$2,000,000.00 February 12, 1999
SECURED JULY NOTE
FOR VALUE RECEIVED, the undersigned, Convergent Communications Services, Inc., a
Colorado corporation ("CCSI"), whose address is 000 Xxxxxxxxx Xxxxx Xxxxx,
Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, promises to pay to Kansas
Communications, Inc. ("KCI"), or order, at KCI's offices at 000 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000, or at such other place as the
holder of this Secured July Note may from time to time designate, the principal
sum of $2,000,000.00 (Two Million Dollars), together with interest thereon at
the rate or rates hereafter specified pursuant to this Note ("Note"). The
following terms shall apply to this Note:
1. Asset Purchase Agreement. This Note is being delivered to KCI pursuant to,
and subject to, the terms and conditions of that certain Asset Purchase
Agreement, dated as of February 1, 1999, between KCI and CCSI (the "Agreement"),
whereby CCSI is acquiring the Purchased Assets (as defined in the Agreement)
from KCI, on the terms and conditions set forth in the Agreement.
2. Interest Rate. From the date of this Note until all sums due and owing
hereunder, whether principal, interest, charges, fees or other sums, have been
paid in full, interest shall accrue on the unpaid principal balance at a rate
equal to Eleven Percent (11%) simple interest (the "Interest Rate").
3. Calculation of Interest. Interest shall be calculated on the basis of a three
hundred sixty (360) day year applied to the actual number of days the principal
balance is outstanding.
4. Terms of Repayment. Principal shall be paid in a single lump sum payment on
or before July 1, 1999 (the "Maturity Date"). Interest shall be payable in
arrears on the first day of each month, beginning on March 1, 1999.
5. Acceleration Rights. If there is an "Equity or Debt Financing" as that term
is defined in the Security Agreement (as defined herein), at the option of KCI,
an amount of principal due under this Note equal to the product of the amount of
unpaid principal on this Note multiplied by the ratio of the aggregate amount of
such Equity or Debt Financing divided by ($25,000,000) Twenty-Five Million
Dollars shall be accelerated and such principal and interest thereon shall be
immediately due and payable.
6. Application of Payments. Unless otherwise agreed or required by applicable
law, all payments made hereunder shall be applied first to any unpaid collection
costs and late charges, then to accrued unpaid interest, and any remaining
amount to principal.
7. Prepayment. CCSI shall have the right to prepay the principal balance of this
Note in full or in part at any time during the term hereof. Payments or
prepayments when made, shall be first applied to all accrued interest to the
date of payment, then to any damages, penalties, fees, costs or other charges
accrued and payable pursuant to this Note, and the remainder shall be applied to
payment of the outstanding principal balance. No prepayment shall relieve the
obligation of CCSI to make the next accruing installment due hereunder and the
amount of such future installments shall not be changed after any such
prepayment.
8. Security for Note. This Note and the payments due hereunder are secured,
inter alia, by the Security Agreement of even date herewith, between CCSI and
KCI (the "Security Agreement"). Reference is hereby made to the Security
Agreement (which is incorporated herein by reference as fully and with the same
effect as if set forth herein at length) for a description of the collateral, a
statement of the covenants and agreements contained therein, a statement of the
rights, remedies, and security afforded thereby, and all matters therein
contained.
9. No Waiver. No delay on the part of any holder hereof in exercising any rights
hereunder and no waiver of any payment shall operate as a waiver of any power or
right on the non-performance or upon default or non-payment of any obligation
above mentioned.
10. Severability. If any provision hereof shall be deemed or declared to be
unenforceable, invalid or void, the same shall not impair the other provisions
of this Note, which shall be enforced in accordance with their respective terms.
11. Binding Nature. This Note shall inure to the benefit of and be enforceable
by KCI, its successors and assigns and any other person to whom KCI may grant an
interest in CCSI's obligations hereunder, and shall be binding upon and
enforceable against CCSI and XXXX's successors and assigns.
12. Choice of Law. This Note shall be governed, construed and interpreted
strictly in accordance with the laws of the State of Colorado.
13. Notice. All notices served under this Note shall be in writing and shall be
served by certified or registered mail, confirmed telephone facsimile, courier
service or personal delivery, to the party at its address or fax number
appearing below, or to such other address or fax number as specified by notice
by such party to the other parties hereunder. Except as otherwise provided in
this Note, service of any such notice shall be deemed effective on the earlier
of the day of (i) actual delivery, or (ii) seventy-two (72) hours after deposit
in the United States mail, registered or certified, or (iii) receipt of fax
confirmation. The addresses of both parties are:
CCSI: Convergent Communications Services, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Legal Department
Tel: (000) 000-0000
Fax: (000) 000-0000
KCI: Kansas Communications, Inc.
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000-0000
Attn: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
14. General. CCSI hereby waives presentment, protest, demand or notice of any
kind in connection with any failure to pay when due the indebtedness evidenced
by this Note. If CCSI fails to pay the indebtedness when due, CCSI agrees to pay
holder's reasonable legal fees and expenses incurred in connection with the
enforcement of this Note.
15. Amendments. This Note may not be amended or modified except by an instrument
in writing expressing such intention executed by the parties sought to be bound
thereby.
16. Cross-Default. The occurrence of a default or event of default under any
other agreement for leased property or for borrowed money to which CCSI is a
party or a guarantor, if the effect of such default or event of default would
permit the obligations of CCSI thereunder to become due prior to the expressed
maturity date and after any applicable cure period, shall be an event of default
hereunder.
17. Event of Default. It shall be an event of default under this Note if
Purchaser has not paid Seller all amounts due and owing to Seller on the
Maturity Date; provided, however, Purchaser shall have ten (10) days from the
date of written notice of such default to cure such event of default (the "Cure
Period"). If such event of default has not been cured or waived by the
expiration of the Cure Period, Seller shall be entitled to foreclose on the
Purchased Assets in accordance with the terms of the Security Agreement.
IN WITNESS WHEREOF, XXXX has executed this Note on the date first above
written.
CONVERGENT COMMUNICATIONS SERVICES, INC.
By:______________________________________
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
