0000909518-01-500341.txt : 20011018
0000909518-01-500341.hdr.sgml : 20011018
ACCESSION NUMBER: 0000909518-01-500341
CONFORMED SUBMISSION TYPE: SC 14D9
PUBLIC DOCUMENT COUNT: 4
FILED AS OF DATE: 20011010
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: NATIONAL TELEPHONE CO OF VENEZUELA
CENTRAL INDEX KEY: 0001025862
STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]
IRS NUMBER: 000000000
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 14D9
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-47557
FILM NUMBER: 1756403
BUSINESS ADDRESS:
STREET 1: EDIFICIO CANT PRIMER PISO
STREET 2: AVENIDA LIBERTADOR
CITY: CARACAS VENEZUELA
STATE: X5
BUSINESS PHONE: 5825006800
MAIL ADDRESS:
STREET 1: MILBANK TWEED HADLEY & MCCLOY
STREET 2: 1 CHASE MANHATTAN PLAZA
CITY: NEW YORK
STATE: NY
ZIP: 10005
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: VERIZON COMMUNICATIONS INC
CENTRAL INDEX KEY: 0000732712
STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]
IRS NUMBER: 232259884
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 14D9
BUSINESS ADDRESS:
STREET 1: 1095 AVE OF THE AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10036
BUSINESS PHONE: 2123952121
MAIL ADDRESS:
STREET 1: 1717 ARCH ST 47TH FL
CITY: PHILADELPHIA
STATE: PA
ZIP: 19103
FORMER COMPANY:
FORMER CONFORMED NAME: BELL ATLANTIC CORP
DATE OF NAME CHANGE: 19920703
SC 14D9
1
mv-14d9.txt
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(d) (4) OF THE SECURITIES EXCHANGE ACT OF 1934
COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV)
--------------------------------------------------------------------------------
Name of Subject Company
NATIONAL TELEPHONE COMPANY OF VENEZUELA (CANTV)
--------------------------------------------------------------------------------
(Translation of Subject Company's name into English)
VERIZON COMMUNICATIONS INC.
--------------------------------------------------------------------------------
(Name of Person(s) Filing Statement)
American Depositary Shares
(each representing the right to receive 7 Class
D shares of common stock of Compania
Anonima Nacional Telefonos de Venezuela (CANTV),
par value Bs.36.90182224915 per share)
--------------------------------------------------------------------------------
(Title of Class of Securities)
204421101
--------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Marianne Drost
Senior Vice President, Deputy General
Counsel and Corporate Secretary
Verizon Communications Inc.
1095 Avenue of the Americas
New York, New York 10036
(212) 395-1783
--------------------------------------------------------------------------------
(Name, address and telephone numbers of person authorized to receive notices
and communications on behalf of the persons filing statement)
Copies to:
Steven Zipperstein
Senior Vice President & Deputy General Counsel
Verizon Services Corp.
1095 Avenue of the Americas
New York, New York 10036
(212) 395-1295
[__] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
NY2:\1085929\06\N9WP06!.DOC\65886.0076
ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is Compania Anonima Nacional
Telefonos de Venezuela (CANTV) (the "Company"). The Company is organized under
the laws of the Bolivarian Republic of Venezuela ("Venezuela"). The principal
executive offices of the Company are located at Avenida Libertador, Centro
Nacional de Telecomunicaciones, Nuevo Edificio Administrativo, Piso.l, Apartado
Postal 1226, Caracas, Venezuela 1010 and its phone number is (58) 212-500-6800.
The classes of equity securities to which this statement relates are
shares of common stock of the Company, par value Bs. 36.90182224915 per share
(the "Shares"), and American Depository Shares of the Company (each an "ADS"
and, collectively, the "ADSs"), each representing the right to receive seven
Class D Shares. As of September 24, 2001, the Company estimates that 926,037,385
Shares were outstanding, including 372,907,241 Class A Shares, 51,900,000 Class
B Shares, 97,278,406 Class C Shares and 403,950,738 Class D Shares. As of
September 24, 2001, 55,463,748 ADSs were outstanding in the United States,
representing 96.29% of the total Class D Shares outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
This statement is being filed by Verizon Communications Inc., a
Delaware corporation ("Verizon"). The principal business office of Verizon is
1095 Avenue of the Americas, New York, New York 10036 and its phone number is
(212) 395-2121.
Verizon is an affiliate of the Company. Verizon beneficially owns,
directly and through its affiliates, including through VenWorld Telecom, C.A.,
approximately 37% of the outstanding Shares. Also, 2 of the Company's 9
directors are affiliated with Verizon, and 2 other directors are employees of
Verizon as a matter of administrative convenience.
This statement relates to (a) the tender offer by the AES
Comunicaciones de Venezuela. C.A., a company organized under the laws of
Venezuela ("Purchaser") , which is jointly owned by The AES Corporation ("AES")
and AES's 87% owned subsidiary, Corporacion EDC, C.A. ("CEDC"), upon the terms
and subject to the conditions set forth in the offer to purchase, dated
September 25, 2001 (the "Offer to Purchase"), and the related letter of
transmittal (which together constitute the "U.S. Offer"), pursuant to which
Purchaser makes an offer to purchase for $24.00 per ADS, net to each seller in
cash, less any withholding taxes and without interest thereon, an aggregate of
28,566,944 ADSs and (b) the offer by Purchaser, AES and CEDC (the "Venezuelan
Offer" and, together with the U.S. Offer, the "Offers") to purchase 199,968,608
Shares validly tendered and not properly withdrawn prior to the expiration of
the Venezuelan Offer, each for $3.4285714 in cash payable in U.S. dollars or in
Bolivares to tendering holders that elect to be paid in Bolivares. Each ADS
represents seven Class D Shares of the Company. The U.S. Offer and the
Venezuelan Offer expire at 5:00 p.m. New York time (6:00 p.m. Caracas time) on
October 29, 2001 (the "Expiration Date").
The Offer to Purchase and the Venezuelan Offer state that the
principal executive office and phone number of AES, the ultimate parent of the
Purchaser, are 1001 North 19/th Street, Arlington, Virginia, 22209 (telephone
no.: (703) 522-1315). The Offer to Purchase and the Venezuelan Offer do not
provide a principal executive office and phone number for the Purchaser.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Except as described (i) in this statement, (ii) in the description of
the appointment of directors which is attached to this statement as Exhibit (e)
(1) and incorporated herein by reference and (iii) in the description of related
party transactions which is attached to this statement as Exhibit (e) (2) and
incorporated herein by reference, to the best knowledge of Verizon, as of the
date hereof there exists no other material agreement, arrangement or
understanding and no actual or potential conflict of interests between Verizon
or its affiliates (other than the Company) and (x) the Company and its executive
officers, directors or affiliates (other than Verizon), or (y) AES or its
executive officers, directors or affiliates.
On January 1, 1992, the Company entered into an agreement for
services (the "Services Agreement") with GTE Service Corporation, an affiliate
of Verizon, currently the largest shareholder of the Company through its
participation and equity ownership in VenWorld. Under the Services Agreement,
GTE Service Corporation makes available to the Company various services,
including administrative, financial, accounting, information management,
marketing sales, operational, traffic support, engineering, planning and
personnel services, regulatory planning and rate case management services, the
secondment of employees and management to the Company and access to and use of
certain intellectual property. The Services Agreement was for an initial term of
twelve months and automatically extends for an additional twelve-month term
unless notice has been given to terminate by either party thirty days prior to
the end of each successive term. For the year ended December 31, 2000, the
Company paid approximately $6.8 million in the aggregate for services rendered
in connection with the Services Agreement. A copy of the Services Agreement is
attached to this statement as Exhibit (e) (3).
As a matter of administrative convenience, Gustavo Roosen (Chairman
of the Board, President and CEO of the Company), Vicente Llatas (Director,
Executive Vice President and COO of the Company) and Armando Yanes (General
Manager and CFO of the Company) each have an employment agreement with Verizon.
All compensation paid under such agreements is an expense of the Company. As
permitted under applicable Venezuelan rules and regulations, the Company does
not disclose to its shareholders or otherwise make publicly available
information specifying the compensation of individual directors and executive
officers.
Verizon and AES and/or their affiliates may from time to time be
parties to contracts or other arrangements for the provision of power and/or
other services entered into in the ordinary course of business.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. For the reasons set forth below, Verizon has
concluded that each of the U.S. Offer and the Venezuelan Offer individually, and
the Offers together, would have a negative impact on the Company and its
shareholders and ADS holders, employees, customers and the people of Venezuela.
Accordingly, Verizon recommends that the Company's shareholders and ADS holders
reject the U.S. Offer and the Venezuelan Offer and not tender their Shares or
ADSs pursuant to the Venezuelan Offer and the U.S. Offer.
(b) Reasons for Recommendation. Verizon has determined to recommend
that the Company and its shareholders and holders of ADSs not tender their
Shares or ADSs in the Offers. Verizon determined that the Offers would have a
negative impact on the Company's shareholders and ADS holders. In making this
determination, Verizon considered certain factors, including, among others:
Verizon believes that the price offered for the Shares and ADSs is
inadequate.
The closing price of the ADSs was $21.98 prior to the announcement of
the Offers on August 29, 2001. As a result, the Offers represent a premium of
9.2% over the closing price of the Company's Shares on the date of the
announcement for the portion of the shares that are subject to the Offers. The
premium of AES's Offers over the ADS price 30 days prior to the AES announcement
is only 4.4%. The Offers represent an approximate 5.0% and 6.6% premium over the
six-month and one-year weighted averages, respectively, and a 5.1% discount on
the two year weighted average. These premiums are significantly lower than
premiums generally paid in transactions that involve a change in control.
In addition, in 1999 and 2000, the Company effected two buyback
programs at an average of approximately $29 and $27 per ADS, respectively, well
above the price offered by AES in the Offers.
2
The proposed transactions will have adverse tax effects on remaining
shareholders and ADS holders.
Following conclusion of the Offers, AES has stated that it intends to
cause the Purchaser to transfer all Shares and ADSs to a new holding company,
and then to merge the Company with the Purchaser, with Purchaser to be the
surviving corporation (the "Merger"). According to the Offer to Purchase, under
U.S. law, shareholders and holders of ADSs who are subject to U.S. taxes and who
either do not tender their Shares or ADSs to AES, or who tender their Shares but
whose Shares are subsequently not accepted by AES as a result of proration or
otherwise, will be required to recognize unrealized gains or losses on the
Shares they retain following the Merger. According to the Company's
Solicitation/Recommendation Statement on Form 14D-9 filed with the Securities
and Exchange Commission on October 2, 2001 (the "Company 14D-9"), under
Venezuelan law, shareholders and holders of ADSs subject to Venezuelan taxes,
including Venezuelans who reside in the United States or non-Venezuelans who
have a permanent establishment in Venezuela and who either do not tender their
Shares or ADSs to AES, or who tender their Shares or ADSs but whose Shares are
subsequently not accepted by AES as a result of proration or otherwise will be
subject to up to a 34% tax on the unrealized gain on the Shares or ADSs they
retain after the Merger.
As a result of the Merger proposed by AES, the Company's employees
will be employed by a new employer which may adversely affect the successor
corporation and its shareholders.
Upon consummation of the Merger proposed by AES, the Company's
employees will be employed by the successor corporation, a new employer. This
substitution of employer may impair morale of these employees, with adverse
effects on the Company and its shareholders. Moreover, according to the Company
14D-9, under Venezuelan labor law, the Company's employees may be entitled to
consider this change of employer as an unjustified termination of their
employment relationship with the Company which may result in adverse
consequences to the successor corporation and its shareholders.
The plans of AES following successful conclusion of the Offers and
consummation of the transactions contemplated by the Offers would leave the
Company in a weakened financial and operational position and would create
significant uncertainty as to the amount and timing of the payment of the
dividend contemplated by the Offers.
Verizon has been advised that the Company has a Floating Rate Note
facility under which $72.5 million is outstanding containing change of control
provisions which would trigger a right of acceleration of repayment if AES were
to successfully conclude the Offers. The Company and Telecomunicaciones
Movilnet, C.A. ("Movilnet") are also parties to IFC loans under which an
aggregate of $91.3 million is outstanding which would become subject to
acceleration if the Company were to transfer ownership of Movilnet as
contemplated by the Offers. An acceleration of payment of any of these amounts
would trigger cross-default provisions under an additional U.S.$200 million of
outstanding Fixed Rate Notes. Should these amounts be accelerated, the Company
would partially deplete its cash reserves in order to pay such debts. Given
current global conditions, it may be difficult to refinance or incur new debt,
particularly given AES's post-Offer plans. Any refinancing could be made more
difficult as a result of the Company being controlled by AES which has a below
investment grade credit rating. Verizon, which currently beneficially owns
directly and through VenWorld approximately 37% of the Company's outstanding
Shares, is highly rated.
Verizon also believes that the implementation of AES's post-Offer
plans may depress the value of the remaining Shares of the Company. Although
promising to distribute the Company's cash to shareholders, AES has not
indicated the size of that dividend and the value AES intends to deliver to
shareholders. Verizon is concerned that Movilnet is at risk of being sold by AES
to extract cash from the Company without giving careful consideration to all of
the Company's options with respect to Movilnet and all possible buyers of
Movilnet, including the appropriateness of current market conditions to conduct
any such sale. Also, AES has indicated in its Offers that it is negotiating with
3
one party the possible sale of Movilnet. Given the limited negotiations with a
single party, the overall conditionality of the Offers and current market
conditions, Verizon believes that there is no assurance that these negotiations
would result in the best price in the sale of Movilnet even in the event such a
sale would be desired. Moreover, by selling Movilnet, the Company will forego
the operational synergies and other benefits associated with operating both a
wireline and a wireless business in the same territory.
Finally there is uncertainty under the terms described in the Offers
as to the level of indebtedness that would remain outstanding following the
completion of the Offers, the Merger and the transactions contemplated by the
Offers.
AES has no experience in operating a national telephone network and
there are no material synergies between the Company and AES.
The Company is a leading provider of wireline and wireless telephone
services in Venezuela. AES is an electric utility company. Because AES has no
experience in managing or operating a telephone company, Verizon is concerned
about the effect a change of control will have on the Company, its shareholders,
customers and employees and the continued reliability of telephone service in
Venezuela. Apart from the potential for AES to exercise a dominant economic
influence in certain markets acting through the Company and through C.A. la
Electricidad de Caracas, its electric subsidiary in Venezuela, a matter
currently under review by Procompetencia, the combination of the two businesses
would not result in any material synergies which make the combination
attractive. Additionally, the acquisition of control of the Company by AES would
likely cause the Company to lose the technical and related support it has
received from Verizon.
The Offers are highly conditional.
The consummation of the Offers is subject to a number of conditions,
including, among others: the receipt of all necessary government approvals,
including the approval by the Comision Nacional de Telecomunicaciones (the
"CONATEL"); the absence of an objection to the Offers by Procompetencia; AES
shall be reasonably satisfied that Banco de Desarrollo Economico y Social
("BANDES"), the Venezuelan government agency that holds the Class B Shares, has
agreed to vote in favor of the Merger; the ability of AES, once it acquires more
than 50% of the outstanding capital stock of the Company, to appoint a majority
of the members of the Board; that AES shall not have become aware that any
material amount of the Company's indebtedness may be accelerated as a result of
the Offers; the absence of any threatened, instituted or pending litigation or
governmental action challenging, delaying or otherwise restraining the Offers,
or imposing more onerous conditions on AES, or adversely affecting the Company
or diminishing the benefits AES expects to derive as a result of the
transactions contemplated by the Offers; the absence of an adverse change in the
business, properties or financial condition of the Company; the absence of
adverse changes in national and international securities exchanges and banking
operations; the absence of adverse national or international events, including
the commencement of armed hostilities involving the United States; and the
absence of changes in the Company's capitalization or other material
transactions involving the Company. The failure to satisfy any of these
conditions would allow AES to terminate the Offers.
Verizon believes it to be unlikely that several of these conditions
will be met. The current international situation resulting from the events of
September 11, 2001 and attacks led by the United States on locations in
Afghanistan commencing on October 7, 2001 may permit AES to terminate the
Offers. Moreover, according to the Company's 14D-9, consummation of the Offers
would result in a change of control of the Company, which would provide lenders
with a right of acceleration under the instruments governing the Company's $72.5
million outstanding Floating Rate Notes. The Company and Movilnet are also
parties to IFC loans under which an aggregate amount of $91.3 million is
outstanding which, according to the Company's 14D-9, would become subject to
acceleration if the Company were to transfer ownership of Movilnet as
contemplated by the Offers. Acceleration of any of these amounts would in turn
would cause a cross-default under the instruments governing the Company's
U.S.$200 million of Fixed Rate Notes. Given current global conditions, there is
4
no certainty that the Company would be able to refinance any such accelerated
indebtedness.
Moreover, satisfaction of other conditions is at best uncertain,
CONATEL has not yet approved a change of control to AES. Procompetencia has only
recently initiated its investigation of the potential consequences of a
consummation of the Offers. It has been reported that this investigation will
include analysis of the anticompetitive effects of ownership by AES and its
affiliates of the principal electrical and telecommunications companies in
Venezuela. As structured, the Offers place the Company's shareholders in the
position of having to determine whether to tender to AES on or prior to the
Expiration Date without knowing whether AES intends to consummate the Offers.
The purchase of the Shares and the ADSs in the Offers will adversely
affect the liquidity of the remaining Shares and ADSs.
(c) Intent to Tender.
Verizon does not intend to tender its Shares or ADSs pursuant to the
Offers. To the knowledge of Verizon, each executive officer, director, affiliate
or subsidiary of the filing person who or which owns Shares or ADSs presently
intends to hold any Shares or ADSs that it owns of record or beneficially and
not tender any such Shares or ADSs pursuant to the Offers.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
Neither Verizon nor any person acting on its behalf has employed,
retained or compensated any person to make any solicitations or recommendations
to shareholders on its behalf concerning the Offers.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
To the knowledge of Verizon, no transactions in the ADSs or Shares of
the Company have been effected during the past 60 days by Verizon or the Company
or any executive officer, director, affiliate (other than the Company) or
subsidiary of Verizon.
ITEM 7. NOT APPLICABLE.
ITEM 8. ADDITIONAL INFORMATION.
The information included in this Item 8 is based upon information
appearing in the Company's 14D-9.
OWNERSHIP OF THE EQUITY CAPITAL OF THE COMPANY
The following table sets forth certain information concerning
ownership of the equity capital of the Company as of September 24, 2001:
5
At September 24, 2001
---------------------
Ownership
Class Number of Shares Percentage
----- ---------------- ----------
VenWorld Telecom, C.A. (1)........................ A 308,907,717 33.4%
The AES Corporation (2)........................... A 63,999,524 6.9%
Venezuelan Investment Fund........................ B 51,900,000 5.6%
Company employees and retirees (3)................ C 97,278,406 10.5%
Verizon Communications Inc. (4)(5)................ D 32,945,829 3.6%
Brandes Investment Partners, L.P. (5)............. D 105,701,708 11.4%
Others (5)........................................ D 265,304,201 28.6%
--------------
926,037,385
==============
----------------
(l) At September 24, 2001, VenWorld Telecom, C.A. ("VenWorld") was owned
74.8%, 20.7% and 4.5%, respectively, by indirect wholly or partially owned
subsidiaries of Verizon, T.I. Telefonica Internacional de Espana, S.A.
("Telefonica") and other participants in the VenWorld consortium.
(2) AES, through its indirect partially owned subsidiaries, is the owner of a
deminimus amount of shares of VenWorld and has indicated in a filing with
the Securities and Exchange Commission (the "SEC") that it owns an
additional 1,000 Class D Shares and 1,000 ADSs.
(3) Class C Shares held directly or through the employee trusts.
(4) Verizon, acting through its indirect wholly-owned subsidiary, purchased
7,823,200 ADSs, for an aggregate purchase price of approximately U.S.$190
million in the initial public offering of the Company's Class D Shares in
1996 and in transactions consummated following the completion of the
initial public offering. In December 1998, Verizon, acting through its
indirect wholly-owned subsidiary, exchanged 3,116,653 ADSs for 7,728,307
shares in VenWorld held by a trust administered by Banco Mercantil, C.A.,
S.A.C.A. (Banco Universal) Fiduciary. As of September 24, 2001, GTE
Venezuelan Telephone Incorporated, an indirect wholly-owned subsidiary of
Verizon, owns ADSs representing an aggregate of 32,945,829 Class D shares,
and owns 74.8% of the equity share capital of VenWorld.
(5) Includes Class D Shares held by The Bank of New York as depositary for
American Depositary Receipts of the Company, each of which represents
seven Class D Shares.
VenWorld is a corporation organized under the laws of Venezuela by a
private consortium of companies, including subsidiaries of Verizon, which own
collectively 74.8% of the outstanding share equity of VenWorld, and Telefonica,
which owns 20.7% of the outstanding share equity of VenWorld. The remaining 4.5%
of the equity share capital of VenWorld is owned by other VenWorld consortium
participants. The VenWorld consortium itself owns 308,907,717 Class A Shares of
the Company, or 33.4% of the outstanding shares of the Company. The participants
in the VenWorld consortium contribute broad operating experience and expertise
to the operation of the Company and provide the Company with access to
technology, research and product development and procurement. In addition,
certain participants in the VenWorld consortium have entered into service
agreements with the company to provide technical, consulting and other
assistance, as described in Item 3 of this statement.
Under VenWorld's Bylaws, participants in the VenWorld consortium have
the right to require VenWorld to redeem all or a part of their shares in
VenWorld in exchange for Class A Shares of the Company. The non-redeeming
VenWorld participants then have the right to purchase such Class A Shares. If
none of the remaining participants in the VenWorld consortium purchase the Class
A Shares, these shares become Class D Shares of the Company when sold to the
public.
6
THE COMPANY'S CAPITAL STOCK
The Company's share capital consists of four classes of shares,
designated as Class A, Class B, Class C and Class D. Each share, regardless of
class designation, is entitled to one vote on all matters submitted for approval
for the Company's shareholders at a meeting of shareholders. In general, matters
submitted to a vote at a shareholders' meeting will be adopted only if a
majority of the holders of the Shares present at such meeting vote in favor of
such matters.
Class A Shares
Class A shares may be owned only by VenWorld and certain affiliates
of Verizon, Telefonica, and other participants or former participants (including
CEDC) in the VenWorld consortium. Any transfer of Class A Shares to any other
person will cause such transferred Shares to be automatically converted into an
equal number of Class D Shares upon transfer of the Shares.
Class B Shares
Class B Shares may be owned only by the Venezuelan government and
other Venezuelan public sector entities. The transfer of Class B Shares to a
private sector person or entity will cause such transferred Shares to be
automatically converted into an equal number of Class D Shares upon transfer of
the Shares except upon transfer of the Shares to employees or retirees of the
Company which causes such transferred Shares to be automatically converted into
an equal number of Class C Shares upon transfer.
A majority vote of the holders of the Class B Shares is required for
decisions concerning, among others, the Company's dissolution or merger into
another company, or any special operations involving the Company or the
repayment or reduction of the capital stock and the authorization of the sale of
the Company's assets. In addition, the vote of holders of a majority of Class B
Shares is also required to amend the Bylaws of the Company (the "Bylaws")
relating to (i) corporate purpose; (ii) classification of share capital and the
rights accorded to the classes of capital shares and provisions requiring the
approval of certain classes of shares; (iii) shareholders' meetings, notices and
quorum requirements; (iv) decisions in respect of any capital increase; (v)
composition of the Board and Board meetings, notices and quorum requirements;
(vi) provisions related to the approval of transactions by the Board; (vii)
prohibitions on the Company to enter into transactions with interested parties
other than at arm's-length; and (viii) the right of the Board to enter into
agreements on behalf of the Company.
Class C Shares
Class C Shares may be owned only by employees of the Company
("Company Employees"), retirees ("Retirees"), companies 100%-owned by such
employees or retirees and whose sole corporate purpose is the acquisition and
ownership of such Shares ("Worker Companies" and, together with Company
Employees and Retirees, "Participants"), trusts and benefit plans established
for such employees or retirees (the "Benefit Plans"), former Company Employees
who elect to retain their Class C Shares upon termination of employment ("Former
Employees"), Company Employees', Former Employees' or Retirees' former spouses
who receive Class C Shares through partition of marital property ("Ex-Spouses"),
and Company Employees', Former Employees' or Retirees' heirs who receive Class C
Shares in succession ("Heirs"). Any transfer of Class C shares to any person or
entity other than a Participant or a Benefit Plan, or to Ex-Spouses or Heirs,
will cause such transferred Shares to be automatically converted into an equal
number of Class D Shares.
Pursuant to the Bylaws, Class C Shares may not be sold or otherwise
transferred without first offering such Shares to Participants and Benefit
Plans. If a Class C shareholder proposes to transfer any Class C Shares, all
other Participants and Benefit Plans will have the right to acquire all or a
portion of such Class C Shares. Any holder of Class C Shares who intends to
transfer any of such Shares must provide written notice to the Company
indicating the number of Shares sought to be sold and the price therefor.
7
Generally, during the last five days of each month, the Company publishes
internal notices indicating the number of Class C Shares available for purchase
and the price therefor. Beginning on the first business day of each month,
Participants and Benefit Plans have the right for 10 business days to acquire
such Shares, which are sold in the order in which offers are received. In the
event the offered Shares are not purchased within such 10 business day period,
the holder has the right to transfer such Shares to Participants, Benefit Plans
and non-Participants at a price not less than the offered price. The time
periods set forth under this right of first refusal may be modified by a
unanimous vote of the Board.
Class D Shares
Class D Shares are not subject to any restrictions in the Bylaws
relating to ownership or transfer.
EXTRAORDINARY DIVIDEND AND SHARE REPURCHASE
On October 7, 2001, the Company announced that, among other things,
it had called a special shareholders meeting for October 24, 2001 for the
purpose of considering the distribution of an extraordinary dividend and to
approve a share repurchase program. Verizon favors an extraordinary dividend and
the repurchase of shares by the Company and is urging the Company to pursue such
a course of action. Subject to its review of the details of any such program as
adopted and proposed by the Company's Board of Directors, Verizon intends to
vote in favor of such a program and will urge shareholders to do likewise.
ITEM 9. EXHIBITS.
Exhibit (e) (1) Description of the appointment of the Company's directors
Exhibit (e) (2) Description of related party transactions
Exhibit (e) (3) Services Agreement, dated January 1, 1992, as amended,
between the Company and GTE Service Corporation
8
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
VERIZON COMMUNICATIONS INC.
By: /s/ Michael T. Masin
-----------------------------------
Name: Michael T. Masin
Title: Vice Chairman and President
Dated: October 10, 2001
9
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
Exhibit (e) (1) Description of the appointment of the Company's directors
Exhibit (e) (2) Description of related party transactions
Exhibit (e) (3) Services Agreement, dated January 1, 1992, as amended,
between the Company and GTE Service Corporation
10
EX-99
3
ex-e1.txt
E-1
EXHIBIT (E)(1)
Directors
The information set forth in this Exhibit (E)(1) is based upon
information appearing in the Company's 14D-9.
The Company is managed by its Board which, in accordance with its
Bylaws, consists of the President of the Company and eight principal directors,
each of whom has an alternate to act in his or her absence. The members of the
Board are elected at the annual shareholder meeting. All holders of equity
capital of the Company vote as a single class to elect any director not elected
by the Government, who holds the Company's Class B Shares, or holders of Class C
Shares. The Government, as holder of the Company's Class B Shares has the right
to elect one principal director subject to the Government continuing to own at
least one Class B Share. Holders of Class C Shares have the right, voting as a
separate class, to elect two directors and will continue to have such right
provided such Shares represent at least 8% of the Company's share capital and
will have the right to elect at least one director provided such Shares
represent at least 3% but less than 8% of the equity share capital of the
Company. Accordingly, at the current time (a) holders of all Shares voting as a
single class are entitled to elect the President and the five additional
principal directors; (b) the Government, as holder of the Company's Class B
Shares, is entitled to elect one principal director; and (c) the holders of the
Company's Class C Shares are entitled to elect two principal directors.
In addition, according to recently adopted regulations of the CNV,
holders of Class A Shares and holders of Class D Shares may be entitled to
proportional representation on the Board provided such holders represent at
least 20% of the Company's share capital (excluding for the purposes of such
calculation the directors appointed by Class B and Class C shareholders) and
meet certain other conditions. The entire Board, and their respective
alternates, are elected annually, and serve until a successor is elected and
takes office. Directors may be removed and replaced in the same manner they were
designated prior to the end of their term by the same class or classes of
shareholders who designated them as directors. Until a vacancy is filled, the
respective alternate fills temporary and permanent absences of the principal
director. The Company's Bylaws require that the Board meet at least once every
three months. A quorum at any meeting of the Board is five members.
(E)(1)-1
EX-99
4
ex-e2.txt
E-2
EXHIBIT (E)(2)
Related Party Transactions
In 1992, the Company and GTE Service Corporation entered into an
Agreement for Services pursuant to which GTE Service Corporation has agreed to
provide the Company with certain administrative, financial, strategic planning,
marketing, procurement, audit, network, systems, regulatory and legal support
services. Under this agreement, as amended in 2001, the Company has agreed to
pay GTE Service Corporation US$4,500,000 per year for such services. Services
rendered prior to 2001 and services outside the scope of the specific services
provided for under the agreement were or are billed on a time and materials
basis. In 1998, 1999 and 2000, GTE Service Corporation invoiced the Company
US$1,145,201, US$1,927,361 and US$2,028,047, respectively, for services provided
under the agreement, including pass through billing of services rendered by
third parties.
From time to time, the Company purchases supplies and equipment from
Verizon. For the years 1998, 1999 and 2000, Verizon invoiced the Company
US$17,054,657, US$1,973,433 and US$6,923,926, respectively, for supplies and
equipment ordered by the Company on a purchase order basis. The substantial
majority of these purchases involve orders of supplies and equipment from third
prices from whom Verizon can obtain significantly better pricing.
Verizon and certain of its international affiliates, including,
without limitation, Compania Dominicana de Telefonos, C. por A. ("CODETEL") and
Puerto Rico Telephone Company, transmit international long distance traffic to
the Company or receive international long distance traffic from the Company,
paying or receiving, as the case may be, established international settlement
payments.
The Company and GTE Laboratories Inc. have entered into an agreement
pursuant to which the Company has licensed GTE Laboratories' proprietary TONICS
network management software at no cost.
In 2001, Verizon provided advances to VenWorld Telecom C.A.
("VenWorld") to pay legal fees in the amount of US$56,678.17. VenWorld
subsequently repaid this amount to Verizon out of the dividend payments received
from the Company in June 2001.
GTE Service Corporation sublicensed the base customer care and
billing system developed by AMDOCS (UK) Limited to Telecomunicaciones Movilnet,
C.A. ("Movilnet") and provided or arranged for implementation and integration
services to Movilnet for such system in 1998 and 1999, billing Movilnet
US$19,468,069 in 1998 and US$12,408,466 in 1999. Substantially all of these
license and service fees were paid by GTE Service Corporation to third party
subcontractors, including AMDOCS (UK) Limited.
GTE Service Corporation and Movilnet entered into a Technical
Assistance Agreement in June 2001 relating to the provision of additional
know-how as well as maintenance and operational support services in connection
with the AMDOCS customer care and billing system. The agreement has a term of
five years. Movilnet paid GTE Service Corporation US$8,866,500 in consideration
of the grant of a license or sublicense for the proprietary and third party
know-how provided and to be provided by GTE Service Corporation to Movilnet
relating to the AMDOCS system. Movilnet also agreed to pay Verizon a quarterly
fee for operational support and maintenance services relating to the AMDOCS
system: for each of the third and fourth quarters of 2001, US$1,375,000; and for
each of the four quarters in 2002, US$750,000. Fees for operational support and
maintenance services relating to the AMDOCS system for future quarters will be
determined by mutual agreement of the parties. Over 90% of these fees were paid
by GTE Service Corporation to third party subcontractors, including AMDOCS (UK)
Limited.
From time to time, Movilnet purchases supplies and equipment from
Verizon. For the years 1998, 1999 and 2000, Verizon invoiced the Company
US$6,465,966, US$5,569,647 and US$5,135,682, respectively, for supplies and
equipment ordered by the Company on a purchase order basis. The substantial
(E)(2)-1
majority of these purchases involve orders of supplies and equipment from third
prices from whom Verizon can obtain significantly better pricing.
Certain Verizon wireless affiliates have roaming agreements with
Movilnet at customary roaming rates.
GTE Overseas Corporation currently employs 22 expatriates at the
Company. These expatriates include three executive officers of the Company:
Gustavo Roosen, President and Chairman of the Board of Directors of the Company;
Vicente Llatas, Chief Operating Officer of the Company; and Armando Llatas,
Chief Financial Officer of the Company.
Mr. Roosen's initial contract with GTE Overseas Corporation was
executed in June 1995. This agreement was most recently amended, by letter
agreement, in December 2000. Mr. Roosen's current base salary is US$305,000 and,
apart from customary benefits, he is also entitled to an annual bonus in an
amount up to his base salary as well as a long term incentive target of 175% of
his base salary amount [(for which he has been granted options to acquire
Verizon stock)]. In the event that Mr. Roosen's employment is terminated
involuntarily without cause, he is entitled to one year's base salary.
Mr. Llatas' initial contract with GTE Overseas Corporation was
executed in April 1998. Mr. Llatas' current base salary is US$242,000 and, apart
from customary benefits, he is also entitled to an annual bonus in an amount up
to $193,600 as well as a long term incentive target of 100% of his base salary
amount.
Mr. Yanes' initial contract with GTE Service Corporation was executed
in May 2000. Mr. Yanes' current base salary is US$173,000 and, apart from
customary expatriate employee benefits, he is also entitled to an annual bonus
as well as an annual grant of options to acquire Verizon stock.
GTE Overseas Corporation pays the salaries and certain expenses of
these expatriates, which amounts are invoiced to the Company without markup. In
1998, 1999 and 2000, GTE Overseas Corporation invoiced the Company approximately
US$7,746,000, US$7,809,000 and US$6,800,000, respectively.
(E)(2)-2
EX-99
5
ex-e3.txt
E-3
EXHIBIT (E)(3)
AGREEMENT FOR SERVICES
DATED JANUARY 1, 1992
THIS AGREEMENT is made as of this 1/st/ day of January, 1992, by and
between Compania Anonima Nacional Telefonos de Venezuela ("CANTV"), located at
Edificio Administrativo, Av. Libertador, Caracas, Venezuela, and GTE Service
Corporation ("Vendor"), located at 600 Hidden Ridge, Post Office Box 152092,
Irving, Texas 75015, U.S.A.
In consideration of the mutual promises expressed in this Agreement,
the parties agree as follows:
ARTICLE 1
SERVICES TO BE PROVIDED
1.1 The Services to be provided by Vendor to CANTV are technical
assistance services described in Schedule A and technological services described
in Schedule B (collectively the "Proposal") attached hereto and by this
reference specifically made a part hereof.
ARTICLE 2
COMPENSATION AND EXPENSES FOR SERVICES
2.1 CANTV agrees to pay Vendor for technical assistance performed and
technological services provided under this Agreement, in accordance with the
schedule of charges set forth in Schedule C attached hereto.
2.2 In addition to the compensation specified above, CANTV agrees to
reimburse Vendor for expenses incurred for travel, lodging, and subsistence of
Vendor personnel while they are away from Vendor offices performing work called
for under this Agreement.
2.3 Compensation pursuant to this Article shall include all
Venezuelan taxes thereon.
2.4 Vendor shall invoice CANTV on a monthly basis for the
compensation and expenses. CANTV shall have the right to review itemized details
as to all expenses. Payment shall be due in thirty (30) days and shall be
subject to a finance charge of one percent (1%) per month on invoices
outstanding beyond thirty (30) days.
ARTICLE 3
CONTRACT TERM AND TERMINATION
3.1 This Agreement shall become effective upon its execution by both
parties and, except as otherwise provided in this Agreement, shall continue in
full force and effect thereafter for twelve months after the date hereof. If
notice has not been given to terminate this Agreement as provided in paragraph
3.2, the term shall automatically be extended for another twelve months.
3.2 This Agreement may be terminated by either party upon thirty
days' notice to the other party. In the event of termination, CANTV shall be
liable for all compensation and expenses owed to Vendor for services provided
prior to the date of termination, but not thereafter.
(E)(3)-1
ARTICLE 4
CONFIDENTIALITY
4.1 To effectuate this Agreement, it may be necessary for Vendor to
disclose to CANTV or for CANTV to disclose to Vendor, proprietary or
confidential customer, technical and business information in written, graphic,
oral or other tangible or intangible forms ("Information"). In order to protect
such Information from improper disclosure, both parties agree:
(a) That all such Information shall be and shall remain
confidential;
(b) To limit access to such Information to authorized
employees who have a need to know the Information in order for Vendor to perform
the services set out in this Agreement;
(c) To keep such Information confidential and to use the
same level of care to prevent disclosure or unauthorized use of the received
Information as the disclosing party exercises in protecting its Information of a
similar nature;
(d) For a period of one (1) year following any disclosure
by either party, not to copy or publish or disclose such Information to others
or authorize anyone else to copy or publish or disclose such Information to
others without the prior written approval of the disclosing party;
(e) To use such Information only for purposes of fulfilling
work or services performed hereunder and for other purposes only upon such terms
as may be agreed upon between the parties in writing.
4.2 The above-stated obligations shall not apply to any Information
which was legally in the possession of the other party prior to receipt, or was
received in good faith from a third party not subject to a confidential
obligation, or now is or later becomes publicly known through no breach of
confidential obligation by the receiving party, or was developed by the
receiving party without the developing person(s) having access to any of the
Information received in confidence from the other party.
4.3 The obligation of confidentiality and non-use with respect to
Information disclosed by either party to the other shall survive any termination
of this Agreement for a period of two (2) years from the date of the initial
disclosure of the Information.
ARTICLE 5
OWNERSHIP OF WORK PRODUCT
5.1 All inventions, improvements, discoveries, computer software
(including firmware), and other forms of technology or intellectual property
made or conceived or actually or constructively reduced to practice during the
term of this Agreement, result from any work which Vendor may do pursuant to
this Agreement, shall be and remain the property of both CANTV and Vendor, and
both shall have the rights to use such for any purpose.
5.2 All notes, designs, models, prototypes, drawings, data storage
media, listings, deliverables, technical data, and other work product developed
in connection with or pursuant to the terms and conditions of this Agreement,
including any reports to be prepared by Vendor for CANTV under this Agreement,
shall become and remain the property of both CANTV and Vendor, and both shall
have the rights to use such for any purpose without any additional compensation.
(E)(3)-2
ARTICLE 6
CANTV RIGHT TO AUDIT
6.1 CANTV shall have the right to examine Vendor's books and records
for the purpose of auditing all amounts billed to CANTV pursuant to this
Agreement.
6.2 CANTV may request to examine Vendor's books and records pertinent
to the provision of services at any time, and the parties shall thereupon agree
to a date and location for the review. Vendor shall make available to CANTV its
books and records reflecting all services provided to CANTV.
6.3 Each party shall bear its own expenses in connection with an
audit by CANTV of Vendor's records.
6.4 Materials reviewed by CANTV in the course of the audit shall be
deemed confidential information.
ARTICLE 7
MISCELLANEOUS
7.1 Amendments, Modifications and Supplements. Amendments,
modifications and supplements to this Agreement are allowed and will be binding
on the parties after the effective date, provided such amendments, modifications
and supplements (1) are in writing, signed by an authorized representative of
both parties, and (2) by reference incorporate this Agreement and identify the
specific sections or clauses contained herein which are amended, modified or
supplemented or indicate that the material is new. The term, "this Agreement"
shall be deemed to include any future amendments, modifications and supplements.
7.2 Assignment. Neither party may assign or delegate its obligations
under this Agreement without the prior written consent of the other.
7.3 Attorneys' Fees. In the event any party to this Agreement shall
be required to initiate legal proceedings (i) to interpret or to enforce
performance of any term or condition of this Agreement; (ii) to enjoin any
action prohibited hereunder; or (iii) to gain any other form of relief
whatsoever, the prevailing party shall be entitled to recover such sums, in
addition to any other damages or compensation received, as will reimburse the
prevailing party for reasonable attorneys' fees and court costs incurred on
account thereof notwithstanding the nature of the claim or cause of action
asserted by the prevailing party.
7.4 Compliance with Laws and Regulations. The parties shall comply
with all federal, state and local laws and regulations applicable to their
performance as described in this Agreement.
7.5 Consent. Where consent, approval or mutual agreement is required
of a party, it shall not be unreasonably withheld or delayed.
7.6 Default. If either party refuses or fails in any material respect
properly to perform its obligations under this Agreement, or violates any of the
material terms or conditions of this Agreement, such refusal, failure or
violation shall constitute a default. In such event, the non-defaulting party
may so notify the other party in writing of the default and allow that party a
period of thirty (30) calendar days to cure such default. If the defaulting
party does not cure such default within said thirty (30) calendar days, the
non-defaulting party shall have the right to terminate this Agreement upon
written notice to the other party.
(E)(3)-3
7.7 Entire Agreement. Except for written amendments, supplements or
modifications made after the execution of this Agreement, this Agreement
represents the entire agreement between the parties hereto with respect to the
subject matter of this Agreement and supersedes all prior negotiations,
representations and agreements, either oral or written.
7.8 Force Majeure. In the event performance of this Agreement, or any
obligation hereunder, is prevented, restricted or interfered with by reason of
acts of God, wars, revolution, civil commotion, acts of public enemy, embargo,
acts of the Government in its sovereign capacity, labor difficulties, including
without limitation, strikes, slowdowns, picketing, or boycotts, unavailability
of equipment from Vendor, changes requested by Customer, or any other
circumstances beyond the reasonable control and without the fault or negligence
of the party affected, the party affected, upon giving prompt notice to the
other party, shall be excused from such performance on a day-to-day basis to the
extent of such prevention, restriction, or interference (and the other party
shall likewise be excused from performance of its obligations on a day-to-day
basis until the delay, restriction or interference has ceased); provided,
however, that the party so affected shall use its best reasonable efforts to
avoid or remove such causes of nonperformance and both parties shall proceed
whenever such causes are removed or cease.
7.9 Governing Law. This Agreement shall be governed by and
interpreted or construed in accordance with the laws of Venezuela and shall be
subject to the exclusive jurisdiction of the courts therein.
7.10 Headings. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to define or
limit the scope, extent or intent of this Agreement or any of the provisions
hereof.
7.11 Independent Contractor Relationship. The persons provided by
each party to the other party on a part-time basis within each year shall be
solely that party's employees and shall be under the sole and exclusive
direction and control of that party. They shall not be considered employees of
the other party for any purpose. Each party shall remain an independent
contractor with respect to the other and shall be responsible for compliance
with all laws, rules and regulations involving, but not limited to, employment
of labor, hours of labor, health and safety, working conditions and payment of
wages. Each party shall also be responsible for payment of taxes, including
federal, state and municipal taxes, chargeable or assessed with respect to its
employees, such as, Social Security, unemployment, Workers' Compensation,
disability insurance, and federal and state withholding. Each party shall
indemnify the other for any loss, damage, liability, claim, demand or penalty
that may be sustained by reason of its failure to comply with this provision.
Persons provided to the party for a period in excess of six (6) months may
become employees of the other party.
7.12 Insolvency. Either party may terminate this Agreement by notice,
in writing, if the other party admits insolvency, makes an assignment for the
benefit of creditors, or has a trustee or receiver appointed over all or any
substantial part of its assets.
7.13 Limitation of Liability. It is expressly understood that neither
party makes any warranty to the other with respect to the performance or fitness
for any purpose of the products or services contemplated by this Agreement. Each
party's liability to the other for any loss, cost, claim, injury, liability or
expense, including reasonable attorney's fees, relating to or arising out of any
negligent act or omission in its performance of obligations arising out of this
Agreement, shall be limited to the amount of direct damage actually incurred.
Absent gross negligence or knowing and willful misconduct which causes a loss,
neither party shall be liable to the other for any indirect, special or
consequential damage of any kind whatsoever.
7.14 Notices. Any notice to any of the parties required or permitted
under this Agreement shall be deemed to have been received on the date of
service if served personally on the party to whom notice is to be given, on the
date receipt is acknowledged in writing by the recipient if delivered by regular
(E)(3)-4
mail, or on the date stated on the receipt if delivered by certified or
registered mail or by a courier service which obtains a written receipt. Any
notice shall be delivered using one of the alternatives mentioned in this
section.
For the purposes of this Agreement, notices and communications to the
parties hereunder shall be directed to the addresses indicated below and such
addresses shall be deemed to be the most recent address of the addressee and
shall remain so until written notice of a change of address is provided to the
other party by the party whose address has changed:
If to CANTV: Compania Anonima Nacional Telefonos de Venezuela
Attention: Bruce E. Haddad, President
Edificio Administrativo
Av. Libertador
Caracas, Venezuela Fax: 582-531-0614
If to Vendor: GTE Telephone Operations
Attention: Thomas W. White, Sr. Vice President
600 Hidden Ridge
Post Office Box 152092
Irving, Texas 75015 USA Fax: 214-718-2450
7.15 Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court or regulatory body of competent jurisdiction
to be invalid, void, or unenforceable, the rest of the Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
7.16 Successors. This Agreement shall be binding on and inure to the
benefit of the respective successors and permitted assigns of the parties.
7.17 Waiver. Any waiver of the terms and conditions of this Agreement
may be made by either party if reduced to writing and signed by both parties. No
waiver of the terms of this Agreement or failure by either party to this
Agreement to exercise any option, right or privilege on any occasion or through
the course of dealing, shall be construed to be a waiver of any subsequent
breach or of any option, right or privilege on any subsequent occasion.
(E)(3)-5
AMENDMENT NO. 1 TO
AGREEMENT FOR SERVICES
DATED JANUARY 1, 1992
This first Amendment to the Agreement for Services dated January 1,
1992, by and between Compania Anonima Nacional Telefonos de Venezuela ("CANTV")
and GTE Service Corporation ("Vendor") is agreed to by CANTV and Vendor, and
provides as follows:
1. Schedule C, Technical Assistance, is hereby amended to insert, following the
table of Billing Rates for technical assistance, the following:
"Technical assistance provided to CANTV by Vendor through
personnel assigned to work in Venezuela for more than six
months may be billed by Vendor to CANTV in an amount equal
to the cost to the GTE company providing such personnel to
CANTV, in lieu of the above hourly rates."
2. This Amendment shall be effective as of the date of the Agreement being
amended hereby.
(E)(3)-6
AMENDMENT
Pursuant to Article 7.1 Amendments, Modifications and Supplements of
the Agreement for Services dated January 1, 1992 (the "Agreement"), GTE Service
Corporation (Vendor) and Compania Anonima Nacional Telefonos de Venezuela
(CANTV) hereby amend said Agreement effective October 1, 1994, by adding the
following words at the end of paragraph 2.1:
No more than once annually, Vendor may revise Schedule C to
reflect changes in Vendor's fully allocated costs by
following the procedures set forth in Paragraph 7.14
Notices. The revised Schedule C shall be effective upon
receipt by CANTV and shall be substituted for the prior
Schedule C and made a part of this Agreement. In no event
shall Vendor's charges exceed the lowest price charged by
Vendor to any third party for the same or similar services.
The amendment shall apply to paragraph 2.1 of Schedule C only and the remaining
provisions of this Agreement shall remain in full force and effect.
(E)(3)-7
AMENDMENT NO. 3
AGREEMENT FOR SERVICES
DATED JANUARY 1, 1992
This AMENDMENT is made as of this 1st day of August, 1996, by and
between COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA ("CANTV"), located at
Edificio Administrativo, Avenida Libertador, Caracas, Venezuela, and GTE Service
Corporation ("VENDOR"), located at 600 Hidden Ridge, Post Office Box 152092,
Irving, Texas 75015, USA.
WHEREAS, CANTV and the VENDOR executed the Agreement for Services as
of January 1, 1992.
WHEREAS, CANTV and the VENDOR have executed and delivered Amendment
No. 1 to the Agreement dated as of January 1, 1992.
WHEREAS, CANTV and the VENDOR have executed and delivered Amendment
No. 2 to the Agreement dated as of October 1, 1994.
WHEREAS, CANTV has failed to make all payments due to the VENDOR in
accordance with the terms of the Agreement.
WHEREAS, CANTV and the VENDOR desire to amend such Agreement.
NOW, therefore, in consideration of the mutual promises expressed in
this Agreement and for other consideration, the receipt and sufficiency of which
is hereby acknowledged, the VENDOR and CANTV agree that pursuant to Article 7.1
Amendments, Modifications and Supplements of the Agreement for Services dated
January 1, 1992 (the "Agreement"), GTE Service Corporation and COMPANIA ANONIMA
NACIONAL TELEFONOS DE VENEZUELA hereby amend said Agreement as follows:
1. Section 2.4 of the Agreement is hereby amended by adding at the end thereof
the following paragraph:
"Any and all amounts due to VENDOR under the Agreement on
the date of Amendment No. 3 to this Agreement which have
not been paid shall be payable 30 days after the date
hereof."
2. Section 3.1 of the Agreement is hereby amended by substituting for the second
paragraph thereof the following paragraph:
"If notice has not been given to terminate this Agreement
as provided in Section 3.2 prior to the end of the initial
12-month term, the term shall automatically be extended for
an additional 12-month term and if notice has not been
given to terminate the Agreement as provided in Section 3.2
prior to the end of each successive term, the term shall
automatically be extended for an additional 12-month term."
The Amendment shall apply to Sections 2.4 and 3.1 of the Agreement and remaining
provisions of said Agreement shall remain in full force and effect, and the
Agreement is hereby ratified by the VENDOR and CANTV.
(E)(3)-8
AMENDMENT NO. 4 TO
AGREEMENT FOR SERVICES
DATED JANUARY 1, 1992
FOURTH AMENDMENT (this "Amendment") is made as of November __, 2000
by and between COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV)
("CANTV"), located at Edificio Administrativo, Av. Libertador, Caracas,
Venezuela and GTE Service Corporation located at 600 Hidden Ridge, Post Office
Box 152092, Irving, Texas 75015, USA (the "Vendor").
WITNESSETH
WHEREAS, CANTV and the Vendor have entered into the Agreement for
Services dated as of January 1, 1992 (as amended by Amendment No. 1 to Agreement
for Services dated as of January 1, 1992, Amendment No. 2 to Agreement for
Services dated as of October 1, 1994 and Amendment No. 3 to Agreement for
Services dated as of August 1, 1996, the "Agreement"), in respect of certain
technical assistance and technological services (as further described in the
Agreement) being rendered to CANTV by the Vendor (the "Services");
WHEREAS, in addition to the Services provided by the Vendor to CANTV
pursuant to the terms hereof, certain additional services and products have been
provided by the Vendor (and certain affiliates of the Vendor) to CANTV pursuant
to the terms of Section 4.1.1 of the Stock Purchase and Sale Agreement (the
"Stock Purchase Agreement") dated among Fondo de Inversiones de Venezuela,
Venworld Telecom, C.A. ("Venworld") and GTE Corporation ("GTE") requiring
Venworld, subject to certain exceptions, to use its best efforts (including,
without limitation, making available to CANTV, and applying in the management
and operation of CANTV, the managerial, technical and marketing expertise and
experience of GTE and the Consortium Participants (as defined in the Stock
Purchase Agreement) and their respective affiliates) to cause CANTV to comply
completely with all the terms and conditions of the Concession Agreement (as
defined in the Stock Purchase Agreement);
WHEREAS, the obligation of the Vendor to provide CANTV such
additional services pursuant to the terms of Section 4.1.1 of the Stock Purchase
Agreement terminates on January 1, 2001; and
WHEREAS, CANTV desires to continue to obtain from the Vendor, and the
Vendor desires to continue to provide to CANTV certain of these additional
services on the terms and conditions set forth in the Agreement (as amended,
modified and supplemented by this Amendment) until such time as CANTV and the
Vendor may enter into a more definitive agreement.
NOW, THEREFORE, in consideration of the mutual promises expressed in
this Amendment and for other consideration, the receipt and sufficiency of which
is hereby acknowledged, CANTV and the Vendor wish to amend and modify certain of
the terms of the Agreement pursuant to Article 7.1 of the Agreement and
accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Terms used but not defined herein
shall have the respective meanings ascribed to such terms in the
Agreement.
Section 2. Amendments. Article 1 of the Agreement is hereby
amended by inserting a new Section 1.2, following Section 1.1, to
read as follows:
Section 1.2. In addition to the technical assistance and
the technological services provided by the Vendor to CANTV
under Section 1.1 hereof, the Vendor shall provide to CANTV
such additional services and products (including providing
CANTV with certain rights and access to, and use of,
technology owned by and/or licensed to the Vendor and
trademarks and service marks now or hereafter owned by the
Vendor in Venezuela) at such negotiated rates as the Vendor
and CANTV may agree from time to time. Invoices for
(E)(3)-9
requested services and products shall reflect in reasonable
detail, the nature and quantity of the requested services
and products rendered during the immediately preceding
calendar quarter and the fee will be payable by CANTV
within thirty (30) days of the invoice date.
Section 3. Documents Otherwise Unchanged. Except as herein
provided, the Agreement shall remain unchanged and in full force and
effect, and each reference to the Agreement shall be a reference to
the Agreement as amended hereby and as the same may be further
amended, supplemented and otherwise modified and in effect from time
to time.
Section 4. Counterparts. This Amendment may be executed in
any number of counterparts, each of which shall be identical and all
of which, when taken together, shall constitute one and the same
instrument, and any of the parties hereto may execute this Amendment
by signing any such counterpart.
Section 5. Binding Effect. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
Section 6. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of Venezuela and shall
be subject to the exclusive jurisdiction of the courts therein.
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