Exhibit R
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of February 7, 2001
(this "Agreement"), is entered into by and among CONVERGENCE
COMMUNICATIONS, INC., a Nevada corporation (the "Company"), XXXXXX XXXXXX
XXXXXX XX XXXXX, an Argentine citizen ("Ostry"), XXXXXXXX XXXX, an
Argentine citizen ("Priu"), TCW/CCI HOLDING II LLC, a Delaware limited
liability company ("TCW"), GLACIER LATIN-AMERICA LTD., a British Virgin
Islands International Business Company ("Glacier"), TELEMATICA EDC, C.A., a
Venezuelan compania anonima ("TELEMATICA"), and XXXXXX CAPITAL MANAGEMENT
III, LLC, an Illinois limited liability company ("MCM III"). Priu, Ostry,
TCW, TELEMATICA, Glacier and MCM III are collectively referred to herein as
the "Purchasers" and each may be singularly referred to herein as a
"Purchaser."
WHEREAS, pursuant to the terms of that certain Umbrella Stock
Purchase Agreement dated February 7, 2001, among the Company and the
Purchasers (the "Purchase Agreement"), the Purchasers have agreed to
acquire shares of the Company's Series D Preferred Stock, and Series D
Warrants (as defined below) for cash;
WHEREAS, it is a condition precedent to the acquisition of those
securities by the Purchasers under the Purchase Agreement that the Company
provide certain registration rights to them in accordance with the terms
hereof; and
WHEREAS, the parties intend that this Agreement constitute the
"Registration Rights Agreement," as defined in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the adequacy and receipt of which
are hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. The following terms shall have the meanings
given to them below:
"Agreement" means this Agreement, as amended, modified or
supplemented from time to time, in accordance with the terms hereof,
together with any exhibits, schedules or other attachments thereto.
"Business Day" means any day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York are authorized or
obligated by law, executive order or government decree to be closed.
"CCI Shareholders' Agreement" means the CCI Shareholders' Agreement,
among the Company and other parties, dated October 18, 1999.
"Closing" has the meaning given it in the Purchase Agreement.
"Closing Date" has the meaning given it in the Purchase Agreement.
"Commission" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
"Common Stock" means the common stock, par value $.001 per share, of
the Company.
"Controlling Person" means a Controlling Person as defined in Section
4.1.
"Damages" has the meaning given it in section 4.1.
"Demand Registration" has the meaning given it in Section 2.2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Financing Warrants" has the meaning given it in the Purchase
Agreement.
"Holder" means any Person who now holds or shall hereafter acquire
and hold Registrable Securities.
"Indemnified Party" has the meaning given it in Section 4.3.
"Indemnifying Party" has the meaning given it in Section 4.3.
"IRR Warrants" has the meaning given it in the Purchase Agreement.
"Market Price" means, with respect to the shares of Common Stock, (a)
if the shares are listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap
Market, the last reported sales price as reported on such exchange or
market; (b) if the shares are not listed or admitted for trading on any
national securities exchange or included in The Nasdaq National Market or
Nasdaq SmallCap Market, the average of the last reported closing bid and
asked quotation for the shares as reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or a similar
service if NASDAQ is not reporting such information; (c) if the shares are
not listed or admitted for trading on any national securities exchange or
included in The Nasdaq National Market or Nasdaq SmallCap Market or quoted
by NASDAQ or a similar service, the average of the last reported bid and
asked quotation for the shares as quoted by a market maker in the shares
(or if there is more than one market maker, the bid and asked quotation
shall be obtained from two market makers and the average of the lowest bid
and highest asked quotation). In the absence of any available public
quotations for the Common Stock, the Board of Directors of the Company
shall determine in good faith the market price of the Common Stock, which
determination shall be set forth in a certificate by the Secretary of the
Company.
"Performance Warrants" has the meaning given it in the Purchase
Agreement.
"October 1999 Rights Agreement" means that certain Amended and
Restated Registration Rights Agreement among the Company and other parties
dated October 18, 1999.
"Person" has the meaning given it in the Purchase Agreement.
"Piggy-Back Registration" has the meaning given it in Section 2.3.
"Prior Rights Agreements" means all agreements pursuant to which the
Company has granted registration rights under the Securities Act prior to
the date hereof, including (i) the October 1999 Rights Agreement, (ii) the
Warrant Agreement in favor of Electro Banque dated June 21, 2000, and (iii)
the registration rights agreements granting piggyback rights to Cahabon
Holding, Ltd., dated April 5, 2000, to Xxxx De la Fuente dated October 9,
2000, and to Xxxx Xxxxxx Xxxxxx dated October 17, 2000.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective Registration Statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
securities covered by such Registration Statement, and all other amendments
and supplements to the prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference in such prospectus.
"Purchase Agreement" has the meaning ascribed thereto in the
introduction hereof.
"Purchasers" has the meaning ascribed thereto in the introduction
hereof.
"Registrable Securities" means (i) the shares of Common Stock issued
or issuable upon exercise of the Series D Warrants or upon the conversion
of the Series D Preferred Stock (whether acquired by a Purchaser under the
terms of the Purchase Agreement at the Closing or pursuant to the Series D
Warrants), and (ii) any shares of Common Stock acquired as a result of
stock splits, stock dividends, reclassifications, recapitalizations, or
similar events relating to the shares described in clause (i) above, until
such time as (x) a Registration Statement covering such shares of Common
Stock has been declared effective by the Commission and such shares of
Common Stock have been disposed of pursuant to such effective Registration
Statement, or (y) such shares of Common Stock would be saleable pursuant to
Rule 144 under the Securities Act (or any similar provisions then in force)
without regard to the volume limitations set forth in Rule 144(e), or (z)
such shares of Common Stock have been otherwise transferred and the Company
has delivered a new certificate or other evidence of ownership for such
Common Stock not bearing a restrictive legend and not subject to any stop
transfer or similar restrictive order and all of such Common Stock may be
resold by the Person receiving such certificate without complying with the
registration requirements of the Securities Act.
"Registration Statement" means any registration statement of the
Company filed under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits and all material
incorporated by reference in such registration statement.
"Request" means a Request as defined in Section 2.2(a).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a Registration Statement under the Securities Act.
"Selling Holders' Counsel" means the counsel selected to represent
the Selling Holders as set forth in Section 3.1(c).
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock, par value $.001 per share, of the Company.
"Series D Warrants" means, collectively, the IRR Warrants, the
Performance Warrants, and the Financing Warrants.
"Shareholder Joinder Agreement" has the meaning given that term in
the Purchase Agreement.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.1 Performance Part of Series of Transactions. The Parties
acknowledge and agree that the performance provided for in this Agreement
is part of a series of transactions which, pursuant to the Purchase
Agreement, are to occur simultaneously and subject to certain conditions
precedent as provided for therein, including the Closing and the execution
of the Shareholder Joinder Agreement which provides for certain
restrictions on transfer of the Registrable Securities. The parties do not
intend that this Agreement diminish or otherwise modify the restrictions on
transfer set forth in the Shareholder Joinder Agreement and this Agreement
shall be construed consistent with that intent.
SECTION 2.2 Demand Registration.
(a) Request for Registration. Subject to the limitations contained
in this Section 2.2(a), at any time after the first
anniversary of the Closing Date any Holder or Holders of an
aggregate of Registrable Securities representing 20% or more
of all the Registrable Securities may make written requests
(individually, a "Request") on the Company for the
registration of the offer and sale of some or all of the
Holders' Registrable Securities under the Securities Act (such
registration being hereinafter referred to as a "Demand
Registration"). Subject to the penultimate sentence of Section
2.2(b), the Company shall have no obligation to effect more
than three (3) Demand Registrations. Any Request will specify
the number of Registrable Securities proposed to be sold and
the intended method(s) of disposition thereof and shall also
state the intent of the Holder to offer Registrable Securities
for sale. The Company shall give written notice of such
Request within 10 days after the receipt thereof to all other
Holders. Within 20 days after receipt of such notice by any
such Holder, such Holder may request in writing that all or
any portion of his or its Registrable Securities be included
in such Registration Statement and the Company shall include
in the Registration Statement for such Demand Registration the
Registrable Securities of all Holders that requested to be so
included. Each such request by such other Holders shall
specify the number of Registrable Securities proposed to be
sold and the intended method(s) of disposition thereof and
shall also state the intent of the Holder to offer Registrable
Securities for sale. Notwithstanding the foregoing, the
Company shall not be requested to effect a Demand Registration
unless the Request has been made at least 180 days since the
last Registration Statement (other than a shelf registration
under Rule 415 of the Securities Act or a Registration
Statement on Form S-8) was filed by the Company.
(b) Effective Registration. A registration will not be deemed to
have been effected as a Demand Registration unless the
Registration Statement relating thereto has been declared
effective by the Commission and the Company has complied in
all material respects with its obligations under this
Agreement with respect thereto; provided that if, after the
Registration Statement has become effective, the offering
and/or sale of Registrable Securities pursuant to such
Registration Statement is or becomes the subject of any stop
order, injunction or other order or requirement of the
Commission or any other governmental or administrative agency,
or if any court or other governmental or quasi-governmental
agency prevents or otherwise limits the offer and/or sale of
the Registrable Securities pursuant to the Registration
Statement, other than in each case primarily as a result of
acts or omissions of the Holder or any agent thereof, such
registration will be deemed not to have been effected. If (i)
a registration requested pursuant to this Section 2.2 is
deemed not to have been effected or (ii) the Registration
Statement relating to a Demand Registration requested pursuant
to this Section 2.2 does not remain effective for a period of
at least 180 consecutive days beyond the effective date
thereof or, with respect to an underwritten offering of
Registrable Securities, until 45 days after the commencement
of the distribution by the Holders of the Registrable
Securities included in such Registration Statement, then the
Company shall continue to be obligated to effect such
Registration pursuant to this Section 2.2. The Holders shall
be permitted to withdraw all or any part of the Registrable
Securities from a Registration Statement at any time prior to
the effective date of such Demand Registration Statement;
provided that in the event of such withdrawal, such Holders
shall be responsible for the fees and expenses referred to in
Section 3.2(viii) hereof incurred by such Holders with respect
to such Demand Registration prior to such withdrawal.
(c) Limitations. At such time as the Registrable Securities may be
registered on Form S-2 or Form S-3, as the case may be (or any
similar form or forms promulgated by the Commission), the
Holders of Registrable Securities shall have unlimited rights
(subject to the one-year after Closing condition and the 20%
request requirement described in Section 2.2(a)) to request
registration of their shares on Form S-2 or Form S-3, as the
case may be, or any such similar form. Registrations effected
on Form S-2 and Form S-3 shall not be counted towards the
limit on Demand Registrations under Section 2.2(a).
(d) Selection of Underwriter. If a requested registration pursuant
to this Section 2.2 involves an underwritten offering, the
managing Underwriter(s) thereof shall be selected by the
Selling Holders and shall be reasonably acceptable to the
Company unless the Company has theretofore sold shares of
Common Stock in an underwritten offering, in which case the
managing Underwriter(s) of a requested registration pursuant
to this Section 2.2 shall be selected by the Company and shall
be reasonably acceptable to the requesting Holders.
(e) Deferral of Registration. Notwithstanding any other provision
of this Section 2, the Company shall not be obligated to
effect the filing of a Registration Statement pursuant to
Section 2.2(a) hereof (i) during any period when there exists
an effective Registration Statement covering any Registrable
Securities, or (ii) for a period not to exceed 90 days, if the
Company shall furnish to the Holders requesting a Registration
Statement under Section 2(a) hereof a certificate, signed by
the Company, stating that in the good faith judgment of the
Board of Directors of the Company it would be detrimental to
the best interests of the Company and its stockholders
generally for such Registration Statement to be filed at that
time; provided that in such event, the Holders initiating the
request for registration will be entitled to withdraw such
request.
SECTION 2.3 Piggy-Back Registration. If at any time after the first
anniversary of the Closing Date the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering by the
Company for its own account (including for the purpose of effecting any
transaction approved by the Company's board of directors under the terms of
Section 6(b)(vi) or Section 6(c)(i) of the CCI Shareholders Agreement, or
which the shareholder parties thereto agree to proceed with under the terms
of Section 9 of the CCI Shareholders Agreement) or for the account of any
of its respective security holders (other than a Registration Statement on
Form S-4 or Form S-8 or on any other form inappropriate for an underwritten
public offering or related solely to securities to be issued in a merger,
acquisition of the stock or assets of another entity or in a similar
transaction (or any substitute form that may be adopted by the Commission),
including a Registration Statement pursuant to a Demand Registration under
Section 2.2), then the Company shall give written notice of such proposed
filing to the Holders as soon as practicable (but in no event less than 30
days before the anticipated filing date), and such notice shall offer such
Holders the opportunity to register such number of Registrable Securities
as each such Holder may request (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and shall
also state the intent of the Holder to offer Registrable Securities for
sale) (a "Piggy-Back Registration"). The Company shall use all reasonable
efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on the same terms and
conditions as any similar securities of the Company or any other security
holder included therein and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method of
distribution thereof. Any Holder shall have the right to withdraw his or
its request for inclusion of his or its Registrable Securities in any
Registration Statement pursuant to this Section 2.3 by giving written
notice to the Company of his or its request to withdraw, provided that in
the event of such withdrawal (other than pursuant to Section 2.5(c)
hereof), such Holder shall be responsible for the fees and expenses
referred to in Section 3.2(viii) hereof incurred by such Holder prior to
such withdrawal relating to such Registration Statement. The Company may
withdraw a Piggy-Back Registration at any time prior to the time it becomes
effective.
No registration effected under this Section 2.3, and no failure to
effect a registration under this Section 2.3, shall relieve the Company of
its obligation to effect a registration upon the request of Holders
pursuant to Section 2.2, and no failure to effect a registration under this
Section 2.3 and to complete the sale of Registrable Securities in
connection therewith shall relieve the Company of any other obligation
under this Agreement (including, without limitation, the Company's
obligations under Sections 3.2 and 4.1).
SECTION 2.4 [intentionally omitted]
SECTION 2.5 Reduction of Offering.
(a) Demand Registration. The Company may include in a Demand
Registration pursuant to Section 2.2 securities of the same
class as the Registrable Securities for the account of the
Company and any other Persons who hold securities of the same
class as the Registrable Securities on the same terms and
conditions as the Registrable Securities to be included
therein; provided, however, that if the managing Underwriter
or Underwriters of any underwritten offering described in
Section 2.2 have informed the Company in writing that it is
their opinion that the total number of Registrable Securities,
and securities of the same class as the Registrable Securities
which Holders, the Company and any other Persons desiring to
participate in such registration intend to include in such
offering is such as to materially and adversely affect the
success of such offering, then the number of shares to be
offered for the account of the Company and for the account of
all such other Persons (other than the Holders) participating
in such registration shall be reduced or limited pro rata in
proportion to the respective number of shares requested to be
registered to the extent necessary to reduce the total number
of shares requested to be included in such offering to the
number of shares, if any, recommended by such managing
Underwriter or Underwriters, and if the offering is not
underwritten, no other Person, including the Company, shall be
permitted to offer securities under any such Demand
Registration unless the Selling Holders owning a
majority-in-interest of the Common Stock to be sold consent to
the inclusion of such shares therein.
(b) Piggy-Back Registration.
(i) Notwithstanding anything contained herein, if the
managing Underwriter or Underwriters of any underwritten
offering described in Section 2.3 have informed, in
writing, the Holders requesting inclusion in such
offering that it is their opinion that the total number
of shares which the Company, Holders and any other
Persons holding securities of the same class as the
Registrable Securities desiring to participate in such
registration intend to include in such offering is such
as to materially and adversely affect the success of
such offering, then, the Company will include in such
registration (A) first, all the shares the Company
offered for its own account, if any, (B) then, if
additional shares may be included in such registration
without materially and adversely affecting the success
of such offering, the shares offered by the holders of
securities as a result of their exercise of registration
rights by such holders, if any (provided, that in
determining the priority of such holders, preference
shall be given to the holders of the Company's
securities that are exercising rights pursuant to the
Prior Rights Agreements, and then to the Holders), and
(C) then, if additional shares may be included in such
registration without materially and adversely affecting
the success of such offering, the number of shares
offered by the Holders and such other holders of
securities of the same class as the Registrable
Securities whose piggy-back registration rights may not
be reduced without violating their contractual rights
(provided such contractual rights were in existence
prior to the date of this Agreement), on a pro rata
basis in proportion to the relative number of
Registrable Securities of the holders (including the
Holders) participating in such registration.
(ii) If the managing Underwriter or Underwriters of any
underwritten offering described in Section 2.3 notify
the Holders requesting inclusion in such offering that
the securities that the Holders, the Company and any
other Persons desiring to participate in such
registration intend to include in such offering is such
as to materially and adversely affect the success of
such offering, (A) the Registrable Securities to be
included in such offering shall be reduced as described
in clause (i) above or (B) if such reduction would, in
the judgment of the managing Underwriter or
Underwriters, be insufficient to substantially eliminate
the material adverse effect that inclusion of the
Registrable Securities requested to be included would
have on such offering, such Registrable Securities will
be excluded from such offering.
(c) Withdrawal. If, as a result of the proration provisions of
this Section 2.5, any Holder shall not be entitled to include
all Registrable Securities in a Demand Registration or
Piggy-Back Registration that such Holder has requested to be
included, such Holder may elect to withdraw his request to
include Registrable Securities in such registration; provided,
however, that if a Holder withdraws his request pursuant to
this Paragraph 2.5(c), the Company shall be responsible for
the fees and expenses referred to in Section 3.2(viii) hereof.
(d) Holdback Agreements. If any registration of Registrable
Securities shall be in connection with an underwritten public
offering, each Holder agrees not to effect any public sale or
distribution, including any sale pursuant to Rule 144 under
the Securities Act, of any Registrable Securities, and not to
effect any such public sale or distribution of any other
equity security of the Company or of any security convertible
into or exchangeable or exercisable for any equity security of
the Company (in each case, other than as part of such
underwritten public offering) during the seven (7) days prior
to, and during the one hundred eighty (180) day period
beginning on, the effective date of such Registration
Statement (except as part of such registration).
ARTICLE 3
REGISTRATION PROCEDURES
SECTION 3.1 Filings; Information. Whenever the Company is required to
effect or cause the registration of the offer and sale of Registrable
Securities pursuant to Section 2.2 or 2.3 hereof, the Company will use its
best efforts to effect the registration of the offer and the sale of such
Registrable Securities in accordance with the intended method(s) of
disposition thereof as quickly as practicable, and in connection with any
such request:
(a) Registration Filing. The Company will prepare and file with
the Commission a Registration Statement with respect to the
offer and sale of such securities and use its best efforts to
cause such Registration Statement to become and remain
effective until the completion of the distribution
contemplated thereby; provided, however, the Company shall not
be required to keep such Registration Statement effective for
more than 180 days (or such shorter period which will
terminate when all Registrable Securities covered by such
Registration Statement have been sold, but not prior to the
expiration of the applicable period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if
applicable); provided, further, that with respect to a Demand
Registration, the Company shall use its best efforts to file
with the Commission a Registration Statement as soon as is
practicable after the date of the Request and in any event no
later than 60 days after the date of the Request for the
Demand Registration and shall use its best efforts to cause
such Registration Statement to be declared effective as soon
as is practicable after the date of filing and in any event no
later than 180 days after the date of such Request.
(b) Amendments. The Company will prepare and file with the
Commission such amendments and post-effective amendments to
the Registration Statement as may be necessary to keep such
Registration Statement effective for as long as such
registration is required to remain effective pursuant to the
terms hereof; cause the Prospectus to be supplemented by any
required Prospectus supplement, and, as so supplemented, to be
filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act applicable to
it with respect to the disposition of all Registrable
Securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the Selling Holders set forth in such
Registration Statement or supplement to the Prospectus.
(c) Copies. The Company, at least ten (10) Business Days prior to
filing a Registration Statement or at least five (5) Business
Days prior to filing a Prospectus or any amendment or
supplement to such Registration Statement or Prospectus, will
furnish to (i) each Selling Holder, (ii) not more than one
counsel representing all Selling Holders ("Selling Holders'
Counsel"), to be selected by a majority-in-interest of such
Selling Holders, and (iii) each Underwriter, if any, of the
Registrable Securities covered by such Registration Statement
copies of such Registration Statement as proposed to be filed,
together with exhibits thereto, which documents will be
subject to review and approval by each of the foregoing within
five (5) Business Days after delivery (except that such review
and approval of any Prospectus or any amendment or supplement
to such Registration Statement or Prospectus must be within
three (3) Business Days after delivery), and thereafter,
furnish to such Selling Holders, Selling Holders' Counsel and
Underwriters, if any, such number of conformed copies of such
Registration Statement, each amendment and supplement thereto
(in each case including all exhibits thereto and documents
incorporated by reference therein), the Prospectus included in
such Registration Statement (including each preliminary
Prospectus) and such other documents or information as such
Selling Holders, Selling Holders' Counsel or Underwriters may
reasonably request in order to facilitate the disposition of
the Registrable Securities (it being understood that the
Company consents to the use of the Prospectus and any
amendment or supplement thereto by each Selling Holder and the
Underwriters, if any, in connection with the offering and sale
of the Registrable Securities covered by such Prospectus or
any amendment or supplement thereto).
(d) No Stop Orders. The Company will take all reasonable actions
required to prevent the entry of such stop order or to remove
it at the earliest possible moment if entered.
(e) Blue Sky Filings. On or prior to the date on which the
Registration Statement is declared effective, use its best
efforts to register or qualify such Registrable Securities
under such other securities or "blue sky" laws of such
jurisdictions as any Selling Holder, Selling Holders' Counsel
or Underwriter reasonably requests and do any and all other
acts and things which may be necessary or advisable to enable
such Selling Holder to consummate the disposition in such
jurisdictions of such Registrable Securities owned by such
Selling Holder; use its best efforts to keep each such
registration or qualification (or exemption therefrom)
effective during the period which the Registration Statement
is required to be kept effective; and use its best efforts to
do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration
Statement; provided that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in
any such jurisdiction.
(f) Post-Effective Matters. The Company will notify each Selling
Holder, Selling Holders' Counsel and any Underwriter and (if
requested by any such Person) confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed and, with respect to a
Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of a
Registration Statement or the initiation or threatening of any
proceedings for that purpose, (iii) of the issuance by any
state securities commission or other regulatory authority of
any order suspending the qualification or exemption from
qualification of any of the Registrable Securities under state
securities or "blue sky" laws or the initiation of any
proceedings for that purpose, and (iv) of the happening of any
event which makes any statement made in a Registration
Statement or related Prospectus or any document incorporated
or deemed to be incorporated by reference therein untrue in a
material respect or which requires the making of any changes
in such Registration Statement, Prospectus or documents so
that they will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements in the
Registration Statement and Prospectus not misleading in light
of the circumstances in which they were made; and, as promptly
as practicable thereafter, prepare and file with the
Commission and furnish a supplement or amendment to such
Prospectus so that, as thereafter deliverable to the buyers of
such Registrable Securities, such Prospectus will not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(g) Earning Statement. The Company will make generally available
an earning statement satisfying the provisions of Section
11(a) of the Securities Act no later than 90 days after the
end of the 12-month period beginning with the first day of the
Company's first fiscal quarter commencing after the effective
date of a Registration Statement, which earning statement
shall cover said 12-month period, and which requirement will
be deemed to be satisfied if the Company timely files complete
and accurate information on Forms 10-Q, 10-K and 8-K under the
Exchange Act and otherwise complies with Rule 158 under the
Securities Act.
(h) Underwriting Agreement. The Company will enter into customary
agreements (including, if applicable, an underwriting
agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(i) Transfer Agent and Registrar. The Company will provide for a
transfer agent and registrar for all such Registrable
Securities not later than the effective date of such
registration statement, and use its best efforts to cause all
such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be listed on the NASDAQ
(or other national market) and, if listed on the NASDAQ, use
its best efforts to secure designation of all such Registrable
Securities covered by such registration statement as a NASDAQ
national market system security within the meaning of Rule
11Aa2-1 of the Commission or, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at
least two market makers to register as such with respect to
such Registrable Securities with the NASDAQ.
(j) Information Regarding Distribution. The Company, during the
period when the Prospectus is required to be delivered under
the Securities Act, will file all documents required to be
filed with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act.
The Company may require each Selling Holder to promptly furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection
with such registration including, without limitation, all such information
as may be requested by the Commission or the National Association of
Securities Dealers, Inc.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
3.1(f) hereof, such Selling Holder will forthwith discontinue disposition
of Registrable Securities pursuant to the Registration Statement covering
such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section
3.1(f) hereof, and, if so directed by the Company, such Selling Holder will
deliver to the Company all copies, other than permanent file copies then in
such Selling Holder's possession, of the most recent Prospectus covering
such Registrable Securities at the time of receipt of such notice. In the
event the Company shall give such notice, the Company shall extend the
period during which such Registration Statement shall be maintained
effective (including the period referred to in Section 3.1(a) hereof) by
the number of days during the period from and including the date of the
giving of notice pursuant to Section 3.1(f) hereof to the date when the
Company shall make available to the Selling Holders covered by such
Registration Statement a Prospectus supplemented or amended to conform with
the requirements of Section 3.1(f) hereof.
SECTION 3.2 Registration Expenses. The Company shall pay all expenses
incident to the Company's performance of or compliance with this Agreement
including, without limitation: (i) all registration and filing fees, (ii)
the fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) all printing,
messenger and delivery expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), (v) the fees and
expenses incurred in connection with the listing or quotation, as
appropriate, of the Registrable Securities, (vi) the fees and disbursements
of counsel for the Company and the fees and expenses for independent
certified public accountants retained by the Company (including the
expenses of any special audit or cold comfort letters), (vii) the fees and
expenses of any special experts retained by the Company in connection with
such registration, and (viii) the fees and expenses of the Selling Holders
Counsel, provided, however, that, notwithstanding the foregoing, any Holder
whose Registrable Securities are included in more than two registration
statements filed pursuant to the provisions of Section 2.2(a) hereof shall
pay his pro rata portion of all the foregoing expenses (based on the number
of shares included) with respect to the third registration statement in
which such Holders' shares are included. The Company shall have no
obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities and any of the expenses
incurred by Selling Holders which are not payable by the Company, such
costs to be borne by the Selling Holder or Selling Holders.
ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each
Selling Holder, its partners, officers, directors, employees, advisors and
agents, and each Person, if any, who controls such Selling Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the partners, officers, directors, employees,
advisors and agents of such controlling Person (collectively, the
"Controlling Persons"), from and against any loss, claim, damage,
liability, attorneys' fees, cost or expense and costs and expenses of
investigating and defending any such claim (collectively, the "Damages")
and any action in respect thereof to which such Selling Holder, its
partners, officers, directors, employees, advisors and agents, and any such
Controlling Person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Damages (or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus or any preliminary Prospectus, or arise out of, or
are based upon, any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based
upon information furnished in writing to the Company by a Selling Holder
expressly for use therein, and shall reimburse each Selling Holder, its
partners, officers, directors, employees, advisors and agents, and each
such Controlling Person for any legal and other expenses reasonably
incurred by that Selling Holder, its partners, officers, directors,
employees, advisors and agents, or any such Controlling Person in
investigating or defending or preparing to defend against any such Damages
or proceedings. The Company also agrees to indemnify any Underwriters of
the Registrable Securities, their officers and directors and each Person
who controls such Underwriters on substantially the same basis as that of
the indemnification of the Selling Holders provided in this Section 4.1.
SECTION 4.2 Indemnification by Selling Holders. Each Selling Holder
agrees, severally but not jointly, to indemnify and hold harmless the
Company, its officers, directors, employees, advisors and agents and each
Person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, together with the
partners, officers, directors, employees, advisors and agents of such
Controlling Person, to the same extent as the foregoing indemnity from the
Company to such Selling Holder, but only with reference to information
related to such Selling Holder, or its plan of distribution, furnished in
writing by such Selling Holder expressly for use in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or any
preliminary Prospectus; provided, however, that such Selling Holder shall
not be liable in any such case to the extent that prior to the filing of
any such Registration Statement or Prospectus or amendment or supplement
thereto, such Selling Holder has furnished in writing to the Company
information expressly for use in such Registration Statement or Prospectus
or any amendment or supplement thereto which corrected or made not
misleading information previously furnished to the Company. In no event
shall the liability of any Selling Holder be greater in amount than the
dollar amount of the proceeds received by such Selling Holder upon the sale
of the Registrable Securities giving rise to such indemnification
obligation.
SECTION 4.3 Conduct of Indemnification Proceedings. Promptly after
receipt by any Person in respect of which indemnity may be sought pursuant
to Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or
the commencement of any action, the Indemnified Party shall, if a claim in
respect thereof is to be made against the Person against whom such
indemnity may be sought (an "Indemnifying Party"), notify the Indemnifying
Party in writing of the claim or the commencement of such action; provided
that the failure to notify the Indemnifying Party shall not relieve it from
any liability which it may have to an Indemnified Party otherwise than
under Section 4.1 or 4.2 except to the extent of any actual prejudice
resulting therefrom. If any such claim or action shall be brought against
an Indemnified Party, and it shall notify the Indemnifying Party thereof,
the Indemnifying Party shall be entitled to participate therein, and, to
the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying
Party to the Indemnified Party of its election to assume the defense of
such claim or action, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Indemnified Party
shall have the right to employ separate counsel to represent the
Indemnified Party and its Controlling Persons who may be subject to
liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, but the
fees and expenses of such counsel shall be for the account of such
Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii)
in the opinion of counsel to such Indemnified Party, representation of both
parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such
claim or action or separate but substantially similar or related claims or
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (together with appropriate local
counsel) at any time for all Indemnified Parties. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect
any settlement of any claim or pending or threatened proceeding in respect
of which the Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding. Whether or not the
defense of any claim or action is assumed by the Indemnifying Party, such
Indemnifying Party will not be subject to any liability for any settlement
made without its consent, which consent will not be unreasonably withheld.
SECTION 4.4 Contribution. If the indemnification provided for in this
Article 4 is unavailable to the Indemnified Parties in respect of any
Damages referred to herein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages in such
proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Selling Holders on the other from the
offering of the Registrable Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits but also the relative fault of the
Company on the one hand and the Selling Holders on the other in connection
with the statements or omissions which resulted in such Damages, as well as
any other relevant equitable considerations. The relative fault of the
Company on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as
a result of the Damages referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Selling Holder shall
be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise paid by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. Each Selling Holder's obligations to
contribute pursuant to this Section 4.4 is several in the proportion that
the proceeds of the offering received by such Selling Holder bears to the
total proceeds of the offering received by all the Selling Holders and not
joint.
ARTICLE 5
MISCELLANEOUS
SECTION 5.1 Participation in Underwritten Registrations. No Person
may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements and these registration rights.
SECTION 5.2 Additional Rights. If subsequent to the date hereof the
Company grants to holders or prospective holders of its securities
registration rights which are more favorable than the terms or provisions
of this Agreement are to the Holders of the Registrable Securities, this
Agreement shall be deemed to be automatically amended (without the
necessity of any action on the part of the Company or the Holders) to grant
to the Holders of the New Registrable Securities such more favorable or
additional rights, in addition to those set forth herein.
SECTION 5.3 Rule 144 and 144A. The Company covenants that it will
file any reports required to be filed by it under the Securities Act and
the Exchange Act and that it will take such further action as any Holder
may reasonably request, all to the extent required from time to time to
enable Holders to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 or Rule 144A under the Securities Act, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any
Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 5.4 Amendment and Modification. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a
writing executed by the party against whom the enforcement of such waiver
is sought. This Agreement may not be amended, modified or supplemented
other than by a written instrument signed by the holders of at least 66
2/3% of the Registrable Securities (calculated with respect to the Series D
Preferred Stock on an as-converted basis in accordance with the terms and
conditions for such securities under the certificate establishing the
Series D Preferred Stock's rights and preferences); provided, however, that
without the consent of all the Holders, no amendment or modification which
materially and adversely affects any Holders' rights hereunder without the
consent of such Holders. No course of dealing between or among any Persons
having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations
of any Person under or by reason of this Agreement.
SECTION 5.5 Successors and Assigns; Third Party Beneficiaries. This
Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties hereto, each subsequent Holder and their
respective successors and assigns and executors, administrators and heirs.
Holders are intended third-party beneficiaries of this Agreement and this
Agreement may be enforced by such Holders.
SECTION 5.6 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
SECTION 5.7 Headings. Subject headings are included for convenience
only and shall not affect the interpretation of any provisions of this
Agreement.
SECTION 5.8 Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing and shall be deemed
to have been duly given on the date of service if personally served or sent
by telecopy, on the business day after notice is delivered to a courier or
mailed by express mail if sent by courier delivery service or express mail
for next day delivery and on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered,
return receipt requested, postage prepaid and addressed as follows:
If to the Company to:
Convergence Communications, Inc.
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Senior Vice President
Administration & Legal
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx & Xxxxxxx
000 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
if to the Purchasers, at the address set forth next to such Purchaser's
name on the signature page hereto.
SECTION 5.9 Governing Law; Forum; Process. This Agreement shall be
construed in accordance with, and the rights of the parties shall be
governed by, the internal laws of the State of New York, including Section
5-1401 of the New York General Obligations Law. All disputes arising under
or relation to this Agreement shall first be subject to conciliation in
accordance with the Rules of Conciliation of the International Chamber of
Commerce and, failing conciliation, be finally settled under the Rules of
Arbitration of the International Chamber of Commerce by three arbitrators
appointed in accordance with said Rules. The place of arbitration shall be
New York, New York. The language of the arbitration shall be English. In
the event any dispute under the Purchase Agreement relates in any way to
the validity, performance or interpretation of this Agreement and an
arbitral tribunal is constituted pursuant to Section 11(n) of the Purchase
Agreement, all parties to any dispute hereunder agree (i) to be joined to
the procedures initiated pursuant to Section 11(n) of the Purchase
Agreement; (ii) to have any proceedings initiated hereunder consolidated
with proceedings initiated pursuant to Section 11(n) of the Purchase
Agreement and (iii) to be bound by any ruling of the arbitral tribunal
constituted pursuant to Section 11(n) of the Purchase Agreement or any
interim or final award thereof. Submission of disputes to arbitration
pursuant to the Rules of Arbitration of the International Chamber of
Commerce, in consolidation with any disputes submitted to arbitration
pursuant to Section 11(n) of the Purchase Agreement as provided above,
shall be the sole method of resolving disputes between the Parties hereto.
Judgment upon an arbitration award may be entered in any court having
jurisdiction.
SECTION 5.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single agreement.
SECTION 5.11 Severability. In the event that any one or more of the
immaterial provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable, the same shall not affect any
other provision of this Agreement, but this Agreement shall be construed in
a manner which, as nearly as possible, reflects the original intent of the
parties.
SECTION 5.12 No Prejudice. The terms of this Agreement shall not be
construed in favor of or against any party on account of its participation
in the preparation hereof.
SECTION 5.13 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
SECTION 5.14 Remedy for Breach. The Company hereby acknowledges that
in the event of any breach or threatened breach by the Company of any of
the provisions of this Agreement, the Holder would have no adequate remedy
at law and could suffer substantial and irreparable damage. Accordingly,
the Company hereby agrees that, in such event, the Holder shall be
entitled, without the necessity of proving damages or posting bond, and
notwithstanding any election by any Holder to claim damages, to obtain a
temporary and/or permanent injunction, without proving a breach therefor,
to restrain any such breach or threatened breach or to obtain specific
performance of any such provisions, all without prejudice to any and all
other remedies which any Holder may have at law or in equity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
CONVERGENCE COMMUNICATIONS, INC.
By: /s/ Xxxx X'Xxxxxxxx
--------------------------------------
Name: Xxxx X'Xxxxxxxx
Title: Sr. Vice President
Address: 000 Xxxx 000 Xxxxx,
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Fax No.: (000) 000-0000
TCW/CCI HOLDING II LLC
By: /s/ Xxxxxx Xxxxxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: Authorized Person
Address: c/o TCW/ Latin America
Private Equity Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
GLACIER LATIN-AMERICA LTD.
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Treasurer
Address: 0000 X.X. 000 Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
/s/ Xxxxx Xxxx, Attorney in Fact
------------------------------------------
Xxxxxxxx Xxxx
Address: Xxxxx 925, 1er Piso
(1038) Xxxxxx Xxxxx X0000XXX
Xxxxxxxxx
/s/ Xxxxx Xxxx, Attorney in Fact
------------------------------------------
Xxxxxx Xxxxxx Xxxxxx xx Xxxxx
Address: Xxxxx 925, 1er Piso
(1038) Buenos Aires C1038AAS
Argentina
TELEMATICA EDC, C.A.
By: /s/ Xxxxxxxx Xxxxxxxx
--------------------------------------
Its: Authorized Person
Address: Xxxxxxx Xxxxxxx,
Xxx Xxxxxxxxxx
Xxxxxxxx 0000, Caracas
1010 - A - Venezuela
XXXXXX CAPITAL MANAGEMENT III, LLC
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Address: 00 Xxxxx XxXxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
