Ehibit 10.34
[LOGO APPEARS HERE](TM)
July 16, 1999
Convergent Communications Services, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Ladies and Gentlemen:
Cisco Systems Capital Corporation, a corporation organized and
existing under the laws of the State of Nevada, is pleased to make a credit
facility available to Convergent Communications Services, Inc., a corporation
organized and existing under the laws of the State of Colorado, on the following
terms and conditions:
SECTION 1. DEFINITIONS.
1.1 As used in this agreement (this "Agreement"), the following terms shall
have the following meanings:
"Availability Period" has the meaning set forth in the
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Schedule.
"Banking Day" has the meaning set forth in the Note(s).
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"Bankruptcy Code" means Title 11 of the United States Code
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entitled "Bankruptcy".
"Borrower" means Convergent Communications Services, Inc.
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"Borrowing Date" means any date on which a Loan is made to
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Borrower.
"Change of Control" means any "Change of Control" defined in
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the Senior Note Indenture.
"Cisco Systems" means Cisco Systems, Inc. or any subsidiary or
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affiliate thereof.
1.
"Cisco Products" means information systems networking
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equipment and other goods, spare parts and accessories which Cisco Systems
manufactures, assembles or sells.
"Closing Date" has the meaning set forth in Section 3.1.
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"Closing Deadline" has the meaning set forth in the Schedule.
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"Collateral" means the property described in the Collateral
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Documents, and all other property now existing or hereafter acquired which may
at any time be or become subject to a Lien in favor of Lender pursuant to the
Collateral Documents or otherwise, securing the payment and performance of the
Obligations.
"Collateral Documents" means each Collateral Document
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identified in the Schedule, any security agreement provided under Section 5.1(n)
and any other agreement pursuant to which Borrower, any Guarantor or any other
Person provides a Lien on its assets in favor of Lender and all filings,
documents and agreements made or delivered pursuant thereto.
"Commitment" means the Dollar amount set forth in the Schedule
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or where the context so requires, the obligation of Lender to make Loans up to
such aggregate principal amount on the terms and conditions set forth in this
Agreement.
"Compliance Certificate" means a certificate of Holdings, in
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substantially the form of Exhibit H, with such changes thereto as Lender may
from time to time reasonably request.
"Default" means an Event of Default or an event or condition
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which with notice or lapse of time or both would constitute an Event of Default.
"Dollars" and the sign "$" each means lawful money of the
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United States.
"Event of Default" has the meaning set forth in Section 6.1.
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"Financed Products" means the Cisco Products and other goods
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the acquisition of which is financed by Lender hereunder.
"Financing Documents" has the meaning set forth in the
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Schedule.
"GAAP" means generally accepted accounting principles as in
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effect from time to time.
"GSCP Facility" means the Credit and Guaranty Agreement, dated
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as of June 3, 1999, among Holdings, Borrower and Convergent Capital Corporation,
various Lenders and Xxxxxxx Sachs Credit Partners, L.P., as it may be amended or
supplemented from time to time.
"Governmental Authority" means any national government, or any
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state, province or other political subdivision thereof or therein, or any
governmental ministry, department, body, commission, board, bureau, agency,
central bank, court, tribunal or other instrumentality or
2.
authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantor" means Holdings, any Subsidiary of Borrower
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becoming a guarantor as provided under Section 5.1(n) and any guarantor
identified in the Schedule other than Convergent Capital Corporation.
"Guarantor Documents" means any Guaranty and all other
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documents, agreements and instruments delivered to Lender under or in connection
with any Guaranty.
"Guaranty" means the guaranty of any Guarantor, as provided
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under Section 5.1(n), and any guaranty of any Guarantor identified in the
Schedule.
"Holdings" means Convergent Communications, Inc.
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"Indebtedness" means, for any Person, (i) all indebtedness or
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other obligations of such Person for borrowed money, or for the deferred
purchase price of property or services (acquired or obtained other than on
normal trade credit terms); (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (iii) all
non-contingent reimbursement and other obligations of such Person in respect of
letters of credit and bankers acceptances and all net obligations in respect of
interest rate swaps, caps, floors and collars, currency swaps, or other similar
financial products; (iv) all obligations under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases; and (v) all
indebtedness of another Person of the types referred to in clauses (i) through
(iv) guaranteed directly or indirectly in any manner by the Person for whom
Indebtedness is being determined.
"Insolvency Proceeding" means (i) any case, action or
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proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (ii) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors, in each case undertaken under U.S.
federal, state or foreign law, including the Bankruptcy Code.
"Lender" means Cisco Systems Capital Corporation .
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"Lien" means any mortgage, pledge, security interest,
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assignment, deposit arrangement, charge or encumbrance, lien or other type of
preferential arrangement (other than a financing statement filed by a lessor in
respect of an operating lease not intended as security).
"Loan Documents" means this Agreement, the Notes, any
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Collateral Documents, any Guaranty, any Guarantor Documents and all other
certificates, documents, agreements and instruments delivered to Lender under or
in connection with this Agreement.
"Loans" has the meaning set forth in Section 2.1.
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3.
"Material Adverse Change" means (i) a material adverse change
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in the business, operations or financial condition of Borrower and its
Subsidiaries taken as a whole or any Guarantor and its Subsidiaries taken as a
whole, or (ii) any event, matter, condition or circumstance which (A) would
materially impair the ability of Borrower, any Guarantor or any other Person to
perform or observe its obligations under or in respect of the Loan Documents, or
(B) affects the legality, validity, binding effect or enforceability of any
provision of the Loan Documents, which would impair the ability of Lender to
realize a material benefit under the Loan Documents.
"Note" means each Promissory Note referred to in the Schedule.
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"Obligations" means the indebtedness, liabilities and other
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obligations of Borrower and any Guarantor to Lender under or in connection with
the Loan Documents, including all Loans, all interest accrued thereon, all fees
due under this Agreement and all other amounts payable by Borrower and any
Guarantor to Lender thereunder or in connection therewith.
"Permitted Acquisitions" means any transaction or series of
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related transactions for the purpose of or resulting, directly or indirectly, in
(i) the acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (ii) the acquisition of all or any of the
capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (iii) a
merger or consolidation or any other combination with another Person (except as
provided in Section 5.1(g)), provided that Holdings, Borrower or its Subsidiary,
is the surviving Person (an "Acquisition"); and provided further that the
Acquisition conforms to the following requirements: (a) Lender shall have
received promptly, and in any event no less than 15 Banking Days prior to the
consummation of such Acquisition, financial information regarding the assets,
Person or business to be acquired, including the most recent audited financial
statements, if available, but in any case the most recently prepared balance
sheet, statement of income and statement of cash flows for the assets, Person or
business to be acquired and pro forma projected financial statements showing the
effect of the Acquisition of the assets, Person or business on Holdings,
including a balance sheet for Holdings and its Subsidiaries as of the time of
the Acquisition and projected statements of income and cash flows for Holdings
and its Subsidiaries through at least the maturity date of the Loans, (b) all
transactions related to such Acquisition shall be consummated in accordance with
applicable Requirements of Law, and (c) immediately after giving effect to such
Acquisition no Default or Event of Default shall have occurred and be continuing
or would result therefrom.
"Person" means an individual, corporation, partnership, joint
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venture, trust, unincorporated organization or any other entity of whatever
nature or any Governmental Authority.
"Requirement of Law" means, as to any Person, any law, treaty,
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rule or regulation or determination of an arbitrator or of a Governmental
Authority, in each case applicable to or binding upon the Person or any of its
property or to which the Person or any of its property is subject.
4.
"Responsible Officer" means, as to any Person, the chief
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financial officer or treasurer of such Person (or any other senior officer of
such Person involved principally in the financial administration or
controllership function of such Person).
"Restricted Subsidiary" has the meaning set forth in the
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Senior Note Indenture.
"Schedule" means the Schedule of Information attached hereto.
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"Senior Note Indenture" means the indenture pursuant to which
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the Senior Notes are issued, as such indenture may be amended from time to time.
"Senior Notes" means the $160,000,000 in aggregate principal
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amount of 13% Senior Notes due 2008 of Holdings issued
pursuant to the Senior Note Indenture.
"Subordinated Debt" has the meaning set forth in Section
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5.1(j).
"Subsidiary" means with respect to any Person, any
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corporation, association, partnership, joint venture or other business entity of
which more than 50% of the voting stock or other equity interest is owned
directly or indirectly by such Person or one or more of the other Subsidiaries
of such Person or a combination thereof.
"United States" and "U.S." each means the United States of
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America.
"Vendor" means Cisco Systems, or any distributor or other
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reseller of Cisco Products.
5.
1.2 Interpretation. In the Loan Documents, except to the extent the context
otherwise requires: (i) any reference to an Article, a Section, a Schedule or an
Exhibit is a reference to an article or section thereof, or a schedule or an
exhibit thereto, respectively, and to a subsection or a clause is, unless
otherwise stated, a reference to a subsection or a clause of the Section or
subsection in which the reference appears; (ii) the words "hereof," "herein,"
"hereto," "hereunder" and the like mean and refer to this Agreement or any other
Loan Document as a whole and not merely to the specific Article, Section,
subsection, paragraph or clause in which the respective word appears; (iii) the
meaning of defined terms shall be equally applicable to both the singular and
plural forms of the terms defined; (iv) the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation;" (v)
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto; (vi)
references to statutes or regulations are to be construed as including all
statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation referred to; (vii) any table of contents, captions and
headings are for convenience of reference only and shall not affect the
construction of this Agreement or any other Loan Document; and (viii) in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding"; and the word "through" means "to and including."
SECTION 2. THE LOAN FACILITY.
2.1 The Loans. Subject to compliance with the conditions precedent set forth in
Sections 3.1 and 3.2, Lender agrees, on the terms and conditions hereinafter set
forth, to make loans (each a "Loan" and, collectively, the "Loans") to Borrower
during the Availability Period, in an aggregate principal amount up to but not
exceeding the Commitment. Any amount of the Loans repaid may not be reborrowed.
2.2 Use of Proceeds. Borrower agrees to use the proceeds of any Loans made
hereunder solely for the purposes described in the Schedule.
6.
2.3 Borrowing Procedure. Except to the extent otherwise provided in the
Schedule, each Loan to be made hereunder shall be in such minimum principal
amount and subject to such advance written notice, or telephonic notice
(confirmed immediately in writing), as shall be mutually agreed by Borrower and
Lender. Each such written notice of borrowing shall be in substantially the form
of Exhibit A (with appropriate completions). Upon fulfillment of the applicable
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conditions set forth in Section 3.1 and 3.2, Lender shall make the proceeds of
the Loan available to Borrower in accordance with its payment instructions. In
the case of any Loan made hereunder for the purpose of paying the purchase price
of Cisco Products, (i) Lender shall make the Loan available directly to the
Vendor on the Borrowing Date (which date shall not be earlier than the date such
Loan is deemed to be outstanding in accordance with clause (ii)), and Borrower
hereby authorizes and directs Lender to make direct payment to the Vendor of all
such Loan proceeds, and (ii) each such Loan shall be deemed to be outstanding
hereunder and under the Note evidencing such Loan effective as of the date 30
days after the invoice date of the Cisco Products which are being financed by
such Loan. Promptly following each Loan funding Lender shall send Borrower a
written confirmation of the Loan funding, provided that any failure to send, or
delay in sending, such confirmation shall not limit or otherwise affect the
obligation of Borrower to pay any amount owing with respect to the Loans.
2.4 Evidence of Indebtedness. As additional evidence of the Indebtedness of
Borrower to Lender resulting from the Loans made by Lender, Borrower shall
execute and deliver the Note (or Notes) required pursuant to the Schedule.
2.5 Interest and Fees.
(a) Interest. Borrower shall pay interest on the unpaid principal amount
of each Loan at the interest rate and on the dates set forth in the Note
evidencing such Loan.
(b) Fees. Borrower agrees to pay to Lender such fees as may be specified
in the Schedule, payable on the dates set forth in the Schedule. All fees
payable under this Section 2.5 shall be nonrefundable.
(c) Determinations. Each determination by Lender of any applicable rate
of interest, and of any change therein, in the absence of manifest error shall
be conclusive and binding on the parties hereto.
2.6 Computations. All computations of fees and interest hereunder shall be made
on the basis of a year of 360 days for the actual number of days occurring in
the period for which any such interest or fee is payable.
7.
2.7 Highest Lawful Rate. Anything herein to the contrary notwithstanding, if
during any period for which interest is computed hereunder, the applicable
interest rate, together with all fees, charges and other payments which are
treated as interest under applicable law, as provided for herein or in any other
Loan Document, would exceed the maximum rate of interest which may be charged,
contracted for, reserved, received or collected by Lender in connection with
this Agreement under applicable law (the "Maximum Rate"), Borrower shall not be
obligated to pay, and Lender shall not be entitled to charge, collect, receive,
reserve or take, interest in excess of the Maximum Rate, and during any such
period the interest payable hereunder shall be limited to the Maximum Rate.
2.8 Repayment of the Loans. Borrower shall repay to Lender the principal amount
of each Loan in accordance with the terms and conditions of the Note evidencing
such Loan.
2.9 Prepayments. Borrower may, upon prior notice to Lender, prepay the
outstanding amount of the Loans in whole or in part. If any mandatory
prepayments are required under the Schedule, Borrower shall prepay the
outstanding Loans in the amounts and at the times specified in the Schedule. Any
such prepayments shall not be subject to any fee, premium or penalty except to
the extent a prepayment fee is required under the Schedule. The notice given of
any prepayment shall identify the Loan to be prepaid and specify the date and
amount of the prepayment. Partial prepayments of a Loan shall be applied to the
installments of principal thereof in the inverse order of maturity. Accrued
interest on any such Loan prepaid shall be due on the prepayment date as to the
principal amount of such Loan prepaid.
2.10 Reduction or Termination of the Commitment. Borrower may, upon prior notice
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to Lender, terminate in whole or reduce in part, as of the date specified by the
Borrower in such notice, any then unused portion of the Commitment. From the
effective date of any reduction or termination, any commitment fee payable
pursuant to the Schedule shall be computed on the basis of the Commitment as so
reduced or terminated. Once reduced or terminated, the Commitment may not be
increased or otherwise reinstated.
8.
2.11 Increased Costs. If, due to either (i) the adoption of, or any change in,
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (a "Regulatory Change"), or (ii)
compliance by Lender with any request, guideline or directive (whether or not
having the force of law) of any such Governmental Authority, there shall be any
increase in the cost to Lender of agreeing to make or making, or funding or
maintaining, any Loan, or any reduction of any amount received or receivable by
Lender under this Agreement or the Note with respect thereto, then from time to
time, within 15 days after demand by Lender, Borrower shall pay to Lender such
additional amounts as shall compensate Lender for such increased cost or
reduction. Any such request for compensation by Lender under this Section 2.11
shall set forth the basis of calculation thereof and shall, in the absence of
manifest error, be conclusive and binding for all purposes. In determining the
amount of such compensation, Lender may use any reasonable averaging and
attribution methods.
2.12 Funding Losses. In addition to such amounts as are required to be paid by
Borrower pursuant to the Schedule, Borrower shall compensate Lender, promptly
upon receipt of Lender's written request, for all losses, costs and expenses
(including any loss or expense incurred by Lender in obtaining, liquidating or
re-employing deposits or other funds to fund or maintain the Loans), if any,
which Lender sustains if: (i) Borrower repays, converts or prepays any Loan on a
date other than the last day of an Interest Period for such Loan (whether as a
result of an optional prepayment, a mandatory prepayment, a payment as a result
of acceleration or otherwise); (ii) Borrower fails to borrow a Loan after giving
its notice of borrowing under Section 2.3; or (iii) Borrower fails to prepay a
Loan after giving its notice thereof. Any such request for compensation shall
set forth the basis for requesting such compensation and shall, in the absence
of manifest error, be conclusive and binding for all purposes. As used herein,
"Interest Period" has the meaning set forth in the Note(s).
2.13 Payments. Borrower shall make each payment under the Loan Documents
unconditionally in full and free and clear of, and without reduction for or on
account of, any present and future taxes or withholdings, and all liabilities
with respect thereto (other than any taxes on the overall net income of Lender).
Each such payment shall be made without set-off, counterclaim or, to the extent
permitted by applicable law, other defense, including without any deduction or
setoff arising out of or in connection with the purchase of the Cisco Products,
all of which rights of Borrower are hereby expressly waived by Borrower;
provided, however, that no payment hereunder shall be deemed to be a waiver of
any right or claim that Borrower may have against Cisco Systems or other Vendor
with respect to the Cisco Products. Each such payment shall be made on the day
when due to Lender in Dollars and in immediately available funds, to Lender's
account specified in the Schedule or to such other bank and/or account of Lender
as it from time to time shall designate in a written notice to Borrower.
SECTION 3. CONDITIONS PRECEDENT.
9.
3.1 Conditions Precedent to the Initial Loan. The obligation of Lender to make
its Loan on the initial Borrowing Date (the "Closing Date") shall be subject to
the satisfaction on or before the Closing Deadline of each of the following
conditions precedent before or concurrently with the initial Loan:
(a) Documents. Lender shall have received the following, in form and
substance reasonably satisfactory to it: (i) the Note (or Notes) required under
the Schedule, executed by Borrower; (ii) any required Guaranty and any
additional Loan Documents specified in the Schedule, executed by each of the
respective parties thereto, and (iii) any other documents and information
specified in the Schedule.
(b) Additional Closing Documents. Lender shall have received the
following, in form and substance reasonably satisfactory to it: (i) evidence
that all approvals or consents of any other Person, required in connection with
the execution, delivery and performance of the Loan Documents shall have been
obtained; (ii) a certificate of the Secretary or other appropriate officer of
Borrower, dated the Closing Date, or a date not more than five Banking Days
prior to the Closing Date, certifying (A) copies of the certificate or articles
of incorporation and bylaws of Borrower and the resolutions adopted by Borrower
and other actions taken or adopted by Borrower (or any shareholders of Borrower)
authorizing the execution, delivery and performance of the Loan Documents, and
(B) the incumbency, authority and signatures of each officer of Borrower
authorized to execute and deliver the Loan Documents and act with respect
thereto; and (iii) a certificate of the Secretary or other appropriate officer
of any Guarantor, dated the Closing Date, or a date not more than five Banking
Days prior to the Closing Date, certifying (A) copies of the certificate or
articles of incorporation and bylaws of any Guarantor and the resolutions and
other actions taken or adopted by any Guarantor authorizing the execution,
delivery and performance of any Guarantor Documents, and (B) the incumbency,
authority and signatures of each officer of any Guarantor authorized to execute
and deliver any Guarantor Documents and act with respect thereto.
(c) Legal Opinion. Lender shall have received a legal opinion of legal
counsel to Borrower and any Guarantor, dated the Closing Date, or a date not
more than five Banking Days prior to the Closing Date, in form and substance
reasonably satisfactory to Lender.
10.
(d) Collateral. If any Collateral Documents are referred to in the
Schedule, Lender shall have received the following, in form and substance
reasonably satisfactory to it: (i) executed copies of all UCC-1 financing
statements necessary or appropriate in the reasonable opinion of Lender to
perfect the security interests of Lender created under the Collateral Documents;
(ii) written advice relating to such Lien and judgment searches as Lender shall
have requested, and such termination statements or other documents, as may be
necessary to confirm that the Collateral described in the Collateral Documents
is subject to no other Liens in favor of any Persons; (iii) evidence that all
other actions necessary or appropriate in the reasonable opinion of Lender to
perfect and protect the security interest created by the Collateral Documents
have been taken; and (iv) evidence that Lender has been named as loss payee
under all policies of property insurance, and as additional insured under all
policies of liability insurance, as required by the Collateral Documents.
(e) Fees, Costs and Expenses. Borrower shall have paid (i) all fees then
due in accordance with the Schedule, and (ii) all invoiced costs and expenses
then due in accordance with Section 7.4.
(f) Compliance Certificate. Lender shall have received a completed
Compliance Certificate of a Responsible Officer of Borrower, as of the end of
the fiscal quarter immediately preceding the Closing Date.
3.2 Conditions Precedent to All Loans. The obligation of Lender to make each
Loan shall be subject to the satisfaction of each of the following conditions
precedent:
(a) Use of Proceeds. Lender shall have received details with respect to the
use of proceeds of the Loan (in the form of a schedule or other listing of the
Financed Products or in the form of the Notice of Borrowing attached as Exhibit
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A hereto).
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(b) Representations and Warranties; No Default. On and as of the date of
such Loan, both before and after giving effect thereto and to the application of
proceeds therefrom: (i) the representations and warranties contained in Section
4.1 and in the other Loan Documents shall be true, correct and complete in all
material respects as though made on and as of such date; and (ii) no Default
shall have occurred and be continuing or shall result from the making of such
Loan. For purposes of this Section 3.2(b), clause (i) shall take into account
any amendments to any disclosures made in writing by Borrower and any Guarantor
to Lender after the Closing Date and approved by Lender. The giving of any
notice of borrowing and the acceptance by Borrower of the proceeds of each Loan
made following the Closing Date shall each be deemed a certification to Lender
that on and as of the date of such Loan such statements are true in all material
respects.
11.
(c) Material Adverse Change. On and as of the date of such Loan, there
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shall have occurred no Material Adverse Change since the date of the financial
statements furnished to Lender prior to the Closing Date.
(d) Additional Documents and Conditions. Lender shall have received, in
form and substance satisfactory to it, such additional approvals, opinions,
documents and other information as Lender may reasonably request, including any
specified in the Schedule; and any additional conditions precedent set forth in
the Schedule shall have been satisfied.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.1 Representations and Warranties of Borrower. Borrower represents and
warrants to Lender that:
(a) Organization and Powers. Borrower (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has all requisite power and authority to own its assets and
carry on its business and to execute, deliver and perform its obligations under
the Loan Documents, (iii) is qualified to do business and is in good standing in
each jurisdiction in which the failure so to qualify or be in good standing
would result in a Material Adverse Change, and (iv) is in compliance with all
Requirements of Law, except to the extent that such noncompliance could not
reasonably be expected to result in a Material Adverse Change.
(b) Authorization; No Conflict. The execution, delivery and performance by
Borrower of the Loan Documents have been duly authorized by all necessary
corporate action of Borrower and do not and will not (i) contravene the terms of
the articles or certificate of incorporation, or bylaws, of Borrower or result
in a breach of or constitute a default under any material lease, instrument,
contract or other agreement to which Borrower is a party or by which it or its
properties may be bound or affected, or (ii) violate any provision of any law,
rule, regulation, order, judgment, decree or the like binding on or affecting
Borrower.
(c) Binding Obligations. The Loan Documents constitute, or when delivered
under this Agreement will constitute, legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.
(d) Consents. No authorization, consent, approval, license, exemption of,
or filing or registration with, any Governmental Authority, or approval or
consent of any other Person, is required for the due execution, delivery or
performance by Borrower or any Guarantor of any of the Loan Documents or the
purchase of the Cisco Products, except as may be set forth in the Schedule.
12.
(e) Litigation. There are no actions, suits or proceedings pending or, to
the best of Borrower's knowledge, threatened against or affecting Borrower or
any of its Subsidiaries before any Governmental Authority or arbitrator which
would reasonably be expected to result in a Material Adverse Change.
(f) Financial Statements. All consolidated financial statements of Holdings
and its Subsidiaries delivered to Lender are complete and correct and fairly
present the financial condition of Holdings and its Subsidiaries as at the times
and for the periods covered by such statements, in each case in accordance with
GAAP, consistently applied, subject, in the case of any unaudited financial
statements, to normal year-end adjustments and any absence of notes. Since the
date of the most recent financial statements furnished to Lender prior to the
Closing Date, there has not been any Material Adverse Change.
(g) Purchase Transaction. Each purchase transaction to be financed with
any Loan represents a bona fide and undisputed transaction between Borrower and
the Vendor (or other applicable vendor of Financed Products) entered into in
compliance with all applicable laws and regulations.
(h) Subsidiaries. Except as set forth in the Schedule, on the date of
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this Agreement Borrower has no Subsidiaries.
(i) Patents and Other Rights. Each of Borrower and its Subsidiaries
possesses all approvals, authorizations, permits, franchises, licenses, patents,
trademarks, trade names, service marks, copyrights, leases and all rights with
respect thereto, free from burdensome restrictions, except those the absence of
which will not result in a Material Adverse Change that are reasonably necessary
for the ownership, maintenance and operation of its business, and neither
Borrower nor any such Subsidiary is in material violation of any rights of
others with respect to the foregoing.
(j) Insurance. The properties of Borrower and its Subsidiaries are insured,
with financially sound and reputable insurance companies, in such amounts, with
such deductibles and covering such risks as is customarily carried by companies
engaged in similar businesses and owning similar properties in the localities
where Borrower or such Subsidiary operates.
(k) Year 2000 Compliance. On the basis of a review and assessment of
Borrower's and its Subsidiaries' systems and equipment and that of its material
suppliers, vendors and customers, Borrower reasonably believes that the "Year
2000 problem" (that is, the inability of computers, as well as embedded
microchips in non-computing devices, to perform properly date-sensitive
functions with respect to certain dates prior to and after December 31, 1999),
including costs of remediation, will not result in a Material Adverse Change.
13.
(l) Disclosure. None of the representations or warranties made by Borrower
in the Loan Documents as of the date of such representations and warranties, and
none of the statements contained in any other information with respect to
Borrower and its Subsidiaries, including each exhibit or report, furnished by or
on behalf of Borrower to Lender in connection with the Loan Documents, contains
any untrue statement of a material fact or, when considered as a whole, omits
any material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading.
(m) Restricted Subsidiary. As of the date hereof, the Restricted
Subsidiaries include only the Borrower and Convergent Capital Corporation.
4.2 Representations and Warranties of Lender. Lender represents and warrants to
Borrower that Lender: (i) will acquire each Note for its own account for
investment and (subject to the disposition of its property being at all times
within its control) not with a view to any resale or other distribution of such
Note in a transaction constituting a public offering or otherwise requiring
registration under the Securities Act of 1933, as amended (the "Securities Act")
or in a transaction that would result in noncompliance with applicable state
securities laws; (ii) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and the risks of its
acquisition of any Note and credit extensions to Borrower, (iii) is an
accredited investor as such term is defined in Rule 501 of Regulation D under
the Securities Act, and (iv) understands that such Note has not been, and will
not be, registered under the Securities Act or any state securities laws.
SECTION 5. COVENANTS.
5.1 Covenants. So long as any of the Obligations shall remain unpaid or Lender
shall have any Commitment, Borrower agrees that:
14.
(a) Financial Statements and Other Information. Borrower shall furnish
to Lender: (i) as soon as available and in any event within 45 days after the
end of the first three fiscal quarters of each fiscal year of Holdings or 90
days (in the case of the fourth fiscal quarter), its quarterly consolidated
financial statements, prepared in accordance with GAAP, and, if requested by
Lender, its quarterly consolidating financial statements, accompanied by a
certificate of a Responsible Officer of Holdings stating that such consolidated
financial statements fairly present the financial condition of Holdings and its
Subsidiaries as at such date and the results of operations of Holdings and its
Subsidiaries for the period ended on such date in accordance with GAAP and have
been prepared in accordance with GAAP consistently applied, subject to changes
from normal, year-end adjustments and except for the absence of notes, (ii) as
soon as available and in any event within 90 days after the end of each fiscal
year of Holdings, its consolidated annual financial statements, prepared in
accordance with GAAP and, if requested by Lender, consolidating annual financial
statements, and in the case of consolidated financial statements, accompanied by
an unqualified report thereon of independent certified public accountants of
recognized standing; (iii) as soon as available and in any event not more than
90 days after the commencement of each fiscal year, the business plan and
financial projections of Holdings and its Subsidiaries for such fiscal year;
(iv) promptly after Borrower has knowledge or becomes aware thereof, notice of
(A) the occurrence of any Default hereunder, and (B) any default or event of
default under any Financing Documents; (v) prompt written notice of any
condition or event which has resulted, or that could reasonably be expected to
result, in a Material Adverse Change; (vi) together with the financial
statements required pursuant to clauses (i) and (ii), a Compliance Certificate
of a Responsible Officer of Holdings as of the end of the applicable accounting
period; and (vii) such other information respecting the operations, properties,
business or financial condition of Holdings, its Subsidiaries and any Guarantor
as Lender may from time to time reasonably request.
(b) Preservation of Existence, Etc. Except as otherwise permitted by
Section 5.1(g), Borrower shall, and shall cause each of its Subsidiaries to,
maintain and preserve (i) its corporate existence, and (ii) all material
copyrights, patents, trademarks, trade names and service marks and other
intellectual property rights, and all other material rights, qualifications,
permits, licenses, franchises and privileges, necessary or desirable in the
normal course of its business and operations and the ownership of its
properties, except in connection with any transactions expressly permitted by
this Section 5.1.
(c) Licenses. Borrower shall, and shall cause each of its Subsidiaries
to, obtain and maintain all licenses, authorizations, consents, filings,
exemptions, registrations and other governmental approvals of any Government
Authority necessary or desirable (i) in connection with the execution, delivery
and performance of the Loan Documents, the purchase of the Cisco Products or the
consummation of the transactions therein contemplated, or (ii) in the normal
course of its business and operations and the ownership of its properties,
except, in the case of this clause (ii), to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Change.
15.
(d) Compliance with Laws. Borrower shall comply, and shall cause each
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business, except
such as may be contested in good faith or as to which a bona fide dispute may
exist or where noncompliance could not reasonably be expected to result in a
Material Adverse Change.
(e) Insurance. Borrower shall, and shall cause each of its Subsidiaries
to, carry and maintain in full force and effect, at its own expense and with
financially sound and reputable insurance companies, insurance in such amounts,
with such deductibles and covering such risks as is customarily carried by
companies engaged in the same or similar businesses and owning similar
properties in the localities where Borrower or such Subsidiary operates. Without
limiting the generality of the foregoing, Borrower shall, and shall cause each
of its Subsidiaries to, comply with all requirements of the Collateral Documents
pertaining to maintenance of insurance.
(f) Change in Nature of Business. Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it at the
date hereof.
(g) Restrictions on Fundamental Changes. Borrower shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
a. Borrower or any of Borrower's Subsidiaries may merge with or
consolidate into any Subsidiary of Borrower or Holdings (provided that the
surviving or transferee entity is a Restricted Subsidiary or Holdings) or to the
Borrower or Holdings and in connection therewith such Subsidiary may be
liquidated or dissolved;
b. Borrower or any of Borrower's Subsidiaries may transfer all
or substantially all of its assets (except Financed Products) to any Subsidiary
of Borrower, the Borrower or Holdings;
c. Borrower or any of its Subsidiaries may sell or dispose of
assets in accordance with the provisions of Section 5.1(h);
d. the Borrower or any of its Subsidiaries may make any
investment permitted by Section 5.1(k); and
16.
e. the Borrower or any Subsidiary thereof may merge with or
consolidate into any other Person, provided that (i) (in the case of the
Borrower) the Borrower is the surviving Person, (ii) no such merger or
consolidation shall be made while there exists a Default or if a Default would
occur as a result thereof and (iii) all actions have been taken (to the
satisfaction of the Lender) to protect and continue perfected the Liens of the
Lender under this Agreement; provided, further that Lender shall have received
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prior written notice of the consummation of any transaction permitted under this
subsection 5.1(g) promptly, and in any event no less than 15 Banking Days prior
to the consummation thereof.
17.
(h) Sales of Assets. Borrower shall not, and shall not permit any of
its Subsidiaries to, sell, lease, transfer, or otherwise dispose of, or part
with control of (whether in one transaction or a series of transactions) any
assets (except as permitted by Section 5.1(k)) outside the ordinary course of
business (each a "Transfer"), or enter into or consummate any Transfer (i)
involving Financed Products (other than in the ordinary course of business to a
Subsidiary that is a Guarantor hereunder), (ii) that could reasonably be
expected to result in a Material Adverse Change or (iii) that would violate the
terms of any other Loan Document; provided that as a condition to consummating
any Transfer to any such Subsidiary of Financed Products, Borrower shall provide
ten Banking Days' prior written notice to Lender of the proposed Transfer;
provided further that clauses (ii) and (iii) shall not restrict the transfer or
other disposition of assets hereunder (other than Financed Products) from
Borrower to Holdings or a Restricted Subsidiary or from any such Restricted
Subsidiary to Borrower or Holdings.
(i) Negative Pledge. Borrower shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien (other
than Liens in favor of Lender) upon or with respect to any of the Financed
Products or any identifiable proceeds thereof, except to the extent that (i)
Lender has consented in writing to the existence of such Liens, and (ii) such
Liens are junior and subordinate to the Liens of Lender therein pursuant to a
lien subordination agreement in form and substance satisfactory to Lender.
18.
(j) Indebtedness. Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or otherwise become liable for or suffer
to exist any Indebtedness, other than: (i) Indebtedness of Borrower to Lender
hereunder; (ii) Indebtedness of Borrower and its Subsidiaries existing on the
date hereof and disclosed to Lender or extensions, renewals and refinancings of
such Indebtedness, provided that the principal amount of such Indebtedness being
extended, renewed or refinanced does not increase; (iii) Indebtedness of
Borrower and its Subsidiaries under the Financing Documents (if any) in an
aggregate principal amount at any time outstanding not to exceed $50,000,000 or
any refinancings, extensions and renewals of such Indebtedness, provided that
the principal amount of such Indebtedness being extended, renewed or refinanced
does not increase; (iv) accounts payable to trade creditors for goods and
services and current operating liabilities (not the result of the borrowing of
money) incurred in the ordinary course of Borrower's or such Subsidiary's
business in accordance with customary terms and paid within the specified time,
unless contested in good faith by appropriate proceedings and reserved for in
accordance with GAAP; (v) Indebtedness consisting of guarantees resulting from
endorsement of negotiable instruments for collection by Borrower or any such
Subsidiary in the ordinary course of business; (vi) Indebtedness of Borrower and
its Subsidiaries under capital leases or otherwise incurred under or in
connection with any Liens upon or in any property acquired or held by Borrower
or any of its Subsidiaries to secure the purchase price of such property or
Indebtedness incurred solely for the purpose of financing the acquisition of
such property provided that the principal amount of the Indebtedness secured
thereby does not exceed 100% of the cost of such property; (vii) Indebtedness
subordinated to the payment of the Obligations of Borrower (the "Subordinated
Debt") on terms satisfactory to Lender; and (viii) Indebtedness of Borrower to
Holdings or to any Restricted Subsidiary or of any Restricted Subsidiary to
another Restricted Subsidiary.
(k) Loans and Investments. Except to the extent permitted by the
---------------------
Financing Documents, Borrower shall not, and shall not permit any of its
Subsidiaries to, purchase or otherwise acquire the capital stock, assets
(constituting a business unit), obligations or other securities of or any
interest in any Person, or otherwise extend any credit to or make any additional
investments in any Person (each an "Investment"), other than in connection with:
(i) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sales of goods or services in the ordinary course of
business; (ii) Investments made by Borrower to any of its wholly-owned
Subsidiaries or Holdings or by any of its wholly owned Subsidiaries to another
of its wholly-owned Subsidiaries, Borrower or Holdings; and (iii) short term,
investment grade money market instruments, in accordance with Borrower's usual
and customary treasury management policies. Notwithstanding the foregoing,
Borrower or any of its Subsidiaries, shall be permitted to engage in one or more
Permitted Acquisitions.
19.
(l) Transactions with Affiliates. Borrower shall not, and shall not
----------------------------
permit any of its Subsidiaries to enter into, any transaction (including the
purchase, sale, lease or exchange of any property) with any Affiliate of
Borrower, on terms that (when taken in the light of any related or series of
transaction of which such transaction is a part (if any)) are less favorable to
the Borrower or any such Subsidiary than those which might be obtained at the
time from a Person who is not an Affiliate.
(m) Amendments of Financing Documents. Borrower shall not, and shall
not permit any of its Subsidiaries to, agree to or permit any amendment or
modification of any provision of the Financing Documents if the effect of such
amendment or modification results in, or would reasonably be expected to result
in, a Material Adverse Change or agree or permit any amendment or modification
of any provision of the Senior Note Indenture without the prior written consent
of Lender, which consent shall not be unreasonably withheld.
(n) Additional Subsidiaries. (A) If Borrower proposes to incorporate,
create or acquire any additional Subsidiary, Borrower shall notify Lender
thereof. After the incorporation, creation or acquisition of any such
Subsidiary, within five Banking Days following receipt by Borrower from Lender
of a security agreement, in form and substance satisfactory to Lender, and a
guaranty of the Obligations in form and substance satisfactory to Lender,
Borrower shall cause such Subsidiary to execute and deliver such guaranty and
security agreement to Lender. Such requirement shall not apply in the case of
any non-U.S. Subsidiary and any Subsidiary that will remain a dormant,
transitional or shell Subsidiary. (B) Within five Banking Days after receipt
from Lender of any request to do so, Borrower shall cause such Subsidiary to
have executed and filed any UCC-1 financing statements furnished by Lender in
each jurisdiction in which such filing is necessary to perfect the security
interest of Lender in the Collateral of such Subsidiary and in which Lender
requests that such filing be made. (C) Additionally, Borrower and such
Subsidiary shall have executed and delivered to Lender such other items as
reasonably requested by Lender in connection with the foregoing, including
resolutions, incumbency and officers' certificates, opinions of counsel, search
reports and other certificates and documents.
(o) Books and Records; Inspections. Borrower shall, and shall cause
each of its Subsidiaries to, keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP. Borrower shall
provide Lender and its agents access to the premises of Borrower and its
Subsidiaries at any time and from time to time, during normal business hours and
upon reasonable notice under the circumstances, and at any time on and after the
occurrence of a Default or Event of Default, for the purposes of (i) inspecting
and verifying the Collateral, (ii) inspecting and copying (at Borrower's
expense) any and all records pertaining thereto, and (iii) discussing the
affairs, finances and business of Borrower and its Subsidiaries with any
officer, employee or director of Borrower or with its accountants.
20.
(p) Further Assurances and Additional Acts. Borrower shall execute,
acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, documents and assurances and
perform such acts as Lender shall reasonably deem necessary or appropriate to
effectuate the purposes of the Loan Documents, and promptly provide Lender with
evidence of the foregoing reasonably satisfactory in form and substance to
Lender.
SECTION 6. EVENTS OF DEFAULT.
6.1 Events of Default. Any of the following events which shall occur shall
constitute an "Event of Default":
(a) Payments. Borrower shall fail to pay when due (i) any amount of
principal of any Loan or Note (other than an inadvertent failure outside of
Borrower's control that can be and is fully remedied within 24 hours of the
occurrence thereof), or (ii) any amount of interest on any Loan or Note, or any
fee or other amount payable under any of the Loan Documents, and in the case of
this clause (ii) any such default shall remain unremedied for five days.
(b) Representations and Warranties. Any representation or warranty by
Borrower under or in connection with the Loan Documents shall prove to have been
incorrect in any material respect when made or deemed made.
(c) Failure by Borrower to Perform Certain Covenants. Borrower shall
fail to perform or observe any term, covenant or agreement contained in
subsections (b)(i)or (f) through (o) of Section 5.1.
(d) Failure by Borrower to Perform Other Covenants. Borrower shall fail
to perform or observe any other term, covenant or agreement contained in any
Loan Document on its part to be performed or observed and any such failure shall
remain unremedied for a period of 30 days from the occurrence thereof (unless
Lender reasonably determines that such failure is not capable of remedy).
(e) Insolvency. (i) Borrower, any Guarantor or any of their respective
Subsidiaries shall be dissolved, liquidated, wound up or cease its corporate
existence; or (ii) Borrower, the Guarantor or any such Subsidiary (A) shall make
a general assignment for the benefit of creditors, or shall generally fail to
pay, or admit in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (B) shall voluntarily cease to conduct its business in the ordinary
course; (C) shall commence any Insolvency Proceeding with respect to itself; or
(D) shall take any action to effectuate or authorize any of the foregoing.
21.
(f) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against Borrower, any Guarantor or any or their respective
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of Borrower's, any
Guarantor's or any such Subsidiary's properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) Borrower, any Guarantor
or any such Subsidiary admits the material allegations of a petition against it
in any Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) Borrower, any
Guarantor or any such Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business.
(g) Defaults Under Other Indebtedness. Borrower, any Guarantor or any of
their respective Subsidiaries shall fail (i) to make any payment of any
Indebtedness evidenced by or arising under any Financing Document, or any other
Indebtedness in an aggregate principal amount outstanding of at least $1,000,000
(or its equivalent in another currency) when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace or notice period, if any, specified in the
agreement or instrument relating to such Indebtedness as of the date of such
failure, or (ii) to perform or observe any term, covenant or condition on its
part to be performed or observed under any Financing Document, or any other
agreement, note or instrument relating to any such Indebtedness, when required
to be performed or observed, or any other event shall occur or condition shall
exist thereunder, and such failure, event or condition shall continue after the
applicable grace or notice period, if any, specified in such agreement, note or
instrument, if the effect of such failure, event or condition is to accelerate,
or to permit the acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or (without limiting the generality of the foregoing) any
defined "Event of Default" (as defined in any Financing Document) shall have
occurred and be continuing.
(h) Cisco Defaults. Borrower or any Guarantor (i) shall fail to pay any
Indebtedness owing under any other agreement with Cisco Systems, Lender or any
of their respective Subsidiaries or under any note or instrument in favor of
Cisco Systems, Lender or any of their respective Subsidiaries, when due (whether
at scheduled maturity or by required prepayment, acceleration, demand or
otherwise), or (ii) shall otherwise be in breach of or default in any of its
obligations under any such agreement, note or instrument, and such failure,
breach or default shall continue after the applicable grace period, if any,
specified in such agreement, note or instrument.
(i) Material Adverse Change. Any Material Adverse Change shall occur that
gives Lender grounds to conclude that Borrower may not, or will be unable to,
perform or observe in the normal course its obligations under the Loan
Documents.
22.
(j) Failure by Guarantor to Perform Covenants; Invalidity of Guaranty. Any
Guarantor shall fail to perform or observe any term, covenant or agreement
contained in any Guaranty on its part to be performed or observed, or any
default shall occur under any Guaranty, and any such failure or default shall
continue after the applicable grace period, if any, specified in any Guaranty as
of the date of such failure, or any defined "Event of Default" as defined in any
Guaranty shall have occurred and is continuing; or any Guaranty or any other
Guarantor Document shall for any reason be revoked or invalidated, or otherwise
cease to be in full force and effect, or any Guarantor or any other Person shall
contest in any manner the validity or enforceability thereof or deny that it has
any further liability or obligation thereunder.
(k) Default under Other Loan Documents. Any defined "Event of Default" (as
defined in any other Loan Document) shall have occurred.
(l) Consents, Etc. Any law, decree, license, consent, authorization,
registration or approval now or hereafter necessary to enable Borrower or any
Guarantor to comply with its obligations incurred in the Loan Documents or in
connection with the purchase of Cisco Products shall be modified in a materially
adverse manner, or shall be revoked, withdrawn or withheld or shall cease to
remain in full force and effect and such modification or revocation remains
unremedied for a period of 30 days.
(m) Judgments. A final judgment or order for the payment of money in
excess of $1,000,000 (or its equivalent in another currency) which is not fully
covered by third-party insurance shall be rendered against Borrower or any
Guarantor or any of their respective Subsidiaries; or (ii) any non-monetary
judgment or order shall be rendered against Borrower, any Guarantor or any such
Subsidiary which has resulted in or would reasonably be expected to result in a
Material Adverse Change; and in each case there shall be any period of 30
consecutive days during which such judgment continues unsatisfied or during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
(n) Change of Control. There shall occur a Change of Control.
(o) Subordination. Borrower or any Guarantor makes any payment on account
of any Indebtedness which has been subordinated to the Obligations
("Subordinated Debt") other than as permitted in the applicable subordination
agreement, or if any Person who has subordinated such Subordinated Debt
terminates or in any way limits its subordination agreement.
23.
6.2 Effect of Event of Default. If any Event of Default shall occur and is
continuing, Lender may by notice to Borrower, (i) declare its Commitment to be
terminated, whereupon the same shall forthwith terminate, and (ii) declare the
entire unpaid principal amount of the Loans and the Note(s), all interest
accrued and unpaid thereon and all other Obligations to be forthwith due and
payable, whereupon the Loans and the Note(s), all such accrued interest and all
such other Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower, provided that if an event described in
Section 6.1(e) or 6.1(f) shall occur, the result which would otherwise occur
only upon giving of notice by Lender to Borrower as specified in this Section
6.2 shall occur automatically, without the giving of any such notice.
SECTION 7. MISCELLANEOUS.
7.1 Amendments. No amendment to any provision of the Loan Documents shall be
effective unless it is in writing and has been signed by Lender and Borrower,
and no waiver of any provision of any Loan Document, or consent to any departure
by Borrower therefrom, shall be effective unless it is in writing and has been
signed by Lender. Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
7.2 Notices. All notices and other communications provided for hereunder and
under the other Loan Documents shall, unless otherwise stated herein, be in
writing (including by facsimile transmission) and mailed, sent or delivered to
the respective parties hereto at or to their respective addresses or facsimile
numbers set forth in the Schedule, or at or to such other address or facsimile
number as shall be designated by any party in a written notice to the other
party hereto. All such notices and communications shall be effective (i) if
delivered by hand, when delivered; (ii) if sent by courier service, when
delivered; (iii) if sent by mail, upon the earlier of the date of receipt or
five Banking Days after deposit in the mail, first class (or air mail, with
respect to communications to be sent to or from the United States), postage
prepaid; and (iv) if sent by facsimile transmission, when sent; provided,
however, that notices and communications to Lender pursuant to Section 2 shall
not be effective until received.
7.3 No Waiver; Cumulative Remedies. No failure on the part of Lender to
exercise, and no delay in exercising, any right, remedy, power or privilege
under any Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under the Loan Documents are
cumulative and not exclusive of any rights, remedies, powers and privileges that
may otherwise be available to Lender.
24.
7.4 Costs and Expenses; Indemnification. Borrower agrees to pay on demand (i)
the reasonable out-of-pocket costs and expenses of Lender and any of its
affiliates, and the reasonable fees and disbursements of counsel to Lender , in
connection with the negotiation, preparation, execution and delivery of the Loan
Documents; and (ii) all costs and expenses of Lender and its affiliates, and
fees and disbursements of counsel, in connection with any amendments,
modifications or waivers of the terms of any Loan Documents requested by
Borrower, any Default, the enforcement or attempted enforcement of, and
preservation of any rights or interests under, the Loan Documents, and any out-
of-court workout or other refinancing or restructuring or any bankruptcy or
insolvency case or proceeding. In addition, whether or not the transactions
contemplated hereby shall be consummated, Borrower hereby agrees to indemnify
Lender, any affiliate thereof and their respective directors, officers,
employees, agents, counsel and other advisors (each an "Indemnified Person")
against, and hold each of them harmless from, any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including the
reasonable fees and disbursements of counsel to an Indemnified Person, which may
be imposed on, incurred by, or asserted against any Indemnified Person, in any
way relating to or arising out of any of the Loan Documents, the use or intended
use of the proceeds of the Loans or the transactions contemplated hereby or
thereby, including with respect to any investigation, litigation or other
proceeding relating to any of the foregoing, irrespective of whether the
Indemnified Person shall be designated a party thereto (the "Indemnified
Liabilities"); provided that Borrower shall not be liable to any Indemnified
Person for any portion of such Indemnified Liabilities to the extent they are
found by a final decision of a court of competent jurisdiction to have resulted
from such Indemnified Person's gross negligence or willful misconduct. If and to
the extent that the foregoing indemnification is for any reason held
unenforceable, Borrower agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
7.5 Survival. All covenants, agreements, representations and warranties made in
any Loan Documents shall, except to the extent otherwise provided therein,
survive the execution and delivery of this Agreement, the making of the Loans
and the execution and delivery of any Note, and shall continue in full force and
effect so long as Lender has any Commitment, any Loans remain outstanding or any
other Obligations remain unpaid or any obligation to perform any other act
hereunder or under any other Loan Document remains unsatisfied. Without limiting
the generality of the foregoing, the obligations of Borrower under Section 7.4,
and all similar obligations under the other Loan Documents (including all
obligations to pay costs and expenses and all indemnity obligations), shall
survive the repayment of the Loans and the termination of the Commitment.
7.6 Benefits of Agreement. The Loan Documents are entered into for the sole
protection and benefit of the parties hereto and their successors and assigns
and the Indemnified Persons referred to in Section 7.5, and no other Person
shall be a direct or indirect beneficiary of, or shall have any direct or
indirect cause of action or claim in connection with, any Loan Document.
25.
7.7 Binding Effect; Successors and Assigns. This Agreement shall become
effective when it shall have been executed by Borrower and Lender and thereafter
shall be binding upon and shall inure to the benefit of Lender and Borrower and
their respective successors and permitted assigns, except as otherwise provided
herein. Borrower may not assign, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder or under any other Loan
Document without the prior express written consent of Lender. Any such purported
assignment, transfer, hypothecation or other conveyance by Borrower without the
prior express written consent of Lender shall be void. Borrower acknowledges and
agrees that Lender may assign, or grant participations in, all or a portion of
its rights and obligations hereunder and under the other Loan Documents,
including the benefit of Section 7.4. Upon any assignment of Lender's rights
hereunder and under the other Loan Documents, such assignee shall have, to the
extent of such assignment, all rights of Lender hereunder and thereunder and may
in turn assign such rights. Upon any assignment and delegation of Lender's
obligations hereunder and under the other Loan Documents, such assignee shall
have, to the extent of such assignment, all obligations of Lender hereunder and
thereunder and may in turn assign such obligations, and, if any such assignee
has expressly assumed Lender's obligations hereunder and thereunder, Lender
shall be relieved of its obligations hereunder and thereunder to the extent of
such assignment and assumption. Borrower agrees that, upon any such assignment,
such assignee may enforce directly, without joinder of Lender, the rights of
Lender set forth in this Agreement and in the other Loan Documents. Any such
assignee shall be entitled to enforce Lender's rights and remedies under this
Agreement and under any other Loan Document to the same extent as if it were the
"Lender" party hereto or thereto. In the event of any partial assignment,
Lender, Borrower and such assignee shall enter into such amendments to this
Agreement and the other Loan Documents as shall be necessary to effect such
assignment. Additionally, Borrower shall execute and deliver substitute Notes to
the assignee, or to Lender and the assignee (in the case of a partial
assignment), dated the effective date of such assignment, and containing other
appropriate insertions as to the payee, principal amount and place for payments.
26.
7.8 Customer Information. Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information respecting Borrower and its business ("Customer Information").
Borrower agrees that Lender may disclose from time to time all Customer
Information in its possession to Lender's other offices, to its subsidiaries and
affiliates, to any potential assignees or participants of the rights and/or
obligations of the Lender hereunder, to any underwriters or placement agents for
any securities to be issued by the Lender or any of its affiliates (or any
transferee of any such affiliates) and to any rating agency such rating such
securities and to their respective legal counsel, agents and other professional
advisors, provided however that such Person shall execute a nondisclosure
agreement in form and substance reasonably satisfactory to Borrower and Lender.
Borrower also consents to the disclosure of Customer Information by Lender, or
any of its subsidiaries or affiliates, (i) at the request of any Governmental
Authority having jurisdiction over Lender or such subsidiary or affiliate, (ii)
pursuant to subpoena or other court process, or to the extent required in
connection with any litigation between Lender, any of its subsidiaries or
affiliates and Borrower, (iii) when otherwise required to do so in accordance
with applicable law, (iv) to any prospective assignee or participant in
connection with this Agreement (provided with respect to this clause (iv) such
prospective assignee or participant shall execute a nondisclosure agreement in
form and substance reasonably satisfactory to Borrower and Lender), and (v)(A)
to the extent such information is made available by any Guarantor or was or
becomes generally available to the public other than as a result of disclosure
by Lender, or (B) was or becomes available on a non-confidential basis from a
source other than Borrower, provided that such source is not bound by a
confidentiality agreement with Borrower known to Lender.
7.9 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
7.10 Submission to Jurisdiction. Borrower hereby (i) submits to the
non-exclusive jurisdiction of the courts of the State of New York and the
Federal courts of the United States sitting in the Borough of Manhattan
(collectively, the "New York Courts"), for the purpose of any action or
proceeding arising out of or relating to the Loan Documents, (ii) irrevocably
waives (to the extent permitted by applicable law) any objection which it now or
hereafter may have to the laying of venue of any such action or proceeding
brought in any of the New York Courts, and any objection on the ground that any
such action or proceeding in any New York Court has been brought in an
inconvenient forum, and (iii) agrees that (to the extent permitted by applicable
law) a final judgment in any such action or proceeding brought in a New York
Court shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner permitted by law. Nothing in this Section
7.10 shall limit the right of Lender to bring any action or proceeding against
Borrower or its property in the courts of other jurisdictions.
7.11 Waiver of Jury Trial. Each of Lender and Borrower hereby knowingly,
voluntarily and intentionally waives any rights it may have to a trial by jury
in respect of any litigation in connection with any Loan Document.
27.
7.12 Entire Agreement. The Loan Documents reflect the entire agreement between
Borrower and Lender with respect to the matters set forth therein and supersede
any prior agreements, commitments, drafts, communication, discussions and
understandings, oral or written, with respect thereto.
7.13 Severability. Whenever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of any of the Loan
Documents shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of such Loan Document, or the validity or effectiveness of such
provision in any other jurisdiction.
7.14 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.
[remainder of page intentionally left blank]
28.
Please indicate Borrower's agreement and acceptance below and return a
copy of this Agreement to Lender. Upon the signature of Borrower below, this
Agreement shall become a binding agreement of Lender and Borrower as of the date
first written above.
Very truly yours,
Cisco Systems Capital Corporation
By: Xxxxx Xxxxxxxx
Title:
Acknowledged and Agreed:
-----------------------
Convergent Communications Services, Inc.
By: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
29.
[LOGO APPEARS HERE](TM)
July 16, 1999
SCHEDULE OF INFORMATION
This Schedule of Information (this "Schedule") is an integral part of
the Agreement dated as of July 16, 1999 (as amended, modified, renewed or
extended from time to time, the "Credit Agreement") between Convergent
Communications Services, Inc. and Cisco Systems Capital Corporation ("Lender").
Capitalized terms used herein shall have the respective meanings assigned to
them in the Credit Agreement.
1. Information Relating to the Loans and Borrower:
(a) Availability Period: (i) Tranche A-1 and Tranche A-2 (as each are
defined below), for the twelve month period from the Closing Date; Tranche B-1
and Tranche B-2 (as each are defined below), for the twelve month period
beginning on the first day of the thirteenth month from the Closing Date; and
(iii) Tranche C-1 and Tranche C-2 (as each are defined below), for the twelve
month period beginning on the first day of the twenty fifth month from the
Closing Date (the last day of the Tranche C-1 and Tranche C-2 availability
period hereinafter referred to as the "Commitment Expiry Date").
(b) Commitment: $103,500,000 to be made available as follows: (i) up
to $20,000,000 of term Loans ("Tranche A-1"), in multiple drawdowns, in minimum
drawings of $1,000,000 or a multiple of $1,000,000 in excess thereof; (ii) up to
$3,000,000 of term Loans ("Tranche A-2"); (iii) up to $30,000,000 of term Loans
("Tranche B-1"), in multiple drawdowns, in minimum drawings of $1,000,000 or a
multiple of $1,000,000 in excess thereof; (iv) up to $4,500,000 of term Loans
("Tranche B-2"); (v) up to $40,000,000 of term Loans ("Tranche C-1"), in
multiple drawdowns, in minimum drawings of $1,000,000 or a multiple of
$1,000,000 in excess thereof; and (vi) up to $6,000,000 of term Loans ("Tranche
C-2"). Notwithstanding the foregoing, Borrower shall not drawdown more than 15%
of the outstanding Loans of each of Tranche X-0, Xxxxxxx X-0 and Tranche C-1
with respect to each of Tranche X-0, Xxxxxxx X-0 and Tranche C-2, respectively.
(c) Fees:
(i) Closing Fee: 1.50% of the Commitment as of the Closing Date,
payable on each available Tranche Loan (as defined herein).
(ii) Commitment Fee: 1.00% per annum on the average daily unused
portion of the Commitment, computed on a quarterly basis in
arrears on the last
30.
Banking Day of each quarter based on the daily utilization for
that month as calculated by Lender. Such Commitment Fee shall
accrue from the Closing Date to the Commitment Expiry Date and
shall be due and payable quarterly in arrears on the last Banking
Day of each calendar quarter, with the final payment to be made
on the Commitment Expiry Date; provided that, in connection
--------
with any reduction or termination of the Commitment, the accrued
Commitment Fee calculated for the period ending on such reduction
or termination date shall also be paid on the date thereof. The
Commitment Fee provided for herein shall accrue at all times
after the abovementioned commencement date, including at any time
during which one or more conditions precedent in Section 3.2 are
not satisfied.
(iii) Facility Fee: $25,000 per quarter for months in which principal
is outstanding and payable under the Loans. Such Facility Fee
shall accrue from the Closing Date until the date upon which all
Obligations due under the Credit Agreement shall have been paid
in full and shall be due and payable quarterly in arrears on the
last Banking Day of each calendar quarter, with a final payment
to be made on the date upon which such final payment of
Obligations is made. Any payment of Facility Fee for a partial
quarter shall be calculated on a prorated basis.
(iv) Prepayment Fee: 2.00% of the outstanding amount of the Loans as
of the date of such prepayment. The foregoing prepayment fee shall also be due
and payable upon any acceleration of the Loans pursuant to the Credit Agreement.
(d) Closing Deadline: July 30, 1999.
(e) Additional documents and information: Completion of additional
due diligence satisfactory to Lender including, but not limited to steps
required to validate the underlying industry and market assumptions with regard
to Borrower's business plan and pro forma financials.
(f) Other conditions:
(i) Conditions Precedent to Closing Date: The following condition
precedent shall be satisfied on or prior to the Closing Date: (A)
if applicable, execution of an intercreditor agreement with each
senior lender in form and substance satisfactory to Lender,
providing for the subordination of such lender's security
interest in the Collateral and (B) a warrant in favor of Lender
in form and substance reasonably satisfactory to Lender.
(ii) Conditions Precedent to Each Borrowing Date: Additionally, the
following condition(s) precedent shall be satisfied on or prior
to each Borrowing Date: (A) Borrower shall provide to Lender a
detailed schedule
31.
or other listing of the Financed Products at least five Banking
Days prior to the funding of such Loan, and, if any Subsidiary is
the intended recipient of the Financed Products, designation of
the Loan proceeds being borrowed for the benefit of such
Subsidiary and identification of such Subsidiary. (B) Borrower
shall designate whether a proposed Loan is a utilization of
Tranche X-0, Xxxxxxx X-0, Xxxxxxx X-0, Tranche B-2, Tranche C-1
or Tranche C-2 (C) Each Loan request under Tranche X-0,
Xxxxxxx X-0 and Tranche C-1 must be in principal amounts of at
least $1,000,000.
(g) Subsidiaries: None.
2. Additional Terms and Conditions:
(a) Use of Proceeds: Financing of Borrower's purchase of Cisco
Products from the Vendor thereof for Tranche X-0, Xxxxxxx X-0 and Tranche C-1.
Financing of any expenses associated with the integration and installation of
Cisco Systems equipment for Tranche X-0, Xxxxxxx X-0 and Tranche C-2
("Additional Costs").
(b) Note(s): (i) Promissory Note in substantially the form of
Exhibit B evidencing the Loans under Tranche A-1 (the "Tranche A-1 Loans"); (ii)
---------
Promissory Note in the form of Exhibit C, evidencing the Loans under Tranche A-2
---------
(the "Tranche A-2 Loans"); (iii) Promissory Note in substantially the form of
Exhibit D evidencing the Loans under Tranche B-1 (the "Tranche B-1 Loans"); (iv)
---------
Promissory Note in the form of Exhibit E, evidencing the Loans under Tranche B-2
---------
(the "Tranche B-2 Loans"); (v) Promissory Note in substantially the form of
Exhibit F evidencing the Loans under Tranche C-1 (the "Tranche C-1 Loans"); (vi)
Promissory Note in the form of Exhibit G, evidencing the Loans under Tranche C-2
---------
(the "Tranche C-2 Loans") (collectively, the "Tranche Loans").
(c) Mandatory Prepayment: Commencing six months following the
Closing Date, Borrower shall be subject to mandatory prepayment of any principal
and any accrued but unpaid interest of Loans outstanding under Tranche X-0,
Xxxxxxx X-0 and Tranche C-2 out of the net proceeds of a sale or series of sales
of any of its equity securities or debt instruments, which in the aggregate
raise at least $20,000,000 of additional capital; provided, however, that if
Borrower prepays any of its senior creditors as a result of a mandatory
prepayment provision triggered by Borrower raising additional capital pursuant
to a sale or series of sales of its equity securities or debt instruments,
Borrower shall prepay Lender in an amount equal to the quotient of X over Y
multiplied by Z (the "Prepayment Equation") where:
X = the outstanding amount of Loans under Tranche X-0, Xxxxxxx X-0
and Tranche C-2 as of the date of such prepayment due to Lender;
Y = the aggregate amount of loans outstanding due to each of the
senior creditors plus the aggregate amount of Loans outstanding
due to Lender under Tranche X-0, Xxxxxxx X-0 and Tranche C-2; and
32.
Z = the aggregate amount Borrower is required to prepay senior
creditors.
Notwithstanding the foregoing, Borrower shall be subject to mandatory prepayment
of any principal and any accrued interest of Loans outstanding under any of the
Tranche Loans, in the event Borrower shall prepay any of its senior creditors
(other than the GSCP Facility). Prepayment pursuant to the foregoing sentence
shall be made in an amount equal to the Prepayment Equation where:
X = the outstanding amount of Loans under any of the Tranche Loans as
of the date of such prepayment due to Lender;
Y = the aggregate amount of loans outstanding due to each of the
senior creditors plus the aggregate amount of Loans outstanding
due to Lender under any of the Tranche Loans; and
Z = the aggregate amount Borrower is required to prepay senior
creditors
(d) Optional Prepayment: Upon 10 days prior written notice to Lender,
Borrower may, at its option, at any time, prepay the Loans in whole at a
prepayment price equal to the outstanding principal amount of the Loans, plus
interest accrued thereon through and including the date of such prepayment, plus
the Prepayment Fee.
(e) Guaranty: Guaranty, in form and substance satisfactory to
the Lender, made by Holdings, as guarantor, in favor of Lender.
(f) Collateral Documents: Security Agreement between Lender
and Borrower in form and substance satisfactory to the Lender and Security
Agreement between Lender and Holdings in form and substance satisfactory to the
Lender.
(g) Financing Documents: Credit and Guaranty Agreement, dated
June 3, 1999 among Holdings, Borrower and Convergent Capital Corporation,
various Lenders and Xxxxxxx Xxxxx Credit Partners, L.P., (with the Lenders,
collectively and individually the "Creditor").
3. Addresses for Notices:
(a) Borrower:
Convergent Communications Services, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Legal Department
Fax No.: (000) 000-0000
33.
(b) Lender:
Cisco Systems Capital Corporation
Mailstop SJC2 - 3rd Floor
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Loan Administration, Worldwide Financial Services
Fax No.: (000) 000-0000
4. Lender's Account for Payments:
Account no.: 1233124070
Ref. "Convergent Communications Services, Inc."
ABA no.: 000000000
Account maintained with:
Bank of America
Concord, California
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34.
Acknowledged and agreed:
-----------------------
Cisco Systems Capital Corporation
By /s/ Xxxxx Xxxxxxxx
Title:
Convergent Communications Services, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
Title: Executive Vice President
35.
