Exhibit C
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is entered into as of the 18th
day of October, 1999, between Convergence Communications, Inc., a Nevada
corporation ("Grantor") in favor of Telematica EDC, C.A. ("Telematica"),
TCW/CCI Holding LLC ("TCW"), International Finance Corporation ("IFC"),
Glacier Latin-America Ltd. ("Glacier"), FondElec Essential Services Growth
Fund, L.P. ("FondElec") and Internexus S.A. ("Internexus"). Each of
Telematica, TCW, IFC, Glacier, FondElec and Internexus is sometimes
referred to as a "Grantee" and collectively as the "Grantees". The Grantor
and the Grantees are referred to collectively herein as the "Parties" and
singularly as a "Party". Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in that certain
Participation Agreement dated as of October 15, 1999, to which the Grantor
and Grantees are parties (the "Participation Agreement").
WHEREAS, pursuant to the terms of the Participation Agreement,
Telematica, TCW, IFC and Glacier have each agreed to purchase Series C
Shares, and FondElec and Internexus have each agreed to convert certain
debt of the Grantor into Series C Shares;
WHEREAS, the Grantees wish to reserve for themselves the right to
acquire further Series C Shares and the Grantor is prepared to grant such
right under this Agreement; and
WHEREAS, the execution of this Agreement is one of a series of
transactions set out in the Participation Agreement which are to occur
simultaneously at the Closing.
NOW, THEREFORE, the Parties agree as follows:
1. Grant of Option. Grantor hereby grants to each Grantee, and each
Grantee hereby accepts from Grantor, an option (the "Option") to
acquire, during the period set forth in paragraph 3, up to the
number of shares of the Grantor's Series C Preferred Stock, par
value $.001 per share (collectively, the "Option Shares"), as is
set forth below:
(a) to Telematica, 40% of the aggregate number of Series C
Shares actually acquired by it under the terms of the
Participation Agreement, which shall be 1,333,333 Option
Shares, if Telematica purchases all of the Series C Shares
allocated to it under the Participation Agreement;
(b) to TCW, 40% of the aggregate number of Series C Shares
actually acquired by it under the terms of the Participation
Agreement, which shall be 1,333,333 Option Shares, if TCW
purchases all of the Series C Shares allocated to it under
the Participation Agreement;
(c) to IFC, 40% of the number of Series C Shares actually
acquired by it under the terms of the Participation
Agreement, which shall be 266,667 Option Shares, if IFC
purchases all of the Series C Shares allocated to it under
the Participation Agreement;
(d) to Glacier, 40% of the aggregate number of Series C Shares
actually acquired by it under the terms of the Participation
Agreement, which shall be 160,000 Option Shares, if Glacier
purchases all of the Series C Shares allocated to it under
the Participation Agreement;
(e) to FondElec, 40% of the aggregate number of Series C Shares
actually acquired by it under the terms of the Participation
Agreement, which shall be 266,666 Option Shares if FondElec
purchases all of the Series C Shares allocated to it under
the Participation Agreement; and
(f) to Internexus, 40% of the aggregate number of Series C
Shares actually acquired by it under the terms of the
Participation Agreement, which shall be 531,564 Option
Shares, if Internexus purchases all of the Series C Shares
allocated to it under the Participation Agreement.
2. Exercise of Option. Subject to the satisfaction of the condition
precedent set forth in Section 6(c)(iii) of the Participation
Agreement in the case of any exercise by Telematica or TWC of its
Option, a Grantee may, at any time and from time to time during the
term of its Option, as set forth in paragraph 3 below, exercise its
Option in whole or in part by delivering written notice to Grantor
designating the number of Option Shares that it elects to purchase,
together with the full purchase price therefor in immediately
available funds. The purchase price for each Option Share shall be,
subject to adjustments as provided in paragraph 7 below, Seven and
00/000 Xxxxxx Xxxxxx Dollars (U.S. $7.50). Any Option Shares
acquired by a Grantee hereunder shall be entitled to the benefit of
the Registration Rights Agreement among Grantor and Grantees of
even date herewith, and shall be subject to the rights and duties
imposed thereunder. Upon the delivery to Grantor of the
consideration for the Option Shares so exercised, Grantor shall
deliver to the exercising Grantee a certificate or certificates
representing the Option Shares containing restrictive legends
substantially in the form of those legends set forth in Section 3
of the Participation Agreement. Upon their issuance, the Option
Shares shall be deemed validly issued and fully paid and
non-assessable shares of Grantor's Series C Convertible Preferred
Stock, subject to no liens, charges or encumbrances other than
those arising under the terms of the Participation Agreement and
the CCI Shareholders' Agreement entered into pursuant to the
Participation Agreement.
3. Term of Option. Each Grantee's Option shall terminate at 5:00 PM
U.S. Eastern Time on July 18, 2000.
4. Representations and Warranties. Each exercising Grantee shall be
deemed, by its exercise, to affirm the representations and
warranties set forth in Sections 3(e), 3(f) and 3(g) of the
Participation Agreement as to the Option Shares as to which its
Option is exercised and, upon issuance of the Series C Preferred
Stock pursuant to any such exercise, the Grantor shall be deemed to
affirm the representations and warranties set forth in Sections
4(a), 4(b), 4(c), 4(d), 4(f) (except that an expenditure in
accordance with the Business Plan, or Budget or as approved by the
Grantor's board of directors, shall not be considered a material
adverse change), 4(j), 4(k), 4(t) and, to the extent the exercise
relates to the IFC, 4(z).
5. Reservation of Stock. Grantor shall, at all times while the Options
are effective, reserve and keep available out of the designated
Series C Convertible Preferred Stock of Grantor, for the purpose of
issuance on the exercise of the Options provided for herein, such
number of shares of such Series C Convertible Preferred Stock as
shall, from time to time, be sufficient to permit the exercise of
each Option in whole.
6. Restrictions on Exercise. No Option may be exercised unless such
exercise is in compliance with U.S. Securities Law.
7. Adjustment. If an Option is exercised subsequent to any stock
dividend, split-up, recapitalization, merger, consolidation,
combination or exchange of shares, separation, reorganization or
liquidation of the Grantor occurring after the date hereof, as a
result of which shares of any class shall be issued in respect of
outstanding shares of capital stock of the Grantor (or shall be
issuable in respect of securities convertible into shares of
capital stock) or upon exercise of rights (other than the Options)
to purchase shares of capital stock, or shares of such capital
stock shall be changed into the same or a different number of
shares of Series C Convertible Preferred Stock or another class or
classes, the Grantee exercising the Option shall receive, for the
aggregate price paid upon such exercise, the aggregate number and
class of shares which such Grantee would have received if this
Option had been exercised immediately prior to such stock dividend,
split-up, recapitalization, merger, consolidation, combination or
exchange of shares, separation, reorganization or liquidation.
8. Non-Transferability of the Option and Rights of Grantee. A
Grantee's Option may be exercised only by that Grantee, and no
Grantee may transfer its Option in any manner except it may make
such a transfer to a Person who would be permitted to receive a
Transfer of Company Equity from such Grantee under the Shareholders
Agreement. No Grantee shall have any rights as a shareholder with
respect to any Option Shares to be acquired hereunder unless and
until that Grantee exercises its Option with respect to such Option
Shares.
9. Rights and Obligations Part of Series of Transactions. The Parties
acknowledge and agree that the rights and obligations provided for
in this Agreement are part of a series of transactions which,
pursuant to the Participation Agreement, are subject to certain
conditions precedent as provided therein, and are being entered
into in reliance on certain representations and warranties and
covenants of indemnification set out in the Participation Agreement
(which indemnification obligations shall be deemed incorporated
herein). Unless and until such conditions are satisfied or waived,
and these representations and warranties are made, all in the
manner provided for in the Participation Agreement, no Party shall
have any rights or obligations hereunder.
10. Further Assurances. At the request of any Party hereto, each Party
to this Agreement hereby agrees, without the payment of additional
consideration, to execute, deliver, file and verify any and all
documents, instruments or agreements necessary or appropriate to
effectuate the intent of the parties in entering into this
Agreement.
11. Notices. Any notice required or permitted hereunder shall be
effected (and deemed effected) in the manner set forth for giving
notice in the Participation Agreement.
12. 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 relation to this Agreement shall
first be subject to conciliation in accordance with the Rules of
Conciliation of the International Chamber of Commerce and, failing
conciliation, be finally settled under the Rules of Arbitration of
the International Chamber of Commerce by three arbitrators
appointed in accordance with said Rules. The place of arbitration
shall be New York, New York. The language of the arbitration shall
be English. In the event any dispute under the Participation
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 Participation
Agreement, all parties to any dispute hereunder agree (i) to be
joined to the procedures initiated pursuant to Section 11(n) of the
Participation Agreement; (ii) to have any proceedings initiated
hereunder consolidated with proceedings initiated pursuant to
Section 11(n) of the Participation Agreement and (iii) to be bound
by any ruling of the arbitral tribunal constituted pursuant to
Section 11(n) of the Participation 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 Participation
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, each party has executed this Agreement as of
the date set forth above.
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
