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As filed with the Securities and Exchange Commission on February 4, 2000.
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CONVERGENT COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
Colorado 4813 84-1337265
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
400 Inverness Drive South, Suite 400
Englewood, Colorado 80112
(Address of Principal Executive Offices, including Zip Code)
Convergent Communications, Inc.
401(k) Savings Plan
(Full Title of the Plan)
MARTIN E. FREIDEL
Convergent Communications, Inc.
Executive Vice President and General Counsel
400 Inverness Drive South, Suite 400
Englewood, Colorado 80112
(Name and Address of Agent for Service)
(303) 749-3000
(Telephone Number, Including Area Code, of Agent for Service)
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Copies to:
RICHARD M. RUSSO, Esq.
Gibson, Dunn & Crutcher LLP
1801 California Street, Suite 4100
Denver, Colorado 80202-2641
(303) 298-5700
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed Maximum
Title of Securities Amount to be Maximum Offering Aggregate Offering Amount of
to be registered Registered Price Per Share (1) Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common stock, no par
value (2)............. 423,844 N/A $ 3,880,822 $ 1,024.54
- ----------------------------------------------------------------------------------------------------------
Common stock (3) 326,156 N/A $ 2,986,366 $ 788.40
- ----------------------------------------------------------------------------------------------------------
Total......... 750,000 N/A $ 6,867,188 $ 1,812.94*
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</TABLE>
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement on Form S-8 also covers an indeterminate amount of plan
interests, to be offered or sold pursuant to the employee benefit plan described
herein.
* The filing fee of $1,812.94 was sent by two separate wires on January 2,
2000, one in the amount of $1,782.00 and the other in the amount of $30.94.
(1) Estimated solely for the purpose of calculating the registration fee.
(2) These shares are offered under our 401(k) savings plan, a profit sharing
plan which is qualified under Section 401(a) of the Internal Revenue Code
and which provides for contributions pursuant to Section 401(k) of the
Code. Pursuant to Rule 457(h)(1), the filing fee for these shares is
calculated based upon the average high and low prices of our common stock
reported on January 31, 2000, which was $9.15625 per share.
(3) These shares are offered for resale and were issued under the plan set
forth above. Pursuant to Rule 457(h)(3), the filing fee for the 326,156
shares that have been issued is calculated based upon the average high and
low prices of our common stock reported on January 31, 2000, which was
$9.15625 per share.
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INTRODUCTORY STATEMENT
Convergent Communications, Inc., a Colorado corporation, hereby files this
registration statement on Form S-8 relating to 750,000 shares of our common
stock, no par value, issuable in connection with our 401(k) savings plan (the
"Plan").
The shares of our common stock, reserved for issuance or to be awarded
pursuant to the Plan, have not been registered under the Securities Act.
However, we have issued shares under the Plan pursuant to a valid exemption from
the registration requirements of the Securities Act, resulting in the issuance
by us of restricted shares of common stock.
This registration statement is intended to register the following for
issuance by us:
1. 423,844 shares of common stock that we may issue pursuant to the Plan.
Also, this registration statement, and the reoffer prospectus included
herein, is intended to register the following for reoffer and/or resale:
1. 326,156 restricted shares of common stock that we have issued under
the Plan pursuant to a valid exemption from the registration requirements of
the Securities Act; and
2. Shares of common stock that may be acquired in the future under the
Plan by persons who may be considered our affiliates as defined by Rule 405
under the Securities Act.
The materials constituting the reoffer prospectus have been prepared
pursuant to Part I of Form S-3, in accordance with General Instruction C to Form
S-8.
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REOFFER PROSPECTUS
CONVERGENT COMMUNICATIONS INC.
Common stock
(no par value)
Up To 750,000 Shares
This Prospectus relates to up to 750,000 shares of common stock, no par
value, of Convergent Communications, Inc. that were acquired or will be acquired
pursuant to our 401(K) savings plan (the "Plan") by, and which may be offered
for resale from time to time by, certain of our employees and our subsidiaries
named in Annex 1 hereto (the "Selling Shareholders").
We will not receive any of the proceeds from the sale of the common stock
(hereinafter, the "Securities"). We will pay all of the expenses associated
with the registration of the Securities and this Prospectus. The Selling
Shareholders will pay the other costs, if any, associated with any sale of the
Securities.
Our common stock is quoted on the NASDAQ National Market under the symbol
"CONV." On January 31, 2000, the last reported sale price per share of our
common stock, as quoted on the NASDAQ National Market, was $9.15625.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
_______________________________
The date of this Prospectus is February 4, 2000.
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AVAILABLE INFORMATION
We have filed a registration statement on Form S-8 with the Securities and
Exchange Commission under the Securities Act of 1933. This Prospectus omits
some information and exhibits included in the registration statement, copies of
which may be obtained upon payment of a fee prescribed by the Commission or may
be examined free of charge at the principal office of the Commission in
Washington, D.C.
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and in accordance therewith file reports, proxy statements and
other information with the Commission. The reports, proxy statements and other
information filed by us with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission
located at 500 West Madison Street, Room 1400, Chicago, Illinois 60606 and at
the Jacob K. Javits Federal Building, 75 Park Place, New York, New York 10278.
Copies of filings can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Commission maintains a website that contains reports,
proxy and informational statements and other information filed electronically
with the Commission at http://www.sec.gov.
INCORPORATION BY REFERENCE
The following documents previously filed by us with the Commission are
incorporated in this registration statement by reference:
(1) Our Prospectus filed on July 20, 1999 pursuant to Rule 424(b) of the
Securities Act;
(2) The Plan's Annual Report on Form 11-K for the year ended December 31,
1998;
(3) Our Quarterly Reports on Form 10-Q/A for the quarters ended March 31,
1999 and June 30, 1999 and our Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999;
(4) Our Current Report on Form 8-K filed on August 19, 1999; and
(5) The description of our common stock contained in our registration
statement on Form S-1 (Registration No. 333-78483) under the caption
"Description of Capital Stock".
All reports and other documents that we file pursuant to Sections 13(a) and
13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all securities offered hereunder have been sold
or which deregisters all such securities then remaining unsold are incorporated
by reference in this registration statement and to be a part hereof from the
date of filing of such reports and documents.
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RISK FACTORS
We Have a Limited Operating History
We have only been operating since March 1996. Accordingly, we have a
limited operating history upon which an evaluation of our performance and
prospects can be based. We face all of the risks common to companies in their
early stage of development in an emerging industry, including:
. under capitalization;
. cash shortages;
. high capital expenditures;
. an unproven business model;
. difficulties in managing rapid growth; and
. lack of sufficient customers, revenue, cash flow or EBITDA to be self-
sustaining.
In addition, since we are a new company, we have limited experience in
providing some of the products and services we currently offer, including
Internet access, web development and hosting services, electronic commerce
solutions, virtual private networks, frame relay and transport services. Our
failure to address any of the risks described above could have a material
adverse effect on our business, financial condition and results of operations
and on the price of our common stock.
We Have Experienced Increasing Negative EBITDA, Operating Losses and Net Losses
Since our formation we have generated larger negative EBITDA, operating
losses and net losses each quarter. For 1998, we had negative EBITDA of $30.0
million, an operating loss of $37.5 million and a net loss of $50.6 million.
For the first three quarters of 1999, we had negative EBITDA of $41.9 million,
an operating loss of $53.8 million and a net loss of $69.4 million. Our
preliminary estimates for the quarter ended December 31, 1999, include a range
of $48 million to $50 million for fourth quarter revenue, and 1999 year-end
revenue of $160 million to $162 million, up from $24.8 million in revenue for
the quarter ended December 31, 1998, and $61.6 million in revenue for the year
ended December 31, 1998. These trends will need to be reversed or our common
stock will lose its value. We cannot assure you that we will achieve or sustain
positive EBITDA, operating income or net income in the future. If we cannot, we
may not be able to meet our working capital requirements or pay interest on our
debt, which would have a material adverse effect on our business, financial
condition and results of operations and on the price of our common stock.
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We Have an Unproven Business Model
Our business strategy is unproven. To be successful, we must convince
prospective customers to entrust their data and voice operations to a company
without a long and proven track record. We are not aware of any companies that
have a directly comparable business. We cannot assure you that our services
will be widely accepted. The prices we charge for services and products may be
higher than those charged by our competitors. In addition, the prices of
communications services and products have fallen historically, and we expect
them to continue to fall. We may be required to reduce prices periodically to
respond to competition and to generate adequate sales volume. The failure to
achieve or sustain adequate pricing levels or to achieve or sustain a profitable
business would have a material adverse effect on our business, financial
condition and results of operations and on the price of our common stock.
Enterprise Network Services is a New Business Area
Currently there is no significant established market for Enterprise Network
Services. We have derived virtually all of our revenue from the sale of data
and voice products and services, not Enterprise Network Services. Our revenue
from the sale of Enterprise Network Services has been limited and we did not
have any revenue from these services until late 1997 and had only $2.0 million
of such revenue in 1998. As of September 30, 1999, we had entered into long-
term Enterprise Network Services contracts with 47 customers, representing
approximately $36.4 million in contract value. We generated approximately $2.8
million in revenue from Enterprise Network Services contracts for the first
three quarters of 1999. We may not be able to foresee future difficulties in
providing these services. Although we intend to substantially increase our
revenue from our Enterprise Network Services, there is limited historical
information about our ability to enter into and service these contracts. As a
result, we have a limited basis upon which you can evaluate our past or future
performance. If we fail to develop a market for our Enterprise Network
Services, there will be a material adverse effect on our business, financial
condition and results of operations and on the price of our common stock.
We Have Substantial Leverage and Debt Service Obligations
We have a significant amount of debt in relation to our equity. At
September 30, 1999, we had $190.4 million in debt and a $70.2 million
shareholders' equity. We expect to incur substantial additional debt. Our
relatively high leverage could negatively affect our company in a number of
ways, including:
. making it more difficult to obtain additional financing when needed
for our operations, acquisitions, expansions or financing our
Enterprise Network Services (a service offering in which we own
communications assets inside our customers' premises);
. limiting our flexibility in responding to downturns in the economy
or in our business;
. reducing funds available for other corporate purposes;
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. placing us at a disadvantage compared to our competitors who have
less debt; and
. making it more difficult for us to pay our debts.
For example, our 13% Senior Notes require interest payments of $20.8
million each year. Our operating loss in 1998 was $37.5 million and for the
first three quarters of 1999 was $53.8 million. Due to our operating losses we
placed approximately $56.8 million of the proceeds from the sale of our 13%
Senior Notes into an escrow account to provide for the payment of interest on
our 13% Senior Notes through April 1, 2001. Thereafter, a significant portion
of our cash flow from operations, if any, will be dedicated to interest payments
on our debt, thereby reducing funds available for other corporate purposes.
Any of the above described factors could have a material adverse effect on
our business, financial condition and results of operations and on the price of
our common stock.
We May Require Significant Amounts of Additional Capital
If we are not successful in implementing our business plan in a relatively
short period of time, we will need to raise additional funds from other sources.
In addition, we could require additional capital due to material shortfalls in
our operating and financial performance or if we are more aggressive in our
expansion than currently contemplated. We cannot assure you that we will be
successful in raising sufficient debt or equity capital on a timely basis, on
acceptable terms, or at all. If we fail to obtain any necessary financing, we
could be compelled to alter our business strategy, delay or abandon some of our
future plans or expenditures, sell assets or default on interest payments on our
debt. Any of these events would have a material adverse effect on our business,
financial condition and results of operations and on the price of our common
stock.
In July 1999, we entered into a $103.5 million equipment credit facility
with Cisco Systems Capital Corporation of which $9.5 million has been utilized
and an additional $13.5 million is currently available. The Cisco facility
contains certain customary covenants, including financial maintenance covenants.
Some of the financial maintenance covenants are aggressive and may require us to
accelerate our business plan or renegotiate the covenants in the future in order
to satisfy those covenants or avoid a potential default under the facility. We
cannot provide you any assurance that we will be able to satisfy these financial
maintenance covenants.
We Face Risks Involving Acquired Businesses.
We have grown rapidly over the past two years by acquiring other
businesses. We expect that a portion of our future growth will result from
selective strategic acquisitions. Growth through acquisitions entails numerous
risks, including:
. difficulties in assimilating the operations, personnel, products,
. technologies and financial, computer, payroll and other systems of
the acquired businesses;
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. diversion of resources from our existing businesses, including
potential distraction of our management team;
. entering geographic and business markets in which we have little or
no prior experience;
. unanticipated liabilities or contingencies of acquired businesses;
. dilution to existing shareholders if we use stock to acquire
businesses;
. amortization of goodwill from acquired businesses, which will
reduce our earnings per share; and
. the potential loss of key employees or customers of the acquired
businesses.
We have encountered most of these issues in the past. For example, as a
result of our acquisitions, at September 30, 1999, we had $49.1 million of
goodwill, net of amortization, which is being amortized over 10 years. We may
encounter any of these issues in the future. In particular, we may issue common
stock to pay for acquisitions.
We cannot assure you that we will be able to integrate successfully any
businesses that we might acquire in the future. Our failure to do so could have
a material adverse effect on our business, financial condition and results of
operations and on the price of our common stock.
Our Switching Platform Has a Very Limited Performance History
Our multi-service data and voice switching platforms incorporate a number
of independent components manufactured by other companies. While all of the
components of our switching platforms have established histories of successful
performance as individual products, our unique integrated architecture has a
very limited operating history.
We have installed 16 switching platforms and intend to install additional
switching platforms that will utilize a new switch being manufactured by Cisco
Systems, Inc. Currently, Cisco is the only manufacturer of this switch and we
believe we will be the first company to deploy this switch nationwide. Any
failure by Cisco to provide these switches to us on a timely basis would delay
the roll-out of our data service capabilities and our business plan.
If any of our switching platforms contain undetected design faults or
"bugs," interruption of service to our customers or delay in our deployment
could negatively affect our financial performance. We cannot assure you that
our switching platforms will perform as expected or that we will be successful
in deploying them in all of our markets in a timely manner. These factors could
have a material adverse effect on our business, financial condition and results
of operations and on the price of our common stock.
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We Face Risks Associated with Implementing Our Business and Growth Strategies
We are highly leveraged. Our high leverage makes our success, and the
return to our shareholders, extremely dependent on our ability to successfully
implement our business and growth strategies. We are expanding rapidly. This
expansion has increased our operating complexity and strains our management
resources. The successful expansion and development of our operations
(including the acquisition of additional businesses) depends on a number of
factors including our ability to:
. design, market and sell new products and services;
. maintain a high level of quality for our services and products while
controlling costs;
. develop new customer relationships and achieve a sufficient customer
base; increase brand recognition;
. access potential markets;
. identify, complete and integrate suitable acquisitions;
. obtain any required government authorizations, franchises and permits;
. hire and retain qualified personnel;
. obtain financing; and
. install and operate our multi-service switching platform.
Our failure to accomplish any of the foregoing could have a material
adverse effect on our business, financial condition and results of operations
and on the price of our common stock.
We Are Still Developing Our Operational Support System
We are in the process of developing an advanced operational support system
which is designed to integrate all of our internal support systems and include a
full array of order management, customer service, billing and financial
applications. Our operational support system is designed to permit customer
care, sales engineering, service management, service delivery, accounting and
inventory sales management personnel to access a single customer record. We
believe that our operational support system is a critical element in providing
customer care. However, we have not completed the integration of all
applications that will be part of our operational support system. We also have
not completed the integration of some of our more recently acquired businesses
with our operational support system. Our failure to successfully and timely:
. implement all applications of our operational support system,
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. integrate all the customer records and the billing, ordering,
inventory management, accounting and other financial information
systems of the businesses we have acquired or will acquire onto our
operational support system,
. identify all of our information and processing needs,
. repair "bugs" and design defects that may exist in our operational
support system, and
. maintain and upgrade our operational support system as necessary,
could have a material adverse effect on our business, financial condition and
results of operations and on the price of our common stock.
Voice Over Internet Protocol is New Technology
We face risks in deploying voice over Internet Protocol technologies, which
are new, developing and unproven. We currently carry a limited amount of voice
calls on some local area networks, wide area networks, virtual private networks
and the networks inside the premises of our Enterprise Network Services
customers through the use of Internet Protocol. We anticipate using Internet
Protocol to carry much of our customers' voice calls on our network in the
future. Traditionally, voice calls have been transmitted by keeping a circuit
or line between the people on the call constantly open. This method of
transmitting voice calls is inefficient because during conversations there are
pauses and periods of silence when the capacity of the circuit is not being
used. Voice over Internet Protocol transmission is designed to eliminate this
inefficiency. This technology breaks the voice conversation into "packets" of
information and sends those packets over transmission lines individually. The
packets are then re-assembled at or near their destination so the parties are
able to have a conversation. When the parties on the call pause or are silent,
there are no packets transmitted and the transmission lines can be used for
other purposes. This technology promises to substantially reduce the cost of
carrying voice conversations. Voice over Internet Protocol transmission is
under development, is extremely complex and we are currently using it only to
carry voice transmissions on the local area networks, wide area networks,
virtual private networks and the networks inside the premises of our Enterprise
Network-Services customers. Some telecommunications companies (including ICG
Communications, Inc., IDT Corporation and RSL Communications Ltd.) are carrying
calls over similar technologies today and many others are developing this
technology. However, we believe that their transmission quality for external
calls over IP networks is not yet as good as the quality of traditional voice
transmission methods. Accordingly, there is a risk that we will not be able to
develop this technology well enough to be able to use it for all of our
customers' voice traffic and, therefore, will not be able to enjoy the
anticipated cost reductions.
We are making a large capital investment in this new technology. The
switches we expect to buy from Cisco Systems, Inc. are designed to be able to
provide voice transmission over Internet Protocol. If we are not eventually able
to provide voice over IP transmission with these switches for all of our
customers' voice traffic, some of the value of our investment in these switches
may be lost. Furthermore, it is not clear today which of the emerging versions
of this
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technology will prevail. Many telecommunications companies have far more
experience with these types of issues than we do. Our failure to successfully
offer Internet Protocol transmission on our network for all our customers' voice
traffic could have a material adverse effect on our business, financial
condition and results of operations and on the price of our common stock.
We Are Dependent Upon the Products and Services of Others
Successful operation of our business requires that we provide superior
products and services. Although we can exercise direct control over the
customer care and support services we provide, many of the products and services
we offer are provided by others. These products and services are subject to
physical damage, power loss, capacity limitations, software defects, breaches of
security (by such things as computer viruses and "hackers") and other factors.
These problems, even if not caused by us, could lead to a decrease in our
revenue and as a result could have a material adverse effect on our business,
financial condition and results of operations and on the price of our common
stock.
We Have a Long Sales Cycle and Upfront Expenses for Enterprise Network Services
The Enterprise Network Services solutions we offer have not historically
been available to small and medium sized businesses. As a result, making a sale
often requires a significant amount of time and upfront expense to educate
customers regarding the benefits of Enterprise Network Services. Potential
Enterprise Network Services customers tend to engage in extensive internal
reviews before deciding to engage us. Due to the long sales cycle, our revenues
may fluctuate substantially and any given period may include substantial selling
expenses without related revenue. These risks could have a material adverse
effect on our business, financial condition and results of operations and on the
price of our common stock.
There Are Credit Risks Associated with Leasing Equipment and with Providing
Enterprise Network Services
When a company agrees to become one of our Enterprise Network Services
customers, we purchase and own all or a portion of the customer's existing
communications equipment. We may also purchase and own additional
communications equipment and install it on the customer's premise. The customer
agrees to pay us a monthly charge for a fixed term, usually three to five years.
In addition, we provide leasing options for our customers who prefer to lease
our communications equipment rather than contract for our Enterprise Network
Services. If a customer defaults on a payment under an Enterprise Network
Services contract or a lease, we will have the right to remove our property from
the customer's premises. If we are forced to remove our equipment due to a
customer's failure to pay, there are likely to be substantial delays and
expenses in removing our equipment, and the equipment may be damaged or become
obsolete in the interim, thereby making it more difficult to reuse or resell the
equipment. In addition, we may not be able to resell the equipment at a price
that allows us to recover our cost. We have limited experience dealing with the
risks posed by a payment default, and such risks could have a material adverse
effect on our business, financial condition and results of operations and on the
price of our common stock.
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Tie Communications Had Financial Problems in the Past
At the time we acquired the assets of Tie Communications, Tie was in
bankruptcy. Although we believe that Tie's previous financial difficulties were
the result of problems which we did not acquire, we cannot assure you that we
will be able to remedy all of the problems which led to Tie's bankruptcy. Tie
also had previously declared bankruptcy in 1991, primarily as a result of an
inability to service its indebtedness. If we fail to remedy these types of
financial problems, it could have a material adverse effect on our business,
financial condition and results of operations and on the price of our common
stock.
We Are Subject to Fluctuations in Our Financial Results.
Our revenue and operating results have in the past varied and in the future
may vary significantly from quarter to quarter and from year to year as a result
of a number of factors. These factors may include:
. the size and timing of contracts for Enterprise Network Services;
. customer requirements;
. the ability to retain and expand sales to existing customers;
. our ability to maintain or increase current rates of sales
productivity;
. the level of price and product competition; and
. the size and timing of future acquisitions.
As a result of all of these factors, it is possible that in any future
quarter our operating results could be below the expectations of securities
analysts and investors. In this event, there could be a material adverse effect
on the price of our common stock.
We Face Risks Selling Used Equipment We Purchase
Our Enterprise Network Services strategy includes purchasing our customers'
equipment, such as private branch exchanges (PBXs), computers and other data and
voice equipment. The equipment we purchase from customers may be replaced by
more technologically advanced equipment. To maintain our margins for Enterprise
Network Services, we will need to resell the used equipment. In addition, we
lease equipment to some of our customers, and that equipment may also need to be
sold at the end of the lease term. Some of the equipment may be damaged or
obsolete when we try to resell it. The pricing of our Enterprise Network
Service contracts and our leases is based on our assumptions regarding timing
and resale prices for this used equipment. However, we might not be able to
resell this used equipment in a timely manner at acceptable prices, and any
failure to do so could have a material adverse effect on our business, financial
condition and results of operations and on the price of our common stock.
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We Face Competition From Many Sources
We compete for business with many companies that have much greater
financial resources, are more geographically diverse, have better name
recognition and have larger customer bases than we do. Numerous competitors
with long-standing relationships with our potential customers offer one or more
of the individual products and services we offer. We expect that we will face
substantial and growing competition from a number of providers of data and voice
networking and transport services and products.
A continuing trend toward business combinations and alliances in the
telecommunications industry may create significant new competitors with
resources far greater than ours. Technological developments may allow other
companies to provide a single-source solution in competition with our product
offerings. Cisco and other hardware manufacturers have designed or are
designing multi-service data and voice switches that are or will be available to
other providers.
To the extent that competitors begin bundling components of our Enterprise
Network Services (including data networking and the provision of customer
premises equipment) into their own product offerings, we will face additional
competition.
In data services, we compete with, among others, International Network
Services, Inacom Corporation, CompuCom Systems, Inc. and Norstan Consulting,
Inc. In the frame relay services market, we compete with, among others, MCI
WorldCom, Inc., AT&T Corporation, Frontier Communications, and Qwest
Communications International, Inc. In data products, we compete with, among
others, U S WEST, Inc., CompuCom and Inacom.
In voice services, we have numerous competitors in the local and long-
distance markets. Our main competitors for local voice services include the
Regional Bell Operating Companies, as well as agents who resell Bell services,
AT&T, MCI WorldCom and ITC/\Deltacom, Inc. and other competitive local exchange
carriers. In the long-distance market, our competitors include MCI WorldCom,
Qwest, Sprint Corporation and AT&T. In voice products, we compete with, among
others, Norstan, Staples, Inc. and Advanced Telecommunications, Inc.
Intensifying competition could have a material adverse effect on our
business, financial condition and results of operations and on the price of our
common stock.
We Are Subject to FCC and State Public Utility Commission Regulations
We are subject to both federal and state regulation. In rendering our
interstate and international telecommunications services, we must comply with
federal telecommunications laws and regulations prescribed by the Federal
Communications Commission. At the state level, we are subject to regulation by
the various state public utility commissions.
Among other things, the Telecommunications Act of 1996 opened the local
telecommunications marketplace to competition, allowing companies like us to
compete with incumbent local exchange companies. The implementation of the
Telecommunications Act of 1996 is ongoing and is the subject of proceedings
before the FCC, the various state public utility commissions and the courts. As
a result, the regulatory framework that we operate under is
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unsettled. We could also become subject to additional regulatory requirements as
a result of a change in our product offerings. If we are required to comply with
new regulations or new interpretations of existing regulations, this compliance
could have a material adverse effect on our business, financial condition and
results of operations and on the price of our common stock.
Factors Exist Which Could Discourage an Acquisition of Our Company
There are several factors that could deter an attempt to acquire our
company. These factors reduce the chance that our shareholders will be able to
sell their shares in an acquisition. These factors include:
. the rights of the holders of our 13% Senior Notes to require us to
repurchase their Notes if anyone acquires more than 50% of our voting
stock;
. the ability of our board of directors to issue preferred stock without
any further approval being required from our shareholders;
. the concentration of ownership of our stock by our officers and
directors; and
. the "staggered" nature of our board of directors which results in
directors being elected for terms of three years.
Our Success Depends on Our Executive Officers and Employees
Our success depends to a significant degree on the abilities and continued
efforts of our senior management. Our success also will depend on our ability
to attract, retain, and motivate qualified management, marketing, technical and
sales personnel. These people are in high demand and often have competing
employment opportunities. The labor market for engineers, technicians and sales
representatives who are skilled in both voice and data communications systems is
extremely competitive due to limited supply and we may lose key employees or be
forced to increase their compensation. Employee turnover could significantly
increase our training and other related employee costs. Additionally, there are
low levels of unemployment in many of the regions in which we operate. These
low levels of unemployment have led to pressure on wage rates, which can make it
more difficult and costly for us to attract and retain qualified employees. The
loss of key personnel, or the failure to attract additional personnel, could
have a material adverse effect on our business, financial condition and results
of operations and on the price of our common stock.
Our officers and directors beneficially own approximately 25.02% of our
common stock, including approximately 11.28% beneficially owned by our three
founding shareholders and their families. Our founding shareholders and their
families are parties to a voting agreement pursuant to which they have agreed
to vote their common stock as a group. Accordingly, our officers and directors,
and particularly our founding shareholders, are likely to continue to exercise
substantial influence over our business and the election of members of our board
of directors. This concentration of ownership may also delay or prevent an
attempt to acquire our company.
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We Face the Risk of System Failure
Our operations are dependent upon our ability to support our network
infrastructure and avoid damage from fires, earthquakes, floods, power losses,
telecommunications failures, network software flaws, transmission cable cuts and
similar unforeseen events. The occurrence of a natural disaster or other
unanticipated problems at our national operations center or any of our regional
centers could cause interruptions in our services. In addition, failures by our
service providers could cause interruptions in our services. Any damage or
failure that causes interruptions in our services could have a material adverse
effect on our business, financial condition and results of operations and on the
price of our common stock.
Terms of Our Indebtedness Restrict Our Corporate Activities.
The terms of the indenture governing our 13% Senior Notes and our credit
facilities restrict, and in some cases significantly limit or prohibit our
ability and the ability of our subsidiaries to:
. pay dividends and make other distributions on capital stock and redeem
capital stock;
. incur additional indebtedness or refinance existing indebtedness;
. make prepayments of certain indebtedness;
. create liens on our assets;
. make investments;
. engage in transactions with shareholders and affiliates;
. engage in mergers and consolidations; and
. engage in sales of assets.
We cannot assure you that the covenants in our indenture or our credit
facilities will not adversely affect our ability to finance our future
operations or capital needs or to engage in other business activities that may
be in the best interests of our shareholders. As a result, these restrictive
covenants could have a material adverse effect on our business, financial
condition and results of operations and on the price of our common stock.
Possible Volatility of Our Stock Price
The price at which our common stock is traded is volatile and may continue
to fluctuate substantially due to factors such as:
. our historical and anticipated quarterly and annual operating results;
16
<PAGE>
. variations between our actual results and the expectations of
investors and analysts;
. announcements by us or others and developments affecting our business;
. investor perceptions of our company and comparable public companies;
and
. conditions and trends in data and voice communications industries.
In particular, the stock market has from time to time experienced
significant price and volume fluctuations affecting the common stocks of
communications companies, like us. These fluctuations may result in a material
decline in the market price of our common stock.
We Do Not Expect to Pay Dividends
We have not declared or paid, and for the foreseeable future we do not
anticipate declaring or paying, dividends on our common stock. In addition, the
agreements governing our indebtedness, including the indenture for our 13%
Senior Notes and our credit facilities, limit our ability to pay dividends on
our common stock.
An Economic Downturn May Have an Adverse Effect on Our Company
If the general economic health of the United States declines from recent
historically high levels, or if companies fear such a decline is imminent,
companies may reduce expenditures for products and services such as ours. Any
decline or concern about an imminent decline in the economy could delay
decisions among our customers to utilize more of our products and services or
could delay decisions by prospective customers to make initial evaluations of
our services. These delays would have a material adverse effect on our
business, prospects, financial condition and results of operations and on the
price of our common stock.
We May Face Potential Liability for Information Disseminated through Our Network
The law relating to the liability of online service providers, private
network operators and Internet service providers for information carried on or
disseminated through their networks is currently unsettled. The potential
liability for material carried on or disseminated through our systems which
might include defamatory statements and materials infringing on copyrights,
could require us to implement measures to reduce our exposure to such liability,
which may require the expenditure of substantial resources or the
discontinuation of certain product or service offerings. In addition, the costs
incurred in defending against any claims and the potential adverse outcomes of
those claims could have a material adverse effect on our business, financial
condition and results of operations and on the price of our common stock.
Dilution and Shares Eligible for Future Trading
To the extent outstanding warrants and options to purchase our common stock
are exercised or additional equity securities are issued at a price below the
price of a share in this offering, you may experience dilution. In addition,
approximately 9,771,000 shares of our common stock became eligible for public
trading on January 20, 2000 as lock-up periods expired with respect to those
shares of common stock. Up to an additional 3,450,000 shares of our
17
<PAGE>
common stock will be eligible for public trading on April 19, 2000 as the
remaining lock-up periods expire with respect to those shares of common stock.
SELLING SHAREHOLDERS
The table attached as Annex I hereto sets forth, as of the date of this
Prospectus or a subsequent date if amended or supplemented, (a) the name of each
Selling Shareholder and (b) the number of Securities offered pursuant to this
Prospectus by each Selling Shareholder. The information contained in Annex I may
be amended or supplemented from time to time.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Securities
offered hereby.
PLAN OF DISTRIBUTION
We are registering the Securities on behalf of the Selling Shareholders.
All costs, expenses and fees in connection with the registration of the
Securities offered hereby will be borne by us. Brokerage commissions and
similar selling expenses, if any, attributable to the sale of Securities will be
borne by the Selling Shareholders (or their donees or pledgees).
The decision to sell any Securities is within the discretion of the holders
thereof, subject generally to our policies affecting the timing and manner of
sale of common stock by our affiliates. There can be no assurance that any
shares will be sold by the Selling Shareholders.
Each Selling Shareholder is free to offer and sell his or her Securities at
times, in a manner and at prices as he or she determines, subject to any
restrictions that may be imposed by us upon transactions involving our senior
executives. The Selling Shareholders have advised us that sales of Securities
may be effected from time to time in one or more types of transactions (which
may include block transactions) on the NASDAQ National Market, in the over-the-
counter market, in negotiated transactions, through put or call options on the
Securities, through settlement of short sales of Securities, or a combination of
such methods of sale, at market prices prevailing at the time of sale, or at
negotiated prices. These transactions may or may not involve brokers or
dealers. The Selling Shareholders have advised us that they have not entered
into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of the Securities by the Selling Shareholders.
The Selling Shareholders may effect transactions by selling Securities
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. These broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Shareholders and/or the
purchasers of Securities for whom the broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
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<PAGE>
The Selling Shareholders and any broker-dealers that act in connection with
the sale of Securities might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, and any commissions received by the
broker-dealers and any profit on the resale of the Securities sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The Selling Shareholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the Securities against certain liabilities including liabilities arising
under the Securities Act.
Because Selling Shareholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the Selling Shareholders will be
subject to the prospectus delivery requirements of the Securities Act.
We have informed the Selling Shareholders that the anti-manipulative
provisions of Regulation M promulgated under the Exchange Act may apply to their
sales in the market.
Selling Shareholders also may resell all or a portion of the Securities in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon being notified by the Selling Shareholder(s) of any substantive
change(s) in the plan of distribution (which may include information regarding
any material arrangement that has been entered into with a broker-dealer for the
sale of Securities through a cross or block trade, the name of the participating
broker-dealer(s), the number of Securities involved, the price at which the
Securities were sold by the Selling Shareholders, the commissions paid or
discounts or concessions allowed by the Selling Shareholders to their broker-
dealer(s), and, where applicable, that the broker-dealer(s) did not conduct any
investigation to verify the information set out in the prospectus), we will file
a supplemental prospectus under Rule 424(c) of the Securities Act, setting forth
the updated information.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Gibson, Dunn &
Crutcher LLP, Denver, Colorado. The partner of Gibson, Dunn & Crutcher LLP in
charge of the engagement owns 10,000 shares of common stock.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representation not contained in this
Prospectus in connection with this offering other than those contained in this
Prospectus, and if given or made, such information or representation must not be
relied upon as having been authorized by us or
19
<PAGE>
the Selling Shareholders. This Prospectus does not constitute an offer to sell,
or a solicitation of any offer to buy, common stock by anyone in any
jurisdiction in which an offer or solicitation is not authorized, or in which
the person making an offer or solicitation is not qualified to do so, or to any
person to whom it is unlawful to make such an offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that the information contained in this
Prospectus is correct as of any time after the date of this Prospectus.
20
<PAGE>
ANNEX I
Selling Shareholder* Shares To Be Offered Hereby
- ---------------------------- ------------------------------------
William Wood Alberts 2,830
Philip G. Allen 3,384
James G. Bainter 1,581
Brian E. Beatty 1,076
Dale R. Bentlage 1,013
James A. Bishop 1,638
Bruce A. Boland 2,798
Eugene M. Boyd 1,390
Vicki L. Bramble 1,000
Keith V. Burge 3,762
Charles A Coppola Jr. 1,482
Paul E. Doyle 1,304
Richard Durante 1,071
Randy B. Egger 1,063
John R. Evans 3,783
Martin E. Freidel 2,135
William J. Frommelt 1,040
David W. Gerzema 1,150
Brian D. Goodfellow 1,942
Daniel J. Greco 1,842
Robert G. Harrison 1,483
Thomas L. Hewett 1,369
Barry B. Howard 1,750
Christopher C. Howard 1,624
Thomas M. Kennedy 1,383
Peter N. Kopp II 1,764
David A. Korba 2,896
Van K. Kotter 1,640
Andre J. Loveland 1,439
Christopher D. Mach 3,266
Timothy J. Mahoney 2,207
Brian J. Mcmanus 3,183
Timothy N. Penfield 1,035
Abigail T. Pfeiffer 2,132
John James Phibbs Jr. 2,990
Charlene E. Pinell 1,720
Sharon M. Pooley 1,096
Michael A. Porazzo 1,220
John W. Reedy 2,487
Allan J. Reiter 2,019
Joanne M. Robel 1,282
David A. Rovai 1,301
John Schlepphorst 1,843
Jonathan D. Schultz 1,256
Timothy W. Schulz 1,471
Kenneth P. Schwartz 1,109
Scott E. Smith 1,248
Jeffry R. Taylor 1,030
Gregory R. Tennant 1,060
Joseph H. Trimbach 1,287
Patrick J. Von Tscharner 1,714
Clinton J. Wilson 1,388
Michael G. Wohlenhaus 1,975
I-1
<PAGE>
*In addition, unnamed shareholders who are not our affiliates, as defined by
Rule 405 under the Securities Act, may also sell an aggregate of 232,205 shares
of common stock pursuant to this Prospectus, provided that each of those
shareholders holds less than 1,000 shares.
I-2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed by us with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, or as
otherwise indicated, are incorporated herein by reference:
1. Our Prospectus filed on July 20, 1999 pursuant to Rule 424(b) of the
Securities Act;
2. The Plan's Annual Report on Form 11-K for the year ended December 31, 1998;
3. Our Quarterly Reports on Form 10-Q/A for the quarters ended March 31, 1999
and June 30, 1999 and our Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999;
4. Our Current Report on Form 8-K filed on August 19, 1999; and
5. The description of the common stock contained in our Registration Statement
on Form S-1 (Registration No. 333-78483) under the caption "Description of
Capital Stock".
All reports and other documents that we file pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act are incorporated by reference in this
registration statement and are a part of this registration statement from the
dates of filing of the reports and documents, if the reports and other documents
are filed prior to the filing of a post-effective amendment which indicates that
all securities offered by this registration statement have been sold, or the
securities which have not yet been sold are deregistered. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this registration statement shall be deemed to be modified or superseded for
purposes of this registration statement to the extent that the statement is
modified or superseded by a new statement. Any statement that is modified or
superseded shall not be, except as modified or superseded, a part of this
registration statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The partner of Gibson, Dunn & Crutcher LLP in charge of the engagement owns
10,000 shares of common stock.
Item 6. Indemnification of Directors and Officers.
Reference is made to C.R.S. (S) 7-108-102 (1994), which provides for
indemnification of directors, officers and other employees in certain
circumstances, and to C.R.S. (S) 7-108-402 (1994), which provides for the
elimination or limitation of the personal liability for monetary damages of
directors under certain
II-1
<PAGE>
circumstances. Our Amended and Restated Articles of Incorporation eliminate the
personal liability for monetary damages of directors under certain circumstances
and provides indemnification to our directors and officers to the fullest extent
permitted by the Colorado Business Corporation Act. Among other things, these
provisions provide indemnification for officers and directors against
liabilities for judgments in and settlements of lawsuits and other proceedings
and for the advance and payment of fees and expenses reasonably incurred by the
director or officer in defense of any such lawsuit or proceeding.
Item 7. Exemptions from Registration Claimed.
The restricted securities offered for resale by means of this prospectus
were originally issued by us in reliance upon the exemption from the
registration requirements of the Securities Act provided by Section 4(2) of the
Securities Act. Such securities were issued to certain employees in transactions
not involving public offerings in the form of payments by us to the Plan which
were neither voluntary or contributory on the part of employees.
Item 8. Exhibits.
The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as part of this registration statement.
Item 9. Undertakings.
(1) We undertake:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in this
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports that are filed by us pursuant to
Section 13 or Section 15(d) of the Exchange Act and that are incorporated by
reference in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered in the amendment, and
the offering of those securities at that time shall be deemed to be the initial
bona fide offering of those securities.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
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<PAGE>
(2) We also undertake that, for purposes of determining any liability
under the Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission this
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
liabilities (other than payment by us of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
indemnification by us is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Englewood, State of Colorado, on February 4, 2000.
CONVERGENT COMMUNICATIONS, INC.
By: /s/ John R. Evans
-------------------------------
Name: John R. Evans
Title: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Martin
E. Freidel, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ John R. Evans Chairman, Chief Executive February 4, 2000
- -----------------------
John R. Evans Officer and Director (Principal
Executive Officer)
/s/ Brian R. Ervine Chief Financial Officer and February 4, 2000
- -----------------------
Treasurer (Principal Financial
Brian R. Ervine and Accounting Officer)
/s/ Keith V. Burge President, Chief Operating February 4, 2000
- -----------------------
Keith V. Burge Officer and Director
/s/ Philip G. Allen Executive Vice President, February 4, 2000
- -----------------------
Philip G. Allen Secretary and Director
II-4
<PAGE>
Director February 4, 2000
- --------------------------
J. Thomas Markley
/s/ Richard G. Tomlinson Director February 4, 2000
- --------------------------
Richard G. Tomlinson
Director February 4, 2000
- --------------------------
Spencer I. Browne
/s/ Michael J. Marocco Director February 4, 2000
- --------------------------
Michael J. Marocco
Pursuant to the requirements of the Securities Act of 1933, the Convergent
Communications 401(k) Savings Plan has duly caused this Registration Statement
to be signed on its behalf by the undersigned, there unto duly authorized, in
the city of Englewood, State of Colorado, on February 4, 2000.
CONVERGENT COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
By: /s/ John R. Evans
--------------------------
Name: John R. Evans
Title: Trustee
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<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
Number
- ------
4.1 Amended and Restated Articles of Incorporation of
Convergent Communications, Inc., incorporated herein by
reference to Exhibit 3.1 of the Company's Registration
Statement on Form S-4 (Reg. No. 333-5393)
4.2 Bylaws of Convergent Communications, Inc., incorporated
herein by reference to Exhibit 3.2 of the Company's
Registration Statement on Form S-4 (Reg. No. 333-5393)
4.3 Articles of Amendment to the Amended and Restated Articles
of Incorporation of Convergent Communications, Inc.,
incorporated herein by reference to Exhibit 3.3 of the
Company's Registration Statement on Form S-1 (Reg. No.
333-78483)
4.4 Second Articles of Amendment to the Amended and Restated
Articles of Incorporation of Convergent Communications,
Inc., incorporated herein by reference to Exhibit 3.3 of
the Company's Registration Statement on Form S-1 (Reg. No.
333-78483)
4.5 Third Articles of Amendment to the Amended and Restated
Articles of Incorporation of Convergent Communications,
Inc., incorporated herein by reference to Exhibit 3.3 of
the Company's Registration Statement on Form S-1 (Reg. No.
333-78483)
5.1 Opinion of Gibson, Dunn & Crutcher LLP
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in
Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (included on signature page of this
Registration Statement)
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<PAGE>
EXHIBIT 5.1
[Letterhead of Gibson, Dunn & Crutcher LLP]
February 4, 2000
(303) 298-5700 C 18787-00001
Convergent Communications, Inc.
400 Inverness Drive South, Suite 400
Englewood, Colorado 80112
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We refer to an aggregate of 423,844 shares of Common Stock, no par value,
of Convergent Communications, Inc., a Colorado corporation (the "Company"),
that are the subject of a registration statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), which
shares (the "Shares") may be offered and sold under the Convergent
Communications, Inc. 401(k) Savings Plan (the "Plan").
We have examined the original, or a photostatic or certified copy, of
such records of the Company, certificates of officers of the Company and of
public officials and such other documents as we have determined relevant and
necessary as the basis for the opinion set forth below. In such examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all
<PAGE>
Convergent Communications, Inc.
[Letterhead of Gibson, Dunn & Crutcher LLP]
February 4, 2000
Page 2
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies.
Based upon our examination mentioned above, we are of the opinion that the
Shares have been validly authorized for issuance and, when (a) the Registration
Statement has become effective under the Act, (b) the Shares are issued and sold
in accordance with the terms set forth in the Registration Statement and in the
Plan, and (c) the pertinent provisions of any applicable state securities laws
have been complied with, the Shares so issued will be legally issued and will be
fully paid and nonassessable.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm appearing on the cover of the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Act or the General Rules and Regulations of the Commission.
Very truly yours,
GIBSON, DUNN & CRUTCHER LLP
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 5, 1999, except for Note 16 as
to which the date is April 29, 1999, relating to the consolidated financial
statements, which appears in the Convergent Communications, Inc. Prospectus
filed on July 20, 1999. We also consent to the incorporation by reference in
this Registration Statement on Form S-8 of our report dated May 20, 1999
relating to the Convergent Communications, Inc. 401k Plan which appears in the
Form 11-K filed on February 4, 2000.
PricewaterhouseCoopers LLP
Denver, Colorado
February 4, 2000
