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Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15(d)
Of the Securities and Exchange Act of 1934
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(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934 FOR THE TRANSITION
PERIOD FROM _______ TO ______
Commission file number 0-25194
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InterAmericas Communications Corporation
(Exact name of registrant as specified in charter)
Texas 87-0464860
(State of Incorporation) (IRS Employee Identification)
1221 Brickell Avenue
Miami, Florida 33131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number:
(305) 377-6790
Indicate by check mark whether the registrant (1) filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period than that the registrant was required to file
such reports),
Yes [X] No [ ]
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of May 14, 1997 - 16,152,518
NOTE: Page 1 of 11 sequentially numbered pages
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INTERAMERICAS COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Part I. Financial Information
Item 1. Condensed Consoldiated Financial Statements
Balance Sheets -- Three Months Ended March 31, 1997
and Year Ended December 31, 1996 3
Statements of Operations -- Three Months Ended
March 31, 1997 and 1996 4
Statements of Cash Flows -- Three Months Ended
March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of Operations,
Financial Conditions and Liquidity and Capital Resources 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
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InterAmericas Communications Corporation
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, 1997 Dec. 31, 1996
(Unaudited) Audited
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,016,070 $ 723,396
Restricted cash 350,000 0
Accounts receivable 146,037 113,277
Other receivables 131,757 96,686
Prepaid expenses 491,419 329,806
Due from related parties 17,000 26,424
Other current assets 69,046 38,236
----------- -----------
TOTAL CURRENT ASSETS 2,221,329 1,327,825
OTHER NONCURRENT ASSETS
Property and equipment, net 4,195,024 3,956,130
Intangible assets, net 5,046,669 5,028,107
Other assets 41,869 42,333
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TOTAL ASSETS $11,504,891 $10,354,395
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank line of credit $ 350,000 $ 0
Accounts payable and
accrued expenses 1,305,189 1,389,647
Lease obligations, current 138,605 114,308
Other current liabilities 388,048 171,303
----------- -----------
TOTAL CURRENT LIABILITIES 2,181,842 1,675,258
OTHER LIABILITIES
Convertible debentures 1,500,000 0
Lease obligations, less current portion 452,523 248,238
Deferred income taxes 156,996 152,105
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TOTAL OTHER LIABILITES 2,109,519 400,343
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TOTAL LIABILITIES 4,291,361 2,075,601
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, authorized
10,000,000 shares, none issued 0 0
Common stock, $.001 par value, authorized
50,000,000 shares, 16,152,518 issued
and outstanding 16,153 16,153
Additional paid in capital 18,492,957 18,492,957
Accumulated deficit (11,199,614) (10,152,607)
Cummulative translation adjustments (95,966) (77,709)
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Total Stockholders' Equity 7,213,530 8,278,794
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,504,891 $10,354,395
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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InterAmericas Communications Corporation
Condensed Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
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1997 1996
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<S> <C> <C>
Sales $ 567,968 $ 54,453
Cost of Sales (560,177) (213,518)
Selling, general and administrative expenses (1,035,293) (456,923)
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LOSS FROM OPERATIONS (1,027,502) (615,988)
Interest income and other 17,901 13,167
Interest expense (37,406) (10,675)
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NET LOSS $(1,047,007) $ (613,496)
=========== ============
NET LOSS PER SHARE $ (0.06) $ (0.05)
=========== ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 16,152,518 12,198,076
=========== ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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InterAmericas Communications Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
-----------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,047,007) $ (510,929)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Amortization and depreciation expense 220,002 1,672
Changes in assets and liabilities:
Accounts receivable (32,760) (49,199)
Other receivables (35,071) 7,000
Prepaid expenses (161,613) (15,796)
Due from related parties 9,424 3,172
Other current assets (30,810) (16,808)
Accounts payable and accrued expenses (84,458) (648,772)
Lease obligations, current 24,297 0
Other current liabilities 216,745 0
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NET CASH USED IN OPERATING ACTIVITIES (921,251) (1,229,660)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 0 500
Conversion of notes payable to equity 0 1,232,800
Proceeds from credit agreements 1,704,285 83,142
Capital contribution 0 1,124,500
Exchange rates (18,257) 12,498
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NET CASH PROVIDED BY FINANCING ACTIVITIES 1,686,028 2,453,440
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CASH FLOWS FROM INVESTING ACTIVITES:
Investment in equipment and intangible assets (477,458) (96,453)
Decrease in other assets 5,355 5,240
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NET CASH USED IN INVESTING ACTIVITES: (472,103) (91,213)
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NET INCREASE IN CASH AND CASH EQUIVALENTS 292,674 1,132,567
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 723,396 57,000
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,016,070 $ 1,189,567
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
CONVERSION OF NOTES PAYABLE TO EQUITY $ 752,827
===========
RESTRICTED CASH RECEIVED FROM BANK LINE OF CREDIT $ 350,000
===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
COMPANY OVERVIEW
InterAmericas Communications Corporation (the "Company") is a growing
provider of a wide range of telecommunications services over state-of-the-art
fiber optic networks in Santiago, Chile and Lima, Peru. The Company's strategy
is to provide advanced telecommunications services in selected markets in Latin
America, where market deregulation and high demand for access to emerging
telecommunications networks and services should create significant opportunities
for early market entry and expansion.
Currently, the Company has two major wholly owned subsidiaries.
Its Chilean subsidiary, Hewster-Chile ("Hewster"), provides business to
business communication to end users and other carriers in Santiago with high
quality voice and data digital communications services on a private line basis
through a 120 kilometer fiber optic network. In addition, Hewster-Chile provides
its customers with local and wide area network design, engineering,
installation, systems integration and support services. Santiago, the capital of
Chile, has a population of approximately 5.4 million people.
Its Peruvian subsidiary, Red de Servicios Empresariales de
Telecomunicaciones, S. A. ("Resetel"), intends to provide services similar to
Hewster, on a private line basis through a fiber optic network in metropolitan
Lima. Currently, the Company has installed approximately 30 kilometers of its
fiber optic network and plans to complete the installation of another 110
kilometers of fiber optic cable by the end of 1997. Lima, and its adjacent port
city of Callao, has a combined population of approximately 6.4 million people.
FORWARD-LOOKING STATEMENTS
Certain statements set forth below constitute "forward-looking
statements" within the meaning of the safe harbor statements provided under the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
that may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Given these uncertainties, investors and creditors are cautioned not
to place undue reliance on such forward-looking statements.
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RECENT DEVELOPMENTS
In November 1996, the Company hired Patricio E. Northland as Chairman
and Chief Executive Officer. Mr. Northland, a U.S. citizen who grew up in Chile,
has an extensive background in international telecommunications and a wide
network of relationships in this industry throughout Latin America. On May 1,
1997, the Company hired Douglas G. Geib II as Chief Financial Officer. Mr. Geib
is a former Partner with the international accounting, tax and consulting firm
of Ernst & Young, LLP. Mr. Geib has extensive experience in corporate finance,
mergers and acquisitions, SEC public registration statements and industry
expertise in a variety of industries, including telecommunications. Terms of Mr.
Geib's three year employment agreement include base salary, performance awards
and non-qualified stock options to purchase 500,000 shares of the Company's
common stock at $2.42 per share.
The Company believes that the background and expertise of Mr. Northland
and Mr. Geib form the essential foundation to aggressively expand the Company's
current operations during the coming year.
On May 7, 1997 the Company issued $2 million of 8% convertible
debentures. This offering is in addition to a similar financing in February 1997
that raised $1.5 million. The terms and conditions of the May offering are
similar to the convertible debentures that were issued in February 1997. The
proceeds from the offering are being used to finance the construction of the
Resetel fiber optic network, complete construction of the Hewster fiber optic
network, and to pay for the administrative and operating costs of the Company.
BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements included
herein have been prepared by the Company. The foregoing statements contain all
adjustments, consisting only of normal recurring adjustments which are, in the
opinion of the Company's management, necessary to present fairly the
consolidated financial position of the Company as of March 31, 1997 and the
consolidated results of its operations and its consolidated cash flows for the
three months ended March 31, 1997 and 1996.
Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. These unaudited condensed
consolidated financial statements should be read in conjunction with the
December 31, 1996 audited financial statements of the Company and the notes
thereto.
The financial statements have been prepared on the going concern basis
of accounting, which contemplates realization of assets and liquidation of
liabilities in the ordinary course of business. The Company has incurred
operating losses since its
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inception while investing in the infrastructure necessary to generate material
operating revenues in the future. In addition, the Company has funded a
significant amount of capital expenditures over the same time period. The
Company's continued funding of its operating expenses, working capital needs and
capital expenditures is dependent on its ability to raise additional financing
in the future. Historically, the Company has been successful in raising such
funds.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS,
FINANCIAL CONDITIONS, AND LIQUIDITY AND CAPITAL RESOURCES
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
The Company's sales for the three months ended March 31, 1997 were
$567,968 as compared to $54,453 for the three months ended March 31, 1996. This
increase of approximately $568,000, was attributable to the acquisition of
Hewster Servicios Intermedios, S.A. on July 31, 1996 (currently an operating
division of Hewster), an investment in the required infrastructure necessary to
drive incremental sales, and ongoing marketing of the Company's fiber optic
network in Santiago.
The Company's cost of sales for the three months ended March 31, 1997
was $560,177 as compared to $213,518 for the three months ended March 31, 1996.
This increase of approximately $347,000, was attributable to added costs
associated with the increase in sales discussed above. For the first quarter of
1997 the increase in cost of sales was at a slower rate than the increase in
sales, as compared to the first quarter of 1996, because a greater portion of
the Company's sales costs were more variable in nature during 1997.
The Company's selling, general and administrative expenses ("SG&A") for
the three months ended March 31, 1997 were $1,035,293 as compared to $456,923
for the three months ended March 31, 1996. This increase of approximately
$578,000, was primarily attributable to an increase in the number of personnel
at Hewster, additional marketing expenses related to the Chilean fiber optic
network and corporate expenses related to financing and business development
opportunities. Mr. Northland, the Company's new CEO, continues to emphasize the
importance of controlling all costs, especially SG&A, even though the Company is
growing rapidly. For example, such expenses for Hewster decreased from
approximately $710,000 in the fourth quarter of 1996 to approximately $558,000
in the first quarter of 1997, or a decrease of $152,000. This decrease occurred
despite an increase in Hewster's sales to $568,000 in the first quarter of 1997
from approximately $185,000 in the fourth quarter of 1996.
The Company's interest expense for the three months ended March 31,
1997 was $37,406 as compared to $10,675 for the three months ended March 31,
1996. This increase of approximately $27,000, was due to additional financing
costs related to the issuance of convertible debentures in February 1997.
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The Company's net loss for the three months ended March 31, 1997 was
$1,047,007 as compared to $613,496 for the three months ended March 31, 1996.
The increase in the Company's net loss was primarily due to the ongoing
investment in the Company's infrastructure in anticipation that sales will
increase in the future.
LIQUIDITY AND CAPITAL RESOURCES
The Company has experienced operating losses since its inception as a
result of efforts to construct its network infrastructure, build its customer
base, develop its systems, compensate new employees and expand into new markets.
On a cost effective basis, the Company expects to continue to focus on
increasing its customer base, internal resources and geographic coverage.
Accordingly, the Company expects that its cost of sales, SG&A and capital
expenditures will continue to increase significantly, all of which may have a
negative impact on operating results for the foreseeable future. The Company
expects to incur significant operating losses and to generate negative cash
flows from operating and construction activities during the next several years
while it further develops its business and installs and expands its fiber optic
network.
Should the Company not be able to obtain the necessary financing to
further develop its operations, the Company's business and prospects would be
materially adversely affected and the Company would be required to delay capital
and other expenditures. This, in turn, would delay the anticipated revenue
streams associated with those projects until such time, if any, that such
financing becomes available. The Company estimates that its present cash level
would allow the Company to continue operations for approximately three months,
although no assurance can be given in this regard.
Cash used in operating activities for the three months ended March 31,
1997 was approximately $921,000 as compared to approximately $1.2 million for
the three months ended March 31, 1996. Cash used in operating activities relate
primary to operational, administrative and business development expenses
incurred prior to the generation of revenues.
Cash provided by financing activities during the three months ended
March 31, 1997 approximated $1.7 million and relates primarily to the proceeds
received from the issuance of convertible debentures in February 1997. Cash used
in investing activities during the three months ended March 31, 1997 was
approximately $472,000. These funds were used primarily to expand the Company's
fiber optic networks in Chile and Peru.
EFFECTS OF INFLATION
The Company does not believe that inflation had any significant impact
on operations in 1996, nor does it expect that it will have any significant
impact on operations throughout 1997.
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PART II
OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits listed below are filed as part of this Report.
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------
10.1 Executive Employment and Severance Agreement
dated April 14, 1997 between InterAmericas
Corporation and Douglas G. Geib II.
10.2 Stock Option Agreement dated May 1, 1997 between
InterAmericas Communications Corporation and
Douglas G. Geib II.
10.3 Registration Rights Agreement dated May 1, 1997
between InterAmericas Communications
Corporation and Douglas G. Geib II.
10.4 Securities Purchase Agreement dated May 6, 1997
between InterAmericas Communications
Corporation and Arcadia Importers and
Exporters, Inc.
10.5 Debenture dated May 6, 1997 issued by
InterAmericas Communications Corporations to
Arcadia Importers and Exporters, Inc.
10.6 Registration Rights Agreement dated May 6, 1997
between InterAmericas Communications
Corporation and Arcadia Importers and
Exporters, Inc.
27 Financial Data Schedule (for SEC use only)
(b) During the first quarter of 1997, the Company did not file a
Form 8-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERAMERICAS COMMUNICATIONS CORP.
/s/ Patricio E. Northland 5/14/97
- ------------------------------------------------ ---------------
Patricio E. Northland Date
President, Chairman of the Board and Chief
Executive Officer
/s/ Douglas G. Geib II 5/14/97
- ------------------------------------------------ ---------------
Douglas G. Geib II Date
Chief Financial Officer
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EXHIBIT 10.1
EXECUTIVE EMPLOYMENT
AND SEVERANCE AGREEMENT
THIS EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT (the "AGREEMENT") is
executed as of the 14th day of April, 1997, by and between InterAmericas
Communications Corporation, a Texas corporation (hereinafter referred to as the
"COMPANY"), and Douglas G. Geib II (hereinafter referred as the "EXECUTIVE").
WITNESSETH:
WHEREAS, the Company desires to have the benefit of the Executive's
efforts and services:
WHEREAS, the Executive is willing to commit himself to serve the
Company, on the terms and conditions herein provided; and
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.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree a 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 in
connection with 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.
(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.
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(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 as reasonably
requested by the Company's Chief Executive Officer (the "CEO")
(unless significantly changed without the Executive's
consent); or
(iv) Gross Negligence by the Executive in performing
the Executive's material duties or responsibilities as
reasonably requested by the CEO (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 May 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;
(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 (other than a
one-time reduction of twenty-five percent (25%) or less in the
compensation and/or benefits which reduction is generally
effective for the CEO.
(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
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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) If Patricio Northland fails to be employed by as
CEO of Company at any time during the Employment Term other
than upon expiration of Mr. Northland's employment agreement
with the Company;
(vi) The assignment to the Executive of duties,
responsibilities or authority that is materially inconsistent
with Sections 4(a) and 4(b) hereof; or
(vii) 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 commence on the Effective Date and end on
April 30, 2000. Such period is hereinafter defined as the "Employment Term."
4. POSITIONS AND DUTIES.
(a) The Executive shall serve as Chief Financial Officer and
as a member of the Board of Directors 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 or the CEO, provided such duties,
responsibilities and authority are of a nature customarily assigned to
directors and chief financial officers of companies similar in size and
structure to the Company. The Executive shall devote substantially all
the Executive's working time and reasonable efforts to the business and
affairs of the Company.
(b) The Executive's duties shall include, but not be limited
to, the following:
(i) Recommend to the CEO the approval of budgets,
cash flow plans and schedules and any amendments thereto of
the Company and its affiliates and subsidiaries;
(ii) Recommend to the CEO the appointment of the
independent public accountants of the Company;
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(iii) Assist the CEO in the preparation and filing of
all reports, returns and notices required to be filed by the
Company;
(iv) Use his reasonable efforts to obtain financing
for the operations and expansion of the Company;
(v) Assist the Company's legal counsel in connection
with the preparation of filings required to be made by the
Company with the U.S. Securities and Exchange Commission;
(vi) Assist the CEO in the due diligence review of
companies sought to be acquired by the Company;
(vii) Assist the CEO in expanding, improving and
enhancing investor relations;
(viii) Supervise and direct the financial and
accounting activities of the Company and of the operating
subsidiaries and affiliates of the Company;
(ix) establish fully integrated accounting and
financial control systems for the Company, its operating
subsidiaries and affiliates; and
(x) Subject to Section 4(a) hereof, take any other
action that may be reasonably requested by the Board of
Directors or by the CEO of the Company.
(c) The Executive shall report to the CEO of the Company.
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. The Company hereby acknowledges that the Executive presently
resides in Brecksville, Ohio, and agrees that between the date of this Agreement
and the date that the Executive permanently relocates his family to Miami,
Florida, the Company will pay all costs and expenses reasonably incurred by the
Executive and his wife and children in traveling between Brecksville, Ohio, and
Miami, Florida, including, without limitation, costs of transportation, meals
and lodging. The Company further agrees to reimburse for all costs and expenses
reasonably incurred by the Executive in moving from Brecksville, Ohio to Miami,
Florida, including, without limitation, (a) all brokerage fees related to the
sale and/or rental of Executive's Brecksville, Ohio, residence and to the
purchase and/or rental of a Miami, Florida, residence, (b) costs and expenses
(including transportation, meals and lodging) incurred by the Executive and his
immediate family in connection with house hunting trips, and (c) costs and
expenses relating to packing and transporting goods and personal belongings from
Brecksville, Ohio, to Miami, Florida, such costs and expenses to be reimbursed
by the Company within seven days of presentment by the Executive to the Company
of receipts evidencing such costs and expenses. Notwithstanding the foregoing,
in no event shall the costs and expenses incurred by the Executive and his
immediate family pursuant to this Section 5 exceed $40,000 without the prior
written consent of the CEO.
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) Commencing on the date hereof, the Company shall pay to
the Executive an annualized base salary at a rate of $250,000 (Two
Hundred and Fifty Thousand U.S. Dollars) in
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equal installments as nearly as practicable on the fifteenth and last
days of each month, in arrears. Commencing May 1, 1998, and each May 1,
thereafter during the Employment Term, the Base Salary shall be
increased, but shall not be decreased, by that percentage by which the
Consumer Price Index (All Items Less Shelter), Urban Wage Earners and
Clerical Workers, for the Miami, Florida area published by the United
States Government (the "Index") for the immediately preceding calendar
year exceeds such index for the next preceding calendar year. If
publication of the Index is discontinued, the parties hereto shall
accept comparable statistics on the cost of living for the Miami,
Florida area as computed and published by an agency of the United
States government or, if no such agency computes and publishes such
statistics, by any regularly published national financial periodical
that does compute and publish such statistics. The Executive's base
salary may be increased above the foregoing amounts at the discretion
of the Board of Directors.
(b) Performance awards. The Executive shall be entitled to
receive an annual performance award (a "Bonus"), as determined by the
CEO in his reasonable discretion, not to exceed Two Hundred Fifty
Thousand Dollars ($250,000), based upon the fulfillment of the
Executive's duties as specified in Section 4(b) hereof. 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.
(c) 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;
(d) The Executive hereby is granted an option (the "Option")
to purchase 500,000 shares of the Company's common stock at an exercise
price equal to the average closing price of the Company's Common Stock
on the Nasdaq SmallCap Market for the five consecutive trading days
ending on April 17, 1997. The Option may be exercised, in whole or in
part, subject to the following sentence, in accordance with the
following vesting schedule: (i) 1/3 of the Option shall vest
immediately upon the signing this Agreement, (ii) 1/3 of the Option
shall vest one year after the signing of this Agreement, (iii) 1/3 of
the Option shall vest two years after the signing of this Agreement.
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 Reasons, any portion of the Option which
has not vested prior to such termination or resignation shall be
cancelled 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
(e) Stock Option and Registration Rights: Simultaneously with
the execution of this Agreement, the Company agrees to execute and
deliver to the Executive the Stock Option Agreement and the
Registration Rights Agreement in the forms attached hereto as Exhibits
1 and 2, respectively. The Company hereby represents and warrants that,
except for the number of shares subject to the attached agreements and
the exercise price relating thereto, the terms of the Stock Option
Agreement and the Registration Rights Agreement attached hereto are the
same as the terms of the Stock Option Agreement and the Registration
Rights Agreement entered into between the Company and Patricio
Northland.
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<PAGE> 6
(f) The Executive shall be entitled to four weeks 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.
(h) The Executive shall be provided with major medical,
hospitalization, and dental insurance; disability insurance; term life
insurance equal to one year's salary; and other benefits upon terms and
conditions similar to those provided to the Company's other executive
officers.
(i) The Executive shall be provided a car allowance not to
exceed $600 per month.
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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<PAGE> 7
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.
Such lump sum payment shall not be reduced by any present value or
similar factor. 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 by reason of 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 cure period specified in
Section 1 hereof, the Executive shall continue to receive 50% of the
Executive's base salary 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
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<PAGE> 8
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
dispute, 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.
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, that the Executive will not:
(a) 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
(b) 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
(c) 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
(d) 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.
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<PAGE> 9
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.
(a) The Company hereby agrees to reimburse the Executive for all
reasonable attorney's fees incurred by the Executive in connection with the
negotiation and preparation of this Agreement. (b) 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 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.
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<PAGE> 10
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 paid
to 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. RIGHT TO CANCELLATION.
Notwithstanding anything to the contrary contained herein, in the event
the Board of Directors does not elect the Executive as a member of the Board of
Directors of the Company within ten (10) business days from the date hereof, the
Executive shall have the right to cancel this Agreement upon written notice to
the Company within fifteen (15) days from the date hereof, in which event the
Executive and the Company shall be relieved of all of their respective
obligations and liabilities in connection with this Agreement. Upon the
Executive's cancellation of this Agreement pursuant to this Section 23, the
Executive shall not be entitled to any of the compensation provided for in this
Agreement including, without limitation, termination payment pursuant to Section
13.
24. 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.
25. 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.
26. 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.
27. HEADINGS.
The headings herein contained are for reference only and shall not
affect the meaning ~ interpretation of any provision of this Agreement.
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<PAGE> 11
28. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
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/ Patricio E. Northland
-------------------------
Patricio E. Northland
President and Chief
Executive Officer
/s/ Douglas G. Geib II
-------------------------
Douglas G. Geib II
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<PAGE> 1
EXHIBIT 10.2
NEITHER THIS OPTION NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF HAS
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAW (THE "LAW"), AND THIS OPTION HAS BEEN,
AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER THE LAW
RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
INTERAMERICAS COMMUNICATIONS CORPORATION AND ITS COUNSEL, THAT SAID REGISTRATION
AND QUALIFICATIONS ARE NOT REQUIRED UNDER THE ACT AND LAW, RESPECTIVELY.
INTERAMERICAS COMMUNICATIONS CORPORATION
STOCK OPTION AGREEMENT
This stock option (the "OPTION" or the "AGREEMENT") is being granted
pursuant to certain resolutions of the Board of Directors of InterAmericas
Communications Corporation (the "COMPANY").
I. NOTICE OF STOCK OPTION GRANT
OPTIONEE: Douglas G. Geib II
The Optionee has been granted an option to purchase Common Stock of
InterAmericas Communications Corporation (the "COMPANY"). This option shall be
subject to the following terms and conditions:
<TABLE>
<S> <C>
Date of Grant April 8, 1997
Number of Shares Subject
to Option 500,000
Type of Option: Incentive Stock Option, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE")
(subject to paragraph 9 hereof)
Expiration Date: April 8, 2007, unless sooner terminated as set forth herein.
Vesting Schedule: The Option may be exercised, in whole or in part, in
accordance with the following vesting schedule:
(i) 1/3 of the Option shall vest immediately upon the
signing of this Agreement,
(ii) 1/3 of the Option shall vest one year after the
signing of this Agreement,
(iii) 1/3 of the Option shall vest two years after the
singing of this Agreement.
Exercise Price: The exercise price (the "Exercise Price")
shall be equal to $2.437 per share of the Company's
Common Stock, representing the closing price of the
Company's Common Stock on the Nasdaq SmallCap Market
on April 10, 1997.
</TABLE>
<PAGE> 2
II. AGREEMENT
1. GRANT OF OPTION. The Company hereby grants to the Optionee named in
the Notice of Stock Option Grant ("NOTICE OF GRANT") attached as Part I of this
Agreement (the "OPTIONEE"), an option (the "OPTION") to purchase the number of
shares ("SHARES") of the Company's Common Stock, par value $.001 per share
("COMMON STOCK"), as set forth in the Notice of Grant, at the Exercise Price per
Share set forth in the Notice of Grant, subject to the terms and conditions set
forth herein.
2. EXERCISE OF OPTION.
(a) Rights to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule and Exercise Price set
forth in the Notice of Grant and the applicable provisions of this
Option Agreement. In the event of Optionee's death, Disability or other
termination of Optionee's employment relationship, the exercisability
of the Option shall be governed by the applicable provisions of the
Employment Agreement dated the date hereof between the Optionee and the
Company (the "Employment Agreement").
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit A (the "EXERCISE
NOTICE"), which shall state the election to exercise the Option, the
number of Shares in respect of which the Option is being exercised (the
"EXERCISED SHARES"), and such other representations and agreements as
may be required by the Company. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The Exercise Notice shall be accompanied
by payment of the aggregate Exercise Price as to all Exercise Shares.
This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) Cash;
(b) Check;
(c) In lieu of exercising this Option by delivery of cash or
check, the Optionee may make a valid Option exercise by electing to
receive Shares equal to the value of this Option (or the portion
thereof being canceled) by surrendering this Option at the principal
office of the Company together with the Exercise Notice (a "NET
EXERCISE"), in which event the Company shall transfer to the Optionee a
number of Shares computed using the following formula:
<TABLE>
<S> <C> <C>
X = Y (A-B)
------
A
Where X = the number of Option Shares to be issued to such Optionee.
Y = the number of Option Shares purchasable by such Optionee under this
Option Agreement the rights to which are surrendered pursuant to
the Net Exercise.
A = the Fair Market Value of one Option Share, (as determined by the
average bid and ask price (or closing price, as appropriate) per
share
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
of Common Stock as quoted on Nasdaq or other national exchange
upon which the Company's Common Stock is quoted).
B = the Exercise Price (as adjusted to the date of such
calculation).
</TABLE>
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised in accordance with the
terms of the Employment Agreement.
6. TERMINATION OF OPTION. The Option shall terminate in accordance with
the provisions of the Employment Agreement.
7. DILUTION PROTECTION.
(a) In the event the Company shall (i) declare a dividend on
its Common Stock in shares of Common Stock or make a distribution in
shares of Common Stock, (ii) declare a stock split or reverse stock
split of its outstanding shares of Common Stock; (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities (including any such reclassification in
connection with a consolidation or merger in which the Company or any
of its subsidiaries is the continuing corporation), then the number of
shares of Common Stock of the Company deliverable to Optionee hereunder
and the exercise price related thereto shall be adjusted so that the
Optionee shall be entitled to receive the kind and number of shares of
Common Stock of the Company which the Optionee has the right to
receive, upon the happening of any of the events described above, with
respect to the shares of the Common Stock which were otherwise
deliverable pursuant hereto and the exercise price per share thereof
shall be adjusted so that the same percentage of the Company's issued
and outstanding shares of capital stock shall remain subject to
purchase at the same aggregate exercise price. An adjustment made
pursuant to this paragraph shall become effective immediately after the
effective date of such event;
(b) In the event of any consolidation or merger to which the
Company is a party other than a merger or consolidation in which the
Company is the continuing corporation, or in case of any sale or
conveyance to another entity of the property of the Company as an
entirety or substantially as an entirety, or in the case of any
statutory exchange of securities with another corporation (including
any exchange effected in connection with a merger of a third
corporation into the Company), as a condition to any such
consolidation, merger or sale, the Company shall secure the agreement
of the surviving corporation or purchaser, in a manner reasonably
satisfactory to the Optionee, that the Optionee shall have the right
thereafter to convert this Option into the kind and amount of
securities, cash or other property which he would have owned or have
been entitled to receive immediately after such consolidation, merger,
statutory exchange, sale or conveyance had the Option been exercised
immediately prior to the effective date of such consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if
necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 7 shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in
relation to any shares of stock or other securities or property
thereafter deliverable on the exercise of this Option. The above
provisions of this Subsection 7(b) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances.
Notice of any such consolidation, merger, statutory exchange, sale or
conveyance and of said provisions so proposed to be made, shall be
mailed to the Optionee not less than 20 days prior to such event. A
sale of all or substantially all of the assets of the Company for a
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<PAGE> 4
consideration consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
(c) Whenever the number of Shares or the exercise price of
this Option is adjusted pursuant to this paragraph, the Company shall
promptly mail by first class mail, postage prepaid, to Optionee, notice
of such adjustment or adjustments.
(d) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable.
(i) If there occurs any transaction (which shall include
a series of transactions occurring within 60 days or
occurring pursuant to a plan), that has the result
that shareholders of the Company immediately before
such transaction cease to own at least 51 percent of
the voting stock of the Company or of any entity that
results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or
any other form of corporate transaction;
(ii) If the shareholders of the Company shall approve a
plan of merger, consolidation, reorganization,
liquidation or dissolution in which the Company does
not survive (unless the approved merger,
consolidation, reorganization, liquidation or
dissolution is subsequently abandoned); or
(iii) If the shareholders of the Company shall approve a
plan for the sale, lease, exchange or other
disposition of all or substantially all the property
and assets of the Company (unless such plan is
subsequently abandoned).
8. AVAILABILITY OF COMPANY STOCK. The Company hereby agrees and
covenants that at all times during the Exercise Period it shall reserve for
issuance a sufficient number of shares of Common Stock as would be required upon
full exercise of the Option represented by this Agreement
9. APPROVAL OF STOCK OPTION PLAN. The Company intends, at its next
Annual Meeting of Shareholders (the "ANNUAL MEETING"), to submit for shareholder
consideration and approval its 1997 Stock Option Plan (the "PLAN"). In the event
that the Plan is approved by the Company's shareholders, then this Option shall
be deemed to be an Incentive Stock Option (within the meaning of the Internal
Revenue Code of 1986, as amended, (the "Code") have been granted under and
pursuant to the Plan. If, however, the Plan is not so approved at the Annual
Meeting, then this Option shall be deemed to be a non-qualified stock option
(which means any option which is not an Incentive Stock Option under the Code).
10. NO RIGHT TO EMPLOYMENT. Nothing in this Agreement shall interfere
with or limit in any way the right of the Company to terminate the Optionee's
employment at any time, nor confer upon the Optionee any right to continue in
the employ of the Company or any Subsidiary (subject, in each case, to the
Optionee's Employment Agreement with the Company);
11. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Florida.
12. TERMS OF EMPLOYMENT AGREEMENT TO CONTROL. In the event of any
conflict between the terms of this Agreement and the Employment Agreement, the
terms of the Employment Agreement shall be deemed to prevail.
4
<PAGE> 5
IN WITNESS WHEREOF, this Agreement is executed as of the 1st day of
May, 1997.
INTERAMERICAS COMMUNICATION CORPORATION
By: /s/ Patricio E. Northland
-------------------------
Its: President
------------------------
OPTIONEE:
/s/ Douglas G. Geib II
----------------------
Douglas G. Geib II
5
<PAGE> 6
EXHIBIT A
INTERAMERICAS COMMUNICATIONS CORPORATION
EXERCISE NOTICE
InterAmericas Communications Corporation
1221 Brickell Avenue
Miami, FL 33131
1. EXERCISE OF OPTION. Effective as of today, _____________, 199__, the
undersigned ("PURCHASER") hereby elects to purchase __________ shares (the
"SHARES") of the Common Stock of InterAmericas Communications Corporation (the
"COMPANY") under and pursuant to the Stock Option Agreement dated April __, 1997
(the "OPTION AGREEMENT"). The purchase price for the Shares shall be as set
forth in the Option Agreement, as adjusted.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares (either in cash, check or through a Net
Exercise as defined in the Option Agreement).
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser
has received, read and understood the Option Agreement and agrees to abide by
and be bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by
reference. This Exercise Notice and the Option Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof.
Submitted by: Accepted by:
OPTIONEE: INTERAMERICAS COMMUNICATIONS CORPORATION
By: By:
-------------------------- ------------------------------
Its:
------------------------------
Address:
- --------
- -----------------------------
<PAGE> 1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered
into as of the 1st day of May, 1997, by and between InterAmericas Communications
Corporation (the "Company") and Douglas G. Geib II (the "Holder").
RECITALS
--------
A. Pursuant to an Employment Agreement of even date herewith (the
"Employment Agreement"), the Holder is becoming the Chief Financial Officer of
the Company.
B. Under the Employment Agreement, the Company is granting the Holder
an option to purchase 500,000 shares of the Company's common stock, par value
$.001 per share ("Common Stock").
C. The Company has agreed to register under the Securities Act of 1933,
as amended (the "Securities Act"), the shares (the "Shares") of Common Stock of
the Company to be received by the Holder from time to time under the Option
Agreement, upon the terms, and subject to the conditions, hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good, valuable and
sufficient consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
AGREEMENT
---------
1. Registration at the Request of the Holder.
(a) The Company agrees that upon receipt by the Company of a
Registration Demand (as hereinafter defined) satisfying the conditions under
Section 1(b) hereof, the Company will, with reasonable promptness, and in any
case not later than ninety (90) days after receipt by the Company of the
Registration Demand (except that such filing shall be coordinated with the close
of the fiscal quarters of the Company), file a registration statement with the
Securities and Exchange Commission ("Commission") relating to such shares of
Common Stock as to which registration is requested in the Registration Demand.
The Company shall use its best efforts to cause such registration statement to
promptly become effective under the Securities Act and to qualify the same under
the blue sky laws of such states as may be requested; provided, however, that
with respect to compliance with blue sky laws, the Company shall not be
obligated to qualify as a foreign corporation or as a dealer in securities or to
execute or file any general consent to service of process under the laws of any
such state where it is not so subject.
(b) A "REGISTRATION DEMAND" shall be a written notice from the
Holder stating that he desires to sell shares of Common Stock ("Shares") under
circumstances requiring registration under the Securities Act and requesting
that the Company effect registration with respect to the Shares held by the
Holder and designated in such written notice, PROVIDED, that (i) in no event may
the Holder make a Registration Demand before November 15, 1997 and (ii) the
number of Shares sought to be sold by the Holder pursuant to such Registration
Demand shall not
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<PAGE> 2
be less than 100,000 Shares (as adjusted to reflect any stock dividend, stock
split, recapitalization, merger or other such transaction involving the
Company).
(c) The Company shall be obligated to effect registration and
qualification pursuant to a request of the Holder under this Section 1 no more
than three times subject to the terms and conditions hereof.
(d) If the Holder informs the Company by written notice that
he is withdrawing his Registration Demand, then the registration statement need
not be filed and may be withdrawn, and if any registration statement that has
been filed with the Securities and Exchange Commission is withdrawn (which the
Company hereby agrees to use its best efforts to so cause) and the Holder pays
all of the Company's out-of-pocket expenses with respect to such registration
and qualification incurred to the date of the notice under this Section 1(d),
then the whole effort will not count as a registration and qualification (or an
exercise of rights) for purposes of the limit established in Section 1(c)
hereof. If the withdrawing Holder does not pay such out-of-pocket expenses, then
the effort will so count.
2. PIGGY BACK RIGHTS. If the Company shall at any time propose
to file a registration statement under the Securities Act for any underwritten
sales of shares of any of the Company's equity securities (or any warrants,
units, convertibles, rights or other securities related or linked to any shares
of the Company's equity securities), whether for a secondary offering or for a
primary offering of equity securities by the Company, and if the Company shall
at any time propose to file a registration statement under the Securities Act
pursuant to Section 1 hereof, the Company shall give written notice of such
registration to the Holder no later than thirty (30) days before its filing with
the Commission; provided, that registrations in connection with any employee
stock option or employee stock purchase or savings plan shall not be deemed to
be an underwritten sale for purposes of this Section 2. If the Holder so
requests within thirty (30) days, the Company shall include in any registration
the Shares (including Shares issuable upon exercise of any vested and
immediately exercisable option) held by the Holder and requested to be included
in such registration, but the Company shall not be obligated to so include such
Shares to the extent the underwriter or underwriters, if any, of such securities
being otherwise registered by the Company shall determine in good faith that the
inclusion of such Shares would jeopardize the successful sale at the desired
price of such other securities proposed to be sold by such underwriter or
underwriters, in which case the Shareholder or Shareholders requesting to
participate in such registration shall be entitled to participate in any such
reduced number of Shares (if any) which may be included in such registration.
The obligations and rights of the Company and the Holder under this Section 2
shall not affect in any way the obligations and rights of the Company and the
Holder under Section 1.
3. EXPENSES. Subject to the limitations contained in this
Section 3 and except as otherwise specifically provided in this Agreement, the
entire costs and expenses of the registrations and qualifications pursuant to
Section 1 hereof and of any registration and qualification pursuant to Section 2
hereof shall be borne by the Company. Such costs and expenses shall include,
without limitation, the fees and expenses of counsel for the Company and of its
accountants, all other costs, fees and expenses of the Company incident to the
preparation, printing and filing under the Securities Act of the registration
statement and all amendments and supplements thereto, the reasonable fees and
expenses of a special counsel to the Holder relating to such registration and
qualification, the cost of furnishing copies of each preliminary prospectus,
each final prospectus and each amendment or supplement thereto to underwriters,
dealers and other purchasers of the Shares and the costs and expenses (including
fees and disbursements of counsel) incurred in connection with the qualification
of the Shares under the blue sky laws of various jurisdictions. The Company
shall not, however, pay underwriting discount or commissions to the extent
related to the sale of Shares sold in any registration and qualification.
- 2 -
<PAGE> 3
4. PROCEDURES.
(a) In the case of each registration or qualification pursuant
to Section 1 or 2, the Company will keep the Holder advised in writing as to the
initiation of proceedings for such registration and qualification and as to the
completion thereof, and will advise the Holder, upon request, of the progress of
such proceedings.
(b) At the Company's expense, the Company will keep each
registration and qualification under this Agreement effective (and in compliance
with the Securities Act) by such action as may be necessary or appropriate for a
period of 120 days after the effective date of such registration statement,
including, without limitation, the filing of post-effective amendments and
supplements to any registration statement or prospectus necessary to keep the
registration statement current and the further qualification under any
applicable blue sky or other state securities laws to permit such sale or
distribution, all as requested by the Holder. The Company will immediately
notify the Holder at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
(c) The Company will use its best efforts to furnish to the
Holder a signed counterpart, addressed to the Holder, of (i) an opinion of
counsel for the Company, dated the effective date of such registration
statement, and (ii) a so-called "cold comfort" letter signed by the independent
public accountants who have certified the Company's financial statements
included in such registration statement, and such opinion of counsel and
accountants' letter shall cover substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of such accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in connection with
underwritten public offerings of securities.
(d) Without limiting any other provision hereof, in connection
with any registration of Shares under this Agreement, the Company will use its
best efforts to comply with the Securities Act, the Securities Exchange Act of
1934, as amended (the "Securities Exchange Act"), and all applicable rules and
regulations of the Commission.
(e) In connection with any registration of Shares under this
Agreement, the Company will provide, if appropriate, a transfer agent and
registrar for the Shares not later than the effective date of such registration
statement.
(f) In connection with any registration of Shares under this
Agreement, the Company will, if requested by the underwriters for any Shares
included in such registration, enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, provisions relating to
indemnification and contribution.
(g) If the Company at any time proposes to register any of its
securities under the Securities Act, other than pursuant to a request made under
Section 1 hereof, whether or not for sale for its own account, and such
securities are to be distributed by or through one or more underwriters, then
the Company will make reasonable efforts, if requested by the Holder, to
- 3 -
<PAGE> 4
arrange for such underwriters to include the Shares owned by the Holder among
the securities to be distributed by or through such underwriters. The Holder
shall be a party to any such underwriting agreement, and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
the Holder.
(h) In connection with the preparation and filing of each
registration statement registering Shares under this Agreement, the Company will
give the Holder and their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers, its counsel and the independent
public accountants who have certified its financial statements, as shall be
necessary, in the opinion of such holders or such underwriters or their
respective counsel, in order to conduct a reasonable and diligent investigation
within the meaning of the Securities Act. Without limiting the foregoing, each
registration statement, prospectus, amendment, supplement or any other document
filed with respect to a registration under this Agreement shall be subject to
review and reasonable approval by the Holder registering Shares in such
registration and by his counsel.
5. PROVISION OF DOCUMENTS. The Company will, at the expense of
the Company, furnish to the Holder, such number of registration statements,
prospectuses, offering circulars and other documents incident to any
registration or qualification referred to in Sections 1 or 2 as the Holder from
time to time may reasonably request.
6. INDEMNIFICATION. The Company will indemnify and hold harmless
the Holder and any underwriter (as defined in the Securities Act) for the
Holder and each person, if any, who controls the Holder or underwriter within
the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, and expenses (including reasonable attorneys'
fees and expenses and reasonable costs of investigation) to which the Holder or
underwriter or such controlling person may be subject, under the Securities Act
or otherwise, insofar as any thereof arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in (A)
any registration statement under which the Holder's Shares were registered under
the Securities Act pursuant to Sections 1 or 2 hereof, any prospectus or
preliminary prospectus contained therein, or any amendment or supplement thereto
or (B) any other document incident to the registration of the Shares under the
Securities Act or the qualification of the Shares under any state securities
laws applicable to the Company, (ii) the omission or alleged omission to state
in any item referred to in the preceding clause (i) a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Securities Exchange Act or any other federal or state securities law, rule
or regulation applicable to the Company and relating to action or inaction by
the Company in connection with any such registration or qualification, except
insofar as such losses, claims, damages, liabilities or expenses arise out of or
are based upon any untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished to the Company in writing by
the Holder or by any underwriter for the Holder expressly for use therein (with
respect to which information the Holder or underwriter shall so indemnify and
hold harmless the Company, any underwriter for the Company and each person, if
any, who controls the Company or such underwriter within the meaning of the
Securities Act). The Company will enter into an underwriting agreement with the
underwriter or underwriters for any offering registered under the Securities Act
pursuant to Section 1 or 2 hereof and with the Holder selling Shares pursuant to
such offering, and such underwriting agreement shall contain customary
provisions with respect to indemnification and contribution which shall, at a
minimum, provide the indemnification set forth above.
- 4 -
<PAGE> 5
7. NOTICES. All notices required or permitted to be given
pursuant to this Agreement shall be given in writing, shall be transmitted by
personal delivery, by registered or certified mail, return receipt requested,
postage prepaid, or by telecopier or other electronic means (with a confirming
copy by registered or certified mail, postage prepaid) and shall be addressed as
follows:
When the Holder is the intended recipient:
Douglas G. Geib II
WITH A COPY TO:
Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3485
ATTENTION: Jerome P. Grisko, Jr., Esq.
Telecopy: (216)696-0740
When the Company is the intended recipient:
InterAmericas Communications Corporation
1221 Brickell Avenue
Miami, Florida 33131
ATTENTION: Patricio E. Northland, CEO
Telecopy: (305) 377-6793
WITH A COPY TO:
Baker & McKenzie
701 Brickell Avenue, Suite 1600
Miami, Florida 33131
ATTENTION: Andrew Hulsh, Esq.
Telecopy: (305) 789-8900
Any party to this Agreement (each a "Party") may designate a new address to
which notices required or permitted to be given pursuant to this Agreement shall
thereafter be transmitted by giving written notice to that effect to the other
Parties. Each notice transmitted in the manner described in this Section 9 shall
be deemed to have been given, received and become effective for all purposes at
the time it shall have been (i) delivered to the addressee as indicated by the
return receipt (if transmitted by mail), the affidavit of the messenger (if
transmitted by personal delivery) or the answer back or call back (if
transmitted by telecopier or other electronic means, but only if a confirmation
copy of such telecopied or electronically delivered notice is also delivered by
registered or certified mail, postage prepaid) or (ii) presented for delivery to
the addressee as so indicated during normal business hours, if such delivery
shall have been refused for any reason.
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<PAGE> 6
8. GOVERNING LAW; FORUM.
(a) The validity, interpretation, performance and enforcement
of this Agreement shall be governed by the laws the State of Florida (without
giving effect to the laws, rules or principles of the State of Florida regarding
conflicts of laws).
(b) Each party agrees that any proceeding arising out of or
relating to this Agreement or the breach or threatened breach of this Agreement
shall be commenced and prosecuted in a court in Miami, Florida. Each party
consents and submits to the non-exclusive personal jurisdiction of any court in
Miami, Florida in respect of any such proceeding. Each party consents to service
of process upon it with respect to any such proceeding by registered mail,
return receipt requested, and by any other means permitted by applicable laws
and rules. Each party waives any objection that it may now or hereafter have to
the laying of venue of any such proceeding in any court in Miami, Florida and
any claim that it may now or hereafter have that any such proceeding in any
court in Miami, Florida has been brought in an inconvenient forum.
(c) Final judgment against any party hereto in any suit or
proceeding shall be conclusive, and may be enforced in any other jurisdiction
(i) by suit, action or proceeding on the judgment, a certified or true copy of
which shall be conclusive evidence of the fact and the amount of indebtedness or
liability of the party hereto, or (ii) in any other manner provided by or
pursuant to the laws of such other jurisdiction.
(d) Nothing herein shall in any way be deemed to limit the
ability or right of any party to serve any legal process, summons, notices or
other documents in any other manner permitted by applicable law, or to obtain
jurisdiction over any other party, or to bring actions, suits or proceedings
against any other party in such other jurisdictions, and in such manner, as may
be otherwise permitted by applicable law.
9. BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES. This
Agreement shall be binding upon the parties and their respective successors and
assigns and shall inure to the benefit of the parties and their respective
successors and permitted assigns. No party shall assign any of its rights or
delegate any of its duties under this Agreement (by operation of law or
otherwise) without the prior written consent of the other parties. Any
assignment of rights or delegation of duties under this Agreement by a party
without the prior written consent of the other parties, if such consent is
required hereby, shall be void. No person (including, without limitation, any
employee of a party) shall be, or be deemed to be, a third party beneficiary of
this Agreement.
10. ENTIRE AGREEMENT; EFFECTIVE DATE OF AGREEMENT. This Agreement
constitutes the entire contract between the parties with respect to the subject
matter hereof and cancels and supersedes all of the previous contracts,
commitments, representations, warranties and understandings (whether oral or
written) by, between or among the parties with respect to the subject matter
hereof.
11. AMENDMENTS. No addition to, and no cancellation, renewal,
extension, modification or amendment of, this Agreement shall be binding upon a
party unless such addition, cancellation, renewal, extension, modification or
amendment is set forth in a written instrument which states that it adds to,
amends, cancels, renews, extends or modifies this Agreement and has been
approved by all of the parties hereto.
12. WAIVERS. No waiver of any provision of this Agreement shall
be binding upon a party unless such waiver is expressly set forth in a written
instrument which is executed and delivered by such party or on behalf of such
party by an officer of, or attorney-in-fact for, such party. Such waiver shall
be effective only to the extent specifically set forth in such written
instrument. Neither the exercise (from time to time and at any time) by a party
of, nor the delay or
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<PAGE> 7
failure (at any time or for any period of time) to exercise, any right, power or
remedy shall constitute a waiver of the right to exercise, or impair, limit or
restrict the exercise of, such right, power or remedy or any other right, power
or remedy at any time and from time to time thereafter. No waiver of any right,
power or remedy of a party shall be deemed to be a waiver of any other right,
power or remedy of such party or shall, except to the extent so waived, impair,
limit or restrict the exercise of such right, power or remedy.
13. REMEDIES.
(a) The rights, powers and remedies of the parties set forth
herein for a breach of or default under this Agreement are cumulative and in
addition to, and not in lieu of, any rights or remedies that any party may
otherwise have under this Agreement, at law or in equity.
(b) The parties acknowledge that the Shares are unique, and
that any violation of this Agreement cannot be compensated for by damages alone.
Accordingly, in addition to all of the other remedies which may be available
hereunder or under applicable law, any party shall have the right to any
equitable relief which may be appropriate to remedy a breach or threatened
breach by any other party hereunder, including, without limitation, the right to
enforce specifically the terms of this Agreement by obtaining injunctive relief
in respect of any violation or non-performance hereof, and any party shall have
the right to seek recovery of and be awarded attorneys' fees and expenses in any
proceeding with respect to this Agreement as reasonably determined by the court
in which such proceeding is brought.
14. HEADINGS; COUNTERPARTS. The headings set forth in this
Agreement have been inserted for convenience of reference only, shall not be
considered a part of this Agreement and shall not limit, modify or affect in any
way the meaning or interpretation of this Agreement. This Agreement may be
signed in any number of counterparts, each of which (when executed and
delivered) shall constitute an original instrument, but all of which together
shall constitute one and the same instrument. It shall not be necessary when
making proof of this Agreement to account for any counterparts other than a
sufficient number of counterparts which, when taken together, contain signatures
of all of the parties.
15. SEVERABILITY. If any provision of this Agreement shall
hereafter be held to be invalid, unenforceable or illegal, in whole or in part,
in any jurisdiction under any circumstances for any reason, (i) such provision
shall be reformed to the minimum extent necessary to cause such provision to be
valid, enforceable and legal while preserving the intent of the parties as
expressed in, and the benefits to the parties provided by, this Agreement or
(ii) if such provision cannot be so reformed, such provision shall be severed
from this Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: /s/ Patricio E. Northland
---------------------------
Name: Patricio E. Northland
Title: President
/s/ Douglas G. Geib II
------------------------------
Douglas G. Geib II
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<PAGE> 1
EXHIBIT 10.4
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance
set forth below, is entered into by and between INTER AMERICAS COMMUNICATION
CORPORATION, a Texas corporation, with headquarters located at 1221 Brickell
Avenue, Suite 900, Miami, Florida 33131("Company"), and the undersigned (the
"Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded,
INTER ALIA, by Rule 506 under Regulation D ("Regulation D") as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the
1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 8% Convertible Debentures (the "Debenture"),
of the Company which will be convertible into shares of Common Stock, $.01 par
value per share (the "Common Stock"), of the Company upon the terms and subject
to the conditions of such Debenture (the Common Stock and the Debenture
sometimes referred to herein as the "Securities"), and subject to acceptance of
this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
A. PURCHASE. The undersigned hereby agrees to initially purchase from
the Company, the Debentures of the Company, in the principal amount set forth on
the signature page of this Agreement, out of a total offering of $2,000,000 in
P. 4(b), Debentures as more specifically set forth in and having the terms and
conditions and being in the form attached hereto as ANNEX I. The purchase price
for the Debenture shall be as set forth on the signature page hereto and shall
be payable in United States Dollars.
B. FORM OF PAYMENT. The Buyer shall pay the purchase price for the
Debenture by delivering immediately available good funds in United States
Dollars to the escby the Buyer to the Escrow Agent of the purchase price of the
Debentures, the Company shall deliver the Debenture duly executed on behalf of
the Company to the Escrow Agent. By signing this Agreement, the Buyer and the
Company, and subject to acceptance by the Escrow Agent, each
1
<PAGE> 2
agrees to all of the terms and conditions of, and becomes a party to, the Joint
Escrow Instructions, all of the provisions of which are incorporated herein by
this reference as if set forth in full.
C. METHOD OF PAYMENT. Payment into escrow of the purchase price for the
Debenture shall be made by wire transfer of funds to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For credit to the account of Krieger & Prager, Esqs.
Account No. 637-1657450
Not later than 1:00 p.m., New York time, on the date which is one (1) New York
Stock Exchange trading day after the Company shall have accepted this Agreement
and returned a signed counterpart of this Agreement to the Escrow Agent by
facsimile, the Buyer shall deposit with the Escrow Agent the aggregate purchase
price for the Debenture, in currently available funds. Time is of the essence
with respect to such payment, and failure by the Buyer to make such payment,
shall allow the Company to cancel this Agreement.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
A. Without limiting Buyer's right to sell the Common Stock pursuant to
the Registration Statement as defined in the Registration Rights Agreement, the
Buyer is purchasing the Debenture and will be acquiring the shares of Common
Stock issuable upon conversion of the Debenture for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof;
B. The Buyer is (i) an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), and (ii) experienced in making investments of the kind described
in this Agreement and the related documents, (iii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the Securities;
2
<PAGE> 3
C. All subsequent offers and sales of the Debenture and the shares of
Common Stock issuable upon conversion of, or issued as dividends on, the
Debenture (the "Shares" or "Common Stock" and, together with the Debenture, the
"Securities") by the Buyer shall be made pursuant to registration of the Shares
under the 1933 Act or pursuant to an exemption from registration;
D. The Buyer understands that the Debenture is being offered and sold,
and the Shares are being offered, to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Debenture and to receive an offer of the Shares;
E. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Debenture and the offer of the
Shares which have been requested by the Buyer, including ANNEX V hereto. The
Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. Without limiting the generality of the foregoing, the Buyer
has also had the opportunity to obtain and to review the Company's (1) Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, (2) Quarterly
Report on Form 10-Q for the fiscal quarters ended June 30, 1996 and September
30, 1996, and (3) Form 8-K dated October 16, 1996 (the "Company's SEC
Documents").
F. The Buyer understands that its investment in the Securities involves
a high degree of risk;
G. The Buyer understands that no United States federal or state agency
or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities;
H. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
I. Neither Buyer, nor any affiliate of Buyer, has any present intention
of entering into, any put option, short position, or other similar position with
respect to the Debenture or the Shares.
3
<PAGE> 4
J. Notwithstanding the provisions hereof or of the Debenture, in no
event (except with respect to an Event of Mandatory Conversion upon the maturity
of the Debenture) shall the holder be entitled to convert any Debenture to the
extent after such conversion, the sum of (1) the number of shares of Common
Stock beneficially owned by the Buyer and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Debenture), and (2) the number of shares of Common
Stock issuable upon the conversion of the Debenture with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Buyer and its affiliates of more than 4.9% of the outstanding
shares of Common Stock. For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G
thereunder, except as otherwise provided in clause (1) of such proviso.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
A. CONCERNING THE SHARES. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Common Shares.
B. REPORTING COMPANY STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. The Company has registered its Common Stock pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common
Stock is listed and traded on the NASDAQ/Small Cap. The Company has received no
notice, either oral or written, with respect to the continued eligibility of the
Common Stock for such listing.
C. AUTHORIZED SHARES. The Company has sufficient authorized and
unissued Shares as may be reasonably necessary to effect the conversion of the
Debenture. The Common Shares have been duly authorized and, when issued upon
conversion of, or as interest on, the Debenture, will be duly and validly
issued, fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder.
D. SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS AGREEMENT AND
STOCK. This Agreement and the Registration Rights Agreement, the form of which
is attached hereto as ANNEX IV (the "Registration Rights Agreement"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Registration Rights Agreement, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally; and the Debenture will be duly and validly authorized and,
when executed and delivered on behalf of the Company in accordance with this
4
<PAGE> 5
Agreement, will be a valid and binding obligation of the Company in accordance
with its terms, subject to general principles of equity and to bankruptcy,
insolvency, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally.
E. NON-CONTRAVENTION. The execution and delivery of this Agreement and
the Registration Rights Agreement by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Registration Rights Agreement, and the
Debenture do not and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default under (i) the
articles of incorporation or by-laws of the Company, (ii) any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
including any listing agreement for the Common Stock except as herein set forth,
(iii) any existing applicable law, rule, or regulation or any applicable decree,
judgment, or (iv) order of any court, United States federal or state regulatory
body, administrative agency, or other governmental body having jurisdiction over
the Company or any of its properties or assets, except such conflict, breach or
default which would not have a material adverse effect on the transactions
contemplated herein.
F. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the Stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
G. SEC FILINGS. None of the SEC Filings with the Securities and
Exchange Commission since January 1, 1996 contained, at the time they were
filed, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements made
therein in light of the circumstances under which they were made, not
misleading. Except as set forth on ANNEX V hereto, the Company has since January
1, 1996 timely filed all requisite forms, reports and exhibits thereto with the
Securities and Exchange Commission.
H. ABSENCE OF CERTAIN CHANGES. Since January 1, 1997, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, or results of operations of the
Company, except as disclosed in ANNEX V or in the documents referred to in
Section 2(e) hereof.
I. FULL DISCLOSURE. There is no fact known to the Company (other than
general economic conditions known to the public generally) or as disclosed in
the documents referred to in Section 2(e), that has not been disclosed in
writing to the Buyer that (i) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) or in the earnings,
business affairs, properties or assets of the Company or (ii) could reasonably
be expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement.
5
<PAGE> 6
J. ABSENCE OF LITIGATION. Except as set forth in ANNEX V hereto, and in
the documents referred to in Section 2(e), which the Buyer has reviewed, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company or any of its
subsidiaries, wherein an unfavorable decision, ruling or finding would have a
material adverse effect on the properties, business, condition (financial or
other), results of operations or prospects of the Company and its subsidiaries
taken as a whole or the transactions contemplated by this Agreement or any of
the documents contemplated hereby or which would adversely affect the validity
or enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents.
K. ABSENCE OF EVENTS OF DEFAULT. Except as set forth in ANNEX V hereto
and Section 3(e), no Event of Default, as defined in the respective agreement to
which the Company is a party, and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a material adverse effect on
the Company's financial condition or results of operations.
L. NO DEFAULT. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound, and
neither the execution, nor the delivery by the Company, nor the performance by
the Company of its obligations under this Agreement or the Debenture, other than
the conversion provision thereof, will conflict with or result in the breach or
of any lien or charge on any assets or properties of the Company under, any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound or any statute or the Certificate of Incorporation or By-Laws
of the Company, or any decree, judgment, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or its
properties, or the Company's listing agreement for its Common Stock.
M. PRIOR ISSUES. During the twelve (12) months preceding the date
hereof, the Company has not issued any securities except as set forth in Exhibit
3(m). The presently outstanding unconverted principal amount of each such
issuance and any outstanding securities which have registration rights as at
__________________ are set forth in Exhibit 3(m).
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the Debenture
has not been and is not being registered under the provisions of the 1933 Act
and, except as provided in the Registration Rights Agreement, the Shares have
not been and are not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder or (B) the Buyer shall
have delivered to the Company an opinion of counsel, reasonably satisfactory in
form,
6
<PAGE> 7
scope and substance to the Company, to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 193.
B. RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that the
Debentures, and, until such time as the Common Stock has been registered under
the 1933 Act as contemplated by the Registration Rights Agreement and sold in
accordance with such Registration Statement, the shares of Common Stock issued
to the Holder upon conversion of the Debentures shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of the Debenture and such shares of Common Stock):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
C. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter
into the Registration Rights Agreement, in substantially the form attached
hereto as ANNEX IV, on or before the Closing Date.
D. FILINGS. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Debenture to the Buyer under any
United States laws and regulations, or by any domestic securities exchange or
trading market, and to provide a copy thereof to the Buyer promptly after such
filing.
E. REPORTING STATUS. So long as the Buyer beneficially owns any of the
Debentures, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
F. USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Debenture (excluding amounts paid by the Company for legal fees and finder's
fees in connection
7
<PAGE> 8
with the sale of the Debenture) for internal working capital purposes , and
shall not, directly or indirectly, use such proceeds for any loan to or
investment in any other corporation, partnership enterprise or other person,
except for wholly owned subsidiaries.
G. CERTAIN AGREEMENTS. The Company covenants and agrmon stock with any
third party until the expiration of ninety (90) days after the effective date of
the Registration Statement. . However, clauses 4(g)(i) will not apply to (x) the
issuance of securities (other than for cash) in connection with a merger,
consolidation, sale of assets, disposition of a business, product or license by
the Company, strategic alliance, bank loan or agreement, or the exercise of
outstanding options, (y) the exchange of the capital stock for assets, stock or
other joint venture interests, or (z) the issuance by the Company of Units
consisting of Senior Discount Notes and Warrants to purchase the Company=s
Common Stock pursuant to an offering to be managed by Paine Webber Incorporated,
which offering (the "Note Offering") is expected to be completed in June 1997
and is expected to result in gross proceeds of at least $100 million, and
further provided, that any registration rights in connection therewith, shall
not require the filing of a Registration Statement in respect of such stock
prior to the effective date of the Registration Statement under the Registration
Rights Agreement between the Buyer and Seller. However, nothing contained herein
shall be deemed to preclude the Company from taking such action as may be
reasonably required to cure any alleged default under agreements to which the
Company is or may become a party.
H. AVAILABLE SHARES. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield the number of Common Stock issuable at conversion as may be
required to satisfy the conversion rights of the Buyer pursuant to the terms and
conditions of the Debentures.
I. WARRANTS. The Company agrees to issue to Buyer within ten (10) days
after the Closing Date, transferable divisible warrants (the "Warrants") for
20,000 shares of Common Stock. Such Warrants shall bear an exercise re, on the
Closing Date, and shall be exercisable commencing June 30, 1997 and for a period
of five (5) years thereafter, in the form annexed hereto as Exhibit VI, together
with piggy-back registration rights, and demand registration rights.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the aggregate
purchase price for the Debenture in accordance with Section 1(c) hereof, the
Company will irrevocably instruct its transfer agent to issue Common Stock from
time to time upon conversion of the Debenture in such amounts as specified from
time to time by the Company to the transfer agent, bearing the restrictive
legend specified in Section 4(b) of this Agreement prior to registration of the
Shares under the 1933 Act, registered in the name of the Buyer or its nominee
and in such denominations to be specified by the Buyer in connection with each
conversion of the Debenture. The Company warrants that no instruction other than
such instructions referred to in this Section 5 and stop transfer instructions
to give effect to Section 4(a) hereof prior to registration and sale of
8
<PAGE> 9
the Shares under the 1933 Act will be given by the Company to the transfer agent
and that the Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement, the
Registration Rights Agreement, and applicable law. Nothing in this Section shall
affect in any way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities. If the Buyer provides
the Company with an opinion of counsel reasonably satisfactory to the Company
that registration of a resale by the Buyer of any of the Securities in
accordance with clause (1)(B) of Section 4(a) of this Agreement is not required
under the 1933 Act, the Company shall (except as provided in clause (2) of
Section 4(a) of this Agreement) permit the transfer of the Securities and, in
the case of the Shares, promptly instruct the Company's transfer agent to issue
one or more certificates for Common Stock without legend in such name and in
such denominations as speof the Buyer's representations and warranties herein,
upon the conversion of any Debenture by a person who is a non-U.S. Person, and
following the expiration of any applicable Restricted Period, the Company,
shall, at its expense, take all necessary action (including the issuance of an
opinion of counsel) to assure that the Company's transfer agent shall issue
stock certificates without restrictive legend or stop orders in the name of
Buyer (or its nominee (being a non-U.S. Person) or such non-U.S. Persons as may
be designated by Buyer) and in such denominations to be specified at conversion
representing the number of shares of Common Stock issuable upon such conversion,
as applicable. Nothing in this Section 4, however, shall affect in any way
Buyer's or such nominee's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
c. The Company will permit the Buyer to exercise its right to convert
the Debenture by telecopying an executed and completed Notice of Conversion to
the Company and delivering within three business days thereafter, the original
Notice of Conversion and the Debenture representing the Shares to the Company by
express courier to the Transfer Agent. Each date on which a Notice of Conversion
is telecopied to and received by the Company in accordance with the provisions
hereof shall be deemed a Conversion Date. The Company will transmit the
certificates representing the Shares of Common Stock issuable upon conversion of
any Debenture (together with the Debenture representing the Shares not so
converted) to the Buyer via express courier, by electronic transfer or
otherwise, within three business days after receipt by the Company of the
original Notice of Conversion and the Debenture representing the Shares to be
converted (the "Delivery Date").
d. The Company understands that a delay in the issuance of the Shares
of Common Stock beyond the Delivery Date could result in economic loss to the
Buyer. As compensation to the Buyer for such loss, the Company agrees to pay
late payments to the Buyer for late issuance of Shares upon Conversion in
accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond five (5) business days from
Delivery Date:
9
<PAGE> 10
<TABLE>
<CAPTION>
Late Payment For Each
$10,000 of Debenture
No. Business Days Late Principal Amount Being Converted
---------------------- --------------------------------
<S> <C>
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
10 $1,000 + $200 for each Business
Day Late beyond 10 days
</TABLE>
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit Buyer's right to pursue
actual damages for the Company's failure to issue and deliver Common Stock to
the Buyer. Furthermore, in addition to any other remedies which may be available
to the Buyer, in the event that the Company fails for any reason to effect
delivery of such shares of Common Stock within five business days after the
Delivery Date, the Buyer will be entitled to revoke the relevant Notice of
Conversion by delivering a notice to such effect to the Company whereupon the
Company and the Buyer shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion.
6. DELIVERY INSTRUCTIONS.
The Debenture shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof, or a delivery against payment basis at the
closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Debenture (the
"Closing Date" ) shall occur no later than 12:00 Noon, New York time on the
second NYSE trading day after the fulfillment or waiver of all Closing
conditions pursuant to Sections 8 and 9, or such other mutually agreed to time.
The closing shall occur on such date at the offices of the Escrow Agent.
Notwithstanding anything to the contrary contained herein, the Escrow Agent will
be authorized to release the fund representing the Purchase Price for the
Debenture, and the Debenhe Company for at least Two Million ($2,000,000.00)
Dollars in Debenture (or such lesser amount as the Company, in its sole
discretion, shall determine);
B. Delivery by the Buyer to the Escrow Agent of good funds as payment
in full of an amount equal to the purchase price for the Debenture in accordance
with Section 1(c) hereof;
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<PAGE> 11
C. The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement as if made on the Closing
Date and the performance by the Buyer on or before the Closing Date of all
covenants and agreements of the Buyer required to be performed on or before the
Closing Date;
D. There shall not be in effect any law, rule or regulation prohibiting
or restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Debentures on the Closing Date is conditioned upon:
A. Acceptance by Buyer of an Agreement for the sale of Debenture, as
indicated by execution of this Agreement;
B. Delivery by the Company to the Escrow Agent of the Debenture in
accordance with this Agreement;
C. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement as if
made on the Closing Date and the performance by the Company on or before the
Closing Date of all covenants and agreements of the Company required to be
performed on or before the Closing Date; and
D. On the Closing Date, the Buyer having received an opinion of counsel
for the Company, dated the Closing Date, in form, scope and substance reasonably
satisfactory to thece with the laws of the State of New York. Each of the
parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the City of New York or the state courts of the State of
New York sitting in the City of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. Any costs (including attorneys fees and disbursements) incurred by Buyer
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<PAGE> 12
with respect to any default by the Company under this Agreement, the
Registration Rights Agreement, or the Debenture, shall be the obligation of the
Company.
11. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given upon, (a) by personal delivery, or (b) if advance copy is given by fax,
upon (i) seven business days after deposit in the United States Postal Service
by regular or certified mail, or (ii) three business days me and fees prepaid,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.
COMPANY: INTER AMERICAS COMMUNICATION CORPORATION
1221 Brickell Avenue, Suite 900
Miami, Florida 33131
Telecopier No. (305) 377-6791
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<PAGE> 13
with a copy to:
Andrew Hulsh, Esq.
Baker & McKenzie
Suite 1600
Barnett Tower
701 Brickell Avenue
Miami, Florida 33131
Telecopier No. (305) 789-8953
PURCHASER: At the address set forth on the signature page of this
Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Telecopier No. (212) 213-2077
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Company's
representations and warranties shall survive the execution and delivery hereof
of this Agreement and the delivery of the Debenture.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 14
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
or one of its officers thereunto duly authorized as of the date set forth below.
AGGREGATE INITIAL PURCHASE PRICE OF SUCH DEBENTURE: $ 2,000,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 6th day of May, 1997.
<TABLE>
<S> <C>
111 Arlosorov ARCADIA IMPORTERS AND EXPORTERS, INC.
- -------------------------------------------- -------------------------------------
Printed Name of Subscriber
Tel Aviv, Israel
- --------------------------------------------
By: /s/ John Gainsford
Telecopier No. ---------------------------------
----------------------------- (Signature of Authorized Person)
Director
---------------------------------
British Virgin Islands Print Name and Title
- -------------------------------------------
Jurisdiction of Incorporation
or Organization
</TABLE>
This Agreement has been accepted as of the date set forth below.
INTER AMERICAS COMMUNICATION CORPORATION
By: /s/ Patricio E. Northland
-------------------------
Title: President
----------------------
Date:
----------------------
14
<PAGE> 1
EXHIBIT 10.5
FORM OF DEBENTURE
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE RESTRICTED
AND MAY NOT BE UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION OR
SAFE HARBOR THEREFROM.
No. AIE-1 US $2,000,000
----- ----------
INTER AMERICAS COMMUNICATION CORPORATION
8% CONVERTIBLE DEBENTURE DUE APRIL 30, 1998
THIS DEBENTURE is one of a duly authorized issue of $2,000,000 in
Debentures of INTER AMERICAS COMMUNICATION CORPORATION, a corporation organized
and existing under the laws of the State of Texas (the "Company") designated as
its 8% Convertible Debenture Due April 30, 1998.
FOR VALUE RECEIVED, the Company promises to pay to ARCADIA IMPORTERS
AND EXPORTERS, INC., the registered holder hereof (the "Holder"), the principal
sum of Two Million and 00/100 (US $2,000,000) Dollars on April 30, 1998 (the
"Maturity Date") and to pay interest on the principal sum outstanding from time
to time in arrears upon conversion as provided herein on April 30, 1998 at the
rate of 8% per annum accruing from the date of initial issuance. Accrual of
interest shall commence on the first such business day to occur after the date
hereof until payment in full of the principal sum has been made or duly provided
for. Subject to the provisions of P. 4 below, the principal of, and interest on,
this Debenture are payable at the option of the Holder, in shares of Common
Stock of the Company, $.001 par value ("Common Stock"), or in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Debenture Register of the Company as designated in writing by the Holder
from time to time. The Company will pay the principal of and interest upon this
Debenture on the Maturity Date, less any amounts required by law to be deducted,
to the registered holder of this Debenture as of the tenth day prior to the
Maturity Date and addressed to such holder as the last address appearing on the
Debenture Register. The forwarding of such check shall constitute a payment of
principal and interest hereunder and shall satisfy and discharge the liability
for principal and interest on this Debenture to the extent of the sum
represented by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand Dollars
(US$10,000) and integral multiples thereof. The Debentures are exchangeable for
an equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holders surrendering the same. No service
charge will be made for such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the
<PAGE> 2
United States income tax laws or other applicable laws at the time of such
payments, and Holder shall execute and deliver all required documentation in
connection therewith.
3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Debenture, the Company may require, prior to issuance of a new
Debenture in the name of such other person, that it receive reasonable transfer
documentation including opinions that the issuance of the Debenture in such
other name does not and will not cause a violation of the Act or any applicable
state or foreign securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
4. A. Subject to Section 4B, the Holder of this Debenture is entitled,
at its option, to convert at any time commencing the earlier of (a) sixty (60)
days after the date hereof, or (b) the effective date of the Registration
Statement filed pursuant to the Registration Rights Agreement between the
Company and the Holder, or the Holder's predecessor in interest, the principal
amount of this Debenture, provided that the principal amount is at least US
$10,000 (unless if at the time of such election to convert the aggregate
principal amount of all Debentures registered to the Holder is less that Ten
Thousand Dollars (US $10,000), then the whole amount thereof) into shares of
Common Stock of the Company at a conversion price for each share of Common Stock
("Conversion Rate") equal to the lesser of (a) 100% of the Market Price on the
Issuance Date, or (b) 80% of the Market Price on the Conversion Date. For
purposes of this Section 4, the Market Price shall be the average closing bid
price of the Common Stock on the five (5) trading days immediately preceding the
Issuance Date or Conversion Date, as may be applicable, as reported by the
National Association of Securities Dealers, or the closing bid price on the
over-the-counter market on such date or, in the event the Common Stock is listed
on a stock exchange, the Market Price shall be the closing price on the exchange
on such date, as reported in the Wall Street Journal. Conversion shall be
effectuated by surrendering the Debentures to be converted to the Company with
the form of conversion notice attached hereto as Exhibit A, executed by the
Holder of the Debenture evidencing such Holder's intention to convert this
Debenture or a specified portion (as above provided) hereof, and accompanied, if
required by the Company, by proper assignment hereof in blank. Interest accrued
or accruing from the date of issuance to the date of conversion shall, at the
option of the Holder, be paid in cash or Common Stock upon conversion at the
Conversion Rate. No fraction of Shares or scrip representing fractions of shares
will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share. The date on which notice of conversion is given (the
"Conversion Date") shall be deemed to be the date on which the Holder has
delivered this Debenture, with the conversion notice duly executed, to the
Company or, the date set forth in such facsimile delivery of the notice of
conversion if the Debenture is received by the Company within three (3) business
days therefrom. Facsimile delivery of the conversion notice shall be accepted by
the Company at facsimile number (305-377-6791; ATT: Douglas Geib, Chief
Financial Officer). Certificates representing Common Stock upon conversion will
be delivered within three (3) business days from the date the notice of
conversion with the original Debenture is delivered to the Company.
B. (i) The Company shall have the right to redeem any
Debentures for which a Notice of Conversion has not
theretofore been submitted by delivering a Notice of
Redemption to the Holder of the Debenture.
<PAGE> 3
(ii) The redemption price shall be calculated at (a) 115%
for the first forty-five (45) days hereafter, (b)
120% for days forty-six (46) through seventy-five
(75), (c) 125% for days seventy-six (76) through
ninety (90), and 130% thereafter, of the principal
amount of the Debenture, plus accrued and unpaid
interest, and shall be paid to the Holder within ten
(10) days from the date of the Notice of Redemption,
except with respect to any Debentures for which a
Notice of Conversion is submitted to the Company,
within five (5) business days of the Holder's receipt
of the Company's Notice of Redemption. Furthermore,
in the event such payment is not timely made, any
rights of the Company to redeem the Debenture shall
terminate, and the Notice of Redemption shall be null
and void.
C. The Company shall have the right to require, by written notice to
the Holder of this Debenture at least ten (10) days prior to the Maturity Date,
that the Holder of this Debenture exercise its right of conversion with respect
to all or that portion of the principal amount and interest outstanding on the
Maturity Date.
5. No provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.
6. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
7. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person and
the holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the Holder
hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture, less all amounts required by
law to be deducted, upon which tender of paymennversion shall terminate.
8. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon conversion thereof except under circumstances which
<PAGE> 4
will not result in a violation of the Act or any applicable state Blue Sky or
foreign laws or similar laws relating to the sale of securities.
9. This Debenture shall be governed by and construed in accordance
with the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based ON FORUM NON COVENIENS, to the bringing of any such
proceeding in such jurisdictions.
10. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal
or interest on this Debenture and same shall continue
for a period of three (3) days; or
b. Any of the representations or warranties made by the
Company herein, in the Subscription Agreement, or in
any certificate or financial or other written
statements heretofore or hereafter furnished by the
Company in connection with the execution and delivery
of this Debenture or the Subscription Agreement shall
be false or misleading in any material respect at the
time made; or
c. The Company fails to issue shares of Common Stock to
the Holder or to cause its Transfer Agent to issue
shares of Common Stock upon exercise by the Holder of
the conversion rights of the Holder in accordance
with the terms of this Debenture, fails to transfer
or to cause its Transfer Agent to transfer any
certificate for shares of Common Stock issued to the
Holder upon conversion of this Debenture and when
required by this Debenture or the Registration Rights
Agreement, or fails to remove any restrictive legend
or to cause its Transfer Agent to transfer on any
certificate or any shares of Common Stock issued to
the Holder upon conversion of this Debenture as and
when required by this Debenture, the Agreement or the
Registration Rights Agreement and any such failure
shall continue uncured for five (5) business days.
d. The Company shall fail to perform or observe, in any
material respect, any other covenant, term,
provision, condition, agreement or obligation of the
Company under this Debenture and such failure shall
continue uncured for a period of thirty (30) days
after written notice from the Holder of such failure;
or
e. The Company shall (1) admit in writing its inability
to pay its debts generally as they mature; (2) make
an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (3)
apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial
part of its property or business; or
f. A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall
not be discharged within sixty (60) days after such
appointment; or
<PAGE> 5
g. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental
agency shall assume custody or control of the whole
or any substantial portion of the properties or
assets of the Company and shall not be dismissed
within sixty (60) days thereafter; or
h. Any money judgment, writ or warrant of attachment, or
similar process in excess of Two Hundred Thousand
($200,000) Dollars in the aggregate shall be entered
or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of sixty(60) days
or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or
i. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed within sixty (60) days after such
institution or the Company shall by any action or
answer approve of, consent to, or acquiesce in any
such proceedings or admit the material allegations
of, or default in answering a petition filed in any
such proceeding; or
j. The Company shall have its Common Stock suspended or
delisted from an exchange or over-the-counter market
from trading for in excess of two trading days.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
11. Nothing contained in this Debenture shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: May 6, 1997
INTER AMERICAS COMMUNICATION CORPORATION
By: /s/ Patricio E. Northland
-------------------------
Patricio E. Northland
(Print Name)
President and CEO
-------------------------
(Title)
<PAGE> 6
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ ________________
of the principal amount of the above Debenture No. ___ into Shares of Common
Stock of INTER AMERICAS COMMUNICATION CORPORATION (the "Company") according to
the conditions hereof, as of the date written below.
Date of Conversion* ________________________________________________________
Applicable Conversion Price _______________________________________________
Signature __________________________________________________________________
[Name]
Address: ____________________________________________________________________
____________________________________________________________________
* This original Debenture and Notice of Conversion must be received by the
Company by the third business date following the Date of Conversion.
<PAGE> 1
EXHIBIT 10.6
ANNEX IV
TO
STOCK PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of May 6, 1997 (this
"Agreement"), is made by and between INTER AMERICAS COMMUNICATION CORPORATION, a
Texas corporation (the "Company"), and the person named on the signature page
hereto (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of May 6, 1997, between the Initial Investor and
the Company (the "Securities Purchase Agreement"), the Company has agreed to
issue and sell to the Initial Investor 8% Convertible Debentures of the Company
(said principal amount of $2,000,000 collectively the "Debentures") which will
be convertible into shares of the common stock, $.01 par value (the "Common
Stock"), of the Company (the "Conversion Shares") upon the terms and subject to
the conditions of such Debentures; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agrees as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any permitted transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering
1
<PAGE> 2
securities on a continuous basis ("Rule 415"), and the declaration or ordering
of effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the Conversion Shares.
(iv) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(b) As used in this Agreement, the term Investor includes (i) each
Investor (as defined above) and (ii) each person who is a permitted transferee
or assignee of the Registrable Securities pursuant to Section 9 of this
Agreement.
(c) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company shall prepare and file with the
SEC, no later than July 1, 1997, either a Registration Statement on Form S-3
covering a sufficient number of shares of Common Stock for the Initial Investors
(or such lesser number as may be required by the SEC, but in no event less than
the number of shares into which the Debenture would be convertible at the time
of filing of the Form S-3, or an amendment to any pending Company Registration
Statement on Form S-3, and such Registration Statement or amended Registration
Statement shall state that, in accordance with Rule 416 and 457 under the
Securities Act, it also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon conversion of the Debenture resulting
from adjustment in the Conversion Price, or to prevent dilution resulting from
stock splits, or stock dividends). If at any time the number of shares of Common
Stock into which the Debenture may be converted exceeds the aggregate number of
shares of Common Stock then registered, the Company shall, within ten (10)
business days after receipt of a written notice from any Investor, either (i)
amend the Registration Statement filed by the Company pursuant to the preceding
sentence, if such Registration Statement has not been declared effective by the
SEC at that time, to register all shares of Common Stock into which the
Debenture may be converted, or (ii) if such Registration Statement has been
declared effective by the SEC at that time, file with the SEC an additional
Registration Statement on Form S-3 to register the shares of Common Stock into
which the Debenture may be converted that exceed the aggregate number of shares
of Common Stock already registered.
(b) UNDERWRITTEN OFFERING. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors acting by majority in interest of the Registrable Securities subject
to such underwritten offering shall have the right to select one legal counsel
to represent their interests, and an investment banker or bankers and manager or
managers to administer the offering, which investment banker or bankers or
manager or managers shall be reasonably satisfactory to the Company. The
Investors who hold the Registrable Securities to be included in such
underwriting shall pay all underwriting discounts and
2
<PAGE> 3
commissions and other fees and expenses of such investment banker or bankers and
manager or managers so selected in accordance with this Section 2(b) (other than
fees and expenses relating to registration of Registrable Securities under
federal or state securities laws, which are payable by the Company pursuant to
Section 5 hereof) with respect to their Registrable Securities and the fees and
expenses of such legal counsel so selected by the Investors.
(c) PAYMENTS BY THE COMPANY. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) hereof is not effective by August 15, 1997 (the "Initial Date"), then the
Company will make payments to the Initial Investor in such amounts and at such
times as shall be determined pursuant to this Section 2(c). The amount to be
paid by the Company to the Initial Investor shall be determined as of each
Computation Date, and such amount shall be equal to two (2%) percent of the
purchase price paid by the Initial Investor for the Debenture pursuant to the
Securities Purchase Agreement for any period from the Initial Date to the first
Computation Date, and three (3%) percent of the purchase price for any period to
each Computation Date thereafter, to the date the Registration Statement is
declared effective by the SEC (the "Periodic Amount"). The full Periodic Amount
shall be paid by the Company in immediately available funds within three
business days after each Computation Date. Notwithstanding the foregoing, the
amounts payable by the Company pursuant to this provision shall not be payable
to the extent any delay in the effectiveness of the Registration Statement
occurs because of an act of, or a failure to act or to act timely by the Initial
Investor or its counsel, or in the event all of the Registrable Securities may
be sold pursuant to Rule 144 or another available exemption under the Act.
As used in this Section 2(c), the following terms shall have the
following meanings:
"Computation Date" means the date which is the earlier of (a) 35 days
after the Company is notified by the SEC that the Registration Statement may be
declared effective or (b) September 15, 1997 and, if the Registration Statement
required to be filed by the Company pursuant to Section 2(a) has not theretofore
been declared effective by the SEC, each date which is thirty (30) days after
the previous Computation Date unti
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of
the Registrable Securities, the Company shall do each of the following.
(a) Prepare promptly, and file with the SEC by July 1, 1997, a
Registration Statement with respect to not less than the number of Registrable
Securities provided in Section 2(a), above, and thereafter use its best efforts
to cause each Registration Statement relating to Registrable Securities to
become effective on the earlier of (i) five days after notice from the
Securities and Exchange Commission that the Registration Statement may be
declared effective, or (b) ninety (90) days after the Closing Date, and keep the
Registration Statement effective at all times until the earliest (the
"Registration Period") of (i) the date that is two years after the Closing Date
(ii) the date when the Investors may sell all Registrable Securities under Rule
144 or (iii) the date the Investors no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated
3
<PAGE> 4
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) Furnish to each Investor whose Registrable Securities are included
in the Registration Statement and its legal counsel identified to the Company,
(i) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents,
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor;
(d) Use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Investors who hold a majority in
interest of the Registrable Securities being offered reasonably request and in
which significant volumes of shares of Common Stock are traded, (ii) prepare and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
PROVIDED, HOWEVER, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause more than nominal expense or burden to the
Company or (E) make any change in its articles of incorporation or by-laws,
which in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders;
(e) As promptly as practicable after becoming aware of such event,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration
4
<PAGE> 5
Statement or other appropriate filing with the SEC to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(f) As promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop
order or other suspension of the effectiveness of the Registration Statement at
the earliest possible time;
(g) Use its commercially reasonable efforts, if eligible, either to (i)
cause all the Registrable Securities covered by the Registration Statement to be
listed on a national securities exchange and on each additional national
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation of all the Registrable Securities covered by the Registration
Statement as a National Association of Securities Dealers Automated Quotations
System ("NASDAQ-1 of the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the quotation of the Registrable Securities on
the NASDAQ Small Cap Market; or if, despite the Company's commercially
reasonable efforts to satisfy the preceding clause (i) or (ii), the Company is
unsuccessful in doing so, to secure NASDAQ authorization and quotation for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities;
(h) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(i) Cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates for
the Registrable Securities to be offered pursuant to the Registration Statement
and enable such certificates for the Registrable Securities to be in such
denominations or amounts as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request; and, within
three (3) business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver, to
the transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement) an
appropriate instruction and opinion of such counsel; and
(j) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
5
<PAGE> 6
(a) It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) days prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires from each
such Investor (the "Requested Information") if such Investor elects to have any
of such Investor's Registrable Securities included in the Registration
Statement. If at least two (2) business days prior to the filing date the
Company has not received the Requested Information from an Investor (a
"Non-Responsive Investor"), then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f) and, if
so directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
5. EXPENSES OF REGISTRATION. All reasonable expenses, other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and a
fee for a single counsel for the Investor not exceeding $3,500, shall be borne
by the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities or expenses (joint or several) incurred (collectively,
"Claims") to which any of them may become subject under the Securities Act, the
Exchange Act or
6
<PAGE> 7
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). The
Company shall reimburse the Investors, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (I) apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(b) hereof; (II) with respect to any preliminary prospectus, inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or supplemented, if such prospectus was timely made available by
the Company pursuant to Section 3(b) hereof; (III) be available to the extent
such Claim is based on a failure of the Investor to deliver or cause to be
delivered the prospectus made available by the Company; or (IV) apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. Each Investor will indemnify the Company and its officers, directors
and agents against any claims arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company, by or on behalf of such Investor, expressly for use in
connection with the preparation of the Registration Statement, subject to such
limitations and conditions as are applicable to the Indemnification provided by
the Company to this Section 6. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.
(b) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written
7
<PAGE> 8
notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the reasonable fees and
expenses to be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such counsel
of the Indemnified Person or Indemnified Party and the indemnifying party would
be inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. In such event, the Company shall pay for only one
separate legal counsel for the Investors; such legal counsel shall be selected
by the Investors holding a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action. The indemnification required by this Section 6 shall bhe
amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with
8
<PAGE> 9
the reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities (or all or any portion of any Debenture of the Company which is
convertible into such securities) only if: (a) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address of such
transferee or assignee and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) immediately following
such transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, and (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein. In the event of any delay in filing or effectiveness of the
Registration Statement as a result of such assignment, the Company shall not be
liable for any damages arising from such delay, or the payments set forth in
Section 2(c) hereof.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
(by hand, by courier, by telephone line facsimile transmission, receipt
confirmed, or other means) or sent by certified mail, return receipt requested,
properly addressed and with proper postage pre-paid (i) if to the Company, 1221
Brickell Avenue, Suite 900, Miami, Florida 33131, ATT: Mr. Patricio Northland;
9
<PAGE> 10
with a copy to Andrew Hulsh, Esq., Baker & McKenzie, Suite 1600, Barnett Tower,
701 Brickell Avenue, Miami, Florida 33131; (ii) if to the Initial Investor, at
the address set forth under its name in the Securities Purchase Agreement, with
a copy to Samuel Krieger, Esq., Krieger & Prager, 319 Fifth Avenue, Third Floor,
New York, NY 10016 and (iii) if to any other Investor, at such address as such
Investor shall have provided in writing to the Company, or at such other address
as each such party furnishes by notice given in accordance with this Section
11(b), and shall be effective, when personally delivered, upon receipt and, when
so sent by certified mail, four (4) calendar days after deposit with the United
states Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on FORUM NON COVENIENS, to the bringing of any such
proceeding in such jurisdictions. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto. This Agreement may
be signed in one or more counterparts, each of which shall be deemed an
original. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(e) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
10
<PAGE> 11
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
(j) The Company acknowledges that any failure by the Company to perform
its obligations under Section 3(a), or any delay in such performance could
result in to the Investors and the Company agrees that, in addition to any other
liability of the company may have by reason of any such failure or delay, the
Company shall be liable for all direct damages caused by any such failure or
delay, unless same is the result of force majeure. Neither party shall be liable
for consequential damages.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
<PAGE> 12
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
INTERAMERICAS COMMUNICATIONS
CORPORATION
By: /s/ Patricio E. Northland
---------------------------
Name: Patricio E. Northland
Title: President
ARCADIA IMPORTERS AND
EXPORTERS, INC.
By: /s/ John Gainsford
---------------------------
Name: John Gainsford
Title: Director
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1) CONDENSED
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997; 2) CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,016,070
<SECURITIES> 350,000
<RECEIVABLES> 146,037
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,221,329
<PP&E> 5,279,325
<DEPRECIATION> 1,084,301
<TOTAL-ASSETS> 11,504,891
<CURRENT-LIABILITIES> 2,181,842
<BONDS> 1,500,000
0
0
<COMMON> 16,153
<OTHER-SE> 7,197,377
<TOTAL-LIABILITY-AND-EQUITY> 11,504,891
<SALES> 0
<TOTAL-REVENUES> 567,968
<CGS> 0
<TOTAL-COSTS> 1,595,470
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,406
<INCOME-PRETAX> (1,047,007)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,047,007)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> 0
</TABLE>
