for a term of 24
(twenty-four) months, the Sellers shall collect the total amount of US$ 96,000
(ninety-six thousand Dollars). The payments shall be made throughout the term of
non-competition, and the Sellers shall issue the corresponding receipt as they
receive payments. Gonzalo Arzuaga shall issue a receipt for US$ 3,800 (three
thousand eight hundred Dollars(), and Fernando Arzuaga shall issue a receipt for
US$ 200 (two hundred Dollars). In the hypothetical situation that either or both
of the Sellers fail(s) to perform the obligation of non-competition, they shall
pay the Buyer a penalty of US$ 200,000 (two hundred thousand Dollars), not
subject to the collection of any deduction whatsoever, plus damages.
<PAGE> 20
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8.3. No Third Party Offerings. The Sellers assume the obligation for a term of
two (2) calendar years from the date of execution of this Agreement, to not
directly or indirectly offer and/or induce and/or tempt and/or propose and/or
promote a job and/or abandon a position and/or any other type of commercial
and/or professional activity for any Person affiliated with the Company by
contract or employment relationship, or who has been affiliated with the Company
by contract or employment relationship for any reason whatsoever, without
reliable written authorization from the Buyer.
The Sellers shall only be authorized to hire those persons listed in Appendix
8.3. hereto.
8.4. Condition of equipment, Domains and other assets. The Sellers assume the
obligation to deliver the Domains in operating conditions. They further assume
the obligation of delivering the hardware, software and database components in
operating condition, as well as any other system necessary for developing the
activity of the Company.
8.5. Pre-emptive right in favor of the Buyer. If the Sellers should decide to
seek partners and/or investors for any type of business that they may initiate
related to the operation of Internet activities and/or any other type of
activities within the telecommunications sector in the broadest sense, they
shall give the Buyer pre-emptive rights to join them and become a partner and/or
investor in such businesses, provided that the Buyer has matched or bettered the
offers that the Sellers may have received from third parties.
In order to allow the Buyer to better the third party offer, the Sellers shall
notify the Buyer of the offer received so that within a term of twenty (20)
calendar days from reliable receipt of the notice, the Buyer may match or better
the third party offer. For this purpose, the Sellers shall send the notice
together with a copy of the offer received.
The right provided in favor of the Buyer in this Article shall be valid for a
term of twenty-four months from the date of execution of this Agreement.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1. Waiver. The Buyer may only waive nonperformance by the Sellers of any of
their obligations or agreements arising out of this Agreement if in writing. The
Sellers may only waive nonperformance by the Buyer of any of its obligations or
agreements arising out of this Agreement if in writing.
<PAGE> 21
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9.2. Nonperformance by the Buyer. The Sellers may exercise all rights granted by
law to the fullest extent in the event of nonperformance by the Buyer of any of
its obligations arising out of this Agreement, with the exception of terminating
this Agreement.
9.3. Confidentiality. The Parties may not divulge under any circumstances either
this transaction nor the financial terms of this transaction, nor may publish
anything regarding this transaction, except for those notices which are
necessary for the commercial operation of the Parties, and in cases in which
legal provisions so require (including but not limited to the obligation to file
information for a public offering).
If the Parties mutually agree to make public announcements, they shall do so by
means of a previously agreed upon joint notification.
The Sellers shall not under any circumstances reveal and/or advise and/or
disclose to third parties any strategic plan to which they may have had access
as shareholders and/or directors of the Company or which they may have
developed.
9.4. Notifications. All notifications and other communications that must be made
as a result of this Agreement shall be made in writing, and shall be considered
to be duly made upon receipt of a hand delivered copy with an acknowledgement of
receipt, or any other type of reliable notice, as follows:
(i) Communications addressed to the Sellers, at:
Junin 658 Torre B, 13th Floor, Apartment "D", Buenos Aires, Argentina
Att: Gonzalo Arzuaga/Fernando Arzuaga
(ii) Communications addressed to the Buyer, at:
Tucuman 1, 17th Floor, Buenos Aires, Argentina
Att: Maria Orti/Ines Leopoldo
The names and addresses indicated above may be changed by reliable written
notification to each of the persons listed above.
9.5. Agents and fees. The Parties guarantee that in this transaction there are
no agents or intermediaries of any type whatsoever, so that there is no amount
due to any Person for execution of this Agreement. Any claims by professionals
involved shall be satisfied be the Party that appointed them.
<PAGE> 22
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9.6. Joint and Several Liability. Both of the Sellers are jointly and severally
liable and as such are bound with regard to the other Party by the obligations
arising out of this Agreement.
9.7. Other Warranties. Beginning at the time of execution of this Agreement, the
Sellers shall periodically sign and grant documents that the Buyer may
reasonably request, or arrange to have such documents signed and granted, in
order to more effectively perform the transactions contemplated in this
Agreement, and beginning at the time of execution of this Agreement, the Buyer
shall periodically sign and grant documents that the Sellers may reasonably
request, or arrange to have such documents signed and granted, in order to more
effectively perform the transactions contemplated in this Agreement.
9.8. Entire Agreement. This Agreement, including the Appendices hereto and
documents referred to herein, constitute the entire agreement and understanding
of the parties with regard to the issue included herein. This Agreement
supersedes all other prior agreements and understandings between the Parties
with regard to this matter.
9.9. Assignment. Due to its nature, this Agreement cannot be assigned or
transferred in whole or in part by the Sellers. The Buyer is authorized to
assign or transfer this Agreement in whole or in part.
9.10. Severability. If a competent court should determine that any provisions of
this Agreement or the application of such provisions to any Person or under any
circumstances is invalid, such nullity, illegitimacy or unenforceability shall
in no way affect the remaining provisions of this Agreement (or the remainder
hereof) nor the application of such provision to any other person or
circumstance.
9.11. Applicable Law. This Agreement shall be governed and interpreted according
to the laws of the Republic of Argentina.
9.12. Arbitration. All issues that may arise between the parties regarding this
Agreement, its validity, interpretation, scope, execution, performance, or
termination shall be settled through mediation first and, if an agreement cannot
be reached, the dispute shall be definitively settled through arbitration (de
jure) within the framework of the Arbitral Tribunal of the Buenos Aires Stock
Exchange, according to the regulations and procedures approved for this purpose,
of which the parties state that they are aware, and which they accept as forming
an integral part of this Agreement. The parties expressly waive any other venue
or jurisdiction which may apply. The decision of the Arbitral Tribunal of the
Buenos Aires Stock Exchange shall be definitive and binding for the Parties. The
Parties hereby waive, in the broadest sense permitted by law, the right to
appeal. Any payment provided by the Arbitral Tribunal of the Buenos Aires Stock
Exchange shall be paid in Dollars.
<PAGE> 23
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The Parties indicate their approval by signing this Agreement in two (2) exact
copies for a single purpose, at the place and on the date indicated at the
beginning.
The Sellers
[signed]
Gonzalo Roberto Arzuaga
Federal Identification No. 21.697.798
[signed]
Fernando Martin Arzuaga
Federal Identification No. 20.668.976
The Buyer
[signed]
for: Telefonica Interactiva Argentina S.A.
Name: Maria Orti
Title: Chairman
Signature(s) authenticated per
Notarization No. 0003922303
9/9/1999
[signed and sealed]
<PAGE> 24
[seal of the Board of Notaries]
APPENDIX C 003922303
Buenos Aires, September 9, 1999. In my capacity as Notary No. 132 of Buenos
Aires, I CERTIFY: ONE: That the signatures appearing in the document attached
hereto were affixed in my presence by the persons whose names and identification
numbers appear below, and who are personally known by me. In witness whereof.
Maria Dolores Orti Garcia Vicente: Federal Identification No. 93.762.488 -
Gonzalo Roberto Arzuaga, Federal Identification No. 21.697.798, Fernando Martin
Arzuaga, Federal Identification No. 20.668.976.
TWO: That said persons state that their capacity is as follows: Mrs. Orti Garcia
Vicente, Chairman of TELEFONICA INTERACTIVA ARGENTINA S.A., which I certify that
she evidenced by documentation presented to me for purposes of this
notarization, and the others are acting on their own behalf.
<PAGE> 25
[seal of the Board of Notaries]
C 003922303
THREE: That the respective request(s) were recorded simultaneously in Minutes
No. 110 of the Book of Requests No. 2. I certify that the Special Notarization
Seal No. C006418460 was affixed to this Appendix, as it refers to a single
matter. IN WITNESS WHEREOF.
[signed and sealed]
<PAGE> 26
The following annexes to this agreement have not been included:
- Appendix 3.2(ii.2) - Agreements to be executed prior to sale
- Appendix 4.3 - By-laws of Netgocios S.A.
- Appendix 4.5(i) - Agreement to transfer the domain
www.gauchonet.com.ar
- Appendix 4.5(ii) - Agreement to transfer the domain
www.gauchonet.com
- Appendix 4.5(iii) - Transfer of the trademark "Gauchonet" and
accompanying logo
- Appendix 4.7 - Inventory of assets
- Appendix 4.9 - Lease Agreement
- Appendix 4.12(v) - Overdue taxes
- Appendix 4.13(i) - List of current employees
- Appendix 4.13(iv) - List of parties to be former employees
post-sale
- Appendix 4.16 - Contracts and agreements
- Appendix 4.20 - Bank accounts
- Appendix 4.21 - Accounts payable and accounts receivable
- Appendix 7.1 - Terms and conditions of the Deposit Agreement
- Appendix 8.3 - List of approved future employees
3
<PAGE> 1
Exhibit 2.16
STOCK PURCHASE AGREEMENT
This agreement is executed on September 21, 1999 (together with the Appendices
attached hereto hereinafter referred to as the "Agreement") between Francisco
Mario Piantoni, Federal Identification No. 18.017.792, born on February 14,
1967, married to Maria Carolina Vera, Federal Identification No. 21.393.889,
domiciled at Maria Montessori No. 4591, Cordoba, Province of Cordoba, Argentina
(hereinafter "Francisco Piantoni"), and Cesar Augusto Planas, Federal
Identification No. 20.649.771, born on May 11, 1969, unmarried, domiciled at
Guemes 915, Cordoba, Province of Cordoba, Argentina (hereinafter "Cesar Planas")
(hereinafter jointly referred to as the "Sellers"), and Telefonica Interactiva
Argentina S.A., a company organized and existing under the laws of the Republic
of Argentina, domiciled at Tucuman 1, 17th Floor, Buenos Aires, Argentina
(hereinafter the "Buyer") (hereinafter jointly referred to as the "Parties").
WHEREAS
The Sellers are the legal owners and beneficiaries and have perfect title to
100% of the shares issued, subscribed, paid in and in circulation of the capital
stock and rights thereto (hereinafter referred to as the "Shares") of Donde
Latinoamerica S.A., a company duly organized under the laws of the Republic of
Argentina, pending registration, legally operating under the laws of the
Republic of Argentina (hereinafter referred to as the "Company").
The Company owns the rights to use the following domain names registered with
NIC-Argentina and INTERNIC: donde.com, donde.com.ar, donde.com.py, sida,com.ar,
alquiler.com.ar, ayuda.com.ar, buscando.com.ar,clima.com.ar, compraventa,com.ar,
deportistas,com.ar, educando,com.ar, hospitals,com.ar, hotels,com.ar,
humor.com.ar, informes.com.ar, interior.com.ar, medios.com.ar, programas.com.ar,
provincias.com.ar, rubros.com.ar, suerte.com.ar, super.com.ar, tramites.com.ar,
vuelos.com.ar, dondechat.com, dondemail.com, adondeir.com, dondemail.com.ar,
dondechat.com.ar, dondenet.com.ar, quien.com.ar, adonde.com.ar, 1997.com.ar,
1998.com.ar, 1999.com.ar, blancas.com.ar, como.com.ar, comunicacion.com.ar,
hiper.com.ar, hipernet.com.ar, lavia.com.ar, laviamasrapida.com.ar,
rapida.com.ar, Uruguay.com.ar, via.com.ar, perez.com.ar;
The Company filed applications to register the trademark DONDE LA VIA in the
Trademark Register (Instrument No. 2.091.689, 2.091.690 and 2.091.691, classes
9, 35 and 38);
The Company owns the software program "DONDE - LA VIA MAS RAPIDA -
www.donde.com.ar", registered in the National Copyright Register under No.
950.613.
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The Sellers wish to sell, and the Buyer wishes to buy, the Shares issued by the
company, subject to the terms and conditions of this Agreement;
THEREFORE, based upon the representations and warranties herein and as agreed
herein, the Parties covenant as follows:
ARTICLE 1
DEFINITIONS
1.1. Certain Definitions. In addition to the terms defined in other parts of
this Agreement, the terms indicated below, written with the first letter
capitalized, as used in this Agreement shall be defined as follows:
"Accord": With respect to any Person, any agreement, contract, negotiable
instrument, legally binding and enforceable commitment, arrangement or
understanding, to which said Person is a party or by which it is bound, either
written or oral, including each and all of the amendments thereto.
"Deletion of a Person": The action of eliminating the information on a Person
from the records maintained by NIC-Argentina.
"Banner": A unit of measurement of advertising space on the Internet.
"Change a Person": Replacement by transferring one registered Person to another
registered Person.
"Number of Banners Displayed per Page in a Domain": The number of Banners on a
page in the Domain.
"Number of Pages Displayed Per Day by a Domain": The number of pages displayed
by a domain in one day, resulting from the number of pages viewed according to
the log-file analysis.
"Number of Pages Viewed Per User": The number of pages that are consulted on the
average by the Users when they successfully access the Domain in question.
"Number of Hits per Day": The number of times per day a given Domain is
successfully accessed.
"Total Number of Banners Displayed Per Day by a Domain": The number of banners
displayed per day by a Domain, derived by multiplying the Number of Pages
Displayed Per Day by a Domain by the Number of Banners Displayed Per Page in a
Domain.
<PAGE> 3
3
"Content": Certain content transmitted by the Internet, including but not
limited to movies, music, games, on-line books, information, etc. Content
Providers may be, among others, motion picture studios, editors, periodical
publishers (such as La Nacion, Clarin, etc.) and music composers.
"Content Contracts": All contracts executed by a Domain owner with Content
Providers in order to obtain a profit (either by performing an exchange that is
profitable or by any other method) by incorporating in the domain the Content
that may be of interest to the Users.
"Cost per Thousand": The manner of charging advertisers instituted globally on
the Internet. A price is determined for every thousand hits and then is
multiplied by the number of hits received by the corresponding Banner. Banners
located on the first page, home pages or preferred locations have a higher Cost
per Thousand than the others.
"Domain Name": The complete identifier of a Domain. It consists of the
concatenation of the name and the Subdomain, separated by a dot.
"E-mail address": The only means by which Applicants may submit Requests for
Domain Names.
"Dollars" or "US$": The legal tender of the United States of America.
"Domain": The Internet address expressed in a simple manner for the ease of the
User. The primary function of the Domain is to facilitate Net surfing for Users.
"Internet": A/The network of networks. It is an autopoietic phenomenon. It
consists of services that, supported by networks, links and/or
telecommunications systems, offer facilities that differentiate them from the
basic service, applying processes that make information available, act on it and
even allow the User to interact with the system.
"Log-file": The file that records all server activity, including but not limited
to pages viewed, hits, file transfers, source of hits or server errors.
"LSC": The Law on Commercial Companies No. 19550 and amendments thereto.
"NIC-Argentina": The abbreviation that identifies the Ministry of Foreign
Relations, International Trade and Culture of the Republic of Argentina in its
capacity as administrator of the Argentine Internet Domain.
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"Registered Domain Name": The name that appears in the lists of Domains
maintained by NIC-Argentina.
"Person": Any individual or legal entity, including but not limited to any
company, association, joint venture, trust, de facto corporation, or any other
entity or organization, including government or departmental organizations or
agencies of any government.
"Registrant": The person benefiting from registration of a name.
"Responsible Person": The contact person designated by the Registrant who will
responds to all issues regarding the Domain Name. This person must have a valid
and reachable E-mail Address.
"Pesos" or "$": The legal tender of the Republic of Argentina.
"Percentage of Inventory Sold by a Site": The percentage of banners displayed by
a Domain that generate a cash flow. It is common in any communications media to
exchange advertising space, for which no money is exchanged but rather another
service is provided.
"Internet Portal": A means of communications. An Internet Portal offers an
Internet that is much better organized and much easier to search. Each Internet
Portal provides more functionality to the network and more productive usage. An
Internet Portal offers, in addition to a search engine, among others, services
such as e-mail, chat, news, shopping, personal pages, communities and games.
"Horizontal Portal": A Portal that does not have a specific subject, but instead
is general. A Horizontal Portal is aimed at a general community and not
necessarily a community interested in searching for a specific subject.
"Registration Procedure": The registration procedure used by NIC-Argentina,
consisting of the possibility of Persons filing an Application or Change of
Registration, for which interactive forms are available for the different
Applications. Communications regarding the receipt and results of each
Registration Procedure are sent to the E-mail Address of the contacts of each
Domain.
"Readership": The number of Users that use the same Internet account. This
occurs in cases, especially in companies rather than in homes, in which a single
Internet account is used by various Users.
<PAGE> 5
5
"Application": The application submitted on a NIC-Argentina form in order to
initiate a Registration Procedure. The purpose of the application may be to
register a Domain or Change the Registrant or Person Responsible.
"Applicant": The Person submitting an application to NIC-Argentina.
"Subdomain": A subdivision of the domain AR (Argentina), under which
NIC-Argentina registers the names.
"User": Those who access the Internet from residential or business, private or
public, computer equipment.
1.2. Other terms. Other terms may be defined in another provision in the text of
this Agreement and, unless otherwise indicated, shall be defined as in the
definition, for any application under this Agreement.
1.3. Other definitions: The words "herein," "contained herein," and "established
below" are words that are similar in meaning, when used in this Agreement, and
refer to this Agreement in its entirety. The terms defined in the singular shall
have a comparable meaning when used in the plural and vice-versa, according to
the context.
ARTICLE 2
PURCHASE OF SHARES
2.1. Purchase of Shares: (i) The Sellers hereby sell and transfer to the Buyer,
and the Buyer purchases from the Sellers, subject to the terms and conditions of
this Agreement, all of the Shares for the purchase price established in Article
3 herein.
(ii) For purposes of this Agreement, the term "Shares" means all of the shares
of the Company issued and in circulation, which currently amount to 3,000 (three
thousand) common registered non-endorsable Class A shares with a par value of $
10 (ten pesos), each share entitling the owner to 5 (five) votes, with all
political, economic and other rights corresponding thereto, including but not
limited to: (i) all rights to uncapitalized capital contributions made, and the
stock premiums paid, in effect as of the date of this Agreement; (ii) all rights
to dividends payable in cash, shares or otherwise declared by the Company up to
the date of this Agreement which are unpaid to date; (iii) all rights to
subscribe shares of stock of the Company corresponding to subscriptions offered
by the Company up to the date of this Agreement; (iv) all rights to receive
shares of the Company subscribed prior to the date of this Agreement; (v) all
other distributions declared by the Company, whether capital reductions,
distributions of stock premiums or other concepts.
<PAGE> 6
6
2.2. Transfer of Shares and delivery of documentation: The Sellers hereby
transfer the Shares to the Buyer, free of all encumbrances, and the Parties
deliver all of the documentation and execute all of the acts necessary to
perfect the transfer of the Shares, and the Buyers assume the unrestricted
administration and disposition of the Company, including but not limited to the
documents and acts listed below:
(i) The Sellers deliver to the Buyer the stock certificates representing the
Shares, in a suitable manner for the transfer, together with the corresponding
transfer notices addressed to the Company, signed by the Sellers and, in the
case, of Francisco Piantoni, by his wife as well, in compliance with all
requirements of the LSC;
(ii) The Sellers deliver to the Buyer all of the books, documentation and
accounting and corporate background of the Company, as well as all of the deeds
and other property records of the Company;
(iii) The Permanent and Alternate Directors of the Company submit and deliver
their unconditional resignations and waiver of fees and compensation for any
other reason that may be applicable, indicating that they have nothing to claim
from the Company for any reason whatsoever;
(iv) The Chairman of the Company, who resigns as provided in Article 2.2 (iii),
signs all of the necessary documents prior to resigning, in accordance with
applicable legislation, in order to perfect the transfer of the Shares and the
unrestricted administration of the Company by the Buyer;
(v) After duly registering the transfer of Shares, the Buyer convenes a General
Shareholders Meeting of the Company to, among others, accept the resignation of
the departing Directors and their waiver of any fees that may apply, and to
appoint new members of the Board of Directors of the Company;
(vi) The Buyer delivers the following checks to the Sellers: (i) Check No.
01009846 drawn on Citibank, dated September 21, 1999, for US$ 102,000 (one
hundred two thousand Dollars), not issued to order, in favor of Francisco
Piantoni, and (ii) Check No. 01009847 drawn on Citibank, dated September 21,
1999, for US$ 102,000 (one hundred two thousand Dollars), not issued to order,
in favor of Cesar Planas, in payment of a portion of the price of the Shares to
begin performance of this Agreement, pursuant to the provisions of Article 3
herein, the Agreement being sufficient receipt for such payment.
<PAGE> 7
7
ARTICLE 3
PRICE AND FORM OF PAYMENT
3.1. The total purchase price of the Shares is US$ 4,504,000 (four million five
hundred and four thousand Dollars). This amount is subject to all downward
adjustments and/or deductions that may apply pursuant to Article 6 herein.
The Sellers hold the Buyer harmless from all liability that may result or arise
out of any dispute between the Sellers with regard to distribution of the Price,
adjustments and/or deductions thereto, or indemnifications that they may be
required to sustain as a result of this Agreement.
3.2. The Price shall be paid as follows:
(i) US$ 204,000 (two hundred four thousand Dollars), as established in Article
2.2 (vi) herein, to begin performance of this Agreement, paid herewith;
(ii) Furthermore, the Buyer hereby credits the Sellers in the amount of US$
300,000 (three hundred thousand Dollars), to be used for the Security Deposit as
provided in Articles 6 and 7 herein. The Sellers hereby deliver to the Buyer the
above-mentioned amounts so the Buyer may take the necessary measures for the
Security Deposit.
(iii) The balance of the Price (hereinafter the "Balance of the Price"), i.e.,
US$ 4,000,000 (four million Dollars), shall be paid by the Buyer to the Sellers
as follows:
(iii.1.) US$ 1,000,000 (one million Dollars) shall be paid by the Buyer to the
Sellers within five (5) calendar days from the date on which the Sellers
evidence to the Buyer that the domain names owned by the Company were duly
registered in the name of the Company with NIC-Argentina and INTERNIC.
(iii.2) US$ 1,700,000 (one million seven hundred thousand Dollars) shall be paid
by the Buyer to the Sellers within five (5) calendar days from the date on which
the Sellers evidence to the Buyer that the Company has been duly and legally
registered with the Public Trade Register of Cordoba.
(iii.3) US$ 1,300,000 (one million three hundred thousand Dollars) shall be paid
by the Buyer to the Sellers within five (5) calendar days from the date on which
the Sellers evidence to the Buyer (a) that the Company has executed agreements
on thematic and service areas as detailed in Appendix 3 (iii.3) herein, and that
(b) the Company has the software and hardware to provide these services.
<PAGE> 8
8
The Balance of the Price shall not accrue interest of any type whatsoever in
favor of the Sellers.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer that as of the date of this
Agreement:
4.1. Legal Standing of the Sellers. The Sellers have the right and full legal
standing to enter into this Agreement and execute the transactions provided
herein, and are not subject to any legal, judicial or contractual restriction
with respect to the disposal of their assets in general or the Shares in
particular. This Agreement was duly executed and granted by the Sellers and
constitutes a valid and binding obligation for the Sellers, enforceable
according to the terms and conditions hereof.
4.2. Non-violation. Execution of the operations provided herein and performance
by the Sellers of this Agreement according to the terms and conditions hereof
(i) shall not require the approval, consent or adoption of any measure by any
other person, nor any submission or representation to or sending any
notification to any person, except the spousal consent granted herein by means
of a power of attorney granted by Maria Carolina Vera in favor of Francisco
Piantoni, and (ii) shall not be in conflict with, nor imply nonperformance or
violation of, any of the terms and conditions, nor constitute a fact that may
end or accelerate the terms, or impose any pledge or encumbrance on the assets
of the Company, of any of the following instruments:
(a) The bylaws of the Company;
(b) Any other agreement, instrument or contract (hereinafter "Contract") to
which the Company or the Sellers are a party or by which they are otherwise
bound or subject;
(c) Any ruling, decision, order, mandate, measure to not change or resolution
(hereinafter "Order") of any court, government or administrative agency or
arbitrator applicable to the Company, Sellers, any of the Shares in the
possession of the Sellers or any of the assets of the Company that may impede
the transaction instrumented by this Agreement; or
(d) Any law, legal provision, standard or regulation (hereinafter "Law")
applicable to Company, Sellers, any of the Shares in the possession of the
Sellers or any of the assets of the Company that may impede or have a
significant adverse effect on the transaction instrumented by this Agreement.
<PAGE> 9
9
4.3. Corporate Structure and Standing. The Company is a duly organized
corporation that operates validly and is in existence under the laws of the
Republic of Argentina. After it is registered in the Public Trade Register of
Cordoba, the Company shall have all power necessary to conduct the business in
which it is engaged and to own, rent, lease and operate the assets it owns,
leases or operates. The Sellers have delivered to the Buyer a complete and
correct copy of the bylaws (hereinafter "Bylaws") of the Company, with
amendments and according to the current text, which is included in Appendix 4.3
herein. Likewise, the Sellers evidence that registration of the Company with the
Public Trade Register of Cordoba has not yet been completed, but there are no
proceedings outstanding against the company.
4.4. Ownership of Shares. The Sellers are the sole and unlimited owners and sole
beneficiaries of the Shares. The Sellers have a valid, perfect title to the
Shares, free and clear of all types of pledges, restrictions, encumbrances,
mortgages, legal or administrative attachments, liens, easements, defects,
collateral property rights, claims, usufructs, third party contractual rights,
options and restrictions of any type, including any limitation or restriction to
ownership, transfer and availability of the Shares and/or assets, accordingly
(hereinafter "Encumbrances"). Against delivery of the Shares as provided in
Article 2.2, the Sellers shall transfer to the Buyer the valid, negotiable and
absolute title to the Shares, free and clear of any type of Encumbrance.
4.5. Internet Domains, Trademarks and Intellectual Property of a Software
Program. Notwithstanding the representations and warranties in Article 4.7
herein, the Sellers represent and warrant that the Company has clean title, in
compliance with all legal provisions, of the rights to use the domains and the
intellectual property of a software program as detailed below, and has filed a
trademark application:
(i) Details of Internet domains.
donde.com, donde.com.ar, donde.com.py, sida,com.ar, alquiler.com.ar,
ayuda.com.ar, buscando.com.ar,clima.com.ar, compraventa,com.ar,
deportistas,com.ar, educando,com.ar, hospitals,com.ar, hotels,com.ar,
humor.com.ar, informes.com.ar, interior.com.ar, medios.com.ar, programas.com.ar,
provincias.com.ar, rubros.com.ar, suerte.com.ar, super.com.ar, tramites.com.ar,
vuelos.com.ar, dondechat.com, dondemail.com, adondeir.com, dondemail.com.ar,
dondechat.com.ar, dondenet.com.ar, quien.com.ar, adonde.com.ar, 1997.com.ar,
1998.com.ar, 1999.com.ar, blancas.com.ar, como.com.ar, comunicacion.com.ar,
hiper.com.ar, hipernet.com.ar, lavia.com.ar, laviamasrapida.com.ar,
rapida.com.ar, Uruguay.com.ar, via.com.ar, perez.com.ar
<PAGE> 10
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(ii) Details of intellectual property of a software program
Software program "DONDE - LA VIA MAS RAPIDA - www.donde.com.ar", registered in
the National Copyright Register under No. 950.613
(iii) Trademark Applications
Application to register the trademark DONDE LA VIA... in the Trademark Register
(Instrument No. 2.091.689, 2.091.690 and 2.091.691, classes 9, 35 and 38);.
4.6. Capitalization. The capital stock of the Company is $30,000 (thirty
thousand Pesos), represented by common registered non-endorsable Class A shares
with a par value of $ 10 (ten pesos), each share entitling the owner to 5 (five)
votes (hereinafter the "Capital Stock") There is no other type or class of
capital stock of the company or other ownership of its capital stock. All of the
shares of Capital Stock issued and in circulation have been validly issued and
are fully paid in, and not subject to additional contributions. There are no
options, subscription rights or other rights of any type to acquire additional
shares of Capital Stock of the Company or other ownership of its capital, nor
securities which are convertible to or exchangeable for, or otherwise grant the
holder any right to acquire, any of such additional shares or ownership of
capital stock, and the Company is not bound to issue any options, subscription
rights, rights or certificates. There are no agreements with regard to voting,
redemption, purchase or sale of the Capital Stock. The Company has no pending
(i) capital increases or decreases, (ii) subscriptions, issuances or redemptions
of shares, (iii) amendments to the Bylaws of the Company, (iv) mergers,
spin-offs or transfers of businesses, or (v) other corporate acts of similar
magnitude, with the exception of the sale of Shares in favor of the Buyer
pursuant to this Agreement.
4.7. Assets of the Company. The Company has perfect title to all of the tangible
or intangible property listed in the Financial Statements, including such assets
that were acquired subsequent to the last balance sheet corresponding to the
normal course of business. None of the assets of the Company are subject to
encumbrances, pledges or claims of any type whatsoever. The assets currently
used by the Company in its operations are in good condition and have been
maintained and cared for according to their intended use. Appendix 4.7 herein
lists the assets owned by the Company.
4.8. Legal Proceedings. There are no: (i) outstanding rulings issued by any
court, government, regulatory agency or arbitral tribunal against or involving
the Company or any of its assets; (ii) actions, lawsuits, disputes or
proceedings of any type whatsoever underway or imminent at any time against or
involving the Company or any of its assets, and (iii) investigation underway or
imminent at any time against or involving the Company or any of its assets
(jointly referred to as "Proceedings"), except as indicated in Article 4.5 (ii)
herein. There are no facts, events or
<PAGE> 11
11
circumstances that may be reasonably assumed to entail Proceedings against or
involving the Company or any of its assets.
4.9. Lease. Appendix 4.9 herein contains a copy of the only lease executed by
the Company. The lease is valid, binding, and was granted regularly and
legitimately and is in full force, and the Company is current in all rent
payments and any other amounts payable. The Company has complied with all of the
terms and conditions of the lease, and there is no assumption of termination or
default. The Company has quiet enjoyment of the property covered by such lease.
4.10. Financial Statements. (i) the Financial Statements of the Company have not
yet been prepared because the Company has not yet closed its first fiscal year.
(ii) There are no liabilities, debts, obligations or claims of any type
whatsoever against the Company, whether absolute or contingent.
4.11. Books and Records. The books of the Company have been maintained in a
legal, all-inclusive, adequate and accurate manner, and contain accurate,
complete and exact details of all of the issues that must be recorded in such
books, according to applicable regulations.
4.12. Tax Issues: Other Payments or Declarations to Government Agencies. For
purposes of this Agreement, the term Taxes shall include any type of tax, levy,
contribution, tariff, duty, determination, withholding, assessment or government
charge of any type, including but not limited to any and all taxes or levies of
this type that must be collected and paid to any government agency on behalf of
third parties (including but not limited to obligations derived from acting as
withholding agent, assessment agent, substitute, agent or intermediary, etc.),
including, with regard to each item, all interest, adjustments, punitive charges
or additional amounts, etc., fines and other penalties.
(i) All Sworn Tax Declarations of the Company have been submitted in a timely
manner when due, according to applicable Law, and all significant aspects of
such Sworn Tax Declarations are true, complete and accurate;
(ii) All of the Taxes reflected in such Tax Declarations and all other Taxes
relating to the Company (including all Tax shortages or determinations) have
been paid in a timely manner;
(iii) The charges, amounts due and reserved for Taxes relating to the Company
reflected in the books of the Company (including but not limited to the
Financial Statements) are sufficient to cover all Taxes payable, or which may
become payable, for periods prior to the date of execution of this Agreement;
<PAGE> 12
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(iv) There are no agreements or covenants currently in effect or any pending
requests with regard to the extension or waiver of terms for (a) submitting any
Sworn Tax Declaration for the Company, or (b) the determination or collection of
any type of Tax relating to the Company;
(v) All Taxes that the Company is bound by any Law to withhold or collect have
been duly withheld or collected, and have been paid in a timely manner to the
pertinent government authorities as they became due and payable;
(vi) There are no actions, lawsuits, proceedings, investigations, examinations,
inspections, claims or deficiencies currently pending or imminent in relation to
Taxes applicable to the Company;
(vii) There are no Tax liens against any assets of the Company;
(viii) The Company is not and has never been party to any agreements or
covenants for sharing Taxes, and
(ix) Since its inception, the Company has never been subject to audits by the
Tax Authorities that would entail additional Tax payments by the Company.
4.13. Labor Issues. (i) According to preliminary estimates, the Company is
currently confronting a contingency for personnel and insurance accounts
payable. Appendix 4.13 (i) herein contains the name, hire date, job and gross
monthly salary of all employees of the Company.
(ii) The Sellers assume and agree to confront all consequences derived form this
contingency (hereinafter the "Contingency"), thus releasing and holding the
Buyer harmless from any claim and payment that the Company must confront in the
future, for any reason arising out of this Contingency.
(iii) The Parties agree that in order to facilitate payment of the Contingency,
they shall establish a security deposit, pursuant to Article 7 herein, for a
total of US$ 300,000 (three hundred thousand Dollars). If the definitive amount
that must be paid exceeds the amount of the Security Deposit, the Sellers shall
pay the balance within five (5) business days from notification by the Buyer.
The Security Deposit provided in Articles 6 and 7 herein is not limited only to
the Contingency.
(iv) The Sellers shall also cover the costs derived from severing the employment
relationship of Heredia, Grana and Ferreyra from the Company.
<PAGE> 13
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4.14. Compliance with Laws: Permits and Authorization. (i) The Company has
conducted all of its business in accordance with all applicable federal,
provincial or municipal regulations and with all orders issued by any federal,
provincial or local government, or government, regulatory or administrative
agency, ministry, organization or commission (hereinafter "Government
Regulations") applicable to the Company or any of its assets or activities.
(ii) The Company has full written authorization, in accordance with applicable
Law, to operate and continue to engage in its activities, in the manner and at
the place(s) where it currently does so. The Company has not received any
notification and there is no reasonable basis to assume that other permits,
authorizations and/or licenses will be required. The Company is not under
investigation, the subject of a report or imminent legal or administrative
action or proceeding in relation to the violation of any standard, regulation or
ruling that may entail a request or order for temporary or definitive closure.
4.15. Nonexistence of Contingent or Hidden Liabilities. The Company does not
have any liabilities or obligations of any type (absolute, due, registered,
hidden, simulated, contingent or others) including but not limited to loans, tax
liability, labor and benefit liabilities, which are not fully and duly recorded
in the Financial Statements or for which a reserve or provision is not
established therein. such provisions, records or reserves are adequate,
appropriate, sufficient and reasonable.
4.16. Agreements and Commitments. (i) Appendix 4.16 herein lists all of the
agreements and commitments signed by the Company which are in effect and being
performed as of the date of this Agreement to which the Company is a party.
(ii) The Company has regularly complied with all standards, contracts or
agreements, in accordance with applicable legal provisions in each case, and has
not performed any action or failed to take any measure that may result in the
possibility of a lawsuit or liability or which may have a significant adverse
effect on its business, property, assets or financial condition.
4.17. Accuracy of Information. No representation or warranty of the Sellers in
this Agreement, including the Appendices hereto, or any representation contained
in any document (including but not limited to the Financial Statements,
certificates or other writings submitted or to be submitted by the Sellers to
the Buyer or any of its representatives pursuant to the provisions of this
Agreement or in relation to the operations provided herein) contains or shall
contain any misrepresentation of a key event nor shall fail to state any fact as
necessary, in view of the circumstances, to ensure that the representations
contained herein or in such other documents are not misleading. There is no fact
known by the Sellers or which may be determined by reasonable investigation that
there was or may be a significant adverse change for the Company that has not
been indicated in this Agreement. "Significant Adverse Change" is understood to
be any fact, circumstance or event which significantly affects or may affect the
situation (financial or
<PAGE> 14
14
otherwise), activity, assets, liabilities (contingent or otherwise), cash flow,
operating earnings, capital stock, economic, commercial, legal and/or financial
situation or projections of the Company.
4.18. Insurance Policies. There is no insurance of any type whatsoever carried
by the Company.
4.19. Powers of Attorney. There are currently no powers of attorney granted by
the Company.
4.20. Bank accounts. There are no bank accounts of the Company.
4.21. Backups of Documentation and Programs. The Sellers represent and warrant
to the Buyer that each and all of the programs and information necessary for
normal development of the activities of the Company and all documentation,
whether in hard copy or on magnetic media, necessary to access the history
records and/or to maintain the activities of the Company at the same level are
backed upon on magnetic media. No damage and/or unforeseen circumstances and/or
force majeure will prevent the Sellers from delivering to the Buyer a backup
copy on magnetic media of all of the updated data and information of the
Company.
4.22. Inventory. The Company has no inventory.
4.23. The Sellers represent that the commercial activity of the Company has
resulted in the following averages in August 1999:
(i) Number of unique hits per day: 5,500
(ii) Number of pages viewed: 1,050,000
(iii) Number of registered users: 76,000
(vi) Total sales: US$ 12,000
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that as of the date of this
Agreement:
5.1. Organization. The Buyer is a company organized under the laws of the
Republic of Argentina on July 28, 1999, and was duly registered with the
Corporate Records Office under No. 11778, Book VI - Corporations Volume, on
August 17, 1999, and is validly existing and operating under the laws of
Argentina.
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15
5.2. Corporate Authority. The Buyer has full corporate power and authority to
enter into this Agreement and perform the transactions contemplated herein. The
execution, granting and performance of this Agreement by the Buyer have been
duly authorized by all required corporate means. This Agreement was duly
executed and granted by the Sellers and constitutes a valid and binding
obligation for the Sellers, enforceable according to the terms and conditions
hereof.
ARTICLE 6
INDEMNIFICATION
6.1. Indemnification for the Buyer. The Sellers jointly and severally agree to
indemnify, protect and hold the Buyer and/or the Company harmless, at the
discretion of the Buyer, for all losses, liability, claims, damages,
obligations, costs and charges (including but not limited to reasonable attorney
fees) that may be directly or indirectly caused by or arising out of:
(i) Any inaccuracy, misrepresentation or nonperformance of any of the
representations, warranties or clauses agreed by the Sellers in this Agreement
or in any document or information delivered by the Sellers pursuant to this
Agreement;
(ii) Any nonperformance by the Sellers in implementing or complying with any or
all of this Agreement;
(iii) Each and all of the past, present or future tax liabilities derived from
any violation of laws, regulations or decrees or which result from rulings or
judgments that may affect or be imposed against the Company, its employees or
any of its assets, arising out of measures prior to the date of this Agreement
(hereinafter "Tax Losses");
(iv) Any nonperformance by the Sellers and the Company in payment of labor,
benefit and social security obligations in relation to the employees of the
Company.
(v) Any Contingent Liabilities. For purposes of this Agreement, "Contingent
Liabilities" are defined as any liability or obligation assumed by or imposed
upon the Company, or obligations of the Company that have not been duly reported
in the records or Financial Statements of the Company prior to the date of this
Agreement, or which have been reported but the information does not sufficiently
represent or cover the amount corresponding to the obligation or liability; and
(vi) Any Hidden Liabilities. For purposes of this Agreement, "Hidden
Liabilities" are defined as: (i) any unreported liability or obligation assumed
negligently or fraudulently; or (ii) any unreported liability or obligation of
which the Sellers or the management, executives, employees
<PAGE> 16
16
or representatives of the Company were aware or should have been aware, in order
to take customary care during the normal course of business; or (iii) any
liability or obligation determined or imposed by any authority, including
judges, that was not reported in the Financial Statements; or (iv) any failure
to indicate in the Financial Statements any liabilities that should have been
indicated in accordance with current legal provisions.
The Sellers shall not be released from their liability if the Buyer could have
known of the existence of the contingency, loss, expense or cost by means of
authenticated documents submitted by the Sellers or the results of the Audit;
The facts include din this Article 6.1 for which the Sellers agree to indemnify
the Buyer shall be called "Indemnifiable Facts".
6.2. Terms. The indemnifications established in this Agreement shall remain in
effect for a term of 5 (five) years from the date of this Agreement, except in
the following cases: (i) taxes (except social security), in which case the term
of indemnification shall be 7 (seven) years from the date of this Agreement,
(ii) social security, for 10 (ten) years from the date of this Agreement, and
(iii) Contingent or Hidden Liabilities, until the corresponding statutes of
limitations have elapsed.
6.3. Defense. The Sellers may be entitled to defense against a claim filed
against the Company, together with the actions of the Buyer and/or the Company,
at the discretion of the Buyer. In order to enforce the right to defense, the
Sellers must be notified by the Buyer of any claim sufficiently in advance, in
the event that there is a legal term in which to respond to the claim. This
obligation shall only remain in effect if the Buyer is duly notified of an
actual claim that is indemnifiable. The Sellers do not need to be advised of
notifications of warnings or threats.
6.4. Actions for Damages. If the Sellers must pay an amount pursuant to Article
6.1 herein, the payment shall be made by the Sellers to the Buyer or to the
Company, at the discretion of the Buyer. Once the payment is made, it shall
automatically be deducted from the Security Deposit pursuant to the provisions
of Article 7 herein.
ARTICLE 7
INDEMNIFICATION PROCEDURE - SECURITY DEPOSIT
7.1. The Buyer is expressly and irrevocably authorized by the Sellers to deduct
and/or compensate from the amount of US$ 300,000 (three hundred thousand
Dollars) indicated in Article 3.2 herein, any amount corresponding to an
Indemnifiable Fact. For this purpose, the amount of US$ 300,000 (three hundred
thousand Dollars) is deposited as a security deposit with a bank in Argentina at
the selection of the Buyer, under terms and conditions substantially
<PAGE> 17
17
similar to those in the Deposit Agreement attached hereto as Appendix 7.1 (the
"Security Deposit"). The Security Deposit shall have the terms and conditions
and term as provided in the Deposit Agreement attached hereto as Appendix 7.1.
7.2. The Buyer shall deduct from the Security Deposit the amounts derived from
Indemnifiable Facts in the following cases:
(i) in the event of an administrative resolution or firm ruling on a claim
relating to an Indemnifiable Fact, and/or;
(ii) in the event that the Sellers have signed an agreement regarding the
determination and amount of an Indemnifiable Fact, or if there is an arbitration
award regarding this issue, as provided by Article 9.12 herein, and/or;
(iii) in the event that the Buyer is authorized to compensate according to legal
provisions, and/or;
(iv) in the event of any default on labor obligations by the Sellers and/or the
Company, in which case the amounts necessary to cover the costs of severing the
employment relationship and adjusting the compensation situation of employees of
the Company following a ruling, resolution or arbitration award, or if the Buyer
considers that the claim is fair.
In these cases, the Buyer shall deduct the amounts necessary to cover the
Indemnifiable Fact from the Security Deposit, and shall notify the Sellers of
the amount deducted.
ARTICLE 8
OBLIGATIONS
8.1. As of the date of execution of this Agreement, the Sellers shall not
disparage the operating capacity of the Company to the Buyer.
8.2. Non-Competition. The Sellers agree that for a term of 24 (twenty-four)
months from the date of execution of this Agreement:
(i) they shall not initiate, for their own account or for the account of others,
either directly or indirectly, or through family members, nor shall participate
in any activity directly or indirectly involving the operation of a Horizontal
Portal in any language and in any country, or any other activity that may
compete with the activity developed at the time of signing this Agreement by the
Company, in this respect.
(ii) they shall not develop or participate, as principal, agent, partner,
co-participant, lender, guarantor, owner, operator, manager, executive,
director, shareholder, consultant, contractor,
<PAGE> 18
18
employee, sponsor or in any other capacity, in any location in Argentina or
abroad, in any of the businesses or activities developed at the time of
execution of this Agreement by the Company, as defined in the previous point.
(iii) they shall not compete through shareholding, positions on Boards of
Directors, employment contracts or any other type of contractual or commercial
relationship, in any type of legal entity that is controlled by, parent of,
related to, affiliated with, either directly or indirectly, through one or more
companies and other legal entities, other companies that provide and/or engage
in the activities developed by the Company at the time of execution of this
Agreement, as indicated in this article.
(iv) they shall not have any relationship whatsoever, pursuant to the terms
indicated in the previous paragraphs, with Persons who develop, have agreements
with other Persons, are associated with, operate and or provide the services
indicated in this article.
As total and definitive payment in full for non-competition as established in
Article 8.2 herein, the Sellers shall receive, together with the Buyer, a
monthly payment of US$ 4,000, subject to payment of taxes that may be
applicable. Taking into account that non-competition was agreed for a term of 24
(twenty-four) months, the Sellers shall collect the total amount of US$ 96,000
(ninety-six thousand Dollars). The payments shall be made throughout the term of
non-competition, and the Sellers shall issue the corresponding receipt as they
receive payments. Francisco Piantoni shall issue a receipt for US$ 2,000 (two
thousand Dollars), and Cesar Planas shall issue a receipt for US$ 2,000 (two
thousand Dollars). In the hypothetical situation that either or both of the
Sellers fail(s) to perform the obligation of non-competition, they shall pay the
Buyer a penalty of US$ 200,000 (two hundred thousand Dollars), not subject to
the collection of any deduction whatsoever, plus damages.
8.3. No Third Party Offerings. The Sellers assume the obligation for a term of
two (2) calendar years from the date of execution of this Agreement, to not
directly or indirectly offer and/or induce and/or tempt and/or propose and/or
promote a job and/or abandon a position and/or any other type of commercial
and/or professional activity for any Person affiliated with the Company by
contract or employment relationship, or who has been affiliated with the Company
by contract or employment relationship for any reason whatsoever, without
reliable written authorization from the Buyer.
8.4. Condition of equipment, Domains and other assets. The Sellers assume the
obligation to deliver the Domains in operating conditions. They further assume
the obligation of delivering the hardware, software and database components in
operating condition, as well as any other system necessary for developing the
activity of the Company.
8.5. Pre-emptive right in favor of the Buyer. (i) If the Sellers should decide
to seek partners and/or investors for any type of business that they may
initiate related to the operation of Internet
<PAGE> 19
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activities and/or any other type of activities within the telecommunications
sector which are not prohibited by the provisions of Article 8.2, they shall
give the Buyer pre-emptive rights to join them and become a partner and/or
investor in such businesses, provided that the Buyer has matched or bettered the
offers that the Sellers may have received from third parties.
(ii) In order to allow the Buyer to better the third party offer, the Sellers
shall notify the Buyer of the offer received so that within a term of three (3)
calendar days from reliable receipt of the notice, the Buyer may match or better
the third party offer. For this purpose, the Sellers shall send the notice
together with a copy of the offer received.
(iii) The right provided in favor of the Buyer in this Article shall be valid
for a term of twenty-four months from the date of execution of this Agreement.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1. Waiver. The Buyer may only waive nonperformance by the Sellers of any of
their obligations or agreements arising out of this Agreement if in writing. The
Sellers may only waive nonperformance by the Buyer of any of its obligations or
agreements arising out of this Agreement if in writing.
9.2. Nonperformance by the Buyer. The Sellers may exercise all rights granted by
law to the fullest extent in the event of nonperformance by the Buyer of any of
its obligations arising out of this Agreement, with the exception of terminating
this Agreement.
9.3. Confidentiality. The Parties may not divulge under any circumstances either
this transaction nor the financial terms of this transaction, nor may publish
anything regarding this transaction, except for those notices which are
necessary for the commercial operation of the Parties, and in cases in which
legal provisions so require (including but not limited to the obligation to file
information for a public offering).
If the Parties mutually agree to make public announcements, they shall do so by
means of a previously agreed upon joint notification.
The Sellers shall not under any circumstances reveal and/or advise and/or
disclose to third parties any strategic plan to which they may have had access
as shareholders and/or directors of the Company or which they may have
developed.
<PAGE> 20
20
9.4. Notifications. All notifications and other communications that must be made
as a result of this Agreement shall be made in writing, and shall be considered
to be duly made upon receipt of a hand delivered copy with an acknowledgement of
receipt, or any other type of reliable notice, as follows:
(i) Communications addressed to the Sellers, at:
Fragueiro 214, Cordoba (5000), Province of Cordoba, Argentina
Att: Francisco Piantoni/Cesar Planas
(ii) Communications addressed to the Buyer, at:
Tucuman 1, 17th Floor, Buenos Aires, Argentina
Att: Maria Orti/Ines Leopoldo
The names and addresses indicated above may be changed by reliable written
notification to each of the persons listed above.
9.5. Agents and fees. The Parties guarantee that in this transaction there are
no agents or intermediaries of any type whatsoever, so that there is no amount
due to any Person for execution of this Agreement. Any claims by professionals
involved shall by satisfied by the Party that appointed them.
9.6. Joint and Several Liability. Both of the Sellers are jointly and severally
liable and as such are bound with regard to the other Party by the obligations
arising out of this Agreement.
9.7. Other Warranties. Beginning at the time of execution of this Agreement, the
Sellers shall periodically sign and grant documents that the Buyer may
reasonably request, or arrange to have such documents signed and granted, in
order to more effectively perform the transactions contemplated in this
Agreement, and beginning at the time of execution of this Agreement, the Buyer
shall periodically sign and grant documents that the Sellers may reasonably
request, or arrange to have such documents signed and granted, in order to more
effectively perform the transactions contemplated in this Agreement.
9.8. Entire Agreement. This Agreement, including the Appendices hereto and
documents referred to herein, constitute the entire agreement and understanding
of the parties with regard to the issue included herein. This Agreement
supersedes all other prior agreements and understandings between the Parties
with regard to this matter.
9.9. Assignment. Due to its nature, this Agreement cannot be assigned or
transferred in whole or in part by the Sellers. The Buyer is authorized to
assign or transfer this Agreement in whole or in part.
<PAGE> 21
21
9.10. Severability. If a competent court should determine that any provisions of
this Agreement or the application of such provisions to any Person or under any
circumstances is invalid, such nullity, illegitimacy or unenforceability shall
in no way affect the remaining provisions of this Agreement (or the remainder
hereof) nor the application of such provision to any other person or
circumstance.
9.11. Applicable Law. This Agreement shall be governed and interpreted according
to the laws of the Republic of Argentina.
9.12. Arbitration. (i) All issues that may arise between the parties regarding
this Agreement, its validity, interpretation, scope, execution, performance, or
termination shall be settled through mediation first and, if an agreement cannot
be reached, the dispute shall be definitively settled through arbitration (de
jure) within the framework of the Arbitral Tribunal of the Buenos Aires Stock
Exchange, according to the regulations and procedures approved for this purpose,
of which the parties state that they are aware, and which they accept as forming
an integral part of this Agreement. The parties expressly waive any other venue
or jurisdiction which may apply.
(ii) The decision of the Arbitral Tribunal of the Buenos Aires Stock Exchange
shall be definitive and binding for the Parties. The Parties hereby waive, in
the broadest sense permitted by law, the right to appeal. Any payment provided
by the Arbitral Tribunal of the Buenos Aires Stock Exchange shall be paid in
Dollars.
The Parties indicate their approval by signing this Agreement in two (2) exact
copies for a single purpose, at the place and on the date indicated at the
beginning.
The Sellers
[signed]
Name: Francisco Mario Piantoni
Federal Identification No. 18.017.792
[signed]
Name: Maria Carolina Vera
Federal Identification No. 21.393.889
By: Francisco Mario Piantoni
Title: Attorney-in-fact
[signed] The Buyer
Name: Cesar Augusto Planas [signed]
Federal Identification No. 20.649.771 for: Telefonica Interactiva Argentina
S.A.
Signature(s) authenticated per Name: Maria Orti
Notarization No. 006394820 Title: Chairman
9/21/1999
[signed and sealed]
<PAGE> 22
[seal of the Board of Notaries]
APPENDIX C 006394820
Buenos Aires, September 21, 1999. In my capacity as Notary No. 1467 of Buenos
Aires, I CERTIFY: ONE: That the signatures appearing in the document attached
hereto were affixed in my presence by the persons whose names and identification
numbers appear below, and who are personally known by me. In witness whereof.-
Cesar Augusto Planas, Federal Identification No. 20.649.771, Francisco Mario
Piantoni, Federal Identification No. 18.017.792. Maria Dolores Orti Garcia
Vicente: Federal Identification No. 93.762.488
TWO: That said persons state that their capacity is as follows: Mrs. Orti Garcia
Vicente, Chairman of TELEFONICA INTERACTIVA ARGENTINA S.A., which I certify that
she evidenced by documentation presented to me for purposes of this
notarization, and the others are acting on their own behalf.
<PAGE> 23
[seal of the Board of Notaries]
C 006394820
THREE: That the respective request(s) were recorded simultaneously in Instrument
No. 139 of the Book of Requests No. 24. I certify that the Special Notarization
Seal Nos. C003915428 and C003915429 was affixed to this Appendix, as it refers
to a single matter. IN WITNESS WHEREOF.
[signed and sealed]
<PAGE> 24
The following annexes to this agreement have not been included:
- Exhibit 3(iii.3) - Agreements required to be executed prior to
sale
- Exhibit 4.3 - By-laws of Donde Latinoamerica S.A.
- Exhibit 4.7 - List of assets
- Exhibit 4.8 - Legal proceedings
- Exhibit 4.9 - Lease
- Exhibit 4.13 - List of employees
- Exhibit 4.16 - Contracts
- Exhibit 7.1 - Draft deposit agreement
Copies of the annexes not included herein will be provided upon request.
2
<PAGE> 1
Exhibit 2.17
--------------------------------------------------
CONTRACT FOR ACQUISITION BY TELEFONICA
INTERACTIVA, S.A., OF A 25% INTEREST IN GRUPO
TEKNOLAND.
--------------------------------------------------
Madrid, June 14, 1999
THE FOLLOWING HAVING COME TOGETHER
MR. JUAN PEREA SAENZ DE BURUAGA, of legal age, with domicile for these purposes
in Madrid, Gran Via 28, National Identity Card 14,601,736
and
MR. ENRIQUE COLMAN LOPEZ CANTOLLA, of legal age, married, a resident of Madrid,
with domicile at Camino de la Huerta 80, Tax Identification Number 5,277,655-Y
MR. JESUS ANGEL SUAREZ GIL, of legal age, married, a resident of Boadilla del
Monte (Madrid), with domicile at calle Isla de Buda No. 6, Tax Identification
Number 11,397,309-G
MR. RICARDO CONDE 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
MR. DAVID LOPEZ CANTOLLA, of legal age, Spanish, married, a resident of Madrid,
with domicile at calle Serrano Galvache, No. 3, Tax Identification Number
50,829,685-F.
MR. LUIS CIFUENTES MUNTADAS, of legal age, Spanish, married, a resident of
Madrid, with domicile at calle Emilio Rubin, No. 12, Tax Identification Number
5,343,131-R
[left margin]
illegible signatures
<PAGE> 2
PARTICIPATING AS FOLLOWS
MR. JUAN PEREA SAENZ 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 Mr. Jose Antonio
Escartin Ipiens of Madrid on December 14, 1998, found at number 5399 of his
registry.
MR. ENRIQUE COLMAN LOPEZ CANTOLLA, MR. JESUS ANGEL SUAREZ GIL, MR. RICARDO CONDE
MUNTADAS-PRIM, MR. DAVID LOPEZ CANTOLLA, and MR. LUIS CIFUENTES 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 MR. ENRIQUE COLMAN LOPEZ, MR. JESUS ANGEL SUAREZ GIL, MR. RICARDO
CONDE MUNTADAS-PRIM, MR. DAVID LOPEZ CANTOLLA, and MR. LUIS CIFUENTES
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 Mr. Jose Uranga Otaegui of Bilbao on
August 19, 1994, found at number 3,666 in his registry. Entered in the
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<PAGE> 3
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,
[left margin]
illegible signatures
<PAGE> 4
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.
[left margin]
illegible signatures
<PAGE> 5
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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<PAGE> 6
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
[left margin]
illegible signatures
<PAGE> 7
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
[left margin]
illegible signatures
<PAGE> 8
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.
[left margin]
illegible signatures
<PAGE> 9
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
[left margin]
illegible signatures
<PAGE> 10
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.
[left margin]
illegible signatures
<PAGE> 11
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
[left margin]
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<PAGE> 12
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.
[left margin]
illegible signatures
<PAGE> 13
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.
[left margin]
illegible signatures
<PAGE> 14
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.
[illegible signature] [illegible signature]
JUAN PEREZ SAENZ DE BURUAGA LUIS CIFUENTES MUNTADAS
TELEFONICA INTERACTIVA, S.A.
[illegible signature]
RICARDO CONDE MUNTADAS-PRIM
DAVID LOPEZ CANTOLLA
[illegible signature]
[left margin]
illegible signatures
<PAGE> 15
ENRIQUE COLMAN LOPEZ CANTOLLA
[illegible signature]
JESUS ANGEL SUAREZ GIL
[illegible signature]
[illegible signature]
[left margin]
illegible signatures
<PAGE> 16
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.
<PAGE> 17
ATTACHMENT NO. 2
OPERATIONAL STRUCTURE
0)
<TABLE>
<CAPTION>
Corporacion Real Time Team S.L. Initial Capital
<S> <C>
3,000,000 pesetas
3,000 x 1,000 pesetas
</TABLE>
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
<TABLE>
<S> <C>
Capital 3,462,000 pesetas
No. of Shares 3,462
</TABLE>
Distribution of shares:
<TABLE>
<CAPTION>
---------------------------
Shares %
--------------------------------------------
<S> <C> <C>
CIERV 2,597 75.01
--------------------------------------------
TELEFONICA 865 24.99
--------------------------------------------
Total 3,462 100
--------------------------------------------
</TABLE>
[initials]
<PAGE> 18
ATTACHMENT NO. 4
LIST OF RESOLUTIONS REQUIRED UNDER THE EXPRESS RESOLUTION OF
TELEFONICA INTERACTIVA S.A.
<PAGE> 19
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.
[initials]
<PAGE> 1
Exhibit 2.18
AGREEMENT TO PURCHASE SHARES
IN
"CENTRO DE INVESTIGACION Y EXPERIMENTACION DE REALIDAD
VIRTUAL, S.L."
ENTERED INTO
BETWEEN
"TELEFONICA INTERACTIVA, S.A."
AND
Messrs. ENRIQUE COLMAN LOPEZ CANTOLLA,
JESUS ANGEL SUAREZ GIL,
RICARDO CONDE MUNTADAS-PRIM
DAVID LOPEZ CANTOLLA, AND
LUIS CIFUENTES MUNTADAS
RAMON Y CAJAL, ALBELLA & PALA
Velazquez, 20
28001 Madrid
Tel: (34) 91 576 1900
Fax: (34) 91 575 8678
e-mail: [email protected]
<PAGE> 2
PURCHASE AGREEMENT
In Madrid, on July 29, 1999
Before me, Jesus Roa Martinez, Broker and Member of the Madrid Professional
Association, being expressly required for this purpose, hereby makes this
Purchase Agreement
BETWEEN
Juan Perea Saez de Buruaga, a person of legal age bearing National Identity
Document No. 14,601,736 and domiciled for this purpose in Madrid, c/ Gran Via,
28.
and
Mr. ENRIQUE COLMAN LOPEZ CANTOLLA, a person of legal age married to Ms. BELEN
ALONSO BRONCANO, residing in Madrid, domiciled at Camino de la Huerta 80, and
bearing Taxpayer Identification No. 5,277,655-Y.
Ms. BELEN ALONSO BRONCANO, a person of legal age married to Mr. ENRIQUE COLMAN
LOPEZ CANTOLLA, residing in Madrid, domiciled at Camino de la Huerta 80, and
bearing Taxpayer Identification No. 5,403,395-M.
Mr. JESUS ANGEL SUAREZ GIL, a person of legal age married to Ms. LIDIA-CLARA
RODRIGUEZ GARCIA, residing in Boadilla del Monte (Madrid), domiciled at c/ Isla
de Buda No. 6, and bearing Taxpayer Identification No. 11,397,309-G.
Ms. LIDIA-CLARA RODRIGUEZ GARCIA, a person of legal age married to Mr. JESUS
ANGEL SUAREZ GIL, residing in Boadilla del Monte (Madrid), domiciled at c/ Isla
de Buda No. 6, and bearing Taxpayer Identification No. 11,395,244-D.
Mr. RICARDO CONDE MUNTADAS-PRIM, a married Spanish citizen of legal age,
residing in Sant Cugat (Barcelona), domiciled at c/ Sant Celoni, No. 23, bearing
Taxpayer Identification No. 46,117,053-Y.
Mr. DAVID LOPEZ CANTOLLA, a married Spanish citizen of legal age, residing in
Madrid, domiciled at c/ Serrano Galvache No. 3, bearing Taxpayer Identification
No. 50,829,685-F.
2
<PAGE> 3
Mr. LUIS CIFUENTES MUNTADAS, a married Spanish citizen of legal age, residing in
Madrid, domiciled at c/ Emilio Rubin, No. 12, bearing Taxpayer Identification
No. 5,343,131-R.
REPRESENTATION
Mr. JUAN PEREA SAENZ DE BURUAGA, acting in the name and on behalf of TELEFONICA
INTERACTIVA, S.A. (hereinafter also referred to, without distinction, as the
"Buyer" or as "TELEFONICA INTERACTIVA"), an entity domiciled in Madrid at Gran
Via 28, Taxpayer Identification Document A-82196080.
Mr. Saenz's powers are derived from the document certified by Notary of Madrid,
Jose Antonio Escartin Ipiens, on December 14, 1998 as Number 5,399 of his
notarial record book.
Mr. ENRIQUE COLMAN LOPEZ CANTOLLA, Ms. BELEN ALONSO BRONCANO, Mr. JESUS ANGEL
SUAREZ GIL, Ms. LIDIA-CLARA RODRIGUEZ GARCIA, Mr. RICARDO CONDE MUNTADAS-PRIM
Mr. DAVID LOPEZ CANTOLLA, and Mr. LUIS CIFUENTES MUNTADAS, acting in their own
names and on their own behalves (hereinafter also referred to, without
distinction, as the "Seller" or "Sellers").
The parties, acting in their respective capacities, hereby recognize each
other's legal capacities and interest in entering into this Share Purchase
Agreement (hereinafter referred to also as "Purchase Agreement") as being
sufficient and hereby state that:
WHEREAS
I. The Sellers hold and fully own, in the proportion indicated below, all of
the capital of CENTRO DE INVESTIGACION Y EXPERIMENTACION DE REALIDAD
VIRTUAL, S.L. (hereinafter also referred to, without distinction, as
"CIERV" or "CIERV, S.L."), which is domiciled in Madrid, c/ Almirante No.
16. CIERV was established for an indefinite term by means of a notarial
document certified by the Notary Public of Bilbao, Jose Uranga Otaegui, on
August 19, 1994 under Notarial Record No. 3,666 and registered with the
Commercial Registry Office of the Province of Madrid in Volume 13,717,
Book 0, Folio 96, Section Eight, Page No. M-223689. Its Taxpayer
Identification Document is B-48680185. Furthermore, CIERV holds all of the
shares in CORPORACION REAL TIME TEAM S.L. (hereinafter also referred to as
"CRTT"), a company that, in turn, controls the companies within the
TEKNOLAND Group, as indicated in Attachment No. 1 herein.
II. The activities conducted by the different companies within the TEKNOLAND
Group include, among others:
3
<PAGE> 4
a) COMM CORP. - A virtual community for Spanish speakers.
b) TEKNOLAND RTT, now named REAL TIME TEAM, S.L. - Produces
company-customized web applications.
c) TEKNOLAND THINK-BIZ - Conducts all types of business on IP networks.
III. TELEFONICA INTERACTIVA, S.A. is interested in obtaining a participating
interest in the TEKNOLAND Group in the amount of 25% of its capital stock,
thereby having a participating interest of 25% in the capital stock of the
head company CRTT by means of the following acts:
i) Purchasing the shares covered by this agreement and
ii) Subsequently subscribing and paying for a capital increase to be
agreed to by the head company of the TEKNOLAND Group (CORPORACION
REAL TIME TEAM, S.L.).
IV. Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO are the
owners of 72 shares that are free and clear of all charges, liens and
encumbrances, restrictions, or third-party rights and are numbered 1019 -
1090 and of the undivided half of Share No. 1163, all of which have a par
value of 1,000 pesetas each, fully paid in to CIERV.
CLAUSE: The aforementioned shares belong to said parties based on the Notarial
Document referring to the Capital Increase of CIERV pursuant to a non-cash
contribution dated July 14, 1999, granted before Notary of Madrid, Pablo
Duran de la Colina, as No. 459/99 of his notarial record book.
V. Mr. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA are the
owners of 72 shares that are free and clear of all charges, liens and
encumbrances, restrictions, or third-party rights and are numbered 1091 -
1162 and of the undivided half of Share No. 1163, all of which have a par
value of 1,000 pesetas each, fully paid in to CIERV.
CLAUSE: The aforementioned shares belong to said parties based on the Notarial
Document referring to the Capital Increase of CIERV pursuant to a non-cash
contribution dated July 14, 1999, granted before Notary of Madrid, Pablo
Duran de la Colina, as No. 459/99 of his notarial record book.
VI. Mr. RICARDO CONDE MUNTADAS-PRIM is the owner of 32 shares that are free
and clear of all charges, liens and encumbrances, restrictions, or
third-party rights
4
<PAGE> 5
and are numbered 251 - 282, all of which have a par value of 1,000 pesetas
each, fully paid in to CIERV.
CLAUSE: The aforementioned shares belong to said party by virtue of the
purchase that occurred during company's organizational meeting, as
attested by the CIERV articles of incorporation certified by Notary Public
of Bilbao, Jose Uranga Otaegui, on August 19, 1994, as Number 3,666 of his
notarial record book.
VII. Mr. DAVID LOPEZ CANTOLLA is the owner of 151 shares that are free and
clear of all charges, liens and encumbrances, restrictions, or third-party
rights and are numbered 868 - 1018, all of which have a par value of 1,000
pesetas each, fully paid in to CIERV.
CLAUSE: The aforementioned shares belong to said party by virtue of the Notarial
Document referring to the Capital Increase of CIERV pursuant to a non-cash
contribution approved February 15, 1998, made public record on April 3,
1998 before Notary of Madrid, Emilio Garrido Cerda, as No. 1359/98 of his
notarial record book.
VIII. Mr. LUIS CIFUENTES MUNTADAS is the owner of 317 shares that are free and
clear of all charges, liens and encumbrances, restrictions, or third-party
rights and are numbered 1 - 250 and 801 - 867, all of which have a par
value of 1,000 pesetas each, fully paid in to CIERV.
CLAUSE: Shares Nos. 1 - 250 belong to said party by virtue of the purchase
that occurred during company's organizational meeting, as attested by the
CIERV articles of incorporation certified by Notary Public of Bilbao, Jose
Uranga Otaegui, on August 19, 1994, as Number 3,666 of his notarial record
book. Shares Nos. 801 - 867 belong to said party by virtue of the capital
increase by means of a cash contribution agreed upon in the January 15,
1998 Junta Universal* of CIERV, which was put into the form of a notarial
instrument on April 3, 1998 before Notary of Madrid Emilio Garrido Cerda
as No. 1358/98 of his notarial record book.
IX. The Sellers are interested in selling all of the shares in CIERV cited in
Whereas Clauses IV - VIII to TELEFONICA INTERACTIVA, who is interested in
buying them.
The shares covered by this purchase agreement do not, in any case, include
the company assets and liabilities contributed by CIERV NUEVA, S.L.,
according to the demerger agreements adopted on today's date.
X. The purchase of the shares cited in the aforementioned Whereas Clauses IV
- VIII shall result in a participating interest in
- ----------
* Shareholders' meeting at which all shareholders are present or represented and
unanimously agreed to hold the meeting
5
<PAGE> 6
TELEFONICA INTERACTIVA amounting to 14.33% of the Capital Stock in the
company CORPORACION REAL TIME TEAM, S.L.
The Extraordinary General Shareholders' Meeting of CIERV, held today,
unanimously approved the partial demerger of CIERV as CIERV NUEVA in order
to segregate 85.67% of the shares in CORPORACION REAL TIME TEAM, S.L. and
85.67% of the 51.98% of the shares in RTT PROGRAMACION, S.L., together
with the remaining assets and liabilities set forth in the Demerger Plan
approved by the CIERV Board of Directors on July 1, 1999, which was
submitted for deposit with the Commercial Registry Office of Madrid.
XI. In connection herewith, CIERV NUEVA is to contribute its 472 shares
(Numbers 551 -755 and 796 - 1062) in the company RTT PROGRAMACION, S.L. to
CORPORACION REAL TIME TEAM, S.L., as a capital increase, such that, once
48.02% of the capital that REAL TIME TEAM, S.L. currently has is added to
the 80 shares in RTT PROGRAMACION, S.L. that CIERV will contribute to
CORPORACION REAL TIME TEAM, S.L. pursuant to the capital increase
mentioned in Whereas Clause XII below, it will become a 100% affiliate of
TEKNOLAND. In exchange for the 472 in RTT PROGRAMACION, S.L., CIERV NUEVA
will receive a total of 236 shares in CORPORACION REAL TIME TEAM, S.L.
XII. Likewise tied to the share purchase covered by this Purchase Agreement is
the plan to increase the capital of CORPORACION REAL TIME TEAM, S.L. by
means of a contribution by TELEFONICA INTERACTIVA, S.A. to CORPORACION
REAL TIME TEAM, S.L. of up to 1,262,799,846 (ONE BILLION, TWO HUNDRED AND
SIXTY-TWO MILLION, SEVEN HUNDRED AND NINETY-NINE THOUSAND, EIGHT HUNDRED
AND FORTY-SIX PESETAS), having the following characteristics:
i) Capital will be increased by issuing and circulating 321 (three
hundred and twenty-one) shares in the company CORPORACION REAL TIME
TEAM, S.L. which, when added to those owned by TELEFONICA
INTERACTIVA, S.A. through CIERV, shall give rise to a total final
participating interest following the 25% increase of the capital
stock of CORPORACION REAL TIME TEAM, S.L.
ii) The increase will be accomplished within a maximum of one month as
of the date on which TELEFONICA INTERACTIVA acquires ownership of
all shares resulting from the purchase agreements provided for
herein.
iii) Under no circumstances may the contribution of TELEFONICA
INTERACTIVA be greater than the total of 1,262,799,846. (ONE
BILLION,
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TWO HUNDRED AND SIXTY-TWO MILLION, SEVEN HUNDRED AND NINETY-NINE
THOUSAND, EIGHT HUNDRED AND FORTY-SIX PESETAS).
iv) Pursuant to this capital increase, CIERV shall contribute to
CORPORACION REAL TIME TEAM, S.L. 80 shares in the company RTT
PROGRAMACION, S.L. assessed at par, receiving 79 shares in
CORPORACION REAL TIME TEAM, S.L. in exchange.
v) Therefore, CIERV shall receive a total of 400 shares in CORPORACION
REAL TIME TEAM, S.L.
Once the capital increases mentioned in the preceding Whereas Clauses have
been accomplished, TELEFONICA INTERACTIVA, S.A. shall directly or
indirectly own a 25% share in the capital of CORPORACION REAL TIME TEAM,
S.L.
XIII. TELEFONICA INTERACTIVA, S.A. fulfilled the prior conditions for carrying
out the operation described in the second agreement of the Purchase
Agreement on June 14, 1999, executed by the parties, in that it has a 25%
share in the TEKNOLAND Group.
XIV. The parties having reached full agreement, they signed this agreement
governing the terms and conditions for TELEFONICA INTERACTIVA, S.A. to
assume a participating interest and the terms of the future relationship
of both contracting parties as members of the TEKNOLAND Group. Therefore,
the parties hereby agree to the following.
TERMS AND CONDITIONS
1. Share Purchase
1.1 Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO hereby
sell to TELEFONICA INTERACTIVA, who hereby purchases, their 72 shares in
CIERV mentioned in Whereas Clause IV, which are numbered 1019 -1090 and
the undivided half of Share No. 1163, with all rights inherent to said
shares and free and clear of all charges, liens and encumbrances,
restrictions, or any other third-party rights.
For the purposes of Art. 1462 of the Civil Code, it is expressly agreed
that the purchase of the shares mentioned in the preceding paragraph,
which are covered by this purchase agreement shall have no transferring
effects of ownership for shares until August 8, 1999.
Once the shares covered by this agreement have been transferred, the
Broker, Jesus Roa Martinez, shall issue the
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appropriate share certificate to TELEFONICA INTERACTIVA, the date of which
shall coincide with the date of transfer and the cost of which, if any,
shall be charged to the Sellers.
1.2 Ms. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA hereby
sell to TELEFONICA INTERACTIVA, who hereby purchases, their 72 shares in
CIERV mentioned in Whereas Clause V, which are numbered 1091 - 1162 and
the undivided half of Share No. 1163, with all rights inherent to said
shares and free and clear of all charges, liens and encumbrances,
restrictions, or any other third-party rights.
For the purposes of Art. 1462 of the Civil Code, it is expressly agreed
that the purchase of the shares mentioned in the preceding paragraph,
which are covered by this purchase agreement shall have no transferring
effects of ownership for shares until August 8, 1999.
Once the shares covered by this agreement have been transferred, the
Broker, Jesus Roa Martinez, shall issue the appropriate share certificate
to TELEFONICA INTERACTIVA, the date of which shall coincide with the date
of transfer and the cost of which, if any, shall be borne by the Sellers.
1.3 Mr. RICARDO CONDE MUNTADAS-PRIM hereby sells and transfers to TELEFONICA
INTERACTIVA, who hereby purchases and acquires, his 32 shares in CIERV
mentioned in Whereas Clause VI, numbered 251 - 282, with all rights
inherent to said shares and free and clear of all charges, liens and
encumbrances, restrictions, or any other third-party rights.
1.4 Mr. DAVID LOPEZ CANTOLLA hereby sells and transfers to TELEFONICA
INTERACTIVA, who hereby purchases and acquires, his 151 shares in CIERV
mentioned in Whereas Clause VII, numbered 868 - 1018, with all rights
inherent to said shares and free and clear of all charges, liens and
encumbrances, restrictions, or any other third-party rights.
1.5 Mr. LUIS CIFUENTES MUNTADAS hereby sells and transfers to TELEFONICA
INTERACTIVA, who hereby purchases and acquires, his 317 shares in CIERV
mentioned in Whereas Clause VIII, numbered 1 - 250 and [strikethrough: 868
- 1018] [handwritten correction: 801 - 867], with all rights inherent to
said shares and free and clear of all charges, liens and encumbrances,
restrictions, or any other third-party rights.
1.6 Attached as Attachment 1.6(a) hereto is a certificate granted by the
Sellers, issued by the Secretary, with the Approval of the Chairman of the
CIERV Board of Directors, which establishes that (a) the acquisition by
the Sellers of CIERV shares transferred by the Sellers to
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<PAGE> 9
TELEFONICA INTERACTIVA in accordance with this Purchase Agreement is valid
and was accomplished in compliance with all requirements of the law and
bylaws and that rights to preemptive acquisition, if any, have been
waived; (b) the transfer of said CIERV shares by the Sellers to TELEFONICA
INTERACTIVA is valid and was accomplished in compliance with all
requirements of the Law and bylaws and that rights to preemptive
acquisition, if any, have been waived and they are recorded in the
Shareholders' Register.
2. Price That TELEFONICA INTERACTIVA Must Pay Sellers for CIERV Shares
2.1 The price that TELEFONICA INTERACTIVA must pay the Sellers for their
respective shares in CIERV, mentioned in Whereas Clauses IV - VIII above,
shall be:
i) To Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO, for
the sale of their 72.5 shares, at a price of 1,707,803 pesetas per share,
totaling 123,815,717 pesetas (ONE HUNDRED AND TWENTY-THREE MILLION, EIGHT
HUNDRED AND FIFTEEN THOUSAND, SEVEN HUNDRED AND SEVENTEEN PESETAS).
ii) To Mr. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA, for
the sale of their 72.5 shares, at a price of 1,707,803 pesetas per share,
totaling 123,815,717 pesetas (ONE HUNDRED AND TWENTY-THREE MILLION, EIGHT
HUNDRED AND FIFTEEN THOUSAND, SEVEN HUNDRED AND SEVENTEEN PESETAS).
iii) To Mr. RICARDO CONDE MUNTADAS-PRIM, for the sale of his 32 shares, at a
price of 1,707,803 pesetas per share, totaling 54,649,696 pesetas
(FIFTY-FOUR MILLION, SIX HUNDRED AND FORTY-NINE THOUSAND, SIX HUNDRED AND
NINETY-SIX PESETAS).
iv) To Mr. DAVID LOPEZ CANTOLLA, for the sale of his 151 shares, at a price of
1,707,803 pesetas per share, totaling 257,878,314 pesetas (TWO HUNDRED
AND FIFTY-SEVEN MILLION, EIGHT HUNDRED AND SEVENTY-EIGHT THOUSAND, THREE
HUNDRED AND FOURTEEN PESETAS).
v) To Mr. LUIS CIFUENTES MUNTADAS, for the sale of his 317 shares, at a price
of 1,707,803 pesetas per share, totaling 541,373,551 pesetas (FIVE HUNDRED
AND FORTY-ONE MILLION, THREE HUNDRED AND SEVENTY-THREE THOUSAND, FIVE
HUNDRED AND FIFTY-ONE PESETAS).
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<PAGE> 10
2.2 The parties expressly agree that the sum of 250,000,000 (TWO HUNDRED AND
FIFTY MILLION) pesetas delivered by TELEFONICA INTERACTIVA to CIERV, S.L.
in payment for the purchase of shares in CORPORACION REAL TIME TEAM, S.L.
pursuant to the execution of the purchase agreement by TELEFONICA
INTERACTIVA, S.A. of a 25% share in TEKNOLAND Group on June 14, 1999, is
to be distributed, as applicable and subject to the Bylaws of CIERV and to
the general legal system, by CIERV, S.L. among the Sellers in payment for
their respective shares in CIERV, S.L., as follows:
i) To Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO the
amount of 28,100,775 pesetas (TWENTY-EIGHT MILLION, ONE HUNDRED THOUSAND,
SEVEN HUNDRED AND SEVENTY-FIVE PESETAS).
ii) To Mr. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA the
amount of 28,100,775 pesetas (TWENTY-EIGHT MILLION, ONE HUNDRED THOUSAND,
SEVEN HUNDRED AND SEVENTY-FIVE PESETAS).
iii) To Mr. RICARDO CONDE MUNTADAS-PRIM the amount of 12,403,101 pesetas
(TWELVE MILLION, FOUR HUNDRED AND THREE THOUSAND, ONE HUNDRED AND ONE
PESETAS).
iv) To Mr. DAVID LOPEZ CANTOLLA the amount of 58,527,132 pesetas (FIFTY-EIGHT
MILLION, FIVE HUNDRED AND TWENTY-SEVEN THOUSAND, ONE HUNDRED AND
THIRTY-TWO PESETAS).
v) To Mr. LUIS CIFUENTES MUNTADAS the amount of 122,868,217 pesetas (ONE
HUNDRED AND TWENTY-TWO MILLION, EIGHT HUNDRED AND SIXTY-EIGHT THOUSAND,
TWO HUNDRED AND SEVENTEEN PESETAS).
2.3 The parties expressly agree that the sum of 24,000,000 (TWENTY-FOUR
MILLION) pesetas that REAL TIME TEAM, S.L. is to pay the company
CONSEJEROS EMPRESARIALES ESPANOLES, S.A. as a result of the rescission of
the consulting and brokerage services agreement of October 5, 1998 is to
be deducted by TELEFONICA INTERACTIVA from the price payable to the
Sellers for their respective shares in CIERV, S.L., as follows:
i) From Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO the
amount of 2,697,675 pesetas (TWO MILLION, SIX HUNDRED AND NINETY-SEVEN
THOUSAND, SIX HUNDRED AND SEVENTY-FIVE PESETAS).
ii) From Mr. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA the
amount of 2,697,675 pesetas (TWO MILLION, SIX HUNDRED AND NINETY-SEVEN
THOUSAND, SIX HUNDRED AND SEVENTY-FIVE PESETAS).
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<PAGE> 11
iii) From Mr. RICARDO CONDE MUNTADAS-PRIM the amount of 1,190,698 pesetas (ONE
MILLION, ONE HUNDRED AND NINETY THOUSAND, SIX HUNDRED AND NINETY-EIGHT
PESETAS).
iv) From Mr. DAVID LOPEZ CANTOLLA the amount of 5,618,604 pesetas (FIVE
MILLION, SIX HUNDRED AND EIGHTEEN THOUSAND, SIX HUNDRED AND FOUR PESETAS).
v) From Mr. LUIS CIFUENTES MUNTADAS the amount of 11,795,348 pesetas (ELEVEN
MILLION, SEVEN HUNDRED AND NINETY-FIVE THOUSAND, THREE HUNDRED AND
FORTY-EIGHT PESETAS).
2.4 The parties expressly agree that the amount of 827,000 (EIGHT HUNDRED AND
TWENTY-SEVEN THOUSAND) pesetas payable by TELEFONICA INTERACTIVA, S.A. as
a result of the legal and financial audit of CIERV is to be deducted
thereby from the price payable to the Sellers for their respective shares
in CIERV, S.L., as follows:
vi) From Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO the
amount of 92,958 pesetas (NINETY-TWO THOUSAND, NINE HUNDRED AND
FIFTY-EIGHT PESETAS).
vii) From Mr. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA the
amount of 92,958 pesetas (NINETY-TWO THOUSAND, NINE HUNDRED AND
FIFTY-EIGHT PESETAS).
viii) From Mr. RICARDO CONDE MUNTADAS-PRIM the amount of 41,029 pesetas
(FORTY-ONE THOUSAND AND TWENTY-NINE PESETAS).
ix) From Mr. DAVID LOPEZ CANTOLLA the amount of 193,608 pesetas (ONE HUNDRED
AND NINETY-THREE THOUSAND, SIX HUNDRED AND EIGHT PESETAS).
x) From Mr. LUIS CIFUENTES MUNTADAS the amount of 406,447 pesetas (FOUR
HUNDRED AND SIX THOUSAND, FOUR HUNDRED AND FORTY-SEVEN PESETAS).
2.5 Pursuant to the provisions of the preceding sections, TELEFONICA
INTERACTIVA shall pay each one of the Sellers the following amounts:
i) Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO the amount
of 92,924,309 pesetas (NINETY-TWO MILLION, NINE HUNDRED AND TWENTY-FOUR
THOUSAND, THREE HUNDRED AND NINE PESETAS).
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ii) Mr. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA the amount
of 92,924,309 pesetas (NINETY-TWO MILLION, NINE HUNDRED AND TWENTY-FOUR
THOUSAND, THREE HUNDRED AND NINE PESETAS).
iii) Mr. RICARDO CONDE MUNTADAS-PRIM the amount of 41,014,868 pesetas
(FORTY-ONE MILLION, FOURTEEN THOUSAND, EIGHT HUNDRED AND SIXTY-EIGHT
PESETAS).
iv) Mr. DAVID LOPEZ CANTOLLA the amount of 193,538,909 pesetas (ONE HUNDRED
AND NINETY-THREE MILLION, FIVE HUNDRED AND THIRTY-EIGHT THOUSAND, NINE
HUNDRED AND NINE PESETAS).
v) Mr. LUIS CIFUENTES MUNTADAS the amount of 406,303,539 pesetas (FOUR
HUNDRED AND SIX MILLION, THREE HUNDRED AND THREE THOUSAND, FIVE HUNDRED
AND THIRTY-NINE PESETAS).
3. Form of Payment
3.1 TELEFONICA INTERACTIVA hereby withholds the amount of 55,754,585
(FIFTY-FIVE MILLION, SEVEN HUNDRED AND FIFTY-FOUR THOUSAND, FIVE HUNDRED
AND EIGHTY-FIVE) pesetas from the total amount to be paid by Mr. ENRIQUE
COLMAN LOPEZ CANTOLLA and Ms. BELEN ALONSO BRONCANO by means of Check
0.238.864-3 and hereby pays the amount of 37,169,724 (THIRTY-SEVEN
MILLION, ONE HUNDRED AND SIXTY-NINE THOUSAND, SEVEN HUNDRED AND
TWENTY-FOUR) pesetas as an advance on account for the price described in
Clause 2.5.i), and said parties state that they have received said amount
to their full satisfaction, to which end they grant the most complete and
formal receipt.
Once the TERM established in Agreement 1.1 above has elapsed and the
shares of CIERV sold by Mr. ENRIQUE COLMAN LOPEZ CANTOLLA and Ms. BELEN
ALONSO BRONCANO have been transferred to TELEFONICA INTERACTIVA, the
Buyer, with a value date of that same day, will pay to the Checking
Account designated for that purpose by the Sellers, the amount of the
price withheld. Once receipt of funds in the designated checking account
has been confirmed, the transfer order by TELEFONICA INTERACTIVA shall be
considered to be the most complete and formal receipt.
3.2 TELEFONICA INTERACTIVA hereby withholds the amount of 55,754,585
(FIFTY-FIVE MILLION, SEVEN HUNDRED AND FIFTY-FOUR THOUSAND, FIVE HUNDRED
AND EIGHTY-FIVE) pesetas from the total amount to be paid by Mr. JESUS
ANGEL SUAREZ GIL and Ms. LIDIA-CLARA RODRIGUEZ GARCIA by means of Check
0.238.865-4 and hereby pays the amount of 37,169,724 (THIRTY-SEVEN
MILLION, ONE HUNDRED AND SIXTY-NINE THOUSAND, SEVEN HUNDRED AND
TWENTY-FOUR) pesetas as an advance on account for the price described in
Clause 2.5.ii), and said parties state that they have received said amount
to their full satisfaction, to which end they grant the most complete and
formal receipt.
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Once the TERM established in Agreement 1.2 above has elapsed and the
shares of CIERV sold by Mr. JESUS ANGEL SUAREZ GIL and Ms. LIDIA-CLARA
RODRIGUEZ GARCIA have been transferred to TELEFONICA INTERACTIVA, the
Buyer, with a value date of that same day, will pay to the Checking
Account designated for that purpose by the Sellers, the amount of the
price withheld. Once receipt of funds in the designated checking account
has been confirmed, the transfer order by TELEFONICA INTERACTIVA shall be
considered to be the most complete and formal receipt.
3.3 TELEFONICA INTERACTIVA hereby pays Mr. RICARDO CONDE MUNTADAS-PRIM, by
means of Check 0.238.866-5 the amount of 41,014,868 (FORTY-ONE MILLION,
FOURTEEN THOUSAND, EIGHT HUNDRED AND SIXTY-EIGHT) pesetas described in
Clause 2.5.iii) above and [Mr. CONDE] states that he has received said
amount to his full satisfaction, to which end he grants the most complete
and formal receipt.
3.4 TELEFONICA INTERACTIVA hereby pays Mr. DAVID LOPEZ CANTOLLA, by means of
Check 0.238.867-6 the amount of 193,538,909 (ONE HUNDRED AND NINETY-THREE
MILLION, FIVE HUNDRED AND THIRTY-EIGHT THOUSAND, NINE HUNDRED AND NINE)
pesetas described in Clause 2.5.iv) above and [Mr. LOPEZ] states that he
has received said amount to his full satisfaction, to which end he grants
the most complete and formal receipt.
3.5 TELEFONICA INTERACTIVA hereby pays Mr. LUIS CIFUENTES MUNTADAS, by means
of Check 0.238.868-0 the amount of 406,303,539 (FOUR HUNDRED AND SIX
MILLION, THREE HUNDRED AND THREE THOUSAND, FIVE HUNDRED AND THIRTY-NINE)
pesetas described in Clause 2.5.v) above and [Mr. CIFUENTES] states that
he has received said amount to his full satisfaction, to which end he
grants the most complete and formal receipt.
4. Management of the TEKNOLAND Group and Protection of the Minority Shareholder
4.1 Management of the TEKNOLAND Group shall correspond to the current
shareholders of the Group, in their capacity as majority shareholders
thereof, after the capital of TELEFONICA INTERACTIVA, S.A. has been
incorporated.
4.2 TELEFONICA INTERACTIVA, S.A., in its capacity as minority shareholder of
the Group, shall have the right to:
4.2.1. Appoint two members of the six members of the Board of Directors of
CORPORACION REAL TIME TEAM, S.L. It shall have the same power in terms of
the governing bodies of the different companies constituting TEKNOLAND
Group. One of the members appointed by TELEFONICA INTERACTIVA, S.A. shall
serve as Vice Chairman.
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4.2.2. Appoint a "controller" having financial and management auditing
duties for the companies constituting the TEKNOLAND Group. Said controller
shall report directly to the Board of Directors of each of the companies
in the TEKNOLAND Group in all matters pertaining to the adoption of
agreements in the financial area.
4.2.3. Participate in approving the agreements of the Governing Bodies of
the companies in the TEKNOLAND Group mentioned below, agreements that may
only be adopted with the express approval of TELEFONICA INTERACTIVA.
The Bylaws of the different companies constituting the TEKNOLAND Group shall
include the following list of agreements that will require the participation of
TELEFONICA INTERACTIVA, S.A. by means of the establishment of super quorums that
require its approval:
o Matters Falling Within the Jurisdiction of the Board of Directors that
must be adopted by special majority:
1) Approval of Annual Budgets and the Business Plan
For this purpose, the annual budget shall refer to the fiscal year
immediately subsequent and shall be prepared in no less detail than
that customary for companies of the size and type of activity of the
TEKNOLAND Group. The Business Plan shall refer to, at least, the two
subsequent years and its contents shall be sufficient to establish
the business strategy and objectives of the TEKNOLAND Group.
2) Acquisition, sale, or encumbrance of goods or financial indebtedness
of the Company provided for in the annual budgets.
3) Establishment of Executive Committees, Executive Boards, or other,
analogous entities as well as the determination of their
jurisdictions and the appointment of persons who are to form part
thereof.
4) Approval of the Plan for Options to Purchase Shares extended to
company employees.
o Matters Falling Within the Jurisdiction of the General Shareholders'
Meeting that must be adopted by special majority:
1) Capital increases or decreases, with the exception of those that are
legally obligatory.
2) The total or partial dissolution, transformation, merger, spin-off,
or demerger of the company as well as any equivalent structural
modification.
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3) The modification of the corporate purpose through the introduction
of new activities or through the total or deletion suppression of
those currently pursued and, in general, any other amendment to the
bylaws.
4) Distribution of income or reserves to Shareholders.
5) Appointment, extension of term, or dismissal of Account Auditors.
Likewise, the corresponding clause providing for the other shareholders
the preemptive right of acquisition of shares shall be incorporated to the
Bylaws in the event that no provision has been made at present.
For the purposes of this clause, the Sellers agree to approve and/or
adopt, personally or in the respective Governing Bodies of each of the
companies in the TEKNOLAND Group, within a maximum of two months from the
date that TELEFONICA INTERACTIVA acquires ownership of all shares pursuant
to the purchase agreement described herein, each and every agreement that
may be necessary to carry out the commitments assumed in terms of managing
the TEKNOLAND Group and Protecting the Minority Shareholder.
Regardless of the provisions of the preceding paragraph, approval by the
Governing Bodies of the head company of the group CORPORACION REAL TIME
TEAM, S.L. of the bylaws amendments mentioned with regard to Protecting
the Minority Shareholder shall be given in any event prior to or in
conjunction with the capital increase of CRTT with the cash contribution
mentioned in Whereas Clause XII above, which provides for TELEFONICA
INTERACTIVA to subscribe it in its entirely.
In the event that any of the suppositions provided for herein are not
registered in the Commercial Registry, the parties hereto equally
undertake to act in accordance with the provisions of this Agreement. In
the event of any ambiguity or discrepancy between the provisions of this
Agreement and of the Bylaws of any of the companies in the Group, the
provisions hereof shall prevail among the parties executing this agreement
or their successors or assignees. Consequently, the parties shall exercise
all voting and other rights and powers available to them so as to comply
with the provisions hereof and, if necessary, shall amend the Bylaws as
necessary.
4.3 Failure to adhere to any of the Commitments assumed with regard to the
Management of the TEKNOLAND Group, the Protection of the Minority
Shareholder in any of the companies constituting the TEKNOLAND Group, or
failure to adopt, within the periods provided, the agreements necessary to
amend the bylaws of the companies within the TEKNOLAND Group shall be
construed as instances of a breach of this Purchase Agreement.
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The parties expressly agree that, in the event of a failure to observe the
periods provided for in Agreement 4.2 above for the approval and/or
adoption of all agreements necessary to amend the bylaws of the companies
within the TEKNOLAND Group shall be construed as producing a supposition
in addition to those described in Agreement 6.1 below for the exercising
of the Purchase Option granted TELEFONICA INTERACTIVA, S.A., with the
Vendors hereby granting the Buyer a Purchase Option (under the same terms
and conditions as those described in Agreement 6 below) of shares
representing 26% of Corporacion Real Time Team, S.L., notwithstanding
compensation for damages suffered to which TELEFONICA INTERACTIVA may be
entitled as a result of said failure.
4.4 The Sellers hereby inform TELEFONICA INTERACTIVA, S.A., who indicates its
acceptance, of the TEKNOLAND plan consisting of instigating a share
purchase option plan in said company for its employees. Without prejudice
to the final details of the aforementioned plan, it is hereby established
that the general principle of the plan shall refer to a maximum of 10% of
the capital of each company.
4.5 Furthermore, TELEFONICA INTERACTIVA, S.A. states that it is aware of and
accepts the TEKNOLAND Group plan, which consists of assigning up to 20% of
the capital stock of its affiliate TEKNOLAND E-BIZ, S.L., hereby agreeing
that said assignment shall not be made to any telecommunications company.
5. Purchase Terms and Conditions. Statements and Assurances.
5.1 The "Purchase Terms and Conditions" referring to the TEKNOLAND Group,
which have been attached hereto as Attachment 5.1(a), form an integral
part hereof. The parties state that the price to be made in accordance
with this Purchase Agreement is based on said Purchase Terms and
Conditions being true, accurate, and complete.
5.2 The Sellers shall be liable for not fulfilling their obligation to
transfer and retain fee simple and perfect title and possession of the
shares that they have sold to TELEFONICA INTERACTIVA (warranty of title
and hidden defects).
5.3 The Sellers shall be liable to TELEFONICA INTERACTIVA for any error or
omission in the purchase terms and conditions under the terms set forth
herein.
In the event of any errors or omissions in connection with the statements
made in the Purchase Terms and Conditions, TELEFONICA INTERACTIVA shall be
entitled to compensation from the Sellers
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for all damage caused to TELEFONICA INTERACTIVA from the loss or reduced
company value shown for the value of the TEKNOLAND Group, considered by
TELEFONICA INTERACTIVA to undertake this operation (meaning, the value of
the TEKNOLAND Group) if all Purchase Terms and Conditions had been true,
complete, and accurate.
Moreover, when errors or omission in the Purchase Terms and Conditions
give rise to damage or expense to TELEFONICA INTERACTIVA that is not a
result of the reduced company value of the TEKNOLAND Group, the Sellers
shall directly compensate TELEFONICA INTERACTIVA for the full amount of
the resulting damage or expense that may have been inflicted on TELEFONICA
INTERACTIVA.
In the event that the Sellers exercise their purchase options in
accordance with the provisions of Agreement 7 herein, its obligation to
compensate TELEFONICA INTERACTIVA for errors or omissions in the Purchase
Terms and Conditions shall extend to all of the shares in the TEKNOLAND
Group which may be owned by TELEFONICA INTERACTIVA and were purchased from
the Sellers.
Once the claim by TELEFONICA INTERACTIVA of errors or omissions in the
Purchase Terms and Conditions has been accepted by the Sellers or, as
applicable, once the relevance and amount thereof has been assessed by the
mediator or in the final decision of the arbitrator according to the
procedure established in the paragraph below, the Sellers shall proceed to
pay, within a maximum of ten business days from the date on which the
claim was accepted or upheld, the amount thereof into the checking account
designated by TELEFONICA INTERACTIVA. In this regard, the parties
expressly agree upon the possibility of TELEFONICA INTERACTIVA being
compensated from amounts owed, which may make the payment of said amounts
to the account of future financial or legal business transactions of any
type that have been conducted or are to be executed between TELEFONICA
INTERACTIVA and the Sellers.
Said amounts shall be paid in increments, applying the legal monetary
interest rate plus two points until paid in full. To this end, each time
that an error, omission, debt, liability, or obligation may give rise to a
reimbursement under the terms hereof, TELEFONICA INTERACTIVA shall notify
the Sellers of the specific circumstances giving rise to the claim and the
amounts claimed from the Sellers in damages plus the interest therefor,
stating the grounds for the claim and the information making it possible
to properly evaluate the matter. If the Sellers dispute the facts or
amount, the Sellers shall clearly and concisely notify TELEFONICA
INTERACTIVA of their position within the 20 days subsequent to the
notification given by TELEFONICA INTERACTIVA. If there is no reply within
said 20 days, it shall be presumed that the claim
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<PAGE> 18
has been accepted. If the Sellers reply to the claim and TELEFONICA
INTERACTIVA does not agree with the Sellers' position, they shall be so
notified and any of the Sellers or TELEFONICA INTERACTIVA shall have the
right to refer the matter for the mediation of the party designated by the
Dean of the Madrid Bar Association. Said mediator shall establish the
mediation procedure. The mediator shall act, subject to the second
paragraph of Article Three of the Law of Private Arbitration No. 33/1998
dated December 5. If mediation fails, the parties may submit the dispute
to an arbitrator for a final decision in accordance with Agreement 14
hereof.
5.4 For the purposes of Clause 5, exclusively, a threshold of 5,000,0000 [sic]
pesetas shall be applied so that, if TELEFONICA INTERACTIVA becomes
entitled to compensation from the Sellers pursuant to this clause,
TELEFONICA INTERACTIVA shall not be reimbursed until the amount(s) claimed
from the Sellers has exceeded 5,000,000 pesetas. However, once said
threshold amount has been reached, TELEFONICA INTERACTIVA shall be
entitled to have the Sellers pay it the full amount of the claims and not
only for the part exceeding the threshold. To calculate the amounts for
determining whether or not the minimum threshold mentioned has been
reached, all claims that may have arisen shall be taken into
consideration, even though legal rights may have lapsed.
5.5 The period during which the Sellers shall be liable to TELEFONICA
INTERACTIVA for any errors or omissions in facts, assertions, or
circumstances set forth in the Purchase Terms and Agreements and the
attachments thereof shall run from the execution of this Purchase
Agreement and shall last until (a) the end of the period for exercising
legal rights, allowing for interruptions, for damages derived from tax and
social security obligations; (b) three years from said date for any other
matters. Any claim made by TELEFONICA INTERACTIVA within these Periods (a)
or (b), as applicable, shall be valid and must be resolved by the person
or entity competent according to this Purchase Agreement and shall not be
affected by the arrival of the term established in (a) or (b), as
applicable.
5.6 In any event, the Sellers shall be answerable for the Buyer's claims in
proportion to their respective participating interest in the capital of
CIERV prior to the entry of TELEFONICA INTERACTIVA, up to the limit for
the total amount received as a price, meaning, a total of [1,101,532,934
(ONE BILLION, ONE HUNDRED AND ONE MILLION, FIVE HUNDRED AND THIRTY-TWO
THOUSAND, NINE HUNDRED AND THIRTY-FOUR)] pesetas, unless bad faith on the
part of TELEFONICA INTERACTIVA is proven.
5.7 As of the execution hereof, until such time as the inscription in the
Commercial Registry of all agreements pertaining to the partial demerger
of CIERV and
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<PAGE> 19
establishment of CIERV NUEVA mentioned in Whereas Clause X above is
completed, the Sellers agree not to adopt and/or carry out acts, directly
or through the administrative bodies of the different companies in which
any agreement or decision contrary to the contents or spirit hereof is
present or represented and they agree to act at all times according to the
principle of good faith and business diligence, hereby agreeing to, in any
event, adopt all those agreements and/or decisions that may be necessary
to properly carry out the aforementioned business operation.
Without prejudice to the provisions of the preceding paragraph, the
Sellers agree, at the moment of adopting decisions within the different
bodies, to consult with and, as appropriate, request the express approval
of TELEFONICA INTERACTIVA.
5.8 Sellers' Guarantee for possible contingencies in the Demerger Balance
Sheet of CIERV, S.L. The Sellers state that the CIERV Demerger Balance
Sheet dated June 30, 1999 (hereinafter referred to as the "Demerger
Balance Sheet") reflects the financial, net worth, and economic position
of the Company as of that date and they guarantee CIERV itself and
TELEFONICA INTERACTIVA for any debt, contingency, or reduced company value
that is not included or duly accounted for on the Demerger Balance Sheet.
Furthermore, the Sellers state and guarantee that the demerger process of
CIERV. S.L. shall not entail any tax liability whatsoever for CIERV or for
TELEFONICA INTERACTIVA.
5.9 Sellers' Guarantee for possible contingencies due to a failure to declare
the sole proprietorship of REAL TIME TEAM, S.L. on the part of its sole
shareholder, CIERV. The Sellers indicate and guarantee that they shall
directly compensate CIERV or the company that may take its place, upon any
claim, debt, or loss that CIERV may incur as a result of a failure to
declare the sole proprietorship of REAL TIME TEAM, S.L. during the period
in which CIERV was the sole shareholder thereof.
5.10 The Sellers shall assume responsibility, while holding TELEFONICA
INTERACTIVA harmless, for any claim filed by any worker of the TEKNOLAND
Group as a result of a wage dispute between the wage earned and that
provided for in the applicable Agreement or as a result of any claim by
the General Social Security Treasury for the quoting difference that may
be derived therefrom.
5.11 Sellers' Guarantee for possible tax contingencies within any of the
companies in the TEKNOLAND Group. The sellers shall assume responsibility,
while holding TELEFONICA INTERACTIVA harmless, for any claim filed by the
Tax Administration, claiming any rate, tax, or fee for which any of the
companies within the TEKNOLAND Group may have been obligated due to events
that occurred prior to the purchase of the shares covered by this
Agreement.
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<PAGE> 20
5.12 The Sellers shall assume responsibility in the manner described herein,
while holding TELEFONICA INTERACTIVA harmless, for any claim, suit, or
litigation of a judicial, extrajudicial, or administrative nature that may
be instigated by any individual, specifically, by an employee of any of
the companies within the TEKNOLAND Group, or by a public or private legal
entity, including Social Security, on the grounds of:
i) imperfect fulfillment or failure to fulfill the obligations of
communication and recording of labor agreements with the Employment
Office;
ii) hiring workers for a specific job or service or for training;
iii) unduly enjoying or obtaining reductions or bonuses in the payment of
company shares through unjustified use or fraud in the modes paid in
Social Security;
iv) imperfect fulfillment or failure to fulfill the obligation to give
notice of the opening or moving of the job center;
v) failure to fulfill the obligation to make available the Social
Security and Job Inspection Visit Book; and
vi) imperfect fulfillment or failure to fulfill the obligation to
maintain the Worker Enrollment Book.
6. Call Option in favor of TELEFONICA INTERACTIVA S.A. regarding shares in
CORPORATION REAL TIME TEAM S.L. representing 26% of the Capital Stock
TELEFONICA INTERACTIVA, S.A. acquires, firmly and irrevocably, a right to call
options on shares of CORPORACION REAL TIME TEAM, S.L. representing 26% of its
capital stock, in the event of exercising this option in order to become the
majority shareholder of the TEKNOLAND Group, in the following:
6.1. CIRCUMSTANCES
6.1.1. 24 months after TELEFONICA INTERACTIVA, S.A. becomes a shareholder of the
TEKNOLAND Group, if it has not achieved the accumulated sales goals,
within the said 24 months, contained in the business plans of each of the
companies that comprise the TEKNOLAND Group, i.e.: I) TEKNOLAND RTT
(currently REAL TIME TEAM, S.L.), ii) COMMM Corp., and iii) TEKNOLAND
THINK-BIZ S.L., listed in Appendix No. 5.
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<PAGE> 21
Purchase agreement signed by the parties on June 14, 1999.
6.1.2. Within 36 months from TELEFONICA INTERACTIVA, S.A. becoming a shareholder
of the TEKNOLAND Group.
6.2. TERM FOR EXERCISING CALL OPTION:
In the event of any of the situations described in paragraph 6.1 above,
TELEFONICA INTERACTIVA, S.A. shall have 4 months (FOUR MONTHS) to exercise
the call option, after which time it shall expire pursuant to law.
6.3. PURCHASE PRICE OF THE SHARES COVERED BY THE OPTION
The purchase price of the shares shall be the result of appraising the
shares according to the market value of the TEKNOLAND Group at the time of
execution of this purchase agreement, established by the parties at
8,200,000,000 (EIGHT BILLION TWO HUNDRED MILLION) pesetas, plus 50% of the
difference between this amount and the market value of the TEKNOLAND Group
at the time of exercising the call option, the market value being
calculated as provided in the following paragraph.
If the market value on the date of exercising the option is less than the
value established at the time of execution of this Agreement, the exercise
price shall be market value.
The market value of the TEKNOLAND Group at the time of exercising the
option shall be determined by the arithmetic mean of the appraisal by the
commercial bank designated by each party. If the discrepancy between the
respective appraisals exceeds 25%, the investment banks shall mutually
designate a third investment bank. If they are unable to reach an
agreement, one shall be chosen at random from a list of 4 candidates, two
recommended by each party. The decision of this third investment bank
shall be binding upon the parties.
6.4. FORM OF PAYMENT
The form of payment for the shares shall be in cash.
6.5. RIGHT OF THE CURRENT SHAREHOLDERS OF THE TEKNOLAND GROUP TO DEMAND AN
INCREASE IN THE NUMBER OF SHARES TO BE PURCHASED BY
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<PAGE> 22
TELEFONICA INTERACTIVA, S.A. IF THE CALL OPTION IS EXERCISED
If TELEFONICA INTERACTIVA, S.A. exercises the call option in any of the
situations indicated above, the current shareholders of the TEKNOLAND
Group may demand that TELEFONICA INTERACTIVA, S.A., which shall be bound
to do so, purchase a greater percentage of shares of the company, even up
to 100%, under the same terms.
6.6. FORM OF EXERCISING OPTION
TELEFONICA INTERACTIVA, S.A. shall exercise the Call Option by forwarding,
by any means for which written confirmation may be provided (including fax
with confirmation by registered mail, with acknowledgement of receipt) to
the address for purposes of notification indicated in this Agreement, a
message that must be signed by a representative of TELEFONICA INTERACTIVA
with sufficient power of attorney for purchasing shares, the terms of
which shall read as follows:
"We hereby evidence that TELEFONICA INTERACTIVA, S.A. is exercising the
Call Option provided in Article 6 of the Stock Purchase Agreement of CIERV
dated July 29, 1999, through Jesus Roa Martinez, Madrid Exchange Broker."
The parties hereby agree to expressly and irrevocably waive their
Preferential Rights conferred by the bylaws of CRTT or the Law on Limited
Liability Companies which may apply to them with regard to the shares
covered by the Call Option granted in favor of TELEFONICA INTERACTIVA.
After TELEFONICA INTERACTIVA, S.A. notifies the Sellers of its intent to
exercise the Call Option, the Sellers agree to execute all agreements,
resolutions or documents necessary so that TELEFONICA INTERACTIVA, S.A.
may acquire the shares under the Call Option immediately.
7. Right of the current shareholders of the TEKNOLAND Group to demand that
TELEFONICA INTERACTIVA, S.A. purchase their holdings.
The current shareholders of the TEKNOLAND Group are entitled at any time to
demand TELEFONICA INTERACTIVA, S.A. to purchase all or part of their holdings in
CORPORACION REAL TIME TEAM S.L., and TELEFONICA INTERACTIVA, S.A. shall then be
bound to purchase such shares, according to the following terms:
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<PAGE> 23
7.1. The minimum percentage of shares that TELEFONICA INTERACTIVA, S.A. may be
required to purchase initially shall be 26% of the capital stock, or a
lesser percentage that allows TELEFONICA INTERACTIVA, S.A. to acquire 51%
of the capital stock. The purchase of a minimum of 5% of the total capital
stock shall be required each time to subsequently exercise the call
option.
7.2. The purchase price of the shares shall be as provided in paragraph 6.3
above.
7.3. The form of payment of the shares shall be in cash.
8. Call Option in favor of the current shareholders of the TEKNOLAND Group of
the shares in CORPORACION REAL TIME TEAM S.L. purchased by TELEFONICA
INTERACTIVA, S.A.
The current shareholders of the TEKNOLAND Group, while they are the majority
shareholders of the TEKNOLAND Group, shall be entitled to a call option on all
and not part of the shares of CORPORACION REAL TIME TEAM, S.L. owned by
TELEFONICA INTERACTIVA, S.A. in the following situations and at the price and
under the terms and conditions indicated below:
8.1. CONDITIONS FOR EXERCISING THE CALL OPTION
8.1.1. The call option may be exercised within four months of any of the
following events: 1) A substantial change in the current management team
of TELEFONICA INTERACTIVA, S.A., substantial change being understood as a
change of the office of the chairman of the TELEFONICA Group; 2) The
elimination of TELEFONICA INTERACTIVA, S.A. as a business line of the
TELEFONICA Group; 3) A change of strategy of TELEFONICA S.A. which
implies the elimination or significant loss of importance of the business
related to providing Internet services in the set of activities of the
TELEFONICA Group with regard to the current situation; 4) Reorganization
of the TELEFONICA Group, as a result of which TELEFONICA INTERACTIVA,
S.A. reports to another business unit and not to the Office of the
Chairman of the Group as it currently does, entailing a change in
strategy with regard to the business of the TEKNOLAND Group; 5) A change
of the corporate purpose of TELEFONICA INTERACTIVA, S.A., with the
elimination or significant loss of its current activity; 6) a take-over
of the TELEFONICA Group by another operator; and 7) 40 months from
becoming a shareholder, if TELEFONICA INTERACTIVA, S.A. has not exercised
the call option granted to it as provided in Article FOUR above, and if
it, or the company into which the holdings in the TEKNOLAND Group were
integrated, has not been the object of an IPO. It shall not be necessary
for the 40 month term to have elapsed if TELEFONICA INTERACTIVA, S.A.
adopts the firm and irrevocable agreement to not launch an IPO of its own
stock or stock
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<PAGE> 24
of a company in which the TEKNOLAND Group was integrated.
8.2. PURCHASE PRICE OF SHARES
The purchase price of the shares, in the event the call option is
exercised, shall be the price resulting from application of the provisions
in Article 6.3 herein, except if the option is exercised under the
circumstances provided in paragraph 1) of Article 8.1.1, in which case the
purchase price shall be increased by 50%. In this case, the shares
acquired may not be transferred to a third party for a term of 18 months
from the date of purchase without the express consent of TELEFONICA
INTERACTIVA, S.A. In the event of sale without said consent, TELEFONICA
INTERACTIVA, S.A. shall be entitled to withdraw.
8.3. FORM OF PAYMENT
The form of payment shall be in cash.
9. Cooperation of TELEFONICA INTERACTIVA, S.A. in the future development of
the TEKNOLAND Group.
It is the full intent of the shareholders that significant synergies shall exist
between the TEKNOLAND Group and the TELEFONICA Group in general, and TELEFONICA
INTERACTIVA, S.A. in particular.
TELEFONICA INTERACTIVA, S.A. shall make this potential available to the
TEKNOLAND Group in order to maximize the development of the Company to the
greatest extent possible. Furthermore, the TELEFONICA Group agrees to contribute
the resources necessary for development of the TEKNOLAND Group by means of
capital increases resolved by the shareholders, transactions which shall result
in the corresponding dilution of the holdings of the current shareholders if
they do not accept the capital increase.
10. Commitments of the Shareholders of CIERV NUEVA
10.1 The Sellers, who are shareholders of CIERV NUEVA and managers of the
TEKNOLAND Group, agree to continue to manage the TEKNOLAND Group as long
as they are majority shareholders of the Group.
10.2. Likewise, from the time at which they are no longer majority shareholders
of the Group, as a result of any of the call options stipulated herein
being exercised, they agree to cooperate to find a new management team, to
be approved by TELEFONICA INTERACTIVA, S.A., and to continue to manage
until said team has been accepted, up to a maximum of eighteen months. The
obligation contained in this second paragraph shall become invalid if any
of the events described in paragraph 8.1 herein occur.
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<PAGE> 25
10.3. Throughout the time that CIERV NUEVA or its current shareholders own
shares of the TEKNOLAND Group, or for three years after such time as they
no longer own shares, the shareholders shall not compete with the
TEKNOLAND Group by directly or indirectly engaging in activities which
compete with the activities pursued by the TEKNOLAND Group.
For purposes of the previous paragraph, the parties expressly state that
the price established in Article 2 of this Agreement includes, for all
purposes, indemnification to the Sellers for their non-compete commitment
established in the previous paragraph.
10.4. Finally, while 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 CIERV NUEVA to third parties outside of
the company; third parties do not include their family members up to the
third degree of kinship.
10.5. Failure to perform the commitments assumed under this Agreement:
Independently from the indemnification for damages that TELEFONICA
INTERACTIVA, S.A. may claim from the Sellers for nonperformance of any of
the commitments assumed under this Agreement, the parties expressly agree
that in the circumstances indicated in paragraphs 10.2 and 10.3 above,
TELEFONICA INTERACTIVA shall be entitled to receive from the Sellers, as a
penalty, 50% of the amount that the Sellers received from TELEFONICA
INTERACTIVA as a result of this stock sale, plus, if applicable, any
amounts of future sales of shares of CRTT to TELEFONICA INTERACTIVA, S.A.
as a result of exercising the call options provided in this Sale
Agreement.
11. Taxes and expenses
All taxes derived from this agreement shall be paid by the parties according to
law. The charges incurred as a result of formalizing this agreement shall be
shared equally, provided that there is no provision to the contrary in any of
the articles of this Agreement.
12. Request for notification
TELEFONICA INTERACTIVA, S.A. has requested me, an Authorized Exchange Broker, to
notify the Secretary of the Board of Directors of CIERV, at its registered
office, of the stock transfer, when it occurs, for each of the transactions
under this Purchase agreement, for purposes of recording such transfer in the
Shareholder Register.
13. Confidentiality
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<PAGE> 26
The parties agree that they shall keep the terms of this Purchase agreement
confidential and shall not reveal them to third parties except when so requested
by competent authorities or by written agreement to the contrary by the Sellers
and TELEFONICA INTERACTIVA.
14. Jurisdiction
14.1. TELEFONICA INTERACTIVA and the Sellers agree to settle any dispute which
may arise out of this Purchase agreement (including the appendices hereto)
through a mediator. The mediator shall be (unless otherwise agreed by the
parties) appointed by the Dean of the Board of Notaries of Madrid, which
shall establish the procedure for mediation. The mediator shall act
pursuant to paragraph two, article three, of Arbitration Law No. 33 dated
December 5, 1988. If mediation fails, any dispute arising out of this
Purchase agreement (including the appendices hereto) shall be settled by
means of de jure arbitration, as established in the Rules of procedure and
Charter of the "Civil and Commercial Court of Arbitration" (CIMA) in
effect at the time that the dispute is submitted to arbitration, by three
arbitrators, one of whom is selected by the Sellers, one by TELEFONICA
INTERACTIVA, and the third by the President Judge of the Civil and
Commercial Court of Arbitration (CIMA). The parties agree to be bound by
the decisions of the Arbitral Tribunal. The venue of arbitration shall be
Madrid, and the language of the proceedings shall be Spanish, but either
party may submit oral or written claims or documents in another language,
with a proper translation.
15. Other agreements
15.1. Amendment
Amendments to this Stock Purchase Agreement (including the appendices hereto)
shall be valid only if written and signed by an authorized representative of the
parties.
15.2. Independence
If any of the clauses contained in this Stock Purchase Agreement (including the
appendices hereto) become invalid, annulled or unenforceable for any reason, the
remaining clauses shall remain in effect and the Purchase Agreement shall be
completed, to the extent possible, according to the intent of the parties and
the spirit of the Agreement.
15.3. Notifications
All notifications and correspondence that must be exchanged between the parties
for purposes of this Stock Purchase Agreement (including the appendices hereto)
shall be sent in writing, by fax,
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<PAGE> 27
and confirmed by registered mail with acknowledgement of receipt, to all of the
following addresses:
o For TELEFONICA INTERACTIVA
a) TELEFONICA INTERACTIVA, S.A.
Att: Juan Perea Saez de Buruaga
C/ Gran Via 28
28013 MADRID, Spain
Phone: 91-
Fax: 91-
and
b) RAMON Y CAJAL, ALBELLA & PALA
Velazquez 20, 1st Left
28001 MADRID, Spain
Phone: 91-576-1900
Fax: 91-575-8678
Att: Pedro Ramon y Cajal y Agueras
o For the Sellers
a) Luis Cifuentes Muntadas
Plaza de Canalejas, 3
28014 MADRID, Spain
Phone: 91-3694480
Fax: 91-3693601
and
b) ARIMANY-MANUBENS
C/Diagonal, 652, Esc. A, 8th Floor
08034 BARCELONA, Spain
Phone: 93-2801144
Fax: 93-2802596
Att: Pablo Usandizaga
The parties may change their address, subject to notification to the other party
in writing, by fax, and with the subsequent confirmation by registered mail,
with acknowledgement of receipt, to the addresses indicated above.
15.4. Law 24/1988
Purchases made under this Agreement are not under the provisions of Article
108.2, paragraphs 1 and 2, of Law 24 dated July 28, 1988 on the Stock Exchange.
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<PAGE> 28
15.5. Article 96.3 of the Commercial Code
Purchases and sales executed under this Agreement are not under the provisions
of Article 96.3 of the Commercial Code.
15.6. Appendices
The appendices to this Purchase Agreement shall form an integral part of this
Agreement for all purposes and shall be fully valid and binding on the parties,
which shall perform them as an integral part of this Agreement.
15.7. Assignment of all or part of the contract
The Sellers expressly agree that TELEFONICA INTERACTIVA may assign all or part
of its rights and obligations derived from this Purchase Agreement (including
the appendices hereto) and its rights and obligations derived from any agreement
between the parties as a result of this Purchase Agreement, to any company in
its group, pursuant to Article 4 of Spanish Law 24 dated July 28, 1988 on the
Stock Exchange, and Article 42 of the Spanish Commercial Code, provided that the
provisions established in Article 8.1.1 above are observed.
15.8. Non-dilution Clause
The Sellers agree to vote their shares in the General Shareholders Meeting
against the companies of the TEKNOLAND Group and agree that on behalf of the
governing bodies of these companies, they shall not pass any resolution that
assumes an alteration of the current situation of companies of the TEKNOLAND
Group (capital stock, bylaws, upper management, extraordinary and/or new
operations, etc.) except as expressly agreed in this Purchase Agreement, without
the prior written consent of TELEFONICA INTERACTIVA, including registration of
the capital increase indicated in section XII of this Agreement. The Sellers
effectively agree to not vote for any capital increase or issuance of securities
that may directly or indirectly lead to a capital stock increase of any of the
companies of the Group (convertible bonds, warrants, etc.).
15.9. The headings herein are only provided for convenience and shall not affect
the interpretation of this Agreement in any way whatsoever.
Unless the context requires otherwise, words in singular shall mean the same in
the plural and vice versa, and references to individuals shall also include
legal entities.
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<PAGE> 29
Pursuant to the foregoing, the parties sign this Purchase Agreement in
septuplicate, at the place and on the date indicated in the introduction.
The amendment "301 to 367" in point 1.5 is valid"
JUAN PEREA SAEZ DE BURUAGA LUIS CIFUENTE MUNTADAS
TELEFONICA INTERACTIVA, S.A. [signed]
[signed] RICARDO CONDE MUNTADAS-PRIM
[signed]
DAVID LOPEZ CANTOLLA
[signed]
ENRIQUE COLMAN LOPEZ CANTOLLA and BELEN ALONSO BRONCANO
[signed] [signed]
JESUS ANGEL SUAREZ GIL and LIDIA-CLARA RODRIGUEZ GARCIA
[signed] [signed]
I, the Authorized Exchange Broker intervening in this Agreement, certify that
each of the seven originals consist of 29 pages, written on only one side,
numbered and sealed by me pursuant to Ministerial Order dated May 28, 1998. I
certify that several appendices are attached to this Agreement, which total 262
pages, also written on only one side, numbered and sealed by me pursuant to
Ministerial Order dated May 28, 1998.
Jesus Roa Martinez
Authorized Exchange Broker
[seal and signature]
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<PAGE> 30
The following annexes to this agreement have not been included:
- Annex 1 - Organizational chart of the Teknoland Group at
7/28/99
- Annex 1.6(a) - Certification of sellers as to the validity of
the sale
- Exhibit 1(b) to Annex 5.1(a) - Articles of Incorporation and
By-laws of the Teknoland Group
- Exhibit 1(d) to Annex 5.1(a) - Agreements relating to the
dissolution, merger, spin-off, or exchange of shares or
interests, or relating to capital contributions (excluding
agreements relating to treasury stock)
- Exhibit 3(a) to Annex 5.1(a) - Financial statements of: (i)
CIERV at 2/28/99 and (ii) Real Time Team, S.L. at 12/31/98
- Exhibit 3(b) to Annex 5.1(a) - Liabilities of: (i) CIERV since
2/28/99 and (ii) Real Time Team, S.L. since 12/31/99
- Exhibit 3(j) to Annex 5.1(a) - Minimum capitalization
requirements of the Teknoland Group
- Exhibit 4(a) to Annex 5.1(a) - Overdue tax returns
- Exhibit 6(a) to Annex 5.1(a) - List of contracts pursuant to
which the Teknoland Group transfers intellectual property
rights or industrial "know-how" to third parties
Copies of the annexes not included herein will be provided upon request.
<PAGE> 31
ANNEX 5.1(a)
PURCHASE SPECIFICATIONS
<PAGE> 32
PURCHASE SPECIFICATIONS
TELEFONICA INTERACTIVA, S.A. agrees to enter into a Sales Contract (of which
these purchase specifications are Attachment 5.1.(a)), relying on the following
Purchase Specifications, on the basis of whose truth, accuracy, and
completeness the sales price has been determined. For said effects, ENRIQUE
COLMAN LOPEZ CANTOLLA, JESUS ANGEL SUAREZ GIL, RICARDI CONDE MUNTADAS-PRIM,
DAVID LOPEZ CANTOLLA, AND LUIS CIFUENTES MUNTADAS (hereinafter the "Sellers")
represent and warrant that the information contained in these Purchase
Specifications is true, accurate, and complete, and represents the actual
situation on the date of the signing of the Sales Contract.
The following Purchase Specifications are applicable, and refer to CENTRO DE
INVESTIGACION Y EXPERIMENTACION DE REALIDAD VIRTUAL, S.L., CORPORACION REAL
TIME TEAM, S.L., REAL TIME TEAM, S.L., RTT PROGRAMACION, S.L., TEKNOLAND E-BIZ,
S.L., TIENDA DE FONDOS, S.L., TEKNOLAND THINK-BIZ, S.L., and COMMM CORP
(referred to jointly hereinafter as the "Companies of the Group").
1. ORGANIZATION, LEGAL CAPACITY, AND BYLAWS
a) The Companies of the Group are duly established, duly organized companies
acting in accordance with the law of Spain, or, in the case of COMMM CORP,
U.S. law. All of them have sufficient legal capacity for ownership and the
pursuance of company objectives, in accordance with their respective
bylaws and any applicable laws or regulations.
b) The bylaws in effect for each of the Companies of the Group have been duly
recorded with the Commercial Registry and are included as Attachment (1b)
hereto. No amendments to the above-referenced bylaws are pending recording
with the Commercial Registry, except as set forth in Attachment (1b). The
attached bylaws include all rights and restrictions affecting the capital
stock of the Companies of the Group. No other agreement or pact exists
among the shareholders that could have an influence on the transfer of the
shares, the voting rights, or any other circumstance that could affect the
Companies of the Group.
c) The capital stock of each one of the Companies of the Group and the shares
or stake holdings into which it is divided is as set forth in the bylaws
included as Attachment (1b) hereto. No capital increase or decrease is
pending recording or processing. The Companies of the Group have not
issued shares or stake holdings or other securities or instruments that
grant rights or specific advantages to the founders, or bonds or other
types of securities or financial instruments convertible into shares or
stake holdings.
1
<PAGE> 33
d) The Companies of the Group have not made any resolution regarding their
dissolution, merger, spin-off, or swap of shares, stake holdings,
contributions of assets, or lines of activities, nor regarding the
acquisition of their own shares or stake holdings, other than as indicated
in Attachment (1d). None of the Companies of the Group possesses treasury
stock.
e) All of the company books of each one of the Companies of the Group are
complete and up-to-date, and comply with any laws or regulations
applicable to them.
2. SELLER'S LEGAL CAPACITY AND TITLE
a) The Sellers have full power of attorney and legal capacity to enter into
and comply with the terms hereof, and this contract, once signed, shall
constitute a valid, binding obligation for the Sellers in accordance with
its terms. The signing of this contract and compliance by the Sellers with
their obligations hereunder does not entail any noncompliance with
anything set forth in the bylaws of any of the Companies of the Group or
in any contract, agreement, order, or decision of any court,
administrative authority, or supervising entity to which the Sellers or
any of the Companies of the Group belong, or with which the Sellers or any
of the Companies of the Group are related.
b) The Sellers are the legal owners of the stake holdings referred to in the
sales contract of CIERV, S.L., and are fully entitled to sell and, if
applicable, transmit to TELEFONICA INTERACTIVA the ownership of said stake
holdings pursuant to the terms hereof, without need for consent or
approval from any third party. For its part, CORPORACION REAL TIME TEAM,
S.L. is the exclusive owner of 100% of the stake holdings in REAL TIME
TEAM, S.L. All of the Sellers' stake holdings in CIERV, S.L. and all of
CORPORACION REAL TIME TEAM, S.L.'s stake holdings in REAL TIME TEAM, S.L.
have been duly recorded in each of the shareholder registry books of the
respective companies.
c) There is no third party that has a right (enforceable now or in the
future, contingent or otherwise) to make a claim against the distribution,
issuance, sale, or transfer of any share or stake holdings, or of any
security convertible into shares or stake holdings in any of the Companies
of the Group under any option or other type of contract (including
conversion rights and preferential acquisition rights), and there are no
claims, charges, or liens upon the shares or stake holdings of any of the
Companies of the Group or restrictions that could affect their free
conveyance.
2
<PAGE> 34
3. FINANCIAL STATEMENTS
Attachment (3a) includes the annual reports, balance sheets, and profit and
loss statements of CIERV, S.L. as of February 28, 1999 and of REAL TIME TEAM as
of December 31, 1998, together with the auditing reports prepared by PRICE
WATERHOUSE. The General Shareholders' Meeting has duly approved the
above-referenced annual reports. Attachment (3a) also includes the balance
sheet and profit and loss statement of the Companies of the Group, closing as
of the last day of the month prior to the signing of the Sales Contract. The
balance sheets, profit and loss statements, and reports included in said
Attachment (3a) are complete, true, and accurate, have been prepared in
accordance with generally accepted accounting standards in Spain, applied
consistently and continually, if applicable, over the three preceding
accounting years, in compliance with law and with special regulations
(including but not limited to the circulars of the Banco de Espana, the
instructions and circulars of ICAC[*], etc.) that regulate accounting for
Internet service companies, and duly reflect the financial situation of the
Companies of the Group.
a) The Companies of the Group have not incurred in obligations or debts of
any type that are not duly reflected or provided for in the balance sheets
included in Attachment (3a). In particular, as of February 28, 1999 in the
case of CIERV, S.L., and December 31, 1998 for the rest of the Companies
of the Group, and unless expressly set forth to the contrary in Attachment
(3b), the Companies of the Group:
- - Have not transferred, encumbered, or made use of their shares in a book
value in excess of two million pesetas per transaction, or in excess of
five million pesetas total.
- - Have not entered any new assets into their books for an acquisition cost
in excess of two million pesetas per transaction, or in excess of five
million pesetas total.
- - Have not distributed or agreed to the distribution of final or interim
dividends, nor have they distributed reserves or other sums to their
shareholders or directors.
- - Have not modified or agreed to modify their equity, capital stock, or
reserves.
c) They have not engaged in any relevant transaction, understood to mean any
transaction that could be valuated at more than two million pesetas,
outside of their usual business. The Companies of the Group have not
issued or agreed to issue bonds or other types of securities issued in
series except as indicated in Attachment (3b).
d) There are no commitments pending with respect to capital disbursements
that are to be carried out by any of the Companies of the Group.
e) The Companies of the Group are not owners of their own shares or stake
holdings, nor have they granted their own shares or stake holdings as
security or provided financial assistance for the acquisition of their own
shares, nor are there cross holdings.
- ------------------------
*[Instituto de Contabilidad y Auditoria de Cuentas, the "Institute on
Accounting and Auditing"]
3
<PAGE> 35
f) The Companies of the Group have not granted securities of any type in
favor of third parties in an amount exceeding two million pesetas.
g) Adequate reserves have been set aside in accordance with generally
accepted accounting principles in Spain and in accordance with laws and
other regulations specifically applicable to companies providing Internet
services or related to the activities carried out by the Companies of the
Group, applied consistently throughout the previous fiscal years by the
Companies of the Group.
h) The Companies of the Group keep their commercial books up-to-date in
accordance with applicable legislation and in accordance with generally
accepted accounting principles in Spain and other laws or regulations
applicable to the activities carried out by the Companies of the Group,
applied consistently throughout the previous fiscal years.
i) The Companies of the Group have deposited their annual reports in due time
and form with the Commercial Registry and other authorities or supervising
entities, in due time and form.
j) The Companies of the Group duly comply with all requirements for capital
and equity set by any applicable laws or regulations except as indicated
in Attachment 3j).
4. TAXES
The Companies of the Group are up-to-date in the performance of all their tax
obligations. The Companies of the Group have filed all tax returns of any type
that are mandatory for them in due time and form, and have duly paid their
taxes, except as specifically mentioned in Attachment (4a). The Companies of
the Group have not unduly enjoyed any tax benefit.
The tax reserves entered on the balance sheets included as Attachment (3a) are
sufficient to cover taxes already accrued together with any corresponding
interest, charge, or penalty that could be applicable.
The Companies of the Group have not been subject to any tax audit. There is no
tax audit underway, nor has there been any notification whatsoever that such
audits are going to take place. Neither is any tax claim being made.
5. PRINCIPAL CONTRACTS
a) The Companies of the Group are not parties to any contract in effect that
goes beyond or that is an exception to their ordinary course of business,
or that is not included or referred to in one or more of the points of
these "PURCHASE SPECIFICATIONS." None of the Companies of the Group is a
party to any joint venture agreement or other similar joint forms of
operation or agreements with third parties.
4
<PAGE> 36
b) There are no contracts or agreements in existence between any of the
Companies of the Group and their directors or shareholders beyond the
usual course of business.
c) A change of control of any of the Companies of the Group does not grant
any right whatsoever to the counterparts to terminate such contracts as
are currently in effect.
6. INDUSTRIAL PROPERTY AND COPYRIGHTS
a) Other than as expressly indicated in Attachment (6a), the Companies of the
Group have not permanently or temporarily assigned any type of
intellectual or industrial property rights, know-how, or other knowledge.
b) Attachment (6b) sets forth the licensing contracts through which third
parties have granted intellectual or industrial property rights, know-how,
or other knowledge to one or more Companies of the Group. The Companies of
the Group are up-to-date in the payment of the royalties and other sums
payable under said contracts, and have not breached the terms of the
licensing contracts.
7. INSURANCE
a) The Companies of the Group have only subscribed Commercial Comprehensive
Policy No. 520575 with ATHENA SEGUROS, whose premium has been duly paid on
its respective due date. The Companies of the Group are not aware of any
intention on the part of the insurance company to cancel the
above-mentioned policy, to abnormally increase the premium, or to impose
any other additional and unusual conditions.
b) No payment of the indemnity has been challenged or is expected to be
challenged by the insurance company due to the fact that a risk covered by
the insurance policy mentioned in the preceding Subdivision (a) has
occurred.
c) No claims are pending resolution.
8. LABOR AND SERVICE LEASING AGREEMENTS
a) The Companies of the Group are up-to-date in the payment of their Social
Security obligations and remuneration of any type that is to be satisfied
on behalf of or to their employees.
b) The Companies of the Group are up-to-date in the performance of all of the
obligations arising from said contracts, and are not aware that their
contractual counterparts have failed to comply with or intend to rescind
the same. All the contracts follow standard terms for labor contracts and
do not recognize any specific benefits, seniority, or other rights apart
from or in excess of those directly based on the law or a collective
bargaining agreement.
5
<PAGE> 37
c) The Companies of the Group have not entered into labor contracts with
high-ranking managers or service leasing contracts.
d) The Companies of the Group have not assumed any commitment or obligation
(apart from or in excess of what could result from applicable law) related
to remuneration in metals or in kind in the event of a firing, demotion or
retirement with respect to their executive employees, directors, or
personnel contracted under service leasing agreements.
e) Except as indicated in Point 4.4 of the Sales Contract, there are no
options on shares, shares incentives, or other profit sharing agreements
or "bonuses" that have already been implemented or that are in the course
of being implemented with respect to the employees, executives, or
directors of the Companies of the Group.
f) The Companies of the Group do not have any pension plan or pension plan
arrangement in effect.
9. ADMINISTRATIVE LICENSES AND AUTHORIZATIONS, AND OTHER REGULATED MATTERS
a) The Companies of the Group (i) duly comply with all of the obligations and
requirements related to their activity, and (ii) have not carried out any
activity beyond the scope of their company objective, or any act or
operation prohibited by the law or other applicable provisions.
b) The Companies of the Group have not received any notification informing
them that the licenses in question are not in order or could be canceled
or revoked.
10. DISPUTES
a) The Companies of the Group are not parties to any court or arbitration
proceeding of any type, nor are they aware of any claim or circumstance
that could give rise to a dispute potentially affecting them.
b) The Companies of the Group are parties to two labor claims brought by
Angel Maria San Jose Moreno and Diego Martinez Blanco, and they do not
expect that any other labor claim could arise with the personnel of the
Companies of the Group.
c) No resolution adopted by an internal entity of the Companies of the Group
has been formally challenged.
6
<PAGE> 38
d) Neither the Shareholders of the Companies of the Group nor any third party
has exercised any liability action against the administrators of the
Companies of the Group.
11. MILLENNIUM
The Sellers represent and warrant that the Companies of the Group have adopted
and shall continue to adopt all measures necessary to ensure the proper
functioning of all of their systems (including hardware and software), such
that the Companies of the Group shall not be affected, nor shall they suffer
malfunctions or interruptions in the exercise of their activities on account of
what has been termed "Y2K."
12. CHANGES AND OTHER ADVERSE CIRCUMSTANCES
The Sellers represent and warrant that there has been no adverse change in the
course of the business of the Companies of the Group since December 31, 1998,
nor are they aware of any circumstance that could provoke such an adverse
change or that could affect or have a negative impact on the Companies of the
Group.
13. INFORMATION
a) All information provided by the directors, managers, and consultants of
the Companies of the Group is true and accurate in all its substantial
aspects.
b) There is no information known by the Companies of the Group or by the
Sellers that is not expressly mentioned in the preceding paragraphs and
that could negatively affect the content of these "PURCHASE
SPECIFICATIONS."
c) The "due diligence" process carried out by TELEFONICA INTERACTIVA or its
consultants and auditors does not in any way whatsoever limit the
liabilities of the Sellers under the Sales Contract.
7
<PAGE> 1
Exhibit 2.19
AGREEMENTS RELATED TO THE OLE CORPORATION
In Madrid, on March tenth, nineteen hundred ninety-nine,
A MEETING IS HELD
Between the party of the first part, Juan Perea Saenz de Buruaga, on behalf of
and representing TELEFONICA INTERACTIVA, S.A. (hereinafter "TI"), a company
domiciled in Madrid, C/ Gran Via 28, with Taxpayer I.D. # A-82/196080. For this
act, he makes use of the authority conferred on him by the corporation
represented through an instrument executed before the Madrid notary, Jose
Antonio Escartin Ipiens, on December fourteenth, 1998, officially registered as
number 5.399,
And the party of the second part, Jose Valles Rovira, with Taxpayer I.D. #
46.332.393-C, acting on behalf of and representing the Luxembourg-based company,
INFOSEARCH HOLDINGS, S.A. (hereinafter "INFOSEARCH"), domiciled in Luxembourg.
He is specifically authorized for this act based on the power of attorney
conferred for this purpose.
The parties to the meeting reciprocally acknowledge adequate authority for this
act in the representatives participating and
STATE
I.- That INFOSEARCH is the holder of all corporate shares that make up the
capital stock of the company ORDENAMIENTO DE LINKS ESPECIALIZADOS, S.L.
(hereinafter "OLE"), domiciled in Barcelona, C/ Provenza, 292.
II.- That TI and INFOSEARCH have reached different agreements with respect to
the acquisition of the company OLE by TI and the future development thereof.
III.- That in conformity with the foregoing, the parties
AGREE
One.- Purchase of OLE by TI
INFOSEARCH agrees to sell and TI agrees to buy all the shares into which the
capital stock of OLE is divided.
[partially illegible stamp, probably:]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
<PAGE> 2
The total price of the above-mentioned sale is two billion (2,000,000,000)
pesetas. With this act, TI delivers, through a transfer of the amount of two
hundred million (200,000,000) pesetas to the account designated by INFOSEARCH,
by way of payment on account with respect to the aforementioned sale. This
amount is deemed to be received with this act.
Legalization of the stock sale will take place within the period set in the
Seventh Agreement of this instrument, once it is reviewed and once the financial
condition and assets of OLE, as shown in the financial statements incorporated
into this agreement as Exhibit 1, are found to be satisfactory.
Two.- Increase of capital stock of OLE
Once the purchase of OLE's stock to which the foregoing agreement refers is
legalized, TI will take two steps to increase OLE's capital in accordance with
the following specifications. TI will take possession of and pay in all shares
created:
a) Increase in the amount of one billion (1,000,000,000) pesetas through a
cash contribution.
b) Increase in the amount of two billion (2,000,000,000) pesetas through a
non-cash contribution consisting of a contribution of assets related to
Portal activity on the Internet, which is currently under development by
TI The valuation of the assets to be contributed in this capital increase
is expressly accepted by the parties.
Three.- Sale of 8% of OLE
TI agrees to sell to the shareholders of INFOSEARCH, for itself or for a third
party, shares of OLE in an amount representing 8% of the company's new capital
stock, once the capital increase in OLE to which the prior point refers has been
effected.
The price of this sale is 400 million (400,000,000) pesetas.
Four. - OLE's Withdrawal from the Stock Market
The parties state their express wish to establish as an objective of their roles
as shareholders of OLE to bring OLE's withdrawal from the stock market to a
successful conclusion at the time when they may obtain the highest value. They
will make every effort to bring this to fruition before July in the year 2000.
Until that time, TI agrees not to carry out subsequent capital increases in OLE,
of which the purpose would be to dilute the shares purchased, as indicated in
the prior point.
[illegible stamp, probably:]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
<PAGE> 3
Five -- Management of OLE
Management of OLE will be carried out by the current management team,
integrating into the team individuals deemed suitable by TI and mutually agreed
upon by the parties.
Likewise, the parties will agree upon and evaluate by mutual agreement the
functions, services, tangible assets and human resources belonging to or
assigned to Telefonica Servicios y Contenidos por la Red (TSCR) for the purpose
of integrating those that are most suitable into OLE in the shortest time period
possible.
Six -- Partnership Agreement
A Partnership Agreement will be formalized stipulating future relations between
the partners and elaborating commitments acquired in this instrument. Thus the
Agreement will incorporate other aspects deemed appropriate by the parties,
which will govern the life of the company.
Seven -- Legalization Period
Each and every one of the agreements described in this instrument must be
elaborated and legalized within the next thirty days, since the parties wish to
carry it out as quickly as possible.
Eight -- Suspensive Condition
The effect of all agreements included in this instrument is subject to their
approval by the Board of Directors of Telefonica, S.A., and this must take place
during the current month, March. If this period has elapsed, and the approval
has not been effected, this instrument will be null and void, and INFOSEARCH
will be entitled to keep the amount delivered pursuant to the First Agreement.
In confirmation of their agreement to the foregoing terms, both parties execute
this agreement in two copies, in the place and on the date indicated in the
heading thereto.
[signature] [signature]
For TELEFONICA INTERACTIVA For INFOSEARCH
[handwritten note:] The handwritten change is valid.
[partially illegible stamp, probably:]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
<PAGE> 4
ASSETS
B) FIXED ASSETS
II. INTANGIBLE FIXED ASSETS
2. CONCESSIONS, PATENTS AND TRADEMARKS [illegible figures]
[?] COMPUTER APPLICATIONS
9. DEPRECIATION
TOTAL INTANGIBLE FIXED ASSETS
III. TANGIBLE FIXED ASSETS
2. TECHNICAL FACILITIES AND MACHINERY
3. OTHER INSTALLATIONS, FIXTURES AND EQUIPMENT
5. OTHER FIXED ASSETS
7. DEPRECIATION
TOTAL TANGIBLE FIXED ASSETS
IV.INVESTMENTS
5. LONG-TERM SECURITIES PORTFOLIO
7. LONG TERM DEPOSITS AND GUARANTEES
TOTAL INVESTMENTES
TOTAL FIXED ASSETS
D) CURRENT ASSETS
L17. ACCOUNTS RECEIVABLE
1. SALES AND SERVICE RECEIVABLES
4. MISCELLANEOUS RECEIVABLES
5. DUE FROM STAFF/PERSONAL
6. DUE FROM GOVERNMENT
TOTAL ACCOUNTS RECEIVABLE
VI.TREASURY
TOTAL CURRENT ASSETS
TOTAL ASSETS
[partially illegible stamp, probably:]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
<PAGE> 5
BALANCE SHEET
LIABILITIES
A) STOCKHOLDERS EQUITY
I. CAPITAL SUBSCRIBED
V. RETAINED EARNINGS
2. LOSSES FROM PREVIOUS YEARS
TOTAL RETAINED EARNINGS
INCOME (LOSS)
TOTAL STOCKHOLDERS EQUITY
D) LONG-TERM DEBT
IV.OTHER CREDITORS
[?] OTHER DEBT
TOTAL OTHER CREDITORS
TOTAL LONG-TERM DEBT
[?] SHORT-TERM CREDITORS
IV.TRADE CREDITORS
2. DEBT RELATED TO PURCHASES OF GOODS OR SERVICES
TOTAL TRADE CREDITORS
V. OTHER NON-TRADE DEBT
1. OWED TO GOVERNMENT
4. COMPENSATION PENDING PAYMENT
TOTAL OTHER NON-TRADE DEBT
TOTAL SHORT-TERM DEBT
TOTAL LIABILITIES
<PAGE> 6
EXPENSES
EXPENSES
2. SUPPLIES
A. GOODS USED
B. OTHER OUTSIDE EXPENSES
TOTAL SUPPLIES
3. EMPLOYEE COSTS
A. WAGES, SALARIES AND ACCRUED
B. SOCIAL SECURITY
TOTAL EMPLOYEE COSTS
4. PROVISIONS FOR DEPRECIATION OF FIXED ASSETS
6. OTHER OPERATING EXPENSES
A. OUTSOURCED SERVICES
B. TAXES
TOTAL OTHER OPERATING EXPENSES
1. OPERATING PROFITS
7. FINANCIAL EXPENSES AND ACCRUED EXPENSES
C. LOANS FROM THIRD-PARTIES AND ACCRUED EXPENSES
TOTAL OTHER FINANCIAL EXPENSES AND ACCRUED EXPENSES
II. INCOME
III. INCOME FROM ONGOING OPERATIONS
IV. EXTRAORDINARY INCOME
V. PRETAX INCOME
[?] INCOME TAX
VI. NET INCOME
<PAGE> 7
INCOME
B) REVENUES
I. NET OPERATING INCOME
A. SALES
B. PROVISION OF SERVICES
TOTAL NET OPERATING INCOME
1. OPERATING LOSSES
7. OTHER INTEREST AND ACCRUED INTEREST
C. OTHER INTEREST
TOTAL OTHER INTEREST AND ACCRUED INCOME
III. LOSSES FROM ONGOING OPERATIONS
12. EXTRAORDINARY INCOME
13. RETAINED EARNINGS
V. PRETAX LOSSES
VI. FISCAL YEAR INCOME (LOSS)
<PAGE> 1
Exhibit 2.20
[script:] 20 (Second)
In Madrid, on September 13, 1999
AGREEMENT BETWEEN,
AS ONE PARTY:
TELEFONICA INTERACTIVA, S.A. (hereinafter referred to as "T.I."), an
entity with registered office in Madrid at Calle Gran Via 28, with Taxpayer's
Identification No. A-82/196080, represented herein BY Mr. Juan Perea Saenz de
Buruaga, who, for the purposes hereof, is exercising the powers conferred to him
before Mr. Jose Antonio Escartin Ipiens, notary of Madrid, on December 14, 1998,
as number 5,399 in his official file;
AS ANOTHER PARTY:
INFOSEARCH HOLDINGS (hereinafter referred to as "INFOSEARCH"), an entity
with Luxembourg nationality and registered office in Luxembourg at Aldringen 23,
represented herein by Mr. Jose Valles Rovira, who, for the purposes hereof, is
exercising the powers conferred to him by the Board of Directors of the company;
AND, AS ANOTHER PARTY:
TELEFONICA, SA. (hereinafter referred to as "TELEFONICA"), an entity with
registered office in Madrid at Calle Gran Via 28, with Taxpayer's Identification
No. A-28/O15.865, represented herein by Mr. Jose Maria Mas Millet, who, for the
purposes hereof, is exercising the powers conferred to him before Mr. Agustin
Sanchez Jara, notary of Madrid, on July 16, 1997, as number 4,439 in his
official file.
The three parties in agreement, represented herein as set forth,
reciprocally acknowledge the legal capacity necessary for signing the present
document and bind themselves hereto and, for such purpose, they set forth the
following
PREMISES:
I. That, on April 15, 1999, T.I. acquired from INFOSEARCH the entirety of the
company shares representing the capital stock of the entity ORDENAMIENTO
DE LINKS ESPECIALIZADOS, S.L. (hereinafter referred to as "OLE"), by
virtue of which, at present, T.I. is the sole holder of the mentioned
shares in OLE.
II. That, on the same date of April 15, 1999, T.I. and INFOSEARCH also signed
an agreement by means of which they govern various aspects relating to the
progress of OLE, the composition of its management body, increases in
capital, the reacquisition of shares by INFOSEARCH, the listing of OLE on
the securities exchange, as well as other considerations. The mentioned
agreement of April 15, 1999 is incorporated as an exhibit hereto.
III. That, since that date of April 15, 1999, and up to today, TELEFONICA, the
sole shareholder of T.I., in view of the evolution of the markets, the
development of the businesses relating to the internet and other aspects,
has decided to channel its interests relating to the internet through T.I.
[3 sets of script initials]
<PAGE> 2
IV. That, as of today's date, the capital stock of T.I. is 389,999,170 Euros
represented by 194,995,585 shares with a par value of 2 Euros each, which
are common shares and are of the same class, with all of them owned by
TELEFONICA.
V. That TELEFONICA is interested in the placement of T.I. on the financial
markets, for which purpose it has decided to initiate a public placement
of the shares of T.I. by means of a public offering and intends that all
of this take place prior to this coming December 31, 1999.
VI. That, taking into consideration all of the above, the parties have reached
an agreement to replace the entirety of the content relating to
obligations adopted in the contract dated April 15, 1999 with that set
forth in the present contract, with the understanding that the rights and
obligations established therein are equivalent in economic and legal terms
to those initially agreed to in the mentioned contract.
VII. That, as a result of all of the above, the three entities in agreement
herein, by virtue of their respective interests, have agreed to establish
a new contractual framework to govern their relations and, for such
purposes, they
STIPULATE
One. TELEFONICA undertakes to enable INFOSEARCH to acquire shares
representing the capital stock of T.I. which represent, by means of
the increase in capital referred to in the following paragraph,
2.4649% of the new capital stock of T.I. (hereinafter referred to as
the Shares) at a total price, with the issue premium, if any,
included, of TWENTY-ONE MILLION FIVE HUNDRED AND FORTY THOUSAND UNITED
STATES DOLLARS (US $21,540,000), which shall be converted into Spanish
pesetas according to the official rate of exchange for the dollar on
the date of the signing of the present contract.
This acquisition is to be effected by means of the subscription of
4,928,000 common shares, fully paid-in and with all of the
organizational and economic rights which may pertain to them, by
INFOSEARCH in an increase in capital to take place at T.I. within a
period of time which shall not exceed 45 days from the date of the
signing of this agreement.
The amount of the capital increase referred to above shall be
delivered by means of a check or checks, not transferable by
endorsement, or a bank transfer or transfers for the total amount
within a period of five days from the adoption of the resolution to
increase the capital.
Two. On its part, INFOSEARCH undertakes to subscribe the shares of T.I.
referred to in Article One, and at the price indicated.
Three. The percentage of the shares, of the total capital stock of T.I.,
acquired by INFOSEARCH in accordance with Article One, is to be
reduced as a result of the capital increases established below, in
which INFOSEARCH shall not participate, to an equity holding of 1.76%
of the total capital stock which T.I. finally has by means of the
public placement of its shares, then represented by a total of
280,000,000 shares and thus with 4,928,000 shares pertaining to
INFOSEARCH.
2
[three sets of script initials]
<PAGE> 3
If the number of shares represented by the capital stock of T.I., once
the public offering is carried out, is different from the envisioned
280,000,000 shares, the parties shall proceed to carry out the
corresponding, proportional adjustment by the number of shares owned
by INFOSEARCH so that the equity holding of INFOSEARCH in the final
capital of T.I. shall be 1.76% thereof, and this without any cost
whatsoever to INFOSEARCH.
The capital increases which T.I. undertakes to carry out, effected in
relation to implementing a placement of T.I. on the securities
exchange, are the following:
- That pertaining to the options plan in favor of executives of T.I.,
provided for at 5% of the capital, after the increase.
- That pertaining to the public offering.
INFOSEARCH waives such preemptive right in the mentioned capital
increases as it may be conferred by virtue of its status as a
shareholder of T.I.
In addition, and in order to facilitate the adoption of the company
resolutions necessary or convenient for proceeding to formulate the
public offering of shares of T.I. and the mentioned capital increases,
INFOSEARCH, in its capacity as shareholder of T.I., undertakes to
attend the General Meetings Of Shareholders which may be held for such
purposes and to vote in favor of the proposals for resolution
submitted for consideration provided that it does not contravene that
established in this contract and does not prejudice its own interests.
In the event that the businesses of Chile, Peru and Mexico do not
proceed to be included, T.I. must pay to INFOSEARCH the amount of ONE
MILLION FIVE HUNDRED AND FORTY THOUSAND UNITED STATES DOLLARS (US
$1,540,000) pertaining to the advance made by INFOSEARCH for the
mentioned item.
Four. Upon carrying out the acquisition described in Article One and the
placement of T.I. on the financial markets, it shall be deemed that
the contract dated April 15, 1999 has been fully performed.
In the event that, upon reaching December 31, 1999, there has been no
placement of T.I. on the financial markets, both of the parties shall
have a term of two months, that is, up to March 1, 2000, in order to
demand that the other party transfer the shares acquired by INFOSEARCH
at the same price as that paid by the latter.
In the former eventuality, the contract dated April 15, 1999 shall
automatically resume full and total effectiveness with no need for any
additional act by the parties, with INFOSEARCH thereby again acquiring
the rights in its favor as recognized in the mentioned contract.
3
[three sets of script initials]
<PAGE> 4
Five. INFOSEARCH undertakes, with respect to TELEFONICA, once ownership of
the Shares is acquired, not to transfer all or part of the said Shares
to any person or entity without the prior, express consent of
TELEFONICA; this is until such time as one year has elapsed from the
placement of the shares of T.I. on the financial markets and with the
exception of that provided for in the second paragraph of Article
Seven, below.
Six. On its part, T.I. undertakes, with respect to INFOSEARCH, not to sell
all or part of the equity holdings which it owns in the company
ORDENAMIENTOS [sic] DE LINKS ESPECIALIZADOS, S.L. without the prior
authorization of INFOSEARCH; this is until such time as the placement
of the shares of T.I. on the financial markets takes place.
Seven. Finally, INFOSEARCH undertakes to assume all such obligations as, with
respect to the transfer of shares or the offering thereof, may be
established within the framework of the contracts for underwriting the
public offering of shares of T.I., all of this provided that, upon the
passage of a maximum period of one year since the placement of T.I. on
the financial markets, INFOSEARCH may freely sell the entirety of its
4,928,000 shares subject to no condition whatsoever.
Without prejudice to that set forth above, through the placement of
T.I., INFOSEARCH at all times shall have the power to be able to
transfer the number of shares necessary in order to be able to cover
the payment obligations, to the pertinent credit institutions,
deriving from the financing which the credit institutions may have
been able to grant to INFOSEARCH for the acquisition of the shares
and, as the case may be, for the purposes of that provided for in
Articles Nine and Twelve.
Eight. Initially INFOSEARCH shall not have a right to hold any office on the
board of directors of T.I., while, taking into account the value and
know-how contributed by the partners in INFOSEARCH, the entry of a
representative of INFOSEARCH onto the board of directors shall be
considered upon the first renewal or expansion of the said board of
directors.
Nine. Infosearch indemnifies and holds T.I. harmless against any possible
legal or financial contingency which may derive from the equity
holdings of OLE in ADQ ADVERTISING, S.L., with Infosearch assuming
such costs as may derive from a negotiated settlement in order to
reach a resolution of the present relations existing between OLE and
ADQ or between any of them and Europa Press as a result of the
agreements contained in the articles of incorporation of ADQ.
In order that the mentioned costs may be as low as possible the
parties shall agree to and shall establish, by mutual agreement, in
advance, the strategy and actions to be undertaken within OLE and ADQ
with respect to the agreements contained in the articles of
incorporation of ADQ.
Without prejudice to that indicated above INFOSEARCH reserves the
right to eliminate such contingency, reaching such accord of
cancellation with EUROPA PRESS, in particular, as it may deem most
appropriate for its interests. In
4
[three sets of script initials]
<PAGE> 5
such event T.I. shall endeavor to provide to INFOSEARCH the financing
necessary with the pledging of the shares referred to in Article One,
with a maturity of 60 days from the admission of the shares of T.I. to
listing on the securities exchanges.
Ten. The parties agree that the registered office of the company
ORDENAMIENTO DE LINKS ESPECIALIZADOS, S.L. shall be kept in Barcelona.
Eleven. Given that the only partners in INFOSEARCH are the natural or
artificial persons listed below, they may be subrogated to the
position of the company INFOSEARCH by the proportional part indicated,
in such case assuming all of the rights and obligations deriving from
this contract and therefore obtaining the status of partners in T.I.;
this is to be upon prior, written communication to the other
contracting parties.
Listing of persons and respective percentages:
Mr. Thierry Kern (1.5%)
Mr. Martin Velasco (19.7%)
FUNDACION INFANTIA (19.7%)
ODISEA HOLDING S.A. (or "PORTAL HOLDING S.A.") (companies in the
process of formation) (59.1%)
Twelve. INFOSEARCH undertakes to assume the cost of incorporating into T.I.
the clients of the present electronic mail service referred to as Ole
Mail.
The payment of the mentioned cost, which has been established at the
amount of US $180,000, is to be made by means of a loan for the
mentioned amount from T.I., which INFOSEARCH must repay within a term
of one year from the exit of T.I. to the financial markets.
Thirteen. A violation of the covenants contained in the present Agreement, as
well as a contravening of the acts or decisions adopted in the
performance of the covenants, shall constitute a serious breach of the
said Agreement and shall give rise to the pertinent compensation for
damages.
Fourteen. For the resolution of any dispute which may arise among the parties in
relation to the present contract and, in particular, as to its
interpretation, validity, execution, performance or termination, the
contracting parties submit themselves to the courts and tribunals of
the city of Madrid thus waiving their own venue, if any.
Fifteen. The present document shall be reduced to a public document upon the
request of any of the signatories set forth below made to the other
contracting parties.
Sixteen. The content and the progress of the activities deriving from this
Agreement shall be deemed to be within the strictest rules of
confidentiality by both parties. In the event that it may be so agreed
to among the parties, all publicity as to the content of this
agreement or as to its subsequent progress shall be jointly made by
both INFOSEARCH, T.I. and TELEFONICA.
5
<PAGE> 6
In witness of agreement on the content of the present agreement, and desiring to
bind themselves pursuant hereto, the participating parties, as respectively
represented, sign the present document in triplicate with the same force and
effect at the place and on the date mentioned above. s/
s/For TELEFONICA S.A. For TELEFONICA
INTERACTIVA For INFOSEARCH s/
6
<PAGE> 7
RECORD OF RATIFICATION OF CONTRACT FOR THE PURCHASE AND SALE OF SHARES
Before me, Mr. Jesus Roa Martinez, Securities and Currency Exchange Agent, in
public practice and service in the commercial region of MADRID, belonging to the
Association of Brokers and Trade of Madrid,
APPEARING
AS ONE PARTY: MR. JUAN PEREA SAENZ DE BURUAGA, in the name of and representing
TELEFONICA INTERACTIVA, S.A., an entity domiciled in Madrid at Calle Gran Via 28
and with Taxpayer's Identification No. A/82196080. For the purposes hereof he
is exercising the powers conferred to him by the principal company by means of
the recorded document made before Mr. Jose Antonio Escartin Ipiens, notary of
Madrid, on December 14, 1998, as number 5,399 in his official file;
AS THE OTHER PARTY: MR. JOSE VALLES ROVIRA, with Taxpayer's Identification No.
46.332.393-C, representing INFOSEARCH HOLDINGS, an entity with Luxembourg
nationality domiciled at 23 Rue Aldrigen - 1118 Luxembourg. He is participating
by virtue of a specific power of attorney for making this document, conferred by
the Board of Directors of the company in a meeting held on April 14, 1999, with
apostille at The Hague dated April 23, 1999 and numbered 7,566.
Both of the parties mutually acknowledge the legal capacity necessary, and for
such purpose they
AGREE
That, by means of the present document, the company agreement relating to the
company ORDENAMIENTO DE LINKS ESPECIALIZADOS, S.L., with Taxpayer's
Identification B/61195830, signed on April 15, 1999 by TELEFONICA INTERACTIVA
S.A. and INFOSEARCH HOLDINGS, S.A. be converted into a public document, along
with Exhibit No. 1 ("agreements relating to the company OLE") signed on March
10, 1999 by the same parties.
This legal act amounts to the simple intent on the part of the participants to
confirm the document at issue by ratification for the purposes of Article 1,259
of the Civil Code without assuming a novation or any modification whatsoever of
that agreed to therein and without affecting its period of effectiveness and the
terms of performance of the obligations contained therein, which shall continue
to be governed by that stipulated in the original contract, a photocopy of which
is attached as an exhibit.
And I, the Securities and Currency Exchange Agent, upon making the
appropriate legal admonitions, as well as those of a tax nature and as to that
provided for Point No. 17 of Article 14 of the Amended Law on the Tax on
Documented Legal Acts and Transfers of Assets, do sign and seal, in Madrid, on
May 10, 1999.
TELEFONICA INTERACTIVA S.A. INFOSEARCH HOLDINGS, S.A.
(By authority:) (By authority:)
s/ s/
[various sets of script initials]
With my participation:
The Securities and Currency Exchange Agent
s/
[partially legible rubber-stamped seal, with coat of arms of Spain, of Martinez,
Securities and Currency Exchange Agent, the Association of Commercial Brokers of
Madrid]
<PAGE> 8
In Madrid, on April 15 in the year nineteen hundred and ninety-nine.
AGREEMENT BETWEEN,
As one party, Mr. Juan Perea Saenz de Buruaga, in the name of and representing
TELEFONICA INTERACTIVA, S.A. (hereinafter referred to as "T.I."), an entity
domiciled in Madrid at Calle Gran Via 28, with Taxpayers Identification No.
A-82/196080. For the purposes hereof he is exercising the powers conferred to
him by the principal company by means of the recorded document made before Mr.
Jose Antonio Escartin Ipiens, notary of Madrid, on the fourteenth day of
December, 1998, as number 5,399 in his official file;
As the other party, Mr. Jose Valles Rovira, with National Taxpayer's
Identification No. 46.332.393-C, who is acting in the name of and representing
INFOSEARCH HOLDINGS (hereinafter referred to as INFOSEARCH), domiciled in
Luxembourg. He has been specially empowered for the purposes hereof by virtue of
the power of attorney conferred to such effect on March 10, 1999 in Geneva by
the directors of INFOSEARCH, by means of a document the signatures of which have
been legalized pursuant to notarial protocol.
The parties in agreement, represented herein as set forth, reciprocally
acknowledge sufficient powers for the purposes hereof and they set forth the
following
PREMISES:
I. That, on March 10, 1999, the two parties to the present agreement signed
an Agreement relating to the transfer from INFOSEARCH to T.I. of the
entirety of the company shares representing the capital stock of the
entity ORDENAMIENTO DE LINKS ESPECIALIZADOS, S.L. (hereinafter referred to
as "OLE"). As Exhibit No. 1 to this contract, the mentioned Agreement is
attached in order to avoid useless repetition.
II. That, on today's date, the two parties have signed a purchase and sale
contract by means of which INFOSEARCH sells to T.I., which so purchases,
the entirety of the equity interests mentioned in the previous premise.
III. That, in furtherance of the remaining stipulations contained in the
mentioned Agreement of March 10, 1999, the parties
[various sets of script initials]
[partially legible rubber-stamped seal, extrapolated,
with coat of arms of Spain:]
Jesus Roa Martinez, Association of Commercial
Brokers of Madrid
s/
<PAGE> 9
STIPULATE
One. T.I., in its capacity as owner of the entirety of the shares representing
the capital stock of the company OLE, undertakes to carry out, within a term of
one month commencing from the date of the signing of the present document, an
increase in the capital stock of the company OLE by the amount of ONE BILLION
(1,000,000,000) Spanish pesetas, which is to be fully subscribed and paid in by
T.I. by means of the pecuniary contribution of the said amount.
In addition, T.I. undertakes to carry out, within a term of six months
commencing from the date of the signing of the present document, a second
increase in the capital stock, which is to be fully subscribed and paid in by
T.I. by means of a non-pecuniary contribution of the value of 2.000 billion
Spanish pesetas in assets, both tangible and intangible, which are to add value
to the base business of the company OLE.
Two. INFOSEARCH (or a third party identified for such purpose by INFOSEARCH,
provided that the controlling shareholders thereof are the same as those of
INFOSEARCH) undertakes that, once the increases in capital stock referred to
above are carried out, it shall purchase and T.I. shall sell company equity
interests representing 8% of the capital stock of the company OLE for the price
of FOUR HUNDRED MILLION (400,000,000) Spanish pesetas.
In the event that the said acquisition by the third party indicated above is
carried out, the latter shall assume the entirety of the rights and obligations
which this document allocates to INFOSEARCH, and under the same conditions.
Three. Upon formalizing the transfer referred to in Article Two, above, and upon
payment of the price therefor in full, INFOSEARCH and T.I. undertake that their
relations as partners in the company OLE shall adhere to that established in the
following:
I. Geographical Scope
The company OLE shall extend its activity to the entirety of the territory
of Spain, to Portugal and to such geographical areas of the
Spanish-Portuguese market as may be of mutual interest.
For such purpose the Partners shall draft a business development plan for
the Spanish-Portuguese markets.
In addition, the business area thereof shall be able to be extended to
other geographical zones which may be of interest to the Partners.
[various sets of script initials]
[partially legible rubber-stamped seal, extrapolated,
with coat of arms of Spain:]
Jesus Roa Martinez, Association of Commercial
Brokers of Madrid
s/
2
<PAGE> 10
2. Application of Funds and Development Plan
The Partners undertake to make a development plan and do an analysis of
the resources necessary for the execution of such plan as soon as
possible.
3. Composition of the Board of Directors
Taking into account the value and know-how contributed by the INFOSEARCH
Partners to the development of the business of OLE, the designation of the
members of the Board of Directors of the Company shall not be carried out
by means of the system of proportional representation established in the
statutory law on companies in force. The Board of Directors shall be
initially comprised of six directors, and it shall pertain to T.I. to
designate four directors and to INFOSEARCH to designate two directors.
4. Ordinary Management and Registered Office of the Company
The Management of OLE shall continue to be performed by the present
executive team, adding to such team those persons which T.I., by mutual
agreement between the parties, may deem to be appropriate.
5. Placement of the Company on the Securities Exchange
5.1 The parties set forth their express intent to establish as the
fundamental objective of their activity as OLE partners that of
ensuring the listing of the shares of this company on the securities
exchange at such time as the best price can be attained therefor,
making their best efforts in order that this may be carried out
prior to July in the year 2000.
T.I. undertakes to request and obtain the listing of the shares of
the company on the securities exchange by means of the issuance of a
public offering for the sale of such holding in the equity of OLE as
may constitute the legal minimum therefor, with INFOSEARCH
undertaking to include in such public offering such equity
interest as may proportionally pertain to it by reason of
the percentage of the equity which it owns.
This placement shall be carried out no later than July 31, 2001,
unless the two parties agree on another date in writing.
[various sets of script initials]
[partially legible rubber-stamped seal, extrapolated,
with coat of arms of Spain:]
Jesus Roa Martinez, Association of Commercial
Brokers of Madrid
s/
3
<PAGE> 11
INFOSEARCH shall have the right to increase the equity interest
which it includes in the placement up to reaching 100% of its equity
interest. In such case T.I. shall be able to opt between reducing
the percentage of the holding which it includes in the placement to
the same extent and having the mentioned placement increase
accordingly.
This undertaking on the part of T.I. is upon the condition that the
securities market conditions are favorable for carrying out the
mentioned placement. In the event of a disagreement between the two
parties as to the market conditions, an investment bank of renown
prestige shall be designated by mutual agreement and it shall decide
as to the mentioned market conditions. The decision of such
investment bank shall be binding upon the two parties.
In the event that T.I. fails to comply with the commitment indicated
above, INFOSEARCH shall have the right to purchase up to 51% of the
capital of OLE with a valuation of such capital at 5.000 billion
Spanish pesetas, plus the investments made commencing from today's
date.
5.2 As the majority shareholder in OLE, T.I. undertakes that the
resources necessary for the normal progress of the activities of the
Company up to the initial placement of the equity of OLE on the
market shall derive from the Company itself or from outside
indebtedness, including with a guaranty from T.I.
In the event that, due to legal and/or strategic requirements, it
becomes necessary to carry out any restructuring of the capital of
the company which entails contributions of capital from the
partners, T.I. grants to INFOSEARCH, if INFOSEARCH does not fully
cover the contribution which may pertain to it by virtue of its
equity interest, an option right to purchase the percentage of OLE
shares necessary in order that the equity interest of INFOSEARCH may
reach 8% of the total capital of the company.
INFOSEARCH shall be able to exercise the purchase option granted
herein at any time. If INFOSEARCH exercises the purchase option,
whether in part or in full, T.I. undertakes to sell to it such
shares as may pertain to the option thus exercised. The price of
sale shall be the par value of the mentioned shares and the payment
of the price shall be made within a term of sixty days commencing
from the exercise of the mentioned option.
The purchase option shall expire in three years commencing from the
date of the initial admittance of the equity of OLE to listing.
[various sets of script initials]
[partially legible rubber-stamped seal, extrapolated,
with coat of arms of Spain:]
Jesus Roa Martinez, Association of Commercial
Brokers of Madrid
s/
4
<PAGE> 12
6. Admission of New Partners
The parties shall be able to consider the admission of new partners in OLE
if the projection of the development plans thereof will be strategically
strengthened by their presence. In those cases where this takes place the
admission of other partners must always be availed of the mutual agreement
of the present partners and, in any event, in adherence to the terms
established in Clause 7, below.
7. Preemptive Right Prior to the Placement on Securities Exchange
In the event that INFOSEARCH or a company controlled by the shareholders
thereof desires to transfer all or part of its equity interest in OLE to a
company not controlled by the transferor T.I. shall be acknowledged to
have a preemptive right on such equity interests in the OLE company as may
be the subject matter of the transfer.
The abovementioned preemptive right shall be exercised in accordance with
the following terms and conditions:
1. The right may be exercised by T.I. within 60 days subsequent to the
date when it has formal knowledge that the factual eventuality
originating it has taken place. For such purpose INFOSEARCH
expressly assumes the duty to formally inform T.I., as soon as
possible, as to its intent to transfer all or part of its equity
interests in the company OLE.
2. The right shall be exercised with respect to the entirety of such
equity interests as are intended to be transferred.
3. The price for the equity interests, in the event that this right is
exercised, shall be the same price as that which the third party is
prepared to pay.
This preemptive right is entirely reciprocal and also applies to
INFOSEARCH in the event that T.I. intends to transfer its equity
interest in the company OLE.
8. Exemption from the Preemptive Right
Such right of preemption as the charter/bylaws of the Company may
recognize, as the case may be, shall not apply when the transfer of the
entirety or part of the OLE equity interests is carried out by T.I. to any
company in the Telefonica Group. The purchasing company from the
Telefonica Group fully assumes all of the rights and obligations of the
present contract.
[various sets of script initials]
s/
5
<PAGE> 13
Such preemptive right as the charter/bylaws of the Company may recognize,
as the case may be, shall not apply when the transfer of the entirety or
part of the OLE equity interests is carried out by INFOSEARCH to any
company controlled by the controlling shareholders of INFOSEARCH. The
purchasing company related to INFOSEARCH fully assumes all of the rights
and obligations of the present contract.
9. Covenant not to Compete
INFOSEARCH and its directly or indirectly controlling shareholders
undertake and bind themselves not to directly or indirectly carry out
activities relating to the providing of the services which comprise the
company purpose of OLE and which constitute competition against it unless
the said company refrains from carrying out such activities itself.
With respect to its applicability, the mentioned covenant not to compete
is limited to the geographical scope where the company OLE may be carrying
out its activities at any given time.
A breach by INFOSEARCH or by its controlling shareholders of the present
covenant not to compete shall give rise to the entitlement, in favor of
T.I., to an option right to purchase such equity interests in the company
OLE as INFOSEARCH may own, which, in such case, it shall be required to
sell to T.I. if such purchase option is exercised by the latter. With
respect to the manner of exercise, the mentioned purchase option right
shall have terms identical to those set forth in Clause 5, above.
T.I. undertakes and binds itself not to directly or indirectly carry out
activities relating to providing services which comprise the company
purpose of OLE and which constitute competition against it unless the said
company refrains from carrying out such activities itself.
With respect to its applicability, the mentioned covenant not to compete
is limited to the geographical scope where the company OLE may be carrying
out its activities at any given time.
A breach by T.I. of the present covenant not to compete shall give rise to
the entitlement, in favor of INFOSEARCH, to an option right to purchase
such equity interests in the company OLE as T.I. may own, which, in such
case, it shall be required to sell to INFOSEARCH if such purchase option
is exercised by the latter. With respect to the manner of exercise, the
mentioned purchase option right shall have terms identical to those set
forth in Clause 5, above.
[various sets of script initials]
[partially legible rubber-stamped seal, extrapolated,
with coat of arms of Spain:]
Jesus Roa Martinez, Association of Commercial
Brokers of Madrid
s/
6
<PAGE> 14
Four. A breach of covenants contained in the present Agreement, as well as a
contravening of the acts or decisions adopted in their performance, shall
constitute a serious breach of the said Agreement and shall give rise to the
pertinent compensation for damages.
Five. Any dispute which may arise between the parties with respect to the
present Contract and, in particular, as to its interpretation, validity,
execution, performance or termination, shall be submitted to legal arbitration
governed by the Law on Arbitration of December 5, 1998, and the parties
undertake to adhere to and abide by such award as may be issued in accordance
with the following rules: The arbitration shall be held before the CIMA in
accordance with the arbitration procedure established in the rules thereof, to
which the parties expressly subject themselves, and the dispute shall be decided
by one arbitrator designated in accordance with the charter of the said
institution.
Six. The content and the progress of the activities deriving from this Agreement
shall be deemed to be within the strictest rules of confidentiality by both
parties. In the event that it may be so agreed to between the parties, all
publicity as to the content of this Agreement or as to its subsequent progress
shall be carried out jointly by both INFOSEARCH and T.I.
Seven. The present Agreement shall enter into force commencing with its signing
and it shall remain in force until the dissolution or liquidation of OLE, or
until the complete departure of INFOSEARCH from its equity.
Any modification, amendment or supplement thereto must be effected in writing
and must be signed by both of the parties.
In witness of agreement on the content of the present Agreement, and
desiring to bind themselves pursuant hereto, the participating parties, as
respectively represented, sign the present document in duplicate with the same
force and effect at the place and on the date mentioned above. s/
s/For TELEFONICA INTERACTIVA
For INFOSEARCH
[various sets of script initials]
[partially legible rubber-stamped seal, extrapolated,
with coat of arms of Spain:]
Jesus Roa Martinez, Association of Commercial
Brokers of Madrid
s/
7
<PAGE> 1
Exhibit 2.21
STOCK SALES CONTRACT
In Madrid, on April fifteenth, nineteen hundred ninety-nine
A MEETING IS HELD
Between the party of the first part, Juan Perea Saenz de Buruaga, on behalf of
and representing TELEFONICA INTERACTIVA, S.A. (hereinafter "TI"), a company
domiciled in Madrid, C/ Gran Via 28, with Taxpayer I.D. # A-82/196080. For this
act, he makes use of the authority conferred on him by the corporation
represented through an instrument executed before the Madrid notary, Jose
Antonio Escartin Ipiens, on December fourteenth, 1998, officially registered as
number 5.399,
And the party of the second part, Jose Valles Rovira, with Taxpayer I.D. #
46.332.393-C, acting on behalf of and representing the Luxembourg-based company,
INFOSEARCH HOLDINGS, S.A. (hereinafter "INFOSEARCH,"), domiciled in Luxembourg.
He is specifically authorized for this act based on the power of attorney
conferred for this purpose on March 10, 1999 in Geneva by the Directors of
INFOSEARCH through an instrument whose signatures were legally notarized.
The parties to the meeting reciprocally acknowledge adequate authority for this
act in the representatives participating and
STATE
I. That INFOSEARCH is the holder of all corporate shares that make up the
capital stock of the company ORDENAMIENTO DE LINKS ESPECIALIZADOS, S.L.
(hereinafter OLE), domiciled in Barcelona, C/ Provenza, 292, by virtue of
the sales agreement legalized before the Barcelona Notary Jose Manuel
Rodriguez-Escudero Sanchez on September 10, 1998, officially registered as
number 3.604.
II. That on March 10, 1999, the two parties meeting here signed an Agreement
with respect to the transfer to TI of all the shares representing the
capital stock of the corporation OLE, wholly owned by INFOSEARCH. The
aforementioned Agreement is attached to this agreement as Exhibit No. 1 in
order to avoid pointless repetition.
[stamp:]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
[initials written over stamp]
<PAGE> 2
III. That OLE has been developing a presence on the Internet served through its
own pages and through pages created, maintained and updated by various
consultants.
IV. That TI wishes to purchase and INFOSEARCH to sell all the shares of the
corporation into which OLE's capital stock is divided. In order to
finalize and carry out the respective purchase and sale of said shares,
the parties at this meeting, modifying what was agreed upon in the
aforementioned Agreement of March 10, 1999, as necessary, sign this sales
agreement to that end.
THEY STIPULATE
One.- In this act, INFOSEARCH sells and transfers to the buyer, TI, all the
shares of the corporation representing the company OLE, numbered 1 through 100,
par value five thousand pesetas per share, fully paid in.
Likewise, INFOSEARCH represents and warrants that said shares are
completely free of liens, restrictions and encumbrances, that they are not
subject to any right of acquisition in favor of any third party and that they
are not subject to any judicial or administrative attachment or to any other
limitation on the free transferability of the shares.
Two. The total price of the aforementioned purchase was set at TWO BILLION
(2,000,000,000) pesetas and will be paid in the following way:
TWO HUNDRED MILLION (200,000,000) pesetas, which TI will deliver to
INFOSEARCH through a bank transfer to the account designated by
INFOSEARCH, which INFOSEARCH will deem received at the time the
Agreement referred to in Statement II is signed.
ONE BILLION EIGHT HUNDRED MILLION (1,800,000,000) pesetas, which TI
will transfer to the account designated by INFOSEARCH at the time
when documental support is provided for the following items, to the
total satisfaction of TI:
a) Normalization of the contingencies stated in the process of
"due diligence" carried out with regard to industrial and
intellectual property rights.
[partially illegible stamp, probably:]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
[initials written over stamp]
2
<PAGE> 3
b) Legalization of the two loans granted by INFOSEARCH TO OLE for
amounts of 30,000,000.- pesetas and 150,000.- Swiss francs on
November 25, 1998 and March 18, 1999, respectively.
c) The original stock certificate of the transferred shares that
are the subject of this sales agreement.
The above-mentioned amount will be paid simultaneously with the
legalization of the sales agreement in a notarized instrument.
Three.- INFOSEARCH warrants to TI that the OLE company has not assumed any
commitment or payment obligation whatsoever as a result of holding capital stock
in the companies ADO ADVERTISING QUALITY, S.L., NET PARTNERSHIP, S.L. AND
PLATAFORMAS TEMATICAS INTERNET, S.L.
Likewise INFOSEARCH, as the sole shareholder of OLE, will make every
effort to resolve the commitments assumed by OLE as a partner in ADO ADVERTISING
QUALITY, S.L. with the other partner of said company, Europa Press Comunicacion,
S.A.
With respect to OLE's stake in the company NET PARTNERSHIP, S.L., the
seller [INFOSEARCH] will make every effort to verify this stake to the full
satisfaction of TI. If that is not possible, the seller promises to deliver to
OLE the full amount that the seller could obtain by divesting itself of this
stake. If the transfer is not carried out and therefore, Mr. Valles Rovira
resumes his role as shareholder of NET PARTNERSHIP, S.L., his role [in NET
PARTNERSHIP] will be exclusively a fiduciary role with respect to OLE.
In any event, INFOSEARCH promises and guarantees full indemnification to
TI with respect to any possible legal or financial contingency that could arise,
directly or indirectly, from OLE's holdings both in NET PARTNERSHIP, S.L. and in
ADO ADVERTISING QUALITY, S.L.
Four.- INFOSEARCH likewise warrants that it has not posted collateral of any
kind on the assets of OLE, especially in connection with loans extended to OLE
by INFOSEARCH as well as any other possible debt assumed by OLE in its relations
with INFOSEARCH.
Five. The above-mentioned Agreement signed between the parties on March 10,
1999, which is incorporated into this agreement as Exhibit 1, is an integral
part thereof and is
[illegible stamp, probably:]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
[initials written over stamp]
3
<PAGE> 4
confirmed by both parties in all its terms, except insofar as it is modified by
the clauses of this stock sales agreement.
Six. All expenses and taxes accrued because of this agreement will be paid by
the parties pursuant to the Law.
Seven. Both parties promise to maintain absolute confidentiality about the
content and details of this agreement.
Eight. The participating parties agree that all litigation, discrepancy, dispute
or claim resulting from the performance or interpretation of this agreement or
related to it, directly or indirectly, will be definitively resolved through
arbitration in the framework of the Arbitration Court [Corte de Arbitraje] of
the Madrid Chamber of Commerce and Industry [Camara de Comercio e Industria de
Madrid], which is charged with administrating arbitration and appointing
arbitrators pursuant to its regulations and bylaws.
Likewise, the parties expressly state their commitment to comply with the
arbitration decision handed down.
The arbitration will be equitable arbitration [arbitration ex aequo et
bono -- in which the arbitrator is not bound by legal principles, but decides
the case as seems fair to him].
In witness whereof, both parties sign this agreement in two copies, in the
place and on the date indicated.
For TELEFONICA INTERACTIVA For INFOSEARCH
[signature] [signature]
[illegible stamp, probably:] [signature]
OFFICIAL ASSOCIATION OF COMMERCIAL NOTARIES
JESUS ROA MARTINEZ -- Stockbroker
COMMERCIAL NOTARY
[logo]
[initials written over stamp]
<PAGE> 1
Exhibit 2.22
TELEFONICA TERRA NETWORKS
AGREEMENT FOR OPTION TO SUBSCRIBE SHARES
This Agreement for an Option to Subscribe Shares is entered into by and between:
(i) TELEFONICA DEL PERU, S.A.A., identified under no. 10001749 of the Unified
Taxpayers Registry (Registro Unico de Contribuyentes - RUC), with
corporate offices at Avenida Arequipa 1155, Santa Beatriz, in the province
and department of Lima, Peru; represented herein by Jose Ramon Vela
Martinez, in his capacity as General Manager, as authorized in a special
power of attorney bearing on this agreement, and identified with Alien
Identification Card No. N-87010; hereinafter referred to as "TELEFONICA."
(ii) TERRA NETWORKS, S.A., a corporation founded under the laws of Spain,
identified under Tax ID No. A-82/196060, with corporate offices at Via de
las 2 Castillas No. 33, Pozuelo de Alarcon (Madrid) 28224 Spain,
represented herein by Juan Perea Saenz de Buruaga in his capacity as
Chairman and Chief Executive, identified with National ID Card No.
14801736-W, who warrants that he has sufficient authority to enter into
this agreement; hereinafter referred to as "TERRA."
This Agreement for an Option to Subscribe Shares is entered into according to
the following terms and conditions:
ONE. - OPTION
By this instrument, TERRA grants TELEFONICA an option to subscribe in TERRA
shares in an amount equaling US$30,000,000.00 (thirty million and 00/100 United
States dollars). TELEFONICA shall have to exercise this option one day prior to
the time the documents are registered with the supervisory bodies for the Stock
Exchanges entailed in this transaction. TERRA shall have to give five (5) days
advance notice of this date.
In the event TELEFONICA fails to exercise the option by the deadline and
according to the agreed terms, it shall lose its right to do so.
To this end, the share price of the TERRA shares shall be the institutional
price set for the public offering of subscription stipulated above. To this end,
the "Institutional Price" shall be understood to refer to the price accepted by
TERRA as the share price for the shares issued by Terra that are offered to
institutional investors as part of the Initial Public Offering held in the Stock
Exchanges of Spain, NASDAQ and the stock exchanges of other countries.
<PAGE> 2
TWO. - TRANSFER OF TERRA SHARES
2.1 Restrictions on the Transfer. TELEFONICA hereby undertakes not to transfer
any of its TERRA Shares to any other person, for a period of one (1) year
following the date hereof.
2.2 Pre-Emptive Right. After the one-year period described above has elapsed,
any transfers made by TELEFONICA to third parties of its shares in TERRA
shall be subject to a pre-emptive right which shall apply as set forth
below:
If, at any time, TELEFONICA wishes to transfer its shares in TERRA, it
must submit an offer in writing (the "Offer") to sell all and no fewer
than all of its TERRA Shares (the "Shares Offered") to TERRA. The Offer
must mention the Shares Offered that it proposes to sell, the total number
of TERRA Shares held by TELEFONICA, the terms and conditions, including
the proposed selling price and any other significant fact relating to the
proposed sale. The Offer must also state that TERRA may acquire, in
accordance with the terms of this Agreement, all the Shares Offered for
the price and in accordance with the other terms and conditions of the
Offer, including any deferral of payment (if applicable).
2.2.1 Decision to Buy, Close. If TERRA chooses to buy the Shares Offered
for the price proposed by the Seller, it must give notice of this
fact in writing within ten (10) calendar days following the date on
which the Offer was received. Said notice, together with the Offer,
shall constitute a valid, legally binding and enforceable agreement
to sell and purchase the Shares Offered. This option shall be
subject to obtaining any regulatory approvals that may be needed and
to expiry of any waiting periods required under applicable law. The
parties agree to work together to make the presentations and obtain
the approvals needed for TERRA to be able to exercise its rights
under this Agreement. The sale of the Shares Offered to TERRA in
accordance with this Section must take place at 11:00 a.m., Peruvian
Time, at TELEFONICA'S offices or whatever other place is agreed by
the parties on the later of the following dates (i) the tenth day
following the date the notice sent by TERRA in which it chooses to
purchase the Shares Offered is received, or (ii) the [tenth (10)]
business day after all the regulatory approvals needed for said
transaction have been obtained and any applicable waiting period has
expired. The sale shall be completed when TELEFONICA hands over to
TERRA the certificates representing the Shares Offered which are to
be purchased, together with a transfer of shares, and when TERRA
hands over to TELEFONICA the selling price thereof in cash or in the
form of bank documents representing funds that are immediately
available.
2.2.2 Decision Not to Buy. In the event that TERRA were to accept only
part of the Offer, or if the acceptance period expires without any
statement being made that it intends to buy, the Offer shall be
deemed to have been turned down. Only in such an event may
TELEFONICA offer to sell the TERRA shares to third parties,
<PAGE> 3
subject to the maximum percentage restrictions set out in Section
One above, for a period of ten (10) days following the date on which
the notice of refusal of the Offer was received or was deemed to
have been received, subject to the limitation that the Shares
Offered must be sold for the price and under the same or more
onerous terms than in the Offer. Compliance with said terms must be
checked by the respective general manager of TERRA either when or
before the transfer takes place. If the potential third-party buyer
fails to make the purchase within the same period of time provided
for in the Offer to TERRA in accordance with paragraph (a) above, or
if TELEFONICA wishes to offer its shares in TERRA at a price or
under terms that are not as onerous as the price and terms of the
Offer, the Shares Offered may not be sold, assigned or transferred
unless they have first been offered to TERRA once again, in
accordance with the terms of this Section Two.
THREE. - TERM
This Agreement shall have a term of ten (10) years as from the date hereof. The
above notwithstanding, this Agreement may not be terminated as long as
TELEFONICA remains a shareholder of TERRA.
FINAL PROVISIONS
FOUR. - HEADINGS
The headings used in each Clause are for reference purposes only and shall not
be construed to have any effect on the content or scope of this Agreement.
FIVE. - WAIVERS
Any failure to exercise a right shall not entail a waiver thereof.
SIX. - APPLICABLE LAW
This Agreement shall be construed and governed in accordance with the current
law of the Kingdom of Spain.
SEVEN. - PARTIAL INVALIDITY
In the event that any stipulation or agreement herein is deemed to be invalid or
unenforceable by any arbitration award rendered under the terms of the
Agreement, or by any competent court, said decision shall not affect the
validity of any other provision of this Agreement, provided that they can be
separated.
<PAGE> 4
EIGHT. - EXPENSES
Each Party shall pay the expenses it has incurred for preparing, formalizing and
carrying out this Agreement.
NINE. - ADDRESS FOR NOTICES
Any notices sent to either of the Parties shall be deemed to have been validly
received by the other party if (i) it is delivered in person or sent by a
messenger, courier or similar service; or (ii) it is sent by fax with
acknowledgement of receipt, on the date of delivery, to the addresses given
below:
To TELEFONICA: Av. Arequipa 1155, piso 5
Santa Beatriz
Lima, Peru
Attn.: General Manager
To TERRA: Via de las 2 Castillas, No. 33
Pozuelo de Alarcon
(Madrid) 28224
Spain
Attn: Juan Perea Saenz de Buruaga
These addresses may be changed to new addresses in the city of Lima, giving 15
days' prior written notice to the other party.
TEN. - ARBITRATION AGREEMENT
Any disputes or disagreement between the Parties arising from the interpretation
or performance of this Agreement shall be submitted to an Arbitration Panel made
up of three members, whose decision shall be binding. Each party shall appoint
one arbitrator, and the third arbitrator shall be appointed by the first two
arbitrators so appointed. In the event that no agreement is reached on the
appointment of the third arbitrator, or if either of the parties fails to
appoint its arbitrator within the ten days after being called on to do so by the
other party, the appropriate appointment shall be made by the Lima Chamber of
Commerce.
The arbitration shall be by right and shall be governed by the rules of
procedure laid down by the Arbitration Center of the Lima Chamber of Commerce.
ELEVEN. - GENERAL PROVISIONS
This Agreement may be modified, regulated or terminated only upon the express,
written agreement of the Parties.
<PAGE> 5
TWELVE. - COPIES
Set out in Lima on October 20, 1999, on two identical copies, one copy each
remaining in the possession of each of the Contracting Parties.
[Illegible signature] [Illegible signature]
TELEFONICA DEL PERU, S.A.A. TERRA NETWORKS S.A.
<PAGE> 1
Exhibit 2.23
TELEFONICA TERRA NETWORKS
AGREEMENT FOR DIVESTITURE OF A LINE OF BUSINESS
This Agreement for Divestiture of a Line of Business is entered into by and
between:
(i) Telefonica Servicios Internet S.A.C., identified under no. 30753850 of the
Unified Taxpayers Registry (Registro Unico de Contribuyentes - RUC); with
corporate offices at Avenida Jorge Basadre 592, Office 504, Torre Azul,
Piso 4, San Isidro, Lima, Peru, and represented herein by Jesus Equiza,
under a specific power of attorney granted to this end, and identified
with Alien Identification Card No. 97536; hereinafter referred to as
"TSI."
(ii) Terra Networks Peru S.A., identified under no. 43280716 of the Unified
Taxpayers Registry (Registro Unico de Contribuyentes - RUC), with
corporate offices at in the city of Lima, Peru; represented herein by
Rainer Harry Spitzer Chang, in his capacity as General Manager, and
identified with Voter Registration Card No. 07866791, who states that he
has sufficient authority to enter into this agreement; hereinafter
referred to as "TNP."
This Agreement for Divestiture of a Line of Business is entered into according
to the following terms and conditions:
ONE. - BACKGROUND
1.1 TSI is a subsidiary of Telefonica del Peru S.A.A., founded as part of the
latter's strategy for providing value added services. For the purposes of
this agreement, the listed services shall hereinafter be referred to as
the "INTERNET SERVICES."
In conducting its commercial activities, TSI provides INTERNET SERVICES,
not including what is known as a "Portal," to two clearly defined market
segments: (i) the market consisting of corporate customers (including
companies using INTERNET SERVICES), and (ii) the market including
residential customers. TSI warrants that each line of business is
conducted independently, as demonstrated in the customer breakdown,
listing the customers that belong to each of these market segments.
1.2 Within the overall framework of the global strategies designed for the
various companies making up the Grupo Societario Telefonica, S.A.
(hereinafter, referred to as the "Telefonica Group"), including the
parties hereto, it was decided that it was in the interest of those
concerned to develop the residential user market on an integrated basis
<PAGE> 2
worldwide. For this reason, a decision was made to run the services to be
offered to this market through a specific worldwide corporate sub-group,
owed by the Telefonica Group, and to this end, TERRA NETWORKS was founded.
TERRA NETWORKS is responsible for developing market activities in the
various countries where the Telefonica Group operates, either directly or
through its affiliates or subsidiaries, for INTERNET SERVICES aimed at
residential users and small business markets, known as "small offices/home
offices" (hereinafter, "SOHOs"). The parties understand that the growth
strategy for these markets, as defined, will allow for economies of scale
in the provision of INTERNET SERVICES.
1.3 TNP is an affiliate of TERRA NETWORKS devoted to providing interactive
services over the Internet aimed at the residential user market
(hereinafter, the "TNP Business"). TNP does not offer its value added
activities in the corporate customer market segment.
1.4 For the purposes of this agreement, it shall be understood that the
residential user market consists of (i) individuals who at the time of
contracting for the INTERNET SERVICES, and for as long as they remain
users of such services, have no intention of using the services, nor do
they currently use them to carry out commercial activities relating to
providing goods or services of any type; and (ii) individuals,
telecommuters and self-employed professionals who have the intention to
use the INTERNET SERVICES from their homes for carrying out commercial
activities related to providing goods or services.
TWO. - REPRESENTATIONS AND WARRANTIES
2.1 In its execution of the overall strategy set by the companies making up
the Telefonica Group, TSI agrees to restrict its activities to providing
INTERNET SERVICES for corporate customers (for the purposes herein,
corporate customers shall include any individual or legal entity not
included in the definition given under paragraph 1.4). To this end, and in
accordance with the business strategy designed by TSI, it shall cease
developing or offering the INTERNET SERVICES to residential customers,
hereinafter the "Business."
2.2 In view of the shared interests of TSI and TNP, hereinafter, the
"Parties," they are entering into this Agreement for Divestiture of a Line
of Business under the terms and conditions set forth below.
2.3 TNP represents and warrants the following to TSI:
2.3.1 It is interested in expanding its customer portfolio, and relying
on the use of the assets to set up the Business.
2.3.2 It is authorized to enter into this agreement under its Bylaws and
under all applicable rules and regulations.
<PAGE> 3
2.3.3 There are no legislative, court-ordered, statutory or contractual
provisions, nor any unexecuted awards or provisions of any other
type barring it from entering into or performing the agreement.
2.3.4 Authorization of this agreement or fulfillment of the obligations
set forth herein:
a. Is not in violation of any laws currently in force, any
administrative regulations, judicial rulings, arbitration
awards or any other legal provisions applicable to TNP.
b. Does not imply a breach of any obligations undertaken by TNP.
2.3.5 It has the capacity to undertake all the obligations emerging as a
result of the execution of this agreement.
2.4 TSI represents and warrants the following:
2.4.1 It is authorized to enter into this agreement under its Bylaws and
under all applicable rules and regulations.
2.4.2 There are no legislative, court-ordered, statutory or contractual
provisions, nor any unexecuted awards or provisions of any other
type barring it from entering into or performing the agreement.
2.4.3 Authorization of this agreement or fulfillment of the obligations
set forth herein:
a. Is not in violation of any laws currently in force, any
administrative regulations, judicial rulings, arbitration
awards or any other legal or statutory provisions applicable
to TSI.
b. Does not imply a breach of any obligations undertaken by TSI.
2.4.4 It has the capacity to undertake all the obligations emerging as a
result of the execution of this agreement.
2.4.5 It owns the assets that will be placed at the disposal of TNP for
its use emerging from the execution of the related contracts, so
that TNP may begin to conduct its activities. Furthermore, there
are no liens, encumbrances or any judicial or non-judicial measures
attached to these assets.
2.4.6 It has title to the contractual relationships mentioned in Exhibit
2 of the agreement.
2.4.7 All the fixed assets it will make available for TNP's use are
located at its facilities.
2.4.8 All the fixed assets it will make available for TNP's use are in
good working condition, and have been properly kept and maintained,
and they were
<PAGE> 4
manufactured according the standards of quality applicable to the
normal conduct of the Business.
2.4.9 All the fixed assets it will make available for TNP's use have been
subjected to all actions needed to make them Y2K compliant.
2.4.10 It has title to all licenses, authorizations, registrations and
permits needed to conduct the Business.
2.4.11 It has received no notice of any expropriation of any of its
assets, and it has no knowledge of any pending expropriation
proceedings.
2.4.12 In general, it has been running the Business in accordance with the
laws prevailing in Peru, including any regulations applicable to
environmental protection.
2.4.13 It agrees not to conduct the Business, either directly or in
collaboration with any third parties. In particular, it shall
abstain from providing the Internet Services, any content,
publicity or electronic commerce over the Internet aimed at
residential users, in any shape or form.
2.4.14 None of the statements or representations made in this agreement
contain any information that is false or misleading, or that omits
mention of any material aspect, or that could lead to an inaccurate
impression about the Business. Without restricting the general
nature of the above statements, TSI has no knowledge of any event
that could materially affect the cost of operating the Business.
THREE. - PURPOSE OF THE AGREEMENT
3.1 By entering into this Agreement, TSI undertakes to make available to TNP
so that TNP may start carrying on its business activity, the Business Unit
consisting of the technological service platform required on signing the
relevant trade agreements. TSI shall also transfer 1) all the contractual
relationships it has with its customers as of the date this Agreement is
signed, and 2) the customer databases from the Information Supplier
Centers (CPIs or ISPs) with which it has entered into agreements for
assigning its contractual position, which are listed in Exhibit 1. The
telecommunications infrastructures needed for the Business Unit shall not
be included in the definition of the Business Unit, and shall in each case
be the object of a lease in the appropriate trade agreements entered into
with Telefonica del Peru, S.A.A.
3.2 The Parties agree that the assets of TSI used for or emerging as a result
of the Business that make up the technological service platform and that
are needed for TNP to be able to carry on its activities, including, but
not limited to, the platform required for the Housing and Hosting
services, shall be made available to TNP for the purposes hereof, on
signing the appropriate agreements, so that TNP may carry on the Business
in the future under the same conditions as had been the case for TSI.
During the first six (6) months of the term
<PAGE> 5
of this Agreement, TSI shall provide TNP with the housing and hosting
services over the technological service platform, it being understood that
the remuneration for these services during that six (6) month period has
been included in the consideration set in Clause Four hereof. The
telecommunications infrastructures needed to conduct the TNP Business fall
outside the scope of this paragraph and shall in each case be the object
of a lease through the appropriate trade agreements entered into with
Telefonica del Peru, S.A.A.
3.3 The parties agree that the term "contractual relationships," mentioned in
Clause 3.1 above, covers the portfolio of residential users.
3.4 The sales actions aimed at formalizing the contractual relationships
between TNP and each of TSI's current customers, as well as with the
customers referred to in Clause 3.1 (2) above shall be TNP's
responsibility.
3.5 The parties shall by mutual agreement draw up the procedures to be
followed for determining the number of residential users who are to be
served by TNP as of November 15, 1999.
In the event that as a result of applying these procedures, the above
number of residential users falls below 60,000 (sixty thousand) customers,
the parties agree that TSI must compensate TNP by providing the services
requested by TNP, which TSI shall provide, without TNP having to pay any
amount for said services until the amount of the compensation has been
attained.
To this end, the amount of the compensation shall be the result of
multiplying the difference between 60,000 and the potentially smaller
number of users as of November 15, 1999, by US$500 (five hundred 00/100
United States dollars), up to a limit of US$5,000,000 (five million 00/100
United States dollars).
The amount of the compensation so determined shall be offset against the
remuneration that would have to be paid for the services TSI provides TNP
under the terms of this Clause 3.5, paragraph two, bearing in mind the
rates in force for each of the services at the time any such services are
provided.
FOUR. - PRICE
4.1 The parties agree that the price for conveying the Business Unit shall be
US$5,000,000.00 (five million United States dollars). This does not
include the General Sales Tax (Impuesto General a las Ventas - IGV) or the
Municipal Promotion Tax (Impuesto de Promocion Municipal - IPM). Both
taxes shall be added to the price that must be paid by TNP.
4.2 The Parties likewise expressly provide that when determining the price
they have assessed the situation of the accounts receivable that are an
integral part of Exhibit 1. In
<PAGE> 6
this regard, TNP fully assumes the commercial risk relating to the
portfolio of residential users referred to in Clause 3.3, above.
4.3 TNP shall pay TSI the price in cash, in dollars, the currency of the
United States of America, under the applicable terms of Article 1237 of
the Civil Code.
FIVE. - FORMALIZING THE TRANSFER
5.1 The parties agree that TSI shall cooperate and collaborate at all times,
and make every effort to effectively and fully formalize the
aforementioned contractual relationships. When completing such work, TSI
undertakes not to deviate from the marketing strategies and sales policies
that are set at any time by TNP, as well as to follow its directives for
carrying on said marketing activities on TNP's behalf.
5.2 The parties agree that TNP, as a result of the transfer governed by this
Agreement, shall take over all the rights, obligations, responsibilities,
profits and losses arising from or relating to the aforementioned
customers.
SIX. - TRANSFER OF STAFF
6.1 As a result of the provisions of the above Clauses, the parties agree to
make every effort to ensure that TSI staff attached to the Business are
transferred and become part of TNP's work force as from the effective date
of the transfer.
6.2 For the purposes described in Clause 6.1, above, the parties shall
determine, by mutual agreement, the personnel involved in the activities
of the Business, and TNP shall make every effort to ensure that the
respective workers of TSI voluntarily agree to be transferred to TNP's
work force. If for any reason any TSI worker attached to the Business were
to fail to agree to be transferred to TNP's work force and this were to
force TSI to unilaterally terminate the employment agreement with said
worker, the cost of any severance that would have to be paid said worker
would be met by TNP. In any case, TSI shall make every effort to reduce
any labor-related contingencies that might arise and damage TNP's
interests stemming from the aforementioned staff transfers.
The Parties declare that responsibility for paying remuneration, wages,
commissions, bonuses, social and similar benefits that have accrued up to
the effective date of the transfer for the personnel who are transferred
with the Business, shall be paid by TSI. In the event that, under
applicable law, TNP were to be required to make any of these payments, TSI
shall immediately refund the relevant amount to TNP.
<PAGE> 7
SEVEN. - SURVIVAL AND RELIABILITY OF THE REPRESENTATIONS AND WARRANTIES
7.1 TSI shall be held liable with regard to TNP and shall indemnify and hold
TNP harmless from any loss, liability, cost, fine or expense of any kind
directly or indirectly emerging from:
7.1.1 Any failure to fulfill any representation, warranty or undertaking
made by TSI as set forth herein; and
7.1.2 Any breach or nonperformance of any agreement, undertaking or
obligation made by TSI as set forth herein.
7.2 TNP shall be held liable with regard to TSI and shall defend, indemnify
and hold TSI harmless from any loss, liability, cost, fine or expense of
any kind directly or indirectly arising from:
7.2.1 Any failure to fulfill any representation, warranty or undertaking
made by TNP as set forth or envisioned herein; and
7.2.2 Any breach or nonperformance of any agreement, undertaking or
obligation made by TNP as set forth herein.
7.3 The amount of the indemnity for any claim shall become payable when called
for and shall be determined after recovering any insurance, real tax
savings and recoveries from third parties.
EIGHT. - HEADINGS
The headings used in each Clause are for reference purposes only and shall not
be construed to have any effect on the content or scope of this Agreement.
NINE. - WAIVERS
Any failure to exercise a right shall not entail a waiver thereof.
TEN. - APPLICABLE LAW
This Agreement shall be construed and governed in accordance with the current
law of the Republic of Peru.
ELEVEN. - PARTIAL INVALIDITY
In the event that any stipulation or agreement herein is deemed to be invalid or
unenforceable by any arbitration award rendered under the terms of the
Agreement, or by any competent court, said
<PAGE> 8
decision shall not affect the validity of any other provision of this Agreement,
provided that they can be separated.
TWELVE. - EXPENSES
Each Party shall pay the expenses it has incurred for preparing, formalizing and
carrying out this Agreement, including the respective notary's expenses.
THIRTEEN. - ADDRESS FOR NOTICES
Any notices sent to either of the Parties shall be deemed to have been validly
received by the other party if (i) it is delivered in person or sent by a
messenger or similar service; or (ii) it is sent by fax with acknowledgement of
receipt, on the date of delivery, to the addresses given below:
To TSI: Av. Arequipa 1155, piso 5
Santa Beatriz
Lima, Peru
Attn.: General Manager
To TNP: Av.______________________
_________________________
Lima, Peru
Attn.____________________
These addresses may be changed to new addresses in the city of Lima, giving 15
days' prior written notice to the other party.
FOURTEEN. - ARBITRATION AGREEMENT
Any disputes or disagreement between the Parties arising from the interpretation
or performance of this Agreement shall be submitted to an Arbitration Panel made
up of three members, whose decision shall be binding. Each party shall appoint
one arbitrator, and the third arbitrator shall be appointed by the two
arbitrators so appointed. In the event that no agreement is reached on the
appointment of the third arbitrator, or if either of the parties fails to
appoint its arbitrator within the ten days after being called on to do so by the
other party, the appropriate appointment shall be made by the Lima Chamber of
Commerce.
The arbitration shall be by right and shall be governed by the rules of
procedure laid down by the Arbitration Center of the Lima Chamber of Commerce.
FIFTEEN. - GENERAL PROVISIONS
This Agreement may be modified, regulated or terminated only upon the express,
written agreement of the Parties.
<PAGE> 9
FIFTEEN. - GENERAL PROVISIONS
This Agreement may be modified, regulated or terminated only upon the express,
written agreement of the Parties.
SIXTEEN. - COPIES
Set out on two identical copies, one for TSI and the other for TNP, in Lima on
October 20, 1999.
[Illegible signature] [Illegible signature]
TELEFONICA SERVICIOS INTERNET, S.A.C. TERRA NETWORKS PERU, S.A.C.
<PAGE> 10
[illegible logo] TERRA NETWORKS
ATTACHMENT 1
TO THE AGREEMENT FOR CONVEYANCE OF LINE OF BUSINESS
Internet Service Provider Centers (ISP's) with which TSI has signed
Agreements for the Assignment of Contractual Position as of October 20, 1999
- BLOCKBUSTER
- LA RED
- COSAPI
- ITETE
- AMERINET
[initials]
<PAGE> 1
Exhibit 3.1
[stamp:] 14 12 98 00 4087
COPY
OF THE
ARTICLES OF INCORPORATION OF A SINGLE-SHAREHOLDER CORPORATION
named:
"TELEFONICA COMUNICACIONES INTERACTIVAS, S.A."
[2 sets of script initials/signatures]
[emblem]
[partially legible rubber stamp dated December 11, 1998]
JOSE A. ESCARTIN IPIENS
NOTARY
[script:] 11 16 17 98
Office:
Goya, 61 - 2 Piso [floor] 91 575 58 47
[obscured address and telephone numbers]
[stamp:] Commercial Register of Madrid, Entry No. 1,196, Logbook
836 -1196, Time 10:46 a.m., Date 12/14/98, Submittal 12/4087
27.04.12.1998
<PAGE> 2
2Q1539283
[official, stamped paper, with tax stamp with coat of arms of Spain]
[rubber stamp:] Jose A. Escartin Ipiens, Notary
[illegible telephone numbers and Madrid address]
NUMBER: FIVE THOUSAND TWO HUNDRED AND SEVENTY-SIX
In Madrid, on the fourth day of December in the year nineteen hundred and
ninety-eight,
Before me, JOSE ANTONIO ESCARTIN IPIENS, notary belonging to the
Association of Notaries of Madrid and residing in the said capital city,
THERE APPEARS:
MR. JOSE MARIA MAS MILLET, of legal age, married, of Spanish nationality,
a resident of Madrid, with professional domicile at Gran Via, No. 28,
With National Identity Document No. 22.619.261-A.
HE IS APPEARING:
In the name of and representing "TELEFONICA, S.A.", domiciled in Madrid at
Gran Via 28, with Taxpayer's Identification No. A/28/015865, incorporated for an
unlimited time under the name of "Compania Telefonica Nacional de Espana S.A."
in a recorded document made before the former notary of Madrid, Mr. Alejandro
Rosello Pastor, on April 19, 1924, and which had its charter/bylaws modified by
other, subsequent recorded documents,
<PAGE> 3
changing its name to "Telefonica de Espana S.A." in the recorded document made
before Mr. Juan Manuel de la Puente Menendez, notary of Madrid, as Entry No.
1,415 in his official file, Registration No. 845, adapting its charter/bylaws to
the new General Law of Corporations in the recorded document made before Mr.
Miguel Mestanza Fragero, notary of Madrid, on July 10, 1990, as Entry No. 2,941
in his official file, and, finally, again changing its name to the present name
"TELEFONICA, S.A." in the recorded document authorized by Mr. Agustin Sanchez
Jara, notary of this capital city, on April 15 in the present year, as entry No.
2,720 in my official file, generating Registration No. 1,359 on the corporation
sheet in the Commercial Register.
The Corporation is REGISTERED in the Commercial Register of Madrid at
Corporations Volume No. 308, Folio Page No. 1, Sheet No. M-6164, Registration
No. 946.
He is acting by virtue of a power of attorney - in force according to his
affirmation - in his favor conferred in a recorded document authorized by Mr.
Agustin Sanchez Jara, notary of this capital city, on May 27, 1998, as Entry No.
3,869 in order of sequence in his official file. I have before me an authorized
copy of the said recorded document, and from it I transcribe
<PAGE> 4
2Q1539282
[official, stamped paper, with tax stamp with coat of arms of Spain]
the following particulars, below:
"IT IS GRANTED
"That he may put into the form of a notarial documents the resolutions
adopted by the Board of Directors of TELEFONICA, S.A. in its meeting held on
April 29 of the present year as set forth in the certificate referred to above
and incorporated into this set of documents, and, therefore,
"A power of attorney is severally granted to (omitted) and MR. JOSE MARIA
MAS MILLET, .....(blank)...... and the Secretary, respectively, of the Board of
Directors of TELEFONICA, S.A. in order that, representing said corporation, they
may exercise the powers which are set forth in the certificate referred to above
and incorporated into this original document, which, having been read by the
appearing party himself, are deemed to be reproduced herein for all purposes as
if fully set forth, (omitted).
"ATTACHED DOCUMENT:
"I, JOSE MARIA MAS MILLET, GENERAL SECRETARY AND SECRETARY OF THE
<PAGE> 5
BOARD OF DIRECTORS OF "TELEFONICA, S.A.",
"I HEREBY CERTIFY:
"That the Board of Directors of TELEFONICA, S.A. (formerly named
"Telefonica de Espana, S.A. ["]), in the meeting duly held upon prior notice of
meeting therefor in Madrid on April 29, 1998 under the chairmanship of Mr. Juan
Villalonga Navarro, Chairman of the Board of Directors, with the personal
attendance of the entirety of the members which comprise it, acting as signatory
Secretary, did unanimously adopt, among others, the following resolution:
"To severally empower, in the most ample and effective possible manner
under the law, ....(BLANK).... Mr. Jose Maria Mas Millet, (blank) and the
Secretary, respectively, of the Board of Directors in order that any of them,
without distinction, in the name of and representing "Telefonica, S.A."
(formerly named "Telefonica de Espana, S.A."), may appear in order to found and
form business corporations in the form of Single-Shareholder Corporations or
with multiple proprietors (with any other partners), whether they be stock
corporations, limited corporations, or limited partnerships with shares, with
such covenants and conditions as he may deem
<PAGE> 6
2Q1539281
[official, stamped paper, with tax stamp with coat of arms of Spain]
to be appropriate, and therefore he may subscribe corporation stock or shares
and to pay in for the subscribed capital in full or in part, even with
non-pecuniary contributions, accepting such stock or shares as may be given in
payment, and to establish, in agreement with the other partners, if any, the
essential characteristics of each corporation, its name, domicile, purpose,
capital, form of management and other circumstances thereof, as well as to
accept and approve the charter/bylaws thereof, and he may participate in the
designation of corporation offices, representing the principal Corporation in
the General Meeting of Shareholders or, as the case may be, the Meeting of
Partners, held upon the occasion of the formation of such corporations,
including the ability to designate for such offices any of the two
attorneys-in-fact, as well as, finally, in order to make the recorded document
of foundation for each and all of the corporations referred to, as well as to
carry out and execute such acts as should be effected
<PAGE> 7
for the satisfactory formation and registration thereof in the Commercial
Register, being able to sign for such purposes any such private or public
documents as may be necessary, including recorded documents or curative,
clarifying or corrective documents. ["]
What has been transcribed faithfully and properly conforms to the document
in reference and that omitted has nothing that modifies, alters, contradicts or
conditions that copied.
This power of attorney is pending registration and therefore I, the
notary, do make the pertinent admonitions.
In my opinion, as appearing, he has the legal capacity necessary in order
to formalize the present recorded document of INCORPORATION OF A STOCK
CORPORATION, and, for such purpose,
IT IS SET FORTH:
I. That his principal, the business corporation "TELEFONICA, S.A.", has
decided to form a stock corporation in the nature of a Single-Shareholder
Corporation and with pecuniary contributions under the name of "TELEFONICA
COMUNICACIONES INTERACTIVAS, S.A."
II. On the basis of that set forth, he proceeds to form
<PAGE> 8
2Q1539280
[official, stamped paper, with tax stamp with coat of arms of Spain]
[illegible rubber-stamped seal]
the mentioned Corporation in accordance with the following
STIPULATIONS:
ONE. Incorporation of the Corporation
The business corporation "TELEFONICA, S.A.", represented herein by Mr.
Jose Maria Mas Millet, does found and form a commercial stock corporation, in
the nature of a Single-Shareholder Corporation, with the name of "TELEFONICA
COMUNICACIONES INTERACTIVAS, S.A." and with its registered office in Madrid
(28013) at Gran Via, No. 28, with an unlimited duration, and which shall start
up in business operation on the day of its incorporation.
TWO. Legal System
The legal system shall be the Legal System Law of Stock Corporations, the
Commercial Code and the legal and regulatory provisions which shall be
applicable.
In particular, the charter/bylaws shall govern, as drafted on eight pages
of normal paper, and which the appearing party - appearing as set forth, upon
the prior
<PAGE> 9
reading thereof in this act, understanding the content thereof - consents to and
signs at the foot thereof in my presence, and delivers to me, the notary, in
order for the official filing thereof, and I so do, attaching them to the end of
this set of documents.
THREE. Capital Stock and Subscription of Shares
The capital stock is established to be TEN MILLION (10,000,000.00) SPANISH
PESETAS, represented by one thousand common, bearer shares with a par value of
ten thousand (10,000.00) Spanish pesetas each, comprising a single class and
numbered from 1 to 1,000, both inclusive.
The business corporation "TELEFONICA, S.A.", represented herein by Mr.
Jose Maria Mas Millet, proceeds to subscribe the capital of "TELEFONICA
COMUNICACIONES INTERACTIVAS, S.A.", fully paying in for the entirety of the
mentioned shares by means of its cash contribution of TEN MILLION
(10,000,000.00) SPANISH PESETAS.
FOUR. Disbursement of Contribution and Verification
The said subscriber does disburse, in cash, the total amount of the par
value of the shares which he has subscribed and it is set forth that the amount
of such disbursements, which reaches the entirety of the amount of
<PAGE> 10
2Q1539279
(Paper Exclusively for Notarial Documents)
[official, stamped paper, with tax stamp with coat of arms of Spain]
TEN MILLION (10,000,000.00) SPANISH PESETAS, has been deposited into Account No.
2100-2931-92-0200034719 opened at the Branch of "La Caixa" at Paseo de la
Castellana, No. 51, in Madrid, in the name of the Corporation being
incorporated.
It is so substantiated by the exhibition and delivery to me, the notary,
of a certificate issued by the said banking institution, with is attached to
this set of documents and is to form an integral part hereof.
FIVE. The Directors.
1. The appearing party, as appearing herein, as the sole, founding partner
of the entity, acting as a General Meeting of Shareholders and taking into
account that established in the corporation charter/bylaws, decides to commence
the management of the Corporation with a Board of Directors composed of six
members, which is between the minimum and maximum numbers established in the
charter/bylaws.
2. In addition, he appoints the following persons to be the Directors of
the Corporation:
<PAGE> 11
MR. JUAN PEREA SAENZ DE BURUAGA
MR. MANUEL ECHANOVE PASQUIN
MR. GUILLERMO FERNANDEZ VIDAL
MR. LUIS MARTIN DE BUSTAMENTE VEGA
MR. ANTONIO VIANA BAPTISTA
AND MR. HANS [partially legible name extrapolated:] WIJERS.
They shall hold office for a term of FIVE YEARS commencing from their
appointment, without prejudice to the power of the General Meeting of
Shareholders to remove them at any time.
I, the notary, do admonish the appearing party with respect to the
prohibition against the holding of offices in this Corporation by persons
declared to have conflicts of interest in accordance with Law No. 12/1995 of May
11 and Law No. 14/1995 of April 21 of the Autonomous Community of Madrid.
SIX. Start-Up of Business
With respect to the provisions of Article 15 of the General Law of
Corporations in its present version, the sole partner has decided to expressly
empower the management body designed in order that:
a) The records and contracts made with third parties by the management
body designated prior to the registration of the Corporation and within the
<PAGE> 12
2Q1539278
(Paper Exclusively for Notarial Documents)
[official, stamped paper, with tax stamp with coat of arms of Spain]
scope of the powers under the charter/bylaws are automatically accepted and
assumed by the Corporation by virtue of the mere act of the registration of the
Corporation in the Commercial Register.
b) It may effect such records and contracts as the progress of the
business of the corporation constituting its corporation purpose may make
necessary or simply useful, especially for internal and organizational
arrangement, such as the granting, modification and revocation of all manner of
powers.
SEVEN. Auditors
The appearing party, as appearing herein, declares that the eventualities
which the law establishes for the designation of Auditors of Account do not
apply to the Corporation formed hereby.
EIGHT. Name of the Corporation
The name adopted by the Corporation formed hereby does not appear in use
by any other, as assured by the appearing party, which fact
<PAGE> 13
he substantiates to me with the pertinent certificate from the Central
Commercial Register which he delivers to me and which I attach to this set of
documents in order to document it and for its insertion in the copies hereof.
NINE. Incorporation Expenses
The total amount of the expenses incurred in the incorporation of the
Corporation is estimated at the figure of THREE HUNDRED THOUSAND SPANISH
PESETAS.
TEN. Mr. Jose Maria Mas Millet, as appearing, requests the inclusion of
the Corporation formed hereby in the present fiscal year of 1998 in the 24/90
Consolidated Tax Group, of which the dominant corporation is "Telefonica, S.A.",
thus adopting the Special Tax System of Corporation Groups in accordance with
that established in Law No. 43/1995 of December 27 on the Tax on Corporations.
He also requests that the said Corporation incorporated hereby remain
under the Special Tax System of Corporation Groups, within the mentioned Group
24/90, of which the dominant corporation is "Telefonica, S.A.", during fiscal
years 1999, 2000 and 2001, in accordance with that established in Law No.
43/1995 of December 27 on the Tax
<PAGE> 14
2Q1539277
[official, stamped paper, with tax stamp with coat of arms of Spain]
[illegible rubber-stamped seal]
on Corporations.
ELEVEN. Request for Registration
The appearing party requests from the Registrar of the Commercial Register
that the pertinent entries be made. He expressly requests the partial
registration of the present recorded document in the event that the examiner
finds defects which affect a portion of the document but do not prevent the
registration of the remainder of it. With express reservation by the applicant
of such remedies as may apply under the law.
GRANTING AND AUTHORIZATION:
I make the reservations and admonitions under the law. In particular, and
for tax purposes, I admonish as to the tax obligations and liabilities which are
incumbent upon the parties in terms of substance, form and penalties, as well as
the terms and application of assets for the payment of tax, and the consequences
of all natures which may derive from inaccuracy in the returns therefor.
<PAGE> 15
Upon the reading of this recorded document aloud by me, the notary, the
appearing party, by his choice, gave his consent to the content hereof, and has
signed it, as do I.
As to all of which, given that I know the appearing party, and as to the
rest of the content of this public document, issued in the form of seven folio
sheets of Series 2Q, numbered 1,517,616 and the six previous ones in sequential
order, I, the notary, do so attest.
There is a signature of the appearing party:
Mr. Jose Maria Mas Millet
Initialed.
Signed:
Jose A. Escartin
Initialed.
And sealed.
ATTACHED DOCUMENTS:
- 1 -
<PAGE> 16
2Q1539276
[official, stamped paper, with tax stamp with coat of arms of Spain]
[illegible rubber-stamped seal]
[marginal signature]
CHARTER/BYLAWS OF THE CORPORATION
TELEFONICA COMUNICACIONES INTERACTIVAS, S.A.,
A SINGLE-SHAREHOLDER CORPORATION
CHAPTER ONE - NAME, PURPOSE, DOMICILE AND DURATION
Article 1. The Corporation is to be named "TELEFONICA COMUNICACIONES
INTERACTIVAS, S.A.", a Single-Shareholder Corporation. It shall be governed by
the present charter/bylaws and, with respect to that not determined and provided
for therein, by the General Law of Corporations and such other provisions of law
as may be applicable to it.
Article 2. The Corporation has the purpose of providing and operating
telecommunications services, both domestic and international, and performing
services related to the production of content for on-line access and interactive
services, as well as providing and operating communications and information
technologies and services, both present and future, in all events subject to the
provisions of law applicable to the subject matter and upon prior receipt, as
the case may be, of such administrative licenses or authorizations, or those of
some other type, as may be necessary.
The Corporation may also carry out the design, development, manufacture
and marketing of supplementary systems and equipment for the operation of such
communications and the providing of services for the coordination and management
of projects, installation, maintenance, operation, management, administration,
consulting and marketing of communications systems.
All of the activities which comprise the corporation purpose may be
carried out both in Spain as well as abroad and the Corporation may effect them
itself or to take an interest in the activities of other corporations with a
similar purpose, the founding or creation of which it may promote or in the
equity of which it may take a holding.
Article 3. The corporation place of business is established in Madrid at Gran
Via No. 28.
The Board of Directors of the Corporation may decide to establish branch
offices, agency offices and dealerships both in Spain as well as abroad, subject
to the legal prerequisites in each case, and may also decide to eliminate or
move them.
In addition, the Board of Directors may decide as to a move of the
corporation domicile within the same municipal boundary.
Article 4. The duration of the Corporation shall be unlimited. It shall start up
in business on the date of the formalization of the recorded document of
foundation.
CHAPTER TWO - CAPITAL STOCK AND SHARES
Article 6. The capital stock is 10,000,000 Spanish pesetas and it is fully
subscribed and paid in.
<PAGE> 17
[marginal signature]
In general, and unless otherwise provided by the resolution for an
increase in capital and for the issuance of new shares adopted by the General
Meeting of Shareholders, the Board of Directors is empowered to make decisions
as to the form and the dates when the appropriate disbursements of contributions
are to be made when assessments exist, and they shall be paid in cash.
Article 6. The capital of the Corporation is divided into one thousand shares
numbered from 1 to 1,000, both inclusive, with a par value of ten thousand
Spanish pesetas each and comprising a single class and series.
All of the shares are to be represented by certificates, and are to be in
bearer form.
In the event that, in the future, the Corporation issues shares
represented by account entries, or the present shares become represented by such
system, the rules of the Securities Exchange Act and of the General Law of
Corporations itself shall apply.
The certificates of shares, when the shares are decided to be so
represented, shall be numbered in sequence and shall contain, at the minimum,
the legends required by the law. They shall bear the signature of at least one
Director, which signature may also be printed or reproduced by mechanical means
in accordance with the legal prerequisites established for such purpose.
The Corporation may issue provisional vouchers and multiple certificates
under the conditions and in accordance with the prerequisites established by the
law.
All of the shares shall confer to the legitimate holders thereof the
status of shareholder and shall attribute to them those rights which are
recognized by the law and by the charter/bylaws. This notwithstanding, the
Corporation may issue shares without the right to vote under the conditions and
in adherence to the limitations and prerequisites established by the law.
CHAPTER THREE - CORPORATION BODIES
Article 7. The corporation bodies are the General Meeting of Shareholders, as
the supreme deliberative body, where corporations decisions shall be made by a
majority on the matters within its scope, and the Board of Directors, to which
shall pertain the management, administration and representation of the
Corporation with such powers as may be attributed thereto by the law and by the
present charter/bylaws.
Article 8. The lawful shareholders, duly convening in a General Meeting of
Shareholders, shall decide by a majority on the matters within the scope
thereof.
All of the partners, including those in dissent and those not
participating in the meeting, shall be subject to the resolutions of the General
Meeting of Shareholders, without prejudice to the right to challenge those
pertaining to any shareholder in the cases and according to the prerequisites
provided for by the law.
Article 9. The General Meetings of Shareholders may be regular or special and
they shall have to be called by the Board of Directors of the Corporation.
The regular General Meeting of Shareholders, upon prior notice of meeting
for such purpose, shall be necessarily held within the first six months of each
fiscal year in order to assess the corporation management, to approve, as the
case may be, the accounts of the previous fiscal year, and to decide as to the
application of the profits according to the balance sheet approved.
Any General Meeting of Shareholders which is not envisioned in the
preceding paragraph shall have the status of
2
<PAGE> 18
2Q1539272
[official, stamped paper, with tax stamp with coat of arms of Spain]
[illegible rubber-stamped seal]
[marginal signature]
a special General Meeting of Shareholders and it shall have to be held whenever
the Board of Directors may deem appropriate in the interests of the Corporation
and, in any event, if so requested by such number of partners as hold at least 5
percent of the capital stock, setting forth in the request those matters which
are to be deliberated upon in the meeting. In the latter case the Meeting must
be called to be held within thirty days subsequent to the date when the Board of
Directors was requested to call it, and the agenda of meeting must include, at
the least, the matters which have been the subject matter of the request.
Article 10. The General Meetings of Shareholders, both regular and special, must
be called by means of a notice published in the Official Bulletin of the
Commercial Register and in at least one of the daily periodicals of general
circulation in the province where the corporation has its domicile, at least
fifteen days in advance of the date indicated for the meeting on first call, and
the notice must set forth all of the matters which are to be deliberated upon.
It may also set forth the date when, if appropriate, the meeting is to be held
on second call, and a term of at least twenty-four hours must intervene between
the two meetings.
In the General Meetings of Shareholders, both regular and special , no
matters further than those clearly indicated in the notice of meeting shall be
deliberated upon, with the exception of that provided for in Articles 131 and
134 of the General Law of Corporations.
That provided for in the previous paragraphs notwithstanding, a General
Meeting of Shareholders may be held and any matter may be deliberated upon
therein without the need for a prior notice of meeting if all of the capital
stock is in attendance and those present unanimously accept that the meeting be
held.
Article 11. The General Meetings of Shareholders, both regular and special ,
shall be validly convened on first call when the shareholders present or
represented possess at least 25 percent of the subscribed capital with the right
to vote. On second call the convening of the meeting shall be valid whatever the
capital may be attending the meeting.
That set forth in the previous paragraph notwithstanding, in order for a
regular or special General Meeting of Shareholders to be able to validly decide
to issue obligations, an increase or reduction in capital, a change in
corporation form, a merger/consolidation, a spin-off, a dissolution of the
Corporation for the reason set forth in Point No. 1 in Article 260 of the
Amended General Law of Corporations and, in general, any modification of the
charter/bylaws, there shall have to be present therein, on first call,
shareholders in attendance or represented by proxy possessing at least 50
percent of the subscribed capital stock with the right to vote, and on second
call it shall be sufficient to have the attendance of 25 percent of such
capital. When shareholders are in attendance representing less than 50 percent
of the subscribed capital stock with the right to vote the resolutions referred
to in this paragraph shall only be able to be adopted validly with the favorable
vote of two thirds of the capital present or represented by proxy in the
meeting.
Article 12. Any shareholder who has deposited his shares at the corporation
domicile at least five days in advance of the day when the meeting of
shareholders is to be held, or who substantiates, by means of the pertinent
certification setting forth the name, that he has deposited them with any
banking institution or entity authorized for the depositing of securities in
Spain, may personally attend the General Meetings of Shareholders or have
himself represented therein by another person, even if not a shareholder.
For such purpose he shall request and obtain from the Corporation, at any
time subsequent to the publication of the notice of meeting and up to the
commencement of the meeting of shareholders, the pertinent admittance ticket.
The Directors must attend the General Meetings of Shareholders.
3
<PAGE> 19
[marginal signature]
Managers, executives, authorized representatives, technical specialists and
other persons who, in the opinion of the Chairman of the Meeting, should be
present at the meeting due to having an interest in the good progress of the
business of the corporation may also attend. The Chairman of the Meeting may
also in principle authorize the attendance of any other person he may deem to be
appropriate, but the meeting may revoke such latter authorization.
Article 13. The Chairman of the Board of Directors shall be the Chairman of the
General Meeting of Shareholders. The Chairman shall be assisted by a Secretary,
who shall be the Secretary of the Board of Directors.
Prior to the consideration of the agenda of meeting a list shall be made
of those in attendance in the manner and with the prerequisites mandated by the
law.
The Chairman shall direct the deliberations, granting the floor, in strict
order, to all such shareholders who have so requested in writing, and then to
those who so request verbally.
Each one of the points which form part of the agenda of meeting shall be
subjected to a separate vote. The resolutions shall be adopted by a majority of
the shares present or represented by proxy in the meeting except in the case
referred to in the last indent of the last paragraph of Article 11 of the
present charter/bylaws, where the favorable vote of two thirds of the capital
present or represented by proxy in the meeting shall be required.
Each share of the same par value shall confer the right to one vote and in
the case of shares of a different par value the principle of proportionality
between the par value of the shares and the right to vote shall always be
adhered to.
Article 14. The deliberations and resolutions of the General Meetings of
Shareholders, both regular and special, shall be set forth in minutes made or
transcribed in a Book of Minutes and they shall be signed by the Secretary with
the approval of the Chairman, or by such persons as may have acted as such in
the meeting involved. The minutes may be approved by the meeting itself as a
continuation of the holding of the meeting or, in the absence thereof, within a
term of fifteen days, by the Chairman and two examiners, one appointed by the
majority and the other by the minority.
Upon their own initiative, the Directors, if they may so decide, and
necessarily, when it has been so requested formally in writing five days in
advance of the day envisioned for the holding of the meeting on first call by
shareholders representing at least 1 percent of the capital stock, shall require
the presence of a notary to make the minutes of the meeting, and the Corporation
shall bear the cost of the fees of the notary selected. The notarial record
shall be deemed to be the minutes of the meeting.
Article 15. The management, administration and representation of the
Corporation, before the courts and otherwise, and all of the acts included in
the corporation purpose shall pertain to the Board of Directors, which shall act
in a collegial fashion, without prejudice to such delegations and powers of
attorney it may confer.
Article 16. The Board of Directors shall be integrated by a number of Directors
not less than three nor more than eleven members.
The determination of the actual number of Directors to integrate the Board
at any given time shall pertain to the General Meeting of Shareholders, provided
that it is between the minimum and maximum referred to in this article.
Those persons covered by any legal prohibition shall not be able to be
appointed as Directors, especially persons covered by the incompatibilities
established in State Law
4
<PAGE> 20
2Q1539271
[official, stamped paper, with tax stamp with coat of arms of Spain]
[marginal signature]
No. 12/95 of May 11 and in Law No. 14/95 of April 21, of the Assembly of the
Autonomous Community of Madrid.
For the election of the members of the Board of Directors the provisions
contained in Article 123, et seq., of the Amended General Law of Corporations
and the supplementary rules shall apply.
In order to be elected as a member of the Board of Directors it shall not
be required that one be a shareholder except in the case of provisional
appointment by co-option effected by the Board of Directors itself, in
accordance with that provided for in Article 138 of the said amended law.
Article 17. The Directors shall be appointed for a term of five years but they
may be reelected by the meeting of shareholders one or more times for periods of
equal duration.
The removal of the Directors may be decided at any time by the General
Meeting of Shareholders.
Article 18. The Board of Directors shall meet when so required in the interest
of the Corporation, and necessarily within the first three months of each fiscal
year in order to formulate the accounts for the previous fiscal year and the
management report, as well as whenever it must call a General Meeting of
Shareholders, unless the latter is a universal meeting.
It shall be called to meet by the Chairman or by such person as may
substitute for him, upon his own initiative, and necessarily in those cases
referred to in the previous paragraph, or whenever so requested by at least one
third of the Directors in office.
The meetings of the Board of Directors shall be chaired by the Chairman
thereof. In the absence of the Chairman he shall be substituted by one of the
Vice Chairmen and, in the absence of both, the eldest Director. If the Secretary
is not in attendance he shall be substituted by the Vice Secretary and, in the
absence of the latter, the youngest full member from among those attending the
respective meeting.
The Board of Directors shall be deemed to be validly convened when the
meeting is attended, by those present or represented by proxy, by one half plus
one of its members. If the number thereof is odd, the Board of Directors shall
be deemed to be validly convened when the meeting is attended, by those present
or represented by proxy, by a number greater than those absent. Any Director may
confer a proxy to another Director in writing expressly for the meeting
involved.
The deliberations and debates within the Board of Directors shall take
place separately with respect to the various points contained in the agenda of
meeting established in advance or approved by the meeting itself, and they shall
be moderated by the Chairman, who shall grant the floor successively to such
Directors as may desire to take the floor. The proposals for resolutions may be
submitted in writing, or verbally during the course of the meeting. Each one of
the proposals on the points included in the agenda of meeting shall be subjected
to separate voting.
In order to adopt resolutions it shall be necessary to have the favorable
vote of an absolute majority of the Directors in attendance at the session,
except in the case of the permanent delegation of any power of the Board of
Directors to the Executive Committee or to the Managing Director and the
designation of those Directors who are to hold such offices, where it shall be
necessary to have the favorable vote of two thirds of the members of the Board
of Directors.
Voting in writing and without a session shall only be allowed when no
Director opposes such procedure.
The discussions and resolutions of the Board of Directors shall be set
forth in a Book of Minutes, which may be the same as that referred to in Article
14, and each of the minutes shall be signed by the Secretary with the approval
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<PAGE> 21
[marginal signature]
of the Chairman, or by such persons as may have substituted for them in the
meeting to which the minutes refer. In the cases of voting in writing and
without a session the resolutions adopted and the votes cast in writing shall
also be set forth in the Book of Minutes.
Article 19. The Board of Directors shall have the most ample possible powers to
manage, administrate and represent the Corporation, before the courts and
otherwise, in all acts covered by the corporation purpose as defined in the
present charter/bylaws.
Therefore, the following powers, among others, shall pertain to the Board
of Directors, listed here merely as examples:
a) To designate, from among its members, a Chairman and one or more Vice
Chairmen. It shall also designate a Secretary and it may designate a Vice
Secretary, none of whom need necessarily be a Director.
b) To decide as to the notice of meeting for meetings of shareholders, both
regular and special , as and when appropriate, in accordance with the law
and the present charter/bylaws, drafting the agenda of meeting and
formulating such proposals as may be appropriate according to the nature
of the meeting of shareholders which is being called.
c) To represent the Corporation in all judicial and administrative acts and
matters, both commercial and criminal, before the government
administration and government corporations of all types, as well as before
any court (ordinary, administrative, special, labor, etc.) and at any
jurisdictional level, bringing all manner of actions which may pertain to
the defense of its rights, before the courts or otherwise, giving and
granting the appropriate powers to agents and appointing attorneys to
represent and defend the Corporation before such courts and agencies.
d) To direct and to manage the corporation business, attending to the
operation thereof in an constant manner. For this purpose it shall
establish the rules of governance and the system for the administration
and operation of the Corporation, organizing and making rules for the
technical and administrative offices thereof.
e) To enter into all manner of contracts covering all manner of property or
rights under such covenants and conditions as it may deem to be
appropriate and to create and discharge mortgages and other encumbrances
or liens on the property of the Corporation, as well as to waive all
manner of privileges or rights, by means of a payment or without it.
It shall also be able to decide as to the holding by the Corporation of
equity in other corporations or enterprises.
f) To be the signatory for and to act in the name of the Corporation in all
manner of banking transactions, opening and closing checking accounts,
disposing of them, participating in letters of exchange, promissory notes
and other commercial paper as issuer, accepting party, guarantor,
endorser, endorsee or holder thereof, as well as obtaining loans and
credits, with or without security, and discharging them, and making
transfers of funds, incomes, credits or securities, using any method of
money transfer or movement, and approving balances of account and receipts
in discharge, making and withdrawing deposits or bonds, setting off
accounts, formalizing currency exchanges, etc., all of which may be
effected both with the Bank of Spain and official banks as well as with
private banking institutions and any administrative agencies.
g) To appoint, to assign and to discharge any of the personnel of the
Corporation, establishing their
6
<PAGE> 22
2Q1539270
[official, stamped paper, with tax stamp with coat of arms of Spain]
[illegible rubber-stamped seal]
[marginal signature]
powers and duties and determining such salaries, wages and bonuses as may
be appropriate.
h) To designate from within it an Executive Committee or one or more Managing
Directors and to delegate to them, in accordance with the law, such powers
as it may deem to be appropriate, always indicating in the resolution of
designation the system for the activity of such Executive Committee as it
may appoint, or for the Managing Directors, both with respect to their
relations with the Board of Directors as well as among the members
thereof. It shall also be able to confer powers of attorney to any
persons, with or without the power of substitution, and to revoke those
granted previously.
i) To make rules for its own functioning with respect to all of that not
specially provided for by the law or by the present charter/bylaws.
j) To decide such questions as may arise as to the interpretation of the
charter/bylaws, reporting thereon to the first General Meeting of
Shareholders held.
k) To decide as to the distribution of dividends on account in adherence to
the conditions established legally.
In any event, those powers which legally pertain to the General Meeting of
Shareholders are excepted.
Article 20. The compensation of the Directors shall consist of a fixed, monthly
payment, the amount of which shall be decided upon by the General Meeting of
Shareholders for each year or with validity for such fiscal years as the meeting
of shareholders itself may establish, and the compensation may differ from
Director to Director.
CHAPTER FOUR - THE FISCAL YEAR, ACCOUNTING DOCUMENTS AND DISTRIBUTION OF THE
PROFITS
Article 21. The fiscal year shall commence on January 1 and shall terminate on
December 31 of each calendar year.
By way of exception, the first fiscal year shall commence at the time of
the formation of the Corporation and shall terminate on December 31 of the same
year.
Article 22. Within a maximum term of three months commencing from the close of
each fiscal year the Board of Directors must formulate the annual accounts,
which are to include the balance sheet, the income statement and report, the
management report and the proposal for the application of the profits, as well
as, as the case may be, the consolidated management report and accounts, in
accordance with the criteria of valuation and with the structure mandated by the
statutory law in force.
These documents, which must be signed by all of the Directors with express
indication of the reason justifying the omission of the signature of any of
them, shall be submitted, in turn, for the review of an auditor or auditors of
accounts, appointed in the manner, for the terms and with the functions provided
for in the law, for verifying the annual accounts. The General Meeting of
Shareholders, upon appointing the person or persons who are to perform the
auditing, shall determine the number thereof and the period of time during which
they shall hold office.
Article 23. Once the annual accounts are approved, in turn, by the General
Meeting of Shareholders, they shall be submitted for their filing, with the
certificate of the resolutions of the meeting of shareholders, in the
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<PAGE> 23
Commercial Register of the corporation domicile in the form and term and in
accordance with the provisions of the General Law of Corporations and the
Regulations of the Commercial Register.
Article 24. The General Meeting of Shareholders shall decide with respect to the
application of the profits of the fiscal year according to the balance sheet
approved.
Once the applications provided for by the law or the present
charter/bylaws are covered, dividends shall only be able to be distributed
against the profits of the fiscal year or against freely disposable reserves if
the book value of the net worth does not become, as a result of the
distribution, lower than the capital stock.
The distribution of dividends to the common shareholders shall be carried
out in proportion to the capital which they have contributed.
CHAPTER FIVE - DISSOLUTION AND LIQUIDATION OF THE CORPORATION
Article 25. The Corporation shall be dissolved in those cases and with those
prerequisites established by the law.
Article 26. The General Meeting of Shareholders which decides as to the
dissolution of the Corporation shall also appoint the receivers, who, as the
case may be, may be the previous members of the Board of Directors.
The number of receivers shall always be odd. In cases where the meeting of
shareholders decides to appoint the former Directors as receivers and their
number had been even, the General Meeting of Shareholders shall also decide
which Director shall not be appointed to be a receiver.
Without prejudice to that provided for in the preceding paragraph, such
shareholders as represent at least one twentieth of the capital stock and, as
the case may be, the representative or representatives of the bondholders may
apply to the judge of primary jurisdiction for the corporation domicile for the
designation of an administrator with the prerequisites and powers established by
the law.
Article 27. In the liquidation of the Corporation, the rules established in the
law and those which, supplementing them but not contradicting them, may have
been decided, as the case may be, by the General Meeting of Shareholders which
has adopted the resolution to dissolve the Corporation shall be adhered to.
s/
8
<PAGE> 1
Exhibit 3.2
REVISED BYLAWS
"TERRA NETWORKS, S.A."
TITLE ONE - NAME, PURPOSE, CORPORATE HEADQUARTERS AND TERM
Article 1
The Company name is "Terra Networks, S.A." It shall be subject to these Bylaws,
and any matters not defined or envisioned herein shall be governed by the
Corporations Act (Ley de Sociedades Anonimas) and by other applicable legal
provisions.
Article 2
The purpose of the Company shall be to set up activities and provide services in
the fields of telecommunications, information and communication. Specifically,
it may set up Internet and other network-related activities, including those
related to access, to production, distribution and/or exhibition of its own or
third-party content, portals, electronic commerce and any other activities that
may exist in these fields in the future, all of which shall be aimed at meeting
market needs.
The above activities may be set up either directly or in conjunction with other
legal entities.
The Company may devote itself, without reservation or limitation of any kind, to
any type of lawful business that directly or indirectly contributes to
performing the activities included within the corporate purpose, as broadly
defined under this article.
The named activities shall be carried out subject to applicable regulations for
such endeavors, and after obtaining any required government or other licenses or
authorizations.
All activities included under the corporate purpose may be set up both in Spain
and abroad. The Company may initiate such activities either on its own or
through acquiring interests in the activities of other companies having a
comparable purpose, by aiding in the founding of such companies or creating or
obtaining interests in their capital stock.
<PAGE> 2
Article 3
The corporate headquarters shall be located at Avda. Dos Castillas, 33; Edificio
Atica 1; Pozuelo de Alarcon (Madrid, Spain).
The Company's Board of Directors may agree to set up branch offices, agencies or
delegations, both in Spain and abroad, subject to any applicable legal
requirements for such cases, and it may further decide to disband or to relocate
them.
The Board of Directors may also decide to relocate the corporate offices within
the same municipal area.
Article 4
The Company shall be set up for an indefinite term, and it shall commence
operations on the date its incorporation papers are filed.
TITLE TWO - CAPITAL STOCK AND SHARES
Article 5
The capital stock totals three hundred eighty-nine million nine hundred
ninety-one thousand one hundred and seventy (389,991,170) euros, and it is fully
subscribed and paid in.
Article 6
The capital stock has been divided into 194,995,585 shares, each having a par
value of two euros. The shares make up a single class and series and have each
been entered into the account books.
All those who legitimately appear in the entries for the associated account
ledgers shall be recognized as shareholders by the Company.
All shares shall confer the status of shareholder on their lawful owners, along
with all the rights acknowledged under the Law and these Bylaws. The Company
shall nonetheless be entitled to issue non-voting shares under the terms of the
Law and subject to its restrictions and requirements.
2
<PAGE> 3
TITLE THREE - CORPORATE BODIES
Article 7
The General Meeting of Shareholders shall be the Company's supreme deliberating
body, and it shall manifest the will of the corporation through decisions
arrived at by majority vote in all areas that fall under its jurisdiction. The
Board of Directors shall be in charge of managing and representing the Company,
and it shall have the powers vested in it by Law and by these Bylaws.
Article 8
Legitimate shareholders validly represented at the General Shareholders' Meeting
shall decide on issues that fall within the purview of the Meeting by majority
vote.
All shareholders, including any who vote in the negative or who take no part in
a meeting, shall be subject to the decisions made at the General Shareholders'
Meeting, notwithstanding the right of any shareholder to challenge such
decisions as envisioned under the Law and pursuant to its requirements.
Article 9
Meetings of Shareholders may be called by the Company's Board of Directors and
may be regular or special in nature.
A regular Meeting of Shareholders, called for that end, shall be held during the
first six months of each fiscal year for the purpose of auditing the company's
management, approving the account statements for the previous year, when
applicable, and deciding on how to allocate income in accordance with the
approved balance sheet.
Any Shareholders' Meeting dealing with items other than those described in the
above paragraph shall be considered a Special Shareholders' Meeting, and shall
be held whenever the Board of Directors feels it is in the Company's interest to
do so, or whenever any number of shareholders holding at least five per cent of
the corporate stock so requests and states the matters to be addressed at the
Meeting. In the latter case, the Meeting shall be scheduled to take place within
the thirty days following the date on which the request was submitted to the
Board of Directors, and the agenda shall include at least all the issues that
were the subject of the request.
3
<PAGE> 4
Article 10
Calls for both regular and special Meetings of Shareholders shall be announced
in the Official Gazette of the Mercantile Register and in at least one of the
daily newspapers having the highest circulation within the Province where the
Company has its corporate headquarters. The announcements shall be published at
least fifteen days prior to the date set for the first session. All matters to
be discussed at the meeting must be listed in the notice. The date on which any
second session will be held may also be given, and there shall be no less than a
24-hour interval between each session.
Both regular and special Meetings of Shareholders shall deal with the issues
indicated in the notice for the meeting.
A Regular Meeting of Shareholders may address issues of any type, even if not
specifically falling within its defined purview under the Law.
Notwithstanding the above provisions, in the absence of any advance notice of a
meeting, a General Meeting of Shareholders may be held and may deal with matters
of any type if all the capital stock is represented and those in attendance
unanimously agree to hold the meeting.
Article 11
A first session of a regular or special Meeting of Shareholders shall be
considered valid when the shareholders in attendance and those represented by
proxy hold at least 25 per cent of the subscribed capital stock with rights to
vote. A second session of the Meeting shall be valid regardless of the per cent
of capital represented.
Notwithstanding the provisions in the above paragraph, for a first session of a
regular or special Meeting of Shareholders to validly agree to issue bonds, to
increase or reduce the capital stock, to reorganize, merge, split or dissolve
the Company for any of the reasons given under Article 260, Paragraph 1 of the
revised Corporations Act, or in general, for it to amend the Corporate Bylaws in
any way, shareholders representing at least 50 per cent of the voting shares
subscribed must be in attendance or represented through proxy. For a second
session to validly decide these items, representation by 25 per cent of the
capital stock will be sufficient. When attending shareholders represent less
than 50 per cent of the voting shares subscribed, the affirmative vote of two
thirds of the capital in attendance or represented at the Meeting shall be
required for any of the actions referred to in this paragraph to be validly
adopted.
Article 12
Any shareholder who individually or as part of a group holds at least 25 shares
shall be entitled to attend the Meetings of Shareholders.
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<PAGE> 5
A shareholder shall be required to have its shares on record in the associated
account ledger no later than five days prior to the date the meeting is
scheduled before it may attend the meeting.
Without prejudice to shareholders that are legal entities attending through
their authorized representatives, any shareholder entitled to attend may opt to
be represented by another party, even if that party is not a shareholder. Such
representation must be authorized in writing and specified for each Meeting. In
all cases, the provisions set forth under Article 108 of the Corporations Act
shall remain intact.
Board Members shall attend General Shareholders' Meetings. Executive Directors,
Managers, Agents, Engineers and other parties may also attend when the Chairman
of the Board feels their presence is needed because of their interest in the
proper running of the company's business. The Chairman of the Board may
authorize attendance by any other person deemed appropriate, however the Meeting
may revoke any such authorization.
Article 13
The Chairman of the Board shall also serve as Chairman of the Shareholders'
Meetings. He or she shall be assisted by a Secretary who shall be the Secretary
of the Board of Directors.
Before commencing with the agenda, the Secretary shall draw up a list of those
in attendance, indicating the nature of each or who they represent, and the
number of shares they represent. At the end of the list, the determination of
the number of shareholders attending or represented by proxy shall be given,
along with the number of shares and percentage of capital stock held.
The list of attendees may be attached to the Minutes upon signature by the
Secretary and approval from the Chairman. The list may also be drawn up as an
file or saved to an electronic medium, in which case, the type of media used
shall be indicated in the Minutes, and the proper identifying information shall
be recorded on the previously sealed sleeve of the file or media, and signed by
the Secretary with approval from the Chairman.
The Chairman shall lead the debate, granting the floor in strict order to all
shareholders who have asked to speak in writing, followed by those who have
submitted verbal requests.
Each item on the agenda shall be voted on separately. Decisions shall be adopted
by majority vote representing all shares in attendance or represented by proxy,
except in the cases referred to in the final sentence of the last paragraph of
Article 11 of these Bylaws, which shall require the affirmative vote of two
thirds of the capital in attendance or represented at the Meeting.
Each share having the same par value shall be entitled to one vote. When there
are shares having differing par values, voting rights shall in all cases be
determined proportionally according to the par value of the shares.
5
<PAGE> 6
Article 14
Minutes shall be taken to record any debate and decisions made at both regular
and special Shareholders' Meetings, and these shall be attached or transcribed
in a special Record Book. The Chairman and Secretary of record, or whoever may
be acting on their behalf at any given meeting, shall sign the Minutes.
Shareholders may approve the Minutes at the close of the Meeting, or lacking
that, the Chairman and two Participating Auditors, one appointed by the majority
and the other by the minority, shall approve them no more than fifteen days
following the date of the meeting.
The Board Members may require that a Notary attorney attend the meeting to draw
up the official Minutes, either on their own volition if they so decide, or on a
mandatory basis, if certifiably requested in writing at least five days before
the date the first session of the meeting is to be held by shareholders
representing at least one per cent of the capital stock. The Company shall be
responsible for the fees paid to the selected Notary. The Notary Instrument
shall stand as the Minutes of the Meeting.
Article 15
Notwithstanding any powers of agency or powers of attorney it may have
conferred, the Board of Directors shall be responsible for the management,
administration and representation of the Company in and out of court, as well as
for all transactions that fall within the corporate purpose, and it shall do so
acting with one voice.
Article 16
The number of members serving on the Board of Directors shall be no fewer than
three and no more than 15.
The decision as to exactly how many Directors shall sit on the Board at any
given time shall be made by the Meeting of Shareholders, and shall in all cases
fall within the minimum and maximum stated in this article.
No person may be appointed to the Board whose interests conflict with those of
the Company or who is subject to any form of incapacity, incompatibility or ban
as set forth in the prevailing legislation.
Election of Board members shall be subject to the provisions of Article 123 et
seq. of the revised text of the Corporations Act and its related regulations.
Board members need not be shareholders to be elected, unless they are
provisionally appointed by the Board itself through co-option, in accordance
with the provisions of Article 138 of the revised text of the above Act.
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<PAGE> 7
Board members shall be appointed for a term of five years, however they may be
reelected by the Shareholders for one or more terms of equal duration.
The Shareholders' Meeting may at any time agree to remove a Director.
Article 17
The Board shall meet whenever it is in the Company's interest for it to do so.
It shall be required to meet within the first three months of each fiscal year
to draw up the financial statements for the previous year and the management
report, and whenever a General Meeting of Shareholders needs to be called,
unless the latter is all-embracing.
Meetings shall be called by the Chairman or by whoever acts on his behalf,
either on his own initiative or when required under the cases referred to in the
previous paragraph, and in all cases, whenever at least one third of the acting
Directors so requests.
The Chairman of the Board shall preside over Board meetings, and in his absence,
one of the Vice Chairmen shall take his place, and if both are unavailable, the
eldest Board member. Should the Secretary not be present, he or she shall be
replaced by the Vice Secretary, or if unavailable, the youngest Member in
attendance at the respective session who does not also serve as an officer.
A Board meeting shall require a quorum of half plus one of its members before it
may be considered valid, each attending on their own or through proxy. Any Board
Member may be expressly represented by another Board member at any given
meeting, if so authorized in writing. Decisions must receive the affirmative
vote of the absolute majority of Directors present to be adopted, except where a
given power of the Board of Directors has been permanently vested in a Standing
Committee or in a Delegated Member, and the Directors filling such positions
have been appointed. In such cases, the affirmative vote of two thirds of the
members of the Board shall be required.
Ballots in writing outside of a Board meeting shall be valid only when no
objection to such a procedure has been made by any of the Members.
Board debates and agreements shall be recorded in a Journal of Minutes, and each
set of Minutes shall be signed by the Chairman and Secretary, or by whoever has
served in their roles at the meeting recorded in the Minutes. Agreements adopted
and votes issued in writing shall also be recorded in the Journal of Minutes
whenever written ballots are taken outside of a Board meeting.
Article 18
The Board of Directors shall have the broadest possible powers for managing,
running and representing the Company in and out of court, and in all
transactions that fall within the corporate purpose as defined in these Bylaws.
7
<PAGE> 8
Excepted from the above shall be any powers legally corresponding to the
Meetings of Shareholders.
The Board of Directors shall appoint a Chairman from among its members, and it
shall also appoint the Secretary, who need not be a Board Member. It may
additionally appoint one or more Vice Chairmen from among its Members, and it
may also appoint a Vice Secretary, who similarly need not be a Board Member. The
Vice Chairman and Vice Secretary shall stand in for the Chairman and Secretary,
respectively, in the event the latter are absent or infirm.
Article 19
Subject to any prevailing regulations, the Board of Directors may delegate its
powers and duties to a Standing Committee made up of three to nine Directors,
and the Board itself shall decide on the makeup and the rules of procedure for
the Committee.
The positions of Chairman, and if applicable, any Vice Chairmen, and the
Secretary, and if applicable, the Vice Secretary of the Standing Committee shall
be filled by the parties holding each of these positions on the Board.
The stipulations applicable to the Board of Directors under Article 17 of these
Bylaws shall also apply to the Standing Committee, where relevant.
Article 20
The regular Meeting of Shareholders shall decide on the set monthly allowance
each Board Member shall receive as Compensation, deciding on an amount for each
year or for as many years as they determine.
The Shareholders may also allocate per diem allowances for attendance at Board
meetings and decide on the amount of such allocations.
TITLE FOUR - FISCAL YEAR, FINANCIAL STATEMENTS
AND DISTRIBUTION OF PROFITS
Article 21
The fiscal year shall begin on January first and end on December thirty-first of
each calendar year.
8
<PAGE> 9
Article 22
The Board of Directors shall draw up the annual financial statements no more
than three months following the close of each fiscal year. These shall include
the balance sheet, income statements, and the annual report, the management
report and the proposal for distributing profits, and if applicable, the
consolidated statements and management reports, in accordance with legally
required valuation criteria and structures.
These documents must be signed by all members of the Board, and a valid reason
must be expressly indicated for any individual signature that is lacking. Where
applicable, the documents shall be subject to review by the account auditor or
auditors formally appointed for the terms and with the duties the Law specifies
for inspection of annual financial statements. At the same time it appoints the
party or parties who will serve as auditors, the Shareholders' Meeting shall
decide on the number of auditors and the length of time they will exercise their
duties.
Article 23
After the yearly financial statements are approved by the Meeting of
Shareholders, they shall be submitted for filing with the Mercantile Register
where the corporate offices are located, along with the certificate of the
Shareholders' approval. This shall be done in the manner, by the deadline and
according to the provisions set forth in the Corporations Act and the Rules for
the Mercantile Register.
Article 24
The Meeting of Shareholders shall vote on how profits for the Year are to be
distributed pursuant to the approved Balance Sheet.
Once the procedures required by Law or by these Bylaws are met, dividends may be
paid out from the Year's profits or from freely available reserves only if the
Company's net worth is no less than the value of the corporate stock, and will
not become so as a result of the distribution.
Dividends paid out to holders of common stock shall be in proportion to the
capital that they have paid in.
TITLE FIVE - DISSOLVING AND LIQUIDATING THE COMPANY
Article 25
The Company shall be dissolved in such cases as are set forth by Law and in
accordance with the rules set forth for such cases.
9
<PAGE> 10
Article 26
The Meeting of Shareholders at which the decision is made to dissolve the
Company shall also decide on the appointment of the Administrators, and where
applicable, these positions may be filled by the previous members of the Board
of Directors.
There shall be an uneven number of Administrators in all cases. When the
Shareholders choose to appoint the former Board Members as Administrators, and
when the Board had an even number of Members, the Shareholders shall at the same
time decide which Member will not be appointed as Administrator.
Notwithstanding the provisions in the above paragraph, shareholders representing
no less than one twentieth of the corporate stock, and where applicable, the
syndicate of stock and bond holders, may apply to the Court of First Instance
for the jurisdiction where the company has its corporate offices to appoint an
Auditor having the powers and duties set forth by Law.
Article 27
The Company's liquidation shall be carried out in accordance with the rules set
forth by Law, as well as any rules agreed upon by the same Meeting of
Shareholders that voted to dissolve the Company, to the extent the latter are
not in conflict.
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<PAGE> 11
ATTACHED
[stamp:] FRANCISCO ARRIOLA GARROTE - Notary of Madrid 2R5501101
DIEGO L. LOZANO ROMERAL, SECRETARY TO THE BOARD OF DIRECTORS OF "TERRA NETWORKS,
S.A." (formerly called "TELEFONICA INTERACTIVA, S.A.")
I HEREBY CERTIFY:
I. That the General Meeting of Shareholders of "TERRA NETWORKS, S.A." (formerly
called "TELEFONICA INTERACTIVA, S.A.") held as a Universal Meeting of all
Shareholders on October 1, 1999, at the company's corporate offices, attended by
all the shareholders who represent the entire share capital of the company,
took, inter alia, the following decisions by unanimous vote, all of which were
included on the Agenda of the Meeting, also subject to unanimous approval
One. Capital increase taking the form of a cash contribution and waiving
peremptory rights of first refusal, so as to bring INFOSEARCH HOLDINGS, S.A. in
as a shareholder of the Company
To increase the Company's share capital by 9,856,000 euros, by issuing 4,928,000
common shares of a single series with the same rights as the shares issued
beforehand, each with a par value of 2 euros, represented by entries in account.
Said 4,928,000 new shares are issued with a share premium. The total share
premium is 10,971,722 euros and the share premium per share is 2.2264046 euros.
This sole aim of this capital increase is to enable the company INFOSEARCH
HOLDINGS, S.A. to become a shareholder of the Company, for which reason it has
been decided to waive the peremptory right of first refusal held by the Sole
Shareholder of the Company, TELEFONICA, S.A., and all these shares are hereby
subscribed by INFOSEARCH HOLDINGS, S.A., whose representative was present at
this General Meeting as stated on the list of those present. This capital
increase is the outcome of the undertakings entered into by INFOSEARCH HOLDINGS,
S.A., TELEFONICA, S.A. and the Company,
<PAGE> 12
ATTACHED
[stamp:] FRANCISCO ARRIOLA GARROTE - Notary of Madrid 2R5501100
stemming from the Company's acquisition of the company ORDENAMIENTO DE LINKS
ESPECIALIZADOS, S.L. ("Ole").
In accordance with Section 159 of the Corporations Act (as set out in the Tax,
Administrative and Social Measures Act, Law 50/1998, dated December 30), the
appropriate report has been drawn up by the administrators and the compulsory
report was issued by the Company's auditors, Arthur Andersen, on September 29,
1999.
As a result of this capital increase, the Company's capital is now set at
399,847,170 euros, represented by 199,923,585 shares, each with a par value of 2
euros. Consequently, Articles 5 and 6 of the Company's Bylaws shall now be
worded as set out in Decision Three herebelow.
The par value of the new shares and the share premium agreed upon, resulting in
a total of 20,827,722 euros, shall be paid in no later than October 8, 1999, as
shall be attested by the appropriate bank certificate which shall be attached to
the deed of capital increase.
Two. Capital increase taking the form of a cash contribution and waiving the
peremptory right of first refusal, to bring BANCO ZARAGOZANO, S.A. and the CAJA
DE AHORROS Y PENSIONES DE BARCELONA into the share capital of the Company, as
entities acting as agents for the Company's options plan for the Company's
senior managers
To increase the Company's share capital by 28,000,000 euros, by issuing
14,000,000 common shares of a single series with the same rights as the shares
issued beforehand, each with a par value of 2 euros, represented by entries in
account. Said 14,000,000 new
<PAGE> 13
ATTACHED
[stamp:] FRANCISCO ARRIOLA GARROTE - Notary of Madrid 2R5501099
shares are issued with a share premium of 0.16 euro per share, giving a total
share premium of 2,240,000 euros.
This capital gain is subject to the condition that the capital gain set out in
Decision One hereabove is subscribed and paid in.
This sole aim of this capital increase is to enable a share option plan to be
set up for the senior managers of the Company ("Option Plan"), for which reason
it has been decided to waive the peremptory right of first refusal held by the
Sole Shareholder of the Company, TELEFONICA, S.A., and all these shares are
hereby subscribed by BANCO ZARAGOZANO, S.A., which subscribes to 7,000,000
shares, and CAJA DE AHORROS Y PENSIONES DE BARCELONA, which subscribes to
7,000,000 shares, in their capacity as the agents of the Option Plan. Their
representatives were present at this Shareholders' Meeting as stated on the list
of those present. INFOSEARCH HOLDINGS, S.A., whose representative was present at
this Shareholders' Meeting, as stated on the list of those present, states that
it gives its consent to this capital increase and to the waiver of the
peremptory right of first refusal.
In accordance with Section 159 of the Corporations Act (as set out in the Tax,
Administrative and Social Measures Act, Law 50/1998, dated December 30), the
appropriate report has been drawn up by the administrators and the compulsory
report was issued by the Company's auditors, Arthur Andersen, on September 29,
1999.
As a result of this capital increase, the Company's capital is now set at
427,847,170 euros, represented by 213,923,585 shares, each with a par value of 2
euros. Consequently, Articles 5 and 6 of the Company's Bylaws shall now be
worded as set out in Decision Three herebelow.
<PAGE> 14
ATTACHED
[stamp:] FRANCISCO ARRIOLA GARROTE - Notary of Madrid 2R5501098
The par value of the new shares and the share premium agreed upon, giving a
total of 30,240,000 euros, shall be paid in no later than October 8, 1999, as
shall be attested by the appropriate bank certificate which shall be attached to
the deed of capital increase.
Three. Amendment of Articles 5 and 6 of the Company's Bylaws
It has been decided to amend Articles 5 and 6 of the Company's Bylaws, which,
after the capital increases adopted in Decisions One and Two hereabove have been
taken, shall be worded as follows:
"Article 5:
The share capital is four hundred and twenty-seven million eight hundred
and forty-seven thousand one hundred and seventy euros (427,847,170), and
it has been fully subscribed and paid in."
"Article 6:
The share capital has been divided into two hundred and thirteen million
nine hundred and twenty-three thousand five hundred and eighty-five
(213,923,585) shares, each having a par value of two (2) euros, in a
single class and series, represented by entries in account.
The Company shall recognize the shareholder as being the person
legitimately recorded as such in the entries in the appropriate accounting
records.
All the shares entitle their lawful holder to be a shareholder and grant
said holder the rights recognized by Law and in these Bylaws. This
notwithstanding, the company may issue non-voting shares under the terms
and subject to the limits and requirements laid down by the Law."
Four. Powers of attorney
To grant several powers of attorney to Mr. Juan Perez Saenz de Buruaga, to Mr.
Jose Maria Mas Millet and to Mr. Diego L. Lozano Romeral, so that any one of
them may formalize and execute the decisions set out hereabove, and may execute
for said purpose whatever public or private documents may be necessary or
advisable (including documents of clarification, rectification or errors and
remedy of defects) so that they may more fully comply and so that they may be
entered, to the extent required by Law, in the Mercantile Register.
<PAGE> 15
ATTACHED
[stamp:] FRANCISCO ARRIOLA GARROTE - Notary of Madrid 2R5501097
II. That the minutes of the Shareholders' Meeting, drawn up in accordance with
the terms of Article 97 of the Mercantile Register Regulations, were approved
unanimously by all those who attended the Meeting, and said minutes have been
signed by the shareholders after the AGENDA.
In witness whereof, for all necessary intents and purposes, I hereby issue this
certificate, which has been approved by the Chairman of the Board, Mr. Juan
Perea Saenz de Buruaga, in Madrid, on October fourth, nineteen hundred and
ninety-nine.
[illegible signature] [illegible signature]
APPROVED: THE SECRETARY
THE CHAIRMAN
<PAGE> 1
Exhibit 5.1
Uria & Menendez
Abogados
Jorge Juan 6
28001 Madrid
Tel. 915 860 400
Fax. 915 860 403
Terra Networks, S.A.
Via de las Dos Castillas, 33
Complejo Atica
Edificio 1
Pozuelo de Alarcon
28223 Madrid, Spain
Madrid, November 12, 1999
Ladies and Gentlemen:
We are acting as Spanish counsel for Terra Networks, S.A., a corporation
(sociedad anonima) organized under the laws of the Kingdom of Spain (the
"Company"), in connection with the Registration Statement on Form F-1 (the
"Registration Statement") filed with the United States Securities and Exchange
Commission by the Company on October 29, 1999 for the purpose of registering
under the United States Securities Act of 1933 (the "Act") the Company's
ordinary shares, par value 2 Euro per share (the "Shares"), and Shares to be
represented by American Depositary Shares (the "ADSs"), each representing one
Share. We have examined such matters of fact and law as we have deemed necessary
or advisable for the purpose of this opinion.
Based upon and subject to the foregoing, we are of the opinion, limited solely
to the laws of Spain as they exist at the date hereof, that:
1. The Company has been duly incorporated and is validly existing as a
corporation with limited liability under the laws of Spain.
2. All of the Company's Shares, upon their payment, the granting of a
Notarial Deed of Capital Increase and its registration at the Commercial
Registry of Madrid, will be duly and validly issued and are fully paid in
and non-assessable. As far as Spanish law is concerned, such Shares may
be freely delivered in Spain to Banco Bilbao Vizcaya, S.A., Argentaria,
Caja Postal y
<PAGE> 2
Exhibit 5.1 (continued)
Terra Networks, S.A. 2 November 10, 1999
Banco Hipotecario, S.A., Caja de Ahorros y Pensiones de Barcelona, S.A.
and Citibank Espana S.A. (as custodians) for the account of Citibank,
N.A., as depositary, under the Deposit Agreement among the Company,
Citibank, N.A. and the holders from time to time of ADRs issued
thereunder.
We hereby consent to the use of our name under the captions "Risk Factors -- It
may be difficult to enforce judgments against us in U.S. courts" and "Validity
of the Securities" in the Prospectus constituting part of the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Luis de Carlos
<PAGE> 1
EXHIBIT 8.1
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
212-450-4000
FAX: 212-450-4800
November 12,1999
Terra Networks, S.A.
Via de las Dos Castillas, 33
Complejo Atica
Edificio 1
Pozuelo de Alarcon
28223 Madrid, Spain
Ladies and Gentlemen:
We are acting as United States counsel for Terra Networks, S.A., a
corporation (sociedad anonima) organized under the laws of the Kingdom of Spain
(the "COMPANY"), in connection with the Registration Statement on Form F-1 (the
"REGISTRATION STATEMENT") filed with the United States Securities and Exchange
Commission by the Company on October 29, 1999 for the purpose of registering
under the United States Securities Act of 1933 (the "Act") the Company's
ordinary shares, par value 2 Euro per share (the "SHARES"), and Shares to be
represented by American Depositary Shares (the "ADSs"), each representing one
Shares. We have examined such matters of fact and law as we have deemed
necessary or advisable for the purpose of this opinion.
On the basis of the foregoing, we are of the opinion that the statements
in the Prospectus constituting part of the Registration Statement under the
caption "Taxation--United States Taxation" insofar as such statements constitute
summaries of the legal matters, documents or proceedings under the laws of the
United States, fairly summarize the matters referred to therein.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. In expressing our opinion herein, we have
relied as to all matters of Spanish law upon the opinion of Uria & Menendez,
Spanish counsel to the Company, which has been filed as an Exhibit to the
Registration Statement.
<PAGE> 2
Terra Networks, S.A. 2 November 12, 1999
Our opinion is, insofar as such laws are concerned, subject to the assumptions,
qualifications and exceptions contained in such opinions of Uria & Menendez.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Davis Polk & Wardwell
<PAGE> 1
Exhibit 8.2
Uria & Menendez
Abogados
Jorge Juan 6
28001 Madrid
Tel. 915 860 400
Fax. 915 860 403
Terra Networks, S.A.
Via de las Dos Castillas, 33
Complejo Atica
Edificio 1
Pozuelo de Alarcon
28223 Madrid, Spain
Madrid, November 12, 1999
Ladies and Gentlemen,
We are acting as Spanish counsel for Terra Networks, S.A., a corporation
(sociedad anonima) organized under the laws of the Kingdom of Spain (the
"Company"), in connection with the Registration Statement on Form F-1 (the
"Registration Statement") filed with the United States Securities and Exchange
Commission by the Company on October 29, 1999 for the purpose of registering
under the United States Securities Act of 1933 (the "Act") the Company's
ordinary shares, par value 2 Euro per share (the "Shares"), and Shares to be
represented by American Depositary Shares (the "ADSs"), each representing one
Share. We have examined such matters of fact and law as we have deemed necessary
or advisable for the purpose of this opinion.
On the basis of the foregoing, we are of the opinion that the statements in the
Prospectus constituting part of the Registration Statement under the caption
"Taxation--Spanish Taxation" insofar as such statements constitute summaries of
the legal matters, documents or proceedings under the laws of the Kingdom of
Spain, fairly summarize the matters referred to therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Luis de Carlos
<PAGE> 1
Exhibit 10.1
MASTER AGREEMENT
BETWEEN
- - TELEFONICA INTERACTIVA, S. A., a Spanish company with registered office in
Gran Via 28, Madrid, represented by its President Mr. Juan Perea Saenz de
Buruaga;
AND
- - AMADEUS GLOBAL TRAVEL DISTRIBUTION, S. A., a Spanish company with registered
office in Salvador de Madariaga 1, Madrid 28027, represented by its President
and CEO, Mr. Jose Antonio Tazon.
WHEREAS:
(a) TELEFONICA INTERACTIVA, S. A. (hereinafter referred to as "TI"), a 100%
subsidiary of TELEFONICA, S.A. (hereinafter referred to as "TELEFONICA"),
and AMADEUS GLOBAL TRAVEL DISTRIBUTION, S. A. (hereinafter referred to as
"AMADEUS"), intend to build up a cooperation relationship aiming at giving
full value to their respective activities in certain areas through a
common entrepreneurial project;
(b) AMADEUS has developed and operates a fully automated reservation and
distribution system known as AMADEUS Global Travel Distribution System;
(c) AMADEUS has gained specific know-how in the field of electronic travel
industry;
(d) On the basis of the experience acquired in the field of electronic travel
industry, AMADEUS has developed an automated system for reservation and
other travel-related services for airlines, travel agents and other
entities involved in this field;
- --------------------------------------------------------------------------------
Master Agreement Page 1 of 26
<PAGE> 2
(e) AMADEUS has further developed and implemented its own electronic website
technology for the field of travel;
(f) TI owns or operates an "Access to Internet" business, based on several
"Internet Service Provider" companies (including but not limited to
Teleline in Spain, ZAZ in Brasil, Advance in Argentina and CTC-Internet in
Chile), that is aimed to cover a significant part of the "Access to
Internet" market in Spain and Latin America;
(g) TI owns and operates an "Internet Portal" business, based on some
Global/Multilocal Internet High Traffic Websites (including but not
limited to Ole and ZAZ), devoted to both massive advertising and
e-commerce businesses, being this "Portal Network" one of the leading
services in terms of traffic within the Spanish and Portuguese speaking
countries and markets;
(h) TI owns and operates large content and functional Internet development
facilities;
(i) TELEFONICA, as owner of TI, is present in most of the Spanish and
Portuguese speaking countries with its telecommunication business. Among
the companies owned (fully or partially) by TELEFONICA there are several
mobile or cellular operators, cable operators and TV stations.
(j) Within the group of companies owned (fully or partially) by TELEFONICA, TI
has been created as the vehicle to concentrate most of the end-user
oriented Internet related activities world-wide;
(k) TI will make its best efforts to obtain from TELEFONICA and from its
Subsidiaries and Affiliated companies, support to AMADEUS and TI in this
cooperation project in order to contribute to the success of the new
company to be established as set forth herein;
- --------------------------------------------------------------------------------
Master Agreement Page 2 of 26
<PAGE> 3
(l) TI and AMADEUS (hereinafter referred to as "the Parties") have taken due
note of the information previously exchanged with respect to the outlooks,
strategies and operational conditions of their respective commercial
activities under this Agreement.
That being stated, the Parties hereto agree as follows:
Article 1. - Definitions
Affiliated or Affiliate means, with respect to a party, any person which,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such party, where "control" means
power and ability to elect a majority of the Board of Directors (or other
governing body) or to direct or cause the direction of the management and
policies of such Party, whether through ownership of voting securities (but in
no event less than fifty percent (50%) of the total issued and outstanding
common shares) or by contract.
AMADEUS Subscriber means any person, travel agency, or branch thereof, corporate
account or supplier of travel related services, which contracts to receive
access to the AMADEUS Global Travel Distribution System.
Business Plan means a plan for the business of NewCo consisting of:
(a) The strategic, development and marketing objectives of NewCo.
(b) The operating and financial targets and forecasts of NewCo for the year
1999, and the two financial years following that.
- --------------------------------------------------------------------------------
Master Agreement Page 3 of 26
<PAGE> 4
Budget means the budget of NewCo for the years 1999 and 2000 prepared using the
plans, guidelines and forecasts established in Attachment A, which also serves
as a basis for the Business Plan.
Confidential Information means:
(a) The provisions of this Agreement and
(b) Any information, data, practices and techniques supplied or disclosed by a
Party or a Subsidiary or Affiliate ("supplier") to a Party or a Subsidiary
or Affiliate to a Party in connection with NewCo ("recipient") other than
information, data, practices and techniques:
(i) in the possession of a recipient prior to the date of its disclosure
to a recipient by a supplier;
(ii) in the public domain prior to the date of its disclosure to a
recipient by a supplier;
(iii) which have entered the public domain other than as a result of
breach of confidence by the recipient; or
(iv) supplied to a recipient without restriction by a third party who is
under no obligation to a supplier to maintain that information in
confidence.
Security Interest means:
(a) a mortgage, pledge, lien, charge, assignment, hypothecation, security
interest or any interest or power otherwise arising in or over any
interest in any share or reserved in or over an asset, or any other right
of a creditor to have a claim satisfied prior to other creditors from the
proceeds of any asset; or
(b) an agreement to create or give any security or right referred to in
paragraph (a) of this definition.
Subsidiary(ies) means an entity (already existing or yet to be established)
directly or indirectly controlled or owned by a party, as the case may be. (1)
Furthermore, direct or indirect control or ownership shall be deemed to exist as
decribed in this Article 1 ("Definitions").
(1) [ILLEGIBLE]
- --------------------------------------------------------------------------------
Master Agreement Page 4 of 26
<PAGE> 5
Article 2. - Purpose of the Agreement
2.1. With this Agreement TI and AMADEUS intend to establish a jointly owned
company with the objective of establishing a travel-focused website. This
website will provide news, reports, destination information, and on-line
purchase facilities for travel and travel-related products.
Said jointly owned company will be the only travel-oriented component seamlessly
integrated in the overall "internet hubs" being developed by TI. Said Internet
hub aims to target the Spanish and Portuguese speaking markets with the
provision of content and e-commerce services.
The main target customers will be Spanish and Portuguese speaking customers
based in Spain, Portugal and Latin American countries listed in Attachment B.
In particular, the jointly owned company's website will encompass:
(i) On-line purchase facilities provided by AMADEUS through the use of
the 1a-Res product. This product enables access to availability,
fare and reservations on air, hotel, and car services, including
access to negotiated fares and special offers. Additional providers
will be added as they become available through AMADEUS web products,
or as they are specifically developed for the jointly owned company
(for instance, local railways and ferries). Sales of tour operator
packages and cruise services may also initially be offered via
e-mail and/or call centers.
(ii) Information content related to travel that will initially be
purchased, provided by both Parties and later on will be
complemented by the jointly owned company's own editorial/content
management activity. This content will include (but will not be
- --------------------------------------------------------------------------------
Master Agreement Page 5 of 26
<PAGE> 6
limited to) live news feeds related to travel, ad-hoc reports and
articles and links to websites chosen by the jointly owned company.
(iii) Fulfillment services will be contracted out to travel agencies
working with the AMADEUS System in the various targeted markets. The
selection of each travel agency will be mutually agreed by both
Parties.
(iv) Customer support. The jointly owned company will explore the best
solution for Call Center support, if any.
(v) Payment services. Based on AMADEUS' 1a-Res facilities for Air, Car
and Hotel. The jointly owned company will look for adequate
solutions to complete the role of the merchant.
(vi) New services and functionalities covering travel-related and
non-travel-related products will be added at a later stage, as
agreed upon by the Parties.
2.2. In particular, the Parties agree to establish a Spanish "Sociedad Anonima"
(hereinafter referred to as "NewCo") which shall establish the travel-focused
website as described in Article 2.1.
2.3 NewCo shall enter into service agreements with AMADEUS and TI in order to
make available to NewCo the required facilities and services related to the
above. Such agreements shall be discussed in good faith and executed within a
term of seventy five (75) days of signature of this Agreement.
- --------------------------------------------------------------------------------
Master Agreement Page 6 of 26
<PAGE> 7
Article 3. - Corporate Purpose of NewCo
3.1. NewCo shall have as its main purpose the establishment of the
travel-focused website as described in Article 2.1.
3.2. In relation to the above, TI and AMADEUS undertake all reasonable efforts
to supply to NewCo, and implement, following an agreed schedule, the services
and facilities referred to in Attachment A to this Agreement.
3.3. The Parties will enter into an exclusive agreement with AMADEUS for the
access by NewCo to the reservation and distribution facilities of AMADEUS. It is
understood that NewCo will not, in any case, enter into any sort of contractual
agreement or arrangement with any other computer reservation system (CRS) or
distribution system without the prior written approval of the Parties.
Article 4. - Obligations of the Parties
4.1. In accordance with the provisions set forth in Attachment A and subject to
the relevant contractual arrangements, which the Parties intend to conclude
within seventy five (75) days of signature of this Agreement, TI shall (directly
or through the adequate channel or Subsidiary):
(a) promote the NewCo website through all feasible media channels of TI,
both on-line and off-line. This will be performed via regular
advertising at the most favourable rate, and via the use of spare
advertising capacity.
(b) place the website in a prominent position on TI web properties;
(c) give access to competitive technology solutions;
(d) provide content from various media of TI;
- --------------------------------------------------------------------------------
Master Agreement Page 7 of 26
<PAGE> 8
(e) promote the distribution of the services and facilities described
herein through TELEFONICA's mobile phone networks, as feasible and
according to the agreements between NewCo and the corresponding
company providing mobile phone networks;
(f) include in TI's own websites a routing link to the NewCo website.
Other types of support shall be agreed by the Parties and regulated from time to
time (on a case-by-case basis).
In addition to all of the above, and bearing in mind that TI, TELEFONICA and its
Affiliates and Subsidiaries are legally independent companies, TI will make its
best efforts to cause TELEFONICA and its Affiliates and Subsidiaries to perform
the following:
(a) promote the NewCo website through all feasible media channels of
TELEFONICA and its Affiliates and Subsidiaries, both on-line and
off-line. This will be performed via regular advertising at the most
favourable rate, and via the use of spare advertising capacity.
(b) place the website in a prominent position on TELEFONICA and its
Affiliates and Subsidiaries web properties;
(c) give access to competitive technology solutions;
(d) provide content from various media of TELEFONICA and its Affiliates
and Subsidiaries;
(e) promote the distribution of the services and facilities described
herein through TELEFONICA's mobile phone networks, as feasible and
according to the agreements between NewCo and the corresponding
company providing mobile phone networks;
(f) include in the websites owned by TELEFONICA and its Affiliates and
Subsidiaries a routing link to the NewCo website.
4.2 In accordance with the provisions set forth in Attachment A and subject to
the relevant contractual arrangements, which the Parties intend to conclude
within seventy five (75) days of
- --------------------------------------------------------------------------------
Master Agreement Page 8 of 26
<PAGE> 9
signature of this Agreement, AMADEUS shall (directly or through the adequate
channel or Subsidiary):
(a) provide NewCo with access and usage of the customised on-line
booking engine (being the AMADEUS 1a-Res facility at the time of
signature of this Agreement) for air travel, hotel and car
reservations initially (additional provider sevices will be added as
they become available) and, eventually, to other mutually agreed web
based travel related facilities, so that NewCo may carry out
travel-related reservations, at the most favourable customer price
in the markets covered by this Agreement (provided to customers of
comparable size and volumes);
(b) make available its infrastructures and technical know-how for the
development of travel-related e-commerce, also with reference to the
definition and supervision of the fulfilment and logistics
activities;
(c) develop and establish contacts between NewCo and the main suppliers
(at a global level) of travel-related services;
(d) channel NewCo requirements, through the relevant organization within
the AMADEUS Group, into the AMADEUS product plan process, covering
distribution products and functionalities;
(e) put at the disposal of NewCo any appropriate relevant material
concerning the facilities and services described in Attachment A;
(f) include in its own website - as well as in the other sites of the
Subsidiaries - a routing link to the site of NewCo;
Other types support shall be agreed by the Parties and regulated from time to
time (on a case-by-case basis).
- --------------------------------------------------------------------------------
Master Agreement Page 9 of 26
<PAGE> 10
Article 5. - Special Obligations
5.1 Subject to the exceptions noted herein, AMADEUS and TI (on their behalf and
on behalf of their Subsidiaries) agree not to invest, alone or with other
parties, into similar ventures, in order to develop the offer through websites
travel information and on-line purchase of travel-related products for end-users
for the markets of Spain, Portugal and the countries of Latin America listed in
Attachment B.
5.2 AMADEUS and TI agree to actively promote the website of NewCo.
5.3 It is understood and agreed that, as part of their core business, AMADEUS
and its National Marketing Companies and similar distributors may offer
internet-based products and services, as well as corporate management solutions,
to AMADEUS Subscribers. Examples of these products and services are web booking
engines and programmatic interfaces to the AMADEUS System (API).
5.4 TI will have the right to make its own information content available through
other websites, not developed by or for NewCo, regardless of the fact that these
contents are also used by NewCo.
5.5 TI and AMADEUS and/or any of their Subsidiaries, as the case may be, shall
not be bound by the provisions of Article 5.1 above in the event the other Party
breaches the special obligation therein described.
In addition to the above, AMADEUS shall not, in the countries affected by the
activities described below, be bound by the provisions of Article 5.1 in the
event that TELEFONICA by itself or through its Affiliates and/or Subsidiaries
invests with a significant participation, alone or with other parties, in
ventures dedicated to substantially the same purpose as NewCo, without AMADEUS
prior written consent.
- --------------------------------------------------------------------------------
Master Agreement Page 10 of 26
<PAGE> 11
Article 6. - Registered Office. Corporate Name. Bylaws.
NewCo shall have its registered office in Madrid, and shall be incorporated
according to the provisions of this Agreement and the Articles of Association,
not later than 75 (seventy-five) days after the date of signature of this
Agreement.
Article 7. - Corporate Capital
7.1. NewCo shall have a fully subscribed and paid-up corporate capital
equivalent to EURO 1 million which shall be represented by 1 million shares
having a face value of 1 EURO each.
7.2 The capital of NewCo shall be subscribed and fully disbursed as follows:
- - AMADEUS: EURO 500,000 (five hundred thousand)
- - TI: EURO 500,000 (five hundred thousand).
Article 8. - Restriction on Sale and Transfer of Shares
8.1. TI and AMADEUS shall maintain clear title to, and unrestricted voting
rights in, any and all shares or participations ("shares") owned by each of them
in NewCo. The shares of NewCo and/or any right related or arising out of the
same shall not be encumbered with liens of any kind or Security Interest,
without prior consent of all Parties.
The shares of NewCo, and/or any right related or arising out of the same, shall
not be transferable to third parties for a period of five (5) years from the
date of incorporation of NewCo (the "restriction period"), with the exception of
transfers, by either Party, to a Subsidiary
- --------------------------------------------------------------------------------
Master Agreement Page 11 of 26
<PAGE> 12
provided that, prior to any such transfer (which must be all shares and/or
related rights held by the transferring shareholder):
- Any such Subsidiary to which shares and/or related rights are
transferred agrees in writing with the other shareholder(s) to be
bound by all of the terms of this Agreement; and
- The shareholder transferring its interest to its Subsidiary agrees
in writing with the other shareholder(s) to remain jointly and
severally liable with the transferee for any breach by the latter of
any of the terms of this Agreement.
- The shareholder transferring its interest shall remain bound by all
provisions and terms of this Agreement related to marketing and
support services, confidentiality and exclusivity commitments.
8.2. The Parties shall discuss and agree on the possible admission of third
parties as shareholders of NewCo, in the event such third parties are able to
provide a significant contribution, financially or otherwise to the targets and
performance of NewCo. For any such event, and if mutual agreement is reached, it
is understood that it shall be effected by means of an increase in the capital
stock or through an assignment of equal portions of the shares held by the
original shareholders (if they decide to proceed to any such assignment).
Article 9. - Right of First Refusal -- Transfer of shares
9.1. Upon expiration of the restriction period, any transfer of shares in NewCo
and/or related rights, except for a transfer of shares and/or related rights to
a Subsidiary pursuant to Article 8, shall be subject to a right of first refusal
in favor of AMADEUS and TI as the case may be.
9.2. Prior to any transfer of shares whatsoever, or any transfer of any right
related or arising out of the shares (the "transfer"), the transferring
shareholder shall give written notice to all other shareholders at the address
indicated in the Register of Shareholders, by registered mail,
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Master Agreement Page 12 of 26
<PAGE> 13
return receipt requested, of its intention to sell (the "transfer notice"). The
transfer notice shall provide information regarding the number of shares or
related rights for sale, the name of the proposed transferee (and of the actual
beneficial owner), and the agreed price. AMADEUS and/or TI, as the case may be,
shall have sixty (60) days from receipt of the transfer notice to communicate to
the transferring shareholder his acceptance, or refusal, to acquire the shares
and/or related rights being sold. Failure to respond within sixty (60) days
from receipt ("the term") shall be deemed election not to purchase.
9.3. If neither AMADEUS, nor TI, elect to exercise its right of first refusal,
the transferring shareholder shall close the sale within sixty (60) days from
the expiration of the term, and transfer the shares or related rights to the
proposed transferee, at the same price and conditions indicated in the transfer
notice. If neither AMADEUS, nor TI, elect to exercise the right of first
refusal, the transfer of shares and/or related rights shall be made within sixty
(60) days from the expiration of the term, at the same terms and conditions
indicated in the transfer notice. If both AMADEUS and TI elect to exercise the
right of first refusal, the shares and/or related rights shall be allocated in
proportion to their participation in NewCo.
9.4. Within thirty (30) days after the completion of any transfer of the shares
in NewCo and/or related rights, including transfers pursuant to Article 8 above,
the transferring shareholder shall deliver to the other shareholders and to
NewCo:
- An affidavit of the transferring shareholder containing the true and
complete name and address of the party to whom the shares and/or
related rights were transferred; the price and terms and conditions
upon which the shares and/or related rights were transferred;
- An agreement of the buyer or transferee ("transferee") of the shares
whereby such transferee agrees to be bound by all the obligations
under this Agreement, duly signed by such transferee. Should the
transferee fail to execute such an agreement, the transferring
shareholder shall be obliged to guarantee, on terms
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Master Agreement Page 13 of 26
<PAGE> 14
(including financial commitments) set forth by the other
shareholder(s), that the transferee complies with the obligations
under this Agreement.
9.5. In the event that any shareholder of NewCo transfers its shares in NewCo,
and/or related rights, to a Subsidiary or to a third party, such a transfer
shall not affect, impair, or diminish the rights of AMADEUS and TI under this
Agreement, unless otherwise agreed through a written amendment to this
Agreement. The transferring shareholder shall have the responsibility to
regulate its relationship with the transferee accordingly, and shall be
responsible to the other shareholders in the event that the transferee exercises
any rights in such a manner as to affect, impair or otherwise diminish the
rights of the other shareholders under this Master Agreement.
9.6. Should any of the Parties infringe any right of first refusal of the other
Party, or the procedure set forth herein, such breaching Party shall pay to each
other Party a lump sum amounting to twice the purchase price paid by the third
party, without prejudice to the rights of the non-breaching Party to claim for
damages under Spanish Law.
Article 10. - Budget
10.1. Within sixty (60) days of execution of this Agreement, the Parties shall
negotiate, draw up and agree upon an initial Budget covering the years 1999 and
2000, which shall become an integral part of this Agreement.
10.2. By the end of November of each year, the Board of Directors of NewCo shall
approve the Budget for the following year with the majorities provided in
Article 14 below.
10.3. If during any financial period it is necessary to proceed to any activity
determining significant or material variances to the approved Budget, such
activity may be carried out only
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Master Agreement Page 14 of 26
<PAGE> 15
after specific approval by the Board of Directors to be resolved at the
conditions provided in Article 14 below.
10.4. The Parties undertake to support the implementation of the approved Budget
according to the principle of good faith and to take any action which is deemed
appropriate or necessary for such purpose.
Article 11. - Management Report and Information to the Parties
11.1. The Board of Directors of NewCo shall meet every three months to review
the data concerning the quarterly review of the Business Plan and the Budget
follow-up of NewCo, which shall be drawn up for this occasion by the General
Manager.
11.2. Furthermore, NewCo shall supply to each of the Parties comprehensive
information and data regarding the management/business trends and the economic
results of the same. The frequency and conditions at which such information is
to be supplied shall be agreed by the Parties.
Article 12. - Board of Directors of NewCo
12.1. NewCo shall be governed by a Board of Directors (the "Board of Directors"
or the "Board") which shall consist of four (4) members. TI shall have the right
to nominate two (2) members of the Board and AMADEUS shall also have the right
to nominate two (2) members. The members shall remain in office for a period of
three years, renewable upon decision by the General Meeting of Shareholders.
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<PAGE> 16
12.2. If a Director of NewCo must for any reason be replaced, the Party that
nominated such director will nominate a replacement and both Parties shall cause
their shares to be voted for such replacement.
12.3. If a Party votes its shares to remove a member that it nominated, the
other Party shall also vote its shares for such removal.
12.4. The Directors shall not be remunerated for this function, unless otherwise
agreed by the Parties.
12.5. The Board, at its first meeting, shall appoint a permanent secretary who
shall not be a Board member. The permanent secretary shall act under the
direction of the Chairman. The permanent secretary shall attend every Board
meeting and shall be responsible for the drafting of the minutes of the Board,
the notice of each following Board meeting and any required filings or
registrations of decisions or resolutions taken by NewCo's governing bodies.
12.6 Should any of the Parties withdraw - for any reason - from NewCo, at the
moment of assignment of its shares, such Party shall also deliver the letters of
resignation of the Directors appointed by it. In case the letter(s) of
resignation is not delivered and it is necessary to proceed to a removal of such
Directors adopting a resolution to this end, NewCo shall be held harmless from
any and all claims, suits, recoveries or similar which the removed Directors may
file.
Article 13. - Corporate Offices. Chairman. General Manager.
13.1. The Chairman of the Board of Directors of NewCo shall be appointed for the
first year upon designation by the Board of Directors; for any subsequent year,
the principle of alternate government shall be applied. The Parties further
establish that - pursuant to the provisions
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<PAGE> 17
contained in the Articles of Association, - the Chairman of the Board of
Directors shall not be entitled to any special voting rights or a casting vote.
13.2. The General Manager - as mentioned in Article 11.1. above - shall carry
out his/her activity within the framework of the decisions taken by the Board of
Directors and of the provisions of the Budget and the Business Plan. The General
Manager shall further be vested with powers of representation, but only in
connection with the activities and matters decided by the Board and included in
the registered powers of attorney.
Article 14. - Management of NewCo
14.1. The Board of Directors shall have a quorum with the participation of a
majority of the Directors in office, and it shall adopt valid resolutions with
the favourable vote of the absolute majority of the Directors attending.
14.2. Notwithstanding the above, the Parties agree that a quorum of 3 (three)
out of 4 (four) members and a resolution majority with the same proportions
shall be required for the adoption of any resolution or decision concerning the
following matters:
(a) Make any investment or expenditure in excess of EURO 75,000 for any
single investment or expenditure.
(b) Sell fixed assets with a price or value in excess of EURO 75,000.
(c) Sell any intellectual property rights.
(d) Commence or settle any major pending or threatened arbitration,
litigation or other litigated proceeding except for routine
collection matters.
(e) Enter into any contract, including borrowing and debt guarantees,
outside the normal course of business.
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<PAGE> 18
(f) Enter into any contract for the licensing or transfer of technology,
or the provision of technical assistance to, or from, any third
party outside the normal course of the business.
(g) Set up the guidelines for the terms (including fee structures) on
which NewCo shall contract with persons or entities providing
services to NewCo.
(h) Approve and subsequently revise or modify the Budget and / or the
Business Plan, and any contracts entered into with related or
Affiliated parties, including those entered into with a shareholder
of NewCo.
(i) Major changes in business structure including the creation of
subsidiaries and the development of new types of products or
facilities not included in Attachment A.
(j) Acquire or absorb other entities or otherwise carry out investment
in equity securities of other companies.
(k) Proposals with respect to capital contribution, investment plans or
financing from the shareholders.
14.3 Appointment and/or removal of the General Manager and acceptance of
candidates for managerial positions proposed by the General Manager shall be
subject to unanimous decision of the Board of Directors, provided always that
all Board members shall be present or represented in the Board of Directors
meeting taking this decision.
Article 15. - Impossibility on the Part of the Board of Directors of NewCo
to Adopt Valid Resolutions
15.1. In the event the Board of Directors of NewCo is not able to adopt a
resolution for the matters requiring a qualified majority as established in
Article 14.2. above ("deadlock"), the Board shall allow for a period of 30
(thirty) days from the date of such deadlock in order to reexamine the subject
matter of the relevant resolution and to submit alternative proposals regarding
the same.
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<PAGE> 19
15.2. During such period, the Board members shall review in detail the issues
and matters which have led to the non-agreement; they shall do so with the help
of NewCo managers and officers responsible for the matters mentioned in the
relevant resolution.
15.3. If at the end of such thirty-day period the situation of deadlock is still
in place (i.e. NewCo's Board is still not able to adopt a resolution with the
quorum or majorities established in Article 14.2. above), the Parties, in the
persons of their respective President and CEO, shall meet to discuss and settle
the disagreements which resulted in the deadlock within 15 (days) from the date
on which they have been asked to solve the matter.
Article 16. Deadlock
If at the end of the period as stated in Article 15.3. above, the Parties do not
reach an agreement and the deadlock situation is still in place, the Parties
commit to perform and implement all necessary actions in order to proceed with
the dissolution of NewCo. This dissolution will take place according to the
Spanish law.
Article 17. - Suspensive Condition
17.1. The Parties expressly agree and mutually acknowledge that the validity and
enforceability of this Agreement shall be subject to the occurrence of the
following conditions:
- Assessment, valuation and acceptance of the value (also with
reference to staff costs) of the contributions made by each of the
Parties to NewCo;
- Assessment, valuation and acceptance of the services and revenue
flows between each of AMADEUS and TI with NewCo, following the
guidelines and principles set forth in Attachment A.
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<PAGE> 20
- Approval, to the satisfaction of the Parties, of the Budget and
Business Plan of Newco.
- Approval by the respective Board of Directors of AMADEUS and TI,
which the Parties shall make all reasonable efforts to obtain within
seventy five (75) days of signature of this Agreement.
17.2 The Parties shall work together in good faith so that all these suspensive
conditions are achieved, to their mutual satisfaction, within seventy five (75)
days of signature of this Agreement.
If no agreement has been reached on any of these matters, or no Board approval
has been obtained from either of the Parties, by October 30, 1999, the Parties
shall cease any further discussions on the matters contemplated hereby, unless
otherwise agreed, and the Parties shall return to each other any Confidential
Information of the other Party in its possession, including materials or
information derived from such Confidential Information.
Article 18. - General Meeting of Shareholders
18.1. The Parties agree at any General Meeting of Shareholders of NewCo to
exercise their voting powers in such manner that the agreements between the
Parties herein recorded are performed. Any decisions at the General Meeting of
Shareholders shall be taken in accordance with this Agreement, the Articles of
Association and the provisions of the Spanish law.
18.2. The General Meeting shall only adopt valid resolutions on the following
items if a quorum of 75% of the shares of NewCo are present or represented and
if the votes are unanimous:
(a) Dissolution or liquidation of NewCo
(b) Alterations to the Articles of Association of NewCo
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Master Agreement Page 20 of 26
<PAGE> 21
(c) Merger of NewCo or sale of all or substantially all of the assets of
NewCo
(d) Payment of dividends, if the results are below 10% of the approved
Budget results
(e) Appointment or dismissal of NewCo's auditor
(f) Relief of responsibility of each Board member and of the General
Manager.
(g) Capital increase, decrease and any transfer of shares by the
Parties, except as set forth in Section 8.1. for Subsidiaries.
18.3 If no quorum is reached as set forth in Section 18.2, the General Meeting
shall be convoked for the seventh day after the first meeting for another
meeting, where quorum will be established if 65% of the shares of NewCo are
present or represented at the meeting. Voting requirements will be the same as
in Section 18.2.
Article 19. - Confidential Nature of the Agreement
19.1. The Parties shall maintain the contents of this Agreement and any other
matter linked to the understandings reached herein strictly confidential. It is
also understood that the conditions and contents of any information given to
third parties, including press releases and other kinds of communications
delivered through other means of information to the general public, shall be
agreed between the Parties.
19.2 The Parties undertake to maintain the Confidential Information in strict
confidence, prohibiting any disclosure or unauthorised use, except to employees
and advisors on a "need-to know" basis and informing such recipients of the
confidential nature of the Confidential Information.
19.3 In any event, the Parties undertake to use the information received in a
confidential manner and only for the purposes of performance of this Agreement.
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<PAGE> 22
19.4 The rights and obligations of the Parties with respect to confidentiality
shall survive termination of this Agreement for a period of five (5) years.
Article 20. - Duration of the Agreement - Termination
20.1. This Agreement commences upon execution, subject to the suspensive
conditions set forth in Article 17, and terminates on the earlier to occur of:
(a) the date upon which only either AMADEUS or TI hold shares; or
(b) the date upon which NewCo is liquidated.
20.2. The Parties agree and mutually acknowledge that this Agreement shall be
automatically terminated:
(a) in the event NewCo is not able to obtain - within a reasonable time
period - the authorizations which may be necessary pursuant to the
laws and regulations currently in force to carry out its business
activity as specified in this Agreement.
(b) in the event of material breach by a Party of its obligations under
this Agreement, which has not been cured by the breaching Party
within thirty (30) days of the occurrence of the event which gave
rise to the breach.
20.3 In the event of termination of this Agreement as set forth herein, the
Parties agree to vote their shares in order to dissolve and liquidate NewCo,
pursuant to the provisions and under the terms established by Law and the
Articles of Association.
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<PAGE> 23
Article 21. - Entire Agreement - Binding Nature of the Agreement. - Amendments
21.1 All the Articles and Attachments are an integral and substantial part of
this Agreement. In the event of any inconsistency or conflict between the
Articles and Attachments, the Articles shall prevail.
21.2 The Parties shall implement the provisions of this Agreement also in case
the clauses contained herein are different from those of the Articles of
Association of NewCo. In the event of an inconsistency between the Articles and
this Agreement, this Agreement shall prevail to the extent of the inconsistency
and each Party agrees to take any steps, within its power, necessary to procure
that the Articles are altered to eliminate the inconsistency.
21.3 This Agreement may be amended only by means of a subsequent deed executed
by all Parties; this deed shall expressly state that it is meant as an amendment
to this Agreement.
Article 22. - Applicable Law. Rules for the Construction of the Agreement
22.1. This Agreement shall be governed by and construed in accordance with
Spanish law.
22.2 The Parties agree that in the event one or more of the clauses contained in
this Agreement become void, invalid or unenforceable, such voidness or
invalidity shall not imply the invalidity of the Agreement as a whole. In any
such case, the void, invalid or unenforceable clauses shall be deemed excluded
from this Agreement, unless the invalidity or non-effectiveness of such
clause(s) leads to an irreparable damage for one of the Parties or to an
elimination of the goal for which this Agreement has been entered into.
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<PAGE> 24
The Parties agree to take all reasonable steps to replace the void, invalid or
unenforceable clause with a valid or enforceable one that as closely as possible
reflect the intent of the Parties when signing this Agreement.
Article 23. -- Notices
23.1. Any notice exchanged between the Parties with respect to this Agreement
shall be made in writing and shall be deemed validly given: (i) when sent by
registered mail or telegram or other means, upon receipt of the same; (ii) when
sent by telefax, at the moment on which the addressee confirms receipt of the
same (also by telefax); it is understood that the above notices shall be sent to
the Parties at the following addresses (or at such other addresses, telex and
telefax numbers that the Parties may indicate from time to time):
- - TELEFONICA INTERACTIVA, S. A.
Gran Via, 28
Madrid 28013
ATTN: Mr. Juan Perea Saez de Buruaga (President)
With copy to the Legal Department
- - AMADEUS GLOBAL TRAVEL DISTRIBUTION, S. A.
Salvador de Madariaga, 1
Madrid 28027
ATTN: Mr. Jose Antonio Tazon (President and CEO)
With copy to the Legal Department
23.2. It is also agreed that the Parties choose address for service (for any
purpose connected with this Agreement, including service of process) at the
addresses mentioned above (or at such other address which the Parties may from
time to time indicate).
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Master Agreement Page 24 of 26
<PAGE> 25
Article 24 - Tolerance of the Parties
Any tolerance by either of the Parties of any behaviour by the other Party which
is in breach of the provisions of this Agreement shall not be deemed a waiver to
the rights deriving from the provisions breached nor to the right to claim exact
performance of all terms and conditions hereunder.
Article 25. -- Arbitration
25.1. Any matter that cannot be resolved by agreement between the Parties and
any other differences or dispute arising out of or relating to this Agreement,
including any question concerning its existence, validity, or termination, shall
be finally settled by arbitration according to the rules of the International
Chamber of Commerce of Madrid, Spain.
25.2. Appointment of arbitrators. The number of arbitrators shall be three.
25.3 Appointment of arbitrators. The arbitrators shall be appointed as follows:
Each Party shall nominate one arbitrator for confirmation by the ICC. If a Party
fails to nominate an arbitrator within the time period specified by the ICC
Rules, the ICC Court of Arbitrators shall appoint an arbitrator for that Party.
The arbitrators nominated by the Parties shall, within 21 days after their
confirmation by the ICC Court of Arbitration, agree on a third arbitrator who
shall act as the Chairman.
25.4. Language of arbitration. The language of the arbitration shall be English.
25.5. Binding nature of arbitration. The decision of the arbitrators shall be
final and conclusive and shall be binding on the Parties. Any award rendered by
the arbitrators may be enforced by any court or competent jurisdiction.
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<PAGE> 26
25.6. Exclusion of the right to appeal. The Parties agree to exclude the right
of application or appeal to any court in connection with any question of law
arising in the course of the arbitration proceedings or out of the award.
25.7. Place of arbitration. The place of arbitration shall be Madrid, Spain.
25.8 The governing law shall be Spanish Law. In procedural aspects, the Parties
agree to abide by the terms of the ICC rules of procedure and, in the event of a
lack of rules in any particular instance or matter, by the provisions of the
"Ley de Enjuiciamiento Civil espanola", as amended from time to time.
25.9 Currency of award. A monetary award shall be denominated in Euros.
IN WITNESS HEREOF, the Parties have executed this Agreement in Madrid as of the
23rd of July, 1999.
TELEFONICA INTERACTIVA, S.A.
/s/ Juan Perea Saez de Buruaga
- ----------------------------------------
Juan Perea Saez de Buruaga, President
AMADEUS GLOBAL TRAVEL DISTRIBUTION, S.A.
/s/ Jose Antonio Tazon
- ----------------------------------------
Jose Antonio Tazon, President and CEO
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Master Agreement Page 26 of 26
<PAGE> 27
The following annex to this agreement has not been included:
Attachment A -- Project for the Initiative -- Guidelines and Principles
Copies of the annex not included herein will be provided upon request.
<PAGE> 28
Attachment B
List of Latin American countries
Argentina
Bolivia
Brazil
Chile
Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Honduras
Mexico
Nicaragua
Panama
Paraguay
Peru
Uruguay
Venezuela
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Master Agreement Attachment B
<PAGE> 29
Madrid, October 6th, 1999
In accordance with the provisions of the Master Agreement executed on July
23rd, 1999 between Amadeus Global Travel Distribution, S.A. ("Amadeus") and
Terra Networks, S.A. ("Terra" - formerly, Telefonica Interactiva, S.A.), both
Parties had seventy five (75) days of signature of such Master Agreement to
conclude certain requirements.
Today the aforementioned term finishes and, although preliminary actions
have been taken, the Parties have not yet reached the requirements within the
initial term.
Therefore, assuming that both Parties equally cause this delay over such
initial term, it would be necessary that both Parties, by means of their
acceptance and signature of this letter, expressly amend and extend the initial
term with fifteen additional days. Both Parties expect this new term to be
sufficient to conclude the negotiations and to agree with the final drafting of
their respective agreements with NewCo.
For this purpose, we signed this letter as proof of our approval of this
extension of the term to conclude the agreements with the NewCo.
AMADEUS GLOBAL TRAVEL DISTRIBUTION, S.A.
/s/ Tomas Lopez Fernebrand
Tomas Lopez Fernebrand
TERRA NETWORKS, S.A.
/s/ Cristina Lamana
Cristina Lamana
<PAGE> 30
Madrid, October 20th, 1999
In accordance with the provisions of the Master Agreement executed on July
23rd, 1999 between Amadeus Global Travel Distribution, S.A. ("Amadeus") and
Terra Networks, S.A. ("Terra" - formerly, Telefonica Interactiva, S.A.), both
Parties had seventy five (75) days of signature of such Master Agreement to
conclude certain requirements.
By means of Letter signed by Amadeus and Terra last 6th of October, the 75
days period was extended two weeks ending the 20th of October 1999.
Today the aforementioned extension finishes and, although additional
actions have been taken, the Parties have not yet completely reached all the
requirements within the agreed extended term.
Therefore, assuming that both Parties equally cause this delay over such
initial term, it would be necessary that both Parties, by means of their
acceptance and signature of this letter, expressly amend and additionally extend
the term until the 31st of December, 1999. Both Parties expect this new term to
be sufficient to conclude the negotiations and to agree with the final drafting
of their respective agreements with the new joint venture company and to
complete the basic guidelines of the budget and business plan of the new joint
venture company.
For this purpose, we signed this letter as proof of our approval of the
extension of the term as described above.
AMADEUS GLOBAL TRAVEL DISTRIBUTION, S.A.
/s/ Tomas Lopez Fernebrand
Tomas Lopez Fernebrand
TERRA NETWORKS, S.A.
/s/ Cristina Lamana
Cristina Lamana
<PAGE> 1
Exhibit 10.8
TELEFONICA TERRA NETWORKS
AGREEMENT FOR PROVISION OF SERVICES
This Agreement for the Provision of Services is entered into by and between:
(i) TELEFONICA DEL PERU, S.A.A., identified under no. 10001749 of the Unified
Taxpayers Registry (Registro Unico de Contribuyentes - RUC), with
corporate offices at Avenida Arequipa 1155, Santa Beatriz, in the province
and department of Lima, Peru; represented herein by Jose Ramon Vela
Martinez, in his capacity as General Manager, as authorized in a special
power of attorney bearing on this agreement, and identified with Alien
Identification Card No. N-87010; hereinafter referred to as "TELEFONICA."
(ii) TERRA NETWORKS PERU S.A., identified under no. 43280716 of the Unified
Taxpayers Registry (Registro Unico de Contribuyentes - RUC), with
corporate offices at in the city of Lima, Peru; represented herein by
Rainer Harry Spitzer Chang, in his capacity as General Manager, identified
with Voter Registration Card No. 07866791, who states that he has
sufficient authority to enter into this agreement; hereinafter referred to
as "TNP."
In addition, the following are also parties to the agreement to the effects
indicated within the body of the agreement.
(iii) TELEFONICA SERVICIOS INTERNET S.A.C., identified under no. 30753850 of the
Unified Taxpayers Registry (Registro Unico de Contribuyentes - RUC); with
corporate offices at Avenida Jorge Basadre 592, Office 504, Torre Azul,
Piso 4, San Isidro, Lima, represented herein by Jesus Equiza Escudero,
Peru, who states that he has sufficient authority to enter into this
agreement, and is identified with Alien Identification Card No. 97536;
hereinafter referred to as "TSI."
(iv) TERRA NETWORKS, S.A., a corporation founded under the laws of Spain,
identified under Tax ID No. A-82/196060, with corporate offices at Via de
las 2 Castillas No. 33, Pozuelo de Alarcon (Madrid) 28224 Spain,
represented herein by Juan Perea Saenz de Buruaga in his capacity as
Chairman and Chief Executive, identified with National ID Card No.
14801736-W, who warrants that he has sufficient authority to enter into
this agreement; hereinafter referred to as "TERRA NETWORKS."
This Agreement for the Provision of Services is entered into according to the
following terms and conditions:
<PAGE> 2
BACKGROUND
ONE. - ON TELEFONICA, TSI AND TNP
1.1 TELEFONICA is a publicly held corporation dedicated to providing a wide
range of public telecommunications services in Peru, either directly or
indirectly through its subsidiaries. These services include long distance
carrier services, local fixed phone service (domestic and international),
cable television service, and mobile telephony service, among others.
TELEFONICA disposes of all administrative licenses required for carrying
out the activities listed in this paragraph.
1.2 TSI is a subsidiary of TELEFONICA, founded as part of the latter's
strategy for providing value added services. For the purposes of this
agreement, the listed services shall hereinafter be referred to as the
"Internet Services."
In conducting its commercial activities, TSI provides Internet Services
(hereinafter, for the purposes of this agreement, the listed services
shall be referred to as the "INTERNET SERVICES"), not including what is
known as a "Portal," to two clearly defined market segments: (i) the
market consisting of corporate customers (including companies using
INTERNET SERVICES), and (ii) the market including residential customers.
TSI warrants that each line of business is conducted independently, as
demonstrated in the customer breakdown, listing the customers that belong
to each of these market segments.
1.3 Within the overall framework of the global strategies designed for the
various companies making up the Grupo Societario Telefonica, S.A.
(hereinafter, referred to as the "Telefonica Group"), including the
parties hereto, it was decided that it was in the interest of all
concerned to develop the residential user market on an integrated basis
worldwide. For this reason, a decision was made to run the services to be
offered to this market through a specific worldwide corporate sub-group,
owed by the Telefonica Group, and to this end, TERRA NETWORKS was founded.
TERRA NETWORKS is responsible for developing market activities in the
various countries where the Telefonica Group operates, either directly or
through its affiliates or subsidiaries, for INTERNET SERVICES aimed at
residential users and small business markets, known as "small offices/home
offices" (hereinafter, "SOHOs"). Telefonica and the other parties
understand that the growth strategy for these markets, as defined, will
allow for economies of scale in the provision of INTERNET SERVICES.
1.4 TNP is an affiliate of TERRA NETWORKS devoted to providing interactive
services over the Internet aimed at the residential user market
(hereinafter, the "TNP Business"). TNP does not offer its value added
activities in the corporate customer market segment.
1.5 For the purposes of this agreement, it shall be understood that the
residential user market consists of (i) individuals who at the time of
contracting for the INTERNET SERVICES, and for as long as they remain
users of such services, have no intention of using the services, nor do
they currently use them to carry out commercial activities related to
providing goods or services of any type; and (ii) individuals,
telecommuters and self-
<PAGE> 3
employed professionals who have the intention to use the INTERNET SERVICES
from their homes for carrying out commercial activities related to
providing goods or services.
TWO. - REPRESENTATIONS AND WARRANTIES
2.1 In its execution of the overall strategy set by the companies making up
the Telefonica Group, TELEFONICA, understanding it to be in its best
interest, has therefore decided to restrict its activities to providing
INTERNET SERVICES for corporate customers (for the purposes herein,
corporate customers shall include any individual or legal entity not
included in the definition given under paragraph 1.5). To this end, and in
accordance with the business strategy designed by TELEFONICA, it shall
cease developing or offering Internet Services to residential customers.
2.2 In view of the Parties' shared interests, they are entering into this
Agreement for the Provision of Services under the terms and conditions set
forth below.
PURPOSE AND TERM OF THE AGREEMENT
THREE. - RULES GOVERNING CONTENT
By entering into this Agreement, TELEFONICA agrees to institute or not to
institute on TNP's behalf the services listed below. In exchange for these
services, TNP shall be obligated to pay TELEFONICA the amount indicated under
Clause Six, paragraph 6.1 herein.
The services TELEFONICA will perform on TNP's behalf are listed below:
3.1 Service to be performed - TELEFONICA shall provide the telecommunications
services to TNP that it needs to carry out its activities, and it shall do
so as a whole under the most favorable terms it offers.
3.2 Service to be performed - TELEFONICA shall grant TNP, either directly or
through its subsidiaries, the right to use its cable broadcast network
under the terms mutually agreed upon in the respective contracts, so that
TNP may offer the TNP Business to users of the cable broadcast service.
3.3 Service not to be performed - By this agreement, TELEFONICA promises TNP
that it will not set up INTERNET SERVICES, either directly or through its
affiliates or subsidiaries, aimed at residential users.
Both Parties to the Agreement expressly agree that the effective performance of
the services to be performed by TELEFONICA, as mentioned under paragraphs 3.1
and 3.2 of this Clause, shall give rise to TNP's obligation to pay, in addition
to the consideration it undertakes herein, the specific remuneration on a case
by case basis that the parties may agree to from time to time.
<PAGE> 4
The Parties expressly warrant that in no case may it be construed hereby that
TELEFONICA assigns any real or moveable property, whether it be tangible or
intangible, or liabilities or contractual relationships related to any type of
business (in particular, the INTERNET SERVICES). This agreement does not imply
that any agreement will be entered into for the sale or purchase of assets or
the conveyance of business between TELEFONICA and TNP.
FOUR. - TERM OF THE AGREEMENT
This agreement shall extend for a term of ten years following the date of its
execution.
FIVE. - AUTOMATIC RENEWAL
In the absence of any notice to terminate the agreement given by either Party no
later than fifteen (15) days prior to the expiration of the term or any
extension thereto, the agreement shall be successively and automatically renewed
for additional terms of one year each.
RELATIONSHIP AND OBLIGATIONS OF THE PARTIES
SIX. - OBLIGATIONS OF TNP
The Parties agree that TNP shall have the obligations set forth below:
6.1 To pay consideration in a single payment amounting to and under no
circumstances less than the amount of US$25,000,000 (twenty-five million
00/100 United States dollars).
The consideration referred to in this section shall include neither the
General Sales Tax (Impuesto General a las Ventas - IGV) nor the Municipal
Promotion Tax (Impuesto de Promocion Municipal - IPM). Both taxes shall be
added to the consideration that must be paid by TNP. Likewise, in the
event that on the payment date any tax were to be levied on the
consideration, said tax shall be paid entirely by TNP, even when the
taxpayer or the economic subject were TELEFONICA, in which case, the
consideration must be readjusted so that TELEFONICA is always paid the
amount agreed in the previous paragraph.
TNP undertakes to pay the consideration no later than December 15, 1999.
The payment shall be made in cash in United States dollars in accordance
with the terms of Article 1237 of the current Civil Code.
6.2 To pay the consideration by making a deposit to the TELEFONICA bank account:
Beneficiary: Telefonica del Peru, S.A.A.
Account Number:
Bank:
Address:
ABA Number:
<PAGE> 5
6.3 Not to offer for its own account, either directly or indirectly, or to
hold shares in legal entities or take part in associations that offer or
develop INTERNET SERVICES for customers other than residential users.
To this end, TNP shall not be allowed to provide or offer INTERNET
SERVICES, either on its own or through branches or subsidiaries, to third
parties other than those included in the market segment consisting of
residential users, nor shall it be a partner, shareholder or member in any
kind of association, corporation or business collaboration agreement that
provides INTERNET SERVICES to third parties other than those included in
the market segment consisting of residential users. The ban set out in
this paragraph affects the entire territory of Peru only and does not
include the TNP Business.
In the event that TNP wishes to provide INTERNET SERVICES for customers
other than those included in the residential user market segment, it must
apply to TELEFONICA for the appropriate permission. The appropriate
permission must be set out in writing and signed by both Parties.
6.4 TNP also undertakes not to develop or take part, whether directly or
indirectly, in any business, corporation, association or group whose
purpose is to provide telecommunications services that at any time are or
may be in competition with those provided by TELEFONICA. In the event that
TNP were to intend to carry on any business that is likely to compete with
the services provided directly or indirectly by TELEFONICA, it must apply
to TELEFONICA for permission, and TELEFONICA may decide, entirely at its
own discretion, whether or not there might be any conflict of competition
arising out of its contractual relationship with the TELEFONICA Group.
Depending on the case, TELEFONICA shall either bar TNP from carrying on
such business or else set the most suitable corporate structure and
conditions for avoiding the competition conflicts described above.
6.5 To use only the telecommunications infrastructure and services provided by
TELEFONICA and/or its affiliates and subsidiaries and which TNP needs to
contract and use in order to carry on its activities, under the terms laid
down in Clause Three, paragraphs 3.1 and 3.2 and in the next to last
paragraph of Clause Three hereof. Accordingly, TNP shall, under the terms
hereof, be prevented from contracting for use of such telecommunications
infrastructures and services with any suppliers other than TELEFONICA and
its respective affiliate or subsidiary companies, provided that they are
offered on terms that are economically and technologically competitive.
Should this not be the case, the parties shall jointly agree on the best
way of attaining such conditions. In the event that TELEFONICA were not to
provide the services that may at any time be required by TERRA, the
parties shall make every effort to implement said services as quickly as
possible.
SEVEN. - OBLIGATIONS OF TELEFONICA
The Parties agree that TELEFONICA shall have the obligations set forth below:
<PAGE> 6
Not to offer INTERNET SERVICES directly or indirectly to residential customers.
To this end, TELEFONICA shall not be allowed to provide INTERNET SERVICES,
either on its own or through branches or subsidiaries, to third parties in said
market segment. The ban set out in this paragraph affects the entire territory
of Peru.
In the event that TELEFONICA wishes to provide INTERNET SERVICES for customers
in the residential user market segment, it must apply to TNP for the appropriate
permission. The appropriate permission must be set out in writing and signed by
both Parties.
EIGHT. - OBLIGATIONS OF TERRA NETWORKS
The Parties agree that TERRA NETWORKS shall have the obligations set forth below
in reference to the territory of Peru:
8.1 Not to offer for its own account, either directly or indirectly, INTERNET
SERVICES for customers other than residential users.
To this end, TERRA NETWORKS shall not be allowed to provide or offer
INTERNET SERVICES, either on its own or through branches or subsidiaries,
to third parties other than those included in the market segment
consisting of residential users. The ban set out in this paragraph affects
the entire territory of Peru only.
In the event that TERRA NETWORKS wishes to provide INTERNET SERVICES for
customers other than those included in the residential user market
segment, it must apply to TELEFONICA for the appropriate permission. The
appropriate permission must be set out in writing and signed by both
Parties.
8.1 TERRA NETWORKS also undertakes not to develop or take part, whether
directly or indirectly, in any business, corporation, association or group
whose purpose is to provide telecommunications services that at any time
are or may be in competition with those provided by TELEFONICA. In the
event that TERRA NETWORKS were to intend to carry on any business that is
likely to compete with the services provided directly or indirectly by
TELEFONICA, it must apply to TELEFONICA for permission, and TELEFONICA may
decide, entirely at its own discretion, whether or not there might be any
conflict of competition arising out of its contractual relationship with
the Telefonica Group. Depending on the case, TELEFONICA shall either bar
TERRA NETWORKS from carrying on such business or else set the most
suitable corporate structure and conditions for avoiding the competition
conflicts described above.
8.2 To use only the telecommunications infrastructure and services provided by
TELEFONICA and/or its affiliates and subsidiaries and which TERRA NETWORKS
needs to contract and use in order to carry on its activities, under the
terms laid down in Clause Three, paragraphs 3.1 and 3.2 and in the next to
last paragraph of Clause Three hereof. Accordingly, TERRA NETWORKS and its
affiliate or subsidiary companies operating in Peru shall, under the terms
hereof, be prevented from contracting the use of
<PAGE> 7
such telecommunications infrastructures and services with any suppliers
other than TELEFONICA and its respective affiliate or subsidiary
companies.
NINE. - NATURE OF THE SERVICES PROVIDED
The Parties expressly state that the services provided that are the object of
this Agreement shall under no circumstances imply any transfer of secret or
other knowledge of a technical, economic, financial or any other nature
regarding TELEFONICA'S commercial or industrial experience. Thus, this Agreement
shall not entitle any of the parties to be paid royalties under any heading.
TEN. - RELATIONSHIP BETWEEN THE PARTIES
The Parties expressly agree that this Agreement, by its very nature, does not
give rise to any labor-related rights or benefits between the contracting
parties, nor between the contracting parties and the workers and/or employees of
all the other contracting parties. Accordingly, each Party must pay their
remuneration and social security contributions and benefits.
ELEVEN. - CONFIDENTIALITY
The Parties expressly agree that all the information provided by TNP to
TELEFONICA during the term of this Agreement, relating to its business, shall be
deemed to be confidential. TELEFONICA, therefore, agrees to keep such
information confidential and not to disclose it, and to do so with the care that
it normally uses to safeguard its own information of similar importance.
Thus, TELEFONICA may not, under any circumstances, use such information for its
own benefit or disclose it to third parties, either while this Agreement is in
force or after it terminates.
TERMINATION OF THE CONTRACT
TWELVE. - CAUSES FOR TERMINATION ATTRIBUTABLE TO TELEFONICA
The following causes for termination shall, in accordance with the terms of
Article 1430 of the Civil Code, be attributable to TELEFONICA:
12.1 If TELEFONICA files for insolvency or a petition is made by a third party
to have it declared insolvent, or it applies for a Preventive Meeting of
Creditors which might affect the obligations it has entered into
hereunder, or it admits in writing that it is unable to pay two-thirds
(2/3) of the debts due to third parties, or it were required to set up a
trust for the benefit of its creditors, or it decides to dissolve in
accordance with the General Corporations Act, or, in general, in the event
that, for any reason, it were unable to carry on its corporate purpose.
<PAGE> 8
12.2 If TELEFONICA breaches its obligation not to take part in legal entities
or associations that provide INTERNET SERVICES for residential users, laid
down in Clause Seven, paragraph 7.1.
THIRTEEN. - CAUSES FOR TERMINATION ATTRIBUTABLE TO TNP
The following causes for termination shall, in accordance with the terms of
Article 1430 of the Civil Code, be attributable to TNP:
13.1 If TNP fails to pay the remuneration set in Clause Six, paragraph 6.1
hereof.
13.2 If TNP files for insolvency or a petition is made by a third party to have
it declared insolvent, or it applies for a Preventive Meeting of Creditors
which might affect the obligations it has entered into hereunder, or it
admits in writing that it is unable to pay two-thirds (2/3) of the debts
due to third parties, or it were required to set up a trust for the
benefit of its creditors, or it decides to dissolve in accordance with the
General Corporations Act, or, in general, in the event that, for any
reason, it were unable to carry on its corporate purpose.
13.3 If the present shareholders of TNP lose control over TNP.
FINAL PROVISIONS
FOURTEEN. - HEADINGS
The headings used in each Clause are for reference purposes only and shall not
be construed to have any effect on the content or scope of this Agreement.
FIFTEEN. - WAIVERS
Any failure to exercise a right shall not entail a waiver thereof.
SIXTEEN. - APPLICABLE LAW
This Agreement shall be construed and governed in accordance with the current
law of the Republic of Peru.
SEVENTEEN. - PARTIAL INVALIDITY
In the event that any stipulation or agreement herein is deemed to be invalid or
unenforceable by any arbitration award rendered under the terms of the
Agreement, or by any competent court, said decision shall not affect the
validity of any other provision of this Agreement, provided that they can be
separated.
<PAGE> 9
EIGHTEEN. - EXPENSES
Each Party shall pay the expenses it has incurred for preparing, formalizing and
carrying out this Agreement, including the respective notary's expenses. The
above notwithstanding, TNP shall refund TELEFONICA up to a net amount of
US$4,000.00 (Four thousand 00/100 United States dollars) at the simple request
of TELEFONICA.
NINETEEN. - ADDRESS FOR NOTICES
Any notices sent to any of the Parties and to TSI shall be deemed to have been
validly received by the other party if (i) it is delivered in person or sent by
a messenger, courier or similar service; or (ii) it is sent by fax with
acknowledgement of receipt, on the date of delivery, to the addresses given
below:
To TELEFONICA:
Av. Arequipa 1155, piso 5
Santa Beatriz
Lima, Peru
Attn.: General Manager
To TNP:
Av._____________________
________________________
Lima, Peru
Attn.___________________
To TSI:
Av. Arequipa 1155, piso 5
Santa Beatriz
Lima, Peru
Attn.: General Manager
To TERRA NETWORKS:
Via de las 2 Castillas, No. 33
Pozuelo de Alarcon
(Madrid) 28224
Spain
Attn: Juan Perea Saenz de Buruaga
These addresses may be changed to new addresses in the city of Lima, giving 15
days' prior written notice to the other party.
<PAGE> 10
TWENTY. - ARBITRATION AGREEMENT
Any disputes or disagreement between the Parties arising from the interpretation
or performance of this Agreement shall be submitted to an Arbitration Panel made
up of three members, whose decision shall be binding. TELEFONICA and TSI shall
jointly appoint one arbitrator, TERRA NETWORKS and TNP shall jointly appoint
another arbitrator, and the third arbitrator shall be appointed by the two
arbitrators so appointed. In the event that no agreement is reached on the
appointment of the third arbitrator, or if either of the parties fails to
appoint its arbitrator within the ten days after being called on to do so by the
other party, the appropriate appointment shall be made by the Lima Chamber of
Commerce.
The arbitration shall be by right and shall be governed by the rules of
procedure laid down by the Arbitration Center of the Lima Chamber of Commerce.
TWENTY-ONE. - GENERAL PROVISIONS
This Agreement may be modified, regulated or terminated only upon the express,
written agreement of the Parties.
TWENTY-TWO. - COPIES
Set out on four identical copies, one copy each remaining in the possession of
each of the Parties, in Lima on October 20, 1999.
[Illegible signature] [Illegible signature]
TELEFONICA DEL PERU, S.A.A. TERRA NETWORKS PERU S.A.C.
[Illegible Signature] [Illegible Signature]
TELEFONICA SERVICIOS INTERNET, S.A.C. TERRA NETWORKS, S.A.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
OF TERRA NETWORK, S.A.
<TABLE>
<CAPTION>
COMPANY PLACE OF INCORPORATION OR
ORGANIZATION
------------
<S> <C>
Terra Networks Argentina, S.A. Argentina
(TN Argentina)
Netgocios S.A. Argentina
Donde Latinoamericana S.A. Argentina
(Donde)
Telefonica Servicios y Contenidos
por la Red, S.A. Spain
(TSCR)
Ifigenia Plus, S.L. Spain
(Ifigenia)
Telefonica Interactiva de Contenidos, S.A. Spain
Ordenamientos de Links Especializados, S.L. Spain
(Ole)
Advertising Quality, S.L. Spain
(ADQ)
Plataformas Tematicas Internet, S.L. Spain
(PTI)
Telefonica Interactiva Brazil Ltda. Brazil
(TI Brazil)
Terra Networks Brazil, S.A. Brazil
(TNB)
Telefonica Interactiva USA, Inc. Florida, USA
Terra Networks Access Services USA, L.L.C. Delaware, USA
(TI USA ISP)
Terra Networks Interactive Services USA, L.L.C. Delaware, USA
(TI USA Portal)
Infovia, S.A. Guatemala
Centro de Investigacion y Experimentacion
de Realidad Virtual, S.A. Spain
(CIERV)
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
COMPANY PLACE OF INCORPORATION OR
ORGANIZATION
------------
<S> <C>
Corporacion Real Time Team, S.L. Spain
Real Time Team, S.L. Spain
(Teknoland RTT)
Real Time Team Programacion, S.L. Spain
Teknoland E-Biz, S.L. Spain
La Tienda de Fondos, S.L. Spain
Commm Corp. Florida, USA
Teknoland Think-Biz, S.L. Spain
Terra Networks Peru, S.A. Peru
(TN Peru)
Terra Networks, S.A. de C.V. Mexico
Informacion Selectiva, S.A. de C.V. Mexico
(Infosel)
Interdata Infosel S.A. de C.V. Mexico
Infoshare Communications, Inc. Texas, USA
Seguridata Privada, S.A. de C.V. Mexico
Telefonica Interactiva Chile Limitada Chile
(TI Chile)
Proveedora de Servicios de Conectividad, S.A. Chile
(CTC Internet)
</TABLE>
2
<PAGE> 1
Exhibit 99.2
(terra logo)
Complejo Attica
Via de las Dos Castillas, 33.
Edificio 1-1a plta.
Tel.: 34-1-452.30.62
Fax: 34-1-452.31.47
I, Cristina Lamana, General Counsel of Terra Networks, S.A., to the best of my
knowledge and reasonable belief certify that the English translations of the
original Spanish and Portuguese documents that are included as exhibits in this
Registration Statement filed on Form F-1 by Terra Networks, S.A., are fair and
accurate English translations.
November 12, 1999-11-12
/s/ Cristina Lamana
Cristina Lamana
General Counsel
Terra Networks, S.A.
