EXHIBIT 10.14
July 16, 2002
TO: J. XXXXXX XXXXXXXXXX TRUST dated February 26, 1971
XXXX X. XXXXXXX TRUST dated February 26, 1971
XXXX X. XXXXXXXX TRUST dated February 26, 1971
(collectively, the "Xxxxxx Lenders")
c/o Xxxx X. Xxxxxxx
000 X. Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxxxx 00000
RE: Intercreditor (Subordination) Agreement
BACKGROUND
U.S. RealTel, Inc. ("USRT") and Cypress Communications, Inc. ("Cypress")
propose this date to enter into:
- a Loan Agreement (the "Loan Agreement") providing for an
$8,000,000 bridge loan (the "Bridge Loan") by the Xxxxxx
Lenders, Noro-Xxxxxxx Partners V, L.P. ("Noro-Xxxxxxx") and
Wakefield Group III, LLC ("Wakefield") (the Xxxxxx Lenders,
Noro-Xxxxxxx and Wakefield, in their capacity as lenders,
being referred to as the "Bridge Lenders"); and
- a Purchase Agreement providing for the issuance and sale of
$10,000,000 of USRT and Cypress' Fixed Rate Convertible Notes
(the "Notes") to the Xxxxxx Lenders, Noro-Xxxxxxx and
Wakefield (the Xxxxxx Lenders, Noro-Xxxxxxx and Wakefield, in
their capacity as purchasers, being referred to as the
"Noteholders").
It is a condition of the Bridge Loan that the Bridge Lenders enter into an
Intercreditor (Subordination) Agreement with the Noteholders (the
"Intercreditor Agreement"), which, among other things, will provide that under
certain limited circumstances, all amounts payable by USRT and Cypress under
the Bridge Loans and the Notes will be payable, pro rata among the Bridge
Lenders and the Noteholders, on a pari passu basis.
AGREEMENT
To induce the Xxxxxx Trusts to enter into the Intercreditor Agreement, USRT and
Cypress have agreed to pay the Xxxxxx Lenders, in proportion to the amounts
loaned by them under the Loan Agreement, a fee of $1,000,000 (the "Risk
Allocation Fee"). The Risk Allocation Fee will be payable to the Xxxxxx Lenders
in cash in accordance with the following schedule:
The Xxxxxx Lenders
July 16, 2002
Page 2 of 2
PAYMENT AMOUNT PAYMENT DATE
$500,000 The last day of the month following the month in which Cypress
achieves the EBITDA Target, as defined below, but not earlier than
November 30, 2002.
$500,000 The last day of the second month following the month in which Cypress
achieves the EBITDA Target, as defined below, but not earlier than
December 31, 2002.
The lesser of $1,000,000 or the Repayment in full of the Bridge Loan.
unpaid balance
The lesser of $1,000,000 or the June 30, 2003
unpaid balance
For purposes of this letter agreement, the term "EBITDA Target" means 75% of
projected cumulative annualized consolidated Earnings Before Interest, Taxes,
Depreciation and Amortization, ("EBITDA") as set forth in the March, 2002
document prepared by Cypress titled "Consolidation of the Building-centric
Voice & Data Services Industry."
To the extent required, USRT and Cypress shall use their reasonable best
efforts to obtain the consent of Silicon Valley Bank to the payment of the Risk
Allocation Fee.
In the event of any inconsistencies between the terms of this letter agreement
and the Intercreditor Agreement, the terms of the Intercreditor Agreement will
control.
If the foregoing correctly sets forth our agreement by signing this letter in
the space provided below, whereupon it will become a binding agreement among
us.
Very truly yours,
U.S. REALTEL, INC.
By:
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Xxxxxxx X. XxXxxxx
Executive Vice President
CYPRESS COMMUNICATIONS, INC.
By:
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Xxxxxxx X. XxXxxxx
Executive Vice President
ACKNOWLEDGED AND AGREED
as of the date first written above.
J. XXXXXX XXXXXXXXXX TRUST dated February 26, 1971
XXXX X. XXXXXXX TRUST dated February 26, 1971
XXXX X. XXXXXXXX TRUST dated February 26, 1971
By:
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Xxxx X. Xxxxxxx, Trustee
