Exhibit Q
SHAREHOLDER JOINDER AGREEMENT
THIS SHAREHOLDER JOINDER AGREEMENT (this "Agreement") is made as
of February 7, 2001 by and among TCW/CCI HOLDING II LLC ("TCW"),
TELEMATICA EDC, C.A. ("TELEMATICA"), XXXXXXXX XXXX ("Priu"),
XXXXXX XXXXXX XXXXXX xx XXXXX, ("Xxxxx"), XXXXXX CAPITAL MANAGEMENT III,
LLC ("MCM III"), GLACIER LATIN-AMERICA LTD. ("Glacier") and CONVERGENCE
COMMUNICATIONS, INC. (the "Company"). All of the foregoing parties are
sometimes referred to collectively as the "Parties" and individually as a
"Party," and all of the parties other than the Company are sometimes
referred to as the "Shareholder Parties" and individually as a "Shareholder
Party."
R E C I T A L S
WHEREAS, pursuant to the terms of that certain Umbrella Stock
Purchase Agreement among the Parties of even date herewith (the "Purchase
Agreement"), the Shareholder Parties purchased shares of the Company's
Series D Convertible Preferred Stock.
WHEREAS, as a condition to the Shareholder Parties entering into
the Purchase Agreement, they have agreed to certain restrictions on the
manner in which they may dispose of their interests in the Company and have
agreed to execute this Agreement to memorialize those agreements.
WHEREAS, the Parties intend that this Agreement cover (i) the
shares of Series D Convertible Preferred Stock of the Company held, legally
or beneficially, by any Shareholder Party as of the date hereof and which
was acquired by such Shareholder Party under the terms of the Purchase
Agreement, which shares are as set out in Schedule 1 (the "Present
Shares"), (ii) the shares of stock of the Company acquired by any
Shareholder Party on the exercise of any warrant, option or other similar
right, held legally or beneficially by any Shareholder Party granted under
the terms of the Purchase Agreement, which warrant, option or other rights
are as set out in Schedule 1 (the "Share Rights"), and (iii) any shares of
stock of the Company that become outstanding by reason of their issuance
under the terms of the Purchase Agreement and which may be acquired
directly or indirectly from time to time by any other Shareholder Party
(the "Further Shares"). The Present Shares, the Further Shares and the
shares of stock acquired by any Shareholder Party from time to time on the
exercise of any Share Rights are referred to herein in the aggregate as the
"Company Shares", and the Company Shares, together with the Share Rights,
are referred to in the aggregate as the "Company Equity".
NOW, THEREFORE, the Parties agree as follows:
1. Definitions. Capitalized terms used herein but not defined
herein shall have the meaning given to them in the Schedule of Definitions
to the Purchase Agreement, being Schedule 1 thereto.
2. Restriction on Transfer Prior to Realized Valuation Event. No
Shareholder Party may Transfer (as that term is defined in Section 4 below)
the entirety or any part of his or its Company Equity, unless and until
there has occurred a Realized Valuation Event, as defined in, and as
applied to the same parties (or their permitted assigns) as set forth in,
the CCI Shareholders' Agreement dated October 18, 1999 among the Company
and other parties (the "CCI Shareholders' Agreement").
3. Tag-Along Rights. Upon the happening of a Qualified
Disposition, as defined in and as applied to the same parties as set forth
in the CCI Shareholders Agreement, this Agreement shall terminate as
contemplated in Section 12, and the Shareholder Parties shall have no
further restrictions on the Transfer of their respective Company Equity.
However, if there occurs a Qualified Public Offering, as defined in, and as
applied to the same parties (or their permitted assigns) as set forth in
the CCI Shareholders Agreement, the Parties shall have the following rights
and obligations with respect to the Transfer of any of their Company
Equity, for a period of three years following the Qualified Public
Offering.
(a) Notice. If a Shareholder Party ("Transferor") intends to
Transfer any of his or its Company Shares ("Tag Shares") to any Person, the
Transferor shall give each other Shareholder Party ("Optionee") notice of
the Transferor's intent to so transfer, setting out in reasonable detail
the terms and conditions of the proposed transaction.
(b) Exercise. Any Optionee may elect to exercise its rights
under this Section 3 by its written notice to the Transferor given not more
than 15 Business Days after receipt of the notice given as required in
Section 3(a), setting out the number of its Company Shares that such
Optionee desires to transfer pursuant to this Section 3. Thereupon, the
Transferor shall be obligated to cause its intended transferee to acquire
from the Optionee, and the Optionee shall be obligated to transfer to the
intended transferee, on the same terms and conditions and at the same time
as any of the Tag Shares are transferred (except that any Optionee may
elect to transfer rights to acquire Company Shares on the exercise of
warrants, provided that it does not receive any premium therefor) the
lesser of (A) the number of Company Shares specified in the Optionee's
notice, or (B) a number of Company Shares equal to the product of a
fraction having as its numerator the number of Company Shares that the
Optionee owns or has the right to acquire on the exercise of warrants and
as its denominator the aggregate of Company Shares that the Transferor, and
all Optionees having elected to exercise rights under this Section 3 owns
or has the right to acquire on the exercise of warrants, multiplied by the
number of Tag Shares.
(c) Closing on Tag Transaction. Upon the closing of any
transfer by an Optionee as contemplated in this Section 3, the Optionee
shall deliver the instruments representing the same, duly endorsed so as to
effect transfer thereof by delivery.
(d) Excluded Transfers. A Shareholder Party may Transfer, free
and clear of the provisions of this Section 3: (i) any Company Shares
pursuant to an effective registration statement, provided such Company
Shares are sold on a Recognized Exchange (as defined in the CCI
Shareholders Agreement); and provided further that no negotiations have
occurred between such Shareholder Party or its agents and any proposed
buyer or their respective agents, including without limitation, an
underwriter; (ii) such number of its Company Shares as is permitted to be
disposed of by "affiliates" under Rule 144 of the U.S. Securities Laws, in
each case, subject to the volume and other limitations set forth in Rule
144; or (iii) rights under warrants for the purchase of Company Shares.
4. Provisions Generally Applicable to Transfers.
(a) Applicability of Sections 2 and 3. The rights, obligations
and restrictions set out in Sections 2 and 3:
(i) apply to Company Equity (or, in the case of Section 3,
to Company Shares) presently owned or hereafter acquired by a Shareholder
Party, or by the successor of any Shareholder Party or a Related Party;
(ii) apply (subject to the limitations of clauses (iii) and
(iv) below) to any direct or indirect disposition, including, within that
concept and without limitation, a sale, bequest, exchange, assignment or
gift, the creation of any security interest or other encumbrance, a
transfer in connection with a receivership, bankruptcy, insolvency,
dissolution, liquidation, judicial determination of incompetency or similar
proceeding, and any other disposition of any kind, whether voluntary or
involuntary, and however accomplished (including, among other means, by way
of merger, recapitalization, share exchange or other extraordinary
corporate action), affecting title to or possession of any Company Equity
("Transfer");
(iii) do not apply (A) to transfers to be made by a
Shareholder Party or one or more successive transferees or successors under
this Clause (A) or of direct or indirect equity interests in the
Shareholder Party to a Control Affiliate, or (B) (1) in the case of a
transfer by TCW or one or more successive transferees or successors under
this Clause B(1) (or of direct or indirect equity interests in TCW or such
successor, to an entity that has, directly or indirectly, as a general
partner, any of TCW/Latin America Partners LLC or a Person that is
Controlled by TCW/Latin America Partners LLC or an entity which Controls,
is Controlled by or under Common Control with TCW/Latin America Partners
LLC, (2) in the case of a transfer by Telematica to an entity that
Controls, is Controlled by or is under common Control with Corporacion EDC,
C.A. or C.A. La Electricidad de Caracas, or which succeeds to all or
substantially all of the business and assets of Telematica, (3) in the case
of a transfer by MCM III or a successor to MCM III, to an entity that has,
as an investment advisor, White Capital Private Equity Management or an
entity which Controls, is Controlled by or under Common Control with White
Capital Private Equity Management (in any case, such Control having been
evidenced to the reasonable satisfaction of the other Shareholder Parties),
(4) in the case of a transfer by Glacier or a successor to Glacier, to an
entity that has, as an investment advisor, Fenway Capital, Ltd. or an
entity, which Controls, is Controlled by or under Common Control with
Fenway Capital, Ltd. (in any case, such Control having been evidenced to
the reasonable satisfaction of the other Shareholder Parties), or (C) in
the case of Priu and Ostry, to transfers of interests to a spouse, or to a
relative within the first degree of consanguinity, or to trusts or similar
estate planning vehicles for the benefit of either of them (any entity or
person described in this clause (iii), a "Related Party").
(b) Acknowledgment of Agreement Required. Prior to making any
Transfer of Company Equity to a Related Party other than pursuant to the
provisions of paragraph 3(d), the transferring Shareholder Party shall
cause the transferee to execute, and deliver to each other Party, a copy of
this Agreement so as to bind the transferee as a Shareholder Party for all
purposes of this Agreement, and to assume all of the obligations and
liabilities of the transferring Shareholder Party, from and after the date
of the Transfer.
(c) Certain Transfers Void. Any purported Transfer of Company
Equity contrary to this Agreement shall be null and void and of no force or
effect, and the Company shall not recognize the Transfer.
5. Joint Sale Agreement. Upon the occurrence of any transaction
described in Section 9 (dealing with "Joint Sale Agreements") of the CCI
Shareholders Agreement, all of the Shareholder Parties shall be obligated
to participate in that transaction, and each Shareholder Party shall, with
respect to himself or itself, cause the same to occur, provided that the
third party acquires all of the Company Equity of each Shareholder Party on
the same terms and conditions as each of the other Shareholder Parties and
each of the shareholder parties to the CCI Shareholders Agreement and at
the same time. Without limiting the obligation of the Parties to consummate
any such transaction, the Parties will consult reasonably with each other
in connection with the timing of such transaction.
6. Cooperation with an Underwriting. If the Board of Directors of
the Company, acting in the manner provided for in Section 6(a) and clauses
(v) or (vi) of Section 6(b) of the CCI Shareholders Agreement, or the
shareholder parties to the CCI Shareholders Agreement acting in the manner
provided for in Section 9 of that agreement, determine to proceed with a
given transaction, all the Shareholder Parties shall cooperate as necessary
or appropriate to cause such transaction to be effective, including,
without limitation, cooperating with the requirements of the lead
underwriter in any connection with any Qualified Public Offering.
7. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall bind and inure to the benefit of the Parties
and their respective successors or heirs and personal representatives and
permitted assigns (including a Related Party (or Related Parties) which has
obtained Company Equity pursuant to this Agreement, it being understood and
agreed that if more than one Related Party owns directly or indirectly
Company Equity, such rights shall be exercised jointly by such Related
Parties. The Parties express their intention that this Agreement is entered
into for the benefit of the Parties hereto (or their respective successors
or permitted assigns), and that no other person shall be or be deemed to be
a third-party beneficiary of any Party's rights under this Agreement.
8. Relationship to Agreement. This Agreement supersedes all prior
arrangements or understandings with respect to the subject matter hereof.
Notwithstanding the generality of the foregoing, the Parties that are also
parties to the CCI Shareholders Agreement agree that, by entering into this
Agreement, they do not intend to modify, diminish or affect the provisions
of the CCI Shareholders Agreement, including, without limitation, Sections
4(b) or 6 thereof. The entering into of this Agreement is one of a series
of transactions contemplated to occur under the Purchase Agreement.
9. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person, by telecopy or
recognized international courier, addressed or telecopied to such party at
the address or telecopier number set forth in the Purchase Agreement, or
such other address or telecopier number as may hereafter be designated in
writing by the addressee in a notice complying as to delivery with the
terms of this Section 9.
All such notices, requests, consents and communications shall be
deemed to have been given (a) in the case of personal or courier delivery,
on the date of actual delivery, or (b) in the case of telex or telecopier
transmission, on the date on which the sender receives machine confirmation
of such transmission.
10. Changes. The terms and provisions of this Agreement may not be
modified or amended, or any of the provisions hereof waived, temporarily or
permanently, except pursuant to express written agreement executed by all
the Parties.
11. Confidentiality. Each Party will hold in confidence and not
disclose, and cause its Affiliates, employees and agents to hold in
confidence and not disclose or use to the detriment of the disclosing
party, all of the Confidential Information of each other Shareholder Party
or the Company or any Subsidiary or any affiliate of the other, and refrain
from using any such information except in furtherance of the business of
the Company and its Subsidiaries. As used herein, "Confidential
Information" means any information concerning the business and affairs of
any Shareholder Party or their Affiliates or of the Company or its
Subsidiaries that is not already known by or generally available to the
public. If any Party is requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, that Party will notify the others promptly of the
request or requirement so that the others may seek an appropriate
protective order or waive compliance with the provisions of this Section.
12. Term. This Agreement is effective from and after the Closing,
and shall continue in effect until the termination of the CCI Shareholders
Agreement. If this Agreement terminates as a result of a Qualified Public
Offering, however, this Agreement shall otherwise continue in effect until
the third anniversary of the Qualified Public Offering. Notwithstanding any
termination pursuant to this Section 12, the provisions of Section 11 shall
continue for a period of two years following such termination.
13. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
14. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability. Such prohibition or unenforceability in any one
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
16. Governing Law; Dispute Resolution. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York, United States of America, without giving effect to any choice or
conflict of law provision or rule that would cause the application of laws
of any jurisdiction other than the State of New York except to the extent
this Agreement would require the mandatory application of the corporate law
of the State of Nevada. All disputes arising under or relating to this
Agreement shall first be subject to conciliation in accordance with the
Rules of Conciliation of the International Chamber of Commerce and, failing
conciliation, be finally settled under the Rules of Arbitration of the
International Chamber of Commerce by three arbitrators appointed in
accordance with said Rules. The place of arbitration shall be New York, New
York. The language of the arbitration shall be English. In the event any
dispute under the Purchase Agreement relates in any way to the validity,
performance or interpretation of this Agreement and an arbitral tribunal is
constituted pursuant to Section 11(n) of the Purchase Agreement, all
parties to any dispute hereunder agree (i) to be joined to the procedures
initiated pursuant to Section 11(n) of the Purchase Agreement; (ii) to have
any proceedings initiated hereunder consolidated with proceedings initiated
pursuant to Section 11(n) of the Purchase Agreement and (iii) to be bound
by any ruling of the arbitral tribunal constituted pursuant to Section
11(n) of the Purchase Agreement or any interim or final award thereof.
Submission of disputes to arbitration pursuant to the Rules of Arbitration
of the International Chamber of Commerce, in consolidation with any
disputes submitted to arbitration pursuant to Section 11(n) of the Purchase
Agreement as provided above, shall be the sole method of resolving disputes
between the Parties hereto. Judgment upon an arbitration award may be
entered in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CONVERGENCE COMMUNICATIONS, INC.
By: /s/ Xxxx X'Xxxxxxxx
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Its: Sr. Vice President
TCW/CCI HOLDING II LLC
By: /s/ Xxxxxx Xxxxxxxxxxx
----------------------------------
Its: Authorized Person
TELEMATICA EDC, C.A.
By: /s/ Xxxxxxxx Xxxxxxxx
----------------------------------
Its: Authorized Person
XXXXXX CAPITAL MANAGEMENT III, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Its: President
/s/ Xxxxx Xxxx, Attorney in Fact
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XXXXXXXX XXXX
/s/ Xxxxx Xxxx, Attorney in Fact
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XXXXXX XXXXXX XXXXXX xx XXXXX
GLACIER LATIN-AMERICA LTD.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Its: Assistant Treasurer
Convergence Communications, Inc. Shareholder Joinder Agreement
Schedule 1
Share Rights
------------------------------------------------
Maximum Maximum Maximum
Number of Number of Number of
Series D Common Common
Shares in Shares in Shares in
Present Financing Performance IRR
Shares Warrants(1) Warrants(1) Warrants(1)
------------- -------------- ------------ ------------
TCW/CCI Holding II LLC 1,075,268 1,075,268 161,290 161,290
Telematica EDC, C.A. 2 1,075,268 1,075,268 161,290 161,290
Xxxxxxxx Xxxx 182,795 182,795 27,419 27,419
Xxxxxx Xxxxxx Xxxxxx xx Xxxxx 139,784 139,784 20,967 20,967
Glacier Latin-America Ltd. 86,021 86,021 12,903 12,903
Morely Capital Management III, LLC 84,500 84,500 12,675 12,675
Morely Capital Management III, LLC (Option) 2 453,134 453,134 67,970 67,970
------------- -------------- ------------ ------------
Total Potential Shares in Joinder Agreement 3,096,770 3,096,770 464,514 464,514
============= ============== ============ ============
Notes: 1 = Actual number of warrants awarded will be determined in accordance with paragraph 2 of each warrant agreement.
2 = Assumes full payment of proceeds in accordance with paragraph 2(d) of the Umbrella Stock Purchase Agreement.
