Exhibit 4.3
Agreement
This Agreement (this "Agreement") dated effective as of June 7, 2000 is
between Xxxxxxx Xxxxxx Xxxxxxx, an individual residing in Mexico City, Mexico
("Xxxxxx"), and American TeleSource International, Inc., a Delaware corporation
("ATSI").
RECITALS
X. Xxxxxx owns 51% of the stock of Grupo Intelcom de Mexico, S.A. de C.V., a
Mexican corporation ("Grupo") (the "Grupo Stock)";
X. Xxxxxx owns 99.9% of the stock of Telemarketing de Mexico, S.A. de C.V., a
Mexican corporation ("Telemarketing") (the "Telemarketing Stock");
C. Xxxxxxx Xxxxxx Xxxxxxx ("RTorres") owns .1% of the stock of Telemarketing
("RTorresStock");
D. ATSI has or will acquire 49% of the stock of Grupo from COMSAT Mexico, S.A.
de C.V. ("COMSAT Mexico") contemporaneously with the transactions described
in this Agreement, with that stock and part of the purchase price for that
stock to be held in escrow pending the occurrence of certain conditions
precedent defined in that Agreement for the Sale and Purchase Of Part of
the Issued Share Capital of Grupo Intelcom de Mexico, S.A. de C.V. between
ATSI and COMSAT Mexico dated June 6, 2000 (the "COMSAT Agreement");
X. Xxxxxx desires to sell 3% of the shares of Grupo to ATSI's Partners, as
defined below ("3%Stock") and ATSI desires the Partners to acquire the
3%Stock;
X. Xxxxxx desires to transfer control of his remaining 48% of the shares of
Grupo ("48%Stock") to the Partners by causing RTorres to transfer the
RTorresStock to a Partner; transferring the 48%Stock to Telemarketing as a
capital increase, and refraining from exercising his preemptive right to
subscribe and pay additional capital increases in Telemarketing such that
the Partners are able to dilute his percentage ownership of Telemarketing;
G. ATSI desires the Partners to obtain control of the 48%Stock in the manner
described in paragraph F, above; and
H. ATSI desires Xxxxxx to perform consulting services in connection with the
transactions described above and Xxxxxx desires to perform those services.
Therefore, for the consideration described and contained in this Agreement,
and on the terms and conditions described in this Agreement, the parties agree
as follows:
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1. Definitions. The following terms shall have the meanings set forth
below:
"ATSI Shares" means the First ATSI Shares and the Second ATSI Shares.
"Business Day" shall mean a weekday on which the banks in neither the
United States nor Mexico are required or permitted to be closed.
"COFETEL" shall mean the Comision Federal de Telecomunicaciones.
"COMSAT SCT Approval" shall have the meaning given in Section 2(b) of this
Agreement.
"Escrow Agent" shall mean the Laredo National Bank acting as Escrow Agent
pursuant to that Escrow Agreement executed by ATSI and Xxxxxx and attached
as Exhibit 1 to this Agreement.
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"First ATSI Shares" shall mean the 50,000 shares of ATSI common stock
described in Section 2(a)(1)(A)(i) of this Agreement.
"First Release" and "First Release Date" shall have the meanings given them
in Section 2(b) of this Agreement.
"knowledge of" shall mean (i) in the case of natural person, the particular
fact was known, or not known, as the context requires, to that person after
diligent investigation and inquiry by that person, and (ii) in the case of
an entity, the particular fact was known, or not known, as the context
requires, to any employee of such entity after diligent investigation and
inquiry by the principal executive officer of that entity.
"Long Distance Concession" means that Concession issued on June 4, 1998 by
the SCT to Grupo.
"Minutes" shall have the meaning given them in Section 2(a)(2)(A)(iv).
"Note" shall mean the Note attached as Exhibit 2(a)(1)(A)(ii) to this
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Agreement.
"Partners" means Xxxxx Xxxxx de De Stefano and Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx, or such other persons that may be designated by ATSI.
"Poder General" shall have the meaning given in Section 2(a)(2)(A)(vi).
"Second ATSI Shares" shall mean the 350,000 shares of ATSI common stock
described in Section 2(b) of this Agreement.
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"Second Release" and "Second Release Date" shall have the meanings given in
Section 2(c) of this Agreement.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECOFI" shall mean the Secretaria de Comercio y Fomento Industrial.
"Simultaneous Release" shall have the meaning given in Section 2(d) of this
Agreement.
"SRE" shall mean the Secretaria de Relaciones Exteriores.
"SCT" shall mean the Secretaria de Comunicaciones y Transportes.
"Telemarketing Stock Assignment" shall have the meaning given in Section
2(a)(2)(A)(v) of this Agreement.
"Xxxxxx Designee" shall mean the person or persons designated by Xxxxxx in
writing to receive the ATSI Shares, the Note and the Warrant upon the First
Release, Second Release, or Simultaneous Release, if applicable.
"Telemarketing Capital Increase" means the approximately $70,000 and 00/100
U.S. Dollars ($739,000 and 00/100 Pesos Currency of the United Mexican
States) increase in Telemarketing's capital stock which was resolved on the
General Extraordinary Shareholders' Meeting held on February 10 2000.
"Warrant" shall mean the warrant for the purchase of ATSI common stock
attached as Exhibit 2(a)(1)(A)(iii) to this Agreement.
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2. Purchase, Sale, Transfer of Control, and Grant of Security Interest.
Subject to and on the terms provided in this Agreement, Xxxxxx sells the 3%Stock
for approximately $5,500 US Dollars ($51,786 Pesos 00/100 Currency of the United
Mexican States) (the "3%Stock Purchase Price") and the Partners purchase the
3%Stock, Xxxxxx agrees to transfer control of the 48%Stock to the Partners in
the manner described in paragraph F of the Recitals and the Partners agree to
take control of the 48%Stock in the manner provided in paragraph F of the
Recitals, or to transfer and take control in the alternative manner that the
parties may agree on pursuant to Section 2(e) of this Agreement, and Xxxxxx
agrees to perform consulting services for ATSI. Xxxxxx hereby grants a security
interest in the Telemarketing Stock to secure his obligation to transfer control
of the 48%Stock the Partners as provided in this Agreement. ATSI and the
Partners agree to deliver to Xxxxxx or his designees the First ATSI Shares, the
Second ATSI Shares, the Note and the Warrant in payment for sale of the 3%Stock,
transfer of control of the 48%Stock, performance of consulting services and
grant of a security interest.
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(a) Upon Execution of this Agreement. Contemporaneously with the
execution of this Agreement and as a condition to the effectiveness of this
Agreement,
(1) ATSI will:
(A) deliver to the Escrow Agent:
(i) 400,000 shares of ATSI common stock in denominations of
50,000 (the "First ATSI Shares") and 350,000 (the "Second
ATSI Shares"),
(ii) a Note payable to the Xxxxxx Designee for $500,000 U.S.
Dollars, bearing interest at 6.62375% (the One Month
London Interbank Offer Rate published in the Wall Street
Journal on the day preceding the effective date of this
Agreement, maturing on demand five (5) days following the
Second Release or Simultaneous Release, as applicable, and
in the form attached as Exhibit 2(a)(1)(A)(ii) to this
Agreement (the "Note"); and
(iii) a Warrant for the purchase of 100,000 shares of ATSI
common stock having an exercise price of $6.00 and a term
of three years in the form attached as Exhibit
2(a)(1)(A)(iii) to this Agreement (the "Warrant");
(B) deliver to Xxxxxx:
(i) the Officer's Certificate in the form attached as Exhibit
2(a)(1)(B)-1;
(ii) the Secretary's Certificate in the form attached as
Exhibit 2(a)(1)(B)-2; and
(iii) the 3%Stock Purchase Price.
and
(2) Xxxxxx, Grupo and Telemarketing will:
(A) deliver to the Escrow Agent:
(i) the stock certificates for the Grupo Stock, endorsed in
blank;
(ii) the stock certificate for the RTorres Stock, endorsed in
blank; and
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(iii) a document evidencing Xxxxxx agreement to refrain from
exercising his preemptive right to subscribe and pay
additional capital increases in Telemarketing in the form
attached as Exhibit 2(a)(2)(A)(iii) (the "Telemarketing
Waiver");
(iv) the Telemarketing Stock;
(v) an assignment of rights to the Telemarketing Stock to the
Partners in the form attached as Exhibit 2(a)(2)(A)(v)
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(the "Telemarketing Stock Assignment"); and
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(vi) a Poder General naming the Partners in the form attached
as Exhibit 2(a)(2)(A)(vi) (the "Poder General");
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(B) deliver to ATSI:
(i) a Secretary Certificate for each of Grupo and Telemarketing in
the form attached as Exhibit 2(a)(2)(B), and
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(ii) a certified copy of the Minutes of Telemarketing's General
Extraordinary Shareholder's Meeting held on February 10, 2000
(the "Minutes"),
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(C) deliver to the Partners a Poder Especial in the form attached as
Exhibit 2(a)(2)(C) to this Agreement (the "Poder Especial").
(b) First Release. Upon SCT approval of the application filed by Grupo on
May 8, 2000 for the transfer of 49% of the Stock of Grupo from COMSAT Mexico to
ATSI pursuant to the COMSAT Agreement the "COMSAT SCT Approval"), ATSI may elect
to cause the Partners to take title to the 3%Stock by giving written notice to
Xxxxxx. If ATSI elects to cause the Partners to take title to the 3%Stock under
this paragraph, Xxxxxx and ATSI will each provide the other with an officer's
certificate in the form attached as Exhibit 2(b) to this Agreement updating
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their respective representations and warranties described in Sections 3 and 4
below, or stating any exceptions, within two Business Days of ATSI's notice of
its election to cause the Partners to take title to the 3%Stock. Provided there
has been no material change in the matters covered by the parties' respective
representations and warranties, on the first Business Day following receipt of
the officer's certificates (the "First Release Date") ATSI will pay to the
Xxxxxx Designee $100,000 U.S. Dollars in immediately available funds by wire
transfer to the account specified by Xxxxxx or the Xxxxxx Designee (which will
reduce the Note balance by $100,000), and each of Xxxxxx and ATSI will execute
and transmit to the Escrow Agent the First Release of Escrow in the form
attached as Exhibit A to the Escrow Agreement (providing for release to the
Xxxxxx Designee of the First ATSI Shares and release to the Partners of the
certificate for the 3% Stock (the "First Release").
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Upon receipt of the certificate for the 3% Stock, the Partners will complete the
endorsement to themselves.
(c) Second Release. Within two (2) Business Days following satisfaction
of or ATSI's waiver of all of ATSI's conditions precedent described in Section 6
below, Xxxxxx and ATSI will provide the other with a certificate in the form
attached as Exhibit 2(b) to this Agreement updating their respective
representations and warranties described in Sections 3 and 4 below, or stating
any exceptions. Provided there has been no material change in the matters
covered by the parties' respective representations and warranties, on the first
Business Day following receipt of the officer's certificates (the "Second
Release Date") each of Xxxxxx and ATSI will execute and transmit to the Escrow
Agent the Second Release of Escrow in the form attached as Exhibit B to the
Escrow Agreement (providing for the release to the Xxxxxx Designee of the Second
ATSI Shares, the Warrant, the Note, the release to ATSI of the RTorresStock, and
the Telemarketing Waiver, the release to Xxxxxx of the 48%Stock and the
Telemarketing Stock, and if ATSI had not previously elected to complete the
First Release defined in Section 2(b) above, the release to the Xxxxxx Designee
of the First ATSI Shares and the release to ATSI of the 3%Stock) (the "Second
Release").
(d) Simultaneous Release. If the First SCT Release is obtained on or
before the COMSAT SCT Approval, within two (2) Business Days following the
satisfaction of or ATSI's waiver of all of ATSI's conditions precedent described
in Section 6 below (except for the COMSAT Closing described in Section 6(a)),
Xxxxxx and ATSI will provide the other with a certificate in the form attached
as Exhibit 2(b) to this Agreement updating their respective representations and
warranties described in Sections 3 and 4 below, or stating any exceptions.
Provided there has been no material change in the matters covered by the
parties' respective representations and warranties, on the first Business Day
following receipt of the officer's certificates (the "Simultaneous Release
Date") each of Xxxxxx and ATSI will execute and transmit to the Escrow Agent the
Simultaneous Release of Escrow in the form attached as Exhibit C to the Escrow
Agreement (providing for the release to the Xxxxxx Designee of the First ATSI
Shares, the Second ATSI Shares, the Warrant, and the Note, the release to Xxxxxx
the 48%Stock and the Telemarketing Stock, and the release to ATSI of the
3%Stock, the RTorresStock, and the Telemarketing Waiver (the "Simultaneous
Release"). Upon receipt of the certificate for 3%Stock, the Partners will
complete the endorsement to themselves.
(e) Alternative Structure. If the First SCT Approval, as defined in
Section 5(a) below, is denied, Xxxxxx and ATSI agree that the Escrow Agent will
release the Poder General to ATSI, that ATSI and Xxxxxx will cooperate to
perform the notarial process required to made the Poder General fully effective,
and that Xxxxxx and ATSI will work together to achieve the Partners' control of
the 48%Stock by an alternative means, including a direct transfer from Xxxxxx to
the Partners and any requisite approval from COFETEL and SCT for a direct
transfer. (The parties acknowledge that the First SCT Approval is deemed
approved if not denied by August 25, 2000).
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(f) Termination of Escrow. If the Conditions Precedent defined in Section
(6) have not been satisfied by August 31, 2000, or if a certificate delivered by
Xxxxxx pursuant to subparagraphs 2 (b), (c), or (d) above reflects a material
adverse change in the representations and warranties of Grupo, Telemarketing or
Xxxxxx, then ATSI may terminate this Agreement by written notice of termination,
and may terminate the Escrow Agreement by delivering to the Escrow Agent the
Escrow Termination Notice in the form attached as Exhibit D to the Escrow
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Agreement. If a certificate delivered by ATSI pursuant to subparagraphs 2 (b),
(c), or (d) above reflects a material adverse change in the representations and
warranties of ATSI, then Xxxxxx may terminate this Agreement by written notice
of termination, and may terminate the Escrow Agreement by delivering to the
Escrow Agent the Escrow Termination Notice in the form attached as Exhibit D to
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the Escrow Agreement.
(g) The parties acknowledge that ATSI's delivery of irrevocable
instructions to its transfer agent to deliver the stock certificate for the ATSI
Shares to the Escrow Agent constitutes delivery of the ATSI Shares;
(h) The parties acknowledge that the $100,000 U.S. Dollars cash described
in Section 2(b) includes payment of the $6,322.92 U.S. Dollar receivable from
Grupo to Xxxxxx;
(i) If ATSI defaults in its obligations under the Note, ATSI will pay as a
penalty fee to Xxxxxx One Hundred Thousand U.S. Dollars ($100,000) in addition
to the amounts due under the terms of the Note.
3. Representations and Warranties of Xxxxxx. Xxxxxx represents and warrants
the following:
(a) Ownership of Stock. Xxxxxx owns good and marketable title to the
entire interest in the 3%Stock, the 48%Stock, and the Telemarketing Stock, and
is the record owner of the 3%Stock, the 48%Stock, and the Telemarketing Stock.
RTorres owns good and marketable title to entire interest in the RTorres Stock,
and is the record owner of the RTorres Stock. The 3%Stock, RTorres Stock and the
Telemarketing Stock are now and when delivered to the Partners will be free and
clear of all adverse claims, security interests, encumbrances, equities,
proxies, options, shareholder agreements or other restrictions and the 48%Stock
is delivered to Telemarketing free and clear of all adverse claims, security
interests, encumbrances, equities, proxies, options, shareholder agreements or
other restrictions.
(b) Organization and Good Standing; Qualification. Grupo and Telemarketing
are corporations duly organized, validly existing and in good standing under the
laws of Mexico, with all requisite corporate power and authority to carry on the
business in which engaged, to own their respective properties, to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement. Grupo and Telemarketing are duly qualified and licensed to do
business and are in good
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standing in all jurisdictions where the nature of their business makes such
qualification necessary.
(c) Capitalization. The capital stock of Grupo consists of 543,513
shares of common stock, par value $1 Mexican Pesos per share, of which 543,513
shares are issued and outstanding. The capital stock of Telemarketing consists
of 1,000 shares of common stock, par value $1 Mexican Pesos per share, of which
1,000 shares are issued and outstanding. All of the issued and outstanding
shares of capital stock of Grupo and Telemarketing are duly authorized, validly
issued, fully paid and nonassessable. There are no options, warrants,
subscriptions or other rights to purchase, or securities convertible into or
exchangeable for, the capital stock of Grupo or Telemarketing. Neither Xxxxxx,
RTorres, Grupo nor Telemarketing are parties to or bound by, nor do any of them
have any knowledge of, any agreement, instrument, arrangement, contract,
obligation, commitment or understanding of any character, whether written or
oral, express or implied, relating to the sale, assignment, encumbrance,
conveyance, transfer or delivery of any capital stock of Grupo or Telemarketing.
No shares of capital stock of Grupo or Telemarketing have been issued or
disposed of in violation of the preemptive rights of any shareholder of Grupo or
Telemarketing.
(d) Corporate Records. The copies of the Certificate or Articles of
Incorporation and all amendments thereto and the Bylaws of Grupo and
Telemarketing that have been delivered to ATSI are true, correct and complete
copies as of the date of this Agreement. The minute books of Grupo and
Telemarketing, copies of which have been delivered to ATSI, contain accurate
minutes of all meetings of, and accurate consents to all actions taken without
meetings by the shareholders of Grupo and Telemarketing since the formation of
Grupo and Telemarketing, respectively.
(e) Authorization and Validity. The execution, delivery and performance
by Grupo and Telemarketing of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Grupo, Xxxxxx, and
Telemarketing. This Agreement and each other agreement contemplated hereby have
been duly executed and delivered by Grupo, Xxxxxx and Telemarketing and
constitute legal, valid and binding obligations of each of them, enforceable
against them in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. The sale of the 3%Stock by
Xxxxxx to the Partners, the transfer of the RTorres Stock, and the transfer of
the 48%Stock by Xxxxxx to Telemarketing will not impair the ability or authority
of Grupo or Telemarketing to carry on their business as now conducted in any
respect.
(f) No Violation. Neither the execution, delivery or performance of this
Agreement or the other agreements contemplated hereby nor the consummation of
the transactions contemplated hereby or thereby will (i) conflict with, or
result in a violation or breach of the terms, conditions or provisions of, or
constitute a default under, the Certificate of Incorporation or Bylaws of Grupo
or Telemarketing or any agreement, indenture or other instrument under which
Grupo or Telemarketing is bound or to which
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the 3%Stock, the 48%Stock, the Telemarketing Stock, the RTorres Stock, any of
the assets of Telemarketing or any of the assets of Grupo are subject, or result
in the creation or imposition of any security interest, lien, charge or
encumbrance upon the stock or any of the assets of Grupo or Telemarketing, or
(ii) violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over Grupo or Telemarketing, the 3%Stock, 48%Stock,
Telemarketing Stock, the RTorres Stock, or the assets of Grupo or Telemarketing.
Grupo and Telemarketing have complied with all laws, regulations and licensing
requirements and has filed with the proper authorities all necessary statements
and reports.
(g) Consents. Grupo, Telemarketing and Xxxxxx have obtained all consents,
authorizations, approvals, permits or licenses of, or have filed with, any
governmental or public body or authority, any lender or lessor, or any other
person or entity who is required to authorize, or whose authorization is
required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of Grupo,
Telemarketing or Xxxxxx, except for the approvals specifically contemplated by
Sections 5(b) and (c) of this Agreement.
(h) Assets. The balance sheet of Grupo attached as Exhibit 3(h)-1 and
Telemarketing attached as 3(h)-2 of this Agreement is true and complete and
fairly reflects the assets and liabilities of Grupo and Telemarketing,
respectively as of the date shown.
(i) Liabilities. Except as described on the attached Exhibit 3(h), and
for the amounts that may arise from the costs of the interconnection projects
which might be recovered by Telefonos de Mexico, S.A. de C.V. and Telefonos del
Noroeste, S.A. de C.V. in terms of Cofetel's Resolution dated May 28, 1997,
neither Grupo nor Telemarketing has any liabilities, either accrued, contingent
or otherwise (known or unknown and asserted or unasserted), and neither Xxxxxx,
Telemarketing nor Grupo know of any basis for the assertion of any claims or
liabilities.
(j) No Material Change. There has been no material change in the condition
of Grupo or Telemarketing since the date of the balance sheets attached as
Exhibit 3(h), financial or otherwise, that has not been disclosed to ATSI's
senior management.
(k) Litigation. There are no legal actions or administrative proceedings
or investigations instituted, or to the best knowledge of Grupo, Telemarketing
or Xxxxxx threatened, against or affecting, or that could affect, Grupo or
Telemarketing, or any of the stock or the business of Grupo or Telemarketing.
Neither Grupo, Telemarketing nor Xxxxxx are (i) subject to any continuing court
or administrative order, writ, injunction or decree applicable specifically to
Grupo or Telemarketing or to either of their business, assets, operations or
employees or (ii) in default with respect to any such order, writ, injunction or
decree. Neither Grupo, Telemarketing nor Xxxxxx know of any basis for any such
action, proceeding or investigation.
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(l) Operations. Currently Grupo is not conducting any operations other
than the preservation of the Long Distance Concession. The former operations of
Grupo are described on the attached Exhibit 3.l. Telemarketing has never had any
operations.
(m) Employees. Currently Grupo does not have any employees. Telemarketing
does not have and has never had any employees.
(n) Agreements. Besides the Surety Bonds executed with Afianzadora
Mexicana, S.A. and Fianzas Monterrey Aetna, S.A., and the Adhesion Contract to
the Trust Agreement executed with Banco Inverlat, S.A., Grupo is not a party to
any agreement with Xxxxxx or any third party, written or otherwise.
Telemarketing is not a party to any agreement with Xxxxxx or any third party,
written or otherwise.
(o) Officers. The individuals serving as officers of Grupo and
Telemarketing since their formation and their respective terms of service are
shown on Exhibit 3.o.
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(p) Agents. Neither Grupo nor Telemarketing has granted a power of
attorney to act on its behalf to any person or authorized any person to act as
an agent of Grupo or Telemarketing except for the officers listed on Exhibit
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3.p.
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(q) Laws. Grupo and Telemarketing are in compliance with and have complied
with all laws and regulations and have filed with the proper authorities all
necessary statements and reports.
(r) Long Distance Concession. Except as described on Exhibit 3.r., Grupo
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has complied with the terms of the Long Distance Concession.
(s) Finders Fee. Neither Grupo, Telemarketing nor Xxxxxx have incurred
any obligation for any finder's, broker's or agent's fee in connection with the
transactions contemplated hereby.
(t) Accuracy of Information Furnished. All information furnished to ATSI
by Grupo, Telemarketing or Xxxxxx in connection with the transactions
contemplated by this Agreement is true, correct and complete in all respects.
Such information states all facts required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements are made, true, correct and complete. There is no material
information regarding Grupo, Telemarketing, the 4%Stock, the 47% Stock, the
Telemarketing Stock that has not been provided to ATSI.
(u) Competition. Neither Xxxxxx nor his Affiliates will provide intra-
Mexico long distance services to third parties or to seek to acquire a long
distance concession from the Mexican government, either directly or through the
acquisition of another entity, for a period of three (3) years from the date of
this Agreement. For the purposes of this subsection, "Affiliate" means any
person who controls, is controlled by, or is under common control with the
person referred to.
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(v) Certain Payments. To the best knowledge of Grupo, Telemarketing and
Xxxxxx, respectively, neither Grupo nor Xxxxxx, nor any of their respective
directors, officers or employees has paid or caused to be paid, directly or
indirectly, in connection with the business of Grupo or Telemarketing:
(i) to any government or agency thereof or any agent of any supplier or
customer any bribe, kick-back or other similar payment; or
(ii) any contribution to any political party or candidate (other than from
personal funds of directors, officers or employees not reimbursed by their
respective employers or as otherwise permitted by applicable law).
(w) Exemption from Securities Act. Xxxxxx understands that the ATSI
Shares are being transferred by ATSI in reliance on an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and equivalent state securities and "blue sky" laws, and that
ATSI is relying upon the accuracy of, and Xxxxxx' compliance with, the following
representations, warranties and covenants to determine the availability of these
exemptions:
(i) The person or persons who receive the ATSI Shares by indication of
Xxxxxx will receive them for their own account, for investment purposes
only and not with a view towards or in connection with the public sale or
distribution thereof in violation of the Securities Act;
(ii) The person or persons referred to in paragraph (i) above are capable,
by reason of their business and financial experience, of evaluating the
relative merits and risks of an investment in the ATSI Shares, and are able
to afford the loss of their investment in the ATSI Shares;
(iii) The person or persons referred to in paragraph (i) above acknowledge
that in making their decision to receive the ATSI Shares they have been
given an opportunity to ask questions of and to receive answers from ATSI's
executive officers, directors and management personnel concerning ATSI and
the ATSI Shares;
(iv) The person or persons referred to in paragraph (i) above understand
that the ATSI Shares have not been approved or disapproved by the United
States Securities and Exchange Commission or any state securities
commission and that the foregoing authorities have not reviewed any
documents or instruments in connection with the transfer to them of the
ATSI Shares and have not confirmed or determined the adequacy or accuracy
of any such documents or instruments.
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4. Representations and Warranties of ATSI. ATSI represents and warrants the
following:
(a) Organization and Good Standing. ATSI is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
(b) Capitalization. The authorized capital stock of ATSI consists of
100,000,000 shares of common stock, par value $.001 per share, of which
66,462,634 shares are issued and outstanding. All of the issued and outstanding
shares of capital stock of ATSI are duly authorized, validly issued, fully paid
and nonassessable. There are no options, warrants, subscriptions or other rights
to purchase, or securities convertible into or exchangeable for, the capital
stock of ATSI, other than as described on the attached Exhibit 4(b). ATSI is not
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party to or bound by, nor it has any knowledge of, any agreement, instrument,
arrangement, contract, obligation, commitment or understanding of any character,
whether written or oral, express or implied, relating to the sale, assignment,
encumbrance, conveyance transfer or delivery of any capital stock of ATSI other
than as described on Exhibit 4(b). No shares of capital stock of ATSI have been
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issued or disposed of in violation of the preemptive rights of any shareholder
of ATSI.
(c) Authorization and Validity. The execution, delivery and performance by
ATSI of this Agreement and the other agreements contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by ATSI. This Agreement and each other agreement contemplated hereby
have been duly executed and delivered by ATSI and constitute legal, valid and
binding obligations of ATSI, enforceable against ATSI in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies.
(d) No Violation. Neither the execution, delivery or performance of this
Agreement or the other agreements contemplated hereby nor the consummation of
the transactions contemplated hereby or thereby will (i) conflict with, or
result in a violation or breach of the terms, conditions and provisions of, or
constitute a default under, the Certificate of Incorporation or Bylaws of ATSI
or any agreement, indenture or other instrument under which ATSI is bound or
(ii) violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over ATSI or the properties or assets of ATSI.
(e) Finder's Fee. ATSI has not incurred any obligation for any finder's,
broker's or agent's fee in connection with the transactions contemplated hereby.
12
(f) Long Distance Concession. ATSI has reviewed the Long Distance
Concession, the Technical and Financial plans therein, and the extension granted
on April 11, 2000 to the starting of operations and obligations related, and
acknowledges the obligations and consequences deriving from the same.
(g) Accuracy of Information Furnished. All information furnished to Grupo,
Telemarketing or Xxxxxx by ATSI in connection with the transactions contemplated
by this Agreement, when read together with ATSI's public filings with the SEC is
true, correct and complete in all respects. Such information states all facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, true, correct
and complete. There is no information of an adverse nature regarding ATSI and
the ATSI Stock that has not been provided to Xxxxxx.
5. Covenants. The parties covenant as follows:
(a) Xxxxxx will work diligently to obtain the COMSAT SCT Approval and
approval from the SCT for the application filed May 24, 2000 for the approval of
the transfer of the 48%Stock to Telemarketing (the "First SCT Approval");
(b) Unless a Second Release or Simultaneous Release shall have occurred,
within three Business Days of receipt of the First SCT approval described in
Section 5(a) above, Xxxxxx will cause Grupo to take the appropriate corporate
steps to issue non-voting shares for 80% of its capital, and will file the
appropriate notices or applications for the issuance of the non-voting shares
with each of the SCT, SECOFI and other appropriate agencies of the Mexican
government, and work diligently to obtain those approvals (the "N Share
Approvals"). If a Second Release or Simultaneous Release shall have occurred,
Xxxxxx will assist ATSI as a consultant in preparing and filing the appropriate
notices or applications for the issuance of the non-voting shares and work
diligently with ATSI to obtain the N Share Approvals;
(c) Within three (3) Business Days of execution of this Agreement, ATSI
will provide Xxxxxx with a new name for Grupo (and several alternative names in
the event the name selected by ATSI if found not to be available by the SRE).
Within two (2) Business Days of receipt from ATSI of the name and alternative
names, Xxxxxx will cause Grupo to take the appropriate corporate steps to change
the name of Grupo to the name (or alternative name) selected by ATSI and file
the appropriate notice of application with the SRE regarding the change of the
name and work diligently to obtain approval from the SRE (the "SRE Approval").
Within 3 Business Days following the later to occur of the receipt of the SRE
Approval and the First SCT Approval, and provided a Second Release or
Simultaneous Release shall not have occurred, Xxxxxx will cause Grupo to file
the appropriate application with the SCT to approve the change of the name (the
"Second SCT Approval") and will work diligently to obtain approval from the SCT
for the change of the name; If a Second Release or Simultaneous Release shall
have occurred, Xxxxxx will assist ATSI as a consultant in preparing and filing
the appropriate notices or
13
applications for the change of the name of Grupo, and work diligently with ATSI
to obtain those approvals.
(d) Further Actions. The parties shall deliver any further instruments of
transfer and take all reasonable action as may be necessary or appropriate to
(i) vest in the Partner good and marketable title to the 3%Stock; (ii) vest in
the Partner good and marketable title to the RTorresStock, (iii) vest in
Telemarketing good and marketable title to the 48%Stock, (iv) carry out more
effectively the provisions of this Agreement, and (v) establish and protect the
rights created in favor of the parties; including, but not limited to, seeking
approval from the SCT, SRE, COFETEL, and other agencies of the government of
Mexico, and third parties, and completing any notarial process that may be
required under Mexican law. Upon a parties' reasonable request, the other
parties will provide additional information relevant to the transactions that
are the subject of this Agreement
(e) ATSI will assist Xxxxxx in obtaining the First SCT Approval, the SRE
Approval, the N Share Approvals, the Second SCT Approval, an additional
extension of the time to begin operations under the Long Distance Concession
from COFETEL, if needed, and any other governmental approvals required to
consummate the transactions describe in this Agreement to the extent reasonably
necessary and as requested by Xxxxxx.
(f) Notification of Breach of Representations and Warranties. Each party
will notify the others if it becomes aware that any of its representations and
warranties made in this Agreement were not true when made.
(g) Obligation to Hold ATSI Shares. The Xxxxxx Designee who receives the
First ATSI Shares and Second ATSI Shares will not transfer the ATSI Shares or
any rights with respect to the ATSI Shares for one year from the First Release
Date or Simultaneous Release Date, as applicable, and the Second Release Date or
Simultaneous Release Date as applicable, respectively. Following the expiration
of the one-year period, the Xxxxxx Designees may not sell the ATSI Shares except
pursuant to an exemption from United States registration requirements,
including, without limitation, Rule 144 under the Securities Act. Xxxxxx
acknowledges that ATSI has no obligation to register the ATSI Shares.
(h) ATSI Obligation to Repurchase ATSI Shares. At the option of the Xxxxxx
Designee to whom delivery of First ATSI Shares was made, to be exercised no
later than thirty (30) calendar days prior to the first anniversary of the First
Release Date or Simultaneous Release Date, as applicable, ATSI will buy back the
First ATSI Shares for $5.00 per share on the one year anniversary of the First
Release Date or Simultaneous Release Date, as applicable; and at the option of
the Xxxxxx Designee to whom delivery of the Second ATSI Shares was made, to be
exercised no later than thirty (30) days prior to the first anniversary of the
Second Release Date or Simultaneous Release Date, as applicable, ATSI will buy
back the Second ATSI Shares for $5.00 per share; provided however, ATSI shall
-------- -------
have no obligation to buy back more than an aggregate of 100,000 ATSI Shares
under this Section 5(h).
14
(i) ATSI's Obligation to Pay Additional Cash. If, on the first anniversary
of the First Release Date or Simultaneous Release Date, the closing sale price
of ATSI's common stock on The American Stock Exchange is less than $5.00 ATSI
will pay the Xxxxxx Designee cash equal to the difference between $5.00 and the
closing sale price on first anniversary of the First Release Date or
Simultaneous Date, as applicable, times the number of ATSI Shares that have not
been repurchased by ATSI pursuant to subparagraph 5(j) above; and if on the
-----------------
first anniversary of the Second Release Date or Simultaneous Release Date, the
closing sale price of ATSI's common stock on The American Stock Exchange is less
than $5.00 ATSI will pay the Xxxxxx Designee cash equal to the difference
between $5.00 and the closing sale price on first anniversary of the Second
Release Date or Simultaneous Date, as applicable, times the number of ATSI
Shares that have not been repurchased by ATSI pursuant to subparagraph (h)
----------------
above.
(j) Grupo and Telemarketing will take commercially reasonable steps to
maintain their condition as represented in Section 3 above, but except for
actions taken by the Partners pursuant to the Poder Especial or Poder General or
taken with the prior written consent of ATSI, neither Grupo nor Telemarketing
will acquire any assets, incur any liabilities, hire any employees, make any
regulatory filings, or make any other change in their condition, whether or not
material, without the prior consent of ATSI.
6. ATSI's Conditions Precedent to Closing, As a condition precedent to the
Second Release of Escrow, the following conditions must be met or waived by
ATSI:
(a) COMSAT Closing. There has occurred a "Release of Escrow" as defined
in the Agreement for Sale and Purchase Of Part of the Issued Share Capital of
Grupo Intelcom de Mexico, S.A de C.V. between COMSAT Mexico, S.A. de C.V. and
ATSI;
(b) Regulatory Approvals. Xxxxxx has obtained the First SCT Approval;
(c) Name Change and Approval for Issuance of Non-Voting Shares. The
covenants described in Sections 5(b) and (c) above will have been performed and
completed;
(d) Tax Opinions or Escrow. Xxxxxx shall have delivered an opinion of a
CPA registered before the Taxpayer's Administration Services of Mexico, and
acceptable to ATSI, that
(i) ATSI is not obligated to withhold any part of the $500,000 or the ATSI
Shares to satisfy any tax obligation of Xxxxxx, Grupo or Telemarketing
arising from the consummation of the transactions described in this
Agreement; and
(ii) the closing of the transactions contemplated by this Agreement does
not generate income tax to Grupo, Telemarketing, ATSI or the Partners,
or if Xxxxxx is not able to deliver a satisfactory opinion, Xxxxxx has
deposited
15
into escrow with a mutually agreeable escrow agent under terms
reasonably satisfactory to ATSI an amount sufficient to pay any income
tax that may be assessed to ATSI.
(e) Corporate Records. Grupo and Telemarketing shall have delivered to
ATSI the original minute book of Grupo and Telemarketing and all other corporate
books and records.
7. Indemnification.
(a) Indemnification by Xxxxxx. Xxxxxx agrees to indemnify, defend and hold
ATSI and each Partner, and each of their respective directors, officers, agents,
attorneys and affiliates harmless from and against all losses, claims,
obligations, demands, assessments, penalties, liabilities, costs, damages,
attorneys' fees and expenses arising under any theory of legal liability
(collectively, "Damages") asserted against or incurred by ATSI or the Partners
or any of their property by reason of or resulting from an actual or asserted
breach of this Agreement by Xxxxxx, Grupo or Telemarketing, including a breach
of any representation, warranty, or covenant of Xxxxxx in this Agreement or any
document delivered in connection with this Agreement.
(b) Indemnification by ATSI. ATSI agrees to indemnify defend and hold
Xxxxxx, the Xxxxxx Designee, and each of his attorneys and affiliates, harmless
from and against all Damages asserted against or incurred by them or any of
their property by reason of or resulting from an actual or asserted breach of
this Agreement by ATSI, including a breach of any of ATSI's representations,
warranties or covenants in this Agreement or any document delivered in
connection with this Agreement.
(c) Procedures. A person seeking indemnification under this Section shall
provide prompt notice of its claim for indemnification to the indemnifying
party, provided, however, that failure to give prompt notice shall not affect
the indemnifying party's obligations under this Section unless the failure
materially prejudices the indemnifying party's rights. The indemnified person
will have the right to select counsel to defend it in respect of any indemnified
matter under this Section, provided, however, that the counsel selected must be
reasonably satisfactory to the indemnifying party. The indemnified party will
keep the indemnifying party informed of the status of any litigation or dispute
resolution procedure, will give reasonable consideration to the suggestions and
requests of the indemnifying party with respect to the conduct of the litigation
or dispute resolution procedure, and will not settle any matter covered by this
Section without the prior consent of the indemnifying party, which shall not be
unreasonably withheld. Amounts due under this section shall be paid as incurred,
and may be offset against amounts due the indemnifying party under this
Agreement if not paid promptly.
8. Release of Claims Against Grupo and Telemarketing. Xxxxxx hereby releases
Grupo and Telemarketing from any and all claims he may have against it arising
under
16
any theory of legal liability in any jurisdiction, including contingent and
unknown claims, and claims that accrue after the date of this Agreement.
9. Miscellaneous.
(a) Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by all the parties hereto.
(b) Assignment. Neither this Agreement nor any right created hereby or in
any agreement entered into in connection with the transactions contemplated
hereby shall be assignable by any party hereto, except by ATSI to an affiliate
of ATSI.
(c) Survival. The provisions of Sections 4, 5, 7 and 9 shall survive the
closing of the transactions contemplated by this Agreement (including the First
Escrow Release, Second Escrow Release, Simultaneous Escrow Release, Alternative
Escrow Release and Termination of Escrow) and shall continue indefinitely.
(d) Waiver. No waiver by any party of any default or breach by another
party of any representation, warranty, covenant or condition contained in this
Agreement, any exhibit or any document, instrument or certificate contemplated
hereby shall be deemed to be a waiver of any subsequent default or breach by
such party of the same or any other representation, warranty, covenant or
condition. No act, delay, omission or course of dealing on the part of any party
in exercising any right, power or remedy under this Agreement or at law or in
equity shall operate as a waiver thereof or otherwise prejudice any of such
party's rights, powers and remedies. All remedies, whether at law or in equity,
shall be cumulative and the election of any one or more shall not constitute a
waiver of the right to pursue other available remedies.
(e) Parties In Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder, except for holders of ATSI Shares while such shares are
"restricted securities" or have benefits under the terms of Section 5.
(f) Entire Agreement. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
(g) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall
17
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
(h) Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF LAWS) OF THE
STATE OF DELAWARE, U.S.A.; EXCEPT FOR MATTERS REGARDING THE CORPORATE GOVERNANCE
OF GRUPO OR COMSAT MEXICO, AND REQUIRED MEXICAN GOVERNMENTAL APPROVALS, WHICH
WILL BE GOVERNED BY MEXICAN LAW.
(i) Confidentiality. The parties agree that they will not disclose to any
third party (except to its agents or employees with a "need to know") any of the
other party's "Confidential Information," as defined below, or the fact that it
has possession of any of the other party's Confidential Information, whether the
Confidential Information was learned before or after the execution of the
Agreement, and whether it was transmitted in oral, paper, magnetic, photographic
or any other form. "Confidential Information" is any information regarding a
party's assets, liabilities, costs, rates, sales strategies, business plans,
suppliers, operations, financial results, identities of employees, identities of
customers, trade secrets, intellectual property, and any other information not
specifically listed that is commonly understood to be confidential. Provided,
however, that Confidential Information does not include any information which
enters the public domain legally and through no breach of this Agreement, or
other agreement, is independently developed by a party, is required to be
disclosed by applicable law (provided the disclosing party gives notice of the
disclosure at the earliest practical time) or is disclosed as part of a bona
fide legal proceeding brought by one party against the other in connection with
this Agreement. Each party will use the other's Confidential Information only in
connection with the performance of this Agreement, and will use at least a
reasonable degree of care to protect the Confidential Information. Each party
will return or destroy the other's Confidential Information on demand, and will
certify in writing, if requested, that the Confidential Information has been
destroyed.
(j) Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
(k) Gender and Number. When the context requires, the gender of all words
used herein shall include the masculine, feminine and neuter and the number of
all words shall include the singular and plural.
(l) Reference to Agreement. Use of the words "herein", "hereof", "hereto"
and the like in this Agreement shall be construed as references to this
Agreement as a
18
whole and not to any particular Section or provision of this Agreement, unless
otherwise noted.
(m) Notice. Any notice or communication hereunder or in any agreement
entered into in connection with the transactions contemplated hereby must be in
writing and given by depositing the same in the United States mail, addressed to
the party to be notified, postage prepaid and registered or certified with
return receipt requested, or by delivering the same in person or by facsimile
transmission. Such notice shall be deemed received on the date on which it is
hand-delivered or received by facsimile transmission or on the third Business
Day following the date on which it is so mailed. For purposes of notice, the
addresses of the parties shall be:
If to ATSI: American TeleSource International, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000 X.X.X.
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxx, L.L.P.
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000 U.S.A.
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (0000 000-0000
If to Xxxxxx: Xxxxxxx Xxxxxx Xxxxxxx
Xxxx. X. Xxxxx Xxxxxxx 000 00x. Piso,
Col. Xxxxx xx Xxx Xxxxxx, X.X. 00000,
Xxxxxx, D.F.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
(n) Choice of Forum. The parties hereto agree that should any suit, action
or proceeding arising out of this Agreement be instituted by any party hereto
(other than a suit, action or proceeding to enforce or realize upon any final
court judgment arising out of this Agreement), such suit, action or proceeding
shall be instituted only in a state or federal court in the State of Delaware,
U.S.A. Each of the parties hereto consents to the in personam jurisdiction of
-- --------
any state or federal court in the State of Delaware, U.S.A. and waives any
objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside the State of Delaware, U.S.A. may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a
19
jurisdiction outside the State of Delaware, U.S.A., the party instituting such
proceeding shall indemnify any other party hereto for any losses and expenses
that may result from the breach of the foregoing covenant to institute such
proceeding only in a state or federal court in the State of Delaware, U.S.A.,
including without limitation any additional expenses incurred as a result of
litigating in another jurisdiction, such as reasonable fees and expenses of
local counsel and travel and lodging expenses for parties, witnesses, experts
and support personnel.
(o) Service of Process. Service of any and all process that may be served
on any party hereto in any suit, action or proceeding arising out of this
Agreement may be made in the manner and to the address set forth in this Section
and service thus made shall be taken and held to be valid personal service upon
such party by any party hereto on whose behalf such service is made.
(p) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
20
EXECUTED as of the date first above written.
AMERICAN TELESOURCE
INTERNATIONAL, INC.
By: _______________________________
Name: _______________________________
Its: _______________________________
Date: __________________
_____________________________________
Xxxxxxx Xxxxxx Xxxxxxx
Date: __________________
GRUPO INTELCOM DE MEXICO,
S.A DE C.V.
By: _______________________________
Name: _______________________________
Its: _______________________________
Date: __________________
TELEMARKETING DE MEXICO,
S.A. DE C.V.
By: _______________________________
Name: _______________________________
Its: _______________________________
Date: __________________
21
Exhibits
1 Escrow Agreement
2(a)(1)(A)(ii) Note
2(a)(1)(A)(iii) Warrant
2(a)(1)(B)-1 ATSI Officer Certificate
2(a)(1)(B)-2 ATSI Secretary Certificate
2(a)(2)(A)(iii) Telemarketing Waiver
2(a)(2)(A)(v) Telemarketing Stock Assignment
2(a)(2)(A)(vi) Poder General
2(a)(2)(B) Form of Grupo and Telemarketing Secretary Certificate
2(a)(2)(C) Poder Especial
2(b) Officers Certificate Updating Representations and Warranties
3(h)-1 Balance Sheet of Grupo
3(h)-2 Balance Sheet of Telemarketing
3(l) Description of Operations of Grupo and Telemarketing
3(o) Officers of Grupo and Telemarketing
3(p) Agents of Grupo and Telemarketing
3() Compliance with Long Distance Concession
4(b) Capital Stock of ATSI
22
