Letter Agreement Regarding Risk Allocation Fee Among US RealTel, Cypress Communications, and Oliver Lenders (July 16, 2002)

Contract Categories: Business Finance › Financing Agreements
Summary

This agreement is between U.S. RealTel, Inc., Cypress Communications, Inc., and the Oliver Lenders (three trusts), relating to a bridge loan and the issuance of convertible notes. The agreement sets out a $1,000,000 risk allocation fee to be paid by USRT and Cypress to the Oliver Lenders, with payment dates tied to Cypress achieving certain financial targets or loan repayment milestones. The agreement is subject to the terms of a related Intercreditor (Subordination) Agreement and may require consent from Silicon Valley Bank.

Read More Arrow
EX-10.14 8 g77389exv10w14.txt LETTER AGREEMENT DATED 7/16/02 EXHIBIT 10.14 July 16, 2002 TO: J. OLIVER CUNNINGHAM TRUST dated February 26, 1971 ANNE C. MCCLURE TRUST dated February 26, 1971 JANE C. WARRINER TRUST dated February 26, 1971 (collectively, the "Oliver Lenders") c/o Ross J. Mangano 112 W. Jefferson Boulevard Suite 613 South Bend, Indiana 46601 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 Oliver Lenders, Noro-Moseley Partners V, L.P. ("Noro-Moseley") and Wakefield Group III, LLC ("Wakefield") (the Oliver Lenders, Noro-Moseley 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 Oliver Lenders, Noro-Moseley and Wakefield (the Oliver Lenders, Noro-Moseley 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 Oliver Trusts to enter into the Intercreditor Agreement, USRT and Cypress have agreed to pay the Oliver 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 Oliver Lenders in cash in accordance with the following schedule: The Oliver 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: -------------------------------------------------- Charles B. McNamee Executive Vice President CYPRESS COMMUNICATIONS, INC. By: -------------------------------------------------- Charles B. McNamee Executive Vice President ACKNOWLEDGED AND AGREED as of the date first written above. J. OLIVER CUNNINGHAM TRUST dated February 26, 1971 ANNE C. MCCLURE TRUST dated February 26, 1971 JANE C. WARRINER TRUST dated February 26, 1971 By: -------------------------------------------------- Ross J. Mangano, Trustee