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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
AMTEC, INC.
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(Name of issuer)
COMMON STOCK, $.001 PAR VALUE
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(Title of class of securities)
03232Q106
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(CUSIP number)
PAUL BERKOWITZ, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
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(Name, address and telephone number of person
authorized to receive notices and communications)
MARCH 16, 1999
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [ ]
(Continued on following pages)
(Page 1 of 6 Pages)
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SCHEDULE 13D
CUSIP NO. 03232Q106 PAGE 2 OF 6 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COMMUNICATIONS INVESTORS GROUP, [IRS #65-0885535]
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
FLORIDA
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7 SOLE VOTING POWER
3,101,720
NUMBER OF ----------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH
REPORTING ----------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
3,101,720
----------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,101,720
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
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14 TYPE OF REPORTING PERSON*
PN
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2
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AMTEC, INC.
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the shares of common stock (the "Common
Stock"), par value $.001 per share, of Amtec, Inc., a Delaware corporation (the
"Company").
The principal executive offices of the Company are located at 599
Lexington Avenue, New York, NY 10022.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is filed by Communications Investors Group, a
Florida General Partnership (the "Reporting Person"). The
partners of the reporting Person are Manuel D. Medina and
Andres Altaba, each of whom has a 50% interest.
(b) The addresses of the Reporting Person and each of Messrs.
Medina and Altaba is c/o Brian K. Goodkind, 2601 S. Bayshore
Drive, PH 1B, Coconut Grove, FL 33133.
(c) The principal business of the Reporting Person is investments.
Mr. Medina is a real estate developer and is chairman of
Terremark Holdings, Inc. Mr. Altaba is a private investor.
(d) None of the Reporting Person or Messrs. Medina or Altaba has,
during the past five years, been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
(e) None of the Reporting Person or Messrs. Medina or Altaba were,
during the past five years, a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect
to such laws.
(f) Mr. Medina is a citizen of the United States of America and
Mr. Altaba is a citizen of Venezuela.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Reporting Person acquired 901,720 shares of Common Stock of the
Company as a result of the conversion, on December 15, 1998, of certain shares
of Series E Convertible Preferred Stock of the Company then held by the
Reporting Person. The Series E Convertible Preferred Stock was purchased on
November 11, 1998, using funds invested in the Reporting Person by its partners.
The Reporting Person purchased 20 shares of Series G Convertible Preferred Stock
of the Company ("Series G Preferred Stock") and 600,000 warrants to purchase
shares of Common Stock for $2,000,000 on March 16, 1999 with funds borrowed from
Ocean Bank, Miami, Florida. The loan matures on March 16, 2002 and bears
interest at the rate of 0.5% per annum above the prime rate of Citibank, NA.
Both the shares of the Series G Preferred Stock and the 901,720 shares of Common
Stock of the Company held by the Reporting Person are pledged to secure the
loan. The shares of Series G
3
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Preferred Stock are convertible into a total of 1,600,000 shares of Common Stock
at any time.(1) The warrants are each exercisable for one share of Common Stock
at an exercise price of $1.25.
ITEM 4. PURPOSE OF THE TRANSACTION.
The Reporting Person acquired its interest in the Common Stock of the
Company for investment purposes. The Reporting Person continually evaluated its
investment in the Company on the basis of various factors, including the
Company's business, financial condition, results of operations and prospects,
general economic and industry conditions, the securities market in general and
those for the Company's securities in particular, the Reporting Person's own
financial condition, other investment opportunities and other future
developments.
Based upon such evaluation, the Reporting Person intended to take such
actions in the future as the Reporting Person deemed appropriate in the light of
the circumstances existing from time to time. Terremark Holdings, Inc., a
Florida corporation ("Terremark") and an affiliate of the Reporting Person,
entered into, on November 9, 1999, a letter of intent with the Company providing
for the merger of Terremark into the Company. Pursuant to the terms of the
letter of intent, the stockholders of Terremark will receive between 61.5% and
75% of the common stock of the Company on a fully diluted basis. Terremark's
primary business is the development of real estate, including identifying,
acquiring, designing, financing and building real property. Terremark is also
engaged in real estate brokerage activities, real property management, leasing,
construction and advisory services.
Terremark has further agreed to loan up to $1.5 million to the Company
in two equal tranches of $750,000 each, the first to be made within three
business days following the execution of the letter of intent and the second at
such time as the Company can reasonably demonstrate that its cash flow
requirements necessitate additional funding. In connection with the loan, the
Company will execute negotiable promissory notes bearing 10% simple interest to
be payable upon the earlier of December 31, 1999 in the event that no definitive
merger agreement is executed prior to December 1, 1999, or, if a merger
agreement is executed and terminated, five days after such termination.
Except as set forth in this Item 4, neither the Reporting Person nor
Terremark has any plans or proposals with respect to any of the actions
specified in clauses (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Person beneficially owns 3,101,720 shares or
9.0% of the outstanding Common Stock of the Company, based on
a total of 32,113,668 shares of Common Stock outstanding on
August 13, 1999. The shares owned by the Reporting Person
consist of 901,720 shares of Common Stock, 20 shares of Series
G Convertible Preferred Stock which may be converted into
1,600,000 shares of Common Stock and warrants to purchase
600,000 shares of Common Stock.
- ----------
1 The Series G Convertible Preferred Stock pays a dividend in kind at a rate of
8% per year.
4
<PAGE> 5
(b) The Reporting Person has the sole power to vote and dispose of
3,101,720 shares of Common Stock.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
(a) Not applicable.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Letter of intent dated November 9, 1999 between the Company
and Terremark Holdings, Inc., with exhibits thereto.
5
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: November 10, 1999
Communications Investors Group
By /s/ Manuel D. Medina
-----------------------------
Manuel D. Medina
General Partner
6
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Exhibit (a)
November 9, 1999
The Board of Directors
Amtec, Inc.
599 Lexington Ave., 49th Floor
New York, NY 10022
RE: Letter of Intent
Gentlemen:
This Letter of Intent sets forth our understanding as to the terms of
the proposed merger (the "Merger") of Terremark Holdings, Inc. ("Terremark")
into Amtec, Inc. ("Amtec"), with Amtec being the surviving entity. Except as
otherwise set forth below, this Letter of Intent is not binding upon either
party, and is subject to the negotiation and execution of a definitive merger
agreement (the "Merger Agreement") and subject to the terms and conditions set
forth below.
1. MERGER. Upon the effectiveness of the Merger, the stockholders of
Terremark would exchange all of the outstanding common stock of Terremark for
newly issued common stock of Amtec representing between 61.5% and 75% of the
common stock of Amtec on a fully diluted basis. The parties have valued their
respective companies such that, as of the date hereof, the relative post-merger
ownership of Terremark stockholders and existing Amtec stockholders would be
61.5% and 38.5%, respectively, of the post-merger entity. However, the parties
acknowledge that Terremark intends to acquire additional assets (the "New
Assets") prior to the closing of the Merger and that the proportionate ownership
interest in the post-merger entity to be received by the Terremark stockholders
shall be adjusted upward to reflect the value to Amtec of the New Assets, as
follows: For each $1 million worth of New Assets (in excess of liabilities
related thereto) (such value to be mutually determined) acquired by Terremark,
Terremark stockholders shall receive (on a pro rata basis) an aggregate of an
additional 0.45% of equity ownership in post-merger entity. Notwithstanding the
foregoing, the Terremark stockholders shall not be entitled to receive, on the
closing date, more that 75% of the interest in the post-merger entity. By way of
example, (i) if Terremark acquires New Assets of $20 million before the merger,
Terremark stockholders shall be entitled to an interest equal to 70.5% and Amtec
stockholders shall be entitled to 29.5% of the merged company; (ii) if Terremark
acquires New Assets of $30 million, the respective percentages will be 75% and
25%; and (iii) if Terremark acquires New Assets in excess of $30 million, the
respective percentages will still be 75% and 25%. Notwithstanding anything to
the contrary contained in this Paragraph 1, the parties acknowledge and agree as
follows:
(a) Terremark Centre is a 296,000 square foot office building
located in Coconut Grove, Florida, which contains retail, residential and
parking space (the "Building"). The parties acknowledge that it is the current
intent of Terremark to either purchase the partnership that holds title to the
Building, or obtain control over the proceeds upon sale of the Building, in a
transaction substantially as described in the Memorandum of Understanding
attached here to as EXHIBIT "A" (the "MOU"). The Building is not subject to any
liens other than
<PAGE> 8
November 9, 1999
Page 2
liens for borrowed monies in an amount no greater than $30 million, liens for
ordinary course leases and building contracts, and other liens that do not
materially detract from the value or use of the Building. The parties stipulate
and agree that, for the purposes of this Paragraph 1, the value of the equity in
the Building as of the date of this Letter of Intent, taking into account
tangible and intangible factors, is $30 million. The stipulated value of $30
million shall control as of the closing of the Merger even if (e.g., due to a
change in market conditions) the Building is sold for less than $30 million in
net proceeds. Accordingly, if Terremark is successful in purchasing the
partnership that owns the Building or gaining control over the proceeds
substantially in accordance with the terms set forth in the MOU, then the
Building or its proceeds, as the case may be, shall qualify as New Assets with a
value of $30 million such that the respective ownership percentages of
Terremark, the Holders (as that term is defined in the MOU) and the Amtec
shareholders in the post-merger entity shall be 40%, 35% and 25%, respectively.
2. COVENANTS.
(a) Except as otherwise set forth below in this Letter of Intent, Amtec
will continue to operate its business consistent with past practice, but will
not (i) amend its Certificate of Incorporation or Bylaws; (ii) issue any (A)
options, warrants, convertible securities or any other contractual or other
provision to acquire capital stock, or (B) capital stock, other than pursuant to
presently outstanding options, warrants, convertible securities or similar
contractual provisions; (iii) alter the size of the Board of Directors, (iv)
effect any material transaction not in the ordinary course of business, (v) make
any material capital expenditure, or (vi) incur any material debt.
Notwithstanding the foregoing, Amtec shall be permitted to take any of the
forgoing actions as required or necessary (x) to comply with the terms of the
Merger Agreement, (y) to comply with its legal binding obligations existing as
of the date hereof, or (z) in order to fulfill its fiduciary obligations to the
stockholders of Amtec in the event of any extraordinary and unforeseen event not
in the control of Amtec.
(b) Prior to or upon the execution of this Letter of Intent, Terremark
shall provide to Amtec its reviewed financial statements for the year ended
March 31, 1999. On or before November 18, 1999 (without delaying the execution
of the Merger Agreement or effecting the validity thereof), Terremark will
provide to Amtec, audited financial statements for the same period and unaudited
financial statements for the period ending September 30, 1999. The audited
financial statements for March 31 and unaudited for September 30 shall show no
material adverse change in Terremark's financial condition from the March 31
reviewed statements. In the event there is such a material adverse change, Amtec
may terminate the Merger Agreement via written notice to Terremark delivered
within 5 days of Amtec's receipt of the audited statements, citing with
specificity the change(s) on which it is relying.
(c) At all times prior to the closing of the Merger, Terremark will
conduct its operations consistent with past practices and in the ordinary course
of its business (which includes but is not limited to all aspects of real estate
acquisition and development) and, there
<PAGE> 9
November 9, 1999
Page 3
will be no material adverse change in Terremark's financial condition from that
reflected on the above mentioned financial statements.
3. BEST EFFORTS. The parties agree to negotiate in good faith, and to
use their reasonable best efforts with regard to executing a definitive Merger
Agreement on or before November 18, 1999. Such Merger Agreement shall contain
customary terms and provisions, including a break up fee from Amtec to Terremark
in certain enumerated circumstances and substantially mutual representations and
warranties between the parties. The Merger Agreement shall also contain
agreements to the effect that the parties shall each use their reasonable best
efforts to (i) obtain all necessary third-party and government consents
(including all certificates, permits and approvals) required in connection with
the Merger and (ii) close the transaction as soon as practicable, but no later
than July 1, 2000. Amtec shall also agree to use its reasonable best efforts to
(a) engage an investment banker on behalf of Amtec to render advice regarding
the Merger and (b) subject to the terms and conditions of the Merger Agreement,
(1) prepare and file with the U.S. Securities & Exchange Commission the
appropriate registration statement and/or proxy statements for the Merger in
conjunction with Terremark (particularly in connection with any disclosure
pertaining to Terremark and any pro forma financial statements), and (2) submit
the items set forth herein for approval by its stockholders as soon as
practicable, but no later than July 1, 2000.
4. CONFIDENTIALITY. Each party will use and will cause its
Representatives (as defined below) to use the information acquired regarding the
other in connection with the proposed Merger solely for the purpose of such
party's investigation of the business of the other, and unless and until the
parties consummate the Merger, each party will, and will cause its affiliates,
directors, officers, employees, advisors and agents (collectively,
"Representatives") to, keep the information strictly confidential. In the event
the Merger is not consummated, each party will return to the other any materials
containing such information, or will certify in writing that all such materials
or copies of such materials have been destroyed. The provisions of this Section
4 will survive the termination of this Letter of Intent.
5. OTHER AGREEMENTS OF AMTEC.
(a) Amtec hereby represents and warrants to Terremark that neither it
nor any of its Representatives is currently participating in any discussion or
negotiations with any third-party with respect to any Acquisition Proposal.
Amtec shall promptly advise Terremark orally and in writing of any Acquisition
Proposal (or any request for information in connection with the same) received
by it after the date hereof.
"Acquisition Proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of 20% or more
of the assets of Amtec or 20% or more of any class of equity securities of
Amtec, any tender offer or exchange offer that if consummated would result in
any person beneficially owning 20% or more of any class of equity securities of
Amtec, any merger, consolidation, business combination, sale of all or
substantially
<PAGE> 10
November 9, 1999
Page 4
all the assets, recapitalization, liquidation, dissolution or similar
transaction involving Amtec (other than the transactions between the parties
hereto contemplated by this Letter of Intent or ordinary course trading of the
Amtec stock on the American Stock Exchange).
(b) Amtec shall pay to Terremark all reasonable out-of-pocket fees and
expenses incurred by Terremark in connection with the transactions contemplated
hereby up to a limit of $100,000 in the following events: (i) Amtec terminates
this Letter of Intent, (ii) this Letter of Intent expires and within twelve
months thereafter Amtec enters into a definitive agreement with a third party
relating to an Acquisition Proposal, or (iii) Terremark terminates this Letter
of Intent due to the Board of Directors of Amtec having failed to recommend or
withdrawn, or modified or changed in a manner adverse to Terremark, their
approval or recommendation of this Letter of Intent and the transactions
contemplated hereby. The provisions of this paragraph 5(b) shall survive the
termination of this Letter of Intent.
6. PUBLIC ANNOUNCEMENT. Except as provided below, neither party shall
issue any press releases or public announcements or otherwise publicly
disseminate information regarding this Letter of Intent or the transaction
contemplated by this Letter of Intent without the prior written approval of the
other party, except as may be required by law. The press release in the form
attached hereto as EXHIBIT "B" is approved by the parties and may be publicly
disseminated upon the execution of this Letter of Intent. Subsequent to the
dissemination of such press release by either party, Terremark shall have the
right to make such public announcements, and in such form, as it deems in its
sole discretion to be appropriate or desirable.
7. EXPENSES. Except as set forth in Section 5 above, each party will
pay all of its expenses, including legal fees, incurred in connection with the
Merger.
8. NON-BINDING NATURE; TERMINATION; DUE DILIGENCE; BOARD APPROVAL.
Except as provided in this Section 8, it is agreed that this Letter of Intent
does not create any legally binding obligations for either of the parties but
merely represents the current understanding of the parties with respect to the
proposed Merger, and this Letter of Intent does not contain all material terms
upon which agreement must be reached in order for the Merger to be consummated.
Notwithstanding the foregoing, the provisions of Sections 4, 5, 6, 7, 8 and 9,
are agreed to be legally binding on the parties hereto. This Letter of Intent
shall remain in full force and effect until the Merger Agreement is executed and
delivered, or until the close of business on the day that is the thirtieth (30)
day after the date hereof (or the first business day thereafter, in the event
such day is not a business day), whichever occurs first, unless the term of this
Letter of Intent is extended by the mutual agreement of the parties hereto. The
provisions of Sections 4, 5(b) and 9 hereof shall survive any termination of
this Letter of Intent.
The execution and delivery of the Merger Agreement by each party will
be subject to (a) negotiation of a mutually satisfactory Merger Agreement, (b)
each party being satisfied in its sole discretion with the results of its due
diligence review of the other, including the inventories, properties, affairs,
legal claims, books, records, prospects and plans, and of other relevant matters
<PAGE> 11
November 9, 1999
Page 5
prior to the execution of the Merger Agreement, and (c) the approval by the
Board of Directors of each party of the Merger Agreement. Each party shall
provide the other's legal, accounting and other representatives a full
opportunity to conduct a due diligence examination, including the properties,
affairs, books, and records and to obtain information from its management,
lenders, lawyers, accountants and other consultants, with respect to such
matters as deemed reasonably relevant.
9. LOAN TO AMTEC. In anticipation of the Merger, Terremark shall loan
up to $1.5 million to Amtec (the "LOANS"). The Loans shall be secured by all of
the assets of Amtec and paid out in two equal tranches of $750,000 each, as
follows: (a) the first tranche shall be made within 3 business days following
the execution of this Letter of Intent; and (b) the second tranche shall be made
at such subsequent time that Amtec can reasonably demonstrate that its cash flow
requirements necessitate additional funding, which determination shall be in the
sole reasonable discretion of Terremark (assuming the Merger Agreement has not
been terminated and is effective). Amtec will execute negotiable promissory
notes in form and substance acceptable to Terremark and bearing 10% simple
interest, for each tranche funded, which notes shall be payable to Terremark (to
the extent funded) upon the earlier of (i) December 31, 1999, in the event that
no definitive Merger Agreement is executed by December 1, 1999, (ii) if the
Merger Agreement is executed and terminated prior to closing, within 5 business
days of such termination or (iii) upon the closing of the Merger. The provisions
of this Section 9 will survive the termination of this Letter of Intent.
10. COUNTERPARTS. This Letter of Intent may be executed in two
counterparts, each of which shall be an original and which, taken together,
shall constitute one and the same agreement.
TERREMARK HOLDINGS, INC.
By: /s/ Manuel D. Medina
---------------------------
Manuel D. Medina, President
AMTEC, INC.
By: /s/ Joseph Wright
---------------------------
Name: Wright, J.R.
-------------------------
Title: Chairman and CEO
-------------------------
<PAGE> 12
EXHIBIT A
MEMORANDUM OF UNDERSTANDING
Attached Hereto
<PAGE> 13
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (this "Memorandum") is entered into
this ___ day of October, 1999, between Terremark Holdings, Inc., a Florida
corporation ("Terremark"), and Terremark Centre, Ltd., a Florida limited
partnership ("TCL"), and Terremark at Bayshore, Inc., Terremark Centre, Inc. and
ACGDI, Inc. (the last three of which are Florida corporations and are
collectively referred to as the "Partners"). Other than as specifically set
forth in paragraphs 7 to 11 ("Binding Provisions") below, this Memorandum is
non-binding and is for the sole purpose of expressing the parties' current
intent and understanding in order to facilitate the drafting and eventual
execution of binding formal contracts (collectively, the "Definitive Agreement")
reflecting the parties' agreement with respect to the transactions contemplated
herein. The parties acknowledge that any exchange of drafts of the Definitive
Agreement or other course of conduct or dealing are not intended to create or
constitute any legally binding obligation between them with respect to the
subject matter hereof, and the parties hereto shall not be bound nor have any
liability to any other party hereunder with respect to the matters contemplated
hereby until a fully integrated Definitive Agreement, and other related
documents, are prepared, authorized, executed and delivered by and between all
parties; provided, however, that the Binding Provisions shall be legally binding
and enforceable upon execution of this Memorandum.
RECITALS
A. TCL owns the real property referred to as the Terremark Centre, a
complex of office, residential, parking and retail space, located at 2601 S.
Bayshore Drive, Coconut Grove, Florida (the "Property");
-1-
<PAGE> 14
B. The Partners own 100% of the limited and general partnership
interests in TCL ("Partnership Interests");
C. Terremark and its subsidiaries are in the business of developing,
leasing, managing, brokering and providing other services related to real
estate;
D. Terremark has negotiated an agreement in principal to be merged into
AmTec, Inc., a Delaware corporation traded on the American Stock Exchange, as a
result of which, the shareholders of Terremark, together with the Partners, at
or about the time of the consummation of the merger (and assuming that the
transactions contemplated hereby are consummated) will in the aggregate become
the owners of 75% of the shares of AmTec on a fully diluted basis (the "AmTec
Merger"), with 40% of the shares of AmTec on a fully diluted basis to be
acquired by the shareholders of Terremark and 35% of the shares of AmTec on a
fully diluted basis to be acquired by the Partners or their assignees, all as
set forth in the draft letter of intent between Terremark and AmTec, a copy of
which is attached hereto as Exhibit A (the "AmTec Letter"); and
E. The Partners desire to acquire newly-issued common stock of AmTec,
representing 35% of the outstanding stock of AmTec on a fully diluted basis,
upon or promptly after the closing of the AmTec Merger in accordance with and
subject to the terms and provisions set forth in this Memorandum.
-2-
<PAGE> 15
PROPOSED TRANSACTION
In order to accomplish the proposed transaction involving the parties
to this Memorandum and the AmTec Merger as contemplated by the AmTec Letter, the
parties hereto intend to proceed as follows:
1. The Partners would sell their Partnership Interests in TCL
(representing 100% of the limited and general partnership interests in TCL) to
Terremark or Terremark subsidiaries for a purchase price in an amount equal to
the difference between $56,000,000 and the outstanding principal balance of the
first mortgage loan in favor of Principal Mutual Insurance Company ("First
Mortgage") at the time of closing of such transaction ("Terremark Closing"). The
purchase price would be payable in the form of a promissory note ("Note")
delivered to the Partners at the Terremark Closing. The only expense to be paid
by the Partners in connection with the Terremark Closing shall be income taxes,
as set forth in paragraph 6 below, and the attorneys' fees of counsel to the
Partners. The Definitive Agreement will, however, contain standard provisions
regarding proration of rents, taxes, and other operating expenses. No commission
shall be payable by the Partners to Terremark or any other party in connection
with the sale of the Partnership Interests to Terremark.
2. The terms of the Note would be as follows:
(a) Terremark would be the maker (or guarantor if the
Partnership Interests are sold to Terremark subsidiaries) of the Note and the
Note would be a full recourse Note against Terremark. The Note would be in
registered form for federal income tax purposes. The Partners or their assignees
who hold the Note are sometimes hereinafter referred to as the "Holders".
-3-
<PAGE> 16
(b) The Note would be secured by a pledge of 100% of the
Partnership Interests being sold to Terremark or its subsidiaries pursuant to a
Security Agreement acceptable to the parties, which security interest would be
perfected by the filing of UCC-1 financing statements.
(c) Concurrently with the closing, TCL would enter into an
agreement in favor of the Holders not to further encumber the property and not
to accept any additional advances under the First Mortgage.
(d) Except as provided below, the Note would mature and be
payable in full on December 31, 2000. Interest would accrue on the Note at the
rate of 7% per annum and interest would be payable at maturity. Notwithstanding
the stated interest rate of the Note, Terremark would be obligated to pay a
minimum of $1,000,000 of interest under the Note.
(e) The Note would be prepayable at any time without premium
or penalty (but subject to the obligation to pay a minimum of $1,000,000 of
interest). The Note would contain a usury savings clause. The Note would contain
a "due on sale" clause.
(f) If the Property is sold prior to the consummation of the
AmTec Merger, the Note would become immediately due and payable. If the net
proceeds from the sale of the Property are insufficient to pay the Note in full,
Terremark would be required to make up any difference. The proceeds to be paid
to the Partners to satisfy the Note in full ("Note Proceeds") would be paid into
an interest bearing escrow account (in a commercial bank in the United
-4-
<PAGE> 17
States and of a type account mutually acceptable to the parties) in the name of
the Holders which would require the signatures of two persons to withdraw any
amounts from such escrow account, one being a representative of the Partners,
and the other being a representative of Terremark. The parties would agree that
the Note Proceeds, together with all interest earned thereon, would be required
to be used by the Holders to purchase newly issued registered shares of common
stock of AmTec representing 35% of the outstanding AmTec stock on a fully
diluted basis upon the closing of the AmTec Merger, should such merger close on
or before December 31, 2000. If the AmTec Merger does not close by December 31,
2000, then the Note Proceeds in the escrow account, together with all interest
earned thereon, would be immediately paid to the Partners in full satisfaction
of all obligations under the Note and the Definitive Agreement.
(g) If the Property has not yet been sold by the date of the
consummation of the AmTec Merger, then upon the consummation of the AmTec Merger
(provided the same occurs prior to December 31, 2000) and for a period of thirty
days thereafter, (i) Terremark (or the survivor of the AmTec Merger) would have
the option to pay the Note in full by delivering to the Holders on a pro rata
basis newly-issued registered shares of common stock of AmTec collectively
representing 35% of the AmTec stock on a fully diluted basis and (ii) the
Holders would collectively and jointly (but not severally) have the option to
exchange the Note for newly-issued registered shares of common stock of AmTec
representing 35% of the AmTec stock on a fully diluted basis.
(h) It would be a condition precedent to the Holders'
obligation to exchange the Note or the Note Proceeds, as the case may be, for
AmTec stock as provided in
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<PAGE> 18
subparagraphs (f) and (g) above, that the conditions precedent to the closing of
the AmTec Merger shall in fact have been satisfied. Such conditions precedent
shall include, without limitation, that the shareholders of AmTec shall have
approved the AmTec Merger, that the representations and warranties of AmTec
contained in the AmTec Merger Agreement shall remain materially true and correct
on the date of closing of the AmTec Merger as if made on such date, that AmTec
shall have substantially performed all material obligations required to be
performed by it under the AmTec Merger agreement as of the closing date of the
AmTec Merger and that no material adverse change with respect to the business,
financial condition, operations or prospects of AmTec or to the continuous and
active public trading of Amtec's stock shall have occurred as of the closing
date of the AmTec Merger. A waiver by Terremark of any such conditions precedent
shall not be binding upon the Holders.
(i) In the event that the Property is not sold by December 31,
2000 and the AmTec Merger has not been consummated by that date, then the
Holders would collectively be required, within seven (7) days, to elect one of
the following options and Terremark and its subsidiaries would be required to
comply with such election (failing which the Holders shall be deemed to have
selected option (i)):
(i) Take delivery of 100% of the Partnership
Interests in TCL pledged to secure the Note in full satisfaction of the Note and
any Terremark guaranty and all obligations of the parties under the Definitive
Agreement (in which case the Holders would become the owners of the Property by
virtue of their ownership of TCL); or
(ii) Agree to extend the maturity of the Note for an
additional four
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<PAGE> 19
years with interest-only payments to be made annually at the
increased rate of 8% per annum and with the entire principal balance and all
accrued but unpaid interest to be payable in full on December 31, 2004. In such
event, the Holders would be obligated to subordinate their debt and security
interest to any refinancing of the First Mortgage, so long as such refinancing
is not in an amount that exceeds $28.5 million.
(j) The Note would be divisible into smaller denominations and
provide that it would be assignable in whole or in part by the Partners to any
other persons or entities, subject to the provisions of the Definitive
Agreement. The Note will not be negotiable to a holder in due course.
3. The execution and delivery of the Definitive Agreement shall occur
simultaneously with the execution and delivery of a definitive merger agreement
and related documents ("AmTec Merger Agreement") between Terremark and AmTec.
The parties anticipate that the Definitive Agreement and the AmTec Merger
Agreement would be executed and delivered on or about November 15, 1999. The
closing of the Definitive Agreement would occur no later than December 20, 1999.
It is anticipated that the closing of the AmTec Merger Agreement would be no
later than June 30, 2000.
4. The form and substance of the AmTec Merger Agreement shall be
satisfactory to the Partners and their counsel in their sole discretion. In that
regard, drafts of the AmTec Merger Agreement shall be provided to counsel for
the Partners in sufficient time to permit such counsel to review and comment
upon the same.
5. If the Partners, their assignees or any related or affiliated person
or entity once
-7-
<PAGE> 20
again obtain title or control over the Property or the Partnership Interests
pursuant to any rights described above, they would agree that the contracts that
Terremark's subsidiary currently has to manage and lease the Property would be
immediately reinstated without change in their terms, conditions or
interpretation.
6. The Partners would be responsible for paying all income taxes that
may be due by them as a result of the transaction contemplated herein.
BINDING PROVISIONS
7. Any public disclosures relating to the Partners or their principals
shall be approved in advance by the Partners, which approval shall not be
unreasonably withheld or delayed.
8. Terremark agrees to provide to the Partners and their
representatives all information regarding the business, operations, financial
condition and prospects of AmTec which it has obtained and which it may in the
future obtain prior to the date of the closing of the AmTec Merger. In addition,
Terremark shall cooperate and assist the Partners in connection with any due
diligence investigation which the Partners may reasonably desire to perform with
respect to AmTec prior to the closing of the AmTec Merger.
9. The existence of this Memorandum and the AmTec Letter, and the
transactions contemplated therein, shall all remain confidential and shall not
be disclosed by any of the parties hereto, except as necessary to obtain
professional services related to the contemplated transactions.
10. TCL and the Partners hereby agree, on their own behalf and for
their owners and
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<PAGE> 21
principals, that during the next ten (10) years they will not under any
circumstances attempt to enter into a transaction with AmTec except through
Terremark pursuant to transactions contemplated by this Memorandum and the AmTec
Letter or otherwise through a transaction approved in writing by Terremark.
11. If the parties have not entered into the Definitive Agreement on or
before November 22, 1999, this Memorandum and all binding provisions thereof
(except paragraphs 7, 9 and 10 above) shall automatically terminate.
Executed as of this ____ day of October, 1999.
TERREMARK HOLDINGS, INC.
By: /s/ Manuel D. Medina
-----------------------------------
Name: Manuel D. Medina
--------------------------
Title: President
--------------------------
11-9-99
TERREMARK CENTRE, LTD., by its
managing general partner,
TERREMARK CENTRE, INC.
By: /s/ Peter B. Evans
-----------------------------------
Peter B. Evans, President
TERREMARK AT BAYSHORE, INC.
By: /s/ Peter B. Evans
-----------------------------------
Peter B. Evans, President
-9-
<PAGE> 22
TERREMARK CENTRE, INC.
By: /s/ Peter B. Evans
-----------------------------------
Peter B. Evans, President
ACGDI, INC.
By: /s/ Peter B. Evans
-----------------------------------
Peter B. Evans, President
-10-
<PAGE> 23
EXHIBIT B
FORM OF PRESS RELEASE
Attached Hereto
<PAGE> 24
APPROVED DRAFT
FINANCIAL CONTACT FINANCIAL RELATIONS
Karin-JoyceTjon Cameron Associates Inc.
Vice President Kevin McGrath
(212) 319-9160 (212) 245-4577
E-mail: [email protected] E-mail: [email protected]
Webpage: www.amtec-inc.com
AMTEC TO ACQUIRE TERREMARK
Combined Company Expected To Have Liquid Assets of $30 Million
New York, NY - November 9, 1999 - AmTec, Inc. (Amex:ATC) an international
telecommunications services company, today, announced it signed a Letter of
Intent to acquire Terremark Holdings, Inc. (Terremark) a privately held, full
service real estate and development company based in Miami, Florida. AmTec will
be the surviving company and under the terms of the proposed acquisition, will
acquire all existing Terremark assets, including, real estate, development
projects, management and construction contracts and brokerage operations. In
addition, Terremark is providing AmTec with a collateralized bridge financing up
to $1.5 million, to meet AmTec's capital requirements and working capital needs
and Terremark is committed to providing the combined company with initial liquid
assets of approximately $30 million from a third party affiliate of Terremark
upon completion of the merger. The merger contemplated by the Letter of Intent
is subject to satisfactory completion of due diligence, execution of a
definitive agreement and approval of the Board of Directors and shareholders, of
AmTec.
"This transaction comes at a critical time for AmTec," said Joseph R. Wright,
Jr., AmTec's Chairman and CEO. "During the past year, we have aggressively moved
into high growth value-added telecommunications services, including
international telecom and Internet businesses. In the past several months, AmTec
formed a joint venture called "IP.com" with Fusion Telecommunications
International, Inc. (Fusion) a multi-national long distance carrier. IP.com
recently started offering voice, data and Internet telephony between the U.S.
and Mainland China. AmTec has also partnered with IXS.Net, a private internet
company, which is providing Internet Protocol fax and other transmission
services in Europe, South America, U.S. and Asia. All of these businesses are
expected to grow quickly and require expansion capital."
The $30 million in liquid assets will be invested in the combined company by
entities associated with Mr. Francis Lee, one of the most successful businessman
in Southeast Asia. Mr. Lee has extensive holdings in timber plantations, real
estate and other industries and has been associated with Terremark for over 15
years. Mr. Lee is of Chinese descent and has significant relationships and
contacts in Southeast Asia. He is extremely interested in high tech industries
and is anxious to use his status in the region and his resources to assist in
the growth of AmTec's telecommunications and Internet businesses in China.
<PAGE> 25
Wright continued, "The purpose of this merger is to give AmTec a stronger
balance sheet, a more diversified business with immediate revenues, and the
capability to fund and increase our new telecom and Internet businesses around
the world."
Manuel D. Medina, Chairman and CEO of Terremark explained, "Terremark will bring
capital and established operations, alon with contracts and opportunities in
Asia and South America. Conversely, AmTec has the telecommunications
relationships to allow Terremark to expand its business to offer a full range of
telecommunications services to its tenants." Terremark presently has 2,000,000
square feet under management, a number of development projects underway, and
relationships with other real estate companies that it expects to use to service
"captive" properties.
Terremark affiliates own approximately 9% of AmTec on a fully diluted basis and
have an investment position in AmTec's joint venture partner, Fusion. In
addition, Mr. Medina is a Director of Fusion.
The two companies are in the process of completing due diligence and preparing a
definitive merger agreement which will require AmTec Board and stockholder
approval. The transaction is expected to close in the first quarter of 2000. If
them is no definitive agreement by December 31 or no closing by July 1, 2000,
AmTec will have to repay the bridge loans. Upon completion of the merger
Terremark shareholders will own 40% of AmTec's common stock, affiliates of Mr.
Lee will control 35% and existing AmTec shareholders will own 25% on a fully
diluted basis.
Mr. Wright concluded by stating, "AmTec's recent expansion into international
telecom and Internet businesses are working out very well for the company.
Unlike China based cellular services, they do not rely as heavily on
Chinese-Foreign Joint Ventures. Originally, AmTec entered into an agreement with
Hebei Province to finance and assist China UNICOM in the construction of
cellular networks in the ten largest cities of Hebei Province. As is happening
with all of these ventures, this agreement is in the process of being
renegotiated and perhaps terminated. Hebei Province, AmTec's partner, is
negotiating the settlement on behalf of AmTec and a possible substitute
agreement with UNICOM. There is no certainty of getting either a substitute
agreement or a settlement satisfactory to AmTec."
AmTec, Inc. is an international telecommunications service company that provides
voice, data, and Internet telephony services through IP.com, a partnership with
Fusion Telecommunications International, Inc.; provides business-to-business
Internet services worldwide through IXS.NET, and holds joint venture telecom
interests in the People's Republic of China.
* * * *
Note: Forward-looking statements in this press release are necessarily subject
to risks and uncertainties that may affect the accuracy of each statements. The
forward-looking statements in this release address a variety of subjects
including, for example, the expected date of closing of the merger and the
potential benefits of the merger. The following factors among others, could
cause actual results to differ materially from those described in these
forward-looking statements, the risk that Terremark business will not be
successfully integrated with AmTec's business; the successful completion of the
merger, costs associated with the merger, the ability to obtain the approval of
AmTec's stockholders matters arising in connection with the parties' efforts to
comply with applicable regulatory requirements relating to the transaction risk
associated with entering into a new business agreements, increased competitions
and technological changes in the business in which AmTec and Terremark competes
and any political instability in China, any delays in construction of networks,
and market acceptance of and demand for the Company's products. For a discussion
of certain of these risks, please refer to the Company's Form 10(K) filed with
Security Exchange Commission for the fiscal year ending March 31, 1999. The
Company undertakes no obligation to update such factors or to publicly announce
the result of any revisions to the forward-looking statements contained herein.
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