<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------
Date of Report (Date of earliest event reported): October 16, 1997
INTERAMERICAS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 0-25194 87-0464860
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1221 Brickell Avenue
Miami, Florida 33131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 305/377-6790
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 5. OTHER EVENTS.
1. Commencement of Private Placement
On October 8, 1997, the Registrant commenced a private placement of its
units, consisting of senior notes and warrants, in an aggregate amount of up to
$150.0 million (the "Offering") pursuant to Rule 144A and Regulation S
promulgated under the US Securities Act of 1933 (the "Act"). The securities
offered pursuant to the Offering are not registered under the Act and may not be
offered or sold in the United States absent registration or an applicable
exemption from the registration requirements of the Act.
2. Employment Agreement between the Registrant and Patricio E.
Northland
In September 1997, the Registrant's Board of Directors authorized and,
effective October 1, 1997, the Registrant entered into an employment and
severance agreement (the "Northland Agreement") with Patricio E. Northland,
President, Chief Executive Officer and Chairman of the Board of Directors of the
Registrant, which replaced his former employment agreement with the Registrant.
The Northland Agreement has a term of three years unless earlier terminated for
cause, death or disability, and provides for an initial annual base salary of
$350,000, subject to an increase of $50,000 in each of the second and third year
of the agreement. In addition, Mr. Northland also was granted non-qualified
stock options to purchase 300,000 shares of the Registrant's Common Stock in the
following manner: 100,000 shares which vest on the date of employment at an
exercise price of $4.00 per share; 100,000 shares which vest one year thereafter
at an exercise price of $6.00 per share; and 100,000 shares which vest two years
after the date of employment at an exercise price of $8.00 per share. In
consideration of Mr. Northland's agreement to terminate his former employment
agreement with the Registrant, which would have provided for a substantial bonus
to Mr. Northland upon consummation of the Offering referred to in item 1. above,
the Registrant agreed to grant to Mr. Northland a performance bonus of $250,000
and to vest all of his existing options to acquire 1,000,000 shares.
3. Issuance of Shares and Grant of Stock Options to Certain
Officers and Directors
In September 1997, the Registrant's Board of Directors authorized the
issuance of, and on October 7, 1997, the Registrant issued, the following shares
of the Registrant's Common Stock, .001 par value, to the following officers and
directors of the Registrant: (i) 600,000 shares of Common Stock to Patricio E.
Northland, President, Chief Executive Officer and Chairman of the Board, and
(ii) 250,000 shares of Common Stock to Douglas G. Geib II, Chief Financial
Officer. In addition, during September 1997, the Registrant agreed to grant the
following stock options to the following officers and directors of the
Registrant at an exercise price of $2.13 per share: (i) Patricio E. Northland,
President, Chief Executive Officer and Chairman of the Board, was granted
options to acquire 600,000 shares of Common Stock, and (ii) Douglas G. Geib II,
Chief Financial Officer and a director of the Registrant, was granted options to
acquire 250,000 shares of Common Stock. One third of such options vested on
October 7, 1997 and the remainder of such options will vest in equal annual
installments on October 7, 1998 and October 7, 1999. The Registrant will
recognize a non-cash charge to its Statements of Operation for the third quarter
of 1997 in the amount of approximately $2,865,000 related to the issuance of
such shares and grant of such options.
4. Settlement Agreement between the Registrant and each of Maroon
Bells Capital Partners, Inc. Theodore Swindells, Phillip
Magiera and Paul A. Moore
On October 4, 1977, the Registrant entered into an agreement with
Maroon Bells, Theodore Swindells, Paul Moore and Phillip Magiera to compensate
them for services rendered to the Registrant. Pursuant to such agreement, the
Registrant agreed to make a cash payment to Maroon Bells of $500,000 upon
consummation of the Offering, and to issue to each of Messrs. Moore and Magiera
250,000 shares of Common Stock and options to acquire 250,000 shares of Common
Stock at an exercise price of $2.13 per share. In connection with such
agreement, Messrs. Moore and Magiera resigned from the Registrant's Board of
Directors. The Registrant will recognize a non-cash charge to its Statements of
Operation for the third quarter of 1997 in the amount of approximately
$1,775,000 relating to this settlement.
5. Donoso Settlement Agreement
Pursuant to a settlement agreement, during October 1997, the Registrant
agreed to issue 300,000 shares of Common Stock to Eleazar Donoso as compensation
for certain financial assistance Mr. Donoso provided to the Registrant during
its development stage. Mr. Donoso is a co-founder with Mr. Cargill, a director
of the Registrant, of Telectronic S.A. and its President. Mr. Donoso is also a
shareholder of the Registrant. The Registrant will recognize a non-cash charge
to its Statements of Operation for the third quarter of 1997 of approximately
$852,000 related to this settlement.
<PAGE> 3
6. Conversion of Debentures into Common Stock
During October 1997, the Company issued 851,162 shares of Common Stock in
connection with the conversion of $1.45 million aggregate principal amount of
its 8% Convertible Debentures, plus related accrued interest, and issued 197,796
shares of Common Stock in connection with the conversion of $400,000 aggregate
principal amount of its 7% Convertible Debentures plus related accrued interest.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
The unaudited pro forma condensed combined financial statements of the
Registrant contained herein, consisting of the Unaudited Pro Forma Condensed
Combined Balance Sheet as of June 30, 1997 and the Unaudited Pro Forma Condensed
Combined Statements of Operation for the year ended December 31, 1996 and the
six months ended June 30, 1997, gives effect to the Offering, the use of
proceeds therefrom and the consummation of the acquisition of Iusatel Chile S.A.
(the "Iusatel Acquisition"). In addition, the pro forma condensed combined
balance sheet of the Registrant as of June 30, 1997 gives effect to the
transactions listed under Item 5 - Other Events contained in this Report.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
10.1 Settlement Agreement between the Registrant
and each of Maroon Bells Capital Partners, Inc., Phillip
Magiera and Paul A. Moore dated October 4, 1997 and exhibits
consisting of Stock Option Agreements between the Registrant
and each of Paul moore and Phillip Magiera, respectively,
dated October 4, 1997.
10.2 Executive Employment and Severance Agreement between the Registrant
and Patricio E. Northland dated October 7, 1997.
10.3 Settlement Agreement between the Registrant and Eleazar Donoso
dated October 3, 1997.
</TABLE>
2
<PAGE> 4
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 hereunto duly authorized.
INTERAMERICAS COMMUNICATIONS CORPORATION
Date: October 16, 1997 /s/ Douglas G. Geib II
------------------------
Douglas G. Geib II
Chief Financial Officer
3
<PAGE> 5
INDEX TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION................ F-1
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (JUNE 30, 1997)........ F-2
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS....................... F-3
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS........ F-4
<PAGE> 6
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information consists
of the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 1997
and the Unaudited Pro Forma Condensed Combined Statements of Operations for the
year ended December 31, 1996 and the six months ended June 30, 1997
(collectively the "Pro Forma Statements"). The Unaudited Pro Forma Condensed
Combined Balance Sheet as of June 30, 1997 gives effect to the Offering, the use
of the proceeds therefrom and the consummation of the Iusatel Acquisition, as if
they each had occurred at that date and the related Unaudited Pro Forma
Condensed Combined Statements of Operations for the year ended December 31, 1996
and the six months ended June 30, 1997 gives effect to the Offering, the
application of proceeds therefrom and the consummation of the Iusatel
Acquisition as if they each had occurred at the beginning of the relevant
period. The Iusatel Acquisition is accounted for under the purchase method of
accounting.
The June 30, 1997 historical balance sheet information for ICCA and Iusatel
has been derived from the unaudited June 30, 1997 balance sheets of ICCA and
Iusatel, respectively, included in this Offering Memorandum. The information for
the six months ended June 30, 1997 have been derived from ICCA's and Iusatel's
unaudited statement of operations for the six months ended June 30, 1997
included elsewhere herein. The pro forma adjustments relating to the purchase by
ICCA of Iusatel represent the Company's preliminary determinations of these
adjustments and are based upon available information and certain assumptions the
Company considers reasonable under the circumstances. Final amounts could differ
from those set forth herein. The unaudited historical financial information of
ICCA referred to above, in the opinion of management of ICCA, include all
adjustments consisting only of normal recurring adjustments, necessary for a
fair presentation of the results of ICCA for the unaudited interim periods.
The Pro Forma Statements and accompanying notes should be read in
conjunction with the Company's consolidated financial statements and Iusatel's
Financial Statements, including the notes thereto, appearing elsewhere in this
Offering Memorandum. The Pro Forma Statements do not purport to represent what
the Company's results of operations or financial position would actually have
been if the aforementioned transactions or events had occurred on the dates
specified or to project the Company's results of operations or financial
position for any future periods or at any future date. The pro forma adjustments
are based upon available information and certain adjustments that the Company
believes are reasonable. In the opinion of the Company, all adjustments have
been made that are necessary to present fairly the Pro Forma Statements.
F-1
<PAGE> 7
INTERAMERICAS COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------
RECENT ICCA PRO FORMA PRO FORMA
ICCA TRANSACTIONS(1) AS ADJUSTED IUSATEL(2) ADJUSTMENTS(3) ICCA
------- --------------- ----------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents............ $ 394 $ 940(a) $ 1,334 $ 89 $ 13,332(a) $ 14,755
Restricted bank deposits
and escrows............ 853 -- 853 -- 82,147(b) 83,000
Accounts receivable,
net.................... 45 -- 45 1,742 -- 1,787
Notes and other
receivables............ 30 -- 30 203 -- 233
Due from related
parties................ 44 -- 44 -- -- 44
Prepaid expenses and
other.................. 552 -- 552 607 -- 1,159
------- ------- ------- ------ -------- --------
Total current
assets.......... 1,918 940 2,858 2,641 95,479 100,978
Restricted escrows......... -- -- -- -- 37,000(c) 37,000
Property and equipment,
net...................... 5,662 -- 5,662 3,270 -- 8,932
Intangibles, net........... 4,894 -- 4,894 29 4,500(d) 9,423
Deferred financing costs
and other................ 481 10(b) 491 -- 7,271(e) 7,762
------- ------- ------- ------ -------- --------
Total assets...... $12,955 $ 950 $13,905 $5,940 $144,250 $164,095
======= ======= ======= ====== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank lines of credit and
Bridge Notes........... $ 921 $ 850(c) $ 1,771 $ -- $ (1,771)(f) $ --
8% Convertible
Debentures............. 1,974 (1,450)(d) 524 -- (524)(g) --
Accounts payable and
accrued expenses....... 909 -- 909 1,724 -- 2,633
Notes payable............ -- -- -- 697 -- 697
Due to related parties... 297 (240)(e) 57 1,194 -- 1,251
Lease obligations,
current................ 88 -- 88 242 -- 330
Other current
liabilities............ 340 -- 340 917 (73)(h) 1,184
------- ------- ------- ------ -------- --------
Total current
liabilities.......... 4,529 (840) 3,689 4,774 (2,368) 6,095
7% Convertible
Debentures............... 1,347 (400)(f) 947 -- (947)(i) --
Senior Notes............... -- -- -- -- 150,000(j) 150,000
Lease obligations,
long-term................ 456 -- 456 -- -- 456
Other...................... 152 -- 152 132 -- 284
------- ------- ------- ------ -------- --------
Total liabilities...... 6,484 (1,240) 5,244 4,906 146,685 156,835
------- ------- ------- ------ -------- --------
Stockholders' equity....... 6,471 2,190(g) 8,661 1,034 (2,435) (k) 7,260
------- ------- ------- ------ -------- --------
Total liabilities
and
stockholders'
equity.......... $12,955 $ 950 $13,905 $5,940 $143,966 $164,095
======= ======= ======= ====== ======== ========
</TABLE>
F-2
<PAGE> 8
INTERAMERICAS COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 SIX MONTHS ENDED JUNE 30, 1997
------------------------------------------------- -------------------------------------------------
HISTORICAL HISTORICAL
-------------------- PRO FORMA PRO FORMA -------------------- PRO FORMA PRO FORMA
ICCA IUSATEL(2) ADJUSTMENTS(4) ICCA ICCA IUSATEL(2) ADJUSTMENTS(4) ICCA
------- ---------- -------------- --------- ------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales..................... $ 652 $ 7,822 $ -- $ 8,474 $ 585 $ 4,392 $ -- $ 4,977
Operating expenses:
Cost of sales........... 958 5,598 -- 6,556 668 2,515 -- 3,183
Selling, general and
administrative........ 3,345 5,068 -- 8,413 1,754 2,588 -- 4,342
Depreciation and
amortization.......... 706 519 450 (a) 1,675 431 257 225 (a) 913
------- ------- -------- -------- ------- ------- -------- --------
Total operating
expenses........ 5,009 11,185 450 16,644 2,853 5,360 (225) 8,438
------- ------- -------- -------- ------- ------- -------- --------
Loss from operations...... (4,357) (3,363) (450) (8,170) (2,268) (968) (225) (3,461)
Other income (expense).... (23) (444) -- (467) 33 (97) -- (63)
Interest expense.......... (246) (1,361) (20,750)(b) (22,357) (531) (154) (10,431)(b) (11,116)
------- ------- -------- -------- ------- ------- -------- --------
Net loss.................. $(4,626) $(5,168) $(21,200) $(30,994) $(2,766) $(1,219) $(10,656) $(14,641)
======= ======= ======== ======== ======= ======= ======== ========
Net loss per common
share................... $ (0.31) $ (2.09) $ (0.17) $ (.91)
======= ======== ======= ========
Weighted average common
shares outstanding
(000's)................. 14,796 14,796 16,153 16,153
======= ======== ======= ========
</TABLE>
F-3
<PAGE> 9
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS)
(1) Represents recent transactions by the Company occurring after July 1, 1997
and prior to the Offering that impact the capitalization of the Company. See
"Certain Relationships and Related Party Transactions."
(a) Cash and cash equivalents:
<TABLE>
<S> <C>
Proceeds received by the Company from the Bridge
Notes.................................................. $ 950
Cash used to pay expenses related to the Bridge Notes... (10)
-------
$ 940
=======
(b) Deferred financing costs:
Expenses in connection with the Bridge Notes............ $ 10
=======
(c) Bridge Notes:
Issuance of Bridge Notes................................ $ 950
Value attributable to warrants issued in connection with
Bridge Notes........................................... (100)
-------
$ 850
=======
(d) 8% Convertible Debentures:
Conversion of aggregate principal amount................ $ 1,450
=======
(e) Due to related parties:
Issuance of 80,000 common shares to extinguish a
liability to related party.................................. $ 240
=======
(f) 7% Convertible Debentures:
Conversion of aggregate principal amount................ $ 400
=======
(g) Stockholders equity:
Value attributable to 1,048,958 shares of Common Stock
issued in connection with the conversion of Convertible
Debentures............................................. $ 1,850
Value attributable to warrants issued in connection with
Bridge Notes........................................... 100
Value of 80,000 shares of Common Stock issued to
extinguish a liability to related party................ 240
Value of 850,000 vested restricted shares of Common
Stock issued to certain officers....................... 2,338
Value of 500,000 vested restricted shares of Common
Stock issued to certain former directors............... 1,420
Value of 300,000 vested restricted shares of Common
Stock issued to extinguish a liability to related
party.................................................. 852
Value of options granted to acquire 850,000 shares of
Common Stock to certain officers....................... 527
Value of options granted to acquire 500,000 shares of
Common Stock to certain former directors............... 355
Noncash compensation expense recognized in connection
with the issuance of 850,000 vested restricted shares
of Common Stock to certain officers.................... (2,338)
Noncash consulting expense recognized in connection with
the issuance of 500,000 vested restricted shares of
Common Stock to certain former directors............... (1,420)
Noncash interest expense recognized in connection with
the issuance of 300,000 vested restricted shares of
Common Stock to extinguish a liability to a related
party.................................................. (852)
Noncash compensation expense recognized is connection
with the grant of options to acquire 850,000 shares of
Common Stock to certain officers....................... (527)
Noncash consulting expense recognized is connection with
the grant of options to acquire 500,000 shares of
Common Stock to certain former directors............... (355)
-------
$ 2,190
=======
</TABLE>
F-4
<PAGE> 10
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF U.S. DOLLARS)
(2) Represents condensed financial information derived from the Iusatel
Financial Statements included elsewhere in this Offering Memorandum. The Iusatel
Financial Statements have been prepared in accordance with Chilean GAAP. For
comparative purposes, the amounts disclosed for the year ended December 31, 1995
have been restated in terms of Chilean Pesos of December 31, 1996 purchasing
power while the unaudited interim June 30, 1997 amounts are expressed in
constant Chilean Pesos of June 30, 1997. Such financial statements also include,
for the convenience of the reader, translation of amounts from Chilean Pesos
into U.S. dollars at the exchange rate on June 30, 1997 of Ch$416.47 = US$1.
The information below for Iusatel reconciles the Chilean GAAP convenience
translation balances to US GAAP. The adjustment column reflects (a) the
principal differences between Chilean GAAP and US GAAP included in Note 28 to
the Iusatel Financial Statements; and (b) the impact of remeasuring
(translating) amounts in accordance with the criteria set forth in Statement of
Financial Accounting Standards No. 52, "Foreign Currency Translation," using the
current rate method of translation, as the Chilean Peso is considered to be the
functional currency and the books and records are maintained in that currency as
follows:
- Assets and liabilities are translated using the current exchange rate at
the balance sheet date.
- Paid-in capital is translated at historical exchange rates.
- Accumulated losses are translated at the weighted average of the
historical rates in effect when the income was earned.
- All revenues and expenses are translated using the exchange rate of the
transaction date.
- Adjustments from translation of the financial statements are reported in
a separate component of equity.
- Exchange gains and losses from translations and balances that are
receivable or payable in a currency other than the functional currency
are included in income.
<TABLE>
<CAPTION>
IUSATEL'S BALANCE SHEET AT JUNE 30, 1997
------------------------------------------
CHILEAN GAAP US GAAP US GAAP
thUS$ ADJUSTMENTS thUS$
-------------- ------------- ---------
<S> <C> <C> <C>
Current assets................................... $2,641 $ -- $2,641
Fixed assets..................................... 3,817 (547) 3,270
Other assets..................................... 30 (1) 29
------ ----- ------
$6,488 $(548) $5,940
====== ===== ======
Current liabilities.............................. $4,774 $ -- $4,774
Long-term liabilities............................ 132 -- 132
Shareholders' equity............................. 1,582 (548) 1,034
------ ----- ------
$6,488 $(548) $5,940
====== ===== ======
</TABLE>
<TABLE>
<CAPTION>
IUSATEL'S STATEMENT OF OPERATIONS FOR THE
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 SIX MONTHS ENDED JUNE 30, 1997
------------------------------------ ------------------------------------
CHILEAN GAAP US GAAP US GAAP CHILEAN GAAP US GAAP US GAAP
thUS$ ADJUSTMENTS thUS$ thUS$ ADJUSTMENTS thUS$
------------ ----------- ------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Sales................... $ 8,111 $ (289) $ 7,822 $ 4,419 $(27) $ 4,392
Operating expenses:
Cost of sales......... 4,824 774 5,598 3,137 (622) 2,515
Selling, general and
administrative...... 5,230 (162) 5,068 2,595 (7) 2,588
Depreciation and
amortization........ 536 (17) 519 258 (1) 257
------- ------- ------- ------- ---- -------
10,590 595 11,185 5,990 (630) 5,360
------- ------- ------- ------- ---- -------
Loss from operations.... (2,479) (884) (3,363) (1,571) 603 (968)
Other income
(expense)............. 274 (718) (444) (403) 306 (97)
Interest expense........ (1,410) 49 (1,361) (156) 2 (154)
------- ------- ------- ------- ---- -------
Net loss.............. $(3,615) $(1,553) $(5,168) $(2,130) $911 $(1,219)
======= ======= ======= ======= ==== =======
</TABLE>
F-5
<PAGE> 11
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF U.S. DOLLARS)
(3) Represents pro forma adjustments to reflect the Offering, the application of
proceeds therefrom and the consummation of the Iusatel Acquisition as
follows:
<TABLE>
<S> <C> <C>
(a) Cash and cash equivalents:
Proceeds from Senior Notes................................ $ 150,000
Cash used to pay estimated transaction fees and expenses
of the Offering......................................... (7,500)
Cash used to pay short-term bank lines of credit and
Bridge Notes, net of
restricted bank deposits................................ (1,018)
Cash used to pay Convertible Debentures*.................. (2,900)
Cash used for Iusatel Acquisition**....................... (5,250)
Cash transferred to short-term restricted escrows:**
Collateral Account...................................... $(62,000)
Pledge Account.......................................... (21,000) (83,000)
--------
Cash transferred to long-term restricted escrows:**
Pledge Account (interest due after one year on Senior
Notes)................................................ (37,000)
---------
$ 13,332
=========
(b) Restricted bank deposits and escrows:
Proceeds from the Offering................................ $ 83,000
Restricted bank deposits used to pay bank lines of
credit.................................................. (853)
---------
82,147
=========
(c) Restricted escrows (long-term):
Pledge Account (for interest payments due beyond one year
on Senior Notes)........................................ $ 37,000
=========
(d) Intangible assets, net:
Intangible assets acquired in the Iusatel Acquisition..... $ 4,500
=========
(e) Deferred financing costs and other:
Estimated transaction fees and expenses related to Senior
Notes***................................................ $ 7,500
Write-off unamortized deferred financing costs related to
Convertible Debentures and Bridge Notes................. (229)
---------
$ 7,271
=========
(f) Bank lines of credit and Bridge Notes:
Payment of short-term bank lines of credit................ $ (921)
Payment of Bridge Notes................................... (950)
Unamortized value of the Bridge Notes warrants............ 100
---------
$ (1,771)
=========
(g) 8% Convertible Debentures:
Payment of original principal amount...................... $ (550)
Unamortized value of warrants............................. 26
---------
$ (524)
=========
(h) Other current liabilities:
Payment of accrued interest on Convertible Debentures..... $ (73)
=========
</TABLE>
F-6
<PAGE> 12
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<S> <C>
(i) 7% Convertible Debentures:
Payment of original principal amount.................... $ (1,100)
Unamortized value of warrants........................... 153
---------
$ (947)
=========
(j) Senior Notes:
Issuance of Senior Notes***............................... $ 150,000
=========
(k) Stockholders equity:
Eliminate historical equity of Iusatel.................... $ (1,034)
Extraordinary loss on early extinguishment of debt........ (1,320)
Reduction in additional paid in capital to eliminate value
of beneficial conversion feature on Convertible
Debentures.............................................. (365)
Value of 100,000 vested shares of Common Stock expected to
be issued to a director upon consummation of the Iusatel
Acquisition............................................. 284
---------
$ (2,435)
=========
</TABLE>
* Cash used to pay Convertible Debentures reflects the Company's current
estimate of the amount required to redeem the 7% Convertible Debentures and
the 8% Convertible Debentures. This amount includes the original principal,
accrued interest, redemption premiums, penalties for not filing a
registration statement to register the shares of Common Stock issuable upon
conversion of the Convertible Debentures and penalties for not converting
the 8% Convertible Debentures pursuant to certain conversion notices. See
"Business -- Legal Proceedings" and the "Convertible Debentures."
** See "Use of Proceeds" and "Description of Units -- Description of Senior
Notes -- Proceeds Pledge and Escrow Agreement."
*** Assumes all proceeds of the Offering are attributable to the Senior Notes.
Following the Offering, a portion of the proceeds of the Offering will be
attributable to the Warrants based on their estimated fair value. Such
amount will be recorded as additional original issue discount ("OID") with
respect to the Senior Notes and amortized over the life of the Senior Notes,
using the effective interest method. Also, following the Offering, the
estimated fair value of 1.5 million Warrants issued to UBS Securities will
be recorded as deferred financing costs.
F-7
<PAGE> 13
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF U.S. DOLLARS)
(4) Represents pro forma adjustments to reflect the Offering, the application of
proceeds therefrom and the consummation of the Iusatel Acquisition on the
condensed consolidated statements of operations for the year ended December
31, 1996 and for the six months ended June 30, 1997. The 1996 historical
operating results for Resetel and HSA prior to the acquisition by the
Company in 1996 have not been included in the pro forma tables for the year
ended December 31, 1996 since such amounts are not significant.
<TABLE>
<CAPTION>
FOR THE
FOR THE SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ------------
<S> <C> <C>
(a) Depreciation and amortization:
Represents the amortization of intangible assets
acquired in the Iusatel Acquisition over a 10
year period...................................... $ 450 $ 225
======== ========
(b) Interest Expense
Interest expense on $150.0 million of Senior Notes
at an assumed interest coupon rate of 14.0% per
annum*........................................... $(21,000) $(10,500)
Represents current amortization expense related to
deferred financing costs on a straight-line basis
over a 10 year period............................ (750) (375)
Elimination of historical interest expense of
Iusatel for debt that will not be assumed by the
Company pursuant to the acquisition.............. 1,000
Elimination of previously recorded interest costs
associated with the issuance of the Convertible
Debentures during 1997 including actual interest
expense, beneficial conversion option, and
amortization of original issue discount
attributable to warrants and deferred financing
costs, net of capitalized interest............... 444
-------- --------
$(20,750) $(10,431)
======== ========
</TABLE>
- ---------------
* An 1/4% change in interest rate will increase or decrease the interest
expense per annum on the Senior Notes by $375.
** See "Certain Relationships and Related Party Transactions."
F-8
<PAGE> 1
EXHIBIT 10.1
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT (the "Agreement") is made
and entered into as of this 4th day of October, 1997, by and among
InterAmericas Communications Corporation ("ICCA"), Maroon Bells Capital
Partners, Inc. ("Maroon Bells"), Theodore Swindells ("Swindells"), Paul A. Moore
("Moore") and Philip Mageira ("Mageira").
A. WHEREAS, a dispute has arisen between ICCA, on the one hand, and
Maroon Bells, Swindells, Moore and Mageira, on the other hand, with respect to
certain matters relating to or arising out of, among other things, certain
proposed Consulting Agreements (the "Consulting Agreements") between ICCA and
each of Moore and Mageira;
B. WHEREAS, in consideration of the parties' mutual desire to resolve
their disputes, ICCA, Maroon Bells, Mageira, Moore and Swindells desire to enter
into this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. INCORPORATION OF RECITALS. The recitals contained in Paragraphs A
and B are incorporated by reference herein as if at this point set forth in
full.
2. SETTLEMENT
a. Matters Settled. Subject to the full and complete payment of the
items listed under Section 2(b) hereof, this Agreement settles all the existing
claims, disputes and matters by and between ICCA, on the one hand, and Maroon
Bells, Swindells, Moore and/or Mageira, on the other hand, relating to the right
to receive compensation, if any, to be paid to them as a result of ICCA's
pending 144A offering of its Units consisting of Senior Notes and Warrants (the
"Offering"), the Consulting Agreements and any other matters arising out of or
relating to the foregoing or occurring up to the date hereof. If the payment of
all items listed under Section 2 (b) hereof have not been completely and fully
made by March 31, 1998, then all claims purported to be settled and released
hereunder (the "Claims") shall be reinstated in full as if there had never been
settlement and release and the recipient of any partial payments may return such
partial payment and pursue all remedies he or it may have with respect to the
Claims as if such partial payments had not been made.
b. Terms of Settlement. As a further inducement to execute this
Agreement, and as recognition of the valuable services provided by each of
Maroon Bells, Swindells, Mageira and Moore to ICCA, ICCA agrees to, make the
following payments, subject to the conditions hereinafter set forth:
(i) ICCA shall pay to Maroon Bells a cash fee in the aggregate
amount of $500,000 subject to and upon consummation of the Offering;
<PAGE> 2
(ii) ICCA shall issue and grant to each of Moore and Mageira on the
date hereof (A) 250,000 shares of Common Stock .001 par value per share, of the
Company (the "Company Common Stock"); and (B) options to acquire 250,000 shares
of the Company Common Stock, at an exercise price of $2.13 per share, fully
vested as of the date of the grant in the form attached hereto as Exhibit A; and
(iii) ICCA shall upon execution of this Agreement reimburse Maroon
Bells, Swindells, Moore and Magiera for the expenses incurred in connection with
performing services for ICCA as listed on Exhibit B.
c. Registration Rights. The Company agrees to register under the
Securities Act of 1933, as amended (the "Securities Act"), within 90 days
following consummation if the Offering, the shares of Company Common Stock
referred to in Section 2 (b) (ii), above (including the shares underlying the
options referred to therein) subject to the agreement of Maroon Bells, Moore and
Mageira not to sell, transfer, pledge or otherwise encumber such shares for a
period of 180 days (or such shorter period as is applicable to members of ICCA
management) following consummation of the Offering. At the election of Maroon
Bells, Moore and Mageira, any registration statement filed pursuant to this
Section 2(c) shall also cover any additional "restricted" shares currently held
by them, including shares issuable upon the exercise or conversion of any
outstanding securities or options held by them.
3. MAROON BELLS, SWINDELS, MAGEIRA AND MOORE RELEASE. Maroon Bells,
Swindells, Magyar and Moore and their respective assigns and transferees, and
each of them (collectively, the "Maroon Bells Parties"), release and forever
discharge ICCA and its respective assigns, transferees and subsidiaries, and
each of them (collectively, the "ICCA Parties"), of and from any and all claims,
demands, damages, debts, liabilities, actions, causes of action, suits,
contracts, controversies, agreements, accounts, reckonings, obligations and
judgments, whether in law or equity, which the parties to this Agreement or any
of them now have, own or hold, or at any time previously ever had, owned or
held, whether personal, representatively, derivatively or otherwise, based upon,
related to, or by reason of any action, contract (express, implied in fact,
implied in law, or otherwise), lien, liability, law, matter, cause, action,
lawsuit, fact, thing, act, omission or whatever occurring or existing at any
time previously and to and including the date of this Agreement. Notwithstanding
the forgoing, none of the Maroon Bell Parties release the ICCA Parties from any
Claims for contribution or indemnification under bylaws, articles, agreements,
insurance policies or otherwise against Claims of third parties and the costs
and expenses to defend such Claims.
4. ICCA RELEASE. The ICCA Parties and each of them, release and forever
discharge each of the Maroon Bells Parties, of and from any and all claims,
demands, damages, debts, liabilities, actions, causes of action, suits,
contracts, controversies, agreements, accounts, reckonings, obligations and
judgments, whether in law or equity, which the parties to this Agreement or any
of them now have, own or hold, or at any time previously ever had, owned or
held, whether personal, representatively, derivatively or otherwise, based upon,
related to, or by reason of any action, contract (express, implied
<PAGE> 3
in fact, implied in law, or otherwise), lien, liability, law, matter, cause,
action, lawsuit, fact, thing, act, omission or whatever occurring or existing at
any time previously and to and including the date of this Agreement.
5. RESIGNATION OF MOORE AND MAGEIRA. Moore and Mageira each hereby
agrees to resign from the Board of Directors of ICCA effective as of the date
that the items listed in Sections 2(b)(ii) and 2(b)(iii) have been fully
delivered or paid, as the case may be.
6. REPRESENTATIONS BY THE PARTIES. Each of the parties warrants and
represents to the others that none of them has assigned or transferred or
purported to assign or transfer to any person not a party to this Agreement any
matter or any part or portion of any matter covered by this Agreement, and each
of them agrees to indemnify and hold harmless the others from and against any
claim, demand, damage, debt, liability, account, reckoning, obligation, cost,
expense, lien, action or cause of action (including attorneys' fees and costs
paid or incurred) based upon or in connection with or arising out of any such
assignment or transfer or purported or claimed assignment of transfer.
7. NO ADMISSION. The execution of this Agreement effects the settlement
of claims which are contested and denied. Nothing contained in this Agreement
shall be construed as an admission by any part of any liability of any kind to
the other parties. Each party acknowledges that the others expressly deny that
any of them is in any way liable or obligated to the others.
8. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties; there are no representations, covenants or undertakings other
than those expressly set forth in this Agreement. Each party acknowledges that
no other party or any agent or attorney of any other party has made any promise,
representation or warranty whatsoever, express, implied or statutory, other than
those contained in this Agreement, to induce them to execute this Agreement. The
parties acknowledge that they have not executed this Agreement in reliance upon
any such promise, representation or warranty not specifically contained in this
Agreement.
9. BINDING ON SUCCESSORS. This Agreement and the covenants and
conditions contained in it shall apply to, be binding upon and inure to the
benefit of the respective heirs, administrators, executors, legal
representatives, assigns, successors and agents of each of the parties.
10. SEVERABILITY. The provisions of this Agreement are severable;
should any provision for any reason be held to be unenforceable, the remaining
provisions shall nonetheless be of full force and effect.
11. GOVERNING LAW. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Florida without
reference to any conflicts of law principles.
<PAGE> 4
12. JOINT PREPARATION. This Agreement is to be deemed to have been
jointly prepared by the parties, and any uncertainty or ambiguity in it shall
not be interpreted against any of the parties, but according to the application
of the rules of interpretation of contracts. Any disclosure by ICCA of this
Agreement or the transactions reflected or contemplated hereby shall require the
prior consent of the Maroon Bells Parties; provided, that this Agreement and the
transactions reflected or contemplated hereby may be disclosed to the extent
that such disclosure is required, based upon the advice of legal counsel, by
applicable law including, without limitation by the Securities Act of 1933, as
amended.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: /s/ Patricio E. Northland
----------------------------------
Its: President, Patricio E. Northland
----------------------------------
MAROON BELLS CAPITAL PARTNERS, INC.
By: /s/ Theodore Swindells
----------------------------------
Its: President
---------------------------------
/s/ Paul A. Moore
--------------------------------------
PAUL A. MOORE
/s/ Theodore Swindells
--------------------------------------
THEODORE SWINDELLS
/s/ Phillip S. Magiera
--------------------------------------
PHILLIP S. MAGIERA
<PAGE> 5
STOCK OPTION AGREEMENT
This is a Stock Option Agreement, dated as of the 4th day of October
1997 (the "Grant Date"), by and between INTERAMERICAS COMMUNICATIONS CORPORATION
(the "Grantor"), and Paul Moore (the "Optionee").
WITNESSETH:
WHEREAS, in consideration of prior services rendered by the Optionee to
the Grantor and certain promises made by the Optionee to the Grantor, the
Grantor desires to grant the Optionee an option to purchase TWO HUNDRED FIFTY
THOUSAND (250,000) shares of Common Stock, par value $.001 per share ("Common
Stock") of the Grantor, upon the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, the Grantor hereby agrees, for the benefit of the
Optionee, as follows:
SECTION 1. GRANT OF OPTION. Subject to the provisions of this
Agreement, the Grantor hereby grants to the Optionee an option (the "Option") to
purchase from the Grantor TWO HUNDRED FIFTY THOUSAND (250,000) shares of Common
Stock (after the exercise of the Option and the acquisition of the shares, the
"Option Shares"), at the price of $2.13 per whole share.
SECTION 2. EXERCISE OF OPTION.
(1) The Option may be exercised in whole or in part at any
time commencing on the date hereof and ending on the tenth anniversary hereof by
the Optionee's delivering to the Grantor a written notice specifying the number
of the Option Shares that the Optionee wishes to purchase pursuant to the Option
and tendering the Option Price multiplied by the number of such Option Shares.
The Option Price of any Option Shares purchased shall be paid in cash, by
certified or official bank check or by money order. The Optionee shall be deemed
to be a holder of the Option Shares immediately upon, and to the extent of, the
exercise of this Option as set forth above.
(2) Number of Shares Exercisable. Each exercise of an Option
hereunder shall reduce the total number of Option Shares that may thereafter be
purchased under this Option.
SECTION 3. SHARE CERTIFICATES. Upon each exercise of the right to
purchase Option Shares pursuant to this Option, prior to the time that a
registration statement shall have been filed and become effective under the
Securities Act of 1933, as amended, with respect to the Option Shares as
required by that certain Mutual Release and Settlement Agreement of even date
herewith between the Grantor, the Optionee and certain other parties, the
Grantor shall cause one or more stock certificates evidencing the Optionee's
ownership of the Option Shares to be issued to the Optionee. A Legend in
substantially the form set forth below shall be placed upon each stock
certificate representing the Option Shares:
"The shares of stock represented by this
certificate have been acquired directly from
an affiliate of the issuer without being
registered under the Securities Act of 1933,
as amended ("Act"), or the securities laws
of any state or other jurisdiction,
including the Florida Securities Act, and
are restricted securities as that term is
defined under Rule 144 promulgated under the
Act. These shares may not be sold,
transferred, pledged, hypothecated or
otherwise disposed of in any manner (a
"Transfer") unless they are registered under
the Act and the securities laws of all
applicable states and other jurisdictions or
unless the request for Transfer is
accompanied by a favorable opinion of
counsel satisfactory to the issuer, stating
that such Transfer will not result in a
violation of such laws."
<PAGE> 6
SECTION 4. ANTI-DILUTION PROVISIONS.
(1) Adjustment for Recapitalization. If the Grantor shall at
any time subdivide its outstanding shares of Common Stock by recapitalization,
reclassification or split-up thereof, or if the Grantor shall declare a stock
dividend or distribute shares of Common Stock to its shareholders, the number of
Option Shares then subject to this Option immediately prior to such subdivision
shall be proportionately increased and the exercise price shall be
proportionately decreased, and if the Grantor shall at any time combine the
outstanding shares of Common Stock by recapitalization, reclassification or
combination thereof, the number of option shares then subject to this Option
immediately prior to such combination shall be proportionately decreased and the
exercise price shall be proportionately increased. Any such adjustments pursuant
to this Section 4(a) shall be effective at the close of business on the
effective date of such subdivision or combination or if any adjustment is the
result of a stock dividend or distribution then the effective date for such
adjustment based thereon shall be the record date therefor.
(2) Adjustment for Reorganization, Consolidation, Merger, Etc.
In case of any reorganization of the Grantor or in case the Grantor shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then, and in each such
case, the Optionee upon the exercise of this Option at any time after the
consummation of such reorganization, consolidation, merger or conveyance, shall
be entitled to receive, in lieu of the Option Shares issuable upon the exercise
of this Option prior to such consummation, the securities or property to which
the Optionee would have been entitled upon such consummation if the Optionee had
exercised this Option immediately prior thereto; in each such case, the terms of
this Option shall be applicable to the securities or property receivable upon
the exercise of this Option after such consummation.
(3) Notice of Certain Events. If at any time:
(A) the Grantor shall declare a dividend or other
distribution of Common Stock payable otherwise than in cash at the same
rate as the immediately preceding regular dividend or in Common Stock;
or
(B) the Grantor shall authorize the granting to the
holders of the Common Stock of rights to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(C) there shall be any plan or agreement of
reorganization, or reclassification of the capital stock, of the
Grantor, or consolidation or merger of the Grantor with, or sale of all
or substantially all of its assets to, another corporation; or
(D) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Grantor
then the Grantor shall give to the Optionee at the address of Optionee, at least
20 days prior to the applicable record date, a written notice summarizing such
action or event and stating the record date for any such dividend or rights (or
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend or rights are to be determined), the
date on which any such reorganization, reclassification, consolidation, merger,
sale of assets, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected the holders of Common Stock
of record shall be entitled to effect any exchange of their shares of Common
Stock for securities or other property deliverable upon any such reorganization,
reclassification, consolidation, merger, sale of assets, dissolution,
liquidation or winding up.
(4) Except as otherwise expressly provided herein, the
issuance by the Grantor of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Grantor
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of Option Shares then subject to this Option.
(5) Without limiting the generality of the foregoing, the
existence of this Option shall not affect in any manner the right or power of
the Grantor to approve or the Grantor to make, authorize or consummate (i) any
or all adjustments, recapitalizations, reorganizations or other changes in the
Grantor's
<PAGE> 7
capital structure or its business; (ii) any merger or consolidation of the
Grantor; (iii) any issuance by the Grantor of debt securities, or preferred or
preference stock that would rank above the Option Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Grantor; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Grantor; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 5. NO RIGHTS AS SHAREHOLDER. The Optionee shall have no rights
as a shareholder in respect to the Option Shares as to which the Option shall
not have been exercised and payment made as herein provided.
SECTION 6. ISSUANCE OF SHARES. As a condition of any sale or issuance
of Option Shares upon exercise of this Option, the Grantor may require such
agreements or undertakings, if any, as the Grantor may deem necessary or
advisable to assure compliance with any such applicable securities or other law
or regulation including, but not limited to, the following:
(1) a representation and warranty by the Optionee to the
Grantor and the Grantor, at the time this Option is exercised, that she is
acquiring the Option Shares to be issued to her for investment and not with a
view to, or for sale in connection with, the distribution of any such Option
Shares; and
(2) a representation, warranty and/or agreement to be bound
by any legends that are, in the opinion of the Grantor, necessary or appropriate
to comply with the provisions of any securities law deemed by the Grantor or the
Grantor to be applicable to the issuance of the Option Shares and are endorsed
upon the Option Share certificates.
SECTION 7. MISCELLANEOUS PROVISIONS.
(1) Notices. Unless otherwise specifically provided herein,
all notices to be given hereunder shall be in writing and sent to the parties by
certified mail, return receipt requested, to each party's respective address as
set forth in the books and records of the Grantor, or to such other address as
such party shall give to the other party hereto by a notice given in accordance
with this Section. Except as otherwise provided in this Agreement, notice shall
be effective when deposited in the United States mails properly addressed and
postage prepaid. If such notice is sent other than by the United States mails,
such notice shall be effective when actually received by the party being
notified.
(2) Assignment. This Agreement may not be assigned in whole
or in part by the Optionee.
(3) Further Assurances. The Optionee shall execute and
deliver such other instruments and do such other acts as may be necessary to
effectuate the intent and purposes of this Agreement.
(4) Captions. The captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, extend or
prescribe the scope of this Agreement or the intent of any of the provisions
hereof.
(5) Completeness and Modification. This Agreement
constitutes the entire understanding between the parties hereto and supersedes
all prior and contemporaneous agreements or understandings among the parties
hereto concerning the grant by the Grantor to the Optionee of stock options and
shall not be terminated or amended except in writing executed by each of the
parties hereto.
(6) Waiver. The waiver of a breach of any term or condition
of this Agreement shall not be deemed to constitute the waiver of any other
breach or the same or any other term or condition.
(7) Severability. The invalidity or unenforceability, in
whole or in part, of any covenant, promise or undertaking, or any section,
subsection, paragraph, sentence, clause, phrase or word or of any provisions of
this Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
<PAGE> 8
(8) Construction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida without
regard to any conflict of law rule or principle that would result in the
application of the laws of another jurisdiction.
(9) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the heirs, successors, estate and personal
representatives of the Optionee and the Grantor.
IN WITNESS WHEREOF, the Grantor has executed this Agreement for the
benefit of the Optionee as of the 4th day of October, 1997.
INTERAMERICAS COMMUNICATIONS
CORPORATION., the Grantor
By: /s/ Patricio E. Northland
----------------------------------
Name: Patricio E. Northland
Title: President
<PAGE> 1
EXHIBIT 10.2
EXECUTIVE EMPLOYMENT
AND SEVERANCE AGREEMENT
THIS EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT (the "AGREEMENT") is
executed as of the 7th day of October, 1997, by and between InterAmericas
Communications Corporation, a Texas corporation (hereinafter referred to as the
"COMPANY"), and Patricio E. Northland (hereinafter referred as the "EXECUTIVE").
WITNESSETH:
WHEREAS, the Company desires to assure itself of the benefit of the
Executive's efforts and services for a period of at least three years from the
date hereof:
WHEREAS, the Executive is willing to commit himself to serve the
Company, on the terms and conditions herein provided;
WHEREAS, in order to effect the foregoing, the Company and the
Executive wish to enter into an employment agreement on the terms and conditions
set forth below; and
WHEREAS, this Agreement has been reviewed and approved by the Company's
Compensation Committee of the Board of Directors.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree follows:
1. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "ACCRUED BENEFITS" shall mean the amount payable not later
than ten (10) days following any applicable date of termination of the
Executive's employment with the Company pursuant to this Agreement (the
"Termination Date") and which shall be equal to the sum of the
following amounts:
(i) All salary earned or accrued through the
Termination Date;
(ii) Reimbursement for any and all monies advanced
concerning the Executive's employment for reasonable and
necessary expenses incurred by the Executive through the
Termination Date;
(iii) Any and all other cash benefits previously
earned through the Termination Date and deferred at the
election of the Executive or pursuant to any deferred
compensation plans then in effect;
(iv) The full amount of any Bonus (as defined in
Section 6(b)) earned by the Executive in the year preceding
the year in which the termination occurs but not paid as of
the Termination Date and the amount of any Bonus payable to
the Executive in accordance with Section 6(b) herein as of the
Termination Date with respect to the year in which termination
occurs, pro rated to reflect the portion of the year in which
such termination occurs during which the Executive was
employed by the Company.
<PAGE> 2
(v) All stock options which have vested or will vest
on or prior to the Termination Date; and
(vi) All other payments and benefits to which the
Executive may be entitled as of the Termination Date under the
terms of this Agreement (including Sections 6(c)-6(e) hereof),
pro rated to reflect the portion of the year in which such
termination occurs during which the Executive was employed by
the Company.
(b) "ACT" shall mean the Securities Exchange Act of 1934;
(c) "BENEFICIAL OWNER" shall have the same meaning as given to
that term in Rule 13d-3 of the General Rules and Regulations of the
Act, provided that any pledgee of Company voting securities shall not
be deemed to be the Beneficial Owner thereof prior to its disposition
of, or acquisition of voting rights with respect to, such securities;
(d) "BOARD" shall mean the Board of Directors of the Company;
(e) "CAUSE" shall mean any of the following:
(i) The engaging by the Executive in fraudulent
conduct, as evidenced by a judgment, order or decree of a
court or administrative agency of competent jurisdiction, in
an action, suit or proceeding, whether civil, criminal,
administrative or investigative, which the Board reasonably
determines has or would have a material adverse impact on the
Company in the conduct of the Company's business;
(ii) Conviction of the Executive of a felony
criminal offense, as evidenced by a binding judgment, order or
decree of a court of competent jurisdiction, which the Board
reasonably determines has or could have a material adverse
impact on the Company in the conduct of the Company's
business;
(iii) Willful refusal by the Executive to perform the
Executive's material duties or responsibilities (unless
significantly changed without the Executive's consent); or
(iv) Gross Negligence by the Executive in performing
the Executive's material duties or responsibilities (unless
significantly changed without the Executive's consent)
Notwithstanding the foregoing, Cause shall not exist under Sections 1
(e)(iii) or (iv) herein unless the Company furnishes written notice to
the Executive of the specific offending conduct and the Executive fails
to correct such offending conduct within the fifteen (15) day period
commencing on the receipt of such notice.
(f) "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time;
(g) "EFFECTIVE DATE" shall mean October 1, 1997,
notwithstanding the date that this Agreement is executed by the parties
hereto.
(h) "GOOD REASON" shall mean:
(i) The required relocation of the Executive,
without the Executive's consent, to an employment location
which is more than seventy-five (75) miles from the
Executive's employment location on the day preceding the
date of this Agreement;
2
<PAGE> 3
(ii) Any reduction by the Company in the
compensation and/or benefits (including Bonus) provided to the
Executive as in effect on the Effective Date as the same may
be increased from time to time after the Effective Date;
(iii) The removal of the Executive from or any
failure to elect the Executive to any of the positions to be
held by the Executive pursuant to this Agreement except in the
event that such removal or failure to reelect is related to
termination by the Company of the Executives employment for
Cause or by reason of death, Disability (as hereinafter
defined) or voluntary retirement;
(iv) Breach or violation of any material provision
of this Agreement by the Company;
(v) The assignment to the Executive of duties,
responsibilities or authority that is materially inconsistent
with Sections 4(a) and 4(b) hereof; or
(vi) A material breach by the Company of the
representation or warranty of the Company set forth in
Sections 6(e) hereof.
(i) "NOTICE OF TERMINATION" shall mean the notice described in
Section 14 herein;
(j) "PERSON" shall mean any individual, partnership, joint
venture, association, trust, corporation or other entity (including a
"group" as defined in Section 13 (d)(3) of the Act), other than an
employee benefit plan of the Company or an entity organized, appointed
or established pursuant to the terms of any such benefit plan;
(k) "TERMINATION PAYMENT" shall mean the payment described in
Section 13 herein;
2. EMPLOYMENT.
The Company hereby agrees to employ the Executive and the Executive
hereby agrees to serve the Company, on the terms and conditions set forth
herein.
3. TERM.
The employment of the Executive by the Company pursuant to the
provisions of this Agreement shall be for a period of three years commencing on
the Effective Date and end on the third anniversary thereof. Such period is
hereinafter defined as the "Employment Term."
4. POSITIONS AND DUTIES.
(a) The Executive shall serve as Chairman of the Board,
President and Chief Executive Officer of the Company. In connection with the
foregoing positions, the Executive shall have such duties, responsibilities and
authority as may from time to time be assigned to the Executive by the Board,
provided such duties, responsibilities and authority are of a nature customarily
assigned to directors and chief executive officers of companies similar in size
and structure to the Company. The Executive shall devote substantially the
entire Executive's working time and reasonable efforts to the business and
affairs of the Company.
(b) The Executive shall have the authority to do or to
delegate to another executive officer of the Company or any subsidiary of the
Company the following, provided, however, the Executive Committee or the Board
of Directors must approve those items exceeding $250,000 in total:
3
<PAGE> 4
(i) Approve budgets, cash flow plans and schedules
and any amendments thereto;
(ii) Enter into or materially amending any contract
for the sale, lease, exchange or other disposition of any
portion of the property or assets of the Company other than in
the ordinary and normal course of business, including, without
limitation, any lease, or contract for the disposition of any
real property;
(iii) Approve all employment contracts, employee
benefit plans, parameters for collective bargaining and other
material labor agreements, if any, fundamental personnel
policies and all material amendments thereto;
(iv) Appoint all officers of subsidiaries of the
Company, subject to compliance with applicable local laws and
regulations. Such appointment will include consultation with
the Company's Board of Directors;
(v) Approve the Company's operating and expansion
program, cash flow plans and schedules and any amendments
thereto;
(vi) Commence, terminate or settle any claim or
lawsuit or other legal action or arbitral or administrative
proceeding, after obtaining any required approval of the
Executive Committee;
(vii) Incur indebtedness not in excess of $250,000
in aggregate principal amount at any one time outstanding;
(viii) Provide or acquire all materials, supplies,
machinery, equipment and services required for the Company and
disposing of the same in the ordinary course of business;
(ix) Procure from outside experts and consultants
all legal, accounting, and other professional services
required by the Company;
(x) Hire, or allocate from its own personnel, all
executives, managers and employees required for the operation
of the business of the Company, including the selection, terms
of employment and termination thereof, rights of compensation
and the supervision, direction, training and assignment of
duties of all employees;
(xi) Prepare and file all reports, returns and
notices required to be filed by the Company;
(xii) Secure and maintain adequate liability and
property insurance, in accordance with good industry practice,
covering the insurable risks of the Company;
(xiii) Open and maintain such bank accounts in the
Company's name as the Executive shall deem appropriate, with
funds authorized to be withdrawn therefrom upon signature of
such Executive, Executive Committee or Board of Directors as
the Executive shall deem appropriate;
(xiv) Take any action contemplated to be taken under
the Indenture relating to the Company's offering of Units
through UBS Securities or any type of financing;
(xv) Take any other action that may be authorized
by the Bord of Directors; and;
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(xvi) Represent, direct and manage all of the
affiliates and or subsidiaries of the Company, subject to
compliance with applicable laws and regulations.
(c) The Executive shall report to the Board of Directors.
5. PLACE OF PERFORMANCE.
In connection with the Executive's employment by the Company, the
Executive shall be based in Miami, Florida, except for required travel on
Company business.
6. COMPENSATION AND RELATED MATTERS.
During the Employment Term, the Company shall pay or provide to the
Executive the following compensation and other benefits:
(a) Upon execution of this Agreement, (i) the Executive shall
be paid a signing bonus of $250,000; (ii) all of the 1,000,000 options
to purchase the Company's Common Stock par value $.001 per share
("Common Stock") granted to the Executive under his prior employment
agreement with the Company shall vest and become immediately
exercisable (iii) the Executive shall receive 600,000 shares of Common
Stock (the "Incentive Shares"); and (iv) the Executive shall be granted
an option (the "Option") to purchase 600,000 shares of the Company's
Common Stock. One-third of the Option may be exercised, in whole or in
part, upon the signing of this Agreement and shall represent the right
to purchase 200,000 shares of Common Stock; one-third of the Option
shall vest one year after the signing of this Agreement and shall
represent the right to purchase 200,000 shares of Common Stock; and
one-third of the Option shall vest two years after the signing of this
Agreement and shall represent the right to purchase 200,000 shares of
Common Stock. All shares of Common Stock subject to the Option may be
purchased at a price of $2.13 per share, subject to adjustment as set
forth in an Option Agreement between the Company and the Executive. The
Option shall expire ten (10) years from the date hereof (the
"EXPIRATION DATE"), and must be exercised, if at all, in whole or in
part on or before the Expiration Date; provided however, that upon the
termination of the Executive's employment hereunder for Cause,
Disability or death or upon the Executive's voluntary resignation as an
employee of the Company prior to the expiration of the Employment Term
for any reason other than Good Reason, any portion of the Option which
has not vested prior to such termination or resignation shall be
canceled and shall no longer be exercisable; and provided further, that
the entire Option shall vest on (a) upon the termination of the
Executive's employment for any reason other than "Cause", Disability or
death, and (b) upon the voluntary termination of employment by
Executive for "Good Reason". The Option Agreement will be in
substantially the form of Exhibit "1" attached hereto. The Company
shall use its best efforts to provide assistance to cause a loan to be
provided to the Executive in an amount which represents his estimated
income tax liability resulting from the issuance of the Incentive
Shares, through an investment banker or other third party, if
available, or from the Company, if such other entities are unwilling to
make such a loan.
(b) The Company shall pay to the Executive an annualized base
salary at a rate of (i) $350,000 during the first year of the
Employment Term, (ii) $400,000 during the second year of the Employment
Term and (iii) $450,000 during the third year of the Employment Term.
All payments of base salary shall be made in equal installments as
nearly as practicable on the fifteenth and last days of each month, in
arrears. The Executive's base salary may be increased above the
foregoing amounts at the discretion of the Board of Directors.
(c) The Executive shall be entitled to receive an annual
performance award (a "Bonus"), as determined by the Board of Directors
in its reasonable discretion, not to exceed the Executive's prevailing
annual base salary, based upon the fulfillment of the Executive's
duties as
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specified in Section 4(b) hereof and the achievement of certain
performance criteria (the "Performance Criteria"). Within 60 days prior
to the end of each fiscal year of the Company during the Term, the
Compensation Committee shall provide a description of the Performance
Criteria to the Executive for the ensuing year of the Term. Any Bonus
earned by the Executive pursuant to this Section 6(b) shall be paid to
the Executive by March 31 of each year based on the performance of the
Executive during the preceding year and shall be prorated for any
partial years of employment. The Executive shall also be compensated
for Incremental Revenues generated during the term of this Agreement.
Incremental Revenues shall be defined as the increase in revenues
earned by the Company in any fiscal year relative to the prior fiscal
year. The Revenue Performance Award shall be paid as follows: (a) In
March 1998, the Executive shall be paid 2.5% of the Incremental
Revenues generated in the 1997 fiscal year, (b) in March 1999, the
Executive shall be paid 2.0% of the Incremental Revenues generated in
the 1998 fiscal year, and (c) in March 2000, the Executive shall be
paid 1.5% of the Incremental Revenues generated in the 1999 fiscal
year. The Incremental Revenues upon which the Revenue Performance Award
is calculated shall only be calculated for the immediately preceding
fiscal year, and shall not be cumulative over the term of this
Agreement. In addition, the 1997 revenues of Iusatel Chile S.A. shall
not be considered for purposes of determining the Incremental Revenues
of the Company under this Agreement.
(d) During the Employment Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services hereunder, including,
but not limited to, all expenses of travel, entertainment and living
expenses while away from home on business or at the request of and in
the service of the Company, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures
presently established by the Company;
(e) The Executive hereby is granted an additional option (the
"Additional Option") to purchase 300,000 shares of the Company's Common
Stock. The Additional Option may be exercised, in whole or in part,
subject to the following sentence, in accordance with the following
vesting schedule: (i) one-third of the Additional Option shall vest
immediately upon the signing this Agreement and shall represent the
right to purchase 100,000 shares of Common Stock at $4.00 per share;
(ii) one-third of the Additional Option shall vest one year after the
signing of this Agreement and shall represent the right to purchase
100,000 shares of Common Stock at $6.00 per share; and (iii) one-third
of the Additional Option shall vest two years after the signing of this
Agreement and shall represent the right to purchase 100,000 shares of
Common Stock at $8.00 per share. The Additional Option shall expire on
the Expiration Date, and must be exercised, if at all, in whole or in
part, on or before the Expiration Date; provided however, that upon the
termination of the Executive's employment hereunder for Cause,
Disability or death or upon the Executive's voluntary resignation as an
employee of the Company prior to the expiration of the Employment Term
for any reason other than Good Reason, any portion of the Option which
has not vested prior to such termination or resignation shall be
canceled and shall no longer be exercisable; and provided further, that
the entire Option shall vest on (a) upon the termination of the
Executive's employment for any reason other than "Cause" Disability or
death, and (b) upon the voluntary termination of employment by
Executive for "Good Reason". The Option Agreement will be in
substantially the form of Exhibit "2" attached hereto
(f) The Executive shall be entitled to four weeks paid
vacation in each calendar year, and to compensation in respect of
earned but unused vacation days, determined in accordance with the
Company's vacation plan or policy. The Executive shall also be entitled
to all paid holidays provided by the Company to its executive officers;
(g) The Company shall furnish the Executive with office space
and such other facilities and services as shall be suitable to the
Executive's position and adequate for the performance of the
Executive's duties as set forth in Section 4 herein.
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(h) The Executive shall be provided with major medical,
hospitalization, and dental insurance and other benefits upon terms and
conditions similar to those provided to the Company's other executive
officers.
(i) The Executive shall be provided with disability insurance
and life insurance in an amount that will not exceed annual premium
payments by the Company of $25,000.00.
(j) The Executive shall be provided a car allowence not to
exceed $1,000 per month.
(k) The Executive shall be allowed to participate in a 401K
retirement program that provides a Company contribution that is equal
to the maximum amount permitted by law.
7. OFFICES.
The Executive agrees to serve without additional compensation, if
elected or appointed thereto, as a member of the Board of Directors or any
subsidiary of the Company; provided, however, that the Executive shall be
indemnified for serving in any and all such capacities on a basis no less
favorable than is currently provided in the Company's bylaws.
8. TERMINATION AS A RESULT OF DEATH.
If the Executive shall die during the term of this Agreement, the
Executive's employment shall terminate on the Executive's date of death and the
Executive's surviving spouse, or the Executive's estate if the Executive dies
without a surviving spouse, shall be entitled to the applicable Termination
Payment as defined in Section 13(a) and all Accrued Benefits.
9. TERMINATION FOR DISABILITY.
If, as a result of physical or mental disability, the Executive shall
have been unable to perform the Executive's duties hereunder on a full-time
basis for ninety consecutive days or 180 days in any 360 day period (a
"Disability"), the Company may terminate the Executive's employment subject to
Section 14 herein. During the term of the Executive's Disability prior to
termination, the Executive shall continue to receive all salary and benefits
payable under Section 6 herein, including participation in all employee benefit
plans, programs and arrangements in which the Executive was entitled to
participate immediately prior to the terms and provisions of such plans,
programs, and arrangements. In the event that the Executive's participation in
any such plan, program or arrangement is barred as the result of such
Disability, the Executive shall be entitled to receive an amount equal to the
contributions, payments, credits or allocations which would have been paid by
the Company to the Executive, to the Executive's account or on the Executive's
behalf under such plans, programs and arrangements. In the event the Executive's
employment is terminated on account of the Executive's Disability in accordance
with this Section 9, the Executive shall receive the Executive's Accrued
Benefits as of the Termination Date and shall remain eligible for all benefits
provided by any long-term disability programs of the Company in effect at the
time of such termination. Upon termination for Disability, the Executive shall
be entitled to the Termination Payment as defined in Section 13(a) and all
Accrued Benefits.
10. TERMINATION FOR CAUSE.
If the Executive's employment with the Company is terminated by the
Company for Cause, subject to the procedures set forth in Section 14 herein, the
Executive shall not be entitled to receipt of any Termination Payment, but shall
be entitled to receive all Accrued Benefits (other than any prorated Bonus
pursuant to Section 6(b) hereof).
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11. OTHER TERMINATION BY COMPANY OR BY THE EXECUTIVE.
If the Executive's employment with the Company is terminated by the
Company other than by reason or death, Disability or Cause, or if the Executive
terminates his employment with the Company for Good Reason, subject to the
procedures set forth in Section 14 herein, the Executive (or in the event of the
Executive's death following the Termination Date, the Executive's surviving
spouse or the Executive's estate if the Executive dies without a surviving
spouse) shall receive the applicable Termination Payment as defined in Section
13(b) and the Accrued Benefits.
12. VOLUNTARY TERMINATION BY EXECUTIVE.
Provided that the Executive furnishes thirty (30) days prior written
notice to the Company, the Executive shall have the right to voluntarily
terminate this Agreement at any time. If the Executive's voluntary termination
is without Good Reason, the Executive shall receive the Executive's Accrued
Benefits as of the Termination Date (other than any prorated Bonus pursuant to
Section 6(b) hereof) and shall not be entitled to any Termination Payment.
13. TERMINATION PAYMENT.
(a) If the Executive's employment is terminated as a result of
death or Disability, the lump sum Termination Payment payable to the
Executive shall be equal to 100% of the Executive's then current annual
base salary;
(b) If the Executive's employment is terminated by the
Executive for Good Reason or by the Company for any reason other than
death, Disability or Cause, the lump sum Termination Payment payable to
the Executive shall be equal to the greater of (i) 100% of the
Executive's then current annual base salary or (ii) the aggregate
amount of base salary to be paid to the Executive for the remainder of
the Employment Term.
(c) If any portion of the Termination Payment is determined to
constitute a "parachute payment" (as defined in Section 280G of the
Code), the Executive hereby agrees to pay any excise tax imposed on
such portion of the Termination Payment by Section 4999 of the Code and
the Company hereby acknowledges and agrees that such portion of the
Termination Payment will not be deductible to the Company pursuant to
Section 280G of the Code.
(d) The Termination Payment shall be payable in a lump sum not
later than ten (10) days following the Executive's Termination Date.
Any present value or similar factor shall not reduce such lump sum
payment. Further, the Executive shall not be required to mitigate the
amount of such payment by securing other employment or otherwise and
such payment shall not be reduced due to the Executive securing other
employment or for any other reason.
14. TERMINATION NOTICE AND PROCEDURE.
Any termination by the Company or the Executive of the Executive's
employment during the Employment Term shall be communicated by written Notice of
Termination to the Executive if such Notice of Termination is delivered by the
Company and to the Company if such Notice of Termination is delivered by the
Executive, all in accordance with the following procedures:
(a) The Notice of Termination shall indicate the specific
termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances alleged to provide a
basis for termination. In the event of a termination claimed by the
Company pursuant to Section 1(e)(iii) or (iv) hereof and the Executive
notifies the Company that a dispute exists concerning the termination
within the fifteen (15) day period following the cure period specified
in Section 1(e) hereof, the Executive shall continue to receive 50% of
the Executive's base salary
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and all other benefits to which he is entitled to receive hereunder
until the earlier of (i) 60 days following such termination or (ii)
resolution of such dispute in accordance with Section 16 hereof. If
such dispute is resolved in favor of the Executive, the Company shall
immediately pay the Executive the remainder of the base pay that was
not paid to the Executive during the pendency of the dispute. If at any
time during the pendency of such dispute the Company fails to pay and
provide such base salary and benefits to the Executive in a timely
manner the Company shall be deemed to have automatically waived
whatever rights it then may have had to terminate the Executive's
employment for "cause."
(b) Any Notice of Termination by the Company shall be approved
by a resolution duly adopted by a majority of the directors of the
Company then in office;
(c) If the Executive shall in good faith furnish a Notice of
Termination for Good Reason and the Company notifies the Executive that
a dispute exists concerning the termination within the fifteen (15) day
period following the Company's receipt of such notice, the Executive
shall continue the Executive's employment during such dispute. If it is
thereafter determined that (i) Good Reason did exist, the Executive's
Termination Date shall be deemed to be the date on which the dispute is
finally determined, either by mutual written agreement of the parties
or pursuant to Section 16 herein or (ii) Good Reason did not exist, the
employment of the Executive shall continue after such determination as
if the Executive had not delivered the Notice of Termination asserting
Good Reason;
(d) If the Executive gives notice to terminate his employment
for Good Reason and a dispute arises as to the validity of such
termination, and the Executive does not continue his employment during
such dispute, and it is finally determined that the reason for
termination set forth in such Notice of Termination did not exist, if
such notice was delivered by the Executive, the Executive shall be
deemed to have voluntarily terminated the Executive's employment other
than for Good Reason.
15. NON-COMPETE.
A) The Executive hereby agrees that during the term of this Agreement
and for the period of six months from the Executive's Termination Date or the
termination of this Agreement (other than termination upon the expiration of the
Employment Term) that the Executive will not:
(i) Within any jurisdiction or marketing area in the United
States or Latin America in which the Company or any subsidiary thereof
is doing business, own, manage, operate or control any business of the
type and character engaged in the telecommunications industry and
competitive with the Company or any subsidiary thereof. For purposes of
this paragraph, ownership of securities of not in excess of five
percent (5%) of any class of securities of a public company shall not
be considered to be competition with the Company or any subsidiary
thereof in the telecommunications industry; or
(ii) Within any jurisdiction or marketing area in the United
States or Latin America in which the Company or any subsidiary thereof
is doing business, act as, or become employed as, an officer, director,
employee, consultant or agent of any business of the type and character
engaged in and competitive with the Company or any of its subsidiaries
in the telecommunications industry; or
(iii) Solicit the business of or sell any products to any
company in the United States or Latin America, which is as of the date
hereof, a customer or client of the Company or any of its subsidiaries,
or was such a customer or client thereof within two years prior to the
date of this Agreement if such solicitation or sale results in
competition to the Company; or
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(iv) Solicit the employment of, or hire, any full time
employee employed by the Company or its subsidiaries as of the date of
termination of this Agreement.
B) Notwithstanding anything in this Agreement to the contrary the
Executive shall be entitled to continue receive his base salary as provided in
section 6(b) hereof during the period in which the Executive is restricted from
acting pursuant to section 15(a) hereof. Furthermore, the Company recognizes and
agrees that the Executive is a 50% shareholder and Director in Northland
Communications, Inc., a company which provides Internet-related services, and
that such involvement shall not be deemed to constitute a conflict of interest
with the Executive's responsibilities to the Company or to otherwise violate the
provisions of this section 15.
16. ARBITRATION.
All claims, disputes and other matters in question between the parties
arising under this Agreement, shall, unless otherwise provided herein, be
decided by arbitration in Miami, Florida in accordance with the Model Employment
Arbitration Procedures of the American Arbitration Association (including such
procedures governing selection of the specific arbitrator or arbitrators),
unless the parties mutually agree otherwise. Within 30 days of the selection of
the arbitrator, the Executive and the Company shall meet in Miami, Florida, with
the arbitrator at a place and time designated by the arbitrator after
consultation with the parties and present their respective positions on the
dispute. Each party shall have no longer than two (2) days to present its
position and the entire proceeding before the arbitrator shall be no more than
five (5) consecutive days in duration. The arbitrator's award, which may include
attorneys' fees, shall be rendered within ten (10) days following the completion
of the proceedings. The arbitrator's decision shall be in writing and shall
state the reasoning on which the award rests unless the parties agree otherwise.
Florida law shall govern all aspects of the relationship and the arbitration,
including the applicable statutes of limitation and excluding its rules
concerning conflicts of law. The Company shall pay the costs of any such
arbitration. The award by the arbitrator or arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable law in any state
or Federal court having jurisdiction thereof.
17. ATTORNEYS' FEES.
In the event that either party hereunder institutes any legal
proceedings in connection with its rights or obligations under this Agreement,
the prevailing party in such proceeding shall be entitled to recover from the
other party, all costs incurred in connection with such proceeding, including
reasonable attorneys' fees, together with interest thereon from the date of
demand at the rate of twelve percent (12%) per annum.
18. SUCCESSORS.
This Agreement and all rights of the Executive shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and beneficiaries. In
the event of the Executive's death, all amounts payable to the Executive under
this Agreement shall be paid to the Executive's surviving spouse, or the
Executive's estate if the Executive dies without a surviving spouse. This
Agreement shall inure to the benefit of, be binding upon and be enforceable by,
any successor surviving or resulting corporation or other entity to which all or
substantially all of the business and assets of the Company shall be transferred
whether by merger, consolidation, transfer or safe.
19. ENFORCEMENT.
The provisions of this Agreement shall be regarded as divisible, and if
any of said provisions or any part hereof are declared invalid or unenforceable
by a court of competent jurisdiction, the validity and
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enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby
20. AMENDMENT OR TERMINATION.
This Agreement may not be amended or terminated during its term as
specified above except by written instrument executed by the Company and the
Executive.
21. ENTIRE AGREEMENT.
This Agreement, in conjunction with the Executive's rights under any
general employee benefit program, sets forth the entire agreement between the
Executive and the Company with respect to the subject matter hereof, and
supersedes all prior oral or written agreements, negotiations, commitments and
understandings with respect thereto.
22. WITHHOLDING.
The Company shall be entitled to withhold from amounts to be paid to
the Executive under this Agreement any federal, state or local withholding or
other taxes or charges which it is from time to time required to withhold in
connection with this Agreement or in connection with any plan or arrangement in
which the Executive is a participant. The Executive shall also be required to
pay to the Company such amount of cash as shall be necessary to satisfy such
withholding or other taxes or charges to the extent that the amounts to be
withheld from the Executive under this Agreement are insufficient therefor. The
Company shall be entitled to rely on an opinion of counsel if any question as to
the amount or requirement of any such withholding shall arise.
23. VENUE; GOVERNING LAW.
This Agreement and the Executive's and Company's respective rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Florida without giving effect to the provisions,
principles, or policies thereof relating to choice or conflict laws.
24. NOTICE.
Notices given pursuant to this Agreement shall be in writing and shall
be deemed given when received, and if mailed, shall be mailed by United States
registered or certified mail, return receipt requested, addressee only, postage
prepaid, if to the Company, to:
InterAmericas Communications Corporation
1221 Brickell Avenue
Miami, Florida 33131
Or to such other address as the Company shall have given to the Executive or, if
to the Executive, to such address as the Executive shall have given to the
Company in writing.
25. NO WAIVER.
No waiver by either party at any time of any breach by the other party
of, or compliance with, any condition or provision of this Agreement to be
performed by the other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.
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'
26. HEADINGS.
The headings herein contained are for reference only and shall not
affect the meaning interpretation of any provision of this Agreement.
27. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
28. TERMINATION OF EXISTING EMPLOYMENT AGREEMENT.
Upon the Effective Date, the existing employment agreement between the
Company and the Executive shall terminate and shall be of no further force or
effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has executed this
Agreement, on the date first above written.
INTERAMERICAS COMMUNICATIONS CORPORATION
/s/ Douglas G. Geib II
------------------------------------------
Douglas G. Geib II
Chief Financial Officer
On behalf of the Company as approved by the
Board of Directors of the Company on
September 9, 1997 and September 22, 1997,
and as also approved by the Compensation
Committee of the Board of Directors of the
Company
/s/ Patricio E. Northland
------------------------------------------
Patricio E. Northland
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EXHIBIT 10.3
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT (the "Agreement") is made
and entered into as of this 3rd day of October, 1997, between InterAmericas
Communications Corporation ("ICCA"), and Eleazar Donoso ("Donoso").
A. WHEREAS, Donoso has requested from ICCA certain shares of ICCA's
common stock in satisfaction of certain amounts allegedly owed to him.
B. WHEREAS, ICCA has requested certain supporting documentation for
Donoso's claims, and such documentation has not been provided to date.
C. WHEREAS, the parties desire to settle all claims that they may have
against one another.
NOW, THEREFORE, the parties hereto agree as follows:
1. INCORPORATION OF RECITALS. The recitals contained in Paragraphs A
through C are incorporated by reference herein as if at this point set forth in
full.
2. SETTLEMENT
a. Matters Settled. This Agreement settles all the existing claims,
disputes and matters by and between ICCA, on the one hand, and Donoso, on the
other hand, relating to any other matters or events occurring up to the date
hereof.
b. Terms of Settlement. As a further inducement to execute this
Agreement, subject to the conditions hereinafter set forth, ICCA shall issue
and grant to Donoso 300,000 shares of Common Stock .001 par value per share, of
the Company.
3. DONOSO RELEASE AND INDEMNIFICATION. Donoso and his assigns,
transferees, employees, servants, successors, agents, attorneys and
representatives, and each of them, release and forever discharge ICCA and its
respective assigns, transferees, subsidiaries, directors, officers, employees,
servants, successors, agents, attorneys and representatives of and from any and
all claims, demands, damages, debts, liabilities, actions, causes of action,
suits, contracts, controversies, agreements, accounts, reckonings, obligations
and judgments, whether in law or equity, which the parties to this Agreement or
any of them now have, own or hold, or at any time previously ever had, owned or
held, or could, shall, or may later have, own or hold, whether personal,
representatively, derivatively or otherwise, based upon, related to, or by
reason of any action, contract (express, implied in fact, implied in law, or
otherwise), lien, liability, law, matter, cause, action, lawsuit, fact, thing,
act, omission or whatever occurring or existing at any time previously and to
and including the date of this Agreement.
4. ICCA RELEASE. ICCA and its assigns, transferees, directors,
officers, employees, servants, successors, agents, attorneys and
representatives, and each of
<PAGE> 2
them, release and forever discharge Donoso and his assigns, transferees,
employees, servants, successors, agents, attorneys and representatives of and
from any and all claims, demands, damages, debts, liabilities, actions, causes
of action, suits, contracts, controversies, agreements, accounts, reckonings,
obligations and judgments, whether in law or equity, which the parties to this
Agreement or any of them now have, own or hold, or at any time previously ever
had, owned or held, or could, shall, or may later have, own or hold, whether
personal, representatively, derivatively or otherwise, based upon, related to,
or by reason of any action, contract (express, implied in fact, implied in law,
or otherwise), lien, liability, law, matter, cause, action, lawsuit, fact,
thing, act, omission or whatever occurring or existing at any time previously
and to and including the date of this Agreement.
5. INTENTION OF THE PARTIES. It is the intention of the parties in
executing this Agreement that it shall be effective as a full and final accord
and satisfactory release of each and every matter herein specifically or
generally referred to.
Each of the parties hereto waive and relinquish any rights and benefits
which they have or may have under any statute or law which limits the release of
unknown claims, to the full extent that they may lawfully waive all such rights
and benefits pertaining to the subject matter of this Agreement. Each of the
parties hereto acknowledge that they are aware that they may later discover
facts in addition to or different from those which they now know or believe to
be true with respect to the subject matter of this Agreement, but it is their
respective intention to fully and finally forever settle and release any and all
matters, disputes and differences, known and unknown, suspected and unsuspected,
which now exist, may later exist or may previously have existed between them, in
each case only with respect to the matters set forth in this Agreement, and that
in furtherance of this intention, the releases given in this Agreement shall be
and remain in effect as full and complete general releases notwithstanding
discovery or existence of any such additional or different facts.
6. REPRESENTATIONS BY THE PARTIES. Each of the parties warrants and
represents to the others that none of them has assigned or transferred or
purported to assign or transfer to any person not a party to this Agreement any
matter or any part or portion of any matter covered by this Agreement, and each
of them agrees to indemnify and hold harmless the other from and against any
claim, demand, damage, debt, liability, account, reckoning, obligation, cost,
expense, lien, action or cause of action (including attorneys' fees and costs
paid or incurred) based upon or in connection with or arising out of any such
assignment or transfer or purported or claimed assignment of transfer.
7. NO ADMISSION. The execution of this Agreement effects the settlement
of claims which are contested and denied. Nothing contained in this Agreement
shall be construed as an admission by any part of any liability of any kind to
the other parties. Each party acknowledges that the others expressly deny that
any of them is in any way liable or obligated to the others.
8. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties; there are no representations, covenants or undertakings other
than those expressly set forth in this Agreement. Each party acknowledges that
no other party or
<PAGE> 3
any agent or attorney of any other party has made any promise, representation or
warranty whatsoever, express, implied or statutory, other than those contained
in this Agreement, to induce them to execute this Agreement. The parties
acknowledge that they have not executed this Agreement in reliance upon any such
promise, representation or warranty not specifically contained in this
Agreement.
9. BINDING ON SUCCESSORS. This Agreement and the covenants and
conditions contained in it shall apply to, be binding upon and inure to the
benefit of the respective heirs, administrators, executors, legal
representatives, assigns, successors and agents of each of the parties.
10. SEVERABILITY. The provisions of this Agreement are severable;
should any provision for any reason be held to be unenforceable, the remaining
provisions shall nonetheless be of full force and effect.
11. GOVERNING LAW. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Florida without
reference to any conflicts of law principles.
12. JOINT PREPARATION. This Agreement is to be deemed to have been
jointly prepared by the parties, and any uncertainty or ambiguity in it shall
not be interpreted against any of the parties, but according to the application
of the rules of interpretation of contracts.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: /s/ PATRICIO E. NORTHLAND
----------------------------------
Its: President and CEO
----------------------------------
/s/ ELEAZAR DONOSO
-------------------------------------
ELEAZAR DONOSO
