<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
----------------------
Mark One
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
-------- --------.
Commission file number: 0-25194
INTERAMERICAS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 87-0464860
(State of Incorporation) (IRS Employer Identification)
104 CRANDON BOULEVARD, SUITE 324
KEY BISCAYNE, FLORIDA 33149
(Address of principal executive officers) (Zip Code)
Registrant's telephone number:
(305) 361-8484
Indicate by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the registrant was
required to file such reports),
Yes X No
--- ---
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of August 8, 1996 - 16,152,518 Shares.
NOTE: Page 1 of 144 Sequentially numbered pages
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INTERAMERICAS COMMUNICATIONS CORPORATION
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements:
Balance Sheet - Six Months Ended June 30, 1996 and
Year ended December 31, 1995 . . . . . . . . . . . . . . 3
Statement of Operations - Six Months Ended June 30,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . 4
Statement of Cash Flows - Six Months ended June 30,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . 5
Statement of Cash Flows - Three Months ended June 30,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Results of
Operations, Financial Conditions and Liquidity of
Capital Resources . . . . . . . . . . . . . . . . . . . 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 13-14
2
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INTERAMERICAS COMMUNICATIONS CORPORATION
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
CONSOLIDATED CONSOLIDATED
JUNE 30, DECEMBER 31,
1996 1995
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash in Bank $ 6,987,494 $ 57,000
Accounts Receivable 65,259 8,000
Other Receivables -- 7,000
Prepaid Expenses 230,606 119,000
Due from Related Parties 39,554 93,000
Other Currents Assets 5,070 4,000
----------- -----------
Total Current Assets 7,327,983 288,000
----------- -----------
Equipment at cost, less
Accumulated Depreciation 2,972,526 2,885,000
Intangible Assets 7,260,663 1,166,000
Other Assets 2,760 8,000
----------- -----------
10,235,949 4,059,000
----------- -----------
TOTAL ASSETS $17,563,932 $ 4,347,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable - Related Parties $ 438,000 $ 698,000
- Other 1,130,981 423,000
Accrued Expenses 533,398 536,000
Note Payable - Related Parties 259,106 634,000
- Other 238,494 1,013,000
Lease obligation - Current 8,235 11,000
----------- -----------
Total Current Liabilities 2,608,214 3,315,000
Lease Obligation - less current portion 210,000 210,000
Deferred Income Taxes 152,000 152,000
----------- -----------
Total Liabilities 2,970,214 3,677,000
----------- -----------
Stockholders' Equity:
Common Stock, $.001 par value,
Authorized 50,000,000 shares
16,152,518 issued and outstanding 16,153 12,000
Additional Paid in Capital 21,170,561 6,153,000
Cumulative Translation Adjustment 56,429 30,000
Accumulated Deficit (6,649,425) (5,525,000)
----------- -----------
Total Stockholders' Equity 14,593,718 670,000
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,563,932 $ 4,347,000
=========== ===========
</TABLE>
3
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INTERAMERICAS COMMUNICATIONS CORPORATION
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
SALES $ 112,921 $ 107,000
COST OF SALES 373,203 266,000
----------- -----------
GROSS PROFIT (260,282) (159,000)
----------- -----------
EXPENSES:
GENERAL AND ADMINISTRATIVE 836,422 856,000
----------- -----------
TOTAL EXPENSES 836,422 856,000
----------- -----------
LOSS FROM OPERATIONS (1,096,704) (1,015,000)
INTEREST INCOME 13,759
INTEREST EXPENSE (41,480)
----------- -----------
NET LOSS ($1,124,425) ($1,015,000)
=========== ===========
NET LOSS PER SHARE ($0.08) ($0.12)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 13,432,076 8,393,833
=========== ===========
</TABLE>
4
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INTERAMERICAS COMMUNICATIONS CORPORATION
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
SALES $ 54,453 $ 70,000
COST OF SALES 213,518 87,000
----------- -----------
GROSS PROFIT (159,065) (17,000)
----------- -----------
EXPENSES:
GENERAL AND ADMINISTRATIVE 456,923 474,000
----------- -----------
TOTAL EXPENSES 456,923 474,000
----------- -----------
LOSS FROM OPERATIONS (615,988) (491,000)
INTEREST INCOME 13,167
INTEREST EXPENSE (10,675)
----------- -----------
NET LOSS ($613,496) ($491,000)
=========== ===========
NET LOSS PER SHARE ($0.05) ($0.05)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 12,198,076 9,414,770
=========== ===========
</TABLE>
5
<PAGE>
INTERAMERICAS COMMUNICATIONS CORPORATION
STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS ($1,124,425) ($1,015,000)
ADJUSTMENTS TO RECONCILE LOSS TO CASH
PROVIDED/USED FROM OPERATING ACTIVITIES:
AMORTIZATION AND DEPRECIATION EXPENSE 3,344 130,000
CHANGES IN ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE (50,259) (225,000)
(INCREASE) DECREASE IN OTHER CURRENT ASSETS (59,230) 278,000
INCREASE (DECREASE) IN OTHER CURRENT LIABILITIES (2,765) 351,000
INCREASE (DECREASE) IN ACCRUED EXPENSES (2,602) (1,447,000)
INCREASE (DECREASE) IN ACCOUNTS PAYABLE 447,981 267,000
----------- -----------
NET CASH PROVIDED (USED) BY OPERATIONS (787,956) (1,661,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
SALE OF COMMON STOCK 1,939 6,000
CONVERSION OF NOTES PAYABLE TO EQUITY 1,232,800
NOTES PAYABLE (805,862) 247,000
CAPITAL CONTRIBUTION 7,443,437 2,089,000
EFFECT OF EXCHANGE RATE CHANGES ON CASH 26,429 (77,000)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 7,898,743 2,265,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF EQUIPMENT AND INTANGIBLE ASSETS (185,533) (514,000)
DECREASE IN OTHER ASSETS 5,240 (24,000)
----------- -----------
NET CASH (USED) BY INVESTING ACTIVITIES (180,293) (538,000)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 6,930,494 66,000
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 57,000 114,000
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 6,987,494 $ 180,000
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
CONVERSION OF NOTES PAYABLE TO EQUITY 751,827
===========
</TABLE>
6
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Notes to Financial Statements (Unaudited)
The Consolidated Balance Sheets as of June 30, 1996 and 1995, the
Consolidated Statements of Income for the six months and three months ended
June 30, 1996 and June 30, 1995 and the Consolidated Statements of Cash Flows
for the six months ended June 30, 1996 and June 30, 1995, have all been
prepared without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position at June 30, 1996 and for
the periods presented, have been made.
Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted
accounting principles has been omitted. It is suggested that these condensed
consolidated financial statements and notes be read in conjunction with the
financial statements and notes therein included in Form 10-K - Annual Report
Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the year
ended December 31, 1995.
ITEM 2 - MANAGEMENTS DISCUSSIONS AND ANALYSIS OF RESULTS OF OPERATIONS,
FINANCIAL CONDITIONS, AND LIQUIDITY AND CAPITAL RESOURCES:
The following discussion should be read in conjunction with the
condensed consolidated financial statements and notes thereto. Throughout
this document, InterAmericas Communications Corporation ("ICCA"), Hewster
Servicios Intermedios, S.A. ("HSI"), VISAT Telecomunicaciones, S.A., ("VISAT")
and the newly acquired Red de Servicios Empresariales de Telecomunicaciones
("RESETEL") are collectively referred to as the "Company".
Except for the historical information contained herein, this report on
Form 10-Q contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially. Factors
which could cause or contribute to such differences include, but are not
limited to, uncertainty as to sufficiency of funds, management of business,
technological changes, global economic factors, successful development of
telecommunications network and other factors.
7
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RESULTS OF OPERATIONS
The unaudited Consolidated Statement of Operations reflects a net loss
of $1,124,425 for the six months ended June 30, 1996. Losses are attributable
primarily to selling, general and administrative expense and interest
expense. The Company expects that it will continue to incur losses from
operations for the foreseeable future. The unaudited Consolidated Balance
Sheet dated June 30, 1996 reflects an accumulated deficit of $6,649,425.
During the first six months of 1996, the Company concentrated its
efforts on continuing to connect and provide services to its customers, and
arrange financing for its ongoing business development. The Company's current
development activities include the expansion of its Santiago network to
connect new customers, provide services to newly developed business
districts, and offer additional services. The Company will conduct such
expansion using fiber-optic and national and international satellite systems.
In addition, the Company is now engineering and will soon initiate
construction in Lima, Peru of an advanced, fiber-optic private line network
which will be owned and operated by the Company's newly acquired subsidiary,
RESETEL. The revenue in the six months ended June 30, 1996 was $112,921
versus $107,000 for the same period in 1995. The Company's operations since
inception have essentially been limited to the installation of fiber-optic
cable and the creation of an advanced, intelligent network in Santiago, Chile.
The selling, general and administrative expenses for the Company for the
six months ended June 30, 1996 was $836,442 versus $856,000 for the same period
in 1995. In addition $41,480 of interest was accrued for the six month period
ending June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The business of the Company requires substantial continuing capital
investment to complete the construction and development of its
telecommunications networks and services. Although the Company has been able
to arrange debt and equity financing to date, there can be no assurance that
sufficient additional financing will continue to be available in the future,
nor that it will be available on terms acceptable to the Company.
The Company raised gross proceeds of approximately $6.9 million in a
Private Placement during June 1996. A significant portion of these funds have
been allocated to capital expenditure and working capital requirements of the
Company's operations in both Chile and Peru. In addition, a portion of these
funds have been utilized for the acquisition of Hewster, S.A. (See "Recent
Developments - Acquisition of Hewster, S.A.). The balance of the proceeds have
been utilized to pay outstanding debts.
The Company estimates that it will need approximately $12 million in
additional debt and equity financing to fully develop its fiber-optic and
wireless network and expand its customer base in Chile, to commence operations
and network construction in Peru, and to provide
8
<PAGE>
sufficient working capital for its operations over the next year and a half.
There can be no assurances that the Company will be successful in obtaining all
or any of this required financing. Should the Company not be able to obtain
this financing in full, it would be required to delay capital expenditures on
certain projects until such financing were available. This in turn would delay
the revenue streams associated with those projects until such financing were
available. The Company estimates that the present cash level would allow the
Company to continue operations for approximately four months.
OPERATING ACTIVITIES
Cash use by operating activities was $787,956 for the six months ended
June 30, 1996 versus $1,661,000 for the same period last year. The cash flow
used by operating activities is related to expenditures made before the start
of significant revenues as the Company has recently come out of the
development stage.
FINANCING ACTIVITIES
Net cash provided by financing activities for the first six months of
1996 was $7,898,743 which includes net proceeds of $1,022,000 from the
issuance of stock in a private sale to an off shore investor during the
quarter ended March 31, 1996 and $6,424,000 raised in a Private Placement
during June 1996. The cash provided by financing in the same period in 1995
was $2,265,000.
INVESTING ACTIVITIES
The net cash used in investing activities was $180,293 for the six
months ended June 30, 1996 and $538,000 for the corresponding period in 1995.
These funds were used primarily to purchase equipment and complete last mile
installations to connect customer locations to the HSI network. The Company's
operational fiber-optic network currently extends over 100 kilometers
throughout downtown Santiago, Chile.
EFFECTS OF INFLATION
The rate of inflation in Chile has remained the lowest in South America
for the past five years, with rates below double digit. The Company does not
believe that inflation had any
9
<PAGE>
significant impact on operations in the first six months of 1996, nor does it
expect that it will have any significant impact on operations throughout the
remainder of the year.
SECURED NOTE
On May 2, 1995, the Company borrowed $1,000,000 from United
International Properties, Inc., a Colorado Corporation, pursuant to a Secured
Promissory Note (the "Secured Note"). The Secured Note was secured by (i) the
45,000 shares of Common Stock of HSI owned by the Company (ii) the shares of
Common Stock of VISAT owned by HSI and (iii) all of the assets of HSI. As
part of the financing, the Company issued a Warrant to United International
Properties, Inc., to acquire 200,000 shares of Company Common Stock at a
price of $3.50 per share. The principal sum together with interest at the
rate of 8% per annum was paid on April 30, 1996.
PROMISSORY NOTES
During April and May, 1996, the Company borrowed an aggregate of
$173,750 from Laura Investments, Ltd. pursuant to three Promissory Notes (the
"Notes"). The Notes bear interest at the rate of 6% per annum. The principal
sum of the Notes, together with simple interest, is due on or before
September 30, 1996. On June 21, 1996, the Company borrowed an additional
$50,000 from Laura Investments, Ltd. pursuant to a Promissory Note which
bears interest at the rate of 6% per annum, and the principal and simple
interest of which is due on or before July 30, 1996.
RECENT DEVELOPMENT
ACQUISITION OF RED DE SERVICIOS EMPRESARIALES DE TELECOMUNICACIONES, S.A.
("RESETEL")
In May, 1996 the Company acquired 100% of the issued and outstanding
stock of Red de Servicios de Telecomunicaciones, S.A., a Peruvian corporation
("RESETEL") in exchange for 1,250,000 shares of Common Stock of the Company
issued to the shareholders of RESETEL pursuant to a stock purchase agreement
dated May 7, 1996. The terms of the agreement and the consideration paid to
the shareholders of RESETEL were determined through arms-length negotiations
among the parties. RESETEL is the first company to obtain a local carrier
concession to compete with Peru's monopoly carrier, Telefonica. The Concession,
issued by Peru's Ministry of Communications, Transportation, Housing and
Construction authorizes RESETEL to operate a fiber-optic telecommunications
network serving corporate customers in metropolitan Lima, Peru and the port
city of Callao. Together these cities have a population of approximately 7
million. The Company is now engineering and plans to commence the construction
and operation of the fiber-optic network in Peru. The Company intends to use
the network design, engineering, construction, management and marketing
expertise developed
10
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through its operations in Chile to construct and operate the network. Like the
Santiago network, the new network will provide high-bandwidth private line
voice, video and data communications services to corporate customers.
ACQUISITION OF HEWSTER, S.A.
On July 31, 1996 the Company acquired 99% of Hewster, S.A., a Chilean
corporation controlled by Hernan Streeter Rios, the Company's President and
Chairman of the Board. The transaction was completed in the following manner:
On July 31, 1996, the Company transferred $1,500,000 to its subsidiary
Hewster Servicios Intermedios, S.A. ("HSI") in exchange for 95% of the issued
and outstanding capital stock of VISAT Telecomunicaciones, S.A. ("VISAT")
held by HSI, pursuant to a Stock Purchase and Sale Agreement. As a result of
this transaction, VISAT will now be a direct subsidiary of the Company
instead of a subsidiary of HSI. HSI then used the $1,500,000 to acquire 99%
of the issued an outstanding stock of Hewster, S.A. from its shareholders,
Santiago Bouza Saavedra and Inversiones Druma, S.A. a Chilean Corporation
controlled by Hernan Streeter Rios, pursuant to the Stock Purchase and Sale
Agreements dated July 30, 1996. The terms of the agreements and the amount of
consideration paid for the Hewster, S.A. stock were determined through
arms-length negotiations among the parties. The $1,500,000 was obtained by
the Company as part of a private placement which closed in June 1996. See
"Capital Resources".
ACQUISITION OF CENTRO EMPRESARIALSE, S.A.
On July 4, 1996, the Company entered into a Stock Purchase Agreement
with Devono Company Limited for the acquisition of Centro Empresariales, S.A.
("Cempresa"), a company organized and existing under the laws of the Republic
of Ecuador in exchange for a cash payment of $36,300,000 certain promissory
notes in the aggregate amount of $14,800,000 and 14,000,000 shares of the
Company's common stock. Cempresa owns a 52.63% interest in Consorcio
Ecuatoriano de Telecomunicaciones, S.A. a cellular service provider organized
and existing under the laws of Ecuador ("Conecel"). Conecel currently has
approximately 30,000 cellular subscribers and holds approximately a 60% share
of the Ecuadorian cellular market. In addition to cellular services, Conecel
provides domestic and international private line services through its own
satellite Earth station and has recently begun providing cellular based pay
phone services. To finance the cash portion of the purchase price, the
Company has entered into a letter of intent with an underwriter to assist the
Company in raising capital through a private offering of its securities.
Consummation of this aqcuisition is subject to due diligence and completion of
successful financing.
11
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OTHER INFORMATION
During April 1996, the Company moved its Corporate offices to 104
Crandon Boulevard, Suite 324, Key Biscayne, Florida 33149. These offices are
occupied under a lease that expires on April 30, 1997.
12
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PART II
OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits listed below are filed as part of this Report.
EXHIBIT NO. DESCRIPTION
----------- -----------
10.25 Convertible Promissory Note for $1,232,800 between
Registrant and Laura Investments Limited dated March
31, 1996 (previously filed with Registrant's Form 10-Q
for the quarter ended March 31, 1996 and Incorporated
herein by reference)
10.26 Stock Purchase Agreement by and among Registrant and
Kayhelm, Ltd. (the shareholder of RESETEL, S.A.) dated
May 9, 1996
10.27 Stock Purchase/Sale Agreement by and among Registrant
and Kayhelm, Ltd. (the shareholder of RESETEL, S.A.)
dated May 10, 1996
10.28 Promissory Note for $30,000 between Registrant and Laura
Investments, Ltd. dated April 9, 1996
10.29 Promissory Note for $93,750 between Registrant and Laura
Investments, Ltd. dated April 24, 1996
10.30 Promissory Note for $50,000 between Registrant and Laura
Investments, Ltd. dated May 6, 1996
10.31 Promissory Note for $50,000 between Registrant and Laura
Investments, Ltd. dated June 21, 1996
*10.32 Stock Purchase and Sale Agreement by and between
Registrant and Hewster Servicios Intermedios, S.A.
dated July 30, 1996.
*10.33 Stock Purchase and Sale Agreement by and between Hewster
Servicios Intermedios, S.A. and Inversiones Druma, S.A.
dated July 30, 1996.
*English Translation of Spanish Document
13
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*10.34 Stock Purchase and Sale Agreement by and between Hewster
Servicios Intermedios, S.A. and Santiago Boza Saaverda
dated July 30, 1996.
*10.35 Stock Purchase Agreement by and between Registrant and
Devono Company Limited dated July 4, 1996.
(b) During the second quarter of 1996, the Company did not file a Form 8-K.
*English Translation of Spanish Document
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERAMERICAS COMMUNICATIONS CORP.
/s/ Hernan Streeter DATE 8/16/96
- - --------------------------------------- ------------
Hernan Streeter
Chairman, President and
Chief Executive Officer
<PAGE>
EXHIBIT 10.26
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into effective
the 9th day of May, 1996, by and between InterAmericas Communications
Corporation, a Texas corporation ("ISSUER") and KAYHELM, LTD., a corporation
organized and existing in accordance with the laws of the United Kingdom; Mr.
Guillermo Villanueva Pinto; Mr. Jesus Otto Villanueva Napuri; Mr. Guillermo Jose
Soto Abanto; Bethany Investments Limited, a Bahamian corporation; Mrs. Margarita
Ulloa De Beeck; Mr. Esteban Viton Ramirez; Mr. Humberto Guillen Luque; Mrs.
Maria Jesus Hume Hurtado; all of whom designate their legal address for the
purposes hereof at Las Begonias 475, Oficina 502, San Isidro, Lima, Peru,
(hereinafter called collectively the "PURCHASERS")
WHEREAS, Issuer is a publicly traded corporation on the OTC Bulletin Board,
traded under the symbol "ICCA";
WHEREAS, Issuer desires to sell, and Purchasers desire to purchase,
$2,812,500.00 of Common Stock of the Issuer, upon the terms and conditions
specified herein;
NOW, THEREFORE, in consideration of the premises, and the representations
and warranties contained herein, and other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE OF SHARES; CLOSING
(a) PURCHASE AND SALE. On the terms and subject to the conditions of
this Agreement, at the Closing referred to in paragraph l(b) below, Issuer
shall deliver to Purchasers and Purchasers shall purchase from Issuer, ONE
MILLION TWO HUNDRED FIFTY THOUSAND (1,250,000) Shares of Common Stock (the
"SHARES") of the Issuer, at an aggregate purchase price of TWO MILLION
EIGHT HUNDRED TWELVE THOUSAND FIVE HUNDRED DOLLARS OF THE UNITED STATES OF
AMERICA (US$ 2,812,500), payable to the Issuer at Closing, by delivering to
the Issuer share certificates representing in aggregate 32,000 shares of
common stock of Red de Servicios Empresariales de Telecomunicaciones, S.A,
Resetel, a company established under the laws of Peru, in accordance with
the terms of the Resetel Share Purchase Agreement between the Issuer and
the Purchasers dated May 9, 1996.
(b) CLOSING. The closing of the purchase and sale contemplated by
this Agreement shall take place at the offices of Purchasers at Las
Begonias 475, Oficina 502, San Isidro, Lima, Peru, on or around May 16,
1996, or on such other date as the parties may mutually agree (the
"CLOSING"). At the Closing, assuming the parties have complied with
Sections 6 and 7 hereof, Issuer shall deliver the Shares to the Purchasers
or their assigns in accordance with Exhibit A, attached hereto and
incorporated herein and Purchasers shall pay the purchase price to Issuer
as set forth above.
2. REPRESENTATIONS OF PURCHASER
(a) OFFSHORE TRANSACTION. Purchasers represent and warrant to Issuer
as follows:
(i) None of the Purchasers is a U.S. citizen, resident or
entity;
- 1 -
<PAGE>
(ii) All of the Purchasers reside outside the United States and
its territories as of the date of the execution and delivery of this
Agreement;
(iii) The Purchasers are purchasing the Shares for their own
account and not on behalf of any U.S. Person, and the sale has not
been pre-arranged with any U.S. Person in the United States or its
territories;
(iv) Purchasers hereby agree that they will not transfer or
otherwise dispose of any of the Shares unless such transfer or other
disposition is registered under the Securities Act of 1933 ("1933
ACT") or such transfer or other disposition is exempt therefrom.
Purchasers further represent and warrant that Purchasers have
sufficient knowledge and experience in financial and business matters
that they are capable of evaluating the merits and risks of the
acquisition of the Shares hereunder and that Purchasers have had made
available to them such information with respect to Seller as they have
deemed necessary or appropriate to make such evaluation, including,
but not limited to, the Company's most recent Form 10-K Report for the
fiscal year ended December 31, 1995.
(v) Purchasers acknowledge that the Shares have not been
registered under the 1933 Act, and may not be offered or sold in the
United States or to any U.S. Persons unless the Shares are registered
under the 1933 Act, or an exemption from registration is available;
(vi) Purchasers acknowledge that the purchase of the Shares
involves a high degree of risk and further acknowledge that Purchasers
can bear the economic risk of the purchase of the Shares, including
the total loss of their investment; and
(vii) Purchasers understand that the Shares are being offered and
sold to them in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that the Issuer
is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgements and understandings of
Purchasers set forth herein in order to determine the applicability of
such exemptions and the suitability of Purchasers to acquire the
Shares.
(b) CURRENT PUBLIC INFORMATION. Purchasers acknowledge that
Purchasers have been furnished with or have acquired copies of the Issuer's
most recent Annual Report on the Form 10-K filed with the SEC and any Forms
10-Q filed thereafter (the "SEC FILINGS"), and other publicly available
documents.
(c) INDEPENDENT INVESTIGATION; ACCESS. Purchasers acknowledge that
Purchasers, in making the decision to purchase the Shares subscribed for,
have relied upon independent investigations made by them and Purchasers
have, prior to any sale to them, been given access and the opportunity to
examine all material books and records of the Issuer, all material
contracts and documents relating to this offering and an opportunity to ask
questions of, and to receive answers from the Issuer or any person acting
on its behalf concerning the terms and conditions of this offering.
Purchasers and their advisors, if any, have been furnished with access to
all publicly available materials relating to the business, finances and
operation of the Issuer and materials relating to the offer and sale of the
Shares which have been requested, including, but not limited
- 2 -
<PAGE>
to, the information set forth in paragraphs 2(a)(iv) and 2(b) above.
Purchasers and their advisors, if any have received complete and
satisfactory answers to any such inquiries.
(d) DUE AUTHORIZATION; BINDING EFFECT. This Agreement has been duly
authorized, executed and delivered on behalf of Purchasers and, assuming
the due authorization, execution and delivery by Issuer, this Agreement
constitutes the valid, legal and binding obligation of Purchasers,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally;
(e) ACCURACY OF REPRESENTATIONS. No representation or warranty made
by Purchasers in this Agreement and no certificate or document furnished or
to be furnished to Issuer pursuant to this Agreement contains or will
contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
(f) NO GOVERNMENT RECOMMENDATION OR APPROVAL. Purchasers understand
that no federal or state agency has passed on or made any recommendation or
endorsement of the Shares.
3. ISSUER REPRESENTATIONS
(a) REPORTING COMPANY STATUS. Issuer has timely filed all reports
under either Section 12(b) or 12(g) of the Securities Act of 1934, as
amended (the "EXCHANGE ACT"). Issuer has registered its Common Stock
pursuant to Section 12 of the Exchange Act and the Common Stock trades on
the OTC Bulletin Board.
(b) CAPITALIZATION. The authorized capital stock of Issuer consists
of 50,000,000 shares of Common Stock, par value $.0001, of which 11,951,685
shares are issued and outstanding, and 10,000,000 shares of Preferred
Stock, par value $.0001, of which no shares are issued and outstanding.
(c) DUE AUTHORIZATION; BINDING EFFECT. This Agreement has been duly
authorized, executed and delivered on behalf of Issuer and, assuming the
due authorization, execution and delivery by Purchaser, this Agreement
constitutes the valid, legal and binding obligation of Issuer, enforceable
in accordance with its terms, except to the extent that enforceability may
be limited by bankruptcy, insolvency, moratorium or similar laws affecting
the enforcement of creditors' rights generally;
(d) ACCURACY OF REPRESENTATIONS. No representation or warranty made
by Issuer in this Agreement and no certificate or document furnished or to
be furnished to Purchasers pursuant to this Agreement contains or will
contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
4. EXEMPTION. Purchasers understand that the offer and sale of the
Shares is not being registered under the 1933 Act.
- 3 -
<PAGE>
5. TRANSFER AGENT INSTRUCTIONS. Issuer's transfer agent will be
instructed by the Issuer to issue share certificates representing the Shares, in
accordance with the instructions delivered by each Purchaser to the Issuer in
accordance with the share amounts as set forth on Exhibit A.
6. CONDITIONS TO OBLIGATIONS OF THE ISSUER. All obligations of the
Issuer under this Agreement are subject to the fulfillment or satisfaction,
prior to or at Closing of each of the following conditions precedent (all of
which may be waived by the Issuer):
(a) EXECUTION OF AGREEMENT. Execution of this Agreement by all
Purchasers;
(b) RECEIPT OF PURCHASE PRICE. Delivery by Purchasers of the
purchase price, as set forth in paragraph 1 hereof;
(c) ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties of the Purchasers herein being true and correct in all material
respects on the date hereof and as of the Closing, and the Purchasers
having performed or complied with all agreements and covenants contained in
this Agreement to be performed or complied with by it prior to or at the
Closing;
(d) NO COURT ACTION. Neither the Issuer nor the Purchasers being
precluded by an order or preliminary or permanent injunction of a court of
competent jurisdiction from consummating the sale and purchase of the
Shares pursuant to this Agreement (each party agreeing to use its
reasonable best efforts to have any such injunction lifted); and
(e) NO ADVERSE LAWS. There not having been any statute, rule or
regulation enacted or promulgated by any governmental body or agency after
the date hereof which is applicable to the purchase and sale of the Shares
pursuant to this Agreement which would render the consummation of any such
purchase and sale illegal.
7. CONDITIONS TO PURCHASERS' OBLIGATIONS TO PURCHASE. Issuer understands
that Purchasers' obligation to purchase the Shares is conditioned upon:
(a) EXECUTION BY ISSUER. Execution by Issuer of this Agreement;
(b) DELIVERY OF SHARES. Delivery of the Shares to the Purchasers or
their assigns;
(c) ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties of the Issuer herein being true and correct in all material
respects on the date hereof and as of the Closing, and the Issuer having
performed or complied with all agreements and covenants contained in this
Agreement to be performed or complied with by it prior to or at the
Closing;
(d) NO COURT ACTION. Neither the Issuer nor the Purchasers being
precluded by an order or preliminary or permanent injunction of a court of
competent jurisdiction from consummating the sale and purchase of the
Shares pursuant to this Agreement (each party agreeing to use its
reasonable best efforts to have any such injunction lifted); and
(e) NO ADVERSE LAWS. There not having been any statute, rule or
regulation enacted or promulgated by any governmental body or agency after
the date hereof which is applicable to the purchase and sale of the Shares
pursuant to this Agreement which would render the consummation of any such
purchase and sale illegal.
- 4 -
<PAGE>
(f) LEGAL OPINION. Purchaser shall have received a legal opinion
from counsel to regarding the enforceability of this Agreement and the
corporate existence of Issuer.
8. REGISTRATION RIGHTS. If the Issuer at any time proposes for any
reason to register any of its equity securities under the Securities Act of
1933, as amended (the "Securities Act"), (other than pursuant to a registration
statement on Forms S-8 or S-4 or a similar or successor form), and such form
could be used to register the shares of Purchaser, then the Issuer shall
promptly give written notice to Purchaser of its intention to do so, and, upon
written request by Purchaser, given within 15 days after receipt of any such
notice (which request shall specify the shares intended to be sold or disposed
of and shall state the intended method of disposition thereof), the Issuer shall
use its reasonable best efforts to cause all such shares to be registered under
the Securities Act promptly upon receipt of such written request all to the
extent requisite to permit the sale or other disposition (in accordance with the
intended methods thereof, as aforesaid) by the Purchaser. In the event that the
proposed registration by the Issuer is, in whole or in part, an underwritten
public offering of common stock of the Issuer, any request pursuant to these
registration rights to register shares may specify that such shares are to be
included in the underwriting on the same terms and conditions as such other
shares of common stock, if any, otherwise being sold through underwriters under
such registration; provided, however, that (i) if the managing underwriter
determines and advises in writing that the inclusion of all shares proposed to
be included in the underwritten public offering would interfere with the
successful marketing of the public offering, then the number of shares intended
to be included by Purchaser shall be reduced pro rata among the holders of other
shares who have a right to have their shares included in the offering. In each
case, those shares which are excluded from the underwritten public offering
shall be withheld from the market by Purchaser for a period, not to exceed 120
days, which the managing underwriter reasonably determines as necessary in order
to effect the underwritten public offering. Under no circumstances may
Purchaser transfer or otherwise convey the registration rights herein set forth
without the written consent of the Issuer. Purchaser shall not have any right to
take any action to restrain, enjoin or otherwise delay any registration as a
result of any controversy that might arise with respect to the interpretation or
implementation of these registration rights.
9. SURVIVAL OF REPRESENTATIONS, ETC. All representations, warranties and
agreements made herein shall survive any investigation made by the Issuer and
the Purchasers and shall survive the Closing.
10. TERMINATION. This Agreement may be terminated:
(a) MUTUAL CONSENT. By mutual consent of the parties, on the date
specified in writing executed by the Issuer and the Purchasers;
(b) BY THE ISSUER. By the Issuer, upon written notice to the
Purchasers, if any representation or warranty made in this Agreement by the
Purchasers shall have been false or incorrect in any material respect when
made or shall have become false or incorrect in any material respect
thereafter, or if the Purchasers shall fail to perform or observe any
material covenant or agreement made by it in this Agreement; or
(c) BY THE PURCHASERS. By the Purchasers, upon written notice to the
Issuer, if any representation or warranty made in this Agreement by the
Issuer shall have been false or incorrect in any material respect when made
or shall have become false or incorrect in any material respect
- 5 -
<PAGE>
thereafter, or if the Issuer shall fail to perform or observe any material
covenant or agreement by it in this Agreement.
11. CONFIDENTIALITY. Each party to this Agreement agrees that, except as
required by law or as permitted by the mutual consent of all parties hereto, the
terms, conditions and existence of this Agreement shall be kept strictly
confidential and shall not be disclosed to any person or entity.
12. MISCELLANEOUS.
(a) BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their respective legal
representatives and successors. This Agreement may not be assigned, except
as provided for herein.
(b) FURTHER ASSURANCES; COOPERATION. Each party shall, upon
reasonable request by the other party, execute and deliver any additional
documents necessary or desirable to complete the sale, conveyance, transfer
and assignment of the Shares acquired by Purchasers, pursuant to and in the
manner contemplated by this Agreement.
(c) ENTIRE AGREEMENT; ABSENCE OF REPRESENTATION. This Agreement
constitutes the entire agreement between the parties hereto and supersedes
all prior arrangements, understandings and agreements, oral or written,
between the parties hereto with respect to the subject matter hereof. The
Purchasers hereby acknowledge that in acquiring the Shares to be acquired
hereunder, the Purchasers have relied only upon the representations and
warranties expressly made in this Agreement, upon information contained in
public reports of Issuer, and upon the information referred to in
paragraphs 2(b) and (c) above, and that no other statements,
representations or warranties, oral or written, expressed or implied, have
been made or relied upon in connection with such acquisition or as an
inducement therefor.
(d) EXECUTION IN COUNTERPARTS; TELECOPIER SIGNATURES. This Agreement
may be executed in counterparts, each of which shall be deemed an original
and all of which shall be deemed to be one and the same instrument.
Signatures received by telecopier shall be deemed to be original
signatures. The original of any signature pages sent to any party via
telecopier shall be mailed to the appropriate party within one business day
of signing.
(e) NOTICES. All notices, requests, permissions, waivers and
communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by telex, telecopier facsimile
transmission or by mail (registered or certified mail, postage
prepaid, return receipt requested) to the respective parties at the
following respective addresses or to such other address as any party hereto
shall specify in a notice to the other parties hereto in accordance with
the terms hereof:
To Issuer: InterAmericas Communications Corporation
104 Crandon Boulevard, #324
Miami, FL 33149
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<PAGE>
To Purchasers: c/o Humberto Guillen
Las Begonias 475, Oficina 502
San Isidro
Lima, Peru
(f) AMENDMENTS AND WAIVERS. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the
Party against whom enforcement of any such modification or amendment is
sought. The Issuer may, by an instrument in writing, waive compliance by
the Purchasers with any term or provision of this Agreement on the part of
the Purchaser to be performed or complied with. The Purchasers may, by an
instrument in writing, waive compliance by the Issuer, with any term or
provision of this Agreement on the part of the Issuer to be performed or
complied with. Any waiver of a breach of any term or provision of this
Agreement shall not be construed as a waiver of any subsequent breach.
(g) HEADINGS, SEVERABILITY. The headings contained in this Agreement
are for convenience of reference only and shall not affect the
interpretation or construction hereof. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, such provision shall be interpreted to be only so broad
as is enforceable.
(h) GOVERNING LAW. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by
the internal laws of the State of Florida applicable to agreements made and
to be performed wholly within such jurisdiction and without regard to
conflicts of laws. The Purchasers hereby irrevocably consent to personal
jurisdiction, within the State of Florida, solely for the purpose of any
litigation with respect to this Agreement, and hereby confirms that upon
service of process upon the Purchasers, the Purchasers shall be deemed to
be under the personal jurisdiction of the applicable United States federal
or state court in the State of Florida. The Purchasers hereby waive any
right it may have to seek a change of venue of such proceedings.
- 7 -
<PAGE>
IN WITNESS WHEREOF, this Agreement was duly executed as of the ____ day of
___________, 1996.
ISSUER:
INTERAMERICAS COMMUNICATIONS CORPORATION
By: /s/ [illegible]
--------------------------------
Its: PRESIDENT/CEO
-------------------------------
PURCHASERS:
KAYHELM, LTD. BETHANY INVESTMENTS LIMITED
By: /s/ [illegible] By: /s/ Dilia H. de Diaz
----------------------- ----------------------
Its: Director Its: President
---------------------- ---------------------
/s/ Guillermo Villaneuva Pinto /s/ Georgina Emilia Valdivia de Villanueva
- - ------------------------------- ------------------------------------------
Guillermo Villaneuva Pinto Georgina Emilia Valdivia de Villanueva
/s/ Jesus Otto Villanueva Napuri /s/ Celia Gutierrez Davila de Villanueva
- - ------------------------------- ------------------------------------------
Jesus Otto Villanueva Napuri Celia Gutierrez Davila de Villanueva
/s/ Guillermo Jose Soto Abanto /s/ Margarita Ulloa De Beeck
- - ------------------------------- -----------------------------------------
Guillermo Jose Soto Abanto Margarita Ulloa De Beeck
/s/ Esteban Viton Ramirez /s/ Betty Aguirre De Viton
- - ------------------------------- -----------------------------------------
Esteban Viton Ramirez Betty Aguirre De Viton
/s/ Humberto Guillen Luque /s/ Patricia Samander Orellana
- - ------------------------------- -----------------------------------------
Humberto Guillen Luque Patricia Samander Orellana
/s/ Maria Jesus Hume Hurtado
- - ------------------------------- -----------------------------------------
Maria Jesus Hume Hurtado
- 8 -
<PAGE>
EXHIBIT A
SHARE DISTRIBUTION
Names of Purchasers ICCA Shares Purchased
------------------- ---------------------
Kayhelm, Ltd 375,000
Bethany Investments, Ltd. 204,766
Margarita Ulloa de Beeck 45,234
Guillermo VILLANUEVA Pinto 62,500
Jesus Otto VILLANUEVA Napuri 46,875
Guillermo Jose SOTO Abanto 46,875
Esteban VITON Ramirez 140,625
Humberto GUILLEN Luque 140,625
Maria Jesus HUME Hurtado 187,500
----------
TOTAL (Note 1) 1,250,000
<PAGE>
EXHIBIT 5.1.2
LOAN TO FUND OPENING OF A CD IN BANCO DEL SUR
CREDITORS AMOUNT (US$)
Cablex Electronique 144,822.00
Rodolfo Beeck-Ulloa 6,034.00
Bethany Investments 150,855.98
----------
TOTAL 301,711.98
----------
----------
<PAGE>
EXHIBIT 7.8
Resetel is obligated to notify the Superintendencia Nacional de
Administracion Tributaria (SUNAT) [National Tax Administration] of the
transfer of the shares from Sellers to Buyer within the first ten (10) days
of the month following the Closing.
<PAGE>
EXHIBIT 10.27
STOCK PURCHASE/SALE AGREEMENT
This document witnesseth the Stock Purchase/Sale Agreement executed by and
between
KAYHELM LTD., a corporation organized and existing in accordance with the
laws of England, duly represented by Ms. Lynne Coram; Mr. GUILLERMO VILLANUEVA
PINTO, identified with Voter's Registration Card No. 0660802, with the
participation of his spouse, Mrs. Georgina Emilia Valdivia de Villanueva; Mr.
JESUS OTTO VILLANUEVA NAPURI, identified with Voter's Registration Card No.
25726864, with the participation of his spouse, Mrs. Celia Gutierrez Davila de
Villanueva; Mr. GUILLERMO JOSE SOTO ABANTO, identified with Voter's Registration
Card No. 09993517; BETHANY INVESTMENTS LIMITED, a Bahamian corporation; Mrs.
MARGARITA ULLOA DE BEECK, identified with Voter's Registration Card No.
06408006; Mr. ESTEBAN VITON RAMIREZ, identified with Voter's Registration
Card No. 09870890, with the participation of his spouse, Mrs. Betty Aguirre
de Viton; Mr. HUMBERTO GUILLEN LUQUE, identified with Voter's Registration
Card No. 07616599, with the participation of his spouse, Mrs. Patricia
Samander Orellana; Mrs. MARIA JESUS HUME HURTADO, identified with Voter's
Registration Card No. 08746487, all of whom designate their legal address for
the purposes hereof at Las Begonias 475, Oficina 502, San Isidro, Lima, Peru,
(hereinafter called collectively the "SELLERS").
RED DE SERVICIOS EMPRESARIALES DE TELECOMUNICACIONES, S.A., a Peruvian
corporation ("RESETEL"), with legal address at Las Begonias 475, Oficina 502,
San Isidro, Lima, Peru, duly represented by its Directors, Ms. Maria Jesus Hume
and Mr. Humberto Guillen Luque.
INTERAMERICAS COMMUNICATIONS CORP., a corporation organized and existing
in accordance with the laws of the State of Texas of the United States of
America, with legal address at 104 Crandon Boulevard, Suite 324, Miami, Florida,
United States of America, duly represented by Mr. Hernan Streeter, (hereinafter
called the "BUYER").
<PAGE>
2
The parties hereto shall be called collectively the "Parties".
This Agreement is subject to the following terms and conditions:
CLAUSE 1: BACKGROUND
The SELLERS are the owners of Thirty-two thousand (32,000) common shares of
RESETEL, a corporation duly organized and existing in accordance with the laws
of the Republic of Peru, with a face value of One Nuevo Sol (S/. 1.00) each,
fully subscribed and paid in, representing one hundred percent (100%) of the
issued and outstanding share capital of RESETEL (hereinafter the "SHARES").
The number of SHARES held by each SELLER and the percentage of the share
capital of RESETEL represented by same in each case, as well as information on
the Stock Certificates issued by RESETEL to the names of the SELLERS, are
detailed in Exhibit A to this Agreement.
CLAUSE 2: OBJECT OF THE AGREEMENT
By this Agreement, the SELLERS agree to transfer the ownership of the
SHARES to the BUYER.
The SELLERS expressly note that this transfer covers everything that
pertains to the SHARES, de facto and de jure, without any reserve or limitation,
including those shares in process of being issued or that may be issued in the
future as a product of the shares sold hereunder.
The obligation to transfer the ownership of the SHARES shall be formalized
on or before May 17, 1996 (the "Closing"). At Closing, the Stock
Certificates shall be endorsed to the
<PAGE>
3
name of the BUYER and the transfer of the SHARES shall be entered in RESETEL's
Stock Register. For this purpose, the SELLERS agree to endorse the Stock
Certificates and to enter the transfer of the SHARES in behalf of the BUYER in
RESETEL's Stock Register, immediately upon receiving payment the shares issued
by the BUYER in accordance with the Stock Purchase Agreement referred to in
point 5.2.3.
CLAUSE 3: PRICE
The global price mutually agreed to by the Parties as payment for the
SHARES is TWO MILLION EIGHT HUNDRED TWELVE THOUSAND FIVE HUNDRED DOLLARS OF THE
UNITED STATES OF AMERICA (US$ 2,812,500).
The Parties declare that there is fair and perfect equivalence between the
agreed price and the value of the SHARES. The SELLERS and the BUYER make mutual
and reciprocal bequest of any difference that may arise hereafter.
CLAUSE 4: PAYMENT OF THE PRICE
The price for the sale of the SHARES shall be paid by the BUYER to the
SELLERS at Closing.
CLAUSE 5: PRIOR OBLIGATIONS
The Parties agree that the covenants and obligations to be fulfilled to
effect the transfer of the SHARES and the payment of the price are the
following:
<PAGE>
4
5.1 OBLIGATIONS OF THE BUYER
Within sixty (60) days after the Closing the BUYER agrees to:
5.1.1 Reimburse to the creditors of RESETEL listed in Exhibit 5.1.1 the
amount of the Concession Fee established in article 205 and 207 of the
General Regulations of the Telecommunications Law, approved by
Supreme Decree No. 06/94/TCC, that is, Twenty-nine Thousand Five
Hundred Eighty and 34/100 Nuevos Soles (S/. 29,580.34), for the
concession to operate Local Carriage Services, granted to RESETEL by
Ministerial Resolution No. 061-96-MTC/15.17 dated February 5, 1996
(hereinafter called the "Concession").
5.1.2 Reimburse to the creditors of RESETEL listed in Exhibit 5.1.2 the
amount of Three Hundred One Thousand Seven Hundred Eleven and 98/100
dollars of the United States of America (US$ 301,711.98) delivered to
Banco del Sur as collateral to induce Banco del Sur to issue an
irrevocable, solidary and automatically enforceable Letter of Guaranty
for the same amount, executed in favor of the Ministry for a term of
Three Hundred Ninety-five (395) days, guaranteeing full and absolute
compliance with the obligations assumed by RESETEL, under the
Concession Agreement for the operation of Local Carriage Services
within the cities of Lima and Callao, executed by and between the
Ministry and RESETEL (hereinafter called the "CONCESSION AGREEMENT").
5.2 OBLIGATIONS OF THE SELLERS
The SELLERS and RESETEL agree to:
<PAGE>
5
5.2.1 Deliver to BUYER at or prior to Closing a duly executed copy of the
CONCESSION AGREEMENT.
5.2.2 Deliver to BUYER at or prior to Closing a legal opinion of counsel to
SELLERS regarding the enforceability of the CONCESSION AGREEMENT and
addressing certain other matters as requested by BUYER.
5.2.3 Deliver to Buyer at or prior to Closing a duly executed copy of the
Stock Purchase Agreement regarding the sale of stock of
InterAmericas Communications Corporation to the SELLERS.
CLAUSE 6: REPRESENTATIONS AND WARRANTIES OF THE SELLERS
To induce BUYER to enter into this Agreement, each Seller individually
represents and warrants to BUYER that the following statements are true, correct
and complete as of the date hereof:
6.1 OWNERSHIP OF RESETEL SHARES. Such SELLER owns, beneficially and of record,
the number of RESETEL Shares shown beside his name in EXHIBIT A hereto, free
and clear of any lien, security interest, pledge, claim, demand or
encumbrance or restriction of any kind or character whatsoever, and the
RESETEL Shares represent all of the issued and outstanding shares of capital
stock and equity securities of RESETEL. All such RESETEL Shares are duly
authorized, validly issued, fully paid and nonassessable and have, in the
hands of such Seller, and will have in the hands of BUYER, all the rights,
privileges and preferences ordinarily accorded to owners of the common stock
of RESETEL.
6.2 AUTHORITY. Such Seller now has and will have, at the Closing, full power,
authority and legal right to sell his RESETEL Shares to BUYER pursuant to
this Agreement. This Agreement
<PAGE>
6
has been duly and validly authorized, executed and delivered by, and is the
valid and binding obligation of, such SELLER.
6.3 COMPLIANCE WITH LAW. The consummation of the transactions contemplated
hereby will be in compliance with all applicable laws, rules, regulations
and requirements of all Peruvian governmental authorities without the
necessity for any license or permit or other action or permission in the
nature thereof, or any registration with, or consent of, any such
governmental authority.
6.4 NO LITIGATION. There are no suits or proceedings at law or in equity, or
before or by any governmental agency or arbitrator, pending, or to the
knowledge of such SELLER, threatened, anticipated or contemplated, which in
any way affect the consummation of the transactions contemplated hereby or,
any claim which, if valid, would constitute or result in a breach of any
representation, warranty or agreement of such Seller set forth herein.
6.5 SOLVENCY. Such Seller is not bankrupt or insolvent and has not assigned
his estate for the benefit of creditors, entered into any arrangement with
creditors, and does not have any present intention to file a petition in
bankruptcy, assign its estate for the benefit of creditors, or enter into
any arrangement with creditors. Such SELLER has no knowledge of any basis
for the filing by any other person of an involuntary petition in bankruptcy
with respect to him or RESETEL.
6.6 SECURITIES LAWS OF COMPLIANCE. Such Seller has been represented by such
legal and tax counsel and others, each of whom has been personally selected
by such SELLER, as such SELLER has found necessary to consult concerning
this transaction, and such representation has included an examination of
applicable documents, and an analysis of all tax, financial, and securities
law aspects. Such SELLER, his/her or its counsel and advisors, and such
other
<PAGE>
7
persons with whom such SELLER has found it necessary to consult, have
sufficient knowledge and experience in business and financial matters to
evaluate the above information, and the merits and risks of the
transactions contemplated by this Agreement, and to make an informed
investment decision with respect thereto.
6.7 NO MATERIAL MISSTATEMENTS. Such SELLER has not made any material
misstatement of fact or omitted to state any material fact necessary or
desirable to make complete, accurate and not misleading every
representation, warranty and agreement set forth herein.
CLAUSE 7: REPRESENTATIONS AND WARRANTIES CONCERNING RESETEL
To further induce BUYER to enter into this Agreement, RESETEL and the
SELLERS jointly represent and warrant to BUYER that the following statements
concerning the affairs of RESETEL are true, correct and complete as of the date
hereof:
7.1 ORGANIZATION, STANDING AND QUALIFICATION. RESETEL is duly organized,
validly existing and in good standing under the laws of the Republic of
Peru and is authorized and qualified to own and operate its properties and
assets and conduct its business in all jurisdictions where such properties
and assets are owned and operated and such business conducted. RESETEL has
duly filed any and all certificates and reports required to be filed to
date by the laws of Peru and any other applicable law. RESETEL has all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which
could materially adversely affect the business, properties, prospects, or
its financial condition. RESETEL is not in default in any material respect
under any of such franchises, permits, licenses or other similar authority.
<PAGE>
8
7.2 CAPITALIZATION. As of the date of Closing, the authorized capital stock of
RESETEL consists of 32,000 shares of common stock, par value One Peruvian
Nuevo Sol (S/. 1.00) per share, of which 32,000 shares are issued and
outstanding, as set forth in the attached EXHIBIT A. All of the outstanding
shares of common stock of RESETEL were duly authorized and validly issued
and are fully paid and nonassessable. RESETEL has no treasury shares.
There are no outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, convertible securities or other rights,
agreements or arrangements of any character or nature whatever relating to
the issuance of common stock or other securities of RESETEL. No holder of
any security of RESETEL is entitled to any preemptive or similar rights to
purchase any securities of RESETEL.
7.3 SUBSIDIARIES. RESETEL has no subsidiaries and no other investment in any
entity. RESETEL is not a participant in any joint venture, partnership or
other similar arrangement.
7.4 STOCK TRANSFER BOOKS. The stock transfer books and stock ledgers of
RESETEL are in good order, complete, accurate and up to date, and with all
necessary signatures, and set forth all stock and securities issued,
transferred and surrendered. No duplicate certificate has been issued at
any time heretofore. No transfer has been made without surrender of the
proper certificate duly endorsed. All certificates so surrendered have
been duly canceled and are attached to the proper stubs with all necessary
stock powers attached thereto.
7.5 CORPORATE RECORDS. The minute books and other corporate record books of
RESETEL are in good order, complete, accurate, up to date, with all
necessary signatures and set forth all meetings and actions taken by the
stockholders and directors, including all actions set forth in all
certificates of votes of stockholders or directors furnished to anyone at
any time. The copies of RESETEL's Articles of Incorporation and Bylaws
which have been delivered to
<PAGE>
9
BUYER are complete and correct, as amended, to the date of execution of
this Agreement.
7.6 NO DEFAULTS. RESETEL is not in default under or in violation of any
provisions of its Articles of Incorporation or Bylaws or any restriction,
lien, encumbrance, indenture, contract, lease, sublease, loan agreement,
note or other obligation or liability relating to RESETEL's business.
7.7 NO CONFLICT. Neither the execution and delivery of this Agreement nor
consummation of the transactions contemplated hereby will conflict with or
result in a breach of or constitute a default under any provision of the
Articles of Incorporation or Bylaws of RESETEL, any law, rule, regulation,
judgment, decree, order or other such requirement, or under any material
restriction, lien, encumbrance, indenture, contract, lease, sublease, loan
agreement, note or other material obligation or liability to which RESETEL
is a party or by which it is bound, or to which any of its assets are
subject, or result in the creation of any lien or encumbrance upon such
assets.
7.8 CONSENTS AND APPROVALS. Except as set forth in EXHIBIT 7.8, the execution,
delivery and performance of this Agreement by SELLERS and the consummation
of the transactions contemplated hereby do not require RESETEL or SELLERS
to obtain any consent, approval or action of, or make any filing with or
give notice to any corporation, person or firm or any public, governmental
or judicial authority in Peru, except: (i) such as have been duly obtained
or made, as the case may be, and are in full force and effect on the date
hereof, (ii) those which the failure to obtain or make would have no
material adverse effect on the transactions contemplated hereby or on
RESETEL's business or financial condition, and (iii) any filings required
under the Securities Act, or any applicable state securities laws.
<PAGE>
10
7.9 RELATED-PARTY TRANSACTIONS. No employee, officer, or director of RESETEL
or member of his or her immediate family is indebted to RESETEL, nor is
RESETEL indebted (or committed to make loans or extend or guarantee credit)
to any of such individuals. To the best of the SELLERS' knowledge, none of
such individuals has any direct or indirect ownership interest in any firm
or corporation with which RESETEL is affiliated or with which RESETEL has a
business relationship, or any firm or corporation that competes with
RESETEL, except that employees, officers, or directors of RESETEL and
members of their immediate families may own stock in publicly traded
companies that may compete with RESETEL. No member of the immediate family
of any officer or director of RESETEL is directly or indirectly interested
in any material contract with RESETEL.
7.10 COMPLIANCE WITH LAW. To the best of SELLERS' knowledge, neither RESETEL
nor any of its directors, officers, fiduciaries, agents or employees, is in
violation of any applicable law, rule, regulation or requirement of any
governmental authority in any way relating to RESETEL's business.
7.11 FINANCIAL STATEMENTS. The Financial Statements of RESETEL for the periods
ending February 29, 1996, attached hereto as EXHIBIT B are correct and
complete and present fairly in all material respects the financial
condition of RESETEL as of the dates described therein, and have been
prepared in accordance with Generally Accepted Accounting Principles
consistently applied. The books and records of the Company are complete in
all material respects and are in an auditable condition such that a
complete audit of RESETEL can be performed as of the Closing without
unreasonable cost or expense.
7.12 PROPERTIES AND ASSETS. The properties and assets presently owned by
RESETEL and shown on its books include all properties and assets of every
kind, class and description, real and personal, tangible and intangible,
known and unknown, used in the business of RESETEL and
<PAGE>
11
necessary to the conduct of its business as presently conducted. RESETEL
has good and indefeasible title to and possession of all such known
properties and assets, free and clear of all liens, claims, security
interests, encumbrances, restrictions and rights, title and interests in
others, and there are no existing agreements, options or commitments or
rights with, to or in any third party to acquire any of the properties or
assets of RESETEL or any interest therein, except for those entered into in
the ordinary course of business and not materially adversely affecting the
properties, assets or rights of RESETEL. The assets of RESETEL on the
Closing date shall include all of the assets described hereinabove or
otherwise reflected on the Financial Statements, adjusted only for
inventory and other assets acquired or disposed of in the ordinary course
of business after February 29, 1996, and before the Closing Date.
7.13 INTELLECTUAL PROPERTY. RESETEL has no intellectual property other than
that referred to in Clause 7.25.
7.14 LETTER OF GUARANTY. The Letter of Guaranty in the amount of US$301,711.98
issued by Banco del Sur described in paragraph 5.1.2 hereof, is valid,
binding and enforceable against Banco del Sur in accordance with its terms.
7.15 MATERIAL CONTRACTS. RESETEL does not have any material obligation,
contract, agreement, lease, sublease, commitment or understanding of any
kind, nature or description, oral or written, fixed or contingent, due or
to become due, existing or inchoate, other than as disclosed on SCHEDULE
7.14 or consisting of customer purchase orders or service contracts, all of
which are either reflected in the Financial Statements for the periods such
were in effect, or which impose upon RESETEL a liability of less than
$5,000 individually or $10,000 in the aggregate.
<PAGE>
12
7.16 NO UNDISCLOSED LIABILITIES. There are no material liabilities or
obligations of RESETEL, including, without limitation, contingent
liabilities for the performance of any obligation, except for (i)
liabilities or obligations which are disclosed or fully provided for in
RESETEL's Financial Statements of February 29, 1996, (ii) liabilities or
obligations disclosed in this Agreement or in any exhibit or schedule to
this Agreement, and (iii) liabilities not in excess of $5,000 individually
or $10,000 in the aggregate.
7.17 LITIGATION. There are no suits or proceedings at law or in equity, or
before or by any governmental agency or arbitrator, pending, or to the
knowledge of the SELLERS, threatened, anticipated or contemplated,
which, if decided against RESETEL, would have a material adverse effect on
its business or financial condition, and there are no unsatisfied or
outstanding judgments, orders, decrees or stipulations which in any way
affect RESETEL or its properties or assets or to which it is or may become
a party. There are no claims against RESETEL pending, or to the knowledge
of SELLERS threatened, anticipated, or contemplated which, if valid, would
constitute or result in a breach of any representation, warranty or
agreement set forth herein.
7.18 TAXES. RESETEL has duly filed all federal, state, local and other tax
returns and reports required to be filed by RESETEL on or prior to the date
hereof with respect to all taxes withheld by or imposed upon RESETEL; all
such returns or reports reflect in all material respects the liability for
such taxes of RESETEL as computed therein for the periods indicated, and
all taxes shown on such returns or reports and all assessments received by
RESETEL have been paid, or fully reserved for, to the extent that such
taxes have become due; there are no waivers or agreements by RESETEL for
the extension of time for the assessment of such taxes; and there are no
material questions of taxation which are, as at the date hereof, the
subject of dispute with any taxing authority. With respect to any period
through the date hereof for which tax returns have not yet been filed, or
for which taxes are
<PAGE>
13
not yet due or owing, RESETEL has made adequate reserves, determined in
accordance with Generally Accepted Accounting Principles, for all
liabilities for taxes as set forth in its financial statements. RESETEL is
not presently the subject of any tax audit by any taxing authority.
7.19 EMPLOYMENT CONTRACTS. RESETEL has no written contracts of employment
with any of its shareholders, employees or sales representatives, and no
verbal contracts of employment which cannot be terminated without default
by RESETEL on thirty (30) days notice.
7.20 EMPLOYEE RESTRICTIONS. To the knowledge of SELLERS, no employee of
RESETEL is subject to any secrecy or non-competition agreement or any other
agreement or restriction of any kind that would impede in any way the
ability of such employee to carry out fully all activities of such employee
in furtherance of the business of RESETEL.
7.21 LABOR MATTERS. RESETEL is not party to nor subject to any collective
bargaining agreement, nor is any union organizing action or certification
vote pending or threatened.
7.22 NO ADVERSE CHANGE. Since February 29, 1996, there has not been:
(a) any material adverse change in the properties, assets, business,
affairs, material contracts or prospects of RESETEL and, to the
knowledge of SELLERS, no such changes currently are threatened,
anticipated or contemplated;
(b) any actual or, to the knowledge of SELLERS, threatened, anticipated or
contemplated damage, destruction, loss, conversion, termination,
cancellation, default or taking by eminent domain or other action by
governmental authority, which has
<PAGE>
14
affected or may hereafter affect the properties, assets, business,
affairs, contracts or prospects of RESETEL;
(c) any material and adverse dispute pending or, to the knowledge of the
SELLERS, threatened, anticipated or contemplated, of any kind with any
customer, supplier, source of financing, employee, landlord, subtenant
or licensee of RESETEL, or any pending or, to the knowledge of
SELLERS, threatened, anticipated or contemplated occurrence or
situation of any kind, nature or description which is reasonably
likely to result in any material reduction in the amount, or any
change in the terms or conditions, of business with any substantial
customer, supplier or source of financing;
(d) any pending or, to the knowledge of SELLERS, threatened, anticipated
or contemplated occurrence or situation of any kind, nature or
description peculiar to the business of RESETEL and materially and
adversely affecting its properties, assets, business, affairs or
prospects; or
(e) any material reduction of capital, or any redemption of stock or
dividend or distribution by RESETEL.
7.23 That RESETEL has fulfilled all the obligations imposed by the laws that
regulate its activities, including those relating to payment of taxes,
contributions to the Instituto Peruano de Seguridad Social (Peruvian Social
Security Institute), or other contributions or obligations, to authorities,
public entities, or pension and severance fund (CTS) administrators.
7.24 MINISTERIAL RESOLUTION. That, by Ministerial Resolution No. 071-96-
MTC/15.17 dated February 5, 1996, RESETEL was granted a Concession to
operate Local Carriage Services for a term of twenty (20) years, within the
cities of Lima and Callao. The CONCESSION
<PAGE>
15
AGREEMENT, the final version of which has already been approved by RESETEL
and the Ministry, has been executed by both Parties and dated April 17,
1996, and will be delivered to BUYER prior to or at Closing.
7.25 INDECOPI REGISTRATION. That RESETEL has registered with INDECOPI a service
trademark by the name of "RESETEL" (Certificate No. 005133), to designate
all kinds of telecommunication services within class 38 of the Official
Nomenclature, which enjoy legal protection up to September 7, 2005. There
are no licensing, usufruct or other agreements authorizing the use thereof
by third parties, nor any legal or administrative actions, claims, or suits
contesting in any way the rights of RESETEL over that trademark.
7.26 NO IMPROPER PAYMENTS. Neither RESETEL nor any of director, officer, agent
or employee of RESETEL or, to RESETEL's knowledge, any other person
associated with or acting on behalf of RESETEL, has directly or indirectly
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any person, private or public, regardless of
what form, whether in money, property, or services (i) to obtain favorable
treatment for business secured, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of RESETEL or any affiliate
of RESETEL, or (iv) in violation of any legal rule or requirement, (b)
established or maintained any fund or asset that has not been recorded in
the books or records of RESETEL. RESETEL and all of its directors,
officers, agents and employees have not taken any action, that if taken by
BUYER, would be in violation of the Foreign Corrupt Practices Act.
7.27 ACTS AND CONTRACTS. That the acts and contracts executed by RESETEL in
order to carry out its activities achieve its corporate object, are valid
and enforceable, and no provision thereof has been unfulfilled.
<PAGE>
16
7.28 REASONABLE CONTRACTS. That no contracts have been executed by RESETEL with
any person or entity that are not based on normal and reasonable values and
terms.
7.29 LABOR OBLIGATIONS. That RESETEL is up to date in fulfillment of all its
labor obligations, and that there are no premiums, bonuses, or salaries
that have not been accounted or provided for.
7.30 TERMINATION RIGHTS. That no director, official, executive, or any other
employee of RESETEL has any right to benefits, bonuses, or indemnities due
to termination of their labor contracts, other than those provided by
Peruvian labor legislation.
7.31 ENVIRONMENTAL AND SAFETY LAWS. RESETEL is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to the best of its knowledge, no
material expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
CLAUSE 8: LIABILITY OF THE SELLERS
8.1 The SELLERS are responsible for the accuracy and truthfulness of the
representations made and warranties made pursuant to Clause 6 and 7 of this
Agreement. The SELLERS assume joint and several obligation to pay
indemnity for damages arising from inaccuracies or lack of truthfulness of
the representations and warranties made pursuant to Clause 7 and several
and prorrata to their shareholding in RESETEL for those of Clause 6.
8.2 Likewise, the SELLERS assume joint and several responsibility towards the
BUYER for all the liabilities, obligations and other contingencies of
RESETEL originated in facts, situations, and others, without exception,
existing prior to the date of this Agreement, provided that they do not
appear in the Financial Statements as of February 29, 1996.
<PAGE>
17
If the liabilities, obligations, and other contingencies mentioned in the
preceding paragraph should exceed ten percent (10%) of the value assigned
to the SHARES in Clause 3 of this Agreement, then the BUYER, without
prejudice to any indemnity due for damages, may choose either to demand
payment of the existing difference to the SELLERS, plus interest, or to
terminate this Agreement as a matter of law, by sending notice, to the
common address of the SELLERS. In this last case, the Parties are jointly
and severally obliged to return any payments, plus interest, within a term
not exceeding thirty (30) calendar days from the date of receipt of said
notice.
8.3 If for any circumstance, without exception, originated in situations
occurring prior to the effective transfer of the SHARES to the BUYER as
stipulated in this Agreement, the Concession mentioned in point 7.23 of
Clause 7 of this Contract should be annulled or declared void, then the
SELLERS shall be held jointly and severally responsible before the BUYER,
as in the case described in the second paragraph of point 8.2 above.
8.4 The liabilities specified in this Clause shall be applicable to the SELLERS
for a term of one year from the effective transfer of the SHARES to the
BUYER, as stimulated in this Agreement, and of tax-related liabilities, for
which the SELLERS shall be responsible during the legal terms established
for the extinguishment of the respective obligations.
CLAUSE 9: TAX CONTINGENCIES
9.1 The SELLERS declare that if RESETEL should receive notice of tax
assessments or demands for contributions from the Superintendencia Nacional
de Administracion Tributaria (SUNAT) [National Tax Administration], the
Superintendencia Nacional de Aduanas (SUNAD) [National Customs
Administration], the Instituto Peruano de Seguridad Social (IPSS) [Peruvian
Social Security Institute], District or Provincial Municipalitis, Pension
Fund
<PAGE>
18
Administrators (AFPs), or any other entity charged with assessing,
controlling, collecting, or supervising taxes (hereinafter called "TAX
AUTHORITIES"), after the date of this Agreement, for taxes, penalties,
obligations, contributions, or payments due or originated prior to that
date, then the SELLERS shall assume jointly and severally before the BUYER
the payment of such taxes, penalties, obligations, contributions, or
payments, as well as of any overcharges, interest, fines, and other
applicable charges, as long as there are no provisions therefor in the
RESETEL Financial Statements. Likewise, the SELLERS shall be held liable
by the BUYER for any tax obligation or contingency chargeable to RESETEL
and not included in its Financial Statements as of February 29, 1996.
9.2 If RESETEL should receive notice of a tax assessment or a demand for
contributions from the TAX AUTHORITIES after the date of this Agreement,
for obligations originated prior to that date and not included in the
RESETEL Financial Statements, then it shall notify this fact in writing to
the SELLERS within the next five (5) business days, in order that the
SELLERS may decide if that tax assessment or demand is to be contested or
appealed. Lack of timely notice extinguishes any obligation of the SELLERS
in connection with said tax assessment or demand. Upon receipt of the
aforegoing notice, the SELLERS shall notify their decision in writing to
the BUYER not less than five (5) business days prior to the deadline for
submitting the corresponding appeal, enclosing the appeal, as appropriate,
and also, as appropriate, the portion thereof that must be paid if that is
essential for the appeal to be admitted. The BUYER undertakes to arrange
for RESETEL to file said remedy or appeal in a timely fashion. The BUYER
also undertakes to provide and/or facilitate to the SELLERS access to all
the information they may reasonably require to prepare their defense,
without prejudice to exercising its best efforts to have that (those)
charge(s) settled.
9.3 If the SELLERS should fail to do what is stipulated in Sub-Clause 9.2
above, and the term for payment of the obligation in question expires, then
the BUYER may arrange for
<PAGE>
19
RESETEL to pay directly the obligation or tax debt that originated such
action. In such case, the BUYER shall have the right to demand that
payment from the SELLERS, in solidum. If the SELLERS should fail to
reimburse to the BUYER the payment made by RESETEL, within the term of ten
(10) business days upon receiving a request in writing, then such payment
shall become overdue and the obligation shall accrue the applicable legal
interest, both compensatory and on overdue payments, until the obligation
is paid. Any such obligation shall be jointly and severally assumed by
SELLERS and SELLERS shall indemnify BUYER for such obligation as set forth
in sub-clause 8.2 above.
CLAUSE 10: WARRANTY OF TITLE
The SELLERS declare that the SHARES transferred to the BUYER have been
subscribed and paid in full, and are not encumbered by any lien, charge,
judicial or extrajudicial action of any kind, or reciprocal preferential
agreements executed between two or more of the SELLERS in connection with the
SHARES; in any case, they agree to guarantee the title and right of possession,
against hidden vices or facts pertaining to the transferor, pursuant to articles
1484 to 1528 of the Peruvian Civil Code.
CLAUSE 11: REPRESENTATIONS AND WARRANTIES OF BUYER
The BUYER represents and warrants to the SELLERS that the following
statements are true and correct:
11.1 KNOWLEDGE AND ACCEPTANCE OF THE TERMS AND CONDITIONS OF THE CONCESSION
AGREEMENT. The BUYER has examined the terms and conditions of the
CONCESSION AGREEMENT and has found them to be completely acceptable and in
accordance with the BUYER's interests.
<PAGE>
20
11.2 INDEPENDENT INVESTIGATION, Access. BUYER acknowledges that BUYER, in
making the decision to purchase the Shares. has relied upon independent
investigations mad e by the BUYER and has been given access and the
opportunity to examine all material books and records of RESETEL, all
material contracts and documents relating to RESETEL and an opportunity to
ask questions of, and to receive answers from RESETEL concerning the
Shares.
CLAUSE 12: ARBITRATION AGREEMENT
The Parties agree that any controversy that may arise between them as a
result of the signing, interpretation, or implementation of this Agreement that
may not be resolved by them shall be submitted exclusively to the attention and
decision of three (3) arbiters appointed by common agreement, as provided by Law
No. 26572, General Arbitration law. In case of failure to agree thereon, either
Party may request the Lima Bar Association to designate the arbitrators. In
such case, the Lima Bar Association shall make that designation according to the
rules of the Centro de Arbitraje y Conciliacion del Peru (CEARCO) [Peruvian
Arbitration and Conciliation Center].
All of the members of that Arbitration Court shall be professional lawyers
and they shall settle the controversy compulsorily according to Law.
CLAUSE 13: NOTICES AND COMMUNICATIONS
Any notices or other communications required or permitted hereunder shall
be deemed to have been duly given when delivered personally, one (1) day
following facsimile transmission, or three (3) days after being sent by express
courier service to the party to whom such notice or communication is addressed
at the address set forth on page 1 (or at such other address for a party as
shall be specified by like notice).
<PAGE>
21
CLAUSE 14: FULL AGREEMENT AND AMENDMENTS
This Agreement supersedes all the oral or written agreements between the
Parties and constitutes the entire agreement between then 4 setting out all the
obligations assumed by each Party.
The obligations stipulated in this Agreement may be modified subject to
prior negotiation and agreement between the Parties. In order to be valid, any
amendments or modifications shall be recorded in writing
CLAUSE 15: PARTIAL NULLITY
If any term or provision of this Agreement should be considered void or non
enforceable by any competent Court of Justice, that legal decision shall be
construed to refer strictly to such term or provision, without affecting the
validity of any other provision of this Agreement.
CLAUSE 16: APPLICABLE LAW
Both Parties submit to the laws of the Republic of Peru for all that
relates, directly or indirectly, to the execution and implementation of this
Agreement.
CLAUSE 17: COSTS
Each party shall bear their own costs and taxes related to the execution of
this Agreement.
<PAGE>
22
CLAUSE 18: FURTHER ASSURANCES
The Parties agree that at any time and from time to time after the date
hereof they will execute and deliver to any other party such further instruments
or documents as may reasonably be required to give effect to the transactions
contemplated hereunder.
CLAUSE 19: COUNTERPARTS AND FACSIMILE DOCUMENTS
This Agreement may be executed in any number of counterparts with the same
effect as if the signatures to each counterpart were upon the same instrument.
Facsimile transmission of any signed original document, and retransmission of
any signed facsimile transmission, shall be the same as delivery of an original.
Facsimile transmissions may be executed in counterparts. The original of any
signature pages sent to any party via facsimile transmission shall be mailed to
the appropriate party within one business day of signing.
CLAUSE 20: MISCELLANEOUS
20.1 TIME OF THE ESSENCE. Time is of the essence with respect to this Agreement
and all matters covered thereby.
20.2 NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended to confer upon any person, other than the parties hereto or their
respective permitted assigns, successors, heirs and legal representatives,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
20.3 EXHIBITS AND SCHEDULES. All exhibits and schedules attached hereto are
incorporated herein by reference and shall constitute a part of this
Agreement.
<PAGE>
Done in _________________(______________) equal copies in the city of Lima on
the ________ day of the Month of April, 1996.
RESETEL:
RED DE SERVICOS EMPRESARIALES
DE TELECOMUNICACIONES, S.A.
By: [illegible]
----------------------------------
Its: DIRECTOR
--------------------------------
BUYER:
INTERAMERICAS COMMUNICATIONS
CORPORATION
By:
----------------------------------
Its:
--------------------------------
SELLERS:
KAYHELM, LTD. BETHANY INVESTMENTS LIMITED
By: By:
---------------------------------- ---------------------------------
Its: Its:
-------------------------------- --------------------------------
- - ------------------------------------- ---------------------------------------
Guillermo Villanueva Pinto Georgina Emilia Valdivia de Villanueva
- - ------------------------------------- ---------------------------------------
Jesus Otto Villanueva Napuri Celia Gutierrez Davila de Villanueva
- - ------------------------------------- ---------------------------------------
Guillermo Jose Soto Abanto Margarita Ulloa De Beeck
<PAGE>
23
Done in _________________(______________) equal copies in the city of Lima on
the ________ day of the Month of April, 1996.
RESETEL:
RED DE SERVICOS EMPRESARIALES
DE TELECOMUNICACIONES, S.A.
By: [illegible]
----------------------------------
Its: DIRECTOR
--------------------------------
BUYER:
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: [illegible]
----------------------------------
Its: PRESIDENT/CEO
--------------------------------
SELLERS:
KAYHELM, LTD. BETHANY INVESTMENTS LIMITED
By: By:
---------------------------------- ---------------------------------
Its: Its:
-------------------------------- --------------------------------
/s/ Guillermo Villanueva Pinto /s/ Georgina Emilia Valdivia de Villanueva
- - ------------------------------------- ------------------------------------------
Guillermo Villanueva Pinto Georgina Emilia Valdivia de Villanueva
/s/ Jesus Otto Villanueva Napuri /s/ Celia Gutierrez Davila de Villanueva
- - ------------------------------------- ------------------------------------------
Jesus Otto Villanueva Napuri Celia Gutierrez Davila de Villanueva
/s/ Guillermo Jose Soto Abanto /s/ Margarita Ulloa De Beeck
- - ------------------------------------- -----------------------------------------
Guillermo Jose Soto Abanto Margarita Ulloa De Beeck
<PAGE>
SIGNATURES CONTINUED 24
/s/ Esteban Viton Ramirez /s/ Mrs. Ramirez
- - ------------------------------------- ---------------------------------------
Esteban Viton Ramirez Mrs. Ramirez
/s/ Humberto Guillen Luque /s/ Patricia Samander Orellana
- - ------------------------------------- ---------------------------------------
Humberto Guillen Luque Patricia Samander Orellana
/s/ Maria Jesus Hume Hurtado
- - ------------------------------------- ---------------------------------------
Maria Jesus Hume Hurtado
<PAGE>
23
Done in _________________(______________) equal copies in the city of Lima on
the ________ day of the Month of April, 1996.
RESETEL:
RED DE SERVICOS EMPRESARIALES
DE TELECOMUNICACIONES, S.A.
By: [illegible]
----------------------------------
Its: DIRECTOR
--------------------------------
BUYER:
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: [illegible]
----------------------------------
Its: PRESIDENT/CEO
--------------------------------
SELLERS:
KAYHELM, LTD. BETHANY INVESTMENTS LIMITED
By: By:
---------------------------------- ---------------------------------
Its: Its:
-------------------------------- --------------------------------
/s/ Guillermo Villanueva Pinto /s/ Georgina Emilia Valdivia de Villanueva
- - ------------------------------------- ------------------------------------------
Guillermo Villanueva Pinto Georgina Emilia Valdivia de Villanueva
/s/ Jesus Otto Villanueva Napuri /s/ Celia Gutierrez Davila de Villanueva
- - ------------------------------------- ------------------------------------------
Jesus Otto Villanueva Napuri Celia Gutierrez Davila de Villanueva
/s/ Guillermo Jose Soto Abanto /s/ Margarita Ulloa De Beeck
- - ------------------------------------- -----------------------------------------
Guillermo Jose Soto Abanto Margarita Ulloa De Beeck
<PAGE>
23
Done in _________________(______________) equal copies in the city of Lima on
the ________ day of the Month of April, 1996.
RESETEL:
RED DE SERVICOS EMPRESARIALES
DE TELECOMUNICACIONES, S.A.
By: [illegible]
----------------------------------
Its: DIRECTOR
--------------------------------
BUYER:
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: [illegible]
----------------------------------
Its: PRESIDENT/CEO
--------------------------------
SELLERS:
KAYHELM, LTD. BETHANY INVESTMENTS LIMITED
By: [illegible] By:
---------------------------------- ---------------------------------
Its: DIRECTOR Its:
-------------------------------- --------------------------------
- - ------------------------------------- ---------------------------------------
Guillermo Villanueva Pinto Georgina Emilia Valdivia de Villanueva
- - ------------------------------------- ---------------------------------------
Jesus Otto Villanueva Napuri Celia Gutierrez Davila de Villanueva
- - ------------------------------------- ---------------------------------------
Guillermo Jose Soto Abanto Margarita Ulloa De Beeck
<PAGE>
23
Done in _________________(______________) equal copies in the city of Lima on
the ________ day of the Month of April, 1996.
RESETEL:
RED DE SERVICOS EMPRESARIALES
DE TELECOMUNICACIONES, S.A.
By: [illegible]
----------------------------------
Its: DIRECTOR
--------------------------------
BUYER:
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: [illegible]
----------------------------------
Its: PRESIDENT/CEO
--------------------------------
SELLERS:
KAYHELM, LTD. BETHANY INVESTMENTS LIMITED
By: By: [illegible]
---------------------------------- ---------------------------------
Its: Its: PRESIDENT
-------------------------------- --------------------------------
- - ------------------------------------- ---------------------------------------
Guillermo Villanueva Pinto Georgina Emilia Valdivia de Villanueva
- - ------------------------------------- ---------------------------------------
Jesus Otto Villanueva Napuri Celia Gutierrez Davila de Villanueva
- - ------------------------------------- ---------------------------------------
Guillermo Jose Soto Abanto Margarita Ulloa De Beeck
<PAGE>
Done in _________________(______________) equal copies in the city of Lima on
the ________ day of the Month of April, 1996.
RESETEL:
RED DE SERVICOS EMPRESARIALES
DE TELECOMUNICACIONES, S.A.
By: [illegible]
----------------------------------
Its: DIRECTOR
--------------------------------
BUYER:
INTERAMERICAS COMMUNICATIONS
CORPORATION
By:
----------------------------------
Its:
--------------------------------
SELLERS:
KAYHELM, LTD. BETHANY INVESTMENTS LIMITED
By: By:
---------------------------------- ---------------------------------
Its: Its:
-------------------------------- --------------------------------
- - ------------------------------------- ---------------------------------------
Guillermo Villanueva Pinto Georgina Emilia Valdivia de Villanueva
- - ------------------------------------- ---------------------------------------
Jesus Otto Villanueva Napuri Celia Gutierrez Davila de Villanueva
- - ------------------------------------- ---------------------------------------
Guillermo Jose Soto Abanto Margarita Ulloa De Beeck
<PAGE>
EXHIBIT A
SHARE DISTRIBUTION
NAMES OF SELLERS RESETEL SHARES SOLD
---------------- -------------------
Kayhelm, Ltd 9,600
Bethany Investments, Ltd. 5,242
Margarita Ulloa de Beeck 1,158
Guillermo VILLANUEVA Pinto 1,600
Jesus Otto VILLANUEVA Napuri 1,200
Guillermo Jose SOTO Abanto 1,200
Esteban VITON Ramirez 3,600
Humberto GUILLEN Luque 3,600
Maria Jesus HUME Hurtado 4,800
--------
TOTAL 32,000
<PAGE>
EXHIBIT B
RED DE SERVICIOS EMPRESARIALES DE TELECOMUNICACIONES, S.A.
(ALL VALUES IN NEW PERUVIAN SOLES)
BALANCE SHEET
AT FEBRUARY 29, 1996
ASSETS
Current Assets S/.
Cash & Banks 4,502
--------
Total Current Assets 4,502
TOTAL ASSETS 4,502
LIABILITIES
Current Liabilities
Taxes Payable (2,958)
Total Current Liabilities (2,958)
EQUITY
Capital Stock 34,440
Retained Earnings (Losses) (25,676)
Earnings (Losses) in 1996 (1,304)
--------
TOTAL EQUITY 7,460
TOTAL LIABILITIES AND EQUITY 4,502
INCOME STATEMENT
JANUARY-FEBRUARY 1996
S/.
Revenues 0
Operating Expenses (446)
--------
Operating Income (Loss) (446)
Financial Expenses (20)
Result for price level adjustment (838)
--------
Net Income (Loss) Before Taxes (1,304)
NET INCOME (LOSS) AFTER TAX (1,304)
<PAGE>
EXHIBIT 5.1.1
LOAN TO FUND PAYMENT OF CONCESSION FEE
CREDITORS AMOUNT (US$)
Cablex Electronique 5,178.00
Rodolfo Beeck-Ulloa 252.00
Bethany Investments 7,139.00
----------
TOTAL 12,569.00
----------
<PAGE>
EXHIBIT 10.28
PROMISSORY NOTE
BY AND BETWEEN
INTERAMERICAS COMMUNICATIONS CORPORATION (ICC)
AND
LAURA INVESTMENTS LIMITED
AMOUNT OF NOTE: US$30,000 INTEREST: 6% SIMPLE INTEREST PER ANNUM
DATE OF NOTE: APRIL 9, 1996
As set forth for cash to be received, InterAmericas Communications
Corporation (ICC) at 104, Crandon Boulevard, Suite 324 Key Biscayne, Florida
33149, U.S.A. promises to pay Laura Investments Limited at P.O. Box No3247,
Nassau, Bahamas, the sum of Thirty Thousand Dollars (US$30,000), together with
interest from the date above on the unpaid principal balance due at the rate of
six percent (6%) simple interest per annum. Principal shall be payable no later
than September 30, 1996.
INTERAMERICAS COMMUNICATIONS CORPORATION
/s/ HERNAN STREETER
HERNAN STREETER
CHAIRMAN, PRESIDENT & CEO
(AUTHORIZED SIGNATORY ON BEHALF OF THE CORPORATION)
<PAGE>
EXHIBIT 10.29
PROMISSORY NOTE
BY AND BETWEEN
INTERAMERICAS COMMUNICATIONS CORPORATION (ICC)
AND
LAURA INVESTMENTS LIMITED
AMOUNT OF NOTE: US$93,750 INTEREST: 6% Simple Interest per Annum
DATE OF NOTE: April 24, 1996
As set forth for cash to be received, InterAmericas Communications
Corporation (ICC) at 104, Crandon Boulevard, Suite 324 Key Biscayne, Florida
33149, U.S.A. promises to pay Laura Investments Limited at P.O. Box No. 3247,
Nassau, Bahamas, the sum of Ninety Three Thousand Seven Hundred and Fifty
Dollars (US$93,750), together with interest from the date above on the unpaid
principal balance due at the rate of six percent (6%) simple interest per
annum. Principal shall be payable no later than September 30, 1996.
INTERAMERICAS COMMUNICATIONS CORPORATION
/s/ HERNAN STREETER
HERNAN STREETER
CHAIRMAN, PRESIDENT & CEO
(AUTHORIZED SIGNATORY ON BEHALF OF THE CORPORATION)
<PAGE>
EXHIBIT 10.30
PROMISSORY NOTE
BY AND BETWEEN
INTERAMERICAS COMMUNICATIONS CORPORATION (ICC)
AND
LAURA INVESTMENTS LIMITED
AMOUNT OF NOTE: US$50,000 INTEREST: 6% Simple Interest per Annum
DATE OF NOTE: May 6, 1996
As set forth for cash to be received, InterAmericas Communications
Corporation (ICC) at 104, Crandon Boulevard, Suite 324 Key Biscayne, Florida
33149, U.S.A. promises to pay Laura Investments Limited at P.O. Box No3247,
Nassau, Bahamas, the sum of Fifty Thousands Dollars (US$50,000), together with
interest from the date above on the unpaid principal balance due at the rate of
six percent (6%) simple interest per annum. Principal shall be payable no later
than September 30, 1996.
INTERAMERICAS COMMUNICATIONS CORPORATION
/s/ HERNAN STREETER
HERNAN STREETER
CHAIRMAN, PRESIDENT & CEO
(AUTHORIZED SIGNATORY ON BEHALF OF THE CORPORATION)
<PAGE>
EXHIBIT 10.31
PROMISSORY NOTE
BY AND BETWEEN
INTERAMERICAS COMMUNICATIONS CORPORATION (ICC)
AND
LAURA INVESTMENTS LIMITED
AMOUNT OF NOTE: US$50,000.00 INTEREST: 6% Simple Interest per Annum
DATE OF NOTE: June 21, 1996
As set forth for cash receive, InterAmericas Communication Corporation (ICC)
at 104, Crandon Boulevard, Suite 324 Key Biscayne, Florida 33149, U.S.A.
promises to pay Laura Investments Limited at P.O. Box No3247, Nassau,
Bahamas, the sum of fifty Thousands Dollars (US$50,000.00), together with
interest from the date above on the unpaid principal balance due at the rate of
six percent (6%) simple interest per annum. Principal shall be payable in one
single payment on July 30, 1996.
This payment shall be payable in lawful currency of the United States of
America.
INTERAMERICAS COMMUNICATION CORPORATION
/s/ HERNAN STREETER
HERNAN STREETER
CHAIRMAN, PRESIDENT & CEO
(AUTHORIZED SIGNATORY ON BEHALF OF THE CORPORATION)
<PAGE>
- - -------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
Dated July 4, 1996
by and between
DEVONO COMPANY LIMITED
and
INTERAMERICAS COMMUNICATIONS CORPORATION
- - -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions ................................................. 1
1.2 Other Defined Terms ................................................. 6
ARTICLE 2
THE TRANSACTION
2.1 Purchase and Sale of Shares ......................................... 6
2.2 Payments ............................................................ 6
2.3 Escrow of Purchase Price ............................................ 7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF SELLER WITH RESPECT TO SELLER
3.1 Organization and Existence .......................................... 8
3.2 Governmental Approvals .............................................. 8
3.3 No Conflict ......................................................... 9
3.4 Binding Effect ...................................................... 9
3.5 Ownership of Shares ................................................. 9
3.6 Title, No Encumbrances .............................................. 10
3.7 Litigation .......................................................... 10
3.8 Brokers' or Finders' Fees ........................................... 10
3.9 Accuracy of Information ............................................. 10
3.10 No Improper Payments ................................................ 10
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF SELLER WITH RESPECT TO COMPANY
4.1 Organization and Existence .......................................... 11
4.2 Capitalization ...................................................... 11
4.3 Seller and Company Power and Authority .............................. 12
4.4 Governmental Approvals .............................................. 12
4.5 Subsidiaries ........................................................ 12
4.6 No Conflict ......................................................... 12
4.7 Ownership of Shares ................................................. 13
4.8 Title, No Encumbrances .............................................. 13
4.9 Litigation .......................................................... 13
4.10 No Default .......................................................... 14
i
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4.11 Approvals and Consents ............................................. 14
4.12 Compliance with Rules and Permits .................................. 14
4.13 Financial Information .............................................. 14
4.14 Taxes .............................................................. 15
4.15 No Undisclosed Liabilities ......................................... 15
4.16 Absence of Certain Changes Since May 30, 1996 ...................... 16
4.17 Title to and Condition of Properties and Liens ..................... 16
4.18 Absence of Violations .............................................. 16
4.19 Contracts, Agreements, Plans and Commitments ....................... 16
4.20 Insurance .......................................................... 16
4.21 Intellectual Property .............................................. 16
4.22 Employee Benefits .................................................. 16
4.23 Employee and Director Matters ...................................... 16
4.24 Brokers' or Finders' Fees .......................................... 17
4.25 Environmental Matters .............................................. 17
4.26 No Improper Payments ............................................... 17
4.27 Loans and Other Extensions of Credit ............................... 17
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
WITH RESPECT TO THE CONTROLLED COMPANIES
5.1 Organization and Existence ......................................... 17
5.2 Capitalization ..................................................... 18
5.3 Governmental Approvals ............................................. 19
5.4 Subsidiaries ....................................................... 19
5.5 No Conflict ........................................................ 19
5.6 Litigation ......................................................... 20
5.7 No Default ......................................................... 20
5.8 Approvals and Consents ............................................. 20
5.9 Compliance with Rules and Permits .................................. 21
5.10 Financial Information .............................................. 21
5.11 Taxes .............................................................. 21
5.12 No Undisclosed Liabilities ......................................... 22
5.13 Absence of Certain Changes Since May 30, 1996 ...................... 22
5.14 Possession of Franchises and Licenses .............................. 23
5.15 Title to and Condition of Properties and Liens ..................... 23
5.16 Absence of Violations .............................................. 23
5.17 Contracts, Agreements, Plans and Commitments ....................... 23
5.18 Insurance .......................................................... 23
5.19 Intellectual Property ............................................. 23
5.20 Employee Benefits ................................................. 24
5.21 Employee Matters .................................................. 24
5.22 Brokers' or Finders' Fees ......................................... 25
5.23 Environmental Matters ............................................. 25
5.24 Accuracy of Information ........................................... 26
ii
<PAGE>
5.25 No Improper Payments ............................................... 26
5.26 Loans and Other Extensions of Credit ............................... 26
5.27 Schedules .......................................................... 26
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
6.1 Organization and Existence ......................................... 27
6.2 Capitalization ..................................................... 27
6.3 Corporate Power and Authority ...................................... 27
6.4 Governmental Approvals ............................................. 27
6.5 Subsidiaries ....................................................... 27
6.6 No Conflict ........................................................ 27
6.7 Litigation ......................................................... 28
6.8 No Default ......................................................... 29
6.9 Approvals and Consents ............................................. 29
6.10 Compliance with Rules and Permits .................................. 29
6.11 Financial Information .............................................. 30
6.12 Taxes .............................................................. 30
6.13 No Undisclosed Liabilities ......................................... 31
6.14 Absence of Certain Changes Since May 30, 1996 ...................... 31
6.15 Possession of Franchises and Licenses .............................. 31
6.16 Absence of Violations .............................................. 31
6.17 Contracts, Agreements, Plans and Commitments ....................... 31
6.18 Insurance .......................................................... 31
6.19 Intellectual Property .............................................. 31
6.20 Employee Benefits .................................................. 32
6.21 Employee Matters ................................................... 32
6.22 Brokers' or Finders' Fees .......................................... 32
6.23 Environmental Matters .............................................. 33
6.24 Accuracy of Information ............................................ 33
6.25 No Improper Payments ............................................... 33
6.26 Loans and Other Extensions of Credit ............................... 34
6.27 SEC Filings ........................................................ 34
6.28 Schedules .......................................................... 34
ARTICLE 7
COVENANTS OF THE PARTIES
7.1 Activity in the Ordinary Course .................................... 34
7.2 Access and Confidentiality ......................................... 35
7.3 Required Approvals and Other Filings ............................... 37
7.4 Further Assurances ................................................. 37
7.5 Notices of Default; Change in Condition ............................ 37
7.6 Maintenance of Records; Retention .................................. 37
7.7 MasTec Agreement ................................................... 37
7.8 The Offering; Compliance with Laws ................................. 37
iii
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7.9 SEC Filings ........................................................ 38
ARTICLE 8
TAXES
8.1 Certain Tax Matters ................................................ 38
8.2 Survival ........................................................... 38
ARTICLE 9
CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Purchaser ............................. 39
9.2 Conditions to Obligations of Seller ................................ 40
ARTICLE 10
CLOSING PROCEDURE
10.1 Execution and Closing Date and Place; Notifications ................ 42
10.2 Deliveries at the Closing .......................................... 42
ARTICLE 11
INDEMNIFICATION AND OTHER REMEDIES
11.1 Survival of Terms; Indemnification ................................. 43
11.2 Other Remedies ..................................................... 44
ARTICLE 12
TERMINATION
12.1 Termination ........................................................ 44
12.2 Effect of Termination .............................................. 45
ARTICLE 13
DISPUTE RESOLUTION
13.1 Disputes ........................................................... 45
13.2 Executive Negotiation .............................................. 46
13.3 Mediation .......................................................... 46
13.4 Arbitration ........................................................ 47
iv
<PAGE>
ARTICLE 14
MISCELLANEOUS
14.1 Assignment ......................................................... 49
14.2 Binding Effect ..................................................... 49
14.3 Notices ............................................................ 50
14.4 Incorporation ...................................................... 51
14.5 Governing Law and Jurisdiction ..................................... 51
14.6 Entire Agreement ................................................... 51
14.7 Counterparts ....................................................... 51
14.8 Headings ........................................................... 51
14.9 Waiver ............................................................. 51
14.10 Expenses ........................................................... 51
14.11 No Third Party Beneficiaries ....................................... 51
14.12 Severability ....................................................... 51
14.13 Performance by the Company ......................................... 52
14.14 Extension of Dates ................................................. 52
14.15 Amendment .......................................................... 52
14.16 Business Opportunities ............................................. 52
v
<PAGE>
EXHIBITS
Exhibit A . . . . . . . . . . . . . . . . . . . . . Power of Attorney Agreement
Exhibit B . . . . . . . . . . . . . . . . . . . . . . Form of Warrant Agreement
Exhibit C . . . . . . . . . . . . . . . . . . . . . . . . . . .MasTec Agreement
Exhibit D . . . . . . . . . . . . . . . . . . Legal Opinion of Seller's Counsel
Exhibit E . . . . . . . . . . . . . . . .Legal Opinion of Snell & Winter L.L.P.
Exhibit F . . . . . . . . . . . . . . . . Form of Registration Rights Agreement
Exhibit G . . . . . . . . . . . . . . . . . .Form of Option and Proxy Agreement
Exhibit H . . . . . . . . . . . . . . . . . . . .Form of Shareholders Agreement
vi
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated July 4, 1996, between
Devono Company Limited, a company organized and existing under the laws of
the British Virgin Islands ("SELLER"), and InterAmericas Communications
Corporation, a company organized and existing under the laws of Texas with
offices in Miami, Florida ("PURCHASER"). In this Agreement, Seller and
Purchaser, together with their successors and permitted assignees, are
separately referred to as a "PARTY" and collectively as the "PARTIES".
RECITALS:
A. Seller owns all of the issued and outstanding shares (the "SHARES")
of common stock, par value 1000 sucres per share of Centro Empresarial, S.A.,
a company organized and existing under the laws of the Republic of Ecuador
("ECUADOR") (referred to herein as either "CEMPRESA" or the "COMPANY"),
subject to the Fideicomiso of MasTec, Inc. (the "MASTEC FIDEICOMISO"), dated
July 14, 1995, between MasTec, Inc. and the Seller.
B. Cempresa owns a 52.63% interest in Corptilor, S.A. ("CORPTILOR"), a
company organized and existing under the laws of Ecuador and a 52.63%
interest in Consorcio Ecuatoriano de Telecomunicaciones, S.A., a company
organized and existing under the laws of Ecuador ("CONECEL", and together
with Corptilor, the "CONTROLLED COMPANIES").
C. The Parties entered into a Letter of Intent (the "LOI") as of
June 18, 1996, which outlined the general terms and conditions contained in this
Agreement and other transactions contemplated by the Purchaser (all of the
transactions described in this recital are collectively referred to as the
"TRANSACTIONS").
D. Seller desires to sell, and Purchaser desires to purchase, the
Shares in accordance with the terms, and for the consideration, described
herein.
NOW, THEREFORE, for and in consideration of their mutual promises,
obligations, agreements, representations and warranties contained herein and
intending to be legally bound hereby, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement and any Schedules
or Exhibits delivered pursuant to this Agreement, the following definitions
shall apply:
"AFFILIATE" shall mean, as to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common
1
<PAGE>
control with such Person and any other Person that is an officer, director,
or full-time Employee of such other Person.
"AGREEMENT" means this Stock Purchase Agreement, including all schedules
and exhibits hereto, as modified, amended or supplemented from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday or day on
which commercial banks in the State of Florida or in Ecuador are authorized
or required to be closed.
"CASH PAYMENT" shall have the meaning given such term in Section 2.2(a)
of this Agreement.
"CEMPRESA" shall have the meaning given such term in the Recitals to
this Agreement.
"CLOSING" and "CLOSING DATE" shall have the respective meanings given
such terms in Section 10.1(b) of this Agreement.
"COMPANY" shall have the meaning given such term in the Recitals to this
Agreement.
"COMPANY FINANCIAL STATEMENTS" shall have the meaning given such term in
Section 4.13(a) of this Agreement.
"COMPANY GOVERNING DOCUMENTS" shall have the meaning given such term in
Section 4.1(b) of this Agreement.
"CONECEL FINANCIAL STATEMENTS" shall have the meaning given such term in
Section 5.10 of this Agreement.
"CONECEL GOVERNING DOCUMENTS" shall have the meaning given such term in
Section 5.1(b) of this Agreement.
"CONECEL LOANS" shall have the meaning given such term in Section 5.26
of this Agreement.
"CONSENTS" means every consent, approval, absence of disapproval, waiver
or authorization from, or notice to, or registration or filing with, any
Person.
"CONTRACT" shall have the meaning given such term in Section 5.17 of
this Agreement.
"CONTROLLED COMPANIES" shall have the meaning given such terms in the
Recitals to this Agreement.
2
<PAGE>
"CORPTILOR" shall have the meaning given such term in the Recitals to
this Agreement.
"DAMAGES" shall have the meaning given such term in Section 11.1(b) of
this Agreement.
"DOCUMENTS" mean the documents required to consummate the Transactions,
including, but not limited to, this Agreement and the exhibits thereto.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization.
"EMPLOYEE" means as to any Person, any person employed by such Person
including, without limitations, those employees who as of the date of this
Agreement are on medical or disability leave, family leave, military leave,
personal or pregnancy leave or any other authorized leave of absence.
"ENCUMBRANCES" means all options, pledges, mortgages, claims, charges,
liens, encumbrances, easements, limitations, restrictions (whether on voting,
disposition or otherwise), commitments and security interests.
"ENVIRONMENTAL CLAIM" means any claim, cause of action, investigation,
or notice (written or oral) by any person or entity alleging potential
liability (including without limitation potential liability for investigatory
costs, cleanup costs, medical monitoring costs, governmental response costs,
natural resource damages, property damages, personal injuries, or civil or
criminal penalties) arising out of or relating to (i) the actual or alleged
presence of or release into the environment of any hazardous substance at any
location, whether or not owned or operated by any party hereto, or
(ii) circumstances forming the basis of any actual or alleged violation of any
Environmental Law.
"ENVIRONMENTAL LAW" means all national, provincial, and local statutes,
regulations, ordinances, rules, judgements, orders, decrees, permits,
licenses or other governmental requirements of Ecuador, relating to the
existence, releases or threatened releases of hazardous substances into the
environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling or cleanup of
hazardous substances.
"EQUITY SECURITIES" means capital stock or other equity interests of the
Company or any options, rights, warrants or other rights to subscribe for or
purchase, or any plans, securities, obligations, contracts or commitments
that are exercisable into such capital stock or other equity interests or
that provide for the issuance of, or grant the right to acquire, or are
convertible into, or exchangeable for, any such capital stock or other equity
interests.
3
<PAGE>
"FORCE MAJEURE" means circumstances beyond the control of the Parties,
including, without limitation, Acts of God, embargoes, fire, lightning,
explosion, war, civil disorders, rebellion, riots, and weather of exceptional
severity.
"GAAP" means generally accepted accounting principles in the relevant
country.
"GOVERNMENTAL APPROVALS" shall have the meaning given such term in
Section 3.2 of this Agreement.
"GOVERNMENTAL ENTITY" means any court or tribunal in any jurisdiction or
any international, multinational, foreign, domestic, national, federal, state,
province, local, municipal, or other administrative or regulatory agency,
department, commission (including, without limitation, the United States
Securities and Exchange Commission), board, bureau or other governmental or
quasi-governmental authority or instrumentality, or body or individual
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the meanings
given such terms in Section 11.1(b) of this Agreement.
"LEGAL REQUIREMENT" means any international, multinational, foreign,
domestic, national, federal, state, province, local, municipal, or other
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, decree, or treaty.
"LOI" shall have the meaning given such term in the Recitals to this
Agreement.
"MASTEC FIDEICOMISO" shall have the meaning given such term in the Recitals
to this Agreement.
"MATERIAL ADVERSE EFFECT" means any change or effect that is reasonably
likely to be materially adverse to the business, operations, properties,
business prospects, condition (financial or otherwise), assets or liabilities
of such Party taken as a whole.
"OFFERING" means the public or private placement of securities of the
Purchaser to be effected as soon as practicable after the date hereof for
purposes of raising $60 million of additional capital.
"ORDER" means any award, decision, injunction, decree, judgment, order,
ruling, subpoena, or verdict entered, issued, made or rendered by any court,
administrative agency, or other Governmental Entity or by any arbitrator.
"PANWORLD" means Panworld, Inc., a British Virgin Islands corporation.
4
<PAGE>
"PERMIT" means any international, multinational, foreign, domestic,
national, federal, state, province, local, municipal, or other license,
permit, concession, right, franchise, certificate of authority, order or
approval necessary or appropriate under applicable Rules.
"PERSON" means any natural person, corporation, trust, association,
unincorporated body, partnership, joint venture, Governmental Entity or any
other person or organization.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof) ending
on or before the close of business on the Closing Date.
"PURCHASER" shall have the meaning given such term in the Recitals to
this Agreement.
"PURCHASE PRICE" shall have the meaning given such term in Section 2.2
of this Agreement.
"RULE" means any statute or law of any Governmental Entity, including,
without limitation, those relating to disclosure, usury, equal credit
opportunity, equal employment, environment, fair credit reporting and
anticompetitive activities.
"SELLER" shall have the meaning given such term in the Recitals to this
Agreement.
"SELLER APPOINTEES" shall have the meaning given such term in Section
9.2(k)(ii) of this Agreement.
"SELLER GOVERNING DOCUMENTS" shall have the meaning given such term in
Section 3.1(b) of this Agreement.
"SHARES" shall have the meaning given such term in the Recitals to this
Agreement.
"TAX" means any of the Taxes and "Taxes" means, with respect to any
entity, (i) all income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits or selected
items of income, earnings or profits) and all gross receipts, asset, sales,
use, ad valorem, transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, environmental, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties or
other taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority (domestic or foreign)
on such entity; and (ii) any liability for the payment of any amount of the
type described in the immediately preceding clause (i) as a result of being a
"transferee" of another entity or a member of a consolidated, affiliated or
combined group.
5
<PAGE>
"TAX ASSET" means any net operating loss, net capital loss, investment
tax credit, foreign tax credit, charitable deduction or any other credit or
tax attribute which could reduce Taxes (including without limitation
deductions and credits related to alternative minimum Taxes).
"TAX RETURN" means all returns, statements, reports and forms (including
estimated tax returns and reports and information returns and reports) with
respect to Taxes as may be required to be filed with any taxing authority by
or on behalf of the Company, Conecel, Corptilor or the Purchaser.
"TRANSACTIONS" shall have the meaning given such term in the Recitals to
this Agreement.
"UNACCEPTABLE CONDITION" shall have the meaning given such term in
Section 9.1(a) of this Agreement.
1.2 OTHER DEFINED TERMS. Other terms may be defined elsewhere in the
text of this Agreement and shall have the meanings indicated throughout this
Agreement.
ARTICLE 2
THE TRANSACTION
2.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to the
conditions set forth in this Agreement, Seller shall sell to Purchaser and
Purchaser shall purchase the Shares on the Closing Date.
2.2 PAYMENTS. The purchase price payable for the Shares (the "PURCHASE
PRICE") will be as follows:
(a) CASH PAYMENT. On the Closing Date, Purchaser will pay to
Seller $36,300,000 in cash in the form of a cashier's check or wire transfer
to be paid out of the proceeds received by the Purchaser from the Offering,
$300,000 of which consists of the fee payable to Panworld pursuant to Section
4.24 hereof.
(b) PROMISSORY NOTES. Purchaser will deliver to Seller or its
designee at Closing $14,800,000 evidenced by two promissory notes ("Note A"
and "Note B" (collectively, the "Notes") due on March 15, 1997. Note A will
be an unsecured, negotiable, senior promissory note convertible into the
Purchaser's common stock, $.001 par value (the "PURCHASER COMMON STOCK"), and
will be in the amount of $11,100,000; and Note B will be an unsecured,
negotiable, senior promissory note, convertible into the Purchaser Common
Stock, and will be in the amount of $3,700,000. Each Note will accrue simple
interest at a rate of 10% per annum until maturity, which interest will be
due and payable together with the principal. The Purchaser shall have the
option to pre-pay, without penalty or any additional charges, all or a
portion of the Notes at any time in one or more installments during the terms
of the Notes.
6
<PAGE>
In the event that the Purchaser makes payment on the Notes, fifty percent
(50%) of any such payment shall be applied to Note A and fifty percent (50%)
shall be applied to Note B, until such time as Note B is paid in full. The
Notes will contain standard anti-dilution provisions applicable to the
Purchaser Common Stock.
(c) On the Closing Date, Purchaser will deliver to Seller or its
designee stock certificates evidencing 14,000,000 shares of Purchaser Common
Stock with a value of no less than $49,000,000 on the basis of a per share
price of $3.50. The parties hereto acknowledge and agree that Seller shall
not be obligated to sell the Shares in the event the Market Price (as defined
below) of the Purchaser Common Stock is below $3.50 per share on the business
day immediately prior to the Closing Date. As used in this Agreement, "Market
Price" shall mean the average closing price of the Purchaser Common Stock on
the over the counter market or a national securities exchange over the thirty
(30) business days prior to the Closing Date.
(d) If Conecel achieves an aggregate of $60,000,000 in gross sales
and $23,000,000 in EBITDA during a period of twelve (12) consecutive months
within the first twenty-four (24) months after the Closing Date, the Purchaser
will deliver to Seller an additional $5,250,000 through the issuance of
1,500,000 shares of the Purchaser Common Stock.
2.3 ESCROW OF PURCHASE PRICE. The Seller has agreed that 7,428,571
shares of Purchaser Common Stock valued at $26,000,000 issued and delivered
to the Seller or its designee on the Closing Date (the "ESCROWED SHARES")
will remain in escrow (the "ESCROW") pending (x) receipt by Conecel of a
written commitment fully executed and in good faith given by the appropriate
Governmental Entity to accept $50 million as a settlement or prepayment of the
annual cellular license fee (the "LICENSE FEE") payable by Conecel to the
Government of the Republic of Ecuador under that certain "Contracto de
Authorization del Servicio de Telefonia Movil Celular" dated August 26, 1993
and (y) receipt of the authorizations and/or frequency permits required by
Conecel to provide international long distance services to its cellular
subscribers through its own facilities. At all times while the Escrowed
Shares are held in Escrow, the Seller shall have the exclusive right to vote
such Escrowed Shares. The parties contemplate that the prepayment of the
License Fee will be approximately $50 million. In the event the Seller is
able to negotiate a prepayment of the License Fee in an amount in excess of
$50 million and said sum is acceptable to the Purchaser, then Purchaser shall
receive from the Escrow shares valued (on the basis of a per share price of
$3.50) at an amount equal to 52.6% of the difference between $50 million and
that amount negotiated and the Seller shall receive the balance thereof. If at
September 30, 1997 the Seller has not yet met the conditions set forth in (x)
and (y) of this Section 2.3, the Escrowed Shares shall be forfeited and
returned to the Purchaser for cancellation. The parties shall enter into an
agreement with respect to the foregoing substantially in the form attached as
Exhibit A hereto.
2.4 ADJUSTMENT TO PURCHASE PRICE. The Purchase Price set forth in this
Article 2 shall be subject to adjustment by the parties based upon the
completion of the December 31, 1995 audit of Conecel's financial statements
by BDO Siemans, independent certified public accountants (the "Auditor"). In
the event the Auditor discovers substantial discrepancies from the previous
financial statements of Conecel presented to the Purchaser and/or other
material problems in the Conecel financial statements, the parties agree to
negotiate in good faith an
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equitable adjustment to the Purchase Price within seven (7) days of receipt
of notice from the Auditor of any of the above mentioned problems.
2.5 WARRANTS. In addition to the Purchase Price, Purchaser will deliver
at Closing warrants to allow Seller to purchase up to eight hundred thousand
(800,000) shares of the Purchaser Common Stock, at a price of $2.25 per share
and the Purchaser will issue and deliver to Panworld warrants to purchase
500,000 shares of the Purchaser Common Stock at a purchase price of $4.80 per
share during a three (3) year period. (collectively, the "WARRANTS"). The
Warrants shall be delivered pursuant to the Warrant Agreement substantially
in the form set fort in Exhibit B attached hereto. Any shares of the
Purchaser Common Stock issuable upon exercise of the Warrants and such shares
when issued are referred to as the "WARRANT SHARES".
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF SELLER WITH RESPECT TO SELLER
Seller hereby represents and warrants to Purchaser with respect to
Seller that the following statements are and will be true and correct on the
Closing Date:
3.1 ORGANIZATION AND EXISTENCE. (a) Seller is a British Virgin Islands
corporation duly incorporated, validly existing, and in good standing under
the laws of the British Virgin Islands. Seller has one share of common stock
issued and outstanding. Such share has been validly authorized and issued,
fully paid and nonassessable and has not been issued in violation of any
preemptive right or any applicable securities laws.
(b) Set forth on Schedule 3.1(b) hereto is a complete list of the
articles of incorporation of Seller, the by-laws of Seller, the minute books,
stock register and all other documents governing the formation of Seller (the
"SELLER GOVERNING DOCUMENTS"). A true, complete and correct copy of each of
the documents set forth on Schedule 3.1(b) has been, or at the Closing will
have been, provided to Purchaser, and the documents set forth on Schedule
3.1(b) include all Seller Governing Documents that are in possession or
control of Seller or the agents of Seller.
3.2 GOVERNMENTAL APPROVALS. Except as set forth on Schedule 3.2 hereto,
there are no authorizations, consents, approvals of, and filings with, any
governmental agency, authority, or other body or any other third persons that
will be required by or with respect to Seller in connection with the
execution and delivery of this Agreement or the Documents or the consummation
of the Transactions ("GOVERNMENTAL APPROVALS").
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3.3 NO CONFLICT. Except as set forth on Schedule 3.3 hereto, the
execution, delivery and performance of this Agreement by Seller will not:
(a) contravene, conflict with, or result in a violation of (i) any
provision of the Seller Governing Documents, or (ii) any resolution adopted
by the board of directors or the stockholders of the Seller;
(b) contravene, conflict with, or result in a violation of, or give any
Governmental Entity or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under any Legal
Requirement, Rule or Order to which the Seller, or any assets owned by or
used by the Seller, may be subject and which would have a Material Adverse
Effect with respect to the Seller;
(c) contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Entity the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Approval
that is held by the Seller or that otherwise relates to the business of, or
any of the assets owned or used by the Seller and which would have a Material
Adverse Effect with respect to the Seller;
(d) cause the Seller to become subject to, or become liable for the
payment of, any Tax;
(e) cause any of the assets owned by the Seller to be reassessed or
revalued by any taxing authority or other Governmental Entity which would
have a Material Adverse Effect with respect to the Seller;
(f) contravene, conflict with, or result in a material violation or
material breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any contract to which the
Seller is a party or by which the assets of the Seller are bound, including,
without limitation, the MasTec Fideicomiso, which would have a Material
Adverse Effect with respect to the Seller; or
(g) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by the Seller.
3.4 BINDING EFFECT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties and any
successor of the Parties by way of reorganization, merger, or consolidation
and any assignee of all or substantially all of their business and assets.
3.5 OWNERSHIP OF SHARES. Subject to the MasTec Fideicomiso, Seller is
the owner of record and beneficially of all of the Shares.
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3.6 TITLE, NO ENCUMBRANCES. Seller has, and shall transfer to Purchaser
at the Closing, good and marketable title to 100% of the Shares free and
clear of any Encumbrances, except for the MasTec Fideicomiso, which encumbers
no more than 40% of the Shares and the terms and conditions of which permit
and are consistent with the Transactions.
3.7 LITIGATION. There is no litigation or legal or other actions,
suits, proceedings or investigations pending, at law or in equity, or before
any governmental department, commission, board, agency or instrumentality,
or, to the best of Seller's knowledge, threatened, in connection with
Seller's interests in the Company, Conecel or Corptilor which, if determined
adversely to Seller, would have a Material Adverse Effect in respect of such
interests. To the knowledge of Seller, no event has occurred or circumstances
exists that may give rise or serve as the basis for commencement of any such
action, suit, investigation, or other proceeding which, if determined
adversely to Seller, would have a Material Adverse Effect on the Seller.
There is no Rule or Order of any Governmental Entity outstanding against the
Seller that could have a Material Adverse Effect on the Seller.
3.8 BROKERS' OR FINDERS' FEES. Except for Panworld, Seller has not
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the Transactions.
3.9 ACCURACY OF INFORMATION. No information contained in the
representations and warranties of Seller set forth in this Agreement,
schedules, documents, or other instruments relating hereto or to be delivered
or referenced as having previously been delivered to Purchaser hereunder
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein or is
misleading.
3.10 NO IMPROPER PAYMENTS. Neither Seller nor any agent of Seller, or,
to Seller's knowledge, any other Person associated with or acting for or on
behalf of Seller, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of what form, whether in money,
property, or services (i) to obtain favorable treatment for business secured,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company, any Affiliate of the Company, or Conecel or (iv) in
violation of any Legal Requirement, or (b) established or maintained any fund
or asset that has not been recorded in the books or records of the Company or
Conecel. Seller and all of its agents and employees are in full compliance
with the Foreign Corrupt Practices Act of 1977, CODIFIED AS AMENDED AT 15
U.S.C. Sections 78m(b)(2), 78dd-1, 78dd-2, and 78ff(c).
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF SELLER WITH RESPECT TO COMPANY
Seller hereby represents and warrants to Purchaser with respect to
Company that the following statements will be true and correct on the Closing
Date:
4.1 ORGANIZATION AND EXISTENCE.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of Ecuador and has the requisite right, power
and authority to own, lease or operate its properties and assets. The Company
has the full right, power, and authority to own and operate its businesses.
(b) Set forth on Schedule 4.1(b) is a complete list of the articles of
incorporation of the Company, the by-laws of the Company, the minute books,
stock register and all other documents governing the formation of the Company
(the "COMPANY GOVERNING DOCUMENTS"). A true, complete and correct copy of
each of the documents set forth on Schedule 4.1(b) has been, or at the
Closing will have been provided to Purchaser, and the documents set forth on
Schedule 4.1(b) include all Company Governing Documents that are in
possession or control of the Company or its agents.
(c) The Company owns 52.63% of the issued and outstanding shares of the
capital stock of each of the Controlled Companies, and all such shares are
free and clear of any Encumbrances. The Company does not own, directly or
indirectly, any ownership, equity, profits or voting interest in any
corporation, partnership, joint venture or to other Person, other than the
Controlled Companies and has no agreement or commitment to purchase any such
interest.
4.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 5,000
shares of common stock, par value 1000 sucres, of which 5,000 shares are
issued and outstanding and no shares are held in the treasury of the Company.
The Shares have been validly authorized and issued, are fully paid and
nonassessable, and have not been issued in violation of any preemptive rights
or of any applicable securities law.
(b) As of the date hereof, except for the MasTec Fideicomiso, there are
no outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements or commitments relating to the issued or
unissued capital stock or other securities of the Company, obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the Company or obligating the Company
to grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment. There are no
voting trusts or other agreements or
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understandings to which the Company is a party with respect to the voting of
the capital stock of the Company.
4.3 SELLER AND COMPANY POWER AND AUTHORITY. This Agreement is a valid
and binding agreement of Seller enforceable with respect to Seller and to
Company in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles. Except as set forth in Schedule 4.3,
Seller has the absolute and unrestricted right, power, authority, and
capacity, and has taken all action necessary and has obtained all necessary
permits, approvals, consents and authorizations to execute and deliver this
Agreement and the Seller's closing documents and to perform Seller's
obligations under this Agreement and Seller's closing documents. Except as
set forth in Schedule 4.3, Company has the absolute and unrestricted right,
power, authority, and capacity, and has taken all action necessary and has
obtained all necessary permits, approvals, consents and authorizations to
comply with this Agreement and the Seller's closing documents.
4.4 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 4.4, there
are no Governmental Approvals that will be required by or with respect to the
Company in connection with the execution and delivery of this Agreement or
the Documents or the consummation of the Transactions.
4.5 SUBSIDIARIES. The Company has no subsidiaries other than the
Controlled Companies.
4.6 NO CONFLICT. Except as set forth in Schedule 4.6, the execution,
delivery and performance of this Agreement by Seller will not:
(a) contravene, conflict with, or result in a violation of (i) any
provision of the Company Governing Documents, or (ii) any resolution adopted
by the board of directors or the stockholders of the Company;
(b) contravene, conflict with, or result in a violation of, or give any
Governmental Entity or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement, Rule or Order to which the Company, or any assets owned by or
used by the Company, may be subject which would have a Material Adverse
Effect with respect to the Company;
(c) contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Entity the right to
revoke, withdraw, suspect, cancel, terminate, or modify, any Governmental
Approval that is held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by the Company which would
have a Material Adverse Effect with respect to the Company;
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(d) cause the Company to become subject to, or become liable for the
payment of, any Tax;
(e) cause any of the assets owned by the Company to be reassessed or
revalued by any taxing authority or other Governmental Entity which would have
a Material Adverse Effect with respect to the Company;
(f) contravene, conflict with, or result in a material violation or
material breach of any provision of, or given any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any contract to which the
Company is a party or by which the assets of the Company are bound which
would have a Material Adverse Effect with respect to the Company; or
(g) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by the Company.
4.7 OWNERSHIP OF SHARES. The Company is the owner of record and
beneficially of 52.63% of the shares of common stock of Conecel and 52.63% of
the shares of common stock of Corptilor.
4.8 TITLE. NO ENCUMBRANCES. The Company has good and marketable title
to 52.63% of the shares of common stock of Conecel and 52.63% of the shares
of common stock of Corptilor, free and clear of any Encumbrances.
4.9 LITIGATION.
(a) Except as set forth in Schedule 4.9(a), there is no litigation or
legal or other actions, suits, proceedings or investigations pending, at law
or in equity, or before any governmental department, commission, board, agency
or instrumentality, or, to the best of Seller's knowledge, threatened, in
connection with the ownership or operation of the Company which, if
determined adversely to the Company, would have a Material Adverse Effect with
respect to the Company. To the knowledge of Seller, no event has occurred or
circumstance exists that may give rise or serve as the basis for commencement
of any such action, suit, investigation, or other proceeding which, if
determined adversely to the Company, would have a Material Adverse Effect
with respect to the Company.
(b) There is no Order (A) to which the Company, or any assets owned by
or used by the Company, is subject, or (B) to which Seller or any officer,
director, or agent of the Company, is subject that relates to the business
of, or any of the assets owned or used by, the Company. The Company has not
been advised by any Governmental Entity that such authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such Order.
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4.10 NO DEFAULT. To the best of Seller's Knowledge, the Company is not
in default or violation (and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation) of any term,
condition or provision of (a) its certificate of incorporation, by-laws,
board resolutions or shareholder resolutions, (b) agreement or other
instrument or obligation to which the Company is a party, or (c) any Rule,
Legal Requirement or Order applicable to the Company and the result of which
would have a Material Adverse Effect with respect to the Company.
4.11 APPROVALS AND CONSENTS. Except as set forth in Schedule 4.11, no
notices, reports or other filings are required to be made by Seller or the
Company with, nor are any Consents required to be obtained by the Company
from, any entity in connection with the execution and delivery of this
Agreement by Seller or the consummation by Seller of any of the Transactions.
4.12 COMPLIANCE WITH RULES AND PERMITS.
(a) The Company has conducted and is conducting its business in
compliance with all applicable provisions of Rules, Orders or Legal
Requirements, except where the failure of which would not have a Material
Adverse Effect. The Company has all necessary Permits to own or lease any
properties and assets and to carry on its business as now conducted except
where the failure of which would not have a Material Adverse Effect with
respect to the Company. All such Permits are valid and in full force and
effect, and no suspension or cancellation of any of them has been initiated
or threatened. Consummation of the Transactions will not affect the validity
of any such Permit or the ability of the Company to comply with applicable
provisions of Rules of Permits.
(b) Except as set forth in Schedule 4.12(b), the Company (i) is not
required to have and has no licenses, Permits, registrations with, or
approvals from any Governmental Entity; (ii) made no filings with any
Governmental Entity since January 31, 1995 other than the miscellaneous
filings with the Superintendency of Corporations in the ordinary course of
business and (iii) had no written communications with any Governmental Entity
since January 31, 1995 other than in the ordinary course of business.
4.13 FINANCIAL INFORMATION.
(a) Seller has or will deliver to Purchaser on or before the Closing
Date (i) unaudited financial statements including a balance sheet, income
statement, stockholders' equity and cash flows of Company for the year ended
December 31, 1995 ("Year-Ended Financial Statements"); and (ii) unaudited
financial statements including a balance sheet as of May 30, 1996, and income
statement, stockholders' equity and cash flows for the five-month period then
ended ("Interim Financial Statements") (Year-End Financial Statements and
Interim Financial Statements collectively "COMPANY FINANCIAL STATEMENTS").
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(b) The Company Financial Statements fairly present in all material
respects the financial position and results of operation of the Company as of
the dates and for the periods indicated, in each case in conformity with GAAP
consistently applied (except as otherwise indicated in the Company Financial
Statements).
4.14 TAXES
(a) All monies which the company is required by law to withhold from
Employees or other third parties, if any, (including, but not limited to,
payments to persons and entities not resident in Ecuador, if any,) have been
withheld and either timely paid to the proper governmental authority or set
aside in accounts for such purposes and accrued on the books of the Company.
(b) The Company has not received any notice of a deficiency or
assessment with respect to Taxes of the Company from any taxing authority
which has not been fully paid or finally settled. There are no ongoing audits
or examinations of any Tax Return which includes the Company and no notice of
audit or examination of any such Tax Return has been received by Seller or
the Company. The Company has not requested any extension of time within
which to file any Tax Return and has not yet filed such Tax Return. The
Company has not entered into nor has there been entered into on its behalf
any closing agreement with any taxing authority. There are no outstanding
agreements or waivers by, or with respect to, the Company that extend the
statute of limitations relating to the payment of Taxes of the Company. No
issue has been raised, on audit or in any other proceeding with respect to
Taxes of the Company by any taxing authority which, if resolved against the
Company, would have a Material Adverse Effect on the Company. There are no
pending claims, actions, suits, proceedings, or investigations now pending or
to the knowledge of Seller and the Company, threatened against or with
respect to the Company in respect of any Tax or Tax Asset. The Company has no
outstanding requests for rulings or determination in respect of any Tax or
Tax Asset pending between the Company and any taxing authority. There are
no liens with respect to Taxes upon any of the properties or assets of the
Company.
(c) The charges, accruals, payments and reserves for Taxes with respect
to the Company for any Pre-Closing Tax Period (including any Pre-Closing Tax
Period for which no Tax Return has yet been filed) reflected on the books of
the Company (excluding any provision for deferred income taxes) are adequate
to cover such Taxes and any Tax Assets reflected on such books are correctly
reflected. As of the date of this Agreement, the Company has not been
required to file, and has not filed, any Tax Returns.
4.15 NO UNDISCLOSED LIABILITIES. To the knowledge of Seller, except for
the agreements described in Section 5.17 herein, the Company has no material
liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except for liabilities
and obligations fully reflected or resolved against in the Company Financial
Statements and current liabilities incurred in the ordinary course of
business.
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4.16 ABSENCE OF CERTAIN CHANGES SINCE MAY 30, 1996. Since May 30, 1996,
there has been no material adverse change in the business, operations,
properties, prospects, assets, or condition of the Company, and no event has
occurred or to the knowledge of the Seller and the Company, circumstance
exists that may result in such a material adverse change.
4.17 TITLE TO AND CONDITION OF PROPERTIES AND LIENS. The Company owns no
real property, leaseholds, or other interests. The Company owns no material
assets and has never owned any material assets other than the shares of
Conecel and Corptilor.
4.18 ABSENCE OF VIOLATIONS. The Company has not been and is not in
material violation of any Legal Requirement, license, permit, authorization,
concession, agreement, contract, corporate document, or other legally
enforceable obligation the result of which would have a Material Adverse
Effect with respect to the Company.
4.19 CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. Except as set forth
in Schedule 4.19, since May 30, 1996, there have been no material contracts
or agreements, written or oral ("CONTRACTS"), to which the Company is or has
been a party or by which the assets of the Company are bound, except such
Contacts entered into by the Company in the ordinary course of business.
4.20 INSURANCE. The Company has no insurance policies held by or for the
benefit of the Company or that insure any of the officers or directors of the
Company.
4.21 INTELLECTUAL PROPERTY. There are no patents, trademarks, trade
names, service marks, copyrights and applications therefor owned by or
licensed to the Company.
4.22 EMPLOYEE BENEFITS. Except as required by law and as set forth in
Schedule 4.22, the Company does not maintain, and does not have and has not
had any employee benefit plan or any other plan or arrangement providing for
deferred compensation, bonus, severance, or disability or vacation pay or
other benefits.
4.23 EMPLOYEE AND DIRECTOR MATTERS.
(a) The Company does not have and has never had any Employee. Simon
Parra Gil and Maria Rivadeneira are the current officers of the Company. The
Company has no directors.
(b) There are no controversies pending or threatened between the
Company and any of its current or former officers, directors, attorneys or
other agents. All sums due for compensation and benefits of Company officers,
directors, attorneys and other agents have been duly and adequately paid. The
Company is not a party to any employment contract, severance agreement or
other similar agreement or arrangement by which the Company is bound with
respect to any Company officer, director, attorney or other agent.
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4.24 BROKERS' OR FINDERS' FEES. Except for Panworld, the Company has not
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the Transactions. The
Seller shall pay the fee due to Panworld in the amount of $300,000
immediately upon receipt of the same from the Purchaser at Closing. In
addition, the Purchaser will issue and deliver to Panworld warrants to
purchase 500,000 shares of the Purchaser Common Stock at a purchase price of
$4.80 per share during a three (3) year period, and on additional terms
acceptable to the Purchaser in all respects.
4.25 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.25, the
Company holds, and is in compliance with, all Permits, licenses and
Governmental Approvals required under all Environmental Laws, if any, and the
Company is otherwise in compliance with all, and has not violated any,
Environmental Laws.
4.26 NO IMPROPER PAYMENTS. Neither the Company nor any director,
officer, agent, or employee of the Company, or to Seller's knowledge any
other Person associated with or acting for or on behalf of the Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback, or other payment to any Person, private
or public, regardless of what form, whether in money, property, or services
(i) to obtain favorable treatment for business secured, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company or any Affiliate of the Company, or (iv) in violation of any
Legal Requirement, (b) established or maintained any fund or asset that has
not been recorded in the books or records of the Company. The Company and all
of its directors, officers, agents and employees are in full compliance with
the Foreign Corrupt Practices Act of 1977, CODIFIED AS AMENDED AT 15 U.S.C.
Sections 78m(b)(2), 78dd-1, 78dd-2, and 78ff(c).
4.27 LOANS AND OTHER EXTENSIONS OF CREDIT. The Company has no
obligations (monetary or otherwise) under any other loan agreements or other
extensions of credit.
ARTICLE 5
REPRESENTATIONS AND WARRANTS OF SELLER
WITH RESPECT TO THE CONTROLLED COMPANIES
Seller hereby represents and warrants to Purchaser with respect to the
Controlled Companies that the following statements will be true and correct
on the Closing Date:
5.1 ORGANIZATION AND EXISTENCE.
(a) Each of Conecel and Corptilor is a corporation duly organized,
validly existing and in good standing under the laws of Ecuador and has the
requisite right, power and authority to own, lease or operate its properties
and assets. Each of Conecel and Corptilor has the full right, power, and
authority to own and operate its businesses.
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(b) Set forth on Schedule 5.1(b) is a complete list of the articles of
incorporation of Conecel, the by-laws of Conecel, the minute books, stock
register and all other documents governing the formation of Conecel (the
"CONECEL GOVERNING DOCUMENTS"). A true, complete and correct copy of each of
the documents set forth on Schedule 5.1(b) has been, or at the Closing will
have been provided to Seller, and the documents set forth on Schedule 5.1(b)
include all Conecel Governing Documents that are in possession or control of
Conecel or the agents or former agents of Conecel.
(c) Set forth on Schedule 5.1(c) is a complete list of the articles of
incorporation of Corptilor, the by-laws of Corptilor, the minute books,
stock register and all other documents governing the formation of Corptilor
(the "CORPTILOR GOVERNING DOCUMENTS"). A true, complete and correct copy of
each of the documents set forth on Schedule 5.1(c) has been, or at the
Closing will have been provided to Seller, and the documents set forth on
Schedules 5.1(c) include all Corptilor Governing Documents that are in
possession or control of Corptilor or the agents or former agents of
Corptilor.
5.2 CAPITALIZATION.
(a) The authorized capital stock of Conecel consists of 75,000,000
shares of common stock, of which 75,000,000 shares are issued and outstanding
and no shares are held in the treasury of Conecel. All shares of common stock
of Conecel owned by the Company have been validly authorized and issued, are
fully paid and nonassessable and have not been issued in violation of any
preemptive rights or of any applicable securities law.
(b) The authorized capital stock of Corptilor consists of 75,000,000
shares of common stock, of which 75,000,000 shares are issued and outstanding
and no shares are held in the treasury of Corptilor. All shares of common
stock of Corptilor owned by the Company have been validly authorized and
issued, are fully paid and nonassessable and have not been issued in
violation of any preemptive rights or of any applicable securities law.
(c) As of the date hereof, except as provided under Ecuadorian law,
there are no outstanding subscriptions, options, warrants, rights,
convertible securities or any other agreements or commitments relating to the
issued or unissued capital stock or other securities of Conecel, obligating
Conecel to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of Conecel or obligating the Company to
grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment. There are no
voting trusts or other agreements or understandings to which Conecel is a
party with respect to the voting of the capital stock of Conecel.
(d) As of the date hereof, except as provided under Escuadorian law,
there are no outstanding subscriptions, options, warrants, rights,
convertible securities or any other agreements or commitments relating to the
issued or unissued capital stock or other securities of Corptilor, obligating
Corptilor to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Corptilor or obligating the
Company to grant, extend
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or enter into any subscription, option, warrant, right, convertible security
or other similar agreement or commitment. There are no voting trusts or other
agreements or understandings to which Corptilor is a party with respect to
the voting of the capital stock of Corptilor.
5.3 GOVERNMENTAL APPROVALS. There are no Governmental Approvals that
will be required to be obtained by Seller or with respect to the Controlled
Companies in connection with the execution and delivery of this Agreement or
the Documents or the consummation of the Transactions.
5.4 SUBSIDIARIES. Neither of the Controlled Companies has any
subsidiaries. Other than Corptilor, Conecel has no other Affiliates.
5.5 NO CONFLICT. The execution, delivery and performances of this
Agreement by Seller will not:
(a) contravene, conflict with, or result in a violation of (i) any
provision of the Controlled Companies Governing Documents, or (ii) any
resolution adopted by the board of directors or the stockholders of the
Controlled Companies;
(b) contravene, conflict with, or result in a violation of, or give any
Governmental Entity or other Person the legitimate right to challenge any of
the Transactions or to exercise any remedy or obtain any relief under any
Legal Requirement, Rule or Order to which Conecel or Corptilor, or any assets
owned by or used by Conecel or Corptilor, may be subject the result of which
would have a Material Adverse Effect with respect to Conecel or Corptilor;
(c) contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Entity the legitimate
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Approval that is held by Conecel or Corptilor or that otherwise
relates to the business of, or any of the assets owned or used by Conecel or
Corptilor the result of which would have a Material Adverse Effect with
respect to Conecel or Corptilor;
(d) cause Conecel or Corptilor to become subject to, or become liable
for the payment of, any Tax with respect to Conecel or Corptilor;
(e) cause any of the assets owned by Conecel or Corptilor to be
reassessed or revalued by any taxing authority or other Governmental Entity
the result of which would have a Material Adverse Effect with respect to
Conecel or Corptilor;
(f) contravene, conflict with, or result in a material violation or
material breach of any provision of, or give any Person the legitimate right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any contract
to which Conecel or Corptilor is a party or by which the
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assets of Conecel or Corptilor are bound which would have a Material Adverse
Effect with respect to Conecel or Corptilor; or
(g) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by Conecel or Corptilor which
would have a Material Adverse Effect with respect to Conecel or Corptilor.
5.6 LITIGATION.
(a) Except as set forth in Schedule 5.6(a), there is no litigation or
legal or other actions, suits, proceedings or investigations pending, at law
or in equity, or before any governmental department, commission, board,
agency or instrumentality, or, to the best of Seller's knowledge, threatened,
in connection with the ownership or operation of the Controlled Companies
which, if determined adversely to Conecel or Corptilor, would have a Material
Adverse Effect with respect to Conecel or Corptilor, as applicable. To the
knowledge of Seller, no event has occurred or circumstance exists that may
give rise or serve as the basis for commencement of any such action, suit,
investigation, or other proceeding the result of which would have a Material
Adverse Effect with respect to Conecel or Corptilor.
(b) To the best of Seller's knowledge, there is no Order (A) to which
either of the Controlled Companies, or any assets owned by or used by either
of the Controlled Companies, is subject, or (B) to which Seller or any
officer, director, or agent of the Controlled Companies, is subject that
relates to the business of, or any of the assets owned or used by, the
Controlled Companies. The Controlled Companies have not been advised by any
such Governmental Entity that such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting)
any such Order.
5.7 NO DEFAULT. To the knowledge of Seller, neither of the Controlled
Companies is in default or violation (and to the knowledge of Seller no event
has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any term, condition or provision of (a)
its certificate of incorporation, by-laws, board resolutions or shareholder
resolutions, (b) any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation or (c) any Rule, Legal Requirement or Order
applicable to Conecel or Corptilor and the result of which would have a
Material Adverse Effect with respect to Conecel or Corptilor, as applicable.
5.8 APPROVALS AND CONSENTS. Except for Governmental Approvals and the
consents set forth in Schedule 5.8, no notices, reports or other filings are
required to be made by Seller or Conecel or Corptilor, nor are any Consents
required to be obtained by Seller, Conecel or Corptilor from, any entity in
connection with the execution and delivery of this Agreement by Seller or the
consummation by Seller of any of the Transactions.
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5.9 COMPLIANCE WITH RULES AND PERMITS.
(a) Each of the Controlled Companies has conducted and is conducting
its business in material compliance with all applicable provisions of Rules,
Permits, Orders or Legal Requirements, except where the failure of which
would not have a Material Adverse Effect with respect to the Controlled
Companies. Each of the Controlled Companies has all necessary Permits to own
or lease any properties and assets and to carry on its business as now
conducted, except where the absence of which would not have a Material
Adverse Effect with respect to the Controlled Companies. All such Permits are
valid and in full force and effect, and no suspension or cancellation of any
of them has been initiated or threatened. Consummation of the Transactions
will not affect the validity of any such permit or the ability of each of the
Controlled Companies to comply with applicable provisions of Rules or Permits.
(b) Except as set forth on Schedule 5.9(b), each of the Controlled
Companies (i) has no licenses, registrations with, or approvals from any
Governmental Entity; (ii) made no filings with any Governmental Entity since
January 1, 1994 other than miscellaneous filings with the Superintendency of
Companies or the Minister of Telecommunications in the ordinary course of
business, and (iii) had no written communications with any Governmental
Entity since January 1, 1994 other than in the ordinary course of business.
5.10 FINANCIAL INFORMATION.
(a) Seller has delivered or on the Closing Date will deliver to
Purchaser (i) audited financial statements including a balance sheet, income
statement, stockholders' equity and cash flows of Conecel for the year ended
December 31, 1995 ("Year-End Financial Statements"); and (ii) unaudited
financial statements including a balance sheet as of May 30, 1996, and income
statement, stockholders' equity and cash flows for the five-month period then
ended ("Interim Financial Statements") (Year-End Financial Statements and
Interim Financial Statements collectively "CONECEL FINANCIAL STATEMENTS").
(b) The Conecel Financial Statements fairly present in all material
respects the financial position and results of operation of Conecel as of the
dates and for the periods indicated, in each case in conformity with GAAP
consistently applied (except as otherwise indicated in the Conecel Financial
Statements).
5.11 TAXES.
(a) Conecel has duly filed (or there has been duly filed on its behalf)
with the appropriate taxing authorities all Tax Returns required to be filed
by or with respect to Conecel on or before the date hereof, and such Tax
Returns are true, correct and complete in all material respects and, as of
the time of filing, correctly reflected the facts regarding the income,
business, activities, status and other relevant matters of Conecel in all
material respects or any other information required to be shown thereon.
Conecel has paid in full on a timely basis (or there has been paid on its
behalf) all Taxes. Conecel is not delinquent in the payment of any
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Tax. To the best of Seller's knowledge, all monies which Conecel is required
by law to withhold from Employees or other third parties (including, but not
limited to, payments to persons and entities not resident in Ecuador) have
been withheld and either timely paid to the proper governmental authority or
set aside in accounts for such purposes and accrued on the books of Conecel.
(b) Except as set forth in Schedule 5.11(b), Conecel has not received
any notice of a deficiency or assessment with respect to Taxes of Conecel
from any taxing authority which has not been fully paid or finally settled.
There are no ongoing audits or examinations of any Tax Return which includes
Conecel and no notice of audit or examinations of any such Tax Return has
been received by Seller or Conecel. Conecel has not requested any extension of
time within which to file any Tax Return and has not yet filed such Tax
Return. Conecel has not entered into nor has there been entered into on its
behalf any closing agreement with any taxing authority. There are no
outstanding agreements or waivers by, or with respect to, Conecel that extend
the statute of limitations relating to the payment of Taxes of Conecel. No
issue has been raised, on audit or in any other proceedings with respect to
Taxes of Conecel by any taxing authority which, if resolved against Conecel
would have a Material Adverse Effect on Conecel. There are no pending claims,
actions, suits, proceedings, or investigations now pending or, to the best of
Seller's knowledge, threatened against or with respect to Conecel in respect
to any Tax or Tax Asset. Conecel has no outstanding requests for rulings or
determination in respect of any Tax or Tax Asset pending between Conecel and
any taxing authority. To the best of Seller's knowledge, there are no liens
with respect to Taxes upon any of the properties or assets of Conecel.
(c) To the best of Seller's knowledge, the charges, accruals, payments
and reserves for Taxes with respect to Conecel for any Pre-Closing Tax Period
(including any Pre-Closing Tax Period for which no Tax Return has yet been
filed) reflected on the books of Conecel (excluding any provision for
deferred income taxes) are adequate to cover such Taxes and any Tax Assets
reflected on such books are correctly reflected. All Tax Returns filed with
respect to taxable years of Conecel through the taxable year ended 1994 have
been examined and closed or are Tax Returns with respect to which the
applicable period for assessment under applicable law, after giving effect to
extensions or waivers, has expired.
5.12 NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule 5.12,
each of Conecel and Corptilor has no material liabilities or obligations of
any nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations fully
reflected or reserved against in the Conecel Financial Statements or the
Financial Statements of Corptilor and current liabilities incurred in the
ordinary course of business since the respective dates thereof.
5.13 ABSENCE OF CERTAIN CHANGES SINCE MAY 30, 1996. Except as set
forth in Schedule 5.13, since May 30, 1996, there has been no material
adverse change in the business, operations, properties, prospects, assets, or
condition of Conecel or Corptilor, and no event has occurred or circumstance
exists that may result in such a material adverse change.
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5.14 POSSESSION OF FRANCHISES AND LICENSES. Each of the Controlled
Companies possesses all franchises, licenses, concessions, and other
authorizations required to operate its business, which are listed on Schedule
5.14 and which do not expire until the periods set forth therein, all of
which were obtained lawfully and were validly issued. The terms and
conditions of said franchises, licenses, concessions and other authorizations
are consistent with the Transactions.
5.15 TITLE TO AND CONDITION OF PROPERTIES AND LIENS.
(a) Set forth in Schedule 5.15(a) is a complete and accurate list of
all real property, leaseholds, or other material interests therein owned by
Conecel. All material properties and assets reflected in the Conecel
Financial Statements are free and clear of all Encumbrances. All buildings
and structures owned by Conecel lie within the boundaries of the real
property owned by Conecel and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person.
(b) Except as set forth in Schedule 5.15(b) hereto, Conecel owns no
material assets and has never owned any material assets.
(c) To the knowledge of Seller, the buildings, structures, and
equipment of Conecel are in good operating condition, ordinary wear and tear
excepted, and are sufficient for continued conduct of Company's business.
5.16 ABSENCE OF VIOLATIONS. To the best of Seller's knowledge, neither
of the Controlled Companies has been since December 31, 1994, and is not in,
violation of any Legal Requirement, license, Permit, Order, Rule,
authorization, concession, agreement, contract, corporate document, or other
legally enforceable obligation the result of which would have a Material
Adverse Effect on either of the Controlled Companies, as applicable.
5.17 CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. Set forth on
Schedule 5.17 hereto is a list of all Contracts to which the Controlled
Companies are or have been a party since January 1, 1994. To the knowledge of
Seller, true copies of any written Contracts, including all amendments and
supplements thereto, have been or by the Closing Date will have been
delivered to Purchaser.
5.18 INSURANCE. There are no insurance policies held by or for the
benefit of the Controlled Companies or that insure any of the officers or
directors of the Controlled Companies.
5.19 INTELLECTUAL PROPERTY.
(a) Set forth on Schedule 5.19(a) is a complete and accurate list and
description of all patents, trademarks, trade names, service marks,
copyrights and applications therefor owned by the Controlled Companies
("PATENT AND TRADEMARK RIGHTS") and licensed to
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the Controlled Companies ("LICENSED RIGHTS"). The Patent and Trademark Rights
are free of any Encumbrances, are not subject to any license (royalty-bearing
or royalty-free) and are not subject to any other arrangement requiring any
payment to any Person or the obligation to grant rights to any Person in
exchange. The Licensed Rights are valid and binding and free and clear of any
liens, claims, Encumbrances, royalties, or other obligations created by
Conecel. The Patent and Trademark and the Licensed Rights are all those
rights necessary to the business of the Controlled Companies as currently
being conducted. The consummation of the Transactions will not result in the
loss or impairment of any of the Patent and Trademark Rights or any of the
Licensed Rights or result in any requirement of new or additional royalty,
licensing fees, relicensing fees, or other expenses.
(b) To the best of Seller's knowledge, neither of the Controlled
Companies in the conduct of its business as currently conducted infringe or
wrongfully use any confidential information, trade secrets, copyrights,
letters, patents, trade marks, service rights, trade names, designs, business
names, or similar industrial, commercial, or intellectual property rights
belonging to a third party.
5.20 EMPLOYEE BENEFITS. Except as required under Ecuadorian law,
neither of the Controlled Companies maintains, or has and has not had any
actual or contingent material liability (whether direct or indirect) with
respect to any employee benefit plan or any other plan or arrangement
providing for deferred compensation, bonus, severance, or disability or
vacation pay or other benefits covering current or former Employees of either
of the Controlled Companies. With respect to employer contributions required
under the Ecuadorian Labor Code, each Controlled Company is in compliance
with all applicable Requirements of Law, and each of the Controlled Companies
has made all required contributions. Neither of the Controlled Companies has
any liability to any retired employee for any employee benefits.
5.21 EMPLOYEE MATTERS.
(a) Schedule 5.21(a) contains a complete and accurate list of the
following information for each employee or director of Conecel and Corptilor:
name; job title; current compensation paid or payable; vacation accrued; and
service credited for purposes of vesting and eligibility to participate under
any pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock
ownership, severance pay, insurance, medical, welfare, or vacation plan, or
any other employee benefit plan or any director plan.
(b) To the knowledge of Seller, each of Conecel and Corptilor has
complied with all applicable Rules, laws, and regulations concerning
employment matters and has made in a timely manner true, complete, and
accurate filings required in connection therewith.
(c) There are no controversies pending or, to the knowledge of Seller,
threatened between Conecel and any of its current or former officers,
directors, attorneys or other agents. Schedule 5.21(c) lists all current
officers, directors, attorneys and other agents of
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Conecel. All sums due for compensation and benefits of Conecel officers,
directors, attorneys and other agents have been duly and adequately paid.
Conecel is not a party to any employment contract, severance agreement or
other similar agreement or arrangement by which Conecel is bound with respect
to any Conecel officer, director, attorney or other agent.
(d) No employee, officer, or director of Conecel is a party to, or is
otherwise bound by, any agreement or arrangement, including any
confidentiality, competition, or proprietary rights agreement between such
employee, officer, or director and any other Person that in any way adversely
affects or will affect the performance of his or her duties as an employee,
officer, or director of Conecel, or the ability of Conecel to conduct its
business.
5.22 BROKERS' OR FINDERS' FEES. Other than Panworld, neither Conecel
nor Corptilor has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finder's fees in connection with the
Transactions.
5.23 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of Seller, each of the Controlled Companies
holds, and is in compliance with, all Permits, licenses and government
authorizations required under all Environmental Laws, and each of the
Controlled Companies is otherwise in compliance with all, and has not
violated any Environmental Laws.
(b) Neither of the Controlled Companies nor the Seller has received any
request for information, and has not been notified that it is a potentially
responsible party under any Environmental Law with respect to any on-site or
off-site location. Neither of the Controlled Companies has arranged for the
treatment or disposal of any Hazardous Substance at, or transported any
Hazardous Substance to, any facility.
(c) Neither of the Controlled Companies nor the Seller has entered into
or agreed to any consent decree or order, and is not subject to any judgment,
decree or judicial order, and there is no action, suit, investigation or
proceeding pending or threatened against either of the Controlled Companies,
relating to compliance with, or the cleanup of Hazardous Substances under,
any Environmental Law.
(d) To the best knowledge of Seller, there are no actions, activities,
circumstances, conditions, or events occurring or existing on or before the
Closing Date that could form the basis of any Environmental Claim against
either of the Controlled Companies, or against any person or entity whose
liability for such Environmental Claim either of the Controlled Companies has
assumed either contractually or by operation of law.
(e) Neither of the Controlled Companies engages in operations that
produce a product or generate a waste and has not engaged in such operations
in the past.
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5.24 ACCURACY OF INFORMATION. No information contained in the
representations and warranties of Seller with respect to each of the
Controlled Companies set forth in this Agreement, schedules, documents, or
other instruments relating hereto or to be delivered or referenced as having
previously been delivered to Purchaser hereunder contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained herein or therein or is misleading.
5.25 NO IMPROPER PAYMENTS. Neither of the Controlled Companies nor any
director, officer, agent, or employee of the Controlled Companies or to
Seller's knowledge any other Person associated with or acting for or on
behalf of the Controlled Companies, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other improper payment to any Person, private or public, regardless of what
form, whether in money, property, or services (i) to obtain favorable
treatment for business secured, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of Conecel or any Affiliate
of Conecel, or (iv) in violation of any Legal Requirement, or (b) established
or maintained any fund or asset that has not been recorded in the books or
records of the Controlled Companies. Each of the Controlled Companies and all
of its and their directors, officers, agents and employees are in full
compliance with the Foreign Corrupt Practices Act of 1977, CODIFIED AS
AMENDED AT 15 U.S.C. Sections 78m(b)(2), 78dd-1, 78dd-2, and 78ff(c).
5.26 LOANS AND OTHER EXTENSIONS OF CREDIT. Set forth on Schedule 5.26
are all loans or other extensions of credit of Conecel (collectively, the
"CONECEL LOANS") pursuant to which Conecel is a party or has obligations
(monetary or nonmonetary, direct or indirect).
(a) Each of the Conecel Loans is valid and binding and in full force
and effect.
(b) Conecel has in all material respects performed all obligations
required to be performed by it under all Conecel Loans.
(c) Conecel has not received notice and has no reason to believe in the
existence of any material violation of any Conecel Loan. No event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute a material default on the part of any party under such
Conecel Loan.
5.27 SCHEDULES. Seller shall complete the Schedules to be provided
hereunder and deliver them to the Purchaser prior to the Closing.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
6.1 ORGANIZATION AND EXISTENCE.
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Texas and has the requisite right, power and
authority to own, lease or operate its properties and assets. Purchaser has
the full right, power, and authority to own and operate its businesses.
(b) Set forth on Schedule 6.1(b) is a complete list of the articles of
incorporation of the Purchaser and the amended and restated by-laws of the
Purchaser (to be adopted prior to closing). A true, complete and correct copy
of each of the documents set forth on Schedule 6.1(b) has been, or at the
Closing will have been provided to Seller.
6.2 CAPITALIZATION. Immediately prior to the Closing, the Purchaser
has a total authorized capitalization consisting of Fifty Million
(50,000,000) shares of Common Stock, $.001 par value, of which 16,152,518 are
issued and outstanding, and Ten Million (10,000,000) shares of Preferred
Stock, $.001 par value, of which no shares are issued and outstanding. All of
the shares of the Capital Stock of the Purchaser that are issued and
outstanding as of the date hereof, were duly authorized, validly issued and
are fully paid and nonassessable. Further, all of the shares of the Capital
Stock of the Purchaser to be issued in connection with the Transactions,
including the Warrant Shares to be issued upon exercise of the Warrants, when
issued and delivered in accordance with the terms of this Agreement, will be
duly authorized, validly issued and fully paid and nonassessable, free and
clear of all Encumbrances.
6.3 CORPORATE POWER AND AUTHORITY. Purchaser has the requisite power
and authority and has taken all action necessary and has obtained all
necessary permits in order to execute and deliver this Agreement and to
consummate the transaction contemplated hereby. This Agreement is a valid and
binding agreement of Purchaser enforceable in accordance with its terms
subject, as to enforceability, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
6.4 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 6.4, there
are no Governmental Approvals that will be required by or with respect to the
Purchaser in connection with the execution and delivery of this Agreement or
the Documents or the consummation of the Transactions.
6.5 SUBSIDIARIES. The Purchaser has no subsidiaries other than as set
forth on Schedule 6.5.
6.6 NO CONFLICT. Except as set forth in Schedule 6.6, the execution,
delivery and performance of this Agreement by Purchaser will not:
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(a) contravene, conflict with, or result in a violation of (i) any
provision of the Purchaser Governing Documents, or (ii) any resolution
adopted by the board of directors or the stockholders of the Purchaser;
(b) contravene, conflict with, or result in a violation of, or
give any Governmental Entity or other Person the legitimate right to
challenge any of the Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement, Rule or Order to which the
Purchaser, or any assets owned by or used by the Purchaser, may be
subject the result of which would have a Material Adverse Effect with
respect to the Purchaser;
(c) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Entity the
legitimate right to revoke, withdraw, suspend, cancel, terminate, or
modify, any Governmental Approval that is held by the Purchaser or that
otherwise relates to the business of, or any of the assets owned or
used by the Purchaser the result of which would have a Material
Adverse Effect with respect to the Purchaser;
(d) cause the Purchaser to become subject to, or become liable
for the payment of, any Tax;
(e) cause any of the assets owned by the Purchaser to be
reassessed or revalued by any taxing authority or other Governmental
Entity the result of which would have a Material Adverse Effect;
(f) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the legitimate
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate,
or modify, any contract to which the Purchaser is a party or by which the
assets of the Purchaser are bound; or
(g) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by the Purchaser.
6.7 LITIGATION.
(a) Except as set forth in Schedule 6.7(a), there is no litigation
or legal or other actions, suits, proceedings or investigations pending,
at law or in equity, or before any governmental department, commission,
board, agency or instrumentality, or, to the best of Purchaser's knowledge,
threatened, in connection with the ownership or operation of the Purchaser
which, if determined adversely to Purchaser, would have a Material Adverse
Effect with respect to Purchaser. To the knowledge of Purchaser, no
event has occurred or circumstance exists that may give rise or serve as the
basis for commencement of any such action, suit, investigation, or other
proceeding which would have a Material Adverse Effect.
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(b) To the best of Purchaser's knowledge, there is no Order (A)
to which the Purchaser, or any assets owned by or used by the Purchaser,
is subject, or (B) to which Seller or any officer, director, or agent
of the Purchaser, is subject that relates to the business of, or any of
the assets owned or used by, the Purchaser. The Purchaser has not been
advised by any Governmental Entity that such authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing
or requesting) any such Order, decrees, agreement, or memorandum of
understanding.
6.8 NO DEFAULT. To the best of Purchaser's knowledge, the
Purchaser is not in default or violation (and no event has occurred which,
with notice or the lapse of time or both, would constitute a default or
violation) of any term, condition or provision of (a) its certificate of
incorporation, by-laws, board resolutions or shareholder resolutions,
(b) any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation, or (c) any Rule, Legal Requirement or Order
applicable to the Purchaser the result of which would have a Material Adverse
Effect with respect to the Purchaser.
6.9 APPROVALS AND CONSENTS. Except as set forth in Schedule 6.9,
no notices, reports or other filings are required to be made by the Purchaser
with, nor are any Consents required to be obtained by the Purchaser from, any
entity in connection with the execution and delivery of this Agreement by
Purchaser or the consummation by Purchaser of any of the Transactions. No
shareholder action or approval is required prior to the consummation by the
Purchaser of the transactions described in this Agreement, including,
without limitation, the appointment of certain directors of the Purchaser in
accordance with Section 9.2(k) hereof and the amendment of the Purchaser's
bylaws as described in Section 9.2(l) hereof.
6.10 COMPLIANCE WITH RULES AND PERMITS.
(a) The Purchaser has conducted and is conducting its business in
material compliance with all applicable provisions of Rules, Orders or Legal
Requirements, except where the failure of which would not have a Material
Adverse Effect with respect to the Purchaser. The Purchaser has all
necessary Permits to own or lease any properties and assets and to carry on
its business as now conducted. All such Permits are valid and in full force
and effect, and no suspension or cancellation of any of them has been
initiated or threatened. Consummation of the Transactions will not affect the
validity of any such Permits or the ability of the Purchaser to comply with
applicable provisions of Rules or Permits.
(b) Except as set forth in Schedule 6.10(b), the Purchaser (i) is not
required to have and has no license, Permits, registrations with, or approvals
from any Governmental Entity; (ii) made no filings with any Governmental
Entity since January 31, 1995 other than filings with the Securities and
Exchange Commission (the "SEC") in the ordinary course of business, and
(iii) had no written communications with any Governmental Entity since
January 31, 1995 other than in the ordinary course of business.
(c) Other than as set forth on Schedule 6.10(c), the Purchaser has at
all times
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observed and has remained in full compliance in all respects with all Rules
and Legal Requirements, including, without limitation, the requirements
imposed by the Securities Act of 1933, as amended (the "Securities Act"), and
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
6.11 FINANCIAL INFORMATION.
(a) Purchaser has or will deliver to Seller on or before the Closing
Date (i) audited financial statements including a balance sheet, income
statement, stockholders' equity and cash flows of Purchaser for the year
ended December 31, 1995 as set forth in Purchaser's Form 10-K annual report
("Year-End Financial Statements"); and (ii) unaudited financial statements
including a balance sheet as of March 30, 1996, and income statement,
stockholders' equity and cash flows for the three-month period then ended
as set forth on Purchaser's Form 10-Q quarterly report ("Interim Financial
Statements") (Year-End Financial Statements and Interim Financial Statements
collectively "PURCHASER FINANCIAL STATEMENTS").
(b) The Purchaser Financial Statements fairly present in all material
respects the financial positions and results of operation of the Purchaser
as of the dates and for the periods indicated, in each case in conformity
with GAAP consistently applied (except as otherwise indicated in the
Purchaser Financial Statements).
(c) Purchaser has provided Seller financial information indicating
that, as of the date hereof, Purchaser has sufficient funds, or has obtained
commitments from responsible financial institutions to enable it to obtain
such funds, as are needed to pay the Purchase Price as set forth in
Section 2.2 hereto.
6.12 TAXES.
(a) All monies which the Purchaser is required by law to withhold
from Employees or other third parties, if any, (including, but not limited
to, payments to persons and entities not resident in Texas, if any,) have
been withheld and either timely paid to the proper governmental authority
or set aside in accounts for such purposes and accrued on the books of the
Purchaser.
(b) The Purchaser has not received any notice of a deficiency or
assessment with respect to Taxes of the Purchaser from any taxing
authority which has not been fully paid or finally settled. There are no
ongoing audits or examinations of any Tax Return which includes the
Purchaser and no notice of audit or examination of any such Tax Return
has been received by the Purchaser. The Purchaser has not requested any
extension of time within which to file any Tax Return and has not yet
filed such Tax Return. The Purchaser has not entered into nor has
there been entered into on its behalf any closing agreement with any
taxing authority. There are no outstanding agreements or waivers by, or
with respect to, the Purchaser that extend the statute of limitations
relating to the payment of Taxes of the Purchaser. No issue has been
raised, on audit or in any other proceeding with respect to Taxes of
the Purchaser by
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any taxing authority which, if resolved against the Purchaser would have
an adverse effect on the Purchaser. There are no pending claims, actions,
suits, proceedings, or investigations now pending or threatened against
or with respect to the Purchaser in respect of any Tax or Tax Asset.
The Purchaser has no outstanding requests for rulings or determination in
respect of any Tax or Tax Asset pending between the Purchaser and any
taxing authority. There are no liens with respect to Taxes upon any of the
properties or assets of the Purchaser.
(c) The charges, accruals, payments and reserves for Taxes with
respect to the Purchaser for any Pre-Closing Tax Period (including any
Pre-Closing Tax Period for which no Tax Return has yet been filed)
reflected on the books of the Purchaser (excluding any provision for
deferred income taxes) are adequate to cover such Taxes and any Tax
Assets reflected on such books are correctly reflected. As of the date
of this Agreement, the Purchaser has not been required to file, and has
not filed, any Tax Returns.
6.13 NO UNDISCLOSED LIABILITIES. Except for the agreements
described in Schedule 6.13 herein, the Purchaser has no material liabilities
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise).
6.14 ABSENCE OF CERTAIN CHANGES SINCE MAY 30, 1996. Since May 30, 1996,
there has been no material adverse change in the business, operations,
properties, prospects, assets, or condition of the Purchaser, and no event
has occurred or circumstance exists that may result in such material adverse
change.
6.15 POSSESSION OF FRANCHISES AND LICENSES. The Purchaser possesses
all franchises, licenses, concessions, and other authorizations required to
operate its business which are listed on Schedule 6.15 and which do not
expire until the periods set forth therein, all of which were obtained
lawfully and were validly issued.
6.16 ABSENCE OF VIOLATIONS. To the best of Purchaser's knowledge,
the Purchaser has not been and is not in violation of any Legal Requirement,
license, permit, authorization, concession, agreement, contract,
corporate document, or other legally enforceable obligation the result of
which would have a Material Adverse Effect with respect to the Purchaser.
6.17 CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. Except as
disclosed on Schedule 6.17, the Purchaser is not a party to any other
material contract or agreement, written or oral, or by which the assets of
Purchaser are bound.
6.18 INSURANCE. The Purchaser has no insurance policies held by or
for the benefit of the Purchaser or that insure any of the officers or
directors of the Purchaser.
6.19 INTELLECTUAL PROPERTY. Except as set forth on Schedule 6.19,
there are no patents, trademarks, trade names, service marks, copyrights
and applications therefor owned by or licensed to the Purchaser.
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6.20 EMPLOYEE BENEFITS. Except as required by law and as set forth in
Schedule 6.20, the Purchaser does not maintain, and does not have and has not
had any employee benefit plan or any other plan or arrangement providing for
deferred compensation, bonus, severance, or disability or vacation pay or
other benefits.
6.21 EMPLOYEE MATTERS.
(a) Schedule 6.21(a) contains a complete and accurate list of the
following information for each employee or director of the Purchaser: name;
job title; current compensation paid or payable; vacation accrued; and
service credited for purposes of vesting and eligibility to participate under
any pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock
ownership, severance pay, insurance, medical, welfare, or vacation plan, or
any other employee benefit plan or any director plan.
(b) To the knowledge of Purchaser, Purchaser has complied with all
applicable Rules, laws, and regulations concerning employment matters and has
made in a timely manner true, complete, and accurate filings required in
connection therewith.
(c) There are no controversies pending or to the knowledge of
Purchaser, threatened between Purchaser and any of its current or former
officers, directors, attorneys or other agents. Schedule 6.21(c) lists all
current officers, directors, attorneys and other agents of Purchaser. All
sums due for compensation and benefits of Purchaser's officers, have been
duly and adequately paid. Other than as set forth on Schedule 6.21(c),
Purchaser is not a party to any employment contract, severance agreement or
other similar agreement or arrangement by which Purchaser is bound with
respect to any Purchaser officer, director, attorney or other agent.
(d) No employee, officer, or director of Purchaser is a party to, or is
otherwise bound by, any agreement or arrangement, including any
confidentiality, competition, or proprietary rights agreement between such
employee, officer, or director and any other Person that in any way adversely
affects the performance of his or her duties as an employee, officer, or
director of Purchaser, or the ability of Purchaser to conduct its business.
6.22 BROKERS' OR FINDERS' FEES. Except for Maroon Bells Capital
Partners, Inc. ("MBCP"), the Purchaser has not employed any investment
banker, broker or finder or incurred any liability for any investment banking
fees, brokerage fees, commissions or finder's fees in connection with the
Transactions. Purchaser shall pay to MBCP at Closing the amount of $1,132,812 as
compensation for services rendered in connection with the Transactions. In
addition, the Seller shall pay the fee due to Panworld immediately upon
receipt of the same from the Purchaser at Closing as provided in Section 4.24
hereof.
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6.23 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of Purchaser, the Purchaser holds, and is in
compliance with, all Permits, licenses and Governmental Approvals required
under all Environmental Laws, if any, and the Purchaser is otherwise in
compliance with all, and has not violated any, Environmental Laws.
(b) Purchaser has not received any request for information, and has not
been notified that it is a potentially responsible party under any
Environmental Law with respect to any on-site or off-site location. Purchaser
has not arranged for the treatment or disposal of any Hazardous Substance at,
or transported any Hazardous Substance to, any facility.
(c) Purchaser has not entered into or agreed to any consent decree or
order, and is not subject to any judgment, decree or judicial order, and
there is no action, suit, investigation or proceeding pending or threatened
against Purchaser, relating to compliance with, or the cleanup of Hazardous
Substances under, any Environmental Law.
(d) To the best knowledge of Purchaser, there are no actions,
activities, circumstances, conditions, or events occurring or existing on or
before the Closing Date that could form the basis of any Environmental Claim
against Purchaser, or against any person or entity whose liability for such
Environmental Claim Purchaser has assumed either contractually or by
operation of law.
(e) Purchaser does not engage in operations that produce a product or
generate a waste and has not engaged in such operations in the past.
6.24 ACCURACY OF INFORMATION. No information contained in the
representations and warranties of Purchaser set forth in this Agreement,
schedules, documents, or other instruments relating hereto or to be delivered
or referenced as having previously been delivered to Purchaser hereunder
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein or is
misleading.
6.25 NO IMPROPER PAYMENTS. Neither the Purchaser nor any director,
officer, agent, or employee of the Purchaser, or to Purchaser's knowledge any
other Person associated with or acting for or on behalf of the Purchaser, has
directly or indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback, or other improper payment to any Person,
private or public, regardless of what form, whether in money, property, or
services (i) to obtain favorable treatment for business secured, (ii) to pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Purchaser or any Affiliate of the Purchaser, or (iv) in violation of any
Legal Requirement, (b) established or maintained any fund or asset that has
not been recorded in the books or records of the Purchaser. The Purchaser and
all of its directors, officers, agents and employees are in full compliance
with the Foreign Corrupt Practices Act of 1977, CODIFIED AS AMENDED AT
15 U.S.C. Sections 78m(b)(2), 78dd-1, 78dd-2, and 78ff(c).
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6.26 LOANS AND OTHER EXTENSIONS OF CREDIT. Set forth on Schedule 6.26
are all loans or other extensions of credit of Purchaser (collectively, the
"PURCHASER LOANS") pursuant to which the Purchaser is a party or has
obligations (monetary or nonmonetary, direct or indirect).
(a) Each of the Purchaser Loans is valid and binding and in full force
and effect.
(b) Purchaser has in all material respects performed all obligations
required to be performed by it under all Purchaser Loans.
(c) Purchaser has not received notice and has no reason to believe in
the existence of any material violation of any Purchaser Loan. No event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute a material default on the part of any party under such
Purchaser Loan.
6.27 SEC FILINGS. The Purchaser has heretofore furnished or made
available to the Seller a true, correct and complete copy of each report
filed by the Purchaser with the SEC pursuant to the Exchange Act and the
Securities Act (the "Purchaser SEC Reports"), since its inception. None of
the Purchaser's, SEC Reports, as of the dates they were respectively filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. To the knowledge of Purchaser, no event has
occurred that would require the amendment or supplement of any of the
Purchaser SEC Reports in order to render any of the Purchaser SEC Reports
true and accurate in all respects as of the date hereof.
6.28 SCHEDULES. Purchaser shall complete the Schedules to be provided
hereunder and deliver them to the Seller prior to the Closing.
ARTICLE 7
COVENANTS OF THE PARTIES
7.1 ACTIVITY IN THE ORDINARY COURSE. Except as contemplated by this
Agreement or otherwise agreed to by the Parties prior to the Closing, each
Party will cause their respective Companies (and the Controlled Companies) to
be operated in the ordinary and usual course of business consistent with past
practices. Without limiting the generality of the foregoing, prior to the
Closing, neither of the Purchaser or the Company, Conecel or Corptilor will,
without the prior written consent of the other Party, which consent shall not
be unreasonably withheld:
(a) amend its corporate documents;
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(b) issue, sell, pledge, dispose of, repurchase or redeem any Equity
Securities or split, combine or reclassify any shares of its capital stock;
(c) enter into any new agreements, commitments or contracts or take any
action that would create a liability or an Encumbrance in excess of U.S.
$50,000, except liens pursuant to existing factoring arrangements of accounts
receivable undertaken in the ordinary course of business and liens created by
Conecel pursuant to funds obtained under the C.A.F. loan;
(d) create or incur any indebtedness for borrowed money or assume,
guarantee or endorse the obligations of any other person in excess of U.S.
$50,000, except under existing lines of credit;
(e) (i) adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, warrant, pension, retirement, deferred
compensation, employment, consulting, indemnification, severance, termination
or other employee benefit plan, agreement, trust fund or arrangement for the
benefit or welfare of any officer, director, Employee, consultant, or agent,
involving in excess of U.S. $50,000 or (ii) agree to any increase in the
compensation (including bonuses) payable or to become payable to any officer,
director, Employee, consultant, or agent;
(f) purchase or otherwise acquire, by merger, consolidation, acquisition
of securities or assets or otherwise, (i) any corporation, partnership,
association or other business organization or division thereof or (ii) any
assets or properties in excess of U.S. $50,0000;
(g) change the accounting methods or practices followed by the Company
or Conecel, including any change in any assumption underlying, or method of
calculating, any return, bad debt, contingency or other reserve;
(h) authorize or permit the declaration or payment of any dividends,
make any other distributions to the shareholders or its employees, pay any
extraordinary bonuses to its employees, make any loans to shareholders, or
shareholders of any of the Companies' subsidiaries or affiliates;
provided, however, that the Purchaser may pay to the shareholders of Hewster,
S.A. ("Hewster") a sum equal to $2,000,000 at the Closing as full and final
payment for the shares of Hewster to be acquired by the Purchaser as
contemplated in the Board of Directors meeting of the Purchaser dated March
14, 1996.
(i) agree, whether in writing or otherwise, to do any of the foregoing.
7.2 ACCESS AND CONFIDENTIALITY.
(a) Each Party shall have the right to conduct a legal, financial,
technical and business due diligence review of the other Party for the period
commencing the date hereof and ending on July 17, 1996. Accordingly, each
Party shall afford to the other and their authorized
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agents (including attorneys, accountants, and financial advisors) free and
full reasonable access to the premises, properties, physical inventory, books,
records, and Contracts of the respective companies and each of their
subsidiaries and affiliates. The Parties shall authorize their officers,
directors, employees, agents, counsel, accountants, customers, suppliers,
vendors, and other persons with whom they have business relations to provide
information as reasonably requested.
(b) Each Party shall, and shall cause its respective directors,
officers, employees, agents, consultants and advisers to, hold in strict
confidence (unless (i) disclosure to a Governmental Entity is necessary or
desirable in connection with any necessary approvals to Transactions; or
(ii) such party is compelled to disclose by judicial or administrative process
or, in the written opinion of its counsel, by other requirements of law or the
applicable requirements of any Governmental Entity) any Confidential
Information (as defined below) concerning any other Party, or its
subsidiaries and affiliates, furnished to it by such other Party or its
representatives pursuant to this Agreement. For purposes of this paragraph,
"Confidential Information" means (i) any information about the Parties or the
Controlled Companies stamped "confidential," or identified in writing as such
by other Party or the Controlled Companies or any of their representatives or
(ii) any of the information described in Section 7.2(c) below provided that it
does not include information which (i) is or becomes generally available to or
known by the public other than as a result of a disclosure made by the Parties,
the Company or the Controlled Companies or their representatives in breach of
this Letter; (ii) was available to the Parties, the Company or the Controlled
Companies on a nonconfidential basis prior to disclosure by the other Party; or
(iii) is hereafter, or was heretofore, independently developed or complied by
the Parties, the Company or the Controlled Companies without the aid,
application, or use of the Confidential Information. Confidential Information
shall also include information other than written information if such
information is referred to as confidential in a writing that is transmitted
by the Parties, the Company or the Controlled Companies within two (2) days
of the date of its disclosure to the other Party or its representatives.
Neither the Parties, the Company or the Controlled shall release or disclose
such Confidential Information to any other Person, except its auditors,
attorneys, financial advisors, bankers, other consultants and advisors and,
to the extent permitted above, to regulatory and judicial authorities. No
Party shall use the Confidential Information of the Party for purposes other
than the consummation of the transaction contemplated by this Agreement. In
the event the Closing fails to occur and this Agreement is terminated, each
Party shall promptly destroy all such Confidential Information or return it
to the other Party.
(c) Each Party undertakes for itself, and undertakes to cause each
of its employees, its directors, and its shareholders, to keep confidential
and all times not disclose publicly or to any third party without the prior
written consent of the other Party, the substance of any negotiations between
the Parties, the contents of this Agreement, the Documents and any
information relating thereto unless and to the extent that: (i) such
disclosure is required by any Governmental Entity having jurisdiction over
such Party or person in order to comply with any official directive or
guideline, whether or not having the force of law; (ii) disclosure is made in
confidence and on a strict "need to know" basis to professional consultants
of such Party or person who are reasonably required to facilitate the
Transactions; and (iii) the disclosing Party
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first provides to the other Party the content of the proposed disclosure, the
reasons that such disclosure is necessary or required by law, and the time
and place that the disclosure will be made.
(d) The confidentiality obligations of the Parties under this
Agreement shall survive the termination of this Agreement.
7.3 REQUIRED APPROVALS AND OTHER FILINGS. As soon as practicable
after the date of execution of this Agreement, Seller shall, and shall cause
the Company to, make all filings, if any, required by Legal Requirements to
be made in order to consummate the Transactions. As soon as practicable after
the date of execution of this Agreement, Purchaser shall make all filings
required by Legal Requirements to be made in order to consummate the
Transactions, including the Offering. Purchaser and Seller shall each use
reasonable efforts to obtain expeditiously any approval to be obtained and to
make all required filings and shall each cooperate with the other in
connection therewith (including the furnishing of any reasonable undertaking
or commitment which may be required to obtain such approvals). Purchaser and
Seller shall provide the other copies of any applications and documents and
all correspondence relating to such approvals and filings prior to filing,
other than material filed in connection therewith under a claim of
confidentiality.
7.4 FURTHER ASSURANCES. Seller and Purchaser shall each execute,
acknowledge and deliver such instruments and take such other actions as the
other party may reasonably request in order to carry out the intent of this
Agreement.
7.5 NOTICES OF DEFAULT; CHANGE IN CONDITION. Seller and Purchaser
shall each promptly give written notice to the others upon becoming aware of
the impending or threatened occurrence of any event which could reasonably be
expected to cause or constitute a breach of any of their respective
representations, warranties, covenants or agreements contained in this
Agreement. Seller and Purchaser shall immediately disclose to the other party
any and all material adverse changes or events in their respective
businesses, properties, financial conditions, operations, or affairs, or the
Company or the Controlled Companies.
7.6 MAINTENANCE OF RECORDS; RETENTION. Through the Closing Date,
Seller will cause the Company to maintain and keep current all books, records
and documents relating to the Company.
7.7 MASTEC AGREEMENT. Seller shall, by the Closing Date, enter into
that certain Agreement with MasTec, Inc. ("MasTec"), substantially in the
form of EXHIBIT C attached hereto (the "MasTec Agreement"), which provides
for the delivery to MasTec of certain cash amounts and other instruments in
consideration of the termination of the MasTec Fideicomiso and full release
of the shares subject thereto.
7.8 THE OFFERING; COMPLIANCE WITH LAWS. The Purchaser shall at all
times observe and remain in strict compliance with all applicable Rules and
Legal Requirements,
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including the requirements imposed by the Securities Act and the Exchange Act
in connection with the Offering. In this regard, the Purchaser covenants that
it shall not include in any memorandum or other document relating to the
Offering any untrue statement of a material fact, nor shall it omit to state
a material fact required to be stated in any such memorandum or other
document, or necessary in order to make the applicable statement, in light of
the circumstances in which it is made, not misleading.
7.9 SEC FILINGS. The Purchaser shall timely file all reports and
other documents required to be filed by it with the Commission under the
Exchange Act from the date of this Agreement to the Closing Date.
ARTICLE 8
TAXES
8.1 CERTAIN TAX MATTERS.
(a) Seller shall cause to be prepared and filed when due all Tax
Returns with respect to Taxes that are required to be filed by or with
respect to the Company for all Pre-Closing Tax Periods. Seller shall pay any
Taxes due in respect of such Tax Returns and shall indemnify Purchaser and
the Company from and against any Taxes imposed upon the Company for any
taxable year or period that ends on or before the Closing Date. With respect
to any Tax period beginning prior to the Closing Date and ending after the
Closing Date, Seller shall indemnify Purchaser and the Company for Taxes
attributable to the period up to and including the Closing Date. Seller shall
indemnify Purchaser and the Company for any Taxes arising from the Company's
inclusion in any consolidated, combined or unitary Tax Return with respect to
a Tax period beginning before the Closing Date.
(b) Whenever it is necessary to determine the liability for Taxes for
a portion of the year or period ending on, and the portion of the year or
period beginning after, the Closing Date the liability for the portion of the
year ending on the Closing Date shall be determined by assuming that the
Company had a taxable year that ended at the close of the Closing Date,
except that exemptions, allowances or deductions that are calculated on an
annual basis, such as the deduction for depreciation, shall be apportioned on
a time basis.
8.2 SURVIVAL. The obligations of Purchaser and Seller under Section
8.1 shall survive without any time limit, except that Section 8.1 shall not
survive rescission of the transaction contemplated by this Agreement.
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ARTICLE 9
CONDITIONS TO CLOSING
9.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. Unless waived by Purchaser,
the obligation of Purchaser to consummate the transaction contemplated by
this Agreement is conditioned upon fulfillment, at or before the Closing, of
each of the following conditions:
(a) APPROVALS. All necessary Governmental Approvals and other consents
and Permits, if any, shall have been obtained and shall remain in full force
and effect, and any filings required to be made prior to the Closing shall
have been made; PROVIDED, HOWEVER, that no such Governmental Approval,
consent or Permit shall have imposed any condition or requirement that would
reasonably be expected to result in any Material Adverse Effect on the
Company, Conecel or Corptilor (an "UNACCEPTABLE CONDITION").
(b) PROHIBITIONS. No Rule shall have been enacted, issued, promulgated
or entered by any Governmental Entity after the date of this Agreement which
remains in effect and would result in a Material Adverse Effect on the
Company.
(c) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Seller contained in this Agreement shall be true in all
material respects as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of the Closing Date;
each of the covenants and agreements of Seller to be performed on or prior to
the Closing Date shall have been performed in all material respects; and
Purchaser shall have received at Closing a certificate to that effect dated
as of the Closing Date and executed by Seller.
(d) ADVERSE CHANGE. There shall be no material adverse change in the
business, legal, or financial condition or prospects of the Company, Conecel
or Corptilor, in relation to the Transactions.
(e) AUDITS AND DUE DILIGENCE. Legal, business, and financial audits and
due diligence shall have been completed in accordance with Section 7.2(a)
hereof and the results thereof shall be satisfactory to Purchaser and its
advisors in their sole and absolute discretion.
(f) DOCUMENTS. All the Documents shall be reasonably satisfactory to
the Purchaser in all respects, including representations and warranties and
opinions of counsel.
(g) INTERNAL APPROVALS. The boards of directors of all the Parties to
the Documents shall have approved the Documents and the Transactions, as
pertinent to each such board of directors.
(h) LEGAL OPINIONS. Purchaser shall have received a legal opinion
dated as of the Closing Date from Leon Roldos, Esq., counsel to Seller, and
Greenburg Traurig, et.al., special counsel to the Seller, with respect to the
Transactions, substantially in the forms of
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EXHIBIT D, attached hereto. Purchaser shall also have received a satisfactory
legal opinion from Perez Bustamante y Perez, special Ecuadorian Legal Counsel
to Purchaser.
(i) SCHEDULES AND EXHIBITS. All Schedules and Exhibits described
herein shall have been completed and delivered, and shall be satisfactory in
all respects, to the Purchaser.
(j) MASTEC AGREEMENT. The MasTec Agreement shall have been fully
executed by the parties thereto.
9.2 CONDITIONS TO OBLIGATIONS OF SELLER. Unless waived by Seller, the
obligation of Seller to consummate the transaction contemplated by this
Agreement to be consummated at the Closing is conditioned upon fulfillment,
at or before the Closing, of each of the following conditions:
(a) APPROVALS. All necessary Governmental Approvals and other consents
and permits, if any, shall have been obtained and shall remain in full force
and effect and any filings required to be made prior to the Closing shall
have been made.
(b) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Purchaser contained in this Agreement shall be true in all
material respects as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of the Closing Date;
each of the covenants and agreements of Purchaser to be performed on or prior
to the Closing Date shall have been duly performed in all material respects;
and Seller shall have received at the Closing a certificate to that effect
dated as of the Closing Date and executed by the Purchaser.
(c) ADVERSE CHANGE. There shall be no material adverse change in the
business, legal or financial conditions or prospects of the Purchaser.
(d) AUDITS AND DUE DILIGENCE. All legal, business and financial due
diligence shall have been completed in accordance with Section 7.2(a) hereof
and the results thereof shall be satisfactory to the Seller and its advisors
in their sole and absolute discretion.
(e) DOCUMENTS. All the Documents shall be reasonably satisfactory to
the Seller in all respects, including representations and warranties and
opinions of counsel.
(f) LEGAL OPINION OF PURCHASER'S COUNSEL. Seller shall have received a
legal opinion from Snell & Wilmer L.L.P. dated as of the Closing Date
substantially in the form of EXHIBIT E attached hereto.
(g) REGISTRATION RIGHTS AGREEMENT. The Purchaser shall have executed
and delivered to the Seller a Registration Rights Agreement dated the Closing
Date (the "Registration Rights Agreement") substantially in the form of
EXHIBIT F attached hereto.
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(h) OPTION AND PROXY AGREEMENT. Hernan Streeter and George Cargill
shall have executed and delivered to the Purchaser an Option and Proxy
Agreement dated the Closing Date (the "Option Agreement"), substantially in
the form of EXHIBIT G attached hereto, which provides for the grant to the
Seller of options to purchase up to 2,000,000 shares of Purchaser Common
Stock owned by Herman Streeter and George Cargill.
(i) SHAREHOLDER AGREEMENT. The Purchaser and Streeter shall have
executed a Shareholder Agreement (the "Shareholder Agreement"), substantially
in the form of EXHIBIT H attached hereto.
(j) RESIGNATIONS OF OFFICERS AND DIRECTORS; APPOINTMENT OF NEW OFFICERS.
The resignations of the officers and directors of the Purchaser, as requested
by Seller, shall have been executed and delivered at and as of the Closing
Date. At and as of the Closing Date, the following individuals shall be
appointed by the Board to hold the following offices: Gary Jaeckel, Chief
Executive Officer, and Herman Streeter, Chief Technical Officer.
(k) BOARD COMPOSITION. On the Closing Date, Purchaser shall have
amended Purchaser's Bylaws, if necessary, to increase the number of members
of the Board of Directors to nine (9) members. The composition of the Board
of Directors of Purchaser at and as of the Closing Date immediately after
giving effect to the transaction contemplated hereby will be as follows:
(i) Jorge Mas, Jr.;
(ii) five (5) directors appointed by the Seller (subsections (i)
and (ii) are collectively referred to as the "SELLER
APPOINTEES"); and
(iii) three (3) directors, one (1) of whom shall be Pual Moore
(as Chairman of the Board), appointed by the Board of
Directors in office prior to the Closing.
(l) TENURE. Purchaser shall have amended Purchaser's Bylaws to provide
for three classes of Directors which will be designated Class A, consisting
of up to three Directors, Class B, consisting of up to three Directors, and
Class C, consisting of up to three Directors. Each Director will serve for a
term of three years after their election, subject to the following: (i) the
term of office of the initial Class A Directors shall expire at the first
annual meeting of shareholders after their election; (ii) the term of office
of the initial Class B Directors shall expire at the second succeeding annual
meeting of shareholders after their election; and (iii) the term of office of
the initial Class C Directors shall expire at the third succeeding annual
meeting of shareholders after their election. At each annual meeting after
the initial classification of Directors, Directors who are replacing those
whose terms expire at such annual meeting shall be elected to hold office
until the third succeeding annual meeting and so on thereafter. Each Director
shall hold office until his successor is elected and qualified or until his
earlier resignation. The number of Directors constituting each class and the
initial classification of the
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duly elected Directors shall be determined by a vote of the Board of
Directors; provided, however, that the parties agree that the directors
described in Section 9.2(k)(ii) shall be Class B and Class C directors as
determined by Seller in its sole and absolute discretion. In addition to the
foregoing, the Purchaser's Bylaws will provide for the establishment of a
Board Nominating Committee through which all subsequent nominations and
appointments to the Board of Directors of the Purchaser shall be effected from
time to time.
(m) SCHEDULES AND EXHIBITS. All Schedules and Exhibits described herein
shall have been completed and delivered, and deemed satisfactory in all
respects, to the Seller.
(n) MASTEC AGREEMENT. The MasTec Agreement shall have been fully
executed by the parties thereto.
(o) PROXIES. The Seller shall have received the irrevocable proxies to
vote all of the shares of Purchaser Common Stock owned and held of record by
each of the shareholders of the Purchaser and their respective Affiliates set
forth on Schedule 9.2(n), which proxies shall be in effect until such time as
the Purchaser shall have increased its market capital by $80 million through
a capital increase or acquisition.
ARTICLE 10
CLOSING PROCEDURE
10.1 EXECUTION AND CLOSING DATE AND PLACE; NOTIFICATIONS.
(a) The execution of this Agreement will be held at the offices of
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., 1221 Brickell
Ave., Miami, FL 33131, on July 4, 1996, unless otherwise extended by the
Parties.
(b) The closing for the transactions provided for herein (the
"CLOSING") shall occur on or before August 14, 1996 (the "CLOSING DATE");
provided however, that the Closing Date shall be automatically extended to no
later than September 30, 1996 in the event the Offering has not been
completed.
10.2 DELIVERIES AT THE CLOSING. Subject to the conditions set forth in
this Agreement, at the Closing:
(a) The Seller shall deliver the Shares and with respect to the Shares
covered by the MasTec Fideicomiso, MasTec shall deliver a fully executed
termination of the Fideicomiso in form reasonably satisfactory to the
Purchaser.
(b) Seller shall deliver to Purchaser, and Purchaser shall deliver to
Seller, all certificates and other instruments and documents required to be
delivered by Seller at a prior to the Closing pursuant to Sections 9.1 and
9.2 hereof or otherwise required in connection herewith;
(c) Purchaser shall deliver to Seller the amount of $36,300,000 as
described in Section 2.2(a) hereof by cashiers check or by wire transfer in
immediately available funds; (ii) the duly executed Notes; (iii) certificates
representing 14,000,000 shares of Purchaser
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Common Stock; (iv) the Warrants; and (v) all certificates and other
instruments and documents required to be delivered by Purchaser at or prior
to the Closing pursuant to Section 10.2 hereof or otherwise required in
connection herewith; provided, that the Purchaser shall follow the
instructions provided by the Seller in accordance with the MasTec Agreement.
(d) Purchaser shall deliver the legal opinion from Purchaser's counsel
substantially in the form of EXHIBIT E attached hereto;
(e) Seller shall deliver the legal opinions from Seller's counsel
substantially in the form of EXHIBIT D attached hereto;
(f) Seller and Purchaser shall deliver to each other, as applicable,
board of directors resolutions approving the Documents and the Transactions;
(g) Seller shall deliver a certificate to Purchaser as provided 9.1(c)
hereto; and
(h) Purchaser shall deliver a certificate to Seller as provided in
Section 9.2(b) hereto.
(i) Purchaser shall execute and deliver to Seller the Registration
Rights Agreement; and
(j) Purchaser shall cause Streeter to execute and deliver to Seller the
Option Agreement and the Shareholder Agreement.
ARTICLE 11
INDEMNIFICATION AND OTHER REMEDIES
11.1 SURVIVAL OF TERMS; INDEMNIFICATION.
(a) All of the terms and conditions of this Agreement, together with
the representations, warranties and covenants contained herein or in any
instrument or document delivered or to be delivered pursuant to this
Agreement, and the agreements of the Seller and the Purchaser to indemnify
each other set forth in this ARTICLE 11, shall receive the execution of this
Agreement and the Closing Date and shall continue for, and all claims with
respect thereto shall be made prior to the end of, twelve (12) months from the
Closing Date, except for (a) the representations and warranties set forth in
Sections 3.5, 4.7, 3.6, 3.5, 4.7, 4.8 and 5.1 which shall survive until, and all
claims with respect thereto shall be made on or prior to the expiration of
the applicable statute of limitations, and (b) agreements, representations,
warranties and indemnities for which notice of a claim for indemnification
has been given in accordance with this Agreement as of the end of the
applicable period referred to above, in which event such indeminities shall
survive with respect to such claim until the final disposition thereof
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(b) Seller shall indemnify and hold harmless Purchaser, and Purchaser
shall indemnify and hold harmless Seller, from and against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
deficiencies, liabilities, claims and damages (collectively, "DAMAGES") to
the extent the party who incurs the Damages (the "INDEMNIFIED PARTY")
incurs such Damages as the result of (a) any breach of any representation or
warranty which would have a Material Adverse Effect or (b) the failure to
perform any covenant or condition made under this Agreement by the other
party which would have a Material Adverse Effect (the "INDEMNIFYING PARTY")
or (c) any action or inaction prior to the Closing of the Purchaser, Seller,
the Company or the Controlled Companies, as applicable, or any of their
directors, officers, employees, agents, representatives or subcontractors.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the maximum amount of damages recoverable by either Party to this
Agreement pursuant to this Article 11 shall be limited to $36,000,000,
inclusive of any and all costs, expenses and other amounts described therein.
In addition, any instruments, including common stock, warrants or notes,
executed and delivered by the parties in connection with the Transactions
shall be returned in the event of such dispute. Further, in the event it is
determined in accordance with the terms hereof that the Purchaser is entitled
to recover any amounts from Seller pursuant to this Article 11, such recovery
shall be received by the Purchaser in the same form and in the same
percentages of cash, promissory notes and capital stock of the Purchaser in
which the Purchase Price for the Shares has been paid to the Seller by the
Purchaser hereunder. Stock certificates representing any shares of the
capital stock of the Purchaser to which the Purchaser may become entitled
pursuant to the immediately preceding sentence shall be surrendered by the
Seller to the Purchaser and the shares evidenced thereby shall be redeemed by
the Purchaser for no additional consideration.
(d) Neither Seller nor Purchaser shall have any liability (for
indemnification or otherwise) with respect to the matters described in clause
(b) of this Section until the total of all Damages with respect to such
matters exceeds U.S. $2,000,000.
11.2 OTHER REMEDIES. The remedies provided elsewhere in this
Agreement will not limit any other remedies that may be available to
Purchaser or Seller.
ARTICLE 12
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time;
(a) by the mutual written consent of Seller and Purchaser;
(b) on the Closing Date, by Seller or Purchaser if the respective
conditions to Closing are not met;
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(c) by Seller or Purchaser, in the event of a material breach by the
other party, of any representation, warranty or agreement contained herein
that is not cured or cannot be cured within 30 days after written notice of
such breach has been delivered to the breaching party; provided, however,
that termination pursuant to this Section 12.1(c) shall not relieve the
breaching party of liability for such breach or otherwise.
(d) by Seller or Purchaser, on or prior to the expiration of the due
diligence period set forth in Section 7.2(a) hereof, in the event the results
of their respective due diligence investigations are not satisfactory in all
respects in their sole and absolute discretion;
(e) by Seller or Purchaser, in the event of a breach by the other
party of any material condition or covenant in the Documents;
(f) by Seller or Purchaser, in the event that the Closing has not
occurred by 11:59 P.M., U.S. Eastern Time, September 30, 1996;
(g) by Seller, in the event Forum Capital Markets, I.P. or other
underwriter acceptable to Seller in all respects in its sole and absolute
discretion, is no longer involved in the raising of additional capital for
the Purchaser pursuant to the Offering;
(h) by Seller, in the event the Market Price (as defined in
Section 2.2(c) hereof) of the Purchaser Common Stock is less than
$3.50 per share; or
(i) by Purchaser at any time after the denial of any Governmental
Approval or other required approval or if any such approval has been obtained
which contains an Unacceptable Condition (unless Purchaser shall have waived
the condition).
12.2 EFFECT OF TERMINATION. In the event the Transactions are not
consummated by September 30, 1996, and neither party has breached the
Agreement, no party shall have any liability or further obligation to any
other party except that (i) the provisions of Sections 7.2, 4.13, 6.11, 11.1,
11.2, 14.1, 14.4 and Article 13 shall survive such termination as
specifically provided in such section, as applicable.
ARTICLE 13
DISPUTE RESOLUTION
13.1 DISPUTES. Any claim, dispute or other matter in controversy
(herein called "dispute"), whether based on contract, tort, statute, or other
legal theory (including but not limited to any claim of fraud or
misrepresentation), arising out of or related to the Agreement, or any
subsequent agreement between the Parties, or the breach thereof, shall be
settled according to the procedures set forth in this Article 13 exclusively;
PROVIDED, HOWEVER, that (1) either Party may seek preliminary judicial relief
if, in its judgement, such action is necessary to avoid irreparable damage
during the pendency of such procedures, and (2) nothing in Section 13.1 shall
prevent either Party from exercising the rights of termination set forth in
Article 12. Despite such judicial, termination or suspension action, the
Parties will continue to participate in good faith in such procedures.
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13.2 EXECUTIVE NEGOTIATION. The Parties shall endeavor in good faith
to promptly resolve the dispute by direct negotiations between executives
who have authority to settle the matter and who are at a higher level of
management than the persons with direct responsibility for administration of
this Agreement. Such negotiations shall be conducted in the spirit of
collaboration and compromise to avoid more extreme dispute resolution
procedures and at the same time approximating satisfaction of the mutual
interest of the Parties.
(a) Any Party may give the other Party written notice of any dispute
not resolved in the normal course of business ("NOTICE OF DISPUTE"). Within
seven (7) days after delivery of the Notice of Dispute, the receiving Party
shall submit to the other a written response (the "RESPONSE"). The Notice of
Dispute and the Response shall include (a) a statement of each Party's
position and a summary of arguments supporting that position, and (b) the
name and title of the executive who will represent that Party and of any
other person who will accompany the executive. Within fifteen (15) days after
delivery of the Notice of Dispute, the executives of both Parties shall meet
at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute. All reasonable
requests for information made by one party to the other will be honored.
(b) All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.
13.3 MEDIATION. If the dispute has not been resolved by direct
negotiations within thirty (30) days of the disputing Party's Notice of
Dispute, or if the Parties failed to meet within fifteen (15) days, the
Parties shall endeavor to settle the dispute by mediation in Miami, Florida
administered by the American Arbitration Association ("AAA") under its
Commercial Mediation Rules in effect on the date of the notice of dispute.
(a) Unless otherwise agreed in writing by the Parties, mediation will
be commenced by notice of demand for mediation filed by either Party with the
other and the AAA within ten (10) days after the expiration of the period set
forth in Section 13.3 or on such other date as the Parties mutually agree.
The time limits for any subsequent arbitration will be extended for the
duration of the mediation process plus seven (7) calendar days.
(b) In the event either Party to the claim, dispute or other matter
has need for material information in the possession of the other in order to
prepare for mediation, the Parties shall attempt in good faith to agree on
procedures for the exchange of such information, with the help of the
mediator, if required. Any discovery disputes will be resolved by the
mediator.
(c) The mediation proceedings are confidential, and no stenographic,
visual or audio record shall be made. All conduct, statements, promises,
offers, views, documents, records, papers and opinions, whether oral or
written, made or delivered in the course of the mediation proceedings by any
of the Parties to the dispute, their agents, employees or representatives,
and by the mediator (who will be the joint agent of the parties for the
purpose of the mediation proceedings), are confidential and shall be kept
confidential by all Parties to
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the dispute and the mediator. Such conduct, statements, promises, offers,
views, documents, records, papers and opinions shall not be discoverable or
admissible for any purposes, and shall not be disclosed to anyone not a Party
to the dispute; provided, however, that (i) the fact that the parties have
reached a settlement of their dispute may be disclosed to anyone, and (ii) by
written agreement of the Parties, the settlement agreement may be converted
into an arbitration award, and the award, in turn, may be enforced by any
court having jurisdiction.
13.4 ARBITRATION. If the Parties have first attempted in good faith
to resolve the dispute by executive negotiations as provided in Section 13.2,
mediation is initiated and the dispute remains unresolved thirty (30) days
after mediation is initiated, or on whatever date the mediator sooner
determines, or the Parties sooner agree in writing, that the dispute cannot
be resolved by mediation, then the dispute shall be settled by arbitration in
Miami, Florida in accordance with the then current Commercial Rules of
Arbitration ("RULES") of the American Arbitration Association (AAA) in effect
on the date of this Agreement, as supplemented or modified by the following:
(a) Notice of demand for arbitration shall be filed with the other
Party and AAA after the expiration of the period set forth in Section 13.4 or
such other date as the Parties mutually agree.
(b) Notwithstanding any choice of law or other provisions of this
Agreement to the contrary, this agreement to arbitrate shall be governed by
the Federal Arbitration Act, 9 U.S.C. Section 1 et seq (the "ACT"), which
shall not be superseded or supplemented by any other arbitration act, statute
or regulation.
(c) In the event that all or a portion of the dispute is the
responsibility in whole or in part of a person or entity who is under no
obligation to arbitrate such matter with the Parties in the same proceeding,
then the Parties shall, in the absence of an agreement between them to the
contrary, delay or stay any arbitration between them pending the
determination, in a separate proceeding, of the responsibility and liability
of such person or entity for the claim, dispute or matter involved. Each
Party agrees that any arbitration instituted by them under this Section 13.4
may, at the election of the other Party, be consolidated with any other
arbitration proceeding involving a common question of fact or law between the
electing Party and any other persons or entities. In any dispute concerning
the application of this Section 13.4(c), the question of arbitrability shall
be decided by the appropriate court and not by arbitration.
(d) A Party who files a notice of demand for arbitration must assert
in the demand all claims, disputes or other matters then known to that Party
on which arbitration is permitted to be demanded. When a Party fails to
include a claim through oversight, inadvertence or excusable neglect, or when
the claim had matured or been acquired subsequently, the arbitration panel
shall permit amendment. In no event shall a demand for arbitration be made
when the institution of legal or equitable proceedings based on such dispute
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would be barred by laches or any applicable statute of limitations; and
whether or not a dispute is time-barred shall be decided by an appropriate
court having jurisdiction and not by arbitration.
(e) If the claim in the dispute does not exceed $100,000, there shall
be a single arbitrator selected by mutual Agreement of the Parties. If the
claim in the dispute exceeds $100,000, the arbitration panel shall consist
of three (3) members, one of whom shall be selected by each Party and the
third, who shall serve as chairman, shall be selected by the two (2) so
selected. If either Party fails to select an arbitrator within ten (10) days
after a demand for arbitration, or if the two arbitrators named by the
Parties fail to agree upon a third within five (5) days after the last
of them have been appointed, then AAA shall select the arbitrator(s). All
arbitrators must be selected from a list of arbitrators submitted to the
Parties by the AAA with the following characteristics: (i) lawyers, (ii) with
ten years of experience in either several commercial litigation,
international law or general corporate and commercial matters, and (iii) who
have had both training and experience as arbitrators. The mediator who
has served in that capacity under Section 13.3 or otherwise shall not be
eligible to serve as an arbitrator.
(f) In advance of the hearing, the arbitrator(s) may compel the
Parties to exchange a detailed statement of their claims, including the
names and addresses of the witnesses and a brief description of the
documents on which they intend to rely. The arbitrator(s) may exclude from
the hearing the introduction of any evidence or the testimony of any
witness not disclosed to the other party in advance as ordered by the
arbitrator(s). The arbitrator(s) may also permit the oral depositions
of the Parties to be taken. However, there shall be no other pre-hearing
discovery unless and then only to the extent that all parties otherwise
agree in writing.
(g) Except for good cause, or in case of emergency, after the
arbitration hearing commences, it shall proceed during each business
day thereafter until concluded. The intent of this paragraph is to
prevent breaks and disruptions in the hearing process except for unusual
and unanticipated circumstances.
(h) The award may not grant any relief that could not be granted
in court litigation to resolve the dispute under the law of the place
governing the substance of the dispute. A monetary award may only be
made for compensatory damages, and if any other damages (whether
exemplary, punitive, consequential or other) are included, the award
shall be vacated and remanded, or modified or corrected as appropriate
to promote this damage limitation. The arbitration panel shall award
the prevailing Party its reasonable attorneys' fees and costs incurred
in connection with the arbitration. "Prevailing Party" for this purpose
includes any party who succeeds, by claim or counterclaim, in court
proceedings to stay litigation or compel arbitration. In addition, the
arbitration panel shall award the costs of administration by AAA as it
may in its judgement decide.
(i) The arbitration award shall be in writing and shall include
a statement of findings of fact and conclusions of law for the
award. Except as otherwise expressly provided
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is this Section 13.4, the award rendered by the arbitrator(s) shall be final
and judgment may be entered upon it in accordance with the Act in any court
having jurisdiction.
(j) Within seven (7) days after the date of the arbitration award,
either Party may request the arbitration panel to correct clerical,
typographical or computational errors in the award and to make an additional
award as to claims presented in the arbitration proceedings in the award.
(k) Either Party can appeal to the U.S. District Court for the Southern
District of Florida if such court has jurisdiction, and otherwise to any
state court of record in Florida having jurisdiction, to vacate and remand,
or modify or correct the arbitration award (a) for any of the grounds
specified in the Act, (b) for any grounds specified in this Section 13.4, (c)
if there is no substantial evidence to support the facts found in the
arbitration award, or (d) if the arbitration panel committed prejudicial
error in the application of the governing substantive law to the facts found.
(l) At the request of either Party, but only if contained in the
initial written demand for arbitration or in the initial response to the
demand, the arbitration proceedings shall be conducted in secrecy. In such
case (a) the fact of the pending arbitration shall not be disclosed or
confirmed by the Parties or the arbitration panel to any person who is not a
party to, or called to testify at, the proceedings until the arbitration
award has been made, (b) the proceedings shall not be recorded or transcribed
in any manner, and (c) all documents, testimony and records (other than the
contract documents out of which the dispute arises) shall be received, heard
and maintained by the arbitrator in secrecy, available for inspection only by
the Parties, their attorneys and by experts who shall agree, in advance and
in writing, to receive all such information in secrecy. Also in such case,
the secret information shall not be described in the arbitration award in
such manner as to be commercially useful.
ARTICLE 14
MISCELLANEOUS
14.1 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations of any party hereunder may be assigned by either
party hereto without the prior written consent of the other party; PROVIDED,
HOWEVER, that such consent shall not be required for transfers to
wholly-owned subsidiaries or affiliates controlled by the assigning party
and, in the case of Seller, any transfer of Seller's rights to MasTec.
Assignment of any or all rights under this Agreement shall not release the
assigning party from any obligation or covenant hereunder.
14.2 BINDING EFFECT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties hereto and
their respective successors by way of reorganization, merger, or
consolidation and any assignee of all or substantially all of its business
and assets.
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14.3 NOTICES. All notices, requests, demands, consents and other
communications given or required to be given under this Agreement and under
the related documents shall be in writing and delivered to the applicable
party at the address indicated below:
If to Seller: Devono Company Limited
c/o Banco Amazonas
General Cordova 1030
9 de Octubre 4 Piso
Guayaquil, Ecuador 09015489
With copies to: Fernando C. Alonso, Esq. and
Patricia Menendez Cambo, Esq.
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Ave.
Miami, FL 33151
Fax: 305-579-0717
and
Leon Roldos, Esq.
Cordoba 1004 y P. Ycaza
1er Piso, Oficina 101
Edificio Alpeca
Casilla 09-10-6281
Guayaquil, Ecuador
Fax: 011-5434-561-481
If to Purchaser: Hernan Streeter
InterAmericas Communications Corporation
104 Crandon Boulevard, Suite 324
Key Biscayne, Florida 33149
Fax: 562-233-6258
With copies to: William C. Gibbs, Esq.
SNELL & WILMER
111 E. Broadway, Suite 900
Salt Lake City, UT 84111
or as to each party at such other address as the addressee has by five days'
prior written notice specified to the other party complying. Any notice shall
be in writing, including telegraphic or facsimile communication (confirmed by
overnight delivery service), and may be sent by registered or certified mail,
return receipt requested, postage prepaid, or by overnight delivery
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service. Any notice will be deemed to have been delivered (i) if given or
made by letter, when actually delivered to the relevant address, or (ii) if
given by facsimile, at the time of transmission, provided that the sending
party shall have obtained electronic or other confirmation of accurate and
complete transmission.
14.4 INCORPORATION. All Exhibits and Schedules attached hereto and to
which reference is made herein are incorporated by reference as if fully set
forth herein.
14.5 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of Florida, USA,
without giving effect to its conflict of law rules.
14.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of and all agreements between the Parties hereto with respect to the subject
matter hereof and supersedes any prior or contemporaneous agreement or
understanding, oral or written, pertaining to any such matters which
agreements or understandings shall be of no force or effect for any purpose.
This Agreement shall supersede the LOI. This Agreement may not be amended or
supplemented in any manner except by mutual agreement of the Parties and as
set forth in a writing signed by the Parties hereto or their respective
successors in interest.
14.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.8 HEADINGS. The headings used in this Agreement have been inserted
for purposes of convenience of reference only and shall not limit or define
the meaning of any provisions of this Agreement.
14.9 WAIVER. The waiver of any breach of any provision under this
Agreement by any party shall not be deemed to be a waiver of any preceding or
subsequent breach under this Agreement.
14.10 EXPENSES. Each party shall bear and pay all costs and expenses
which it incurs, or which may be incurred on its behalf, in connection with
the preparation of this Agreement and consummation of the transaction
described herein, and the expenses, fees, and costs necessary for all
required approvals.
14.11 NO THIRD PARTY BENEFICIARIES. The Parties hereto intend that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the Parties hereto.
14.12 SEVERABILITY. If any provision of this Agreement, as applied to
any party or circumstance, shall be adjudged by a court of competent
jurisdiction to be void, invalid or unenforceable, the same shall in no way
affect any other provision of this Agreement, the
51
<PAGE>
application of any such provision and any other circumstances or the
validity or enforceability of the other provisions of this Agreement.
14.13 PERFORMANCE BY THE COMPANY. Seller agrees to cause the
Company to comply with any obligations hereunder relating to the
Company and to cause the Company to take any other action which may be
necessary or reasonably requested by Purchaser in order to consummate
the Transactions.
14.14 EXTENSION OF DATES. The Parties agree that the dates contained
in this Agreement may be extended in the event of Force Majeure. A Party
requesting extension of a date due to Force Majeure shall provide the other
Party prompt written prior notification.
14.15 AMENDMENT. No amendment or change to this Agreement shall be
effective unless such amendment or change is made in writing and duly
executed by the authorized officers of the Parties.
14.16 BUSINESS OPPORTUNITIES. Immediately upon execution of this
Agreement, the parties shall disclose to each other any business opportunities
in the telecommunications industry that have been presented to either party
prior to such time and the parties shall in good faith explore the manner in
which the Company's market position may be improved within such industry and in
which the Offering may be facilitated. The parties agree that any and all
information exchanged pursuant to this Section 14.16 shall be deemed
"Confidential Information" subject to the restrictions set forth in
Section 7.2 hereof.
52
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the date first
above written.
DEVONO COMPANY LTD., Seller
By: /s/ Simon Parra Gil
-------------------------------------------
Name: Simon Parra Gil
-----------------------------------------
Title: Attorney-in-Fact
----------------------------------------
INTERAMERICAS COMMUNICATIONS CORPORATION,
Purchaser
By: /s/ Hernan Streeter
-------------------------------------------
Name: Hernan Streeter
-----------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
53
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6987494
<SECURITIES> 0
<RECEIVABLES> 65259
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7307983
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 17563932
<CURRENT-LIABILITIES> 2608214
<BONDS> 0
0
0
<COMMON> 16153
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17563932
<SALES> 112921
<TOTAL-REVENUES> 126680
<CGS> 373203
<TOTAL-COSTS> 1209625
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41480
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1124425)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1124425)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> 0
</TABLE>
