EXHIBIT 10.10
LOAN AGREEMENT
JULY 16, 2002
LENDERS: BORROWERS:
J. XXXXXX XXXXXXXXXX TRUST U.S. REALTEL, INC.
DATED FEBRUARY 26, 1971
XXXX X. XXXXXXX TRUST CYPRESS COMMUNICATIONS, INC.
DATED FEBRUARY 26, 1971
XXXX X. XXXXXXXX TRUST
DATED FEBRUARY 26, 1971
NORO-XXXXXXX PARTNERS V, X.X.
XXXXXXXXX GROUP III LLC
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATIONS........................................... 1
1.1 Definitions......................................................... 1
1.2 Accounting Terms.................................................... 6
1.3 Interpretation...................................................... 6
2. TERM LOAN; GENERAL TERMS.................................................. 7
2.1 Term Loan; Warrants................................................. 7
2.2 Evidence of Debt.................................................... 8
2.3 Amount and Maintenance of Term Loan................................. 8
2.4 Interest Rate....................................................... 8
2.5 Borrowing Procedures................................................ 8
2.6 General Provision................................................... 8
2.7 Deliveries.......................................................... 9
2.8 Loan Fee............................................................ 10
3. PAYMENTS ................................................................. 11
3.1 Loan Account; Method of Making Payments............................. 11
3.2 Payment Terms....................................................... 11
3.3 Application of Payments and Collections............................. 11
3.4 Records............................................................. 12
4. WARRANTIES AND REPRESENTATIONS............................................ 12
4.1 General Warranties and Representations.............................. 12
4.2 Survival of Warranties and Representations.......................... 15
5. COVENANTS AND CONTINUING AGREEMENTS....................................... 15
5.1 Affirmative Covenants............................................... 15
5.2 Negative Covenants.................................................. 17
5.3 Payment of Charges.................................................. 18
5.4 Insurance; Payment of Premiums...................................... 18
5.5 Survival of Obligations Upon Termination of Agreement............... 19
6. EVENTS OF DEFAULT; RIGHTS OF REMEDIES..................................... 19
6.1 Event of Default.................................................... 19
6.2 Acceleration of the Liabilities..................................... 22
6.3 Default Interest Rate............................................... 22
6.4 Effect of a WorldCom Default........................................ 22
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7. MISCELLANEOUS............................................................. 22
7.1 Modification of Agreement; Sale of Interest......................... 22
7.2 Attorneys' Fees and Expenses; Lender's Out-of-Pocket Expenses....... 22
7.3 No Offset; Right to Charge Accounts................................. 23
7.4 Waiver by Lender.................................................... 23
7.5 Severability........................................................ 23
7.6 Parties; Entire Agreement........................................... 24
7.7 Conflict of Terms................................................... 24
7.8 Waiver by Borrowers................................................. 24
7.9 Waiver and Governing Law............................................ 24
7.10 Notice.............................................................. 25
7.11 Section Titles, Etc................................................. 27
7.12 Xxxxxx Lenders...................................................... 27
7.13 Tax Treatment....................................................... 27
8. CROSS-GUARANTY............................................................ 27
8.1 Cross-Guaranty...................................................... 27
8.2 Waivers by Borrowers................................................ 28
8.3 Benefit of Guaranty................................................. 28
8.4 Subordination of Subrogation, Etc................................... 28
8.5 Election of Remedies................................................ 28
8.6 Limitation.......................................................... 29
8.7. Contribution with Respect to Guaranty Obligations................... 29
8.8 Liability Cumulative................................................ 30
EXHIBITS
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Exhibit A-1 Permitted Debt
Exhibit A-2 Permitted Liens
Exhibit B (Section 2.2) Form of Term Notes
Exhibit C (Section 2.7(A)(vii)) Form of Opinion of Counsel
Exhibit D (Section 2.7(A)(viii)) Form of Warrants
Exhibit E (Section 2.7(A)(ix)) Form of Noteholder Intercreditor Agreement
Exhibit F (Section 2.7(A)(x)) Form of Senior Lender Intercreditor Agreement
Exhibit G (Section 4.1(F)) Litigation
Exhibit H (Section 4.1(L)) Subsidiaries
SCHEDULES
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Schedule 2.1 Term Loan Commitments and Warrant Shares
Schedule 4.1(N) Intellectual Property
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "AGREEMENT") is made as of this 16th day of
July, 2002, by and among J. Xxxxxx Xxxxxxxxxx Trust dated February 26, 1971, an
Indiana trust (the "XXXXXXXXXX TRUST"), the Xxxx X. XxXxxxx Trust dated February
26, 1971, an Illinois trust (the "XXXXXXX TRUST") the Xxxx X. Xxxxxxxx Trust
dated February 26, 1971, an Indiana trust (the "XXXXXXXX TRUST" and together
with the Xxxxxxxxxx Trust and the XxXxxxx Trust, the "XXXXXX LENDERS"),
Noro-Xxxxxxx Partners V, L.P., a Georgia limited partnership ("NORO-XXXXXXX")
Xxxxxxxxx Group III, LLC a North Carolina limited liability company
("WAKEFIELD"; each of the Xxxxxx Lenders, Noro-Xxxxxxx and Wakefield are a
"LENDER" and together are the "LENDERS"), U.S. RealTel, Inc., a Delaware
corporation and Cypress Communications, Inc., a Delaware corporation (each
herein called a "BORROWER" and collectively, the "BORROWERS").
WHEREAS, Borrowers desire to borrow funds and obtain other financial
accommodations from Lenders, and Lenders are willing to make a term loan and
provide other financial accommodations to Borrowers upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of the term loan or extension of credit previously, now or to be
made to or for the benefit of Borrowers by Lenders, the parties agree as
follows:
1. DEFINITIONS AND INTERPRETATIONS.
1.1 DEFINITIONS. When used in this Agreement, the following terms shall
have the following meanings:
"AFFILIATE" shall mean any and all Persons which directly or
indirectly, own or control, are controlled by or are under common control
with either Borrower, and any and all Persons from whom, in the sole and
absolute judgment of Lenders, either Borrower has not or is not likely to
exhibit independence of decision or action. For the purpose of this
definition and where otherwise applicable herein, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of a Person, whether through the
ownership of at least 20% of the voting securities of such Person, by
contract or otherwise.
"ANCILLARY AGREEMENTS" shall mean all agreements, instruments and
documents, including without limitation, notes, guaranties, powers of
attorney, consents, assignments, contracts, notices, security agreements,
leases, financing statements, subordination agreements, trust account
agreements and all other written matter whether previously, now, or to be
executed by or on behalf of any Borrower or any other Person or delivered
to any Lender or any Participant with respect to this Agreement.
"BUSINESS DAY" shall mean, any day other than a Saturday, Sunday or
legal holiday in the State of Georgia on which commercial banks are open
for business in Atlanta, Georgia.
"CAPITALIZED LEASE OBLIGATIONS" shall mean for any period the
amounts payable with respect to leases of tangible or intangible property
of any character, however denoted, which is required by generally accepted
accounting principles to be reflected as a liability on the face of the
balance sheet.
"CHARGES" shall mean all national, federal, state, county, city,
municipal, or other governmental (including, without limitation, the
Pension Benefit Guaranty Corporation) taxes, levies, assessments, charges,
liens, claims or encumbrances upon or relating to (i) the Liabilities,
(ii) Borrowers' employees, payroll, income or gross receipts, (iii)
Borrowers' ownership or use of any of their assets or (iv) any other
aspect of Borrowers' business.
"CLOSING" shall have the meaning ascribed to it in Section 2.7(A).
"CONVERTIBLE NOTES" shall mean Indebtedness of U.S. RealTel, Inc. of
up to $10,000,000 pursuant to its 7.5% fixed rate convertible notes due
July 1, 2009 issued to the Xxxxxx Lenders, Noro-Xxxxxxx and Wakefield.
"DEFAULT" shall mean any event or condition which, with the passage
of time or the giving of notice or both, would constitute an Event of
Default.
"DOLLARS" and the symbol "$" shall mean the lawful currency of the
United States of America.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public
health and safety and protection of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" shall mean the occurrence or existence of any one
or more of the events described in Section 6.1.
"FIXED RATE" shall mean 14% per annum.
"FIXED RATE LOAN" shall mean any Loan bearing interest at the Fixed
Rate, issued pursuant to the terms of this Agreement.
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"INDEBTEDNESS" shall mean all of Borrowers' liabilities, obligations
and indebtedness to any Person of any and every kind and nature, whether
primary, secondary, direct, indirect, absolute, contingent, fixed, or
otherwise, previously, now or to be owing, due, or payable, however
evidenced, created, incurred, acquired or owing and however arising,
whether under written or oral agreement, by operation of law, or
otherwise. Without in any way limiting the generality of the foregoing,
Indebtedness specifically includes (i) the Liabilities, (ii) all
obligations or liabilities of any Person that are secured by any Lien upon
property owned by Borrowers, even though Borrowers have not assumed or
become liable for the payment thereof, (iii) all obligations or
liabilities created or arising under any lease of real or personal
property, including Capitalized Lease Obligations, or conditional sale or
other title retention agreement with respect to property used or acquired
by Borrowers, even though the rights and remedies of the lessor, seller or
lender, thereunder are limited to repossession of such property, (iv) all
unfunded pension fund obligations and liabilities and (v) deferred taxes.
"INDEBTEDNESS FOR BORROWED MONEY" shall mean for any Person (without
duplication) (i) all Indebtedness created, assumed or incurred in any
manner by such Person representing money borrowed (including but not
limited to the issuance of debt securities), (ii) all Indebtedness for the
deferred purchase price of property or services (other than trade accounts
payable arising in the ordinary course of business which are not more than
thirty (30) days past due), (iii) all Indebtedness secured by any lien
upon property of such Person, whether or not such Person has assumed or
become liable for the payment of such Indebtedness, (iv) all Capitalized
Lease Obligations of such Person and (v) all obligations of such Person on
or with respect to letters of credit, bankers' acceptances and other
extensions of credit whether or not representing obligations for borrowed
money.
"INTEREST PAYMENT DATE" shall mean the first Business Day of each
month, the Term Loan Maturity Date and any other date on which such Term
Loan is paid in full or otherwise satisfied.
"INTEREST RATE" shall mean the interest rate determined in
accordance with Section 2.4.
"KNOWLEDGE" shall mean with respect to any Borrower, the actual
knowledge or awareness of a particular fact or circumstance by any
executive officer or other key employee of such Borrower having
administrative or managerial responsibility for such fact or circumstance,
upon due inquiry of all Persons who may reasonably be expected to have
knowledge of such fact or circumstance.
"LIABILITIES" shall mean all of Borrowers' liabilities, obligations
and indebtedness to each Lender of any and every kind and nature, whether
primary, secondary, direct, absolute, contingent, fixed, or otherwise
(including, without limitation, interest, charges, expenses, attorneys'
fees and other sums chargeable to Borrowers by such Lender, future
advances made to or for the benefit of Borrowers and
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obligations of performance), whether arising under this Agreement or under
any of the Ancillary Agreements, whether previously, now or to be owing,
arising, due, or payable from Borrowers to such Lender, however evidenced,
created, incurred or owing and however arising, whether under written or
oral agreement, operation of law, or otherwise, other than Indebtedness of
U.S. RealTel, Inc. owing under the Convertible Notes.
"LIEN" means any mortgage, pledge or lease of, security interest in
or lien, charge, restriction or encumbrance on any Property of the Person
involved in favor of or which secures any obligation to, any Person.
"LOAN" shall mean any advance (or portion thereof) made by any
Lender to Borrowers under the Term Loan.
"LOAN ACCOUNT" shall have the meaning ascribed to it in Section 3.1.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, property, assets, operations or conditions, financial or
otherwise, of Borrowers and their respective Subsidiaries, taken as a
whole.
"NOTICE OF BORROWING" shall mean a Notice of Borrowing described in
Section 2.5.
"PARTICIPANT" shall mean any Person, now or at any time or times to
be, participating with any Lender in the Term Loan made by such Lender to
Borrowers pursuant to this Agreement and the Ancillary Agreements.
"PERMITTED DEBT" shall mean:
(i) the Liabilities;
(ii) any unsecured Indebtedness arising in the ordinary course
of business of Borrowers and consistent with such Borrower's past
practice, including trade payables, utility costs, payroll and
benefit obligations, accrued tax liabilities and other
non-extraordinary accounts payable but excluding Indebtedness for
Borrowed Money;
(iii) the Senior Debt;
(iv) the Convertible Notes; and
(v) such other Indebtedness described on EXHIBIT A-1 attached
hereto.
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"PERMITTED LIENS" shall mean:
(i) Liens and encumbrances in favor of any Lender to secure
the Liabilities, whether granted under or established by this
Agreement, the Ancillary Agreements, or otherwise;
(ii) Liens for taxes, assessments or other governmental
charges incurred by Borrowers in the ordinary course of business and
for which no interest, late charge or penalty is attaching or which
are being contested in good faith by appropriate proceedings
diligently pursued and for which adequate reserves in accordance
with generally accepted accounting principles shall have been set
aside on its books;
(iii) Liens, not delinquent, incurred by Borrowers in the
ordinary course of business created by statute in connection with
worker's compensation, unemployment insurance, social security, old
age pensions (subject to the applicable provisions of this
Agreement) and similar statutory obligations;
(iv) Liens incurred by Borrowers in favor of mechanics,
materialmen, carriers, warehousemen, landlords or repairmen or other
like statutory or common law Liens securing obligations incurred in
good faith in the ordinary course of business that are not overdue
for a period of more than 30 days or which are being contested in
good faith;
(v) Liens securing the Senior Debt; and
(vi) any existing Liens and encumbrances identified in EXHIBIT
A-2 hereto to secure Indebtedness.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, limited liability company,
unincorporated organization, association, corporation, institution,
entity, party, or government (whether national, federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department).
"PROPERTY" shall mean any and all rights, titles and interests in
and to any and all property whether real or personal, tangible (including
cash) or intangible, and wherever situated and whether now owned or
hereafter acquired.
"REPORTABLE EVENT" shall have the meaning ascribed to it in Section
4.1(I).
"SENIOR DEBT" shall mean Indebtedness of Cypress Communications,
Inc. owing to the Senior Lender in an aggregate principal amount not to
exceed $15,000,000.
"SENIOR LENDER" shall mean Silicon Valley Bank.
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"SUBSIDIARY" shall mean any corporation, partnership, limited
liability company or other legal entity of which either Borrower owns
directly or indirectly 50% or more of the outstanding voting stock or
interests or other interests, or of which either Borrower has effective
control by contract or otherwise.
"TERM LOAN" shall have the meaning ascribed to it in Section 2.1.
"TERM LOAN COMMITMENT" shall have the meaning ascribed to it in
Section 2.1.
"TERM LOAN MATURITY DATE" shall mean the earlier of (i) the Business
Day immediately following the maturity, acceleration or termination of the
Senior Debt, and (ii) July 16, 2005.
"TERM NOTES" shall have the meaning ascribed to it in Section 2.2.
"WORLDCOM ACQUISITION" shall mean the acquisition of the WorldCom
Assets as contemplated by the WorldCom Acquisition Agreement.
"WORLDCOM ACQUISITION AGREEMENT" shall mean that certain Asset
Purchase Agreement, by and among Intermedia Communications, Inc., Shared
Technologies Xxxxxxxxx, Inc., Shared Technologies Xxxxxxxxx Telecom, Inc.,
MCI WorldCom Communications, Inc., WorldCom, Inc. (collectively, the
"WORLDCOM PARTIES"), and Cypress Communications, Inc., dated as of May 31,
2002, as amended by that Amendment No. 1 to Asset Purchase Agreement among
the WorldCom Parties and Cypress Communications, Inc., dated as of July
16, 2002.
"WORLDCOM AGREEMENTS" shall mean (i) the WorldCom Acquisition
Agreement, (ii) the agreements to provide and perform certain services in
connection therewith and (iii) all documents and agreements executed in
connection with the WorldCom Acquisition Agreement.
"WORLDCOM ASSETS" shall mean those certain assets for shared tenant
telecommunications services currently owned by WorldCom and its
Subsidiaries and which are to be purchased under the WorldCom Acquisition
Agreement.
"WORLDCOM BUSINESS" shall mean the assets being purchased under the
WorldCom Acquisition Agreement for providing shared tenant
telecommunications services in various locations utilizing in-building
distribution networks.
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily given them in
accordance with generally accepted accounting principles.
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1.3 INTERPRETATION. In this Agreement and each Ancillary Agreement, unless
a clear contrary intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by such documents, and reference to a Person in a particular
capacity excludes such Person in any other capacity;
(c) reference to either gender includes the other gender;
(d) reference to any agreement (including this Agreement and the
Schedules and Exhibits and the Ancillary Agreements) documents or
instruments means such agreement, document or instrument as amended,
modified, supplemented or replaced from time to time in accordance with
the terms thereof and, if applicable, the terms hereof and the Ancillary
Agreements, and reference to any promissory note includes any promissory
note which is an extension or renewal thereof or a substitute or
replacement therefor;
(e) reference to any law, rule, regulation, order, decree,
requirement, policy, guideline, directive or interpretation means as
amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect on the determination date, including rules and regulations
promulgated thereunder;
(f) reference to any Article, Section, paragraph, clause, other
subdivision, Schedule, or Exhibit means such Article, Section, paragraph,
clause or other subdivision of this Agreement or Schedule or Exhibit to
this Agreement;
(g) "hereunder," "hereof," "hereto" and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular Article, Section or other provision hereof;
(h) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(i) relative to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding"; and
(j) references herein to any Subsidiary shall apply only during such
times as the Borrowers have any Subsidiary(ies).
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2. TERM LOAN; GENERAL TERMS.
2.1 TERM LOAN; WARRANTS. Each Lender severally and not jointly agrees, on
the terms and conditions hereinafter set forth, to make available for Borrowers'
use a term loan (the "TERM LOAN") in the amount set forth opposite such Lender's
name in Schedule 2.1 under the heading "Term Loan Commitments" (such amount
being referred to herein as such Lender's "TERM LOAN COMMITMENT"). Repayments
and prepayments of the Term Loan shall not be subject to reborrowing. In
connection with the making of the Term Loans, U.S. RealTel, Inc., shall issue to
the Lenders warrants to purchase four hundred thousand (400,000) shares of
common stock, par value $0.001 per share of U.S. RealTel, Inc., with an exercise
price of $1.13 per share as allocated among the Lenders set forth on Schedule
2.1 hereto under the heading "Warrant Shares" which warrants shall be
exercisable upon the issuance thereof for a period of ten (10) years.
2.2 EVIDENCE OF DEBT. The Term Loan and the Loans made by each Lender to
Borrowers thereunder shall be evidenced by a term note (each, a "TERM NOTE")
payable to the order of such Lender, which note shall be in the form attached
hereto as Exhibit B in an amount equal to such Lender's Term Loan Commitment.
2.3 AMOUNT AND MAINTENANCE OF LOAN. The Term Loan will be made and
maintained as a Fixed Rate Loan.
2.4 INTEREST RATE. Unless otherwise provided in a writing evidencing such
Liabilities and such writing is executed by Borrowers, Borrowers shall pay
Lenders interest on the outstanding principal balance of the Term Loan from time
to time at a rate equal to the Fixed Rate. Interest shall be payable from the
date of such advance of the Loan to the day of repayment of such advance.
Interest shall be computed on the basis of a year of 360 days and actual days
elapsed and shall be payable as provided in Section 3.2. In no contingency or
event whatsoever shall the rate or amount of interest paid by Borrowers under
this Agreement or any of the Ancillary Agreements exceed the maximum amount
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. In the event that such a court determines
that any Lender has received interest under this Agreement or under any
Ancillary Agreement in excess of the maximum amount permitted by such law, (i)
such Lender shall apply such excess to any unpaid principal owed by Borrowers to
such Lender or, if the amount of such excess exceeds the unpaid balance of such
principal, such Lender shall promptly refund such excess interest to Borrowers
and (ii) the provisions of this Agreement shall be deemed amended to provide for
such permissible rate. All sums paid, or agreed to be paid, by Borrowers which
are, or which may be construed to be, compensation for the use, forbearance or
detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, spread and allocated throughout the term of all such
indebtedness until the indebtedness is paid in full.
2.5 BORROWING PROCEDURES. The Term Loan shall be subject to borrowing on
the date of Closing and the Term Loan Commitment of each Lender shall expire and
terminate on the date of Closing following the funding of that Lender's Term
Loan Commitment. Borrowers
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shall provide each Lender with a written notice of borrowing in form and
substance acceptable to such Lender ("NOTICE OF BORROWING") at Closing under the
Term Loan.
2.6 GENERAL PROVISION. All loans and advances by each Lender to Borrowers
under this Agreement and the Ancillary Agreements shall constitute one loan and
all indebtedness and obligations of Borrowers to such Lender under this
Agreement and the Ancillary Agreements shall constitute one general obligation.
2.7 DELIVERIES. The obligations of each Lender to make the Term Loan
hereunder is subject to the following conditions precedent:
(A) Loans. On or prior to the date hereof (hereinafter called the
"CLOSING"), Borrowers shall have delivered or caused to be delivered to
each Lender, each in form and substance satisfactory to such Lender, the
following:
(i) The Term Notes, which shall be duly executed by Borrowers;
(ii) A certified (as of the date of the Closing) copy of
resolutions of the board of directors of each Borrower authorizing
the execution, delivery and performance of this Agreement, the Term
Notes and each other document to be delivered pursuant hereto;
(iii) A Certificate (dated the date of the Closing) of the
secretary of each Borrower as to the incumbency and signatures of
the authorized officer of such Borrower signing this Agreement, the
Term Notes and each other document to be delivered pursuant to this
Agreement, as applicable;
(iv) A copy of each Borrower's certificate of incorporation
and bylaws, together with a certificate (dated the date of the
Closing) of the secretary of such Borrower to the effect that such
certificates of incorporation and bylaws have not been amended since
the date each document became effective;
(v) Certificates, as of the most recent dates practicable, of
the Secretary of State of Delaware and the secretary of state of
each state in which each Borrower is qualified as a foreign
corporation, or in which it intends to do business following the
receipt of proceeds of the Term Loan, as to the good standing of
such Borrower;
(vi) Uniform Commercial Code, tax lien, bankruptcy and
judgment searches concerning each Borrower and the WorldCom Parties
from all offices and jurisdictions deemed appropriate by any Lender
in such Lender's sole discretion, showing no other filing of record
with respect to Borrowers' and their respective Subsidiary's assets
except Permitted Liens;
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(vii) An opinion of counsel to Borrowers addressed to each
Lender in substantially the form of Exhibit C attached hereto;
(viii) The Warrants of U.S. RealTel, Inc., as provided in
Section 2.1 hereof, in substantially the form of Exhibit D attached
hereto with appropriate insertions;
(ix) An Intercreditor Agreement with the initial purchasers of
the Convertible Notes in the form of Exhibit E attached hereto;
(x) An Intercreditor Agreement with the Senior Lender in the
form of Exhibit F attached hereto;
(xi) A Notice of Borrowing duly executed by Borrowers;
(xii) Evidence of the cancellation of (A) options to purchase
100,000 shares of common stock of U.S. RealTel for $1.00 per share
issued to Xxxxxxx XxXxxxx and (B) options to purchase 100,000 shares
of common stock, par value $0.001 per share of U.S. RealTel for
$1.00 per share issued to Xxxx XxXxxx; and
(xiii) Such other documents as any Lender shall reasonably
determine to be necessary or desirable.
(B) Accuracy of Representations and Warranties. Each representation
and warranty of Borrowers will be true and correct on the Closing Date;
and
(D) WorldCom Acquisition. All conditions precedent to consummation
of the WorldCom Acquisition shall have been satisfied (without giving
effect to any waiver thereof not approved by each Lender) other than
payment of the purchase price for the WorldCom Assets thereunder;
contemporaneously with or prior to the Loan, and all governmental
authorizations, consents, approvals, licenses, permits, exemptions or
other actions required in connection with the WorldCom Acquisition and the
other transactions contemplated by this Agreement shall have been duly
received and not been rescinded and Borrowers shall have so certified to
each Lender and, to the extent requested by any Lender, delivered to such
Lender copies thereof. The closing and consummation of (i) the loans
related to the Senior Debt, (ii) the sale of the Convertible Notes and
(iii) the WorldCom Acquisition shall have occurred contemporaneously with
the making of the Loan.
2.8 LOAN FEES. Borrowers shall pay each Lender an initial loan fee equal
to 2.5% of such Lender's Term Loan Commitment. If the Term Loan is outstanding
sixty (60) days after the Closing, Borrowers shall pay to each Lender an
additional loan fee equal to 1.25% of the then outstanding principal balance of
such Lender's Term Loan. If the Term Loan is outstanding ninety (90) days after
the Closing, Borrowers shall pay to each Lender an additional loan fee
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equal to 1.25% of the then outstanding principal balance of such Lender's Term
Loan. If the Term Loan is outstanding one hundred twenty (120) days after the
Closing, Borrowers shall pay to each Lender an additional loan feeequal to 1.00%
of the then outstanding principal balance of such Lender's Term Loan. The loan
fees described above shall be cumulative and shall be payable on the earlier to
occur of (A) Term Loan Maturity Date and (B) any other date on which each such
Term Loan is paid in full or otherwise satisfied.
3. PAYMENTS.
3.1 LOAN ACCOUNT; METHOD OF MAKING PAYMENTS. Each Lender shall maintain a
loan account (each, a "LOAN ACCOUNT") on its books in which shall be recorded
(i) all advances of the Loan made by such Lender to Borrowers pursuant to this
Agreement, (ii) all payments made by Borrowers on the Loan and (iii) all other
appropriate debits and credits as provided in this Agreement, including, without
limitation, all fees, charges, expenses and interest. All entries in the Loan
Account shall be made in accordance with such Lender's customary accounting
practices as in effect from time to time.
3.2 PAYMENT TERMS. Any of the Liabilities paid to Lenders by Borrowers
shall be paid to such Lender contemporaneously with payments made to each other
Lender in immediately available funds and each payment shall be made pro rata
based on their respective Term Loan Commitments at the address set forth in
Section 7.10. Subject to Section 6.2, the Liabilities will be payable as
follows:
(A) accrued interest shall be payable on the applicable Interest
Payment Date;
(B) fees, costs, expenses and similar charges shall be payable as
and when provided for in this Agreement or the Ancillary Agreements; and
(C) the outstanding principal balance of the Term Loan shall be
payable in full on the Term Loan Maturity Date.
Subject to the contemporaneous payment of the loan fees described in
Section 2.8, Borrowers may prepay all or any portion of the Term Loan, without
penalty or premium, at any time and from time to time. After maturity (whether
upon acceleration or otherwise) of any Liabilities, accrued interest on such
Liabilities shall be payable upon demand.
3.3 APPLICATION OF PAYMENTS AND COLLECTIONS. Each Lender shall apply all
receipts with respect to payments on the Liabilities received by it from, or on
behalf of, Borrowers first, to pay all fees and expenses due and payable to such
Lender hereunder or under any Ancillary Agreements, second, to interest then due
and payable on the Term Loan and third, to the unpaid principal on the Term
Loan; provided, however, that upon an Event of Default, such Lender shall have
the continuing exclusive right to apply and reapply any and all such payments
and collections against the Liabilities in such manner as such Lender may deem
appropriate, notwithstanding any entry by Lender upon any of its books and
records. To the extent that Borrowers make a payment or payments to such Lender,
which payment(s) or proceeds are
11
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment or proceeds received, the Liabilities intended to be
satisfied shall be revived and shall continue in full force and effect, as if
such payments or proceeds had not been received by such Lender.
3.4 RECORDS. All advances to Borrowers, and all other debits and credits
provided for in this Agreement, shall be evidenced by entries made by such
Lender in its internal data control systems showing the date, amount and reason
for each such debit or credit. The balance in the Loan Account, as set forth in
such Lender's internal records, shall be rebuttably presumptive evidence of the
amounts due and owing to such Lender by Borrowers.
4. WARRANTIES AND REPRESENTATIONS.
4.1 GENERAL WARRANTIES AND REPRESENTATIONS. Borrowers, jointly and
severally, warrant and represent to each Lender that:
(A) Borrowers and each of their respective Subsidiaries are
corporations duly organized and validly existing and in good standing
under the laws of the state of Delaware and are qualified or licensed as a
foreign corporation to do business in any state where the failure to be so
qualified or licensed could reasonably be expected to have a Material
Adverse Effect;
(B) Borrowers have the right and power and are duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and
the Ancillary Agreements and this Agreement and the Ancillary Agreements
when duly executed and delivered will be legal, valid and binding
obligations of Borrowers enforceable in accordance with their terms except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights
generally or the application of general equitable principles;
(C) The execution, delivery and performance by Borrowers of this
Agreement and the Ancillary Agreements shall not, by their execution or
performance, the passing of time, the giving of notice or otherwise,
constitute a violation of any applicable law, rule, regulation, judgment,
order or decree applicable to or enforceable against Borrowers or a breach
of any provision contained in Borrowers' certificate of incorporation or
bylaws or contained in any material agreement, instrument, indenture or
other document to which Borrowers are now a party or by which it or any of
their property is bound;
(D) Borrowers' use of the proceeds of any advances made by such
Lender are, and will continue to be, legal and proper corporate uses (duly
authorized by its board of directors, in accordance with any applicable
law, rule or regulation) and such uses are consistent with all applicable
laws, rules and regulations, as in effect as of the date hereof;
12
(E) Borrowers and each of their respective Subsidiaries upon Closing
and upon the consummation of the transactions contemplated by the WorldCom
Acquisition has (i) capital sufficient to carry on its business and
transactions and all businesses and transactions in which it is about to
engage and is solvent and able to pay its debts as they mature and
Borrowers and each of their respective Subsidiaries own property, the fair
saleable value of which is greater than the amount required to pay
Borrowers' or such other Person's debts and (ii) good, indefeasible and
merchantable title to and ownership of its assets free and clear of all
Liens, other than Permitted Liens;
(F) (i) Except as disclosed on Exhibit G there is no litigation,
suit, action, proceeding, inquiry or investigation pending or, to the best
of Borrowers' Knowledge, threatened against Borrowers or any of their
respective Subsidiaries which if unfavorably determined would materially
adversely affect the transactions contemplated hereby, or such Person's
property, prospects assets, operations or condition (financial or
otherwise) and (ii) neither Borrowers nor any of their respective
Subsidiaries have any Indebtedness and have not guaranteed the obligations
of any other Person other than Permitted Debt;
(G) Borrowers and each of their respective Subsidiaries are not, to
Borrowers' Knowledge, in violation of any applicable statute, rule,
regulation or ordinance of any governmental entity, including, without
limitation, the United States of America, any state, city, town,
municipality, county or of any other jurisdiction, or of any agency
thereof, which violation could reasonably be expected to have a Material
Adverse Effect;
(H) Borrowers and each of their respective Subsidiaries are not in
default under any indenture, loan agreement, mortgage, lease, trust deed,
deed of trust or other similar agreement relating to the borrowing of
monies to which they are a party or by which they or any of their property
is bound;
(I) Borrowers and each of their respective Subsidiaries are in
compliance in all material respects with the requirements of ERISA and the
regulations promulgated thereunder and, to the best of their Knowledge,
there exists no event described in Section 4043 of ERISA, excluding
subsections 4043(b)(2) and 4043(b)(3) ("REPORTABLE EVENT");
(J) Borrowers and each of their respective Subsidiaries have filed
all federal, state and local tax returns and other reports, or has been
included in consolidated returns or reports filed by an Affiliate, which
such Person is required by law, rule or regulation to file and all
material Charges that are due and payable have been paid;
(K) Borrowers' execution and delivery of this Agreement and the
Ancillary Agreements do not directly or indirectly violate or result in
any violation by Borrowers of the Securities Exchange Act of 1934, as
amended or any regulations issued pursuant thereto (the "EXCHANGE ACT"),
including without limitation, Regulation U, T or X of the Board of
Governors of the Federal Reserve System (12 CFR 221, 207, 220 and 224,
13
respectively) and Borrowers do not own or intend to purchase or carry any
"MARGIN SECURITY," as defined in such regulations;
(L) Except as set forth on Exhibit H, Borrowers have no Subsidiaries
and do not own an equity interest in any other Person;
(M) To the best of Borrowers' Knowledge, Borrowers, each of their
respective Subsidiaries and each property (including underlying ground
water), operation and facility that Borrowers or any of their respective
Subsidiaries operates or controls are in compliance with all statutes,
judicial or administrative orders, licenses, permits and governmental
rules and regulations applicable to them, including, without limitation,
Environmental Laws, the noncompliance which would be reasonably likely to
have a Material Adverse Effect;
(N) Borrowers possess adequate copyrights, patents, trademarks,
trade secrets and computer software to conduct their businesses and all
such intellectual property (other than computer software and trade
secrets) in the possession of Borrowers as of the date of this Agreement
are listed on Schedule 4.1(N);
(O) Borrowers do not currently have any "rights plan" or other
similar poison pill agreement that would in any way restrict any Lender or
affiliate of any Lender from purchasing or owning shares of Borrowers'
capital stock; and
(P) Each of the documents filed by U.S. RealTel with the U.S.
Securities and Exchange Commission ("SEC") complied when filed with all of
the requirements of the Securities Act of 1933, as amended, and the
Exchange Act, as applicable, and did not contain any untrue statement of a
material fact or omit to state any material fact required to be contained
therein or necessary or necessary in order to make the statements therein
not misleading. The Executive Summary of Cypress, Inc. dated March 2002
and the pro forma financial statements delivered to Lenders did not and do
not contain any untrue statement of a material fact or omit to state any
material fact required to be contained therein or necessary in order to
make the statements therein not misleading and the projections and
assumptions stated therein were made in good faith with reasonable basis
therefor. Notwithstanding the foregoing, Borrowers make no representations
and warranties as to the accuracy of the projections stated therein except
as expressly set forth herein.
(Q) The Form 10-K filed by U. S. RealTel on April 16, 2002, contains
consolidated balance sheets of U.S. RealTel and its consolidated
Subsidiaries, and the consolidated statements of income, stockholders'
equity, and cash flows of the U.S. RealTel and its consolidated
Subsidiaries for each of the three years ended December 31, 2000 and
December 31, 2001, including notes thereto, and the opinion of BDO
Xxxxxxx, LLP, independent certified public accountants with respect to
such financial statements. The quarterly report on Form 10-Q filed by U.S.
RealTel on May 20, 2002, contains the unaudited consolidated balance sheet
of U.S. RealTel and its consolidated Subsidiaries
14
at, and the unaudited consolidated statements of income, stockholders'
equity, and cash flows of U.S. RealTel and its consolidated Subsidiaries
for the period ended, March 31, 2002. All of the foregoing financial
statements are complete and correct in all material respects and fairly
present in all material respects the consolidated financial condition of
U.S. RealTel and its consolidated Subsidiaries at the respective dates of
said balance sheets and the consolidated results of operations of the U.S.
RealTel and its consolidated Subsidiaries for the respective periods
covered thereby. Such financial statements have been prepared in
accordance with Regulation S-X promulgated by the SEC applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). There were no material liabilities, direct or indirect,
fixed or contingent, of U.S. RealTel and its consolidated Subsidiaries as
of the respective dates of such balance sheets that are not reflected
therein or in the notes thereto.
4.2 SURVIVAL OF WARRANTIES AND REPRESENTATIONS. Borrowers covenant,
warrant and represent to each Lender that all representations and warranties of
Borrowers contained in this Agreement and the Ancillary Agreements shall be true
at the time of Borrowers' execution of this Agreement and the Ancillary
Agreements, and shall survive the execution, delivery and acceptance by the
parties and the closing of the transactions described in this Agreement.
5. COVENANTS AND CONTINUING AGREEMENTS.
5.1 AFFIRMATIVE COVENANTS. Borrowers covenant that they shall:
(A) Fees and Costs. Pay to each Lender, on demand, any and all
reasonable fees, costs or expenses which such Lender incurs arising out of
or in connection with (i) the forwarding to Borrowers or any other Person
on behalf of Borrowers, by such Lender of proceeds of the Term Loan made
by such Lender to Borrowers pursuant to this Agreement and (ii) the
depositing for collection, by such Lender of any check or item of payment
received or delivered to such Lender on account of the Liabilities;
(B) Insurance. At their sole cost and expense, keep and maintain and
cause each of their respective Subsidiaries to keep and maintain their
assets and their businesses insured for its full insurable value against
loss or damage by fire, theft, explosion, sprinklers and all other hazards
and risks ordinarily insured against by other owners or users of such
properties in similar businesses and notify such Lender promptly of any
event or occurrence causing a material loss or decline in value of its
assets and the estimated (or actual, if available) amount of such loss or
decline;
(C) Financial Reports. Keep books of account and prepare the
following which shall be furnished to such Borrowers boards of directors:
(i) as soon as available, but not later than one hundred
twenty (120) days after the close of each fiscal year of U.S.
RealTel, Inc., (a) financial statements of U.S. RealTel, Inc. and
each of its Subsidiaries prepared on a consolidated basis (including
a balance sheet, statement of income and retained
15
earnings and cash flow, all with supporting footnotes) as at the end
of such year and for the year then ended, all in reasonable detail
as requested by such Lender and audited by a firm of independent
certified public accountants of recognized standing selected by U.S.
RealTel, Inc., and approved by such Lender, together with an
unqualified opinion thereon from such certified public accountants
and (b) internally prepared financial statements of U.S. RealTel,
Inc., and each of its Subsidiaries prepared on a consolidating
basis;
(ii) as soon as available, but no later than forty five (45)
days after the end of each month, internally prepared consolidated
financial statements of U.S. RealTel, Inc., and each of its
Subsidiaries (including a balance sheet, statement of income and
retained earnings and cash flow) as at the end of and for the
portion of U.S. RealTel Inc.'s fiscal year then elapsed, all in
reasonable detail as requested by such Lender and certified by U.S.
RealTel Inc.'s principal financial officer as prepared in accordance
with generally accepted accounting principles and fairly presenting
in all material respects the financial position and results of
operations of U.S. RealTel, Inc., and each of its Subsidiaries for
such period (subject to normal year-end audit adjustments and
omission of footnotes); and
(iii) such other data and information (financial and other) as
such Lender, from time to time, may reasonably request, bearing upon
or related to Borrowers' and/or any Subsidiary's financial condition
or results of its operations, or the financial condition of any
Person who is a guarantor of any of the Liabilities;
(D) Litigation and Other Events. Notify such Borrower's board of
directors, promptly upon Borrowers' learning of the institution or written
threat of any litigation, suit, action, inquiry, investigation or
administrative proceeding which could be reasonably likely to have a
Material Adverse Effect, which questions the validity or fairness of the
WorldCom Acquisition Agreement or the transactions contemplated thereby,
including the WorldCom Acquisition or results in the occurrence of an
Event of Default or Default;
(E) Existence and Status. Maintain and preserve and cause each of
their respective Subsidiaries to maintain and preserve its existence as a
limited partnership, limited liability company or corporation, as
applicable, in its state of formation and all rights, privileges,
licenses, copyrights, trademarks, trade names, franchises and other
authority to the extent material and necessary for the conduct of its
business in the ordinary course as conducted from time to time. Borrowers
shall not take any action or suffer any action to be taken by others and
will not permit any of their respective Subsidiaries to take any action or
suffer any action which will alter, change or destroy its status as a
limited partnership, limited liability company or corporation;
(F) Use of Proceeds. Use proceeds of the Term Loan only for
acquiring the WorldCom Assets as provided by the WorldCom Acquisition
Agreement; and
16
(G) Environmental Covenant. (a) Use and operate and cause each of
their respective Subsidiaries to use and operate all of its facilities and
properties in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
material compliance therewith, and handle all hazardous substances and
waste in material compliance with all applicable Environmental Laws; (b)
immediately notify such Borrower's board of directors and provide copies
upon receipt of all material written claims, complaints, notices or
inquiries relating to the condition of its or any of their respective
Subsidiary's facilities and properties or compliance with Environmental
Laws, and shall (i) promptly cure and have dismissed with prejudice to the
satisfaction of each Lender any actions and proceedings relating to
compliance with Environmental Laws or (ii) contest any such actions or
proceedings in good faith by appropriate proceedings and establish
adequate reserves therefor; and (c) provide such information and
certifications which each Lender may reasonably request from time to time
to evidence compliance with this subsection.
5.2 NEGATIVE COVENANTS. Borrowers covenants that they shall not, without
the prior written consent of each Lender:
(A) Mergers and Acquisitions. Liquidate, dissolve or merge or
consolidate with or acquire any Person; or permit any of their respective
Subsidiaries to liquidate, dissolve or merge or consolidate with or
acquire any Person or lose control (as such term is defined in the
definition of "AFFILIATE") of any of their respective Subsidiaries except
(i) as specifically contemplated by the WorldCom Acquisition Agreement,
(ii) an acquisition of the stock and/or the assets of X/O 1, Inc., a
Delaware corporation or (iii) a merger or consolidation of one Borrower
with or into another Borrower;
(B) Loans. Make any loans or other advances of money (other than
salary and equity based compensation and cash bonuses not to exceed
$500,000 to any single employee in any fiscal year expressly provided for
in any of employment agreements with any of Borrowers' employees) to
Affiliates, managers, officers, directors, employees or agents of
Affiliates or Borrowers or to any other Person;
(C) Capital Structure and Business. Make any material change in
Borrowers' capital structure or in any of its business objectives,
purposes and operations or permit any of their respective Subsidiaries to
make any material change in such Subsidiary's capital structure or in any
of its business objectives, purposes and operations, other than in
connection with the WorldCom Acquisition Agreement;
(D) Affiliate Transactions. Enter into, or be a party to, any
transaction with any Affiliate or partner, stockholder, director, manager
or officer of Borrowers or an Affiliate, except in the ordinary course of
and pursuant to the reasonable requirements of Borrowers' business and
upon fair and reasonable terms which are fully disclosed to such
Borrower's board of directors and are no less favorable to Borrowers than
could be
17
obtained in a comparable arm's length transaction with a Person not an
Affiliate or partner, stockholder, director, manager or officer of
Borrowers or an Affiliate;
(E) Governing Documents. Amend or otherwise modify or permit any of
their respective Subsidiaries to amend or otherwise modify any term of its
certificate of incorporation or bylaws or other governing document, as
applicable, in effect on the date hereof;
(F) Other Liens; Transfer of Assets. Except for Permitted Liens,
pledge, mortgage, grant a security interest in or permit to exist a Lien
on, encumber, assign, sell, lease or otherwise dispose of or transfer,
whether by sale, merger, consolidation, liquidation, dissolution, or
similar transaction, any of Borrowers' assets or permit any of their
respective Subsidiaries to pledge, mortgage, grant a security interest in
or permit to exist a lien on, encumber, assign, sell or otherwise dispose
of or transfer, whether by sale, merger, consolidation, liquidation,
dissolution or otherwise, any of such Subsidiary's assets;
(G) Other Indebtedness. Incur or guaranty or permit any of their
respective Subsidiaries to incur or guaranty any Indebtedness other than
Permitted Debt;
(H) Capital Structure. Neither Borrowers nor any of their respective
Subsidiaries shall declare or pay a dividend or other distribution upon,
purchase or redeem, or obligate themselves to purchase or redeem, any
capital stock in Borrowers or such Subsidiary of any class, issued and
outstanding from time to time, other than the redemption of U.S. RealTel
Inc.'s Series A Preferred Stock in accordance with its terms. The
Borrowers shall continue to own, directly or indirectly, the same (or
greater) percentage of the ownership interest of each of their respective
Subsidiaries that they held on the date of this Agreement, and no such
Subsidiary shall issue any additional securities other than to the
Borrowers; or
(I) Rights Plan. Adopt or otherwise suffer to exist a "rights plan"
or other similar poison pill agreement that would in any way restrict any
Lender or any of such Lender's affiliates from purchasing or owning shares
of Borrowers' capital stock.
5.3 PAYMENT OF CHARGES. Borrowers shall pay promptly when due all of the
Charges, except for any Charges that are being disputed by Borrowers in good
faith through appropriate proceedings. In the event Borrowers, at any time or
times, shall fail to pay or contest in good faith the Charges or to promptly
obtain the satisfaction of such Charges, Borrowers shall promptly so notify each
Lender and any Lender may, without waiving or releasing any obligation or
liability of Borrowers under this Agreement or any Event of Default, in its sole
discretion, at any subsequent time or times, make such payment or any part
thereof (but shall not be obligated so to do), or obtain such satisfaction and
take any other action which such Lender deems advisable. All sums so paid by
such Lender and any expenses, including reasonable attorneys' fees, court costs,
expenses and other related charges, shall be payable by Borrowers to such Lender
upon demand and shall be additional Liabilities.
18
5.4 INSURANCE; PAYMENT OF PREMIUMS. All policies of insurance on Borrowers
and each of their respective Subsidiary's assets or otherwise required under
this Agreement shall be in form and amount satisfactory to each Lender and with
insurers reasonably recognized as adequate by such Lender. If Borrowers shall
fail to obtain or maintain any of the policies required by this Section 5.4 or
to pay any premium relating thereto, then any Lender, without waiving or
releasing any obligation or Event of Default by Borrowers hereunder, may (but
shall be under no obligation to do so) upon five (5) Business Days prior written
notice to Borrowers, obtain and maintain such policies of insurance and pay such
premiums and take any other action which such Lender deems advisable. All sums
so disbursed by such Lender, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, shall be payable by Borrowers to
such Lender upon demand and shall be additional Liabilities.
5.5 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT. Except as
otherwise expressly provided for in this Agreement and in the Ancillary
Agreements, no termination or cancellation (regardless of cause or procedure) of
this Agreement or the Ancillary Agreements shall in any way affect or impair the
powers, obligations, duties, rights, and liabilities of Borrowers or any Lender
in any way with respect to (i) any transaction or event occurring prior to such
termination or cancellation, or (ii) any of the undertakings, agreements,
covenants, warranties and representations of Borrowers or such Lender contained
in this Agreement or the Ancillary Agreements, until the Liabilities have been
fully and indefeasibly paid and discharged at which time all such undertakings,
agreements, covenants, warranties and representations shall terminate and be of
no further force or effect.
6. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.
6.1 EVENT OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an Event of Default under this Agreement:
(A) (i) Either Borrower fails to pay any part of the Liabilities
when due and payable or declared due and payable or (ii) either Borrower
is in default in the payment of any Indebtedness in the aggregate in
excess of $50,000 or (iii) any Subsidiary of any Borrower is in default on
its Indebtedness in the aggregate in excess of $50,000, after giving
effect to any cure period with respect thereto in any applicable
documentation; or
(B) Either Borrower or any of its Subsidiaries or any guarantor of
the Liabilities fails or neglects to perform, keep or observe any other
term, provision, condition or covenant contained in this Agreement or in
the Ancillary Agreements (other than a failure described in Section
6.1(A)), which is required to be performed, kept or observed by Borrowers
or such Subsidiary or guarantor and the same is not cured to any Lender's
satisfaction within thirty (30) days after any Lender gives Borrowers
notice identifying such default; provided, however, that breach of any of
the provisions, conditions or covenants contained in Sections 5.1 and 5.2
shall without notice or time to cure be an Event of Default; or
19
(C) The occurrence of any default by either Borrower under any of
the Ancillary Agreements or the WorldCom Acquisition Agreement and any
other documents or instruments executed in connection therewith, after
giving effect to any and all rights of such Borrower thereunder to cure
such default; or
(D) Any statement, warranty, representation, report, financial
statement, or certificate made or delivered by Borrowers or any of their
managers, officers, employees or agents to any Lender is not true and
correct in any material respect on the date it was made or delivered or
deemed re-made; or
(E) Any of Borrowers' assets or any assets of any of their
respective Subsidiaries are attached, seized, levied upon or subjected to
a writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors and the same
is not cured within thirty (30) days; or an application is made by any
Person for the appointment of a receiver, trustee, or custodian for any of
Borrowers' assets or any assets of any of their respective Subsidiaries
and the same is not dismissed within forty-five (45) days after such
application; or
(F) An application is made by either Borrower for the appointment of
a receiver, trustee or custodian for any of such Borrower's assets; or an
application is made by any Subsidiary or any guarantor of the Liabilities
for the appointment of a receiver, trustee or custodian for any of such
Person's assets; or any case or proceeding is filed by or against either
Borrower, any of their respective Subsidiaries or any such guarantor for
its dissolution, liquidation, or termination; or such Borrower or any such
Subsidiary ceases to conduct its business as now conducted or is enjoined,
restrained or in any way prevented by court order from conducting all or
any material part of its business affairs; or
(G) A notice of lien, levy or assessment is filed of record with
respect to all or any substantial portion of either Borrower's or any of
their Subsidiary's assets by the United States, or any department, agency
or instrumentality, or by any state, county, municipal or other
governmental agency including, without limitation, the Pension Benefit
Guaranty Corporation, or any taxes or debts owing to any of the foregoing
becomes a lien or encumbrance upon any of either Borrower's or upon any of
their Subsidiary's assets and such lien or encumbrance is not released
within thirty (30) days after its creation; or
(H) Judgment(s) is or are rendered against either Borrower or any of
their respective Subsidiaries in the aggregate in excess of $100,000 and
such Person fails to either discharge the judgment or commence appropriate
proceedings to appeal such judgment(s) within the applicable appeal period
or, after such appeal is filed, such Person fails to diligently prosecute
such appeal or such appeal is denied; or
20
(I) A petition under any section or chapter of the United States
Bankruptcy Code or any similar law or regulation is filed by or against
either Borrower, any of their respective Subsidiaries or any guarantor of
the Liabilities and, if filed against such Borrower, any such Subsidiary
or any such guarantor, is not dismissed within forty-five (45) days after
filing; or either Borrower, any of their Subsidiaries or any such
guarantor makes an assignment for the benefit of its creditors or such
Borrower or any such Subsidiary becomes insolvent, fails generally to pay
its debts as they become due or admits its inability to pay its debts as
they become due; or
(J) Borrowers fail within fifteen (15) days after the occurrence of
any of the following events, to furnish each Lender with appropriate
notice thereof: (i) the happening of a Reportable Event with respect to
any profit sharing or pension plan governed by ERISA (such notice shall
contain the statement of the chief financial officer of the respective
Borrower setting forth details as to such Reportable Event and the action
which such Borrower or the applicable Subsidiary proposes to take with
respect thereto and a copy of the notice of such Reportable Event to the
Pension Benefit Guaranty Corporation), (ii) the termination of any such
plan, (iii) the appointment of a trustee by an appropriate United States
District Court to administer any such plan, or (iv) the institution of any
proceedings by the Pension Benefit Guaranty Corporation to terminate any
such plan or to appoint a trustee to administer any such plan; or
(K) Borrowers fails to: (i) notify each Lender promptly upon receipt
by either Borrower or any of their respective Subsidiaries of any notice
of the institution of any proceeding or other actions which may result in
the termination of any profit sharing or pension plan; or (ii) acquire and
maintain or cause any Subsidiaries to acquire and maintain, when
available, the contingent employer liability coverage insurance provided
for under Section 4023 of ERISA in an amount satisfactory to each Lender;
or
(L) Any guaranty, if any, of the Term Loan shall be repudiated or
become unenforceable or incapable of performance; or
(M) Any Person(s) presently not in control of Borrowers or any of
their respective Subsidiaries shall obtain control directly or indirectly
of such Borrower or such Subsidiary; or
(N) any of the WorldCom Parties, shall dissolve or become insolvent,
a voluntary or involuntary petition in bankruptcy, receivership or other
action concerning creditors' rights shall be filed with respect to any of
the WorldCom Parties, any of the WorldCom Parties shall make an assignment
for the benefit of creditors or any of the WorldCom Parties shall breach
any of the WorldCom Agreements, in each case which has a material adverse
effect on the WorldCom Assets or the WorldCom Business, or the ability of
the WorldCom Parties to satisfy their obligations under any of the
WorldCom Agreements is otherwise impaired in a manner which has a material
adverse effect on the WorldCom Assets or the WorldCom Business, or an
event of default shall occur under
21
the WorldCom Agreements which has a material adverse effect on the Assets
or the Business (collectively a "WorldCom Default").
6.2 ACCELERATION OF THE LIABILITIES. If (a) any Event of Default described
in Section 6.1(I) shall occur, all Term Notes shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, or any
action by any of the Lenders; and (b) any other Event of Default shall occur
(other than an Event of Default described in Section 6.1(I)), each Lender may
declare such Lender's Term Note to be immediately due and payable, whereupon
such Lender's Term Note shall become immediately due and payable, without
presentment, demand, protest or notice of any kind. Each Lender shall promptly
advise Borrowers and the other Lenders of any such declaration, but failure to
do so shall not impair the effect of such declaration.
6.3 DEFAULT INTEREST RATE. To compensate each Lender for additional
unreimbursed costs resulting from the occurrence of an Event of Default,
including without limitation, acts associated with the uncertainty of future
funding and additional supervisory and administrative efforts, upon and after an
Event of Default and after notice thereof is given to Borrowers, the Liabilities
shall continue to bear interest, calculated daily on the basis of a 360-day year
at the Fixed Rate plus additional post-default interest at the rate of three
percent (3%) per year until the Liabilities are paid in full.
6.4 EFFECT OF A WORLDCOM DEFAULT. Upon the occurrence of an Event of
Default set forth in Section 6.1(N) hereof, without any notice to Borrowers or
any act by Lenders, all amounts payable by Borrowers hereunder or the
Convertible Notes shall be immediately due and payable, pro rata among the
Lenders and the holder of the Convertible Notes on a pari passu basis without
presentment, demand, protest or notice of any kind, all of which are waived by
Borrowers.
7. MISCELLANEOUS.
7.1 MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement and the
Ancillary Agreements may not be modified, altered or amended, except by an
agreement in writing signed by Borrowers and each Lender. Borrowers may not
sell, assign or transfer all or any portion of the Loan, this Agreement or the
Ancillary Agreements, including, without limitation, Borrowers' right, title,
interest, remedies, powers, or duties other than to an Affiliate of any Lender.
Lenders shall not have the right to participate, sell, assign, transfer or
otherwise dispose of, at any time or times, the Loan this Agreement or the
Ancillary Agreements, including, without limitation, such Lender's right, title,
interest, remedies, powers, or duties therein without the prior written consent
of Borrowers, which consent shall not be unreasonably withheld.
22
7.2 ATTORNEYS' FEES AND EXPENSES; LENDER'S OUT-OF-POCKET EXPENSES. If, at
any time or times, whether prior or subsequent to the date of this Agreement and
regardless of the existence of a Default or an Event of Default, any Lender
incurs legal or other costs and expenses or employs counsel, accountants or
other professionals for advice or other representation or services in connection
with:
(A) The preparation, negotiation and execution of this Agreement,
all Ancillary Agreements, any amendment of or modification of this
Agreement or the Ancillary Agreements;
(B) Any litigation, contest, dispute, suit, proceeding or action
(whether instituted by any Lender, any Borrower or any other Person) in
any way relating to this Agreement or the Ancillary Agreements; or
(C) Any attempt to enforce any rights of any Lender or any
Participant against Borrowers or any other Person which may be obligated
to such Lender or such Participant by virtue of this Agreement or the
Ancillary Agreements;
then, in any such event, the reasonable attorneys' and paralegals' fees and
expenses arising from such services and all expenses, costs, charges and other
fees of or paid by such Lender in any way or respect arising in connection with
or relating to any of the events or actions described in this Section 7.2 shall
be payable by Borrowers to such Lender upon demand and shall be additional
Liabilities. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include accountants' fees, costs and expenses; court
costs, fees and expenses; photocopying and duplicating expenses; court reporter
fees, costs and expenses; long distance telephone charges; courier charges;
telegram and telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
all such services.
7.3 NO OFFSET; RIGHT TO CHARGE ACCOUNTS. All payments due to any Lender
shall be made in immediately available funds, without setoff or counterclaim.
7.4 WAIVER BY LENDER. Any Lender's failure, at any time or times, to
require strict performance by Borrowers of any provision of this Agreement or of
any Ancillary Agreement shall not constitute a waiver, or affect or diminish any
right of such Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by any Lender of an Event of Default under
this Agreement or any Ancillary Agreement shall not suspend, waive or affect any
other Event of Default under this Agreement or the Ancillary Agreements, whether
the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants and
representations of Borrowers contained in this Agreement or the Ancillary
Agreements and no Event of Default under this Agreement or the Ancillary
Agreements shall be deemed to have been suspended or waived by such Lender,
unless such suspension or waiver is by an instrument in writing signed by an
officer of such Lender and directed to Borrowers specifying such suspension or
waiver.
23
7.5 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
7.6 PARTIES; ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements
shall be binding upon and inure to the benefit of the respective successors and
assigns of Borrower and each Lender. Borrowers' successors and assigns shall
include, without limitation, a trustee, receiver or debtor-in-possession of or
for Borrowers. Nothing contained in this Section 7.6 shall be deemed to modify
Section 7.1. This Agreement is the complete statement of the agreement by and
between Borrowers and each Lender and supersedes all prior negotiations,
understandings and representations between them with respect to the subject
matter of this Agreement.
7.7 CONFLICT OF TERMS. The provisions of the Ancillary Agreements are
incorporated in this Agreement by this reference. Except as otherwise provided
in this Agreement and except as otherwise provided in the Ancillary Agreement,
by specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in any Ancillary Agreement, the provision contained in this
Agreement shall govern and control.
7.8 WAIVER BY BORROWERS. Except as otherwise provided for in this
Agreement, Borrowers waives presentment, demand and protest, notice of protest,
notice of presentment, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of any or all notes, commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrowers may in any way be liable and
hereby ratifies and confirms whatever Lender may do in this regard.
7.9 WAIVER AND GOVERNING LAW. THE TERM LOAN EVIDENCED HEREBY HAS BEEN
MADE, AND THIS AGREEMENT HAS BEEN DELIVERED, AT ATLANTA, GEORGIA, AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD
TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF DELAWARE. BORROWERS (I)
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS;
(II) IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN XXXXXX COUNTY, GEORGIA, OVER ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR ANY OF THE
ANCILLARY AGREEMENTS; (III) IRREVOCABLY WAIVE, TO THE FULLEST EXTENT BORROWERS
MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF ANY SUCH ACTION OR PROCEEDING; (IV) AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE
24
CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (V) AGREE NOT TO INSTITUTE ANY LEGAL
ACTION OR PROCEEDING AGAINST LENDER OR ANY OF LENDER'S TRUSTEE'S, EMPLOYEES,
AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS IN ANY COURT OTHER THAN ONE LOCATED
IN XXXXXX COUNTY, GEORGIA. BORROWERS WAIVE PERSONAL SERVICE OF THE SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR ANY OF
THE ANCILLARY AGREEMENTS, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT,
OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED
TO BORROWERS AT THE ADDRESS SET FORTH IN SECTION 7.10. SHOULD BORROWERS FAIL TO
APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SERVED WITHIN THIRTY
(30) DAYS AFTER THE RECEIPT THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR
IMPAIR ANY LENDER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW
OR ANY LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWERS OR
THEIR PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.
7.10 NOTICE. Except as otherwise provided in this Agreement, any notice
required shall be in writing and shall be deemed to have been validly served,
given or delivered upon (i) delivery in person, by messenger or overnight
courier service, (ii) the day after transmission by facsimile, (iii) or five (5)
Business Days after deposit in the United States certified or registered mails,
with proper postage prepaid, addressed to the party to be notified as follows:
(a) If to the Xxxxxx Lenders, at:
000 X. Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
25
with a copy to:
Ungaretti & Xxxxxx
0000 Xxxxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000
(b) If to Noro-Xxxxxxx:
Noro-Xxxxxxx Partners V. LP
0 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Fax: (000) 000-0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
(c) If to Wakefield:
Wakefield Group III LLC
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
(d) If to Borrowers, at:
U.S. RealTel, Inc.
Fifteen Piedmont Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
26
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Xx.
Fax: (000) 000-0000
or to such other address or facsimile number as each party may designate for
itself by like notice.
7.11 SECTION TITLES, ETC. The section titles and table of contents, if
any, contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto. All Exhibits and Schedules which are referred to herein or
attached hereto are incorporated by reference.
7.12 XXXXXX LENDERS. Each of the Xxxxxx Lenders hereby agree that any
single trustee of any of such trusts, acting alone, shall be authorized on
behalf of the Xxxxxx Lenders to take any action on the Xxxxxx Lenders' behalf as
may be permitted to be taken or required to be taken by the Lender under the
provisions of this Agreement and each Ancillary Agreement. Borrowers consent to
the provisions of this Section 7.12.
7.13 TAX TREATMENT. Borrowers and each of the Lenders shall mutually agree
upon of the treatment of the Term Loans, the Loan Fees and the Warrants for tax
purposes within ninety days of the date hereof. Following such determination,
Borrowers and Lenders shall cause all tax returns and financial statements
(including any amended returns or claims for refund) filed by any of them to be
consistent with such allocation.
8. CROSS-GUARANTY.
8.1 CROSS-GUARANTY. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to each Lender and their respective successors and assigns, the full
and prompt payment (whether at stated maturity, by acceleration or otherwise)
and performance of, all Liabilities owed or hereafter owing to each Lender by
each other Borrower. Each Borrower agrees that its guaranty obligation hereunder
is a continuing guaranty of payment and performance and not of collection, that
its obligations under this Section 8 shall not be discharged until payment and
performance, in full, of the Liabilities has occurred, and that its obligations
under this Section 8 shall be absolute and unconditional, irrespective of, and
unaffected by, the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Ancillary Agreement
or any other agreement, document or instrument to which any Borrower is or may
become a party; the absence of any action to enforce this Agreement (including
this Section 8) or any other Ancillary Agreement or the waiver or consent by
each Lender with respect to any of the provisions thereof; the existence, value
or condition of, or failure to perfect
27
its Lien against, any security for the Liabilities or any action, or the absence
of any action, by each Lender in respect thereof (including the release of any
such security); the insolvency of any Borrower; or any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor. Each Borrower shall be regarded, and shall be
in the same position, as principal debtor with respect to the Liabilities
guaranteed hereunder.
8.2 WAIVERS BY BORROWERS. Each Borrower expressly waives all rights it may
have now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel any Lender to marshal assets or to proceed in
respect of the Liabilities guaranteed hereunder, against any other party or
against any security for the payment and performance of the Liabilities before
proceeding against, or as a condition to proceeding against, such Borrower. It
is agreed among each Borrower and each Lender that the foregoing waivers are of
the essence of the transaction contemplated by this Agreement and the Ancillary
Agreements and that, but for the provisions of this Section 8.2 and such
waivers, the Lenders would decline to enter into this Agreement.
8.3 BENEFIT OF GUARANTY. Each Borrower agrees that the provisions of this
Article 8 are for the benefit of each Lender and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any other Borrower or any Lender, the obligations of such other
Borrower under this Agreement and the Ancillary Agreements.
8.4 SUBORDINATION OF SUBROGATION, ETC. Notwithstanding anything to the
contrary in this Agreement or in any Ancillary Agreement, and except as set
forth in Section 8.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Liabilities any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Liabilities are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit each Lender and shall not limit or otherwise affect such Borrower's
liability hereunder or the enforceability of this Section 8.4, and that each
Lender and their respective successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 8.4.
8.5 ELECTION OF REMEDIES. If any Lender may, under applicable law, proceed
to realize its benefits under this Agreement or any Ancillary Agreement giving
such Lender a Lien upon any Collateral, whether owned by any Borrower or by any
other Person, either by judicial foreclosure or by non-judicial sale or
enforcement, any Lender may, at its sole option, determine which of its remedies
or rights it may pursue without affecting any of its rights and remedies under
this Section 8. If, in the exercise of any of its rights and remedies, any
Lender shall forfeit any of its rights or remedies, including its right to enter
a deficiency judgment against any Borrower or any other Person, whether because
of any applicable laws pertaining to "election of remedies" or the like, each
Borrower hereby consents to such action by such Lender and waives any claim
based upon such action, even if such action by such Lender shall result in a
full or partial loss of any rights of subrogation that each Borrower might
otherwise have had but for
28
such action by such Lender. Any election of remedies that results in the denial
or impairment of the right of any Lender to seek a deficiency judgment against
any Borrower shall not impair any other Borrower's obligation to pay the full
amount of the Liabilities. In the event any Lender shall bid at any foreclosure
or trustee's sale or at any private sale permitted by law or this Agreement or
any Ancillary Agreements, such Lender may bid all or less than the amount of the
Liabilities and the amount of such bid need not be paid by such Lender but shall
be credited against the Liabilities. The amount of the successful bid at any
such sale, whether such Lender or any other party is the successful bidder,
shall be conclusively deemed to be the fair market value of the Collateral and
the difference between such bid amount and the remaining balance of the
Liabilities shall be conclusively deemed to be the amount of the Liabilities
guaranteed under this Section 8, notwithstanding that any present or future law
or court decision or ruling may have the effect of reducing the amount of any
deficiency claim to which any Lender might otherwise be entitled but for such
bidding at any such sale.
8.6 LIMITATION. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 8 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 2) shall be limited to an amount not to exceed as of any date of
determination the greater of: (i) the net amount of all Loans advanced to any
other Borrower under this Agreement and then re-loaned or otherwise transferred
to, or for the benefit of, such Borrower; and (ii) the amount that could be
claimed by Lenders from such Borrower under this Section 8 without rendering
such claim voidable or avoidable under Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law after taking
into account, among other things, such Borrower's right of contribution and
indemnification from each other Borrower under Section 8.7.
8.7 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS. To the extent that
any Borrower shall make a payment under this Section 8 of all or any of the
Liabilities (other than Loans made directly to that Borrower) (a "GUARANTOR
PAYMENT") that exceeds the amount such Borrower would otherwise have paid if
each Borrower had paid the aggregate Liabilities satisfied by such Guarantor
Payment in the same proportion that such Borrower's "Allocable Amount" (as
defined below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Liabilities and termination of the
Commitments) such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment. As of any date of
determination, the "ALLOCABLE AMOUNT" of any Borrower shall be equal to the
maximum amount of the claim that could then be recovered from such Borrower
under this Section 8.7 without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law. This Section 8.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 8.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and
29
when the same shall become due and payable in accordance with the terms of this
Agreement, including Section 8.7. Nothing contained in this Section 8.7 shall
limit the liability of any Borrower to pay the Loans made directly or indirectly
to that Borrower and accrued interest, fees and expenses with respect thereto
for which such Borrower shall be primarily liable. The parties hereto
acknowledge that the rights of contribution and indemnification hereunder shall
constitute assets of the Borrower to which such contribution and indemnification
is owing. The rights of the indemnifying Borrowers against other Borrower under
this Section 8.7 shall be exercisable upon the full and indefeasible payment of
the Liabilities and the termination of the commitments by the Lenders.
8.8 LIABILITY CUMULATIVE. The liability of Borrowers under this Section 8
is in addition to and shall be cumulative with all liabilities of each Borrower
to each Lender under this Agreement and the Ancillary Agreements to which such
Borrower is a party or in respect of any Liabilities or obligation of the other
Borrowers, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
[signature pages attached]
30
This Agreement has been duly executed as of the day and year first written
above.
BORROWERS:
U.S. REALTEL, INC., a Delaware corporation
By: _______________________________________
Name:
Title:
CYPRESS COMMUNICATIONS, INC., a Delaware
corporation
By: _______________________________________
Name:
Title:
LENDERS:
J. XXXXXX XXXXXXXXXX TRUST, dated February 26,
1971, an Indiana trust
By: _______________________________________
Name: Xxxx X. Xxxxxxx
Title: Trustee
XXXX. X. XXXXXXX TRUST, dated February 26,
1971, an Illinois trust
By: _______________________________________
Name: Xxxx X. Xxxxxxx
Title: Trustee
XXXX X. XXXXXXXX TRUST, dated February 26,
1971, an Indiana trust
By: _______________________________________
Name: Xxxx X. Xxxxxxx
Title: Trustee
Loan Agreement
NORO-XXXXXXX PARTNERS V, L.P., a Georgia
limited partnership
By: _______________________________________
Name:
Title:
WAKEFIELD GROUP III LLC, a North Carolina
limited liability company
By: _______________________________________
Name:
Title:
Loan Agreement
EXHIBIT A-1
Permitted Debt
In consideration of a $32 million financing commitment delivered to
Cypress by the Xxxxxx Lenders, the Issuer and Cypress have agreed to pay the
Xxxxxx Lenders a fee equal to $500,000, of which $400,000 remains outstanding.
Pursuant to a consulting agreement between Cypress and Salisbury Ventures,
L.L.C. ("Salisbury"), dated April 8, 2002, Cypress has agreed to pay Salisbury
success fees equal to $150,000 in connection with the capital raised in
connection with the WorldCom acquisition and consulting fees.
$1,000,000 Risk Allocation Fee payable to the Xxxxxx Lenders pursuant to a
letter agreement among the Xxxxxx Lenders and Borrowers dated July 16, 2002.
EXHIBIT A-2
Permitted Liens
LIEN TYPE/
ENTITY LIENOR JURISDICTION FILE NO. DATE
------ ------ ------------ ---------- ----
U.S. REALTEL, INC. None
CYPRESS COMMUNICATIONS, Imperial Capital CA Secty of State UCC-1 #9908560069 03/17/99
INC. Corporation
Cisco Systems CA Secty of State UCC-1 #0110360188 04/10/01
Capital
Corporation
Cisco Systems WA Secty of State UCC-1 #00-000-0000 04/10/01
Capital
Corporation
Cisco Systems Xxxxxx County, GA UCC-1 #060200104964 03/16/01
Capital
Corporation
Powertel/ Dekalb County, GA UCC-1 #000-00-000000 12/01/98
Atlanta, Inc.
Imperial Capital Bacon County, GA UCC-1 ####-##-#### 03/22/99
Corp.
Hewlett Packard Xxxxxx County, GA UCC-1 #000-00-000000 11/13/00
Company
XXX Xxxxxxxxxxx Gwinnett County, GA UCC-1 #00-00-000000 01/17/01
UCC-3 #00-00-000000 03/21/01
(assigned to Fleet
Business Credit, Inc.)
GTE Leasing Gwinnett County, GA UCC-1 #000-00-000000 11/09/00
Corporation
Verizon Credit,
Inc.
Cisco Systems Xxxxxx County, GA UCC-1 #000-00-00000 03/16/01
Capital Corp.
Cisco Systems DE Secty of State UCC-1 #20010237466 03/15/01
Capital Corp.
LIEN TYPE/
ENTITY LIENOR JURISDICTION FILE NO. DATE
------ ------ ------------ ---------- ----
CYPRESS COMMUNICATIONS, Ditch Witch FL Secty of State UCC-1 #980000231935 10/16/98
INC. (BEING ACQUIRED Trencher, Inc. of
FROM INTERMEDIA) Florida
Leasetec FL Secty of State UCC-1 #990000124223 06/02/99
Corporation
Leasetec FL Secty of State UCC-1 990000124225 06/02/99
Corporation
Cisco Systems FL Secty of State UCC-1 200100008045 01/10/01
Capital
Corporation
NationsCredit FL Secty of State UCC-1 200100092136 04/27/01
Commercial
Corporation
Cisco Systems PA Secty of State UCC-1 29370340 as amended 09/10/98
Capital by 30311623
Corporation
CYPRESS COMMUNICATIONS, Xxxxxxx Financial CA Secty of State UCC-1 #9935560366 12/15/99
INC. (BEING ACQUIRED Services
FROM SHARED
TECHNOLOGIES XXXXXXXXX)
Citicorp Vendor DE Secty of State UCC-1 #10688486 07/12/01
Finance
Lucent GA Secty of State UCC-1 #000-00-000000 12/31/97
Technologies, Inc.
Pitney Xxxxx TX Secty of State UCC-1 98-096651 05/11/98
Credit Corporation
CYPRESS COMMUNICATIONS, NEC America DE Secty of State UCC-1: 20987804 12/15/99
INC. (BEING ACQUIRED
FROM SHARED
TECHNOLOGIES XXXXXXXXX
TELECOM)
LIEN TYPE/
ENTITY LIENOR JURISDICTION FILE NO. DATE
------ ------ ------------ ---------- ----
SITECONNECT, INC. Financial Pacific WA Secty of State UCC-1 #00-000-0000 02/23/98
Leasing, LLC (assignee: Bank of 04/20/99
America NT & SA) UCC-1
#00-000-0000 (assigned to
Norwest Bank MN, N.A.)
The Manifest Group WA Secty of State UCC-1 #00-000-0000 10/06/98
Paradyne Credit WA Secty of State UCC-1 #00-000-0000 02/28/00
Corp.
EXHIBIT B (SECTION 2.2)
Form of Term Notes
EXHIBIT C (SECTION 2.7(A)(vii))
Form of Opinion of Counsel
EXHIBIT D (SECTION 2.7(A)(viii))
Form of Warrant
EXHIBIT E (SECTION 2.7(A)(ix))
Form of Noteholder Intercreditor Agreement
EXHIBIT F (SECTION 2.7(A)(x))
Form of Senior Lender Intercreditor Agreement
EXHIBIT G (SECTION 4.1(F))
Litigation
Xxxxxxx Xxxxx v. Cypress Communications, Inc., et al., Xxxx Xx. XX 000000, filed
February 11, 2002, before the Superior Court of the State of California for the
County of Los Angeles West District. Xxxxxxx Xxxxx is a former customer who has
filed a complaint that includes claims for breach of contract, fraud, negligent
misrepresentation, negligence, and restitution of payments obtained under
duress. Cypress has responded to written discovery requests to Plaintiff for the
production of documents, and Cypress intends to serve written discovery requests
upon Plaintiff shortly. Plaintiff has noticed Xxx Xxxxx and Xxxxx Xxxxxxxx for
deposition during the week of June 18, 2002. Plaintiff's attorney made a
settlement offer of $35,000 to which we counter offered with $3,000. Given the
current posture of the case, assessment of the likelihood of a materially
adverse outcome is not possible.
RealTel de Argentina, S.A. was involved in mediation with Xxxxxxx Xxxxxxxx Xxxxx
regarding payment of $150,000 owed for the acquisition of his shares in this
entity. A recent settlement was reached and as soon as the Issuer receives the
settlement agreement, it will pay $131,190 to Xx. Xxxxx.
EXHIBIT H (SECTION 4.1(L))
Subsidiaries
SUBSIDIARIES OF U.S. REALTEL, INC.
CYPRESS COMMUNICATIONS, INC., a Delaware corporation
REALTEL DE ARGENTINA, S.A., an Argentina corporation - USRT owns 71% of this sub
REALTEL DO BRASIL, S.A., a Brazil corporation - USRT owns 89% of this sub
SUBSIDIARIES OF CYPRESS COMMUNICATIONS, INC.
CYPRESS COMMUNICATIONS OPERATING COMPANY, INC., a Delaware corporation
CYPRESS COMMUNICATIONS HOLDING COMPANY OF VIRGINIA, INC., a Virginia corporation
CYPRESS COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation
SITECONNECT, INC., a Washington corporation
SUBSIDIARIES OF CYPRESS COMMUNICATIONS INTERNATIONAL, INC.
CYPRESS CANADA COMMUNICATIONS INC., a Canadian corporation
SCHEDULE 2.1
Term Loan Commitments and Warrant Shares
Term Loan Commitments Warrant Shares
J. Xxxxxx Xxxxxxxxxx Trust $2,070,000 103,500
Xxxx X. XxXxxxx Trust $2,070,000 103,500
Xxxx X. Xxxxxxxx Trust $2,070,000 103,500
Noro-Xxxxxxx Partners V, L.P. $1,460,000 73,000
Wakefield Group III, LLC $ 330,000 16,500
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Total $8,000,000 400,000
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SCHEDULE 4.1(N)
Intellectual Property
"SMARTWATCH" - Cypress' firewall product, 75/758,999, July 23, 1999
