Exhibit G
PARTICIPATION AGREEMENT
AMONG
CONVERGENCE COMMUNICATIONS, INC.,
A NEVADA, UNITED STATES OF AMERICA CORPORATION,
TELEMATICA EDC, C.A.,
A VENEZUELAN COMPANIA ANONIMA,
TCW/CCI HOLDING LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
INTERNATIONAL FINANCE CORPORATION,
AN INTERNATIONAL ORGANIZATION ESTABLISHED BY ARTICLES OF AGREEMENT
AMONG ITS MEMBER COUNTRIES
GLACIER LATIN-AMERICA LTD.,
A BRITISH VIRGIN ISLANDS INTERNATIONAL BUSINESS COMPANY
FONDELEC ESSENTIAL SERVICES GROWTH FUND, L.P.,
A CAYMAN ISLANDS EXEMPT LIMITED PARTNERSHIP,
INTERNEXUS S.A.,
AN ARGENTINE SOCIEDAD ANONIMA,
AND
XXXXX X'XXXXXXXX, XXXX X'XXXXXXXX
AND THE
ESTATE OF XXXXXX X. X'XXXXXXXX
DATED: OCTOBER 15, 1999
TABLE OF CONTENTS
PAGE
1. Definitions.................................................. 2
2. The Transactions............................................. 2
(a) The Transactions..................................... 2
(b) The Closing and the Subsequent Closing............... 5
(c) Deliveries at the Closing............................ 6
(d) Deliveries at the Subsequent Closing................. 9
3. Representations and Warranties of Investors.................. 10
(a) Organization of the Investors........................ 10
(b) Authorization of Transaction......................... 10
(c) Noncontravention..................................... 11
(d) Brokers' Fees........................................ 11
(e) Investment Intent.................................... 11
(f) Restrictive Legend................................... 12
(g) Accredited Investor.................................. 13
(h) HSR Warranty......................................... 13
4. Representations and Warranties of the Company Concerning the
Company and its Subsidiaries................................. 13
(a) Organization, Qualification and Corporate Power...... 14
(b) Authorization of Transaction......................... 14
(c) Capitalization....................................... 14
(d) Noncontravention..................................... 15
(e) Intellectual Property; Permits and Licenses.......... 16
(f) Financial Statements; Financial Condition............ 19
(g) Taxes................................................ 20
(h) Employees and Labor Contracts........................ 20
(i) Environmental Laws and Regulations................... 21
(j) Litigation........................................... 21
(k) Bankruptcy........................................... 21
(l) Ordinary Course...................................... 22
(m) Brokers.............................................. 22
(n) Contracts............................................ 22
(o) Compliance with Laws................................. 22
(p) Business Plan and Use of Proceeds.................... 23
(q) Complete Statements.................................. 23
(r) Reports.............................................. 23
(s) Related Party Transactions........................... 24
(t) Foreign Corrupt Practices Act........................ 24
(u) No Bank Regulation................................... 24
(v) Property; Assets..................................... 24
(w) Employee Benefits.................................... 25
(x) U.S. Employee Plans.................................. 25
(y) Insurance............................................ 26
(z) IFC Policies......................................... 26
(aa) HSR Warranty......................................... 26
5. Pre-Closing Covenants........................................ 26
(a) General.............................................. 27
(b) Notices and Consents................................. 27
(c) Operation of Business................................ 27
(d) Preservation and Conduct of Business................. 27
(e) Full Access.......................................... 27
(f) Notice of Developments............................... 28
6. Conditions to Obligations.................................... 28
(a) Conditions to Obligations of Each Investor at the
Closing.............................................. 28
(b) Conditions to Obligations of the Company at the
Closing.............................................. 29
(c) Conditions to Obligations at the Subsequent
Closing.............................................. 29
7. Indemnity.................................................... 30
8. Termination.................................................. 32
(a) Termination of Agreement............................. 32
(b) Effect of Termination................................ 33
(c) Specific Performance................................. 34
9. D'Ambrosio Participation..................................... 34
10. Removal of Legend;Use of Proceeds............................ 34
11. Miscellaneous................................................ 34
(a) Press Releases and Public Announcements.............. 34
(b) No Third Party Beneficiaries......................... 35
(c) Entire Agreement..................................... 35
(d) Succession and Assignment............................ 35
(e) Counterparts......................................... 35
(f) Headings............................................. 35
(g) Notices.............................................. 35
(h) Governing Law........................................ 38
(i) Amendments and Waivers............................... 38
(j) Severability......................................... 38
(k) Expenses............................................. 39
(l) Construction......................................... 39
(m) Incorporation of Attachments and Exhibits............ 39
(n) Disputes............................................. 39
(o) Special IFC Covenants................................ 40
(p) Reporting to IFC..................................... 41
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Participation Agreement") is
entered into as of October 15, 1999, among CONVERGENCE COMMUNICATIONS,
INC., a Nevada, United States of America corporation (the "Company"),
TELEMATICA EDC, C.A., a Venezuelan compania anonima, ("Telematica"),
TCW/CCI HOLDING LLC, a Delaware, United States of America limited liability
company ("TCW"); INTERNATIONAL FINANCE CORPORATION, an international
organization established by Articles of Agreement among its member
countries, ("IFC"), and GLACIER LATIN- AMERICA LTD., a British Virgin
Islands International Business Company ("Glacier"), FONDELEC ESSENTIAL
SERVICES GROWTH FUND, L.P., a Cayman Islands exempt limited partnership
("FondElec"), INTERNEXUS S.A., an Argentine sociedad anonima
("Internexus"), and, for purposes of Section 9 below, XXXXX X'XXXXXXXX,
XXXX X'XXXXXXXX and the ESTATE OF XXXXXX X. X'XXXXXXXX (the latter three
being sometimes referred to collectively herein as the "D'Ambrosios").
Telematica, TCW, IFC, Glacier, FondElec and Internexus are sometimes
referred to collectively as the "Investors" and individually as an
"Investor", and the Company and the Investors are sometimes referred to
collectively as the "Parties" and singularly as a "Party".
A. The Company, directly or through wholly-owned or controlled
subsidiaries, is engaged in the business of providing data
transmission services, domestic and international telephony,
subscriber cable television, value-added telecommunications
services and services for access to and use of the Internet in
Latin America (together, the "Telecommunications Business"), and
proposes to continue to carry out and to further expand and
develop such Telecommunications Business in the manner and to
the extent set out in the business plan and budget attached as
Exhibits A and B (the "Business Plan" and "Budget",
respectively) to the Company's letter addressed to all Investors
and dated October 15, 1999 and previously delivered to them
("Disclosure Letter") and for such purposes requires additional
capital;
B. The Investors individually desire to participate or to
participate further in the Telecommunications Business and
toward that end intend to invest in the Company;
C. FondElec is a shareholder in the Company and is the holder of a
certain Subordinated Exchangeable Promissory Note from the
Company, dated December 23, 1998, in the original principal
amount of Five Million United States Dollars (US$5,000,000) (the
"FondElec December Note"), and FondElec proposes to capitalize
and, therefore, convert and exchange the principal amount of the
FondElec December Note for equity securities of the Company;
D. Internexus is a shareholder in the Company and the holder of (i)
a certain Subordinated Exchangeable Promissory Note from the
Company, dated December 23, 1998, in the original principal
amount of Five Million United States Dollars (US$5,000,000) (the
"Internexus December Note"); (ii) a certain Promissory Note from
the Company, dated June 12, 1999, in the original principal
amount of Xxx Xxxxxxx Xxxx Xxxxxxx xxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx Dollars (US$2,550,000) (the "MetroNet Note"), and (iii)
certain Promissory Notes from the Company dated September 3,
1999 and October 2, 1999, in the respective original principal
amounts of One Million United States Dollars (US$1,000,000) and
Five Hundred Thousand United States Dollars (US$500,000) (the
"Bridge Notes"), and proposes to capitalize and, therefore,
convert and exchange the principal amount of, and accrued
interest on, the Internexus December Note, the MetroNet Note and
the Bridge Notes for equity securities of the Company; and
E. The Parties are entering into this Participation Agreement and
the other agreements and instruments entered into or delivered
in connection herewith to memorialize the terms for such
investments and conversions.
NOW, THEREFORE, the Parties agree as follows:
1. Definitions. Capitalized terms used in this Participation Agreement
have the meanings ascribed to them in the Schedule of Definitions
attached to this Participation Agreement as Schedule 1, unless the
context otherwise requires. The definition of terms defined in the
singular shall apply to the plural, and the definition of terms
defined in the plural shall apply to the singular.
2. The Transactions.
(a) The Transactions. The Parties confirm their intention that, on
and subject to the terms and conditions of this Participation
Agreement, they shall carry out the following transactions, and
enter into and deliver the following agreements and instruments
(such agreements and instruments herein referred to
collectively as the "Transaction Documents") at a closing to
occur on October 18, 1999 the ("Closing") and, where
appropriate, at a further closing (the "Subsequent Closing") to
occur within five Business Days following the satisfaction of
the conditions set out in Section 6(c), in each case as
provided for in Section 2(b) below:
(i) the entering into, at the Closing, between each of
Telematica, TCW, IFC and Glacier, and the Company of a
Stock Purchase Agreement in the form of Exhibit A to this
Participation Agreement (each a "CCI Stock Purchase
Agreement" and, collectively, the "CCI Stock Purchase
Agreements"), and the purchase and sale, pursuant to such
CCI Stock Purchase Agreements, of 7,733,332 shares in the
aggregate of Series C Convertible Preferred Stock issued
by the Company and having the rights and preferences set
out in Schedule 2 to this Participation Agreement (the
"Rights and Preferences of Series C Shares") for an
aggregate purchase price, in cash or other immediately
available funds, of Fifty-Eight Million United States
Dollars (US$58,000,000), such purchases and sales of
Series C Shares to occur as follows:
(A) the purchase by and sale to Telematica of an
aggregate of 3,333,333 Series C Shares pursuant to
its CCI Stock Purchase Agreement, 2,000,000 being
purchased and sold at the Closing and 1,333,333
being purchased and sold at the Subsequent Closing,
in each case for a purchase price per share of
Seven and 50/100 United States Dollars (US$7.50),
being an aggregate purchase price of Twenty Five
Million United States Dollars (US$25,000,000),
Fifteen Million United States Dollars
(US$15,000,000) being payable at the Closing and
Ten Million United States Dollars (US$10,000,000)
being payable at the Subsequent Closing,
(B) the purchase by and sale to TCW of an aggregate of
3,333,333 Series C Shares pursuant to its CCI Stock
Purchase Agreement, 2,000,000 being purchased and
sold at the Closing and 1,333,333 being purchased
and sold at the Subsequent Closing, in each case
for a purchase price per share of Seven and 50/100
United States Dollars (US$7.50), being an aggregate
purchase price of Twenty Five Million United States
Dollars (US$25,000,000), Fifteen Million United
States Dollars (US$15,000,000) being payable at the
Closing and Ten Million United States Dollars
(US$10,000,000) being payable at the Subsequent
Closing,
(C) the purchase by and sale to IFC of 666,666 Series C
Shares pursuant to its CCI Stock Purchase
Agreement, at the Subsequent Closing, for a
purchase price per share of Seven and 50/100 United
States Dollars (US$7.50), being an aggregate
purchase price of Five Million United States
Dollars (US$5,000,000) payable at the Closing, and
(D) the purchase by and sale to Glacier of 400,000
Series C Shares, pursuant to its CCI Stock Purchase
Agreement, at the Closing, for a purchase price per
share of Seven and 50/100 United States Dollars
(US$7.50), being an aggregate purchase price of
Three Million United States Dollars (US$3,000,000)
payable at the Closing,
and the commitment by the Company to apply the proceeds
of such sale in the manner set out in Schedule 3 to this
Participation Agreement;
(ii) the conversion by Internexus, at the Closing, of the
principal and interest amounts of the Internexus December
Note, the MetroNet Note and the Bridge Notes into
1,328,911 Series C Shares and the conversion by FondElec,
at the Closing, of the principal amount of the FondElec
December Note into 666,666 Series C Shares;
(iii) the entering into, at the Closing, by the Investors, and
the Company of an Option Agreement in the form of Exhibit
B to this Participation Agreement (the "Option
Agreement"), granting an option to each Investor to
acquire further Series C Shares within nine months
following the Closing Date, on the same terms and
conditions as set out in the CCI Stock Purchase Agreement
attached hereto as Exhibit A, except that the maximum
number of Series C Shares acquired by each Investor shall
be 40% of the number to be acquired by it as contemplated
in subsection 2(a)(i), in the case of Telematica, TCW,
IFC and Glacier, or 40% of the number received upon
conversion as contemplated in subsection 2(a)(ii), in the
case of FondElec and Internexus;
(iv) the granting to each Investor of a Series C Warrant in
the form of Exhibit C to this Participation Agreement
(each a "Series C Warrant" and, collectively, the "Series
C Warrants"), providing for the issuance by the Company
of 2,432,226 shares of Common Stock, such grants to occur
as follows:
(A) the grant to Telematica, as to 500,000 shares, at
the Closing, and as to 333,333, at the Subsequent
Closing,
(B) the grant to TCW, as to 500,000 shares, at the
Closing, and as to 333,333, at the Subsequent
Closing,
(C) the grant to IFC, as to 166,666 shares, at the
Subsequent Closing,
(D) the grant to Glacier, as to 100,000 shares, at the
Closing,
(E) the grant to Internexus, as to 332,228 shares, at
the Closing, and
(F) the grant to FondElec, as to 166,666 shares, at the
Closing;
(v) the granting to each of FondElec and Internexus, at the
Closing, of a FondElec/Internexus Warrant in the form of
Exhibit D to this Participation Agreement (each, a
"FondElec/Internexus Warrant"), providing for the
issuance to each of them, in each case at the same time
and for the same price as the Series C Warrants are
subject to exercise, as to 260,000 shares each of Common
Stock;
(vi) the entering into, at the Closing, among the Company, the
Investors, and the D'Ambrosios of a CCI Shareholders'
Agreement in the form of Exhibit E to this Participation
Agreement (the "CCI Shareholders' Agreement") for the
purpose of setting out how the Investors and the
D'Ambrosios will exercise their rights as shareholders
with respect to, among other matters, corporate
governance, the election of directors and the disposition
of their Company Equity;
(vii) the entering into, at the Closing, among the Investors,
the Company, the D'Ambrosios and certain other parties of
an Amended and Restated Registration Rights Agreement in
the form of Exhibit F to this Participation Agreement
(the "Registration Rights Agreement") for the purpose of
setting out the rights of the Investors, the D'Ambrosios
and such other parties to require or join in the
registration of their shares of common stock of the
Company under U.S. Securities Laws;
(viii)the entering into, at the Closing, among Telematica,
FondElec, WCI de Cayman, Inc., a Cayman Islands limited
liability company and a Subsidiary ("WCI") and Chispa Dos
Inc., a Cayman Islands limited liability company ("CCI
Salvador") of a Subscription and Refinance Agreement in
the form of Exhibit G to this Participation Agreement
(the "Salvador Subscription Agreement"), and the
purchase, at the Subsequent Closing, through the
subscription of unissued shares of CCI Salvador common
stock, by Telematica from CCI Salvador, and the sale by
CCI Salvador to Telematica, of 59.1550 shares of common
stock of CCI Salvador (the "Salvador Shares", as further
described in the Salvador Subscription Agreement) for a
purchase price, in cash or other immediately available
funds of Five Million Five Hundred Twenty-Five Thousand
United States Dollars (US$5,525,000); the contribution,
at the Subsequent Closing, by WCI to CCI Salvador of Nine
Hundred One Thousand Seven Hundred and Sixty United
States Dollars (US$901,760) of its accounts receivable
from CCI Salvador in exchange and in subscription for
9.6549 shares of common stock of CCI Salvador; and the
payment, at the Subsequent Closing, by CCI Salvador,
utilizing a portion of the proceeds of the sale of the
Salvador Shares, of Three Million Eight Hundred
Sixty-Four Thousand Five Hundred Twenty-Nine United
States Dollars (US$3,864,529) to repay Three Million Five
Hundred Thousand United States Dollars (US$3,500,000) of
the principal amount of that certain Promissory Note of
CCI Salvador made to FondElec and dated Xxxxx 0, 0000
("Xxxxxxxx Note"), and accrued interest thereon through
October 14, 1999;
(ix) the entering into, at the Closing, among CCI Salvador,
Telematica, WCI, FondElec and the other shareholders of
CCI Salvador of an Amended and Restated Salvador
Shareholders' Agreement in the form of Exhibit H to this
Participation Agreement (the "Salvador Shareholders'
Agreement"), for the purpose of setting out how
Telematica and such other shareholders will manage the
business of CCI Salvador, and provisions regarding the
disposition of their equity interests in CCI Salvador;
and
(x) the entering into, at the Closing, between the Company
and an affiliate of Telematica of a letter of intent in
the form of Exhibit I to this Participation Agreement
("Colombia Letter of Intent").
(b) The Closing and the Subsequent Closing. Subject to the
satisfaction or waiver by the appropriate Party or Parties of
the conditions set out in Section 6, the closing of the
transactions contemplated by this Participation Agreement to
occur at the Closing and the Subsequent Closing shall take
place at the offices of Xxxxxx Xxxx & Priest LLP in New York
City, New York.
(c) Deliveries at the Closing. At the Closing, the Parties will
deliver the following, subject to the satisfaction or waiver by
the appropriate Party or Parties of the conditions set out in
Sections 6(a) and 6(b):
(i) each of Telematica, TCW, IFC and Glacier will deliver or
cause to be delivered the following:
(A) to the Company, the Investor's CCI Stock Purchase
Agreement, duly executed and delivered by it,
together with
(1) in the case of Telematica, Fifteen Million
United States Dollars (US$15,000,000),
(2) in the case of TCW, Fifteen Million United
States Dollars (US$15,000,000), and
(3) in the case of Glacier, Three Million United
States Dollars (US$3,000,000);
(B) to the Company and each of the other parties
thereto, the CCI Shareholders' Agreement, duly
executed and delivered by it; and
(C) to the Company and each of the other parties
thereto, the Registration Rights Agreement, duly
executed and delivered by it;
(ii) Internexus will deliver or cause to be delivered the
following:
(A) to the Company and each of the other parties
thereto, the CCI Shareholders' Agreement, duly
executed and delivered by it;
(B) to the Company and each of the other parties
thereto, the Registration Rights Agreement, duly
executed and delivered by it; and
(C) to the Company, the Internexus December Note, the
MetroNet Note and the Bridge Notes, in each case
duly marked as cancelled and paid in full;
(iii) FondElec will deliver or cause to be delivered the
following:
(A) to the Company, the FondElec December Note duly
marked as cancelled and paid in full;
(B) to the Company and each of the other parties
thereto, the CCI Shareholder Agreement, duly
executed and delivered by it;
(C) to the Company and each of the other parties
thereto, the Registration Rights Agreement, duly
executed and delivered by it; and
(D) to CCI Salvador and each of the other parties
thereto, the Salvador Subscription Agreement, duly
executed and delivered by FondElec; and
(iv) Telematica will deliver or cause to be delivered the
following:
(A) to CCI Salvador and each of the other parties
thereto, the Salvador Subscription Agreement, duly
executed and delivered by it;
(B) to CCI Salvador and each other party thereto, the
Salvador Shareholders' Agreement, duly executed and
delivered by it;
(C) to the Company, the Colombia Letter of Intent, duly
executed and delivered by it.
(v) the Company will deliver or cause to be delivered the
following:
(A) to each of Telematica, TCW, and Glacier, its
corresponding CCI Stock Purchase Agreement, duly
executed and delivered by the Company, together
with certificates representing Series C Shares as
follows:
(1) to Telematica, 2,000,000 Series C Shares,
(2) to TCW, 2,000,000 Series C Shares, and
(3) to Glacier, 400,000 Series C Shares;
and a certified copy of the resolutions of the
Company's Board of Directors, resolving to apply
the proceeds of the sale of such shares in the
manner described in Schedule 3 to this
Participation Agreement;
(B) To Internexus, certificates representing 1,328,911
Series C Shares;
(C) To FondElec, certificates representing 666,666
Series C Shares;
(D) to the Investors, the Option Agreement, duly
executed and delivered by the Company;
(E) to each of Telematica, TCW, Glacier, Internexus and
FondElec, a Series C Warrant, duly executed and
delivered by the Company with respect to the
following appropriate number of shares of Common
Stock:
(1) as to Telematica, 500,000 shares,
(2) as to TCW, 500,000 shares,
(3) as to Internexus, 332,228 shares,
(4) as to Glacier, 100,000 shares, and
(5) as to FondElec, 166,666 shares;
(F) to each of FondElec and Internexus, its
FondElec/Internexus Warrant, duly executed and
delivered by the Company;
(G) to the Investors and each other party thereto, the
CCI Shareholders' Agreement, duly executed and
delivered by the Company and by each other party
thereto other than the Investors;
(H) to the Investors and each other party thereto, the
Registration Rights Agreement, duly executed and
delivered by the Company;
(I) to Telematica, the Salvador Subscription Agreement,
duly executed and delivered by CCI Salvador and
WCI;
(J) to CCI Salvador, Telematica and FondElec, and the
other parties thereto, the Salvador Shareholders'
Agreement, duly executed and delivered by the
Company and by each party thereto other than
Telematica and FondElec;
(K) to Telematica, the Colombia Letter of Intent, duly
executed and delivered by the Company;
(L) to FondElec, $419,178.08 as repayment of the unpaid
interest portions of the FondElec December Note;
(M) to the Investors, opinions of counsel in the form
of Exhibit J-1, Exhibit J-2 and Exhibit J-3, each
addressed to all Investors and each dated the
Closing Date; and
(N) to IFC, a certificate to the effect that the
proceeds of the sale of the Series C Shares to IFC
shall not, when received, be in reimbursement of,
and shall not be used for, expenditures in the
territories of any country other than
less-developed countries in which IFC is actively
pursuing operations (as described in its 1999
annual report) or for goods produced in or services
supplied from any such country.
(d) Deliveries at the Subsequent Closing. At the Subsequent
Closing, the Parties will deliver the following, subject only
to the satisfaction, as to the appropriate Party, of the
conditions set out in Section 6(c):
(i) Telematica will deliver or cause to be delivered:
(A) to the Company, Ten Million United States Dollars
(US$10,000,000), and
(B) to CCI Salvador, Five Million Five Hundred Twenty
Five Thousand United States Dollars (US$5,525,000);
(ii) TCW will deliver to the Company Ten Million United States
Dollars (US$10,000,000);
(iii) FondElec will deliver or cause to be delivered to CCI
Salvador a partial release of the Salvador Note, in the
form of Exhibit K hereto, acknowledging receipt of Three
Million Eight Hundred Sixty Four Thousand Five Hundred
Twenty Nine United States Dollars (US$3,864,529) in
payment of Three Million Five Hundred Thousand United
States Dollars (US$3,500,000) of the principal amount
thereof, and of interest accrued thereon through October
14, 1999;
(iv) IFC will deliver or cause to be delivered to the Company
Five Million United States Dollars (US$5,000,000);
(v) The Company will deliver or cause to be delivered the
following:
(A) To Telematica:
(1) Certificates representing 1,333,333 Series C
Shares,
(2) A Series C Warrant with respect to 333,333
shares of Common Stock, and
(3) Certificates representing the Salvador
Shares;
(B) To TCW:
(1) Certificates representing 1,333,333 Series C
Shares, and
(2) A Series C Warrant with respect to 333,333
Shares of Common Stock;
(C) To IFC:
(1) Certificates representing 666,666 Series C
Shares, and
(2) A Series C Warrant with respect to 166,666
shares;
(D) To each of Telematica, TCW and IFC, an opinion of
counsel in the form of Exhibit L, addressed to each
of them and dated the Subsequent Closing Date; and
(E) To FondElec, Three Million Eight Hundred Sixty Four
Thousand Five Hundred Twenty-Nine United States
Dollars (US$3,864,529).
(F) to CCI Salvador, an acknowledgment by WCI in the
form of Exhibit M of the contribution to capital of
Nine Hundred One Thousand Seven Hundred and Sixty
United States Dollars (US$901,760) by means of the
capitalization and conversion of inter-company debt
owing by CCI Salvador to WCI;
3. Representations and Warranties of Investors. Each Investor, as to
itself, represents and warrants to the Company and to each other
Investor, with the understanding that the Company and each other
Investor is being induced into entering into this Participation
Agreement and the other Transaction Documents in reliance on such
representations and warranties, that the statements contained in this
Section 3, with respect to such Investor only, are true, correct and
complete in all material respects as of the date of this
Participation Agreement and will be true, correct and complete in all
material respects as of the Closing Date and, if such Investor
participates in the Subsequent Closing, that the statements contained
in Sections 3(e), 3(f) and 3(g) will be true, correct and complete in
all material respects as of the date of the Subsequent Closing. Each
such representation and warranty shall survive the Closing and the
Subsequent Closing, as appropriate, and shall continue in force for a
period of 24 months from the Closing Date.
(a) Organization of the Investors. It is duly organized, validly
existing, and in good standing under the laws of the place of
its organization.
(b) Authorization of Transaction. It has full power and authority
to execute and deliver this Participation Agreement and each
Transaction Document to which it is a party and to perform its
obligations hereunder and thereunder, and as of the Closing
Date, and this Participation Agreement each such Transaction
Document delivered at the Closing and as of the date of the
Subsequent Closing, each such Transaction Document, if any,
delivered at the Subsequent Closing, shall have been duly
authorized and executed by it and constitute its valid and
legally binding obligation, enforceable under Applicable Law in
accordance with its terms, except as may be limited by
bankruptcy, reorganization, moratorium, fraudulent conveyance
and insolvency laws and by other laws affecting the rights of
creditors generally and except as may be limited by the
availability of equitable remedies. There is no requirement of
Applicable Law that any notice be given, nor any filing,
authorization, consent, or approval of any governmental
authority be obtained in order that it may execute, deliver and
consummate the transactions contemplated by this Participation
Agreement and each other Transaction Document to which it is a
party, except that if the representing and warranting Investor
is Telematica or TCW, it excepts from the foregoing
representation and warranty the filing and waiting period
requirements applicable pursuant to the HSR Act for the
transactions contemplated to be performed or caused to be
performed by it at the Subsequent Closing.
(c) Noncontravention. Neither the execution nor the delivery by it
of this Participation Agreement or of any other Transaction
Document to which it is or becomes a party, nor the performance
of its obligations hereunder or thereunder will (i) violate any
Applicable Law to which it is subject or any provision of its
charter or other organization documents or bylaws or (ii)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice under any material contract to which it is a party
or by which it or any of its property may be bound.
(d) Brokers' Fees. It has not incurred any liability or obligation
to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated hereunder or
under any other Transaction Document to which it is or becomes
a party for which any other Party could become liable.
(e) Investment Intent. It understands that the Series C Shares, the
Series C Warrants and the Option, and in case of the
representations being made by Telematica, the Salvador Shares,
and, in the case of the representations being made by FondElec
or Internexus, the FondElec/Internexus Warrants (collectively
sometimes referred to as the "Securities") have not been
registered under the United States Securities Act of 1933, as
amended (the "Securities Act"). It is acquiring the Securities
without a view to or for sale in connection with any
distribution thereof inside the United States within the
meaning of Regulation S under the Securities Act or other
exemptions from the registration requirements of the Securities
Act. It understands that the Securities will constitute
"restricted securities" under the Securities Act, and may not
be resold without registration under, or the availability of an
exemption from, the registration requirements of the Securities
Act and similar state laws. It is familiar with Securities and
Exchange Commission Regulation S and Rule 144, as presently in
effect, and understands the resale limitations imposed thereby
and by the Securities Act.
(f) Restrictive Legend. It understands that the certificate or
certificates evidencing the Series C Shares may bear legends in
substantially the following form:
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF
STOCK. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO THE
HOLDER OF THIS CERTIFICATE UPON REQUEST THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS OF EACH CLASS OF THE CORPORATION'S
STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE IN THE
UNITED STATES IN VIOLATION OF THE SECURITIES ACT AND MAY NOT BE
SOLD, MORTGAGED, PLEDGED OR HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT
OR THE DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A SHAREHOLDERS' AGREEMENT DATED OCTOBER 15, 1999
BY AND BETWEEN THE SHAREHOLDER, THE CORPORATION AND CERTAIN
OTHER HOLDERS OF COMMON AND PREFERRED STOCK OF THE CORPORATION
WHICH PROVIDES RESTRICTIONS ON THE TRANSFERABILITY OF THE
SHARES REPRESENTED BY THIS CERTIFICATE. BY ACCEPTING ANY
INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE, THE
PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND
SHALL BE BOUND BY ALL THE PROVISIONS OF SAID SHAREHOLDERS'
AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.
It understands the certificates or agreements representing the Securities
other than the Series C Shares may bear legends in substantially the form
of the second and third paragraphs set forth above.
(g) Accredited Investor. It is an "accredited investor," as that
term is defined in Regulation D promulgated under the
Securities Act, can bear the risk of its investment in the
Securities that it proposes to acquire, and has such knowledge
and experience in financial and/or business matters that it is
capable of evaluating the merits and risks of an investment in
such Securities.
(h) HSR Warranty. The premerger notification and report form, and
any and all appendices and attachments thereto, filed or to be
filed by it, if any under the HSR Act ("HSR Form") with the
Federal Trade Commission ("FTC") and the Antitrust Division of
the Department of Justice, was prepared and assembled in
accordance with the instructions issued by the FTC. To the best
of its knowledge, the information contained in the HSR Form is
true, correct and complete in accordance with the HSR Act and
its regulations. Each Investor, other than Telematica and TCW,
represents that the HSR Act does not require it to file an HSR
Form.
4. Representations and Warranties of the Company Concerning the Company
and its Subsidiaries. The Company represents and warrants to each
Investor, with the understanding that each of them is being induced
to enter into this Participation Agreement and the other Transaction
Documents to which such Investor is a party in reliance on such
representations and warranties, that the statements contained in this
Section 4 are true, correct and complete in all material respects as
of the date of this Participation Agreement and will be true, correct
and complete in all material respects as of the Closing Date and that
the statements contained in Sections 4(a), 4(b), 4(c), 4(d), 4(f)
(except as approved by budget or action taken by the Board of
Directors), 4(j), 4(k), 4(t) and 4(z) will be true, correct and
complete in all material respects as of the Subsequent Closing
except, in each case, as otherwise set out in the Disclosure Letter.
Each such representation and warranty shall survive the Closing (and
as to those made as of the Subsequent Closing, the Subsequent
Closing), and shall continue in force and effect for a period of 24
months from the Closing Date (and as to those made as of the
Subsequent Closing), except that (i) the representations and
warranties set out in clause (j) below with respect to claims or
lawsuits shall not expire, (ii) the representations and warranties
set out in clause (i) below with respect to environmental claims
shall continue in force and effect for a period of 60 months from the
Closing Date, and (iii) the representations and warranties set out in
clauses (c), (g), (h) and (o) below shall continue in force and
effect through the expiration of the statute(s) of limitation for
claims related thereto.
(a) Organization, Qualification and Corporate Power. Each of the
Company and its Subsidiaries is a corporation duly organized,
validly existing, and in good standing under the laws of the
place of its organization, and each of the Company and the
Subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such
qualification is required, and has all requisite corporate
power and authority to own and operate its properties and to
carry on its business as now conducted and as contemplated to
be conducted in the Business Plan. The articles of
incorporation, bylaws and any other organizational documents of
the Company and its Subsidiaries that the Company previously
delivered to each Investor were true, correct and complete as
of the date of delivery, and are true, correct and complete as
of the date hereof, and will be true, correct and complete as
of the Closing Date and as of the Subsequent Closing Date.
(b) Authorization of Transaction. Each of the Company, CCI Salvador
and CCI Venezuela (together sometimes referred to herein as the
"CCI Companies", and individually as a "CCI Company") has full
power and authority to execute and deliver the Participation
Agreement and each Transaction Document to which it is a party
and to perform its obligations hereunder and thereunder, and as
of the Closing Date and as of the Subsequent Closing Date this
Participation Agreement and each such Transaction Document
shall have been duly authorized and executed by the appropriate
CCI Company and constitute its valid and legally binding
obligation, enforceable in accordance with its terms, except as
may be limited by bankruptcy, reorganization, moratorium,
fraudulent conveyance and insolvency law and by other laws
affecting the rights of creditors generally and except as may
be limited by the availability of equitable remedies. Other
than with respect to the Company's filing under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), there is no requirement of Applicable
Law that any notice be given, nor any filing, authorization,
consent, or approval of any governmental authority be obtained
by the Company or its Subsidiaries in order that each CCI
Company may execute, deliver and consummate the transactions
contemplated by this Participation Agreement and each other
Transaction Document to which it is a party.
(c) Capitalization. All of the authorized and outstanding shares of
the capital stock of the Company and each Subsidiary and the
ownership thereof (including, without limitation, the ownership
interests of FondElec and Internexus in the Company) are
described in the Disclosure Letter. All of the issued and
outstanding shares of stock of the Company and of each of the
Subsidiaries have been duly authorized, are validly issued,
fully paid, and are non-assessable, are owned by the Company
(with respect to the stock of the Subsidiaries), and the
holders thereof (with respect to the stock of the Company),
free of claims, charges or encumbrances, and were not issued in
violation of any preemptive rights. Other than the Series C
Warrants, the FondElec/Internexus Warrants and the options
provided for in the Option Agreement, there are no outstanding
or authorized options, warrants, purchase rights, preemptive
rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require
any CCI Company or any of their respective subsidiaries to
issue, sell, or otherwise cause to become outstanding any
additional or other capital stock. Neither the Company nor any
Subsidiary is under any obligation (contingent or otherwise) to
repurchase or otherwise acquire, redeem or retire any of its
equity interests or any warrants, options or other rights to
acquire its equity interests. Neither the Company nor any of
its Subsidiaries is a party or subject to any agreement or
understanding, and, to the best of their Knowledge, there is no
agreement or understanding between any Persons that affects or
relates to the voting or giving of written consents with
respect to any security or the voting by a director of the
Company or any of its Subsidiaries. The Series C Shares, the
Series C Warrants, the FondElec/Internexus Warrants, the
Options and the Common Stock and Series C Shares to be issued
upon the exercise of those Securities, when issued, sold and
delivered by the Company in accordance with the terms of the
CCI Stock Purchase Agreements, the Series C Warrant, the
FondElec/Internexus Warrant or the Option Agreement, as
appropriate, will be duly authorized and validly issued, fully
paid and non-assessable shares of the capital stock of the
Company with the rights, preferences and privileges described
in Schedule 1 of the CCI Shareholders' Agreement. Upon
issuance, sale or delivery, each Investor will receive good and
marketable title to the Securities, free and clear of all
claims and Liens, other than those arising under the
Transactions Documents. The Salvador Shares, when issued, sold
and delivered by CCI Salvador in accordance with the terms of
the Salvador Subscription Agreement, will be duly authorized
and validly issued, fully paid and non-assessable shares of
capital stock of CCI Salvador with the rights, preferences and
privileges described in Schedule 1 thereto, and will be free
and clear of all adverse claims other than those arising under
the Transaction Documents.
(d) Noncontravention. Neither the execution and delivery of this
Participation Agreement or any Transaction Document to which
any CCI Company is a party, nor the performance of its
obligations hereunder or thereunder, will (i) violate any
Applicable Law to which the Company or any of its Subsidiaries
is subject or any provision of the charter or organizational
document of the Company or any of its Subsidiaries or (ii)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice under any Material Contract to which it is a party
or by which it or any of its property may be bound, or (iii)
will with respect to the approval by the directors of such
company of the transactions contemplated by the Transaction
Documents to which it is a party constitute a violation by any
such director of any fiduciary duty that it owes to such
company or to a third party, as a consequence of which the
Company or any of its Subsidiaries is obligated to indemnify
such director, (iv) give rise to any claims against the Company
or the Subsidiaries, or (v) result in the creation of any Lien
on the Securities (other than as created by the Transaction
Documents) or any assets of the Company or its Subsidiaries.
(e) Intellectual Property; Permits and Licenses.
(i) Intellectual Property.
(A) The Disclosure Letter sets forth for all
Intellectual Property, as defined hereinafter,
owned by the Company or any of its Subsidiaries: a
complete and accurate list of all U.S. and foreign
(i) patents and patent applications; (ii) trademark
and servicemark registrations (including internet
domain registrations), trademark and servicemark
applications, and material unregistered
servicemarks and trademarks; and (iii) copyright
registrations, copyright applications, and material
unregistered copyrights. As used herein, the term
"Intellectual Property" means all trademarks,
service marks, trade names, internet domain names,
designs, logos, slogans and general intangibles of
like nature, together with goodwill, registrations
and affiliations relating to the foregoing,
registered and unregistered patents; copyrights
(including registrations and applications of any of
the foregoing); Software (as defined below);
confidential information, technology, know-how,
inventions, processes, formulae, algorithms, models
and methodologies (collectively "Trade Secrets")
in each case used in the Telecommunication Business
as conducted or contemplated to be conducted, and
any licenses to use any of the foregoing;
"Software" means any and all (i) computer programs,
including any and all software implementation of
algorithms, models and methodologies, whether in
source code or object code, (ii) databases and
computations, including any and all data and
collections of data, (iii) all documentation,
including user manuals and training materials,
relating to any of the foregoing, and (iv) the
content and information contained in any web site.
(B) The Disclosure Letter lists all material Software,
other than off-the-shelf or commercially available
software purchased for less than Twenty-Five
Thousand United States Dollars (US$25,000), which
is owned, licensed, leased, or otherwise used by
the Company or any of its Subsidiaries, and
identifies which Software is owned, licensed,
leased, or otherwise used, as the case may be.
(C) The Disclosure Letter sets forth a complete and
accurate list of all agreements granting or
obtaining any right to use or practice any rights
under any Intellectual Property other than
off-the-shelf or commercially available software
set forth in paragraph (B) above, to which the
Company or any of its Subsidiaries is a party or
otherwise bound, as licensee or licensor
thereunder, including license agreements,
settlement agreements, and covenants not to xxx
(collectively, the "IP License Agreements").
(D) The Company or its Subsidiaries own or have the
right to use all Intellectual Property, free and
clear of all liens, claims, charges, encumbrances
or security interests, except that the acquisition
of the assets of Metrotelecom, S.A., a Guatemalan
corporation ("Metrotelecom") or of its subsidiaries
has not been consummated by the Company or any
Subsidiary, the rights of the Company or its
Subsidiaries in connection with Metrotelecom being
as set out in the Disclosure Letter.
(E) Any Intellectual Property owned or, to the
Knowledge of the Company or any Subsidiary, used,
by the Company or its Subsidiaries is valid and
subsisting in full force and effect and has not
been cancelled, expired or abandoned.
(F) To the Knowledge of the Company or any Subsidiary,
the Telecommunications Business as currently and as
contemplated to be conducted does not infringe on
any Intellectual Property of any third party.
(G) The consummation of the transactions contemplated
hereby by the Company and its Subsidiaries will not
result in the loss or impairment of the Company or
any of its Subsidiaries' rights to own or use any
of the Intellectual Property, nor will it require
the consent of any third party, including for the
avoidance of doubt any Governmental Authority, in
respect of any Intellectual Property.
(H) The IP License Agreements are valid and binding
obligations of all parties thereto, enforceable in
accordance with their terms, and there exists no
event or condition which will result in a violation
or breach of, or constitute a default by any party
under any such IP License Agreement.
(I) The Company and each of its Subsidiaries takes
measures consistent with commercial practices to
protect the confidentiality of Trade Secrets,
including requiring its key employees and other key
parties having access thereto to execute written
non-disclosure agreements. To the Knowledge of the
Company, no Trade Secret has been disclosed and the
Company has not authorized the disclosure to any
third party other than pursuant to a non-
disclosure agreement in favor of the Company and
the applicable Subsidiary with respect to such
Trade Secrets.
(J) To the Knowledge of the Company or any Subsidiary,
no third party is misappropriating, infringing,
diluting or violating any Intellectual Property
owned by the Company or any of its Subsidiaries,
the misappropriation, infringement, dilution or
violation of which would have a material adverse
effect on the Company's operation or its
Subsidiaries, either individually or in the
aggregate.
(K) Year 2000. (a) As of the date of this Agreement;
all Date Data and Date-Sensitive Systems owned by
the Company and its Subsidiaries is Year 2000
Compliant (as defined below). As used herein, "Date
Data" means any data of any type that includes date
information or which is otherwise derived from,
dependent on or related to date information.
"Date-Sensitive System" means any Software,
microcode or hardware system or component,
including any electronic or electronically
controlled system or component, that uses or
processes any Date Data and that is installed, in
development or on order by the Company or any of
its Subsidiaries for their internal use or for the
use of third parties, or which the Company or any
of its Subsidiaries sell, lease, license, assign or
otherwise provide to any third party. "Year 2000
Compliant" means (i) with respect to Date Data,
that such data is in proper format and accurate for
all dates, including for those before, on and after
December 31, 1999 and (ii) with respect to
Date-Sensitive Systems, that each such system
accurately processes all Date Data, including for
dates before, on and after December 31, 1999,
without loss of any functionality or performance,
including but not limited to calculating,
comparing, sequencing, storing and displaying such
Date Data (including all leap year considerations),
when used as a standalone system or in combination
with other Software or hardware.
(ii) Permits and Licenses. The Company or its Subsidiaries own
and possess all licenses, permits, concessions and other
authorizations required by law in connection with
carrying out the Telecommunications Business as conducted
as of the Closing Date and all of such licenses, permits,
concessions and other authorizations are in full force
and effect, and no violations are or have been recorded
in respect thereof, nor is any proceeding pending which
threatens to suspend, revoke or limit any such license,
permit, concession or other authorizations, and no such
licenses, permits, concessions or authorizations will be
adversely affected by this Participation Agreement or by
the Transaction Documents. No CCI Company has the
Knowledge of any circumstance, event or set of facts that
constitute (or, with the passage of time or the giving of
notice, or both, would constitute) a violation of or a
breach or default under any such license, permit,
concession or authorization. The Disclosure Letter sets
forth a list, arranged by country, of all such licenses,
permits, concessions and other authorizations.
(f) Financial Statements; Financial Condition. Attached hereto as
Exhibit N are the Company's audited consolidated and
consolidating financial statements (including related
statements of income, changes in shareholders' equity and cash
flow) for the year ended December 31, 1998 and its unaudited
consolidated and consolidating financial statements for the six
months ended June 30, 1999 (together, the "Financial
Statements"). The Financial Statements have been prepared in
accordance with United States GAAP (except in certain instances
for the absence of footnotes, and with respect to the unaudited
portions of the Financial Statements, except for normal year
end audit adjustments consistent with prior Company practice),
present fairly the financial condition of the Company as of the
dates set forth therein and the results of operations for such
periods, and are correct and complete in all material respects.
Since June 30, 1999, neither the Company nor any of its
Subsidiaries has done any of the following or permitted any of
the following to occur: (i) suffered any material adverse
change in its assets or liabilities, business, financial
condition, results of operations or prospects; (ii) incurred
any material liabilities (other than liabilities disclosed in
the Financial Statements and Disclosure Letter, adequately
provided for in the Financial Statements or disclosed in any
related notes thereto, incurred in connection with this
Participation Agreement or the other documents described
herein, or incurred in the ordinary course of business
consistent with past practices without the occurrence of a
material adverse consequence) or (iii) altered its assumptions
underlying or methods of calculating, any bad debt, contingency
or other reserves; (iv) entered into any settlement to avoid or
terminate a judicial dispute; (v) written down the value of any
material inventory, notes or accounts receivable; (vi) canceled
any material debts or waived any material rights; (vii) sold,
transferred, or otherwise disposed of any of its material
properties or rights, or breached or permitted the breach (or
suffered to occur any event which with the passage of time or
the giving of notice would constitute a breach) of any contract
material to its business as presently being conducted; (viii)
granted any material increase in the compensation or benefits
of officers or employees; (ix) made any material capital
expenditure or commitment for additions to property, plant,
equipment or intangible capital assets; (x) declared any
dividend in respect of shares of the Company or any of its
Subsidiaries; (xi) made any change in any method of accounting
or accounting practice; or (xii) entered into any agreement
with any shareholder of the Company or of any Subsidiary or any
affiliate of such shareholder or agreed to take any action
described in this paragraph. Since December 31, 1998, the
Company has not, directly or indirectly, declared, paid or set
aside for payment any dividend or any other transactions
similar to a dividend involving a distribution on any of its
securities of any class, or, directly or indirectly, redeemed,
purchased or otherwise acquired any of its shares or securities
or agreed to do any of the foregoing.
(g) Taxes. The Company and each Subsidiary have (i) duly filed all
tax reports and returns required to be filed by any of them in
accordance with Applicable Law and all such reports and returns
are true, complete and accurate in all material respects and
(ii) has duly paid all taxes and other charges due by it to
federal, state, local or foreign taxing authorities, including,
without limitation, those due in respect of the properties,
income, licenses, sales or payrolls of any of them; the
reserves for taxes reflected in the Financial Statements are
adequate in conformity with United States GAAP; there are no
tax liens upon any property or rights of the Company or any of
its Subsidiaries; and there are no material liabilities (other
than as is set forth in the Financial Statements) for taxes and
there are no extensions or claims or to the Knowledge of the
Company, audits or investigations pending with regard to the
Company's or its Subsidiaries' tax liabilities. The acquisition
by the Company or a Subsidiary of the assets of Metrotelecom or
its subsidiaries will not cause the Company or any Subsidiary
to become liable for any tax or other liabilities of
Metrotelecom or its subsidiaries for, or arising with respect
to, any period prior to such acquisition. Neither the Company
nor any Subsidiary has been subject to any tax audit or has
been notified by any Governmental Authority that it will be
subject to any tax audit.
(h) Employees and Labor Contracts. There are no labor or employment
proceedings against the Company or any of its Subsidiaries
pending in any labor court or other body or authority and no
unsatisfied labor judgments against any of them, and each is in
compliance with all material applicable laws regarding hiring,
employment and employment termination practices, including,
without limitation, laws, regulations, and judicial and
administrative decisions relating to wages, hours, conditions
of work, conditions of employment (including applicable
discrimination statutes, laws and regulations) collective
bargaining, health and safety, payment of social security,
payroll, withholding and other taxes, workers' compensation,
and insurance requirements. Neither the Company nor any
Subsidiary is a party to or bound by any employment contract,
deferred compensation agreement, bonus plan, consulting
agreement, incentive plan, profit sharing plan, retirement
agreement or other employee compensation agreement, except as
set forth on the Disclosure Letter. The Company has entered
into written employment contracts with the persons set forth in
the Disclosure Letter and has previously provided the Investor
copies of those employment agreements, all of which are valid
and binding and are in full force and effect. The transactions
contemplated by this Participation Agreement shall not entitle
any employee of the Company or any of its Subsidiaries to any
severance, termination, indemnity, payments in lieu of notice
or similar related payments.
(i) Environmental Laws and Regulations. The business of the Company
and each of the Subsidiaries is and has been conducted in
compliance with all Environmental Laws. The operations of, and
the buildings and property owned, leased or used by the Company
and each of the Subsidiaries comply with all such Environmental
Laws. There is no existing practice, action or activity of the
Company or any Subsidiary and no existing condition relating to
any of the properties or assets owned or used by the Company or
any Subsidiary which might require clean up or remediation or
give rise to any civil or criminal liability under, or violate
or prevent compliance with, any such Environmental Laws or any
health or occupational safety or other applicable statute,
regulation, ordinance or decree. Neither the Company nor any
Subsidiary has received any notice from any governmental
authority revoking, canceling, materially modifying or refusing
to renew any permit, license or authorization or providing
written notice of violations under any such Environmental Laws.
(j) Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the Knowledge of the Company,
threatened (or any basis therefor known to the Company) which,
either in any case or in the aggregate, might result in a
material adverse change or in any impairment of the right or
ability of the Company or any Subsidiary to carry on their
respective businesses as now conducted or as proposed to be
conducted or in any liability on the part of the Company or any
Subsidiary, either individually or taken as a whole and none
which questions the validity of this Participation Agreement or
any Transaction Document or any action taken or to be taken in
connection herewith. Neither the Company nor any of the
Subsidiaries is a party or subject to the provisions of any
order, injunction, judgement or decree of any court or
government agency or instrumentality (other than government
decrees of general applicability) which might adversely affect
their respective businesses; and there is no action suit,
proceeding or investigation by the Company or any Subsidiary
currently pending or which the Company or any Subsidiary
intends to initiate which may reasonably be expected to
materially adversely affect their respective businesses.
(k) Bankruptcy. Neither the Company nor any Subsidiary has filed
any voluntary petitions admitting its bankruptcy or requesting
a reorganization, nor have any petitions alleging insolvency
been filed against the Company or any Subsidiary, nor have any
of them been judicially declared to be bankrupt or insolvent,
nor is any of them insolvent or in the state of being
liquidated or dissolved.
(l) Ordinary Course. Since the date of the Offering Memorandum, as
defined below, the Company and each Subsidiary has carried on
its business in the ordinary course in substantially the same
manner as reflected in the Reports, following operations and
investment policies consistent with past practices, and will
continue to do so until the Closing.
(m) Brokers. Neither the Company nor any of its Subsidiaries will
be liable directly or indirectly to pay any brokerage fee,
commission, finder's fee or financial advisory or similar fee
by reason of the transactions contemplated by any Transaction
Document to any person claiming such compensation by reason of
any agreement or relationship with the Company or any of its
shareholders or any affiliate thereof or with any Subsidiary or
any of its shareholders or any affiliate thereof.
(n) Contracts. Except for those agreements listed in the Disclosure
Letter, true, correct and complete copies of which have been
delivered to each Investor (and made available to FondElec and
Internexus), none of the Company or any Subsidiary is a party
to (i) any agreement, arrangement, understanding or contract,
whether formal or informal, written or oral, requiring payment
of an amount in excess of Twenty-Five Thousand United States
Dollars (US$25,000) per annum (or its equivalent in other
currencies), (ii) any license, distribution, confidentiality or
similar agreements, (iii) any employment or consulting
agreements requiring a payment of an amount in excess of Fifty
Thousand United States Dollars (US$50,000) per annum (or its
equivalent in other currencies), (iv) any collective
bargaining, severance or similar agreements or other agreements
with labor unions, (v) any agreements with suppliers or
customers not in the ordinary course of business, or (vi) any
agreement not in the ordinary course of business or not made at
arm's length or which would otherwise be material in any
respect to any aspect of the Company's or any Subsidiary's
business or operations. All agreements, arrangements,
understanding and contracts listed in the Disclosure Letter are
valid and binding obligations, in full force and effect in all
respects and are being performed by the Company or its
Subsidiary, as appropriate, and, to the Knowledge of the
Company by all other parties thereto, in accordance with their
terms in all material respects.
(o) Compliance with Laws. The Company and the Subsidiaries have
operated and are operating their business in compliance in all
material respects with all Applicable Laws, and neither the
Company nor any Subsidiary is in violation of, or in default
under, any term of its organizational documents or of any
judgment, decree, writ, statute, governmental rule or
regulation applicable to the Company or any of its Subsidiaries
or to which they or any of them is bound, except to the extent
that such violations or defaults would not (i) affect the
validity or enforceability of any Transaction Document, or (ii)
impair the ability of the Company to perform any material
obligation which the Company has under any Transaction
Document, or (iii) have any material adverse effect in its
assets, liabilities, business, financial condition, result of
operations or prospects.
(p) Business Plan and Use of Proceeds. The Business Plan was
prepared by the Company in good faith, and is based on
assumptions, projections, expressions of opinion and estimates
for which the Company believes there was a reasonable basis in
light of existing market conditions, political and economic
conditions, technology, demographics, competition and
regulatory environment. The purchase price received by the
Company for the Series C Shares sold to Investors will be used
by the Company only for the purposes set forth in the Use of
Proceeds Summary attached in Schedule 3 to this Participation
Agreement.
(q) Complete Statements. No representation or warranty of the
Company in this Participation Agreement contains any untrue
statement of a material fact, and the representations and
warranties of the Company (together with the Disclosure Letter
and the Reports), taken as a whole, do not omit any statement
necessary in order to make any material statements or
descriptions contained herein or therein in light of the
circumstances in which they were made, not misleading or
incomplete.
(r) Reports. The Company has made all filings required of it under
the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended. The Company has made
available to each Investor each such report prepared by it
since December 31, 1998, including its Annual Report on Form
10-KSB for the year ended December 31, 1998 in the form
(including exhibits, annexes and any amendments thereto) filed
with the Securities and Exchange Commission (the "SEC"), as
well as its private offering memorandum (the "Offering
Memorandum") dated April, 1999 (collectively, but not including
any such reports filed subsequent to the date hereof, its
"Reports"). As of their respective dates, the Reports did not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading and no
statement of material fact that was true and not misleading as
of the date of the Report in which it was made is untrue or
misleading as of the date hereof in light of events or changes
in circumstances occurring since the date of the Report which
are not otherwise disclosed in the Reports or the Disclosure
Letter. Each of the consolidated balance sheets included in or
incorporated by reference into the Reports (including the
related notes and schedules) fairly presents the consolidated
financial position of the Company and its Subsidiaries as of
its date and each of the consolidated statements of income and
of cash flows included in or incorporated by reference into its
Reports (including any related notes and schedules) fairly
presents the consolidated results of operations, retained
earnings and cash flows, as the case may be, of it and its
Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to notes and normal year-end
audit adjustments that will not be material in amount or
effect), in each case in accordance with United States GAAP
consistently applied during the periods involved, except as may
be noted therein.
(s) Related Party Transactions. No officer, director, or
stockholder of the Company and its Subsidiaries or any
affiliate thereof, or any member of their immediate families is
directly or indirectly interested in any contract, agreement,
arrangement or transaction with the Company or any Subsidiary.
(t) Foreign Corrupt Practices Act. None of the Company nor any of
the Subsidiaries or any of their respective officers,
employees, directors, representatives or agents acting at the
direction of the Company or any of the Subsidiaries, acting in
such a capacity, has taken any action in violation of any
anti-bribery, anti- corruption or criminal laws of the United
States, Guatemala, El Salvador, Venezuela, Costa Rica, Panama,
Mexico, Argentina or New Zealand, including the Foreign Corrupt
Practices Act of 1977 of the United States, as amended, and
including, but not limited to, the making of improper payments,
directly or indirectly, in the form of cash or otherwise, to
officials of any governmental authority.
(u) No Bank Regulation. Neither of the Company nor any Subsidiary
is a bank subject to regulation as a bank or entered into
agreements with any governmental authority charged with the
supervision or regulation of banks or bank holding companies or
engaged in the insurance of bank deposits.
(v) Property; Assets.
(i) The Disclosure Letter sets forth a complete and accurate
list of (i) all of the real property owned by the Company
or a Subsidiary (the "Owned Real Property") and (ii) all
of the real property leased or subleased by the Company
or a Subsidiary from a third party requiring a payment in
excess of Fifty Thousand United States Dollars
(US$50,000) per year (the "Leased Real Property" and,
together with the Owned Real Property, the "Real
Property"). The Company or its Subsidiaries have (i) (A)
good and marketable title to its interest in the
applicable Owned Real Property and (B) a valid leasehold
interest in the Leased Real Property as provided in the
applicable lease agreements (the "Real Property Leases")
and (ii) with respect to any other material property and
assets, good and marketable title to its interest in such
property and assets, in each case, free and clear of all
Liens, except for (A) Liens, encumbrances, defects,
exceptions, easements, rights of way, restrictions,
covenants, claims or other similar charges listed or
identified in the Disclosure Letter with respect to the
applicable Real Property and (B) Liens, encumbrances,
defects, easements, rights of way, restrictions,
covenants, claims or other similar charges, whether or
not of record, which do not, individually or in the
aggregate, materially impact the use or operation of the
Real Property in connection with the Telecommunications
Business consistent with the current use thereof.
(ii) All of the Real Property, machinery, fixtures, vehicles,
equipment and other personal property owned or leased by
the Company or any Subsidiary is in satisfactory repair
and operating condition, ordinary wear and tear excepted.
(iii) With respect to the Leased Real Property, neither the
Company nor any of its Subsidiaries has received a
written notice of (i) any monetary default or other
material default thereunder or (ii) non-compliance with
any Applicable Laws.
(iv) Neither the Company nor any Subsidiary has received
any written notice from any Governmental Authority with
respect to the Real Property of any violations of any
Applicable Laws, which violation is not in the process of
being cured or contested in good faith
(w) Employee Benefits. Except as set forth in the Disclosure
Letter, neither the Company nor any Subsidiary has any
employees in the United States. With respect to all of the
employee benefit plans of the Company and its Subsidiaries (a)
such plans are in material compliance with any Applicable Laws,
including relevant tax laws, and the requirements of any trust
deed under which they are established, (b) all employer and
employee contributions to each such plan required by law or by
the terms of such plan have been made, or, if applicable,
accrued, in accordance with normal accounting practices; and
(c) the fair market value of the assets of each funded plan,
the liability of each insurer for any plan funded through
insurance or the book reserve established for any plan,
together with any accrued contributions, is sufficient to
procure or provide for the accrued benefit obligations with
respect to all current and former participants in such plan.
(x) U.S. Employee Plans. No employee benefit plan, policy,
arrangement or agreement is maintained for the benefit of any
US employee of the Company (each, a "Plan"), no Plan is
intended to be "qualified" within the meaning of Section 401(a)
of the Internal Revenue Code, no Plan is subject to Title IV of
Employee Retirement Income Security Act ("ERISA") and no
liability under Title IV of ERISA has been incurred by the
Company that has not been satisfied in full, and no condition
exists that presents a material risk to the Company of
incurring a material liability thereunder.
(y) Insurance. The Company and each of the Subsidiaries is insured
with respect to the matters set forth in the Disclosure Letter.
All such insurance is in full force and effect, and neither the
Company nor any of the Subsidiaries is in default thereunder
and all claims thereunder have been correctly filed in a due
and timely manner. A list of all insurance policies held by the
Company and each of the Subsidiaries with coverages in excess
of One Million United States Dollars (US$1,000,000) is set
forth in the Disclosure Letter.
(z) IFC Policies. To the best of its Knowledge, neither the Company
nor any Subsidiary is in violation of any of the policies set
forth in Exhibit O (the "IFC Policies") and neither the Company
nor any Subsidiary has received or is aware of any complaint,
order, directive, claim, citation or notice from any
Governmental Authority with respect to any matter of the
Company's or such Subsidiary's compliance with the relevant
environmental, health and safety laws and regulations in effect
in any Country such as, without limitation, air emissions,
discharges to surface water or ground water, noise emissions,
solid or liquid waste disposal, or the use, generation,
storage, transportation or disposal of toxic or hazardous
substances or wastes.
(aa) HSR Warranty. The HSR Form filed or to be filed by the Company
under the HSR Act with the FTC and the Antitrust Division of
the Department of Justice, was prepared and assembled in
accordance with instructions issued by the FTC. To the best of
its Knowledge, the information contained in the HSR Form is
true, correct and complete in accordance with the HSR Act and
its regulations, subject to the recognition that reasonable
estimates have been made because books and records do not
provide the required data.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period, if any, between the execution of this Participation
Agreement and the Closing Date and, if appropriate, the Subsequent
Closing Date:
(a) General. Each of the Parties will use its reasonable best
efforts to take all actions and to do all things necessary in
order to consummate the transactions contemplated by this
Participation Agreement (including the satisfaction, but not
the waiver, of the closing conditions set forth in section 6
below) and the other Transaction Documents.
(b) Notices and ConsentsEach of the Parties will give any notices,
make any filings and use its reasonable best efforts to obtain
any authorizations, consents, and approvals necessary to
consummate the transactions described herein. Each of TCW,
Telematica, and the Company shall use its best efforts to make
a proper filing, and to cause the waiting period to expire or
terminate under the HSR Act, and to take all other actions
necessary to permit the consummation of the transactions
contemplated by the Participation Agreement and the other
Transaction Documents under the HSR Act.
(c) Operation of Business. The Company will not, and will not cause
or permit any Subsidiary to, prior to the Closing, engage in
any practice, take any action, or enter into any transaction
outside the ordinary course of business. Without limiting the
generality of the foregoing, the Company will not, and will not
cause or permit any Subsidiary, to take any action described in
clauses (ii) through (xii), or the last sentence of the second
paragraph, of Section 4(f).
(d) Preservation and Conduct of Business. The Company will keep its
business and properties substantially intact, including each
Subsidiary's present operations, physical facilities, working
conditions, and relationships with lessors, licensors,
suppliers, customers, subscribers and employees and operate and
carry on the Telecommunications Business in the ordinary course
of business.
(e) Full Access. The Company will permit, and the Company will
cause each of the Subsidiaries to permit, representatives of
the Investors to have full and complete access at all
reasonable times, and in a manner so as not to interfere with
the normal business operations of such entities, to all
premises, properties, personnel, books, records (including tax
records), contracts, and documents of or pertaining to each of
such entities for the purpose of enabling the Investors or
their representations to verify the accuracy of the
representations and warranties contained herein, to verify that
the covenants of this Participation Agreement have been
complied with and to determine whether the conditions to
Investors' performance set forth herein have been satisfied.
(f) Notice of Developments. The Company will give prompt written
notice to the Investors of any of the following that occur
prior to the Subsequent Closing or the termination of this
Agreement under the provisions of Section 8:
(i) any material adverse development causing or potentially
causing a breach of any of the representations and
warranties set forth in Section 4 above,
(ii) any event which constitutes a material default in any of
the terms, conditions or provisions of any Material
Contract, or
(iii) any other event or condition which could reasonably be
expected to have a material adverse effect on the assets,
operations, operating results, customer or employee
relations, business or financial condition or prospects
of the Company or of any Subsidiary.
Each Investor will give prompt written notice to the other
Parties of any material adverse development that occurs prior
to the Closing and causes a breach of any of its own
representations and warranties in Section 3 above. No
disclosure by any Party pursuant to this Section 5(f), however,
shall be deemed to amend or supplement the Disclosure Letter or
prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
6. Conditions to Obligations.
(a) Conditions to Obligations of Each Investor at the Closing. The
obligation of each Investor to consummate or cause to be
consummated the transactions to be performed at the Closing as
described in the appropriate clauses of Section 2(c) is subject
to the satisfaction or waiver by it of the following
conditions:
(i) Each other Party shall consummate or cause to be
consummated the transactions contemplated in the
appropriate clauses of Section 2(c) to be performed at
the Closing;
(ii) the representations and warranties of the Company set
forth in Section 4, and the representations and
warranties of each other Investor set forth in Section 3,
shall have been true and correct at the execution hereof
and shall be true and correct in all respects at and as
of the Closing Date as if made on the Closing Date;
(iii) the Company and each other Investor shall have performed
and complied with all of its covenants hereunder in all
material respects through the Closing Date;
(iv) there have been received by the Investor opinions of
counsel to the Company, in substantially the form(s) set
forth in Exhibit J, addressed to all Investors and dated
as of the Closing Date; and
(v) no court or Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any law,
statute, ordinance, rule, regulation, judgement, decree,
injunction or other order (whether temporary, preliminary
or permanent) that continues in effect and restrains,
enjoins or otherwise prohibits consummation of the
transactions to be performed at the Closing.
(b) Conditions to Obligations of the Company at the Closing. The
obligation of the Company to consummate or cause to be
consummated the transactions to be performed at the Closing as
described in Section 2(c)(v) is subject to the satisfaction or
waiver of the following conditions:
(i) each Investor shall consummate or cause to be consummated
the transactions contemplated in the appropriate clauses
of Section 2(c) to be performed by it at the Closing;
(ii) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects
as to each Investor at and as of the Closing Date;
(iii) no court or Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any law,
statute, ordinance, rule, regulation, judgement, decree,
injunction or other order (whether temporary, preliminary
or permanent) that continues in effect and restrains,
enjoins or otherwise prohibits consummation of the
transactions to be performed at the Closing; and
(iv) each Investor shall have performed and complied with all
of its respective covenants hereunder in all material
respects through the Closing Date as if made on that
Closing Date.
(c) Conditions to Obligations at the Subsequent Closing. The
obligation of any Party (the "Performing Party") to consummate
or cause to be consummated the transaction to be performed at
the Subsequent Closing as described in Section 2(d) is subject
to the satisfaction or waiver by such Party of the following
conditions:
(i) each other Party shall consummate or cause to be
consummated the transactions contemplated in the
appropriate clauses of Section 2(d) to be performed by it
at the Subsequent Closing;
(ii) no court or Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any law,
statute, ordinance, rule, regulation, judgement, decree,
injunction or other order (whether temporary, preliminary
or permanent) that continues in effect and restrains,
enjoins or otherwise prohibits consummation of the
transactions to be performed at the Subsequent Closing;
(iii) any filing and waiting period requirements applicable
pursuant to the HSR Act to the transactions contemplated
to be performed or caused to be performed by the
Performing Party shall have expired or been terminated;
and
(iv) the representations and warranties of each other Party
made as of the Subsequent Closing Date, (i) with respect
to the Investors, in connection with Sections 3(e), 3(f),
and 3(g), and (ii) with respect to the Company in
connection with Sections 4(a), 4(b), 4(c), 4(d), 4(f)
(except as approved by budget or action taken by the
Board of Directors), 4(j), 4(k), 4(t) and, to the extent
the condition relates to the IFC's obligations at the
Subsequent Closing, 4(z), shall be true, correct and
complete at and as of the Subsequent Closing Date as if
made on the Subsequent Closing Date.
7. Indemnity. If any of the representations and warranties of the
Company in this Participation Agreement or any Transaction Document
is untrue or inaccurate as of the Closing Date or as of the date of
the Subsequent Closing, or if any claim or lawsuit described in the
Disclosure Letter is not settled as described therein, or if the
Company or any of its Subsidiaries becomes a party to litigation
arising out of events occurring before the Closing Date (any of the
foregoing here referred to as an "Indemnity Event"), the provisions
of Section 7(a) and, if appropriate, Section 7(b) shall apply:
(a) If, as a result of the Indemnity Event, the Company or any
Subsidiary incurs a liability or otherwise suffers a loss in
value, and such liability or loss in value is not fully offset
by the value of any asset or benefit received by the Company or
a Subsidiary in connection with the Indemnity Event (the extent
to which not so offset being referred to herein as the
"Negative Delta") then, subject to the limitations set out in
Sections 7(d) and 7(e), the Company shall issue to each
Investor, as an indemnity, an additional number of shares of
the Company's stock having the same rights and preferences as
the Series C Shares or, if any of the Series C Shares acquired
pursuant to this Participation Agreement have been converted by
such Investor, an additional number of shares of Common Stock,
("Indemnity Shares") calculated as follows:
(i) first, each Investor shall receive by way of indemnity a
number of Indemnity Shares determined by multiplying the
Negative Delta by the Investor's percentage of the equity
of the Company acquired in the transactions contemplated
by this Agreement (being the Series C Shares acquired at
the Closing or the Subsequent Closing, those acquired or
subject to acquisition in the exercise of the rights
granted under the Option Agreement, and those issued or
issuable to it pursuant to the Series C Warrants or the
FondElec/Internexus Warrants), and dividing the sum by
the Fair Value (taking into account the issuance of the
Indemnity Shares) of a share of Common Stock;
(ii) second, each of FondElec and Internexus shall receive by
way of indemnity a number of additional Indemnity Shares
determined by multiplying the Negative Delta by its
percentage of the equity of the Company obtained by it
prior to the Closing or in the exercise of rights
obtained by it prior to the Closing as reflected in
Schedule 1 to the CCI Shareholders' Agreement, and
dividing that product by the Fair Value (taking into
account the issuance of the Indemnity Shares) of a share
of Common Stock;
(iii) third, each Investor shall receive by way of indemnity
such a number of additional Indemnity Shares as shall be
required to restore the Investor to the percentage
ownership of the Company that it would have had if no
shares had been issued pursuant to clause (ii) above; and
(iv) fourth, each of FondElec and Internexus shall receive by
way of indemnity such a number of additional Indemnity
Shares as shall be required to restore it to the
percentage ownership of the Company that it would have
had if no shares had been issued pursuant to clause (i)
above.
An example of the foregoing indemnity calculations is set out in
Exhibit P, and the Parties acknowledge that the method implicit in
that example is to be used in making the calculations called for
above. It is the Parties' intention and agreement that the indemnity
to FondElec and Internexus be in lieu of the indemnities extended to
them in connection with their various transactions with the Company
prior to the Closing, and each of FondElec and Internexus (on behalf
of itself and all parties which could claim by or through it) hereby
waives all rights to make, and releases the Company from, indemnity
obligations under all prior indemnity agreements or provisions.
(b) To the extent the Indemnity Event is not manifested in the
Company, or any of its Subsidiaries, incurring a liability or
suffering a loss in value not fully offset by the value of
assets or benefits received in connection with the Indemnity
Event, but nonetheless an Investor or any of its directors,
officers, employees, agents or representatives (each, an
"Indemnitee") suffers a loss or incurs liability as a result of
the Indemnity Event, then the Company shall, subject to the
limitations set out in Sections 7(d) and 7(e), indemnify such
Indemnitee for the loss by making a payment to it in cash equal
to the amount of the loss.
(c) If there occurs a disagreement between any Indemnitee and the
Company as to the application of this Section 7, the matter
shall be the subject of dispute resolution in the manner set
out in Section 11(n).
(d) Claims under this Section 7 that are based on a breach of the
Company's representations and warranties may be made only if
notice of such breach is given by any Investor to the Company
during the period of validity of such representations and
warranties as set out in Section 4. No claim may be made
pursuant to Section 7(a) with respect to a given Indemnity
Event, unless either (i) the Negative Delta resulting from such
event exceeds One Hundred Thousand Dollars (US$100,000), or
(ii) such Negative Delta, when added to the Negative Delta
resulting from earlier events as to which an indemnity pursuant
to Section 7(a) has not been satisfied, exceeds Two Hundred
Fifty Thousand Dollars (US$250,000). No claim may be made
pursuant to Section 7(b) with respect to a given Indemnity
Event unless either (i) the loss suffered by all Indemnitees by
reason of such Indemnity Event for which a claim may be made
under Section 7(b) exceeds One Hundred Thousand Dollars
(US$100,000), or (ii) if such loss, when added to the losses
suffered by all Indemnitees by reason of Indemnity Events as to
which an indemnity pursuant to Section 7(b) has not been
satisfied, exceeds Two Hundred and Fifty Thousand Dollars
(US$250,000).
(e) The Company shall not have any obligation to indemnify an
Indemnitee, whether under Section 7(a) or Section 7(b), to the
extent that the loss suffered by the Indemnitee results from
the breach of the relevant Investors' representations,
warranties or agreements in the Participation Agreement or any
other Transaction Document, or the Indemnitees' gross
negligence or willful misconduct. The Company's obligations to
issue stock by way of indemnity as set out in Section 7(a)
shall constitute the sole remedy for breach of contract
available to the Indemnitees by reason of the happening of any
Indemnity Event, except to the extent Section 7(b) is
applicable.
(f) At such time as the Company is obligated to indemnify any
Indemnitee under Section 7(a) or Section 7(b), the Company
shall also reimburse such Indemnitee for its reasonable
attorney's fees and other out-of-pocket expenses of the
Indemnitee, if any, incurred in enforcing its rights under
Section 7.
8. Termination.
(a) Termination of Agreement. The Parties may terminate this
Participation Agreement as provided below:
(i) The Parties may terminate this Participation Agreement as
to all Parties by mutual written consent;
(ii) Any Investor may terminate this Participation Agreement
as to itself if,
(A) prior to the Closing,
(1) the Company or any other Investor has
breached any of its representations,
warranties, or covenants contained in this
Participation Agreement in any material
respect,
(2) such Investor has notified the Company and
each other Investor of the breach prior to
the Closing, and
(3) the breach has continued without cure for a
period of two business days after the notice
of breach, or
(B) if the Closing shall not have occurred on or before
October 28, 1999, or, with respect to the
Subsequent Closing only, if the Subsequent Closing
shall have not occurred on or before January 18,
2000; (unless the failure results primarily from
such Investor breaching any representation,
warranty, or covenant contained in this
Participation Agreement); or
(C) this Participation Agreement has been terminated as
to any other Investor.
(iii) The Company may terminate this Participation Agreement as
to a given Investor if
(A) (1) such Investor has breached any of its
representations, warranties, or covenants contained
in this Participation Agreement in any material
respect,
(2) the Company has notified the Investor of the
breach, and
(3) the breach has continued without cure for a
period of two business days after the notice
of breach, or
(B) if the Closing shall not have occurred on or before
October 28, 1999, or, with respect to the
Subsequent Closing only, if the Subsequent Closing
shall have not occurred on or before January 18,
2000 (unless the failure results primarily from the
Company itself breaching any representation,
warranty, or covenant contained in this
Participation Agreement).
(b) Effect of Termination. If any Party terminates this
Participation Agreement pursuant to Section 8(a) above, all
rights and obligations of the Party hereunder shall terminate
without any liability of any Party to any other Party, except
for any liability of the terminating Party resulting from a
breach that occurs prior to the termination. A termination as
to a given Investor as contemplated in clause (ii) or clause
(iii) of Section 8(a) shall not have the effect of removing
such Investor's performance from among the conditions precedent
to any other Party's obligation hereunder as set out in Section
6, and each other Parties shall be obligated to proceed with
its respective transactions contemplated hereunder only if and
when all of the conditions to their obligations set out in
Section 6 are either fully performed, or expressly waived by
the Party.
(c) Specific Performance. Nothing in this Participation Agreement
shall be interpreted to preclude any Party's right to seek and
obtain specific performance of the terms of this Participation
Agreement or any equitable remedy.
9. D'Ambrosio ParticipationRemoval of Legend;Use of Proceeds.
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to
the subject matter of this Participation Agreement without the
prior written approval of each other Party; provided, however,
that any Party may make any public disclosure it believes in
good faith that it is required by applicable law or any listing
or trading agreement concerning its publicly-traded securities
(in which case the disclosing Party will advise the other
Parties and afford such Parties a reasonable opportunity under
the circumstances to comment prior to making the disclosure).
(b) No Third Party Beneficiaries. This Participation Agreement
shall not confer any rights or remedies upon any person or
entity other than the Parties, their related Indemnitees and
their respective successors and permitted assigns.
(c) Entire Agreement. The English language version of this
Participation Agreement and other Transaction Documents
(including the documents referred to herein) constitutes the
entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the
Parties, written or oral (including, specifically, any letter
of intent or letter or understanding between the Parties), to
the extent they relate in any way to the subject matter hereof.
(d) Succession and Assignment. This Participation Agreement shall
be binding upon and inure to the benefit of the D'Ambrosios and
the Parties and their respective successors and permitted
assigns. Neither any D'Ambrosio nor any Party may assign either
this Participation Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other Parties, except to a Person to whom a Transfer of
Company Equity is made free of the restrictions of Sections 2
and 3 of the CCI Shareholders' Agreement.
(e) Counterparts. This Participation Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the
same instrument. For purposes of this Participation Agreement,
the delivery of a counterpart signature by telephonic facsimile
transmission shall be deemed the equivalent of the delivery of
an original counterpart signature.
(f) Headings. The section headings contained in this Participation
Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Participation Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given when actually received, whether personally
delivered, transmitted by fax or sent by reputable air courier
(such as Federal Express or DHL) and addressed to the intended
recipient as set forth below:
If to the Company:
Convergence Communications, Inc.
c/o Xxxxx X'Xxxxxxxx
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: (000) 000-0000
Copy to:
Xxxxxxx Xxxxx & Xxxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
If to Telematica:
Telematica EDC, C.A.
Xxxxxxx Xxxxxxx, Xxx Xxxxxxxxxx - Xxxxxxxx 0000
Caracas 1010-A-Venuezala
Attention: Xxxxxxxx Xxxxxxxx
Fax: 000-000-000-0000
Copy to:
Angel Xxxxxxx Xxxx
Viso Rodriguez Cottin Xxxxxx Xxxxxxx & Associados
Torre Banvenez
Xx. Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxxx
Xxxxxxx 0000, Venezuela
Fax: 000-000-000-0000
Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
If to TCW:
TCW/CCI Holding LLC
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to IFC:
International Finance Corporation
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000 XXX
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Glacier:
Glacier Latin-America Ltd.
0000 XX 000 Xxxxxx, #000
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to FondElec:
FondElec Essential Services Growth Fund, L.P.
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx Rua
Fax: (000) 000-0000
If to Internexus:
Xxxxx Xxxxxxxxxx and/or
Xxxxx Xxxxxxxx
Internexus X.X.
Xxxxx 000, Xxxx 0
X0000XXX Xxxxxx Xxxxx
Xxxxxxxxx
Fax: 5411-4320-7560
Copy to:
Xxxxx-Xxxxxx &Orts
Florida 000-Xxxx 0
X0000XXX-Xxxxxx Xxxxx
Xxxxxxxxx
Fax: 5411-4325-3564
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, messenger service, telecopy, telex, ordinary
mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Parties notice in the
manner herein set forth.
(h) Governing Law. This Participation Agreement shall be governed
by and construed in accordance with the domestic laws of the
state of New York, United States of America, without giving
effect to any choice or conflict of law provision or rule
(whether of the state of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction
other than the state of New York.
(i) Amendments and Waivers. This Participation Agreement may be
amended, extended or modified by a writing signed by the
Investors, the D'Ambrosios and the Company. No waiver shall be
deemed to have been made unless in writing, nor shall any
waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional
or not, be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
(j) Severability. Any term or provision of this Participation
Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in
connection with this Participation Agreement and the
transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Participation Agreement. In
the event an ambiguity or question of intent or interpretation
arises, this Participation Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this
Participation Agreement. The Parties intend that each
representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the
fact that the Party is in breach of the first representation,
warranty, or covenant.
(m) Incorporation of Attachments and Exhibits. The Schedules and
Exhibits identified in this Participation Agreement are
incorporated herein by reference and made a part hereof.
(n) Disputes.
(i) The provisions of this Section 11(n) shall be the sole
and exclusive method for resolving disputes between the
Parties or their successors or assigns arising under or
relating to the transactions contemplated by this
Participation Agreement or any other Transaction
Documents. In the event there is a dispute under this
Participation Agreement or any Transaction Documents, the
Parties shall meet with one another and diligently
attempt to resolve their disagreements. If they are
unable to do so, then upon request of any Party to the
dispute, they will conciliate the dispute, utilizing a
single conciliator pursuant to the ICC Rules of Optional
Conciliation in a proceeding to take place in New York,
New York, and carried out in the English language. If,
after 60 calendar days, the mediation is not successful,
then any Party to the dispute may bring arbitration to
resolve the dispute as contemplated in this Section
11(n).
(ii) Assuming negotiations and mediation are unsuccessful, any
Party to the dispute may submit the disagreement to
binding arbitration by making a written demand for
arbitration. The arbitration shall occur before a panel
of three arbitrators in New York, New York, and shall be
governed by the Rules of Arbitration of the International
Chamber of Commerce including, in the event of more than
two Parties to the dispute, Article 10 of such rules. To
assure predictability, the arbitrators shall be persons
selected by the Parties with experience in
telecommunication issues and commercial transactions. The
arbitrators shall base their decision on the terms and
conditions of this Participation Agreement, and shall not
vary the same, New York statutory law, and judicial
precedent, and will include in the award findings of fact
and conclusions of law upon which the award is based.
Subject to the limitation set out in the Indemnity clause
above, the arbitrators may grant such legal or equitable
relief as they deem to be appropriate, including money
damages, specific performance and injunctive relief.
(iii) Questions of whether the dispute is subject to
arbitration shall also be decided by the panel of
arbitrators.
(iv) Any Party may request and obtain from a court of
competent jurisdiction provisional or ancillary remedies
for relief such as an injunction or the appointment of a
receiver, but the institution of a judicial proceeding
will not constitute a waiver of the right of such Party
to submit a dispute to arbitration. Judgment upon an
arbitration award may be entered in any court having
jurisdiction. Subject to the award of the arbitrators,
each Party shall pay an equal share of the arbitrators'
fees, except the arbitrators shall have the power to
award all expenses (including attorney's fees, costs and
expert witness fees) to the prevailing Party, as
determined by the arbitrators. All matters relative to
the arbitration, including the result thereof, shall be
maintained as confidential by all Parties to this
Participation Agreement, except as required to obtain
judgment upon an arbitration award or otherwise as
required by law.
(o) Special IFC Covenants.
(i) The Company and its Subsidiaries shall design, construct,
operate, maintain and monitor all of their sites, plant,
equipment and facilities:
(A) in accordance with the IFC Policies; provided,
however, that such obligation shall not be deemed
to require the Company or any Subsidiary to perform
an environmental assessment of projects proposed
nor shall the IFC have the right to approve or
disapprove any proposed operation of the Company or
any Subsidiary;
(B) in compliance with the environmental mitigation and
management measures, as well as applicable
environmental, indigenous peoples, involuntary
resettlement, cultural property protection,
occupational health and safety requirements, and
any child labor and forced labor laws, rules and
regulations (including any international treaty
obligations; if any) of the Governmental Authority
of any Country;
(ii) Neither the Company nor its Subsidiaries shall use the
proceeds of the sale of the Series C Shares to IFC in the
territories of any country other than less-developed
countries in which IFC is actively pursuing operations
(as described in its 1999 annual report) or for
reimbursements of expenditures in those territories or
for goods produced in or services supplied from any such
country.
(p) Reporting to IFC.
(i) Within ninety (90) days after the end of each fiscal
year, deliver to IFC an annual monitoring report,
confirming compliance with the applicable national or
local requirements, the IFC Policies, the environmental
mitigation and management measures and Section (o)(i) or,
as the case may be, detailing any non-compliance together
with the action being taken to ensure compliance.
(ii) As soon as possible but no later than five (5) days after
its occurrence, notify IFC of any incident or accident
involving the Company or any of its Subsidiaries which
has or may reasonably be expected to have an adverse
effect on the environment, health or safety, including,
without limitation, explosions, spills or workplace
accidents which result in death, serious or multiple
injury or major pollution, specifying, in each case, the
nature of the incident or accident, the on-site and
off-site impacts arising or likely to arise therefrom and
the measures the Company or such Subsidiary is taking or
plans to take to address those impacts; and keep IFC
informed of the on-going implementation of those
measures.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CONVERGENCE
COMMUNICATIONS, INC.
By: /s/ Xxxxx X'Xxxxxxxx
Name: Xxxxx X' Xxxxxxxx
Title: Chairman and CEO
TELEMATICA EDC, C.A.
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Duly Authorized
TCW/CCI HOLDING LLC
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Chairman and CEO
INTERNATIONAL FINANCE
CORPORATION
By: /s/
Name:
Title:
GLACIER LATIN-AMERICA LTD.
By: /s/ Xxxxx Leivman
Name: Xxxxx Leivman
Title: Assistant Treasurer
FONDELEC ESSENTIAL SERVICES
GROWTH FUND, L.P.
By: FondElec E.S.G.P. Corp.
Its: General Partner
By: /s/ Xxxxxx Xxxxxx Rua
Name: Xxxxxx Xxxxxx Rua
Title: Director
INTERNEXUS S.A.
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Duly Authorized
JOINDER FOR PURPOSES OF SECTION 9:
Xxxxx X'Xxxxxxxx
By: /s/ Xxxxx X'Xxxxxxxx
Name: Xxxxx X'Xxxxxxxx
Title: Personal Capacity
Xxxx X'Xxxxxxxx
By: /s/ Xxxx X'Xxxxxxxx
Name: Xxxx X'Xxxxxxxx
Title: Personal Capacity
ESTATE OF XXXXXX X. X'XXXXXXXX
By: /s/ Xxxxx X'Xxxxxxxx
Name: Xxxxx X'Xxxxxxxx
Title: Representative of
Estate of Xxxxxx X.
X'Xxxxxxxx
SCHEDULE 1.
INDEX OF DEFINITIONS.
For purposes of the Participation Agreement and the other
Transaction Documents, the following words and phrases shall have the
meanings identified as follows (where a reference is to a Recital, Section
or clause, the same shall be taken to be to the corresponding provision of
the Participation Agreement unless otherwise noted):
"Applicable Law" means all published constitutions, statutes,
rules, regulations, orders, decrees, codes, rulings, charges,
injunctions, or judgments applicable to the entity or person in
question with respect to a relevant matter.
"Budget" shall have the meaning set forth in the first recital of
the Participation Agreement.
"Business Day" means a day on which banks are open both in the
State of New York and in Caracas, Venezuela.
"Business Plan" shall have the meaning set forth in the first
recital.
"CCI Companies" shall have the meaning set forth in Section 4(b) of
the CCI Shareholders' Agreement.
"CCI Salvador" shall mean Chispa Dos Inc., a Cayman Islands limited
liability company.
"CCI Shareholders' Agreement" shall have the meaning set forth in
Section 2(a)(vi).
"CCI Stock Purchase Agreements" shall have the meaning set forth in
Section 2(a)(i).
"Closing" shall have the meaning set forth in Section 2(a).
"Closing Date" shall be the date on which the Closing occurs.
"Colombia Letter of Intent" shall have the meaning set forth in
Section 2(x).
"Common Stock" means the shares of common stock of Convergence
Communication, Inc. with a par value of $0.001 each.
"Company" shall have the meaning set forth in the preamble.
"Company Equity" shall have the meaning given in the second recital
of the CCI Shareholders' Agreement.
"Company Shares" shall have the meaning given in the second recital
of the CCI Shareholders' Agreement.
"Control" (and, with correlative meaning, "Controlled by" and
"under Common Control with") means the possession, directly or
indirectly, of the power to direct the management of a Person
through ownership of voting securities, exercise of contract
rights, or otherwise.
"Control Affiliate" of a Shareholder Party means a Person that
Controls, is Controlled by or under Common Control with the
Shareholder Party, or succeeds to all or substantially all of the
business and assets of the Shareholder Party.
"Country" shall mean Costa Rica, El Salvador, Guatemala, Panama,
Mexico and Venezuela.
"Disclosure Letter" shall have the meaning set forth in recital A.
"Environmental Law" shall mean all the United States, Guatemala, El
Salvador, Venezuela, Costa Rica, Panama, Mexico, Argentina and New
Zealand, and other countries, federal, provincial, state and local
laws, regulations rules and ordinances, relating to pollution or
protection of the environment, and to human health and safety
including, without limitation, laws relating to release,
discharges, leaching, migration or disposal of hazardous, toxic, or
radioactive substances, oils, pollutants or contaminants into the
indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, transport or
handling of such substances, oils, pollutants or contaminants.
"Fair Value" shall mean, with respect to a share of Common Stock,
(a) if the shares are listed or admitted for trading on any
Recognized Exchange, the last reported sales price as reported on
such exchange or market, if available; (b) if the shares are not
listed or admitted for trading on any Recognized Exchange or no
such last sale information is available, the average of the last
reported closing bid and asked quotation for the shares as reported
on 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 Recognized Exchange or included in The Nasdaq
National Market or Nasdaq or Nasdaq SmallCap Market or quoted by 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, "Fair Value"
shall be as is determined by an investment advisor of international
standing reasonably acceptable to the Company and three out of TCW,
Telematica, Internexus and FondElec, based upon conventional
valuation methodologies that the advisor believes are appropriate
in the circumstances.
"Financial Statements" shall have the meaning set forth in Section
4(f).
"FondElec" shall have the meaning set forth in the preamble.
"Fond Elec December Note" shall have the meaning set forth in
recital C.
"FondElec/Internexus Warrant" shall have the meaning set forth in
Section 2(a)(v).
"FTC" means the Federal Trade Commission of the United States of
America.
"GAAP" means generally accepted accounting principles and
practices, as set forth in the opinions and pronouncements adopted
by a significant segment of the accounting profession (including
any generally recognized applicable principles or standards boards,
committees or professional organizations) of the country in
question (as such principles are applied in such country as of the
date of the financial statement or other documents with respect to
which the term is used) and, with respect to the United States, the
accounting principles and practices set forth in the opinions and
pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board.
"Going-In Value" shall mean seven and 00/000 Xxxxxx Xxxxxx Dollars
(US$7.50), except that if, as of the date the Going-In Value is
used in any calculation, there has occurred any subdivision or
combination of outstanding shares of common stock, that amount
shall be proportionately reduced or increased, as appropriate, or
if, as of that date, shares of Common Stock have been issued as a
dividend or other distribution on Common Stock, that amount shall
be multiplied by a fraction (i) the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to
the declaration or payment of such dividend or other distribution,
and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after the
declaration or payment of such dividend or other distribution.
"Glacier" shall have the meaning set forth in the preamble.
"Governmental Authority" shall mean any national or local
government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or judicial body of
United States, Guatemala, Xx Xxxxxxxx, Xxxxxxxxx, Xxxxx Xxxx,
Xxxxxx, Xxxxxx, Xxxxxxxxx or New Zealand.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"HSR Form" shall have the meaning set forth in Section 3(h).
"IFC" shall have the meaning set forth in the preamble.
"IFC Policies" shall have the meaning set forth in Section 4(z).
"Indemnitee" shall have the meaning set forth in Section 7.
"Indemnity Event" shall have the meaning set forth in Section 7.
"Indemnity Shares" shall have the meaning set forth in Section 7.
"Internexus" shall have the meaning set forth in the preamble.
"Internexus December Note" shall have the meaning set forth in
recital D.
"Investors" shall have the meaning set forth in the preamble.
"Knowledge" means the knowledge of the Company or any of the
Subsidiaries and of each Person who is serving or who has at any
time served as a director or officer of the Company or any of the
Subsidiaries and all knowledge that any such Person could be
expected to discover or otherwise become aware of had he or she
fulfilled his or her responsibilities as a director or officer of
the Company or any of the Subsidiaries, as the case may be.
"Lien" as to any Person, shall mean any mortgage, lien, pledge,
charge, preferential payment arrangement, security interest, other
encumbrance, or preferential agreement having the effect of
constituting a security interest, including without limitation, any
equivalent interest or right created or arising under the laws of
any country where the person owns property.
"Material Contracts" means all contracts, agreements, instruments
and documents to which the entity in question (or any one or more
of its subsidiaries) is a party, (i) the breach, violation or
default of which by that entity (or its subsidiaries) would have a
material adverse affect on the business, properties, assets,
conditions (financial or otherwise), or results of operations of
the entity and its subsidiaries, taken as a whole, (ii) which
provides for aggregate payments during the term thereof to be made
or received by the Company in excess of Two Hundred and Fifty
Thousand United States Dollars (U.S. $250,000) or (iii) provides
any Person any preemptive or other preferential rights with respect
to the issuance by such entity or subsidiaries.
"Metrotelecom" shall have the meaning set forth in Section 4(e).
"Negative Delta" shall have the meaning set forth in Section 7.
"Offering Memorandum" means the private placement memorandum of the
Company dated April 1999, previously delivered to the Investor,
relating to the offer and sale of the Company's to-be-designated
Series C Preferred Stock.
"Option Agreement" shall have the meaning set forth in Section
2(a)(iii).
"Participation Agreement" shall have the meaning set forth in the
preamble.
"Person" means a natural person, corporation, society, partnership,
joint venture, unincorporated association or other entity,
including any governmental, multilateral or quasi-public entity.
"Prior Agreement" shall have the meaning set forth in the third
recital of the CCI Shareholders' Agreement.
"Publicly Traded Securities" shall have the meaning given in
Section 2(a) of the CCI Shareholders' Agreement.
"Qualified Disposition" shall have the meaning given in Section
2(a) of the CCI Shareholders' Agreement
"Qualified Public Offering" shall have the meaning given in Section
2(b) of the CCI Shareholders' Agreement.
"Realized Valuation Event" shall have the meaning set forth in
Section 2 of the Shareholders Agreement.
"Recognized Exchange" means the New York Stock Exchange, the
American Stock Exchange or the National Market System for the
National Association of Securities Dealers Automated Quotation
System, or any successor entities thereto.
"Registration Rights Agreement" shall have the meaning set forth in
Section 2(a)(vii).
"Remedy Parties" shall have the meaning set forth in Section 8(d).
"Reports" shall have the meaning set forth in Section 4(r).
"Salvador Notes" shall have the meaning set forth in Section
2(a)(viii).
"Salvador Shareholders' Agreement" shall have the meaning set forth
in Section 2(a)(ix).
"Salvador Shares" shall have the meaning set forth in Section
2(a)(viii).
"Salvador Subscription Agreement" shall have the meaning set forth
in Section 2(a)(viii).
"SEC" shall have the meaning set forth in Section 4(r).
"Securities" shall have the meaning set forth in Section 3(e).
"Securities Act" shall have the meaning set forth in Section 3(e).
"Series C Shares" shall have the meaning set forth in Section
2(a)(i).
"Series C Warrant" shall have the meaning set forth in Section
2(a)(iv).
"Shareholders' Parties" shall have the meaning set forth in the
first recital of the CCI Shareholder's Agreement.
"Subsequent Closing" shall have the meaning set forth in Section
2(a).
"Subsequent Closing Date" shall mean the date on which the
Subsequent Closing occurs.
"Subsidiary" shall mean any Person that is Controlled by the
Company. The Persons listed in clause 1(d) of Section 4(c) of the
Disclosure Letter (except Comunicaciones Centurion S.A.) shall be
included within the meaning of the term "Subsidiary".
"Target Value" means an amount determined as of a given time that
is equal to the greater of (a) twice the Going-In Value or (b) an
amount that, when discounted to the Going-In Value from the date of
calculation to the Closing Date yields a return equal to the daily
equivalent of 40% per annum or greater, calculated on the basis of
a 365 day year for the number of days elapsed.
"TCW" shall have the meaning set forth in the preamble.
"Telecommunications Business" shall have the meaning set forth in
the recital.
"Telematica" shall have the meaning set forth in the preamble
"Transaction Documents" shall have the meaning set forth in Section
2(a).
"Transaction Resulting in a Change of Interest" is a transaction
engaged in by the Company or any Subsidiary as a result of which
the rights or preferences of the Shareholder Parties derived from
their holding of Company Equity are reduced, the ownership
interests of the Shareholder Parties in the Company (or,
indirectly, in any Subsidiary) relative to each other are changed,
representation provided in Section 5 of the CCI Shareholders'
Agreement are adversely affected, or their right of Shareholder
Parties to participate in corporate governance as provided in
Section 6 of the CCI Shareholders' Agreement are limited.
"U.S. Securities Law" means the Securities Act and all other
federal securities laws of the United States and the securities
laws of its separate states, together with the regulations issued
pursuant thereto.
"WCI" shall mean WCI de Cayman, Inc., a Cayman Islands limited
liability company.
