Exhibit 10.35
EXECUTION COPY
GUARANTY
THIS GUARANTY ("Guaranty"), dated as of July 16, 1999, is made by
CONVERGENT COMMUNICATIONS, INC., a Colorado corporation ("Guarantor"), in favor
of CISCO SYSTEMS CAPITAL CORPORATION., a Nevada corporation ("Lender").
Convergent Communications Services, Inc., a Colorado corporation
("Company"), and Lender are parties to an Agreement dated as of July 16, 1999
(as amended, modified, renewed or extended from time to time, the "Agreement").
Guarantor has agreed to guarantee the indebtedness and other obligations of
Company to Lender under or in connection with the Agreement as set forth herein.
Guarantor will derive substantial direct and indirect benefits from the
extension of credit to Company (which benefits are hereby acknowledged by the
Guarantor).
Accordingly, to induce Lender to extend credit to Company, and in
consideration thereof, Guarantor hereby agrees as follows:
1. Guaranty. Guarantor hereby unconditionally and irrevocably
guarantees to Lender the full and prompt payment when due (whether at stated
maturity, declaration, acceleration, demand or otherwise) and performance of all
indebtedness, liabilities and other obligations of Company to Lender, whether
created under, arising out of or in connection with Agreement or any other
document or instrument executed or delivered in connection therewith (each a
"Document" and, collectively, the "Documents") or otherwise, including all
unpaid principal, all interest accrued thereon, all fees due to Lender and all
other amounts payable by Company to Lender thereunder or in connection
therewith. The terms "indebtedness," "liabilities" and "obligations" are used
herein in their most comprehensive sense and include any and all advances,
debts, obligations and liabilities, now existing or hereafter arising,
regardless of by what instrument, agreement, contract or entry in Lender's
accounts they may be evidenced, or whether evidenced by any instrument,
agreement, contract or entry in Lender's accounts, whether voluntary or
involuntary and whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether recovery upon such
indebtedness, liabilities and obligations may be or hereafter become
unenforceable under the Bankruptcy Reform Act of 1978 (the "Bankruptcy Code") or
other applicable law. The foregoing indebtedness, liabilities and other
obligations of Company, and all other indebtedness, liabilities and obligations
to be paid or performed by Guarantor in connection with this Guaranty (including
any and all amounts due under Section 11 hereof), shall hereinafter be
collectively referred to as the "Obligations."
2. Liability of Guarantor. The liability of Guarantor under this
Guaranty shall be irrevocable, absolute, independent and unconditional, and
shall not be affected by any circumstance which might constitute a discharge of
a surety or guarantor other than the indefeasible payment and performance in
full of all Obligations. In furtherance of the foregoing and without limiting
the generality thereof, Guarantor agrees as follows: (i) Guarantor's liability
hereunder shall be the immediate, direct, and primary obligation of Guarantor
and shall not be contingent upon Lender's exercise or enforcement of any remedy
it may have against Company
1.
or any other person or entity ("Person"), or against any collateral for any
Obligations; (ii) this Guaranty is a guaranty of payment when due and not of
collectibility; (iii) Guarantor's payment of a portion, but not all, of the
Obligations shall in no way limit, affect, modify or abridge Guarantor's
liability for any portion of the Obligations remaining unsatisfied; and (iv)
Guarantor's liability with respect to the Obligations shall remain in full force
and effect without regard to, and shall not be impaired or affected by, nor
shall Guarantor be exonerated or discharged by, (A) any insolvency, bankruptcy,
reorganization, arrangement, adjustment, composition, assignment for the benefit
of creditors, liquidation, winding up or dissolution of Company, Guarantor, any
other guarantor or any other Person; (B) any limitation, discharge, or cessation
of the liability of Company, any other guarantor or any other Person for any
Obligations due to any statute, regulation or rule of law, or any invalidity or
unenforceability in whole or in part of any of the Obligations; (C) any merger,
acquisition, consolidation or change in structure of Company, Guarantor or any
other guarantor or Person, or any sale, lease, transfer or other disposition of
any or all of the assets or shares of Company, Guarantor, any other guarantor or
other Person; (D) any assignment or other transfer, in whole or in part, of
Lender's interests in and rights under this Guaranty; (E) any claim, defense,
counterclaim or setoff, other than that of prior performance, that Company,
Guarantor, any other guarantor or other Person may have or assert, including any
defense of incapacity or lack of corporate or other authority to execute or
deliver any Document or this Guaranty or any other document related thereto; (F)
any direction of application of payment to Company, Guarantor, any other
guarantor or other Person; and (G) Lender's vote, claim, distribution, election,
acceptance, action or inaction in any bankruptcy case related to the
Obligations.
3. Consents. Guarantor hereby consents and agrees that, without
notice to or further assent from Guarantor: (i) the time, manner, place or terms
of any payment under any Document may be extended or changed, by a modification
or renewal of any Document or otherwise; (ii) the time for Company's performance
of or compliance with any term, covenant or agreement on its part to be
performed or observed under any Document may be extended, or such performance or
compliance waived, or failure in or departure from such performance or
compliance consented to, all in such manner and upon such terms as Lender may
deem proper; (iii) Lender may discharge or release, in whole or in part, any
other guarantor or any other Person liable for the payment and performance of
all or any part of the Obligations, and may permit or consent to any such action
or any result of such action, and Lender shall not be liable to Guarantor for
any failure to collect or enforce payment of the Obligations; (iv) Lender may
take and hold security of any kind, at any time, as collateral for the
Obligations, may request and accept other guaranties and may, from time to time,
in whole or in part, exchange, sell, surrender, release, subordinate, modify,
waive, rescind, compromise or extend such security or guaranties; and (v) Lender
may exercise, or waive or otherwise refrain from exercising, any other right,
remedy, power or privilege granted by any Document, or otherwise available to
Lender, with respect to the Obligations and any collateral therefor, even if the
exercise of such right, remedy, power or privilege affects or eliminates any
right of subrogation or any other right of Guarantor against Company; all as
Lender may deem advisable, and all without impairing, abridging, releasing or
affecting this Guaranty.
2.
4. Waivers. (a) Guarantor waives and agrees not to assert: (i) any right
to require Lender to proceed against Company, any other guarantor or any other
Person, to proceed against or exhaust any collateral or other security held for
the Obligations (except to the extent required by applicable law), to give
notice of or institute any public or private sale, foreclosure, or other
disposition of any collateral or security for the Obligations, including,
without limitation, to comply with applicable provisions of the New York Uniform
Commercial Code or any equivalent provision of any other applicable law in
connection with the sale, foreclosure, or other disposition of any collateral or
to pursue any other right, remedy, power or privilege of Lender whatsoever, or
give Guarantor any other notice with respect to the foregoing; (ii) the defense
of the statute of limitations in any action hereunder or for the collection or
performance of the Obligations; and (iii) to the fullest extent permitted by
law, any other defenses or benefits that may be derived from or afforded by
applicable law limiting the liability of or exonerating guarantors or sureties,
or which may conflict with the terms of this Guaranty. (b) Guarantor waives any
and all notice of the acceptance of this Guaranty, and any and all notice of the
creation, renewal, modification, extension or accrual of the Obligations. The
Obligations shall conclusively be deemed to have been created, contracted,
incurred and permitted to exist in reliance upon this Guaranty. Guarantor waives
promptness, diligence, presentment, protest, demand for payment, notice of
default, dishonor or nonpayment and all other notices to or upon Company,
Guarantor or any other Person with respect to the Obligations. (c) The
obligations of Guarantor hereunder are independent of and separate from the
obligations of Company and any other guarantor and upon the occurrence and
during the continuance of any Default, a separate action or actions may be
brought against Guarantor, whether or not Company or any such other guarantor is
joined therein or a separate action or actions are brought against Company or
any such other guarantor. (d) Guarantor shall not have any right to require
Lender to obtain or disclose any information with respect to the Obligations,
the financial condition or character of Company or the ability of Company to pay
and perform the Obligations, any collateral or other security for any or all of
the Obligations, the existence or non-existence of any other guarantees of all
or any part of the Obligations, any action or inaction on the part of Lender or
any other Person, or any other matter, fact or occurrence whatsoever.
5. Subrogation. Until the Obligations shall be satisfied in full,
Guarantor shall not have, and shall not directly or indirectly exercise, (i) any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment hereunder or otherwise, (ii) any rights of contribution,
indemnification, reimbursement or similar suretyship claims arising out of this
Guaranty, or (iii) any other right which it might otherwise have or acquire (in
any way whatsoever) which could entitle it at any time to share or participate
in any right, remedy or security of the Lender as against Company or other
guarantors, whether in connection with this Guaranty or otherwise. If any amount
shall be paid to Guarantor on account of the foregoing rights at any time when
any Obligations are outstanding, such amount shall be held in trust for the
benefit of Lender and shall forthwith be paid to Lender to be credited and
applied to the Obligations.
6. Continuing Guaranty. Guarantor agrees that this Guaranty is a
continuing guaranty relating to any Obligations, including Obligations which may
exist continuously or which may arise from time to time under successive
transactions, and Guarantor expressly
3.
acknowledges that this Guaranty shall remain in full force and effect
notwithstanding that there may be periods in which no Obligations exist. This
Guaranty shall continue to be effective or shall be reinstated and revived, as
the case may be, if, for any reason, any payment of the Obligations by or on
behalf of Company shall be rescinded or must otherwise be restored by Lender,
whether as a result of proceedings in bankruptcy or reorganization or otherwise.
To the extent any payment is rescinded or restored, the Obligations shall be
revived in full force and effect without reduction or discharge for such
payment.
7. Payments. Guarantor hereby agrees, in furtherance of the foregoing
provisions of this Guaranty and not in limitation of any other right which
Lender or any other Person may have against Guarantor by virtue hereof, that
upon any Default Guarantor shall forthwith pay, or cause to be paid, in cash, to
Lender an amount equal to the amount of the Obligations then due and unpaid
(including interest which, but for the filing of a petition in bankruptcy with
respect to Company, would have accrued on such Obligations, whether or not a
claim is allowed against Company for such interest in any such bankruptcy
proceeding). All payments made by Guarantor hereunder may be applied in such
order as Lender shall elect. Guarantor shall make each payment hereunder,
without deduction (whether for taxes or otherwise), set-off or counterclaim, on
the day when due in same day or immediately available funds, and in U.S.
dollars. As used herein, "Default" means any of the following: (i) Company
shall fail to pay when due (whether at stated maturity, declaration,
acceleration, demand or otherwise) any of the Obligations; (ii) Guarantor shall
fail in any material respect to perform or observe any term, covenant or
agreement contained in this Guaranty on its part to be performed or observed; or
(iii) (A) Company or Guarantor shall admit in writing its inability to, or shall
fail generally or be generally unable to, pay its debts as they become due, or
shall make a general assignment for the benefit of creditors, or shall file a
voluntary petition in bankruptcy or a petition or answer seeking reorganization,
to effect a plan or other arrangement with creditors or any other relief under
the Bankruptcy Code or under any other state or federal law relating to
bankruptcy or reorganization granting relief to debtors, whether now or
hereafter in effect (collectively, "Bankruptcy Laws"), (B) Company or Guarantor
shall be adjudicated a bankrupt, or shall make an assignment for the benefit of
creditors, or shall apply for or consent to the appointment of any custodian,
receiver or trustee for all or any substantial part of Company's or Guarantor's
property, or shall take any action to authorize any of the actions set forth
above in this clause, or (C) an involuntary petition seeking any of the relief
specified in this clause shall be filed against Company or Guarantor, or any
order for relief shall be entered against Company or Guarantor in any
involuntary proceeding under any Bankruptcy Laws.
8. Representations.
(h) Guarantor (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 hereunder and under
any other documents and agreements executed and delivered to lender in
connection with the Agreement (the "Guarantor Documents"), as applicable, (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
4.
(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.
(i) The execution, delivery and performance by Guarantor of the
Guarantor Documents have been duly authorized by all necessary corporate action
of Guarantor and do not and will not (i) contravene the terms of the articles or
certificate of incorporation, or bylaws, of Guarantor or result in a breach of
or constitute a default under any material lease, instrument, contract or other
agreement to which Guarantor 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 Guarantor.
(j) The Guarantor Documents constitute, or when delivered under this
Agreement will constitute, legal, valid and binding obligations of Guarantor,
enforceable against Guarantor in accordance with their respective terms.
(k) 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 Guarantor or any Guarantor of any of the Guarantor Documents or the purchase
of the Cisco Products, except as may be set forth in the Schedule.
(l) There are no actions, suits or proceedings pending or, to the
best of Guarantor's knowledge, threatened against or affecting Guarantor or any
of its Subsidiaries before any Governmental Authority or arbitrator which would
reasonably be expected to result in a Material Adverse Change.
(m) All consolidated financial statements of Guarantor and its
Subsidiaries delivered to Lender are complete and correct and fairly present the
financial condition of Guarantor 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.
(n) Each of Guarantor 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, that are reasonably necessary for the ownership,
maintenance and operation of its business, and neither Guarantor nor any such
Subsidiary is in material violation of any rights of others with respect to the
foregoing.
(o) The properties of Guarantor 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 Guarantor or such Subsidiary operates.
5.
(p) On the basis of a review and assessment of Guarantor's and its
Subsidiaries' systems and equipment and that of its material suppliers, vendors
and customers, Guarantor 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.
(q) None of the representations or warranties made by Guarantor in
the Guarantor Documents as of the date of such representations and warranties,
and none of the statements contained in any other information with respect to
Guarantor and its Subsidiaries, including each exhibit or report, furnished by
or on behalf of Guarantor to Lender in connection with the Guarantor 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.
(r) As of the date hereof, the Restricted Subsidiaries include only
the Company and Convergent Capital Corporation
1. Covenants.
(a) Except as permitted by Section 9(f), Guarantor 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 9.
(b) Guarantor 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.
(c) Guarantor 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.
(d) Guarantor 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
6.
customarily carried by companies engaged in the same or similar businesses and
owning similar properties in the localities where Guarantor or such Subsidiary
operates. Without limiting the generality of the foregoing, Guarantor shall, and
shall cause each of its Subsidiaries to, comply with all requirements of the
Collateral Documents pertaining to maintenance of insurance.
(e) Guarantor 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.
(f) Guarantor 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:
(i) any of Guarantor's Subsidiaries may merge with or consolidate
into Guarantor or any Subsidiary of Guarantor (provided that the surviving
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or transferee entity is the Guarantor or a Restricted Subsidiary) and in
connection therewith such Subsidiary may be liquidated or dissolved;
(ii) any of Guarantor's Subsidiaries may transfer all or
substantially all of its assets (except Financed Products) to any
Subsidiary of Guarantor;
(iii) Guarantor or any of its Subsidiaries may sell or dispose of
assets in accordance with the provisions of Section 9(g);
(iv) Guarantor or any of its Subsidiaries may make any investment
permitted by Section 9(h);
(v) Guarantor may merge with or consolidate into any other Person
provided that (i) the Guarantor 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 the Agreement; and
(vi) any Subsidiary of Guarantor may merge with or consolidate into
any other Person, provided that (i) in the case of the Company, the Company
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; (iii) all actions have been taken (to the satisfaction of the
Lender) to protect and continue perfected the Liens of the Lender under the
Agreement and (iv) such merger or consolidation does not contravene with
the terms and conditions of the Agreement;
provided, further that Lender shall have received prior written notice of
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the consummation of any transaction permitted under this Section 9(f)
promptly, and in any event no less than 15 Banking Days prior to the
consummation thereof.
7.
(g) Except as permitted by the Agreement and hereunder, Guarantor shall
not, and shall not permit any of its Subsidiaries to: (i) effect any Transfer
involving the Company or any other Transfer of any assets, provided that
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Guarantor shall be permitted to Transfer assets (other than Financed Products)
from Guarantor to any Restricted Subsidiary; (ii) create, incur, assume or
suffer to exist any Lien upon or with respect to any of its properties, revenues
or assets, whether now owned or hereafter acquired; or (iii) create, incur,
assume or otherwise become liable for or suffer to exist any Indebtedness,
provided that the Guarantor shall be permitted to incur unsecured Indebtedness
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and Indebtedness of Guarantor to any Restricted Subsidiary.
(h) Guarantor 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 Guarantor to any of its wholly owned Subsidiaries or by any of its wholly
owned Subsidiaries to another of its wholly owned Subsidiaries; and (iii) short
term, investment grade money market instruments, in accordance with Guarantor's
usual and customary treasury management policies. Notwithstanding the
foregoing, Guarantor or any of its Subsidiaries, shall be permitted to engage in
one or more Permitted Acquisitions.
(i) On a consolidated basis, Guarantor and its Subsidiaries shall maintain
total revenues of the Guarantor and its Subsidiaries for each quarterly period
set forth below of not less than the correlative amount indicated:
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Quarterly Period Ending Required Amount
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September 30, 1999 $ 34,000,000
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December 31, 1999 $ 42,500,000
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March 31, 2000 $ 52,700,000
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June 30, 2000 $ 64,600,000
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September 30, 2000 $ 76,500,000
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December 31, 2000 $ 85,000,000
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March 31, 2001 $ 92,500,000
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June 30, 2001 $ 101,000,000
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September 30, 2001 $ 110,000,000
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December 31, 2001 $ 118,000,000
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March 31, 2002 $ 130,000,000
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June 30, 2002 $ 145,000,000
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September 30, 2002 $ 157,000,000
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December 31, 2002 $ 171,000,000
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March 31, 2003 $ 183,000,000
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June 30, 2003 $ 200,000,000
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September 30, 2003 $ 216,250,000
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December 31, 2003 $ 233,000,000
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8.
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Quarterly Period Ending Required Amount
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March 31, 2004 $243,000,000
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June 30, 2004 $265,500,000
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September 30, 2004 $287,500,000
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December 31, 2004 $310,000,000
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March 31, 2005 $315,000,000
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June 30, 1005 $343,500,000
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September 30, 2005 $372,250,000
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December 31, 2005 $400,000,000
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(j) On a consolidated basis, Guarantor and its Subsidiaries shall maintain
EBITDA for each quarterly period set forth below of not less than the
correlative amount indicated (bracketed amounts (( )) are negative):
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Quarterly Period Ending Required Amount
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September 30, 1999 ($ 11,000,000)
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December 31, 1999 ($ 9,000,000)
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March 31, 2000 ($ 5,000,000)
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June 30, 2000 $ 0
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September 30, 2000 $ 3,000,000
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December 31, 2000 $ 6,000,000
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March 31, 2001 $ 9,000,000
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June 30, 2001 $ 12,250,000
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September 30, 2001 $ 13,250,000
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December 31, 2001 $ 16,250,000
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March 31, 2002 $ 21,000,000
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June 30, 2002 $ 25,750,000
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September 30, 2002 $ 28,000,000
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December 31, 2002 $ 33,000,000
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March 31, 2003 $ 38,000,000
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June 20, 2003 $ 44,250,000
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September 30, 2003 $ 48,000,000
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December 31, 2003 $ 54,000,000
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March 31, 2004 $ 61,000,000
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June 30, 2004 $ 71,250,000
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September 30, 2004 $ 78,000,000
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December 31, 2004 $ 87,000,000
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March 31, 2005 $ 95,000,000
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June 30, 2005 $103,250,000
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September 30, 2005 $112,000,000
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December 31, 2005 $120,500,000
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9.
"EBITDA" shall mean with respect to any fiscal period of a Person,
such Person's earnings (excluding extraordinary items (determined in accordance
with GAAP)), plus (except to the extent attributable to extraordinary items
----
(determined in accordance with GAAP)) the amount of any interest, taxes,
depreciation, amortization deducted in arriving at such earnings, and, without
duplication, plus losses and less gains upon dispositions of properties added or
----
deducted in arriving at such earnings.
(k) On a consolidated basis, the Guarantor and its Subsidiaries shall not
permit the ratio of Consolidated Funded Debt to Capitalization to exceed the
percentage amount set forth below (determined as of the end of the quarterly
period set forth below):
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Quarterly Period Ending Required Percentage
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September 30, 1999 79%
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December 31, 1999 69%
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March 31, 2000 72%
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June 30, 2000 72%
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September 30, 2000 72%
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December 31, 2000 72%
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March 31, 2001 74%
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June 30, 2001 74%
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September 30, 2001 74%
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December 31, 2001 74%
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March 31, 2002 75%
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June 30, 2002 75%
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September 30, 2002 75%
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December 31, 2002 75%
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March 31, 2003 80%
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June 20, 2003 80%
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September 30, 2003 80%
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December 31, 2003 80%
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March 31, 2004 80%
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June 30, 2004 80%
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September 30, 2004 80%
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December 31, 2004 80%
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March 31, 2005 80%
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June 30, 2005 80%
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September 30, 2005 80%
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December 31, 2005 80%
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As used in this subsection (k), the following terms shall have the following
meanings:
(i) "Consolidated Funded Debt" means, as of any date of
determination, all Indebtedness of Guarantor and its Subsidiaries on such date,
on a consolidated
10.
basis and as determined in accordance with GAAP.
(ii) "Capitalization" means, on any date, the sum of (x)
Consolidated Funded Debt, plus (y) the sum of capital stock plus paid in capital
of Guarantor and its Subsidiaries on such date, on a consolidated basis and as
determined in accordance with GAAP.
(l) On a consolidated basis, Guarantor and its Subsidiaries shall not
permit its Operating Cash excluding Restricted Cash to fall below $15,000,000 at
any time. As used in this subsection (l) the following terms shall have the
following meanings:
(i) "Operating Cash" shall mean any cash, cash equivalent or short
term, investment grade money market instruments usual and customary to
Guarantor's treasury management policies.
(ii) "Restricted Cash" shall mean any Operating Cash which is used to
fund the ongoing operations of the Guarantor and assigned as collateral,
interest or other supportive funding for specific operational issues.
(m) The Guarantor shall at all times be the beneficial and record owner of
100% of the capital stock (including all warrants, options or other rights to
acquire capital stock of any class) of the Company.
(n) Guarantor shall not declare or pay any dividends in respect of
Guarantor's capital stock, or purchase, redeem, retire or otherwise acquire for
value any of its capital stock now or hereafter outstanding, return any capital
to its shareholders as such, or make any distribution of assets to its
shareholders as such, or permit any of its Subsidiaries to purchase, redeem,
retire, or otherwise acquire for value any stock of Guarantor, except that
Guarantor may: (A) declare and deliver dividends and distributions payable only
in common stock of Guarantor; and (B) purchase, redeem, retire, or otherwise
acquire shares of its capital stock from officers, directors and employees upon
termination or cessation of employment with Guarantor or with the proceeds
received from a substantially concurrent issue of new shares of its capital
stock.
(o) Guarantor 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. Guarantor shall provide Lender and its agents access to
the premises of Guarantor 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 any and all records pertaining thereto, and (iii)
discussing the affairs, finances and business of Guarantor and its Subsidiaries
with any officer, employee or director of Guarantor or with its accountants.
(p) (A) If Guarantor proposes to incorporate, create or acquire any
additional Subsidiary, Guarantor shall notify Lender thereof. After the
incorporation, creation or acquisition of any such Subsidiary, within five
Banking Days following receipt by Guarantor from Lender of a security agreement,
in form and substance satisfactory to Lender, and a
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guaranty of the Obligations in form and substance satisfactory to Lender,
Guarantor 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, Guarantor 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, Guarantor 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.
(q) Guarantor shall not designate any of its Subsidiaries a Restricted
Subsidiary unless it is a wholly-owned Subsidiary of Company.
(r) Guarantor 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 Guarantor, 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 Guarantor or any such Subsidiary than
those which might be obtained at the time from a Person who is not an Affiliate.
10. Notices. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including by facsimile)
and shall be mailed, sent or delivered (i) if to Lender, to Cisco Systems, Inc.,
Worldwide Financial Services, Mailstop SJC2-3rd Floor, 000 Xxxx Xxxxxx Xxxxx,
Xxx Xxxx, XX 00000-0000, attn. Loan Administration, fax (000) 000-0000; and (ii)
if to Guarantor, at or to its address or facsimile number set forth below its
name on the signature page hereof, or at or to such other address or facsimile
number as such party shall have designated in a written notice to the other
party. All such notices and communications shall be effective upon receipt.
11. No Waiver. No failure on the part of Lender to exercise, and no delay
in exercising, any right, remedy, power or privilege hereunder 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 this Guaranty are cumulative and not exclusive of any rights, remedies,
powers and privileges that may otherwise be available to Lender.
12. Costs and Expenses. Guarantor agrees to pay on demand all reasonable
costs and expenses of Lender and reasonable fees and disbursements of counsel in
connection with the enforcement, or preservation of any rights under, this
Guaranty.
13. Binding Effect; Entire Agreement; Amendments. This Guaranty shall be
binding upon Guarantor and its successors and assigns, and inure to the benefit
of and be enforceable by Lender and its successors, endorsees, transferees and
assigns; provided that Guarantor shall not have the right to assign or transfer
its rights and obligations hereunder without the prior written consent of
Lender. This Guaranty constitutes the entire agreement of
12.
Guarantor with respect to the matters set forth herein and supersedes any prior
agreements, commitments, discussions and understandings, oral or written, with
respect thereto. This Guaranty may not be amended except by a writing signed by
Guarantor and Lender. No waiver of any rights of Lender under any provision of
this Guaranty or consent to any departure by Guarantor therefrom shall be
effective unless in writing and 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.
14. Severability. Whenever possible, each provision of the Guaranty shall
be interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Guaranty shall be
prohibited by or invalid under any such law or regulation, it shall 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 this Guaranty.
15. Law; Submission to Jurisdiction. This Guaranty shall be governed by
and construed in accordance with New York law. Guarantor hereby (i) submits to
the non-exclusive jurisdiction of the courts of State of New York and the
Federal courts of the United States sitting in the Borough of Manhattan for the
purpose of any action or proceeding arising out of or relating to this Guaranty,
(ii) agrees that all claims in respect of any such action or proceeding may be
heard and determined in such courts, (iii) 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
foregoing courts in and of the State of New York, and any objection on the
ground that any such action or proceeding in any such court has been brought in
an inconvenient forum, and (iv) agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner permitted by law.
(remainder of page intentionally left blank)
13.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty, as
of the date first above written.
Convergent Communications, Inc.
By: _________________________________
Title:
Address:
000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Legal Department
Fax: (000) 000-0000
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