EXHIBIT 1
LOAN AGREEMENT
JULY 16, 2002
LENDERS: BORROWERS:
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ TRUST U.S. REALTEL, INC.
DATED FEBRUARY 26, 1971
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST CYPRESS COMMUNICATIONS, INC.
DATED FEBRUARY 26, 1971
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUST
DATED FEBRUARY 26, 1971
NORO-▇▇▇▇▇▇▇ PARTNERS V, ▇.▇.
▇▇▇▇▇▇▇▇▇ GROUP III LLC
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATIONS.................................................................... 1
1.1 Definitions............................................................................... 1
1.2 Accounting Terms.......................................................................... 6
1.3 Interpretation............................................................................ 7
2. TERM LOAN; GENERAL TERMS........................................................................... 8
2.1 Term Loan; Warrants....................................................................... 8
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......................................................................... 9
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............................................................ 19
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............................. 23
7.3 No Offset; Right to Charge Accounts....................................................... 23
7.4 Waiver by Lender.......................................................................... 23
7.5 Severability.............................................................................. 24
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 ▇▇▇▇▇▇ 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
Exhibit A-1 Permitted Debt
Exhibit A-2 Permitted Liens
Exhibit B (ss.2.2) Form of Term Notes
Exhibit C (ss.2.7(A)(vii)) Form of Opinion of Counsel
Exhibit D (ss.2.7(A)(viii)) Form of Warrants
Exhibit E (ss.2.7(A)(ix)) Form of Noteholder Intercreditor Agreement
Exhibit F (ss.2.7(A)(x)) Form of Senior Lender Intercreditor Agreement
Exhibit G (ss.4.1(F)) Litigation
Exhibit H (ss.4.1(L)) Subsidiaries
SCHEDULES
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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Trust dated February 26, 1971, an
Indiana trust (the "▇▇▇▇▇▇▇▇▇▇ TRUST"), the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust dated February
26, 1971, an Illinois trust (the "▇▇▇▇▇▇▇ TRUST") the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust
dated February 26, 1971, an Indiana trust (the "▇▇▇▇▇▇▇▇ TRUST" and together
with the ▇▇▇▇▇▇▇▇▇▇ Trust and the ▇▇▇▇▇▇▇ Trust, the "▇▇▇▇▇▇ LENDERS"),
Noro-▇▇▇▇▇▇▇ Partners V, L.P., a Georgia limited partnership ("NORO-▇▇▇▇▇▇▇")
▇▇▇▇▇▇▇▇▇ Group III, LLC a North Carolina limited liability company
("Wakefield"; each of the ▇▇▇▇▇▇ Lenders, Noro-▇▇▇▇▇▇▇ 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 $10,000,000 pursuant to its 7.5% fixed rate convertible
notes due July 1, 2009 issued to the ▇▇▇▇▇▇ Lenders, Noro-▇▇▇▇▇▇▇ and
Wakefield.
"DEFAULT" shall mean any event or condition which, with the
passage of time or the giving of notice or both, would constitute an
Event of Default.
"DOLLARS" and the symbol "$" 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 ▇▇▇▇▇▇▇▇▇, Inc., Shared Technologies ▇▇▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇
▇▇▇▇▇▇; 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 fee equal 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 ▇▇▇▇▇▇▇, 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 or 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Lenders, at:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
25
with a copy to:
Ungaretti & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Noro-▇▇▇▇▇▇▇:
Noro-▇▇▇▇▇▇▇ Partners V. LP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to Wakefield:
Wakefield Group III LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to Borrowers, at:
U.S. RealTel, Inc.
Fifteen Piedmont Center
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
26
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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 ▇▇▇▇▇▇ LENDERS. Each of the ▇▇▇▇▇▇ Lenders hereby agree that
any single trustee of any of such trusts, acting alone, shall be authorized on
behalf of the ▇▇▇▇▇▇ Lenders to take any action on the ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ TRUST, dated February 26,
1971, an Indiana trust
By:
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇. ▇. ▇▇▇▇▇▇▇ TRUST, dated February 26, 1971,
an Illinois trust
By:
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUST, dated February 26, 1971,
an Indiana trust
By:
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
NORO-▇▇▇▇▇▇▇ PARTNERS V, L.P., a Georgia
limited partnership
By:
---------------------------------------------
Name:
Title:
WAKEFIELD GROUP III LLC, a North Carolina limited
liability company
By:
---------------------------------------------
Name:
Title: