SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) JUNE 10, 1997 (MAY 23, 1997)
TELSCAPE INTERNATIONAL, INC.
(Exact name of registrant as specified in its Charter)
TEXAS 0-24622 75-2433637
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4636 SOUTHWEST FREEWAY, SUITE 800, HOUSTON, TEXAS 77027
(Address of principal executive offices) (Zip code)
Registrants telephone number, including area code (713)968-0968
____________________________________________________________
(Former name of former address, if changed since last report.)
<PAGE>
ITEM 5. OTHER EVENTS
IN RE: THE ESTATE OF NINA JEAN OBEL, DECEASED ET AL V. TELSCAPE INTERNATIONAL,
INC. ET AL
Telscape International, Inc. ("Telscape") has entered into a compromise
and settlement agreement ("Agreement") with respect to the above-referenced
lawsuit ("Lawsuit") which was disclosed in the Company's 10-KSB and 10-QSB for
the periods ended December 31, 1996 and March 31, 1997, respectively. Such
filings are incorporated herein by reference. The Agreement is subject to court
approval and dismissal of the case, which has been requested by all parties.
On May 23, 1997, the Company agreed to repurchase all of the 83,359 shares
of Telscape common stock owned by the Plaintiffs for total consideration of
$425,000. The consideration was paid $125,000 in cash upon the execution of the
Agreement and the balance is to be paid out over three years in six semi-annual
payments of $50,000 each. The outstanding balance accrues simple interest at 6%
per annum. In return for this consideration, the Plaintiffs have agreed to
release Telscape and the other defendant from any and all claims in connection
with the Lawsuit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b) Not applicable
(c) Exhibits
10.1 Compromise and Settlement Agreement and related documents
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 hereunto duly authorized.
TELSCAPE INTERNATIONAL, INC.
(Registrant)
June 10, 1997 /s/ TODD M. BINET
Todd M. Binet
Principal Financial and Accounting Officer
NO. 92-4313-P(C)
IN RE: ) IN THE PROBATE COURT
)
THE ESTATE OF NINA JEAN )
OBEL, DECEASED, )
)
___________________________ )
)
THE ESTATE OF NINA JEAN OBEL, )
et al., ) OF
)
Plaintiffs, )
)
v. )
)
TELSCAPE INTERNATIONAL, INC., )
a Texas Corporation, and )
Dal Berry, )
)
Defendants. ) DALLAS COUNTY, TEXAS
JOINT MOTION FOR APPROVAL OF COMPROMISE AND
SETTLEMENT AGREEMENT AND DISMISSAL WITH PREJUDICE
TO THE HONORABLE JUDGE OF SAID COURT:
COME NOW all Plaintiffs and all Defendants herein and file this their
Joint Motion for Court Approval of the Compromise and Settlement Agreement of
the parties and for Dismissal of this Case With Prejudice and would show the
Court as follows:
I.
On or about May 23, 1997, the parties executed the Compromise and
Settlement Agreement ("Agreement"), a true and correct copy of which (including
the exhibits thereto) is attached hereto as Exhibit "1" and incorporated herein
by reference. Said Agreement compromises and disposes of all claims between and
among the parties. Further, in the
JOINT MOTION FOR APPROVAL OF COMPROMISE AND
SETTLEMENT AGREEMENT AND DISMISSAL WITH PREJUDICE - PAGE 1
<PAGE>
Agreement, the parties agree that they would seek the approval of the Court
respecting the Agreement and request that the claims and counterclaims be
dismissed with prejudice and that the costs be taxed against the party incurring
the same.
II.
Pursuant to Chapter 123, Texas Property Code, the Attorney General of the
State of Texas has been timely advised by the Plaintiffs that this suit was
initiated and that it involved a Charitable Trust. Further, notice was also
timely given to the Attorney General by the Plaintiffs when pleadings were filed
which added new causes of action or additional parties. The Attorney General has
not made an appearance and has failed to intervene. The parties will jointly
notify the Attorney General of the execution of the Agreement and of the filing
of this Joint Motion.
III.
The parties request that a hearing be set on this Joint Motion and that,
at the hearing, the Court sign an Agreed Order approving the Compromise and
Settlement Agreement and incorporating same, declaring that the Attorney General
has not made an appearance herein and has failed to intervene, dismissing the
claims and the counterclaims with prejudice to the refiling of the same, and
taxing the costs against the party incurring the same.
JOINT MOTION FOR APPROVAL OF COMPROMISE AND
SETTLEMENT AGREEMENT AND DISMISSAL WITH PREJUDICE - PAGE 2
<PAGE>
WHEREFORE, PREMISES CONSIDERED, the parties pray for the relief requested
above and for general relief.
Respectfully submitted,
GARDERE & WYNNE, L.L.P.
By: /s/ DOUGLAS S. LANG
Douglas S. Lang
SBN 11895500
Susan M. Halpern
SBN 08805400
A. Christopher Nixon
SNB 00794377
3000 Thanksgiving Tower
1601 Elm Street
Dallas, TX 75201
(Telephone) 214/999-3000
(Telecopier) 214/999-4667
ATTORNEYS FOR DEFENDANT
TELSCAPE INTERNATIONAL, INC.
BAKER & BOTTS, L.L.P.
By: /s/ VAN H. BECKWITH
Van H. Beckwith
SBN 02020150
800 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
(Telephone) 214/953-6500
(Telecopier) 214/953-6503
ATTORNEYS FOR DEFENDANT
W. DAL BERRY
JOINT MOTION FOR APPROVAL OF COMPROMISE AND
SETTLEMENT AGREEMENT AND DISMISSAL WITH PREJUDICE - PAGE 3
<PAGE>
RADER, CAMPBELL, FISHER & PYKE, P.C.
By: /s/ DONOVAN CAMPBELL, JR.
Donovan Campbell, Jr.
SBN 03725300
David M. Pyke
SBN 146419700
Stemmons Place, Suite 1080
2777 Stemmons Freeway
Dallas, TX 75207
(Telephone) 214/630-4700
(Telecopier) 214/630-9996
ATTORNEYS FOR PLAINTIFFS
NOTICE OF SETTING AND
CERTIFICATE OF SERVICE
On the _____ day of ___________, 1997, Notice of the hearing on this
Motion and a copy of this Motion were sent to the Attorney General of the State
of Texas by certified mail, return receipt requested.
_________________________________
Douglas S. Lang
JOINT MOTION FOR APPROVAL OF COMPROMISE AND
SETTLEMENT AGREEMENT AND DISMISSAL WITH PREJUDICE - PAGE 4
<PAGE>
FIAT
The foregoing motion has been set for hearing on the 16th day of
June, 1997, at 3:00 o'clock p.m. in the Probate Court of
Dallas County, Texas.
SIGNED this the 30th day of May, 1997.
/s/ JOE LONING
JUDGE PRESIDING
JUDGE OF PROBATE COURT NO. 3
SITTING FOR JUDGE OF PROBATE COURT
JOINT MOTION FOR APPROVAL OF COMPROMISE AND
SETTLEMENT AGREEMENT AND DISMISSAL WITH PREJUDICE - PAGE 5
<PAGE>
NO. 92-4313-P(C)
IN RE: ) IN THE PROBATE COURT
)
THE ESTATE OF NINA JEAN )
OBEL, DECEASED, )
)
___________________________ )
)
THE ESTATE OF NINA JEAN OBEL, )
et al., ) OF
)
Plaintiffs, )
)
v. )
)
TELSCAPE INTERNATIONAL, INC., )
a Texas Corporation, and )
Dal Berry, )
)
Defendants. ) DALLAS COUNTY, TEXAS
COMPROMISE AND SETTLEMENT AGREEMENT
1. The parties to this Compromise and Settlement Agreement ("Agreement")
are The Estate of Nina Jean Obel, Deceased, by and through Edmund Yates and Hal
Habecker, Its Independent Co-Executors ("the Estate"), The Nina Jean Obel
Revocable Living Trust, by and through Edmund Yates and Hal Habecker, Its
Trustees and Successor Trustees (Living Trust), The Nina Jean Obel Charitable
Trust, by and through Edmund Yates and Hal Habecker, Its Trustees and Successor
Trustees ("Charitable Trust"), Telscape International, Inc., a Texas corporation
("Telscape") and W. Dal Berry, individually ("Berry"). The Estate, the Living
Trust and the Charitable Trust may be referred to collectively as "Obel."
2. Obel filed suit against Telscape and Berry making numerous claims all
as more specifically described in the pleadings on file in the above styled
action ("Lawsuit"). Telscape
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 1
<PAGE>
and Berry deny that Obel is entitled to any of the relief claimed or any relief
of any kind and Telscape has filed a counterclaim against Obel. Obel denies that
Telscape is entitled to any of the relief claimed or any relief of any kind.
3. In order to avoid the expense and uncertainty of continuing the
Lawsuit, and without any party admitting the assertions or claims made by the
other, the parties have determined to compromise and settle their respective
claims described in the Lawsuit and which they may have against each other.
4. Therefore, in consideration of the foregoing and hereinafter set forth
agreements, the parties agree as follows:
(a) Obel owns 83,359 shares of common stock, par value $.001 per
share, of Telscape ("Shares"). In consideration of the agreements set forth
herein, Obel, by and through Edmund Yates and Hal Habecker, as Independent
Co-Executors of the Estate, as Trustees and Successor Trustees of the Living
Trust and as Trustees and Successor Trustees of the Charitable Trust, does by
these presents bargain, sell and convey the Shares to Telscape, and Telscape
does hereby buy and accept transfer of the Shares and agrees to pay to Obel the
Principal Sum (hereinafter defined). Obel represents and warrants to Telscape
that, to the best of Obel's knowledge, Obel has good title to the Shares and
that the Shares are not encumbered by any claims or liens of any kind, by,
through, or under Obel, but not otherwise. This sale of the Shares to Telscape
and the purchase of the Shares by Telscape are effective upon the execution of
this Agreement and all documents referenced herein. Contemporaneous with the
execution of this Agreement Obel will execute a stock power in form as attached
hereto as Exhibit "A."
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 2
<PAGE>
(b) In consideration of the sale and purchase of the Shares and the
settlement of the Lawsuit, pursuant to the terms set forth herein, Telscape
agrees to pay to the order of Obel the sum of $425,000.00 (the "Principal Sum").
The Principal Sum shall be paid in part by Telscape delivering to Obel the sum
of $125,000 by cashier's check (drawn on a national banking association with
offices in Texas acceptable to Obel) payable to the order of Obel or by wire
transfer from Telscape to such bank account as Obel shall direct simultaneously
with the execution of this Agreement. The balance of said Principal Sum,
$300,000, will be paid in six $50,000 installments of principal along with
accrued simple interest at the rate of six percent (6%) per annum pursuant to
the terms of the Promissory Note which is executed contemporaneously with this
Agreement, attached hereto, made a part hereof and marked as Exhibit "B." Obel
and Telscape agree that Obel shall be granted a security interest in the Shares
to secure the payment of the balance of the Principal Sum as provided in Exhibit
"B." The Shares which will be subject to said security interest will be
transferred to Telscape, through the transfer agent, and the certificate
identifying Telscape's ownership of said shares will be without restriction
including, but without being limited to, any restriction under "Rule 144."
Additionally, Telscape will not treat the Shares as treasury shares for purposes
of dividends, stock dividends and/or stock splits. Telscape will advise the
transfer agent of this Agreement and the pledge of the Shares and request that
the transfer agent note in its records the fact that the Shares are subject to a
pledge pursuant to this Agreement and the Pledge Agreement referenced herein.
The security interest in such Shares is granted pursuant to and the parties'
rights are described in this Agreement and in the Pledge Agreement attached
hereto, made a part hereof and marked as Exhibit "C." At such time as all sums
due and owing pursuant to the
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 3
<PAGE>
Promissory Note, which is attached as Exhibit "B," are paid in full, all liens
and encumbrances as, to and on the Shares claimed by Obel are released and null
and void, and the Shares will be delivered promptly by Obel's Designee (defined
as the Secured Party's Designee in Exhibit "C") to Douglas S. Lang, Gardere &
Wynne, L.L.P., 1601 Elm Street, Suite 3000, Dallas, Texas 75201 or to such other
person as Telscape shall designate in writing which Telscape may send to Edmund
Yates prior to such payment in full.
(c) From and after the sale of the Shares by Obel to Telscape as
referenced above in paragraph 4(a), including while Obel has and holds a
security interest in any of the Shares, Telscape will hold and retain any and
all voting rights and may exercise the same, in the sole discretion of Telscape,
in respect of the Shares, except as otherwise provided herein or in the Pledge
Agreement attached hereto as Exhibit "C."
(d) The entire outstanding balance of the Principal Sum referred to
in paragraph 4(b) above and any accrued and earned interest may be prepaid by
Telscape in full, without penalty, at the option of Telscape, at any time prior
to maturity , which payment will extinguish Telscape's obligations to pay any
sums pursuant to the Promissory Note attached hereto as Exhibit "B."
5. In consideration of the foregoing, The Estate of Nina Jean Obel,
Deceased, By and through Edmund Yates and Hal Habecker, Its Independent
Co-Executors, The Nina Jean Obel Revocable Living Trust, By and Through Edmund
Yates and Hal Habecker, Its Trustees and Successor Trustees, and The Nina Jean
Obel Charitable Trust, By and Through Edmund Yates and Hal Habecker, Its
Trustees and Successor Trustees, for themselves and their successors and
assigns, do by these presents, release, acquit and discharge Telscape, its
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 4
<PAGE>
predecessors, affiliates, successors, assigns, officers, directors, former
officers and directors, and attorneys and their respective heirs and assigns,
and W. Dal Berry, individually, and his successors, heirs, assigns and attorneys
from any and all claims, actions and causes of action of whatsoever kind whether
known or unknown, foreseeable or not, which may have arisen from the beginning
of time to the date of the execution of this Agreement, provided, however,
Telscape is not released from its obligations as described in this Agreement and
the Exhibits hereto. Obel intends this release to be as broad and comprehensive
as possible, with the exceptions noted in the previous sentence, so that
Telscape, Berry and those described above are fully and completely released from
any claims of Obel.
6. In consideration of the foregoing, Telscape, for itself, its
affiliates, predecessors, successors and assigns, and W. Dal Berry, for himself,
his successors, heirs and assigns, do by these presents, release, acquit and
discharge The Estate of Nina Jean Obel, Deceased, By and through Edmund Yates
and Hal Habecker, Its Independent Co-Executors, The Nina Jean Obel Revocable
Living Trust, By and Through Edmund Yates and Hal Habecker, Its Trustees and
Successor Trustees, and The Nina Jean Obel Charitable Trust, By and Through
Edmund Yates and Hal Habecker, Its Trustees and Successor Trustees, and their
attorneys and their respective affiliates, predecessors, successors, assigns and
attorneys, of and from any and all claims, actions and causes of action of
whatsoever kind whether known or unknown, foreseeable or not, which may have
arisen from the beginning of time to the date of the execution of this
Agreement, provided, however, nothing herein shall serve to release the
obligations of Obel to perform pursuant to the terms of this Agreement. Telscape
and Berry intend this release to be as broad and comprehensive as possible, with
the exceptions noted in the previous sentence, so
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 5
<PAGE>
that Obel and those described above are fully and completely released from any
claims of Telscape and/or Berry.
7. This Agreement is effective upon execution, but the parties agree to
jointly file a motion with the Court requesting that the Court approve this
Agreement and enter an order of dismissal with prejudice of the Lawsuit,
including the claims of Obel and the counterclaim of Telscape. Simultaneous with
the filing of the above referenced motion, the parties will jointly advise the
Attorney General of the State of Texas of the filing of the motion and the
execution of this Agreement requesting that the Attorney General take notice of
the filing of the motion and if no action is taken by said Attorney General that
the Court will be requested to dismiss the Lawsuit as referenced above; provided
however, each party to this Agreement bears its own risk, if any there be,
respecting Section 123.004(b) Texas Property Code.
8. Each party shall, within five business days of the execution of this
Agreement, return all originals and/or copies of documents produced by counsel
for Berry which documents are bates stamped nos. 000001 through 000612.
9. The signatories to this Agreement represent and warrant that they have
the requisite authority to enter into this binding Agreement and its Exhibits.
10. In reaching, negotiating and executing this Agreement, each party
acknowledges that it has read this Agreement, it has relied on its own knowledge
and judgment and upon the advice of attorneys or counselors of its own free
choice, it has not acted in reliance upon any representation, advice, or action
by any other party except as specifically set forth herein or in the Exhibits
hereto, that it has executed this Agreement voluntarily, in good faith, at arms'
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 6
<PAGE>
length, and without reliance upon any representation of any kind or character
not expressly set forth herein or in the Exhibits hereto.
11. Neither this Agreement nor any of its terms or conditions shall be
offered or received in evidence in any proceeding or utilized in any manner
whatsoever as an admission of any wrongdoing of any nature or any liability
therefor on the part of any party, provided, however, that nothing contained in
this paragraph shall prevent this Agreement or its Exhibits from being used,
offered or received in evidence in any proceeding respecting breach and/or
enforcement of the Agreement or any of its Exhibits.
12. Obel and Telscape will pay their own costs and attorneys fees incurred
respecting the Lawsuit, and Obel shall not pay any of Berry's costs or
attorneys' fees respecting the Lawsuit.
13. This Agreement and its Exhibits are the entire agreement of the
parties. This Agreement expressly supersedes any prior agreements of the
parties, and it may not be amended or modified other than by setting forth such
modification or amendment in writing and all parties must sign such modification
or amendment for the same to be effective.
14. This Agreement is to be governed by the laws of the State of Texas.
Venue of any litigation involving this Agreement will be in Dallas County,
Texas.
15. The parties may execute more than one counterpart of this Agreement,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 7
<PAGE>
Signed this 30th day of May, 1997.
THE ESTATE OF NINA JEAN OBEL, DECEASED
By: /s/ EDMUND YATES
Its Independent Co-Executor
THE NINA JEAN OBEL REVOCABLE
LIVING TRUST
By: /s/ EDMUND YATES
Its Trustee and Successor Trustee
THE NINA JEAN OBEL CHARITABLE TRUST
By: /s/ EDMUND YATES
Its Trustee and Successor Trustee
TELSCAPE INTERNATIONAL, INC.,
a Texas corporation
By: /s/ TODD M. BINET
Its: Executive Vice President
/s/ W. DAL BERRY
W. Dal Berry, Individually
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 8
<PAGE>
APPROVED:
RADER, CAMPBELL, FISHER & PYKE
By: /s/ DONOVAN CAMPBELL, JR.
Donovan Campbell, Jr.
ATTORNEYS FOR PLAINTIFFS
BAKER & BOTTS, L.L.P.
By: /s/ VAN H. BECKWITH
Van H. Beckwith
ATTORNEYS FOR DEFENDANT
W. DAL BERRY
GARDERE & WYNNE, L.L.P.
By: /s/ DOUGLAS S. LANG
Douglas S. Lang
ATTORNEYS FOR DEFENDANT
TELSCAPE INTERNATIONAL, INC.
COMPROMISE AND SETTLEMENT AGREEMENT-- PAGE 9
<PAGE>
EXHIBIT "A"
IRREVOCABLE STOCK POWER
For Value Received, the undersigned hereby sells, assigns and transfers to
Telscape International, Inc., 83,359 shares of the common stock of Telscape
International, Inc., a corporation organized under the laws of the State of
Texas, standing in the undersigned's name on the books of the corporation,
represented by Certificate Nos. ____________, and the undersigned does hereby
irrevocably constitute and appoint ___________________________________________
______________________ its true and lawful attorney-in-fact, with full power of
substitution, to transfer this stock on the books of the corporation.
Dated: _________________
THE ESTATE OF NINA JEAN OBEL, DECEASED
By: /s/ EDMUND YATES
Its Independent Co-Executor
In the presence of:
/s/ DEBBIE HOLCOMB
Signature Guaranteed By:
/s/ SIGNATURE ILLEGIBLE
-------------------------------------------
Authorized Signature
Banker or Member Firm of
New York Stock Exchange
IRREVOCABLE STOCK POWER - PAGE 1
<PAGE>
THE NINA JEAN OBEL REVOCABLE
LIVING TRUST
By: /s/ EDMUND YATES
Its Trustee and Successor Trustee
In the presence of:
/s/ DEBBIE HOLCOMB
Signature Guaranteed By:
/s/ SIGNATURE ILLEGIBLE
--------------------------------------------
Authorized Signature
Banker or Member Firm of
New York Stock Exchange
THE NINA JEAN OBEL CHARITABLE TRUST
By: /s/ EDMUND YATES
Its Trustee and Successor Trustee
In the presence of:
/s/ DEBBIE HOLCOMB
Signature Guaranteed By:
/s/ SIGNATURE ILLEGIBLE
--------------------------------------------
Authorized Signature
Banker or Member Firm of
New York Stock Exchange
IRREVOCABLE STOCK POWER - PAGE 2
<PAGE>
EXHIBIT "B"
PROMISSORY NOTE
$300,000.00 Dallas, Texas May ___, 1997
For value received, Telscape International, Inc. ("Telscape"), promises to
pay jointly to the order of The Estate of Nina Jean Obel, Deceased, By and
Through Edmund Yates and Hal Habecker, Its Independent Co-Executors; The Nina
Jean Obel Revocable Living Trust, By and Through Edmund Yates and Hal Habecker,
Its Trustees and Successor Trustees; and the Nina Jean Obel Charitable Trust, By
and Through Edmund Yates and Hal Habecker, Its Trustees and Successor Trustees
c/o Edmund Yates, 6619 Velasco, in the City of Dallas, Dallas County, Texas
75214 the sum of Three Hundred Thousand and No/100 Dollars ($300,000.00) in
legal and lawful money of the United States of America, with interest thereon
from the date hereof until maturity at the rate of six percent (6%) per annum.
This Note is due and payable as follows, to wit:
Six (6) principal payments of Fifty Thousand and No/100 Dollars
($50,000.00) each, plus the payment of accrued interest on the outstanding
principal balance of the Note at the rate of six percent (6%) simple
interest per annum (as described below), which payments will be made on or
before the dates set forth below:
PAYMENT PAYMENT OF PAYMENT OF TOTAL PRINCIPAL
DATES PRINCIPAL INTEREST PAYMENT BALANCE
----- --------- -------- ------- -------
11/20/97 ($ 50,000.00) ($ 9,073.97) ($ 59,073.97) $250,000.00
05/20/98 ($ 50,000.00) ($ 7,438.36) ($ 57,438.36) $200,000.00
11/20/98 ($ 50,000.00) ($ 6,049.32) ($ 56,049.32) $150,000.00
05/20/99 ($ 50,000.00) ($ 4,463.01) ($ 54,463.01) $100,000.00
11/20/99 ($ 50,000.00) ($ 3,024.66) ($ 53,024.66) $ 50,000.00
05/20/00 ($ 50,000.00) ($ 1,495.89) ($ 51,495.89) $ 0.00
------------- ------------ -------------
Total ($300,000.00) ($31,545.21) ($331,545.21)
PROMISSORY NOTE - PAGE 1
<PAGE>
The entire outstanding balance of the unpaid principal payments and
any accrued and earned interest thereon may be prepaid by Telscape in
full, without penalty, at the option of Telscape, at any time prior to
maturity, which payment will extinguish Telscape's obligations hereunder.
It is expressly provided that upon default in the punctual payment of this
Note or any part thereof, principal or interest, as the same shall become due
and payable, the entire indebtedness evidenced hereby shall be accelerated and
matured, at the option of the holder, and the entire unpaid principal balance
and earned interest shall immediately be due. It is further provided that upon
default in the punctual payment of this Note or any part thereof, the interest
rate on matured, unpaid amounts hereunder shall be the highest rate allowed by
law. Interest hereunder shall not exceed the maximum amount of nonusurious
interest that may be contracted for, taken, reserved, charged, or received under
law; any interest in excess of that maximum amount shall be credited on the
principal or refunded. In the event this Note, or any part hereof, is collected
through Probate, Bankruptcy or other judicial proceedings by an attorney or is
placed in the hands of an attorney for collection after maturity, then the
undersigned agrees and promises to pay all costs of collection, including a
reasonable attorney's fee and Court costs.
Each maker, surety and endorser of this Note expressly waives all notices,
demands for payment, presentations for payment, notices of intention to
accelerate the maturity, notices of acceleration of maturity, and protest and
notice of protest as to this Note and as to each, every and all installments
hereof. This Note is secured by a security interest in a security and Pledge
PROMISSORY NOTE - PAGE 2
<PAGE>
Agreement covering certain corporate stock dated May __, 1997, and executed by
Telscape as the debtor or pledgor in favor of payee hereunder as the secured
party.
TELSCAPE INTERNATIONAL, INC., a Texas
corporation 4635 Southwest Freeway, Suite
800 Houston, Texas 77027
By: /s/ TODD M. BINET
Its: Executive Vice President
PROMISSORY NOTE - PAGE 3
<PAGE>
EXHIBIT "C"
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of May
__, 1997 (the "Effective Date"), by and between Telscape International, Inc., a
Texas corporation ("Telscape" or "Pledgor"), and The Estate of Nina Jean Obel,
Deceased, By and Through Edmund Yates and Hal Habecker, Its Independent
Co-Executors; The Nina Jean Obel Revocable Living Trust, By and Through Edmund
Yates and Hal Habecker, Its Trustees and Successor Trustees; and the Nina Jean
Obel Charitable Trust, By and Through Edmund Yates and Hal Habecker, Its
Trustees and Successor Trustees ("Obel" or "Secured Party").
RECITALS
This Pledge Agreement is made in conjunction with and pursuant to the
terms, and subject to the conditions, set forth in that certain Compromise and
Settlement Agreement (the "Agreement") between and among Telscape, Obel, and Dal
Berry, Individually dated the Effective Date which provides for payments to be
made by Pledgor to the order of Secured Party pursuant to the terms of that
Promissory Note (the "Note") of even date herewith in the original principal sum
of $300,000.00 ("Principal Sum").
NOW, THEREFORE, in consideration of the execution and delivery of the
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Pledgor, Pledgor hereby
covenants and agrees with Secured Party as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Pledge Agreement, the following
terms or phrases have the respective meanings set forth below or in the Section
following such term:
"Collateral" means the aggregate of:
(a) 83,359 shares of the common capital stock of Pledgor, evidenced
by Certificate Numbers __________________ (hereinafter sometimes referred
to as the "Shares").
(b) (i) the certificates or instruments, if any, representing the
Shares, (ii) all dividends (cash, stock or otherwise), cash, instruments,
rights to subscribe, purchase or sell and all other rights and property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such securities, (iii) all
replacements, additions to and substitutions for any of the property
referred to in this definition, including, without limitation, claims
against third parties, (iv) the proceeds, interest, profits and other
income of or on any of the property referred to in this definition, and
(v) all books and records relating to any of the property referred to in
this definition.
PLEDGE AGREEMENT - PAGE 1
<PAGE>
"Shares" has the meaning assigned that term in the definition of
Collateral above.
"Effective Date" has the meaning given that term in the introduction to
this Pledge Agreement.
"Obel" has the meaning given that term in the introduction to this Pledge
Agreement.
"Agreement" has the meaning given that term in the first Recital to this
Pledge Agreement.
"Obligations" means the aggregate of the Principal Sums plus accrued
interest, fees, and costs agreed to be paid by Telscape to Obel pursuant to the
Agreement and the Note and all costs and expenses described in paragraph 5.6
below.
"Pledge Agreement" means this Pledge Agreement dated as of the Effective
Date, between Pledgor and Secured Party, as said agreement may be amended from
time to time.
"Pledged Securities" means all of the Shares and securities and other
property (whether or not the same constitutes a "security" under the UCC)
referred to in the definition of "Collateral" above, and all additional
securities (as that term is defined in the UCC), if any, constituting Collateral
under this Pledge Agreement.
"Pledgor" has the meaning given that term in the introduction to this
Pledge Agreement.
"Proceeds" means whatever is received upon the sale, exchange, collection,
or other disposition of the Collateral and insurance payable or damages or other
payments by reason of loss or damage to the Collateral.
"Secured Party" has the meaning given that term in the introduction to
this Pledge Agreement.
"Security Interest" has the meaning assigned to that term in SECTION 2.1.
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction
applicable, including especially the State of Texas.
1.2 OTHER DEFINITIONS. Other capitalized terms used herein have the
meanings given them herein or in the Agreement or Note.
SECTION 2. CREATION OF SECURITY INTEREST
2.1 CREATION OF SECURITY INTEREST. In consideration of Secured Party's
agreement to allow a payout of the Obligations, in consideration of the mutual
covenants contained herein, and for the purpose of securing the payment and
performance of the Obligations, Pledgor hereby grants to Secured Party a
continuing security interest in, to, and over all Collateral, including all
Proceeds (the "Security Interest").
PLEDGE AGREEMENT - PAGE 2
<PAGE>
2.2 PROCEEDS. Except as otherwise permitted herein, the security interest
of Secured Party hereunder in the Proceeds shall not be construed to mean that
Secured Party consents to the sale or other disposition of any part of the
Collateral.
2.3 TRANSFER OF COLLATERAL. All Collateral including all certificates or
instruments representing or evidencing the Pledged Securities, including stock
powers, shall be delivered by Pledgor to and held pursuant hereto by John Boggs
of First Dallas Securities at 2905 Maple Avenue, Dallas, Dallas County, Texas
75201, a person designated by Secured Party (Secured Party's Designee), and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, including a fully
executed original of that certain Irrevocable Stock Power attached hereto as
Exhibit "A" and incorporated herein. Notwithstanding the preceding sentence, at
Secured Party's discretion all Pledged Securities must be delivered or
transferred by Pledgor as set forth in Section 8-301(a) of the UCC.
SECTION 3. PLEDGOR'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
Pledgor represents, warrants, and covenants for the benefit of Secured
Party that:
3.1 PLEDGED SECURITIES. The Pledged Securities have been duly authorized
and validly issued, and are fully paid and non-assessable.
3.2 FIRST PRIORITY SECURITY INTEREST. The pledge of Pledged Securities
pursuant to this Pledge Agreement creates a valid and perfected first priority
security interest in the Collateral, enforceable against Pledgor and all third
parties and securing the payment and performance of the Obligations. Pledgor
represents that the pledge of the Shares does not violate the articles of
incorporation or bylaws of the Pledgor nor does the pledge of the Shares violate
any agreement to which the Pledgor is a party.
3.3 SALE, DISPOSITION OR ENCUMBRANCE OF COLLATERAL. Pledgor will not in
any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, pledge, assign, lend or otherwise dispose
of or transfer any of the Collateral to or in favor of any person or entity
other than Secured Party.
3.4 DIVIDENDS OR DISTRIBUTIONS. Any and all:
(a) ordinary cash dividends payable in respect of any Collateral and
dividends and other distributions paid or payable in cash in respect of
any Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus
or paid-in surplus, or reclassification, and
(b) cash paid, payable or otherwise distributed in redemption of, or
in exchange for, any Collateral,
shall be, and shall be forthwith delivered to Secured Party's Designee to hold
as, Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated
PLEDGE AGREEMENT - PAGE 3
<PAGE>
from the other property or funds of Pledgor, and be forthwith delivered to
Secured Party's Designee as Collateral in the same form as so received (with any
necessary indorsement).
3.5 STOCK POWERS. Pledgor shall furnish to Secured Party such stock powers
and other instruments as may be required by Secured Party to assure the
transferability of the Collateral when and as often as may be requested by
Secured Party.
3.6 VOTING AND OTHER CONSENSUAL RIGHTS. Prior to any foreclosure hereunder
and except during the occurrence and continuance of a Default (hereinafter
defined, by Pledgor) Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Collateral or any part thereof for
any purpose.
SECTION 4. DEFAULT
4.1 EVENTS OF DEFAULT. A Default is a default in the punctual performance
of any duty of Pledgor under terms of the Agreement, the Promissory Note and/or
the Pledge Agreement. Upon the failure of Pledgor to timely make any payment
referenced in the Agreement or the Note, Secured Party may declare all
Obligations immediately due and payable.
4.2 RIGHTS IN RESPECT OF COLLATERAL. Upon the occurrence and continuation
of any Default, in addition to all other rights of Secured Party, Secured Party
will have the right and power, but will not be obligated, to enter upon and take
possession of all or any part of the Collateral, exclude Pledgor therefrom, and
to hold, use, administer, manage, and operate the same to the extent that
Pledgor could do so. After a Default, Secured Party may exercise every power,
right, and privilege of Pledgor with respect to the Collateral as allowed by
law.
4.3 PLEDGED SECURITIES. Upon the occurrence and during the continuance of
a Default:
(a) All dividends, interest, and other payments that are received by
Pledgor in respect of the Collateral shall be received in trust for the
benefit of Secured Party, shall be segregated from other funds of Pledgor
and shall be forthwith paid over to Secured Party as Collateral in the
same form as so received (with any necessary indorsement).
(b) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Securities or other Collateral as if it
were the absolute owner thereof, including without limitation, the right
to exchange at its discretion, any and all of the Pledged Securities upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of any issuer of such Pledged Securities or upon the exercise
by any such issuer or Secured Party of any right, privilege or option
pertaining to any of the Pledged Securities, and in connection therewith,
to deposit and deliver any and all of the Pledged Securities with any
committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it, but
Secured Party shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure to do
so or delay in so doing.
PLEDGE AGREEMENT - PAGE 4
<PAGE>
SECTION 5. FORECLOSURE ON COLLATERAL
5.1 SALE. Upon the occurrence and continuation of a Default, Secured Party
will have all rights and remedies granted by law, and particularly by the UCC,
including, without limitation, the right to take possession of and foreclose on
the Collateral. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party will give Pledgor reasonable notice of the time and place of any
public sale or of the time after which any private sale or other disposition of
the Collateral is to be made. This requirement of sending reasonable notice will
be met if the notice is sent to Pledgor at least ten days before the time of the
sale or disposition.
5.2 PRIVATE SALE. If Secured Party in good faith believes that the
Securities Act of 1933 or any other state or federal law prohibits or restricts
the customary manner of sale or distribution of any of the Collateral, or if
Secured Party determines that there is any other restraint or restriction
limiting the timely sale or distribution of any such property in accordance with
the customary manner of sale or distribution, Secured Party may sell such
property privately or in any other manner it deems, in good faith, advisable at
such price or prices as it determines in good faith, but otherwise without any
liability whatsoever to Pledgor in connection therewith. Pledgor recognizes and
agrees that such prohibition or restriction may cause such property to have less
value than it otherwise would have and that, consequently, such sale or
disposition by Secured Party may result in a lower sales price than if the sale
were otherwise held.
5.3 SECURED PARTY AS PURCHASER. Secured Party shall have the right to
become the purchaser at any foreclosure sale, and it has the right to credit
upon the amount of the bid the amount payable to it out of the net proceeds of
sale.
5.4 RECITALS CONCLUSIVE; WARRANTY; RATIFICATION. Recitals contained in any
assignment or bill of sale to any purchaser at any sale made hereunder will
conclusively establish, as between the parties to such assignment or bill of
sale, the truth and accuracy of the matters therein stated, including, without
limitation, nonpayment of the unpaid principal sum of, and the interest accrued
on, the written instruments constituting part or all of the Obligations after
the same have become due and payable, nonpayment of any other of the
Obligations, or advertisement and conduct of the sale in the manner provided
herein. Secured Party will have authority to appoint an attorney-in-fact to act
in conducting any foreclosure sale and executing assignments and bills of sale.
All assignments and bills of sale may contain a general warranty of title from
the grantor. Pledgor ratifies and confirms all legal acts that Secured Party may
do in accordance with this Pledge Agreement.
5.5 EFFECT OF SALE. Any sale or sales of the Collateral or any part
thereof will operate to divest all right, title, interest, claim, and demand
whatsoever, either at law or in equity, of Pledgor in and to the property sold,
and will be a perpetual bar, both at law and in equity, against Pledgor,
Pledgor's successors or assigns and against any and all persons claiming or who
shall thereafter claim all or any of the property sold from, through, or under
Pledgor, or Pledgor's successors or assigns. The purchaser or purchasers at the
foreclosure sale will receive immediate possession of the property purchased.
PLEDGE AGREEMENT - PAGE 5
<PAGE>
5.6 APPLICATION OF PROCEEDS. Secured Party shall apply the proceeds of any
sale or other disposition of the Collateral as follows: First, to the payment of
all its expenses incurred in retaking, holding, and preparing any of the
Collateral for sale(s) or other disposition, in arranging for such sale(s) or
other disposition, and in actually selling or disposing of the same (all of
which are part of the Obligations); second, toward repayment of amounts
reasonably expended by Secured Party under SECTION 5 hereof; and third, toward
payment of the balance of the Obligations in the order and manner determined by
Secured Party in its sole discretion. Any surplus remaining shall be delivered
to Pledgor or as a court of competent jurisdiction may direct.
5.7 DEFICIENCY. Pledgor shall remain liable for any deficiency owing to
Secured Party after application of the net proceeds of any foreclosure sale.
Nothing herein contained shall be construed as limiting Secured Party to the
collection of any Obligations only out of the income, revenue, rents, issues,
and profits from the Collateral or as obligating Secured Party to delay or
withhold action upon any default that may be occasioned by failure of such
income or revenue to be sufficient to retire the principal or interest when due
on the indebtedness secured hereby. It is expressly understood between Secured
Party and Pledgor that any Obligations shall constitute an absolute,
unconditional obligation of Pledgor to pay as provided herein or in the
Agreement or Note in accordance with the terms of the instrument evidencing such
Obligations in the amount therein specified at the maturity date or at the
respective maturity dates of the installments thereof, whether by acceleration
or otherwise.
5.8 DISCHARGE OF PURCHASER. Upon any sale made under the powers of sale
herein granted and conferred, the sales receipt issued by Secured Party will be
sufficient discharge to the purchaser or purchasers at any sale for the purchase
money, and such purchaser or purchasers and the heirs, devisees, personal
representatives, successors, and assigns thereof will not, after paying such
purchase money and receiving such receipt of Secured Party, be obliged to see to
the application thereof or be in anywise answerable for any loss,
misapplication, or nonapplication thereof.
SECTION 6. MISCELLANEOUS
6.1 TERMINATION. If all the Obligations are timely paid or prepaid and
performed in full and the covenants herein contained (or contained or referenced
in the Agreement or Note) are performed in all respects, then Secured Party
shall, deliver to Pledgor all collateral and any proper instruments executed by
Secured Party evidencing the release of this Pledge Agreement. Until such
delivery, this Pledge Agreement shall remain and continue in full force and
effect.
6.2 PARTIAL RELEASE. Except as expressly set forth therein, no release
from the security interest of this Pledge Agreement of any part of the
Collateral by Secured Party shall in any way alter, vary, or diminish the force,
effect or lien of this Pledge Agreement on the balance or remainder of the
Collateral.
6.3 SUBROGATION. This Pledge Agreement is made with full substitution and
subrogation of Secured Party in and to all covenants and warranties by others
heretofore given or made in respect of the Collateral or any part thereof.
PLEDGE AGREEMENT - PAGE 6
<PAGE>
6.4 NOTICES. Subject to the provisions of SECTION 5.1, all communications
under this Pledge Agreement shall be given to those who signed the Agreement.
6.5 SUCCESSORS AND ASSIGNS. Pledgor may not assign its rights or delegate
its duties hereunder to any person without prior written consent of the Secured
Party. This Pledge Agreement shall be binding upon the successors and permitted
assigns of each of the parties, and shall inure to the benefit of the successors
and permitted assigns of each of the parties. The provisions of this Pledge
Agreement are intended to be for the benefit of all persons constituting Secured
Party.
6.6 AMENDMENT AND WAIVER. This Pledge Agreement may be amended, and the
observance of any term of this Pledge Agreement may be waived, with (and only
with) the prior written consent of Pledgor and Secured Party. Any such amendment
or waiver shall apply equally to all persons constituting Secured Party or
Pledgor and shall be binding upon each future Secured Party and upon each person
constituting Pledgor regardless of whether this Pledge Agreement, the Agreement
or any other document shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any prior,
subsequent or other obligation not expressly amended or waived or impair any
right consequent thereon.
6.7 GOVERNING LAW. THIS PLEDGE AGREEMENT, THE LEGAL RELATIONS AMONG THE
PARTIES HERETO, AND ALL RIGHTS AND OBLIGATIONS HEREUNDER, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, SHALL BE GOVERNED BY AND INTERPRETED,
CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
TEXAS WITHOUT REFERENCE TO THE LAW OF ANOTHER JURISDICTION.
6.8 SEVERABILITY. If any provision in this Pledge Agreement is rendered or
declared illegal, invalid, or unenforceable by reason of any rule of law, public
policy, or final judicial decision, all other terms and provisions of this
Pledge Agreement shall nevertheless remain in full force and effect.
6.9 ENTIRE AGREEMENT. This Pledge Agreement, the Agreement, the Note, and
the Exhibits to same constitute the entire agreement of the parties hereto with
respect to the matters contained herein and supersede all prior contracts and
agreements with respect thereto, whether written or oral.
6.10 MULTIPLE COUNTERPARTS. The parties may execute more than one
counterpart of this Pledge Agreement, each of which shall be an original but all
of which together shall constitute one and the same instrument.
6.11 REFERENCES. All references herein to one gender shall include the
other. Unless otherwise expressly provided, all references to "Sections" are to
Sections of this Pledge Agreement and all references to "Exhibits" are to the
exhibits attached hereto or to the Agreement, each of which is made a part
hereof for all purposes.
PLEDGE AGREEMENT - PAGE 7
<PAGE>
EXECUTED as of the Effective Date.
SECURED PARTY: THE ESTATE OF NINA JEAN OBEL,
DECEASED, By and Through Edmund Yates
and Hal Habecker, Its Independent
Co-Executors; THE NINA JEAN OBEL
REVOCABLE LIVING TRUST, By and
Through Edmund Yates and Hal Habecker,
Its Trustees and Successor Trustees; and
THE NINA JEAN OBEL CHARITABLE
TRUST, By and Through Edmund Yates
and Hal Habecker, Its Trustees and
Successor Trustees
By: /s/ EDMUND YATES
Name: Edmund Yates
Title: Independent Co-Executor & Trustee
PLEDGOR: TELSCAPE INTERNATIONAL, INC.,
a Texas corporation
By: /s/ TODD M. BINET
Name: Todd M. Binet
Title: Executive Vice President
SECURED PARTY'S DESIGNEE: For valuable consideration, the sufficiency
and receipt of which is acknowledged, I
hereby accept appointment as the Secured
Party's Designee as referenced in paragraph
2.3 above and I agree to perform, without
additional compensation, pursuant to the
terms of this Pledge Agreement.
/s/ JOHN BOGGS
John Boggs
First Dallas Securities
2905 Maple Avenue
Dallas, Dallas County, Texas 75201
PLEDGE AGREEMENT - PAGE 8
<PAGE>
IRREVOCABLE STOCK POWER
For Value Received, the undersigned hereby sells, assigns and transfers to
________________________________________ shares of the common stock of Telscape
International, Inc., a corporation organized under the laws of the State of
Texas, standing in the undersigned's name on the books of the corporation,
represented by Certificate Nos. ____________, and the undersigned does hereby
irrevocably constitute and appoint __________________________________________
____________________________ my true and lawful attorney-in-fact, with full
power of substitution, to transfer this stock on the books of the corporation.
Dated: _____________
TELSCAPE INTERNATIONAL, INC.,
A TEXAS CORPORATION
By: /s/ TODD M. BINET
Name: Todd M. Binet
Title: Executive Vice President, CEO
In the presence of:
/s/ CATHY DAUGHERTY
Signature Guaranteed By:
/s/ DAVID E. STEVENSON
--------------------------------------------
Authorized Signature
Banker or Member Firm of
New York Stock Exchange
PLEDGE AGREEMENT - PAGE 9
