EXHIBIT 10(x)
As of January 1, 1999
First Union National Bank
000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Gentlemen:
This letter sets forth our agreements with respect to the obligations
described below of Farmstead Telephone Group, Inc. (the "Borrower") to
First Union National Bank (successor-in-interest to Affiliated Business
Credit Corporation) ("First Union").
Xxxxxxxx acknowledges that it is unconditionally indebted to First
Union with respect to the revolving loan (the "Revolving Loan") extended by
First Union to Borrower in the original principal amount of up to
$6,000,000 which is evidenced by, among other things, a Commercial
Revolving Loan and Security Agreement dated June 5, 1995, as amended by
letter agreements, between Borrower and First Union dated March 11, 1996,
May 1, 1996, September 6, 1996, as of May 30, 1997, as of December 1, 1997,
May 6, 1998, August 24, 1998, as of September 29, 1998 and as of October
15, 1998 (collectively, the "Loan Agreement") and a $6,000,000 Fourth
Amended and Restated Revolving Promissory Note dated as of October 15, 1998
(the "Fourth Amended and Restated Revolving Promissory Note") (the Fourth
Amended and Restated Revolving Promissory Note sometimes referred to herein
as the "Note"). Borrower acknowledges that the outstanding principal
balance of the Note on December 31, 1998 was $1,815,437.39, plus interest
accrued and accruing thereon and costs and expenses of collection,
including without limitation, attorneys' fees (collectively, the
"Indebtedness"). Additionally, Borrower acknowledges that it has no
defense, offset, counterclaim or right of recoupment to its obligations
with respect to the Indebtedness and further that it has no other claim
whatsoever against First Union (whether arising in contract, tort or
otherwise) with respect to the Indebtedness or any other matter whatsoever.
The Borrower has requested that First Union modify the interest rate
on the Revolving Loan so as to convert the Revolving Loan from a base rate
loan to a loan with interest computed using a LIBOR market index rate (the
"Accommodation").
Capitalized terms used herein that are not defined herein have the
meanings ascribed to them in the Loan Agreement.
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First Union has agreed to extend the Accommodations but only on the
following terms and conditions:
1. As an inducement to and in consideration of First Union's
agreements contained herein, the Borrower represents, warrants and
acknowledges to First Union that (a) all representations and warranties
contained in the Loan Agreement and in the other documents executed in
connection with the Indebtedness (collectively, including without
limitation the Loan Agreement, the "Loan Documents") are true and correct
on and as of the date hereof and are incorporated herein by reference and
hereby remade; (b) the resolutions previously adopted by the Board of
Directors of the Borrower and provided to First Union have not in any way
been rescinded or modified and are now in full force and effect, except to
the extent that they have been modified or supplemented to authorize this
Agreement and the transactions described herein; (c) no event of default
has occurred or is continuing under any of the Loan Documents and no
condition exists which would constitute an event of default thereunder but
for the giving of notice or passage of time, or both; and (d) the
consummation of the transactions contemplated hereby is not prevented or
limited by, nor does it conflict with or result in a breach of the terms,
conditions or provisions of, any evidence of indebtedness, agreement or
instrument of whatever nature to which Borrower is a party or by which it
is bound, does not constitute a default under any of the foregoing, and.
does not violate any federal, state or local law, regulation or order of
any court or agency which is binding upon Borrower.
2. The Loan Agreement is hereby amended as follows:
(a) All references in the Loan Agreement to the Fourth
Amended and Restated Revolving Promissory Note are hereby deleted and
"Fifth Amended and Restated Revolving Promissory Note" is substituted
therefor. The copy of the Fourth Amended and Restated Revolving
Promissory Note attached to the Loan Agreement as Exhibit A is hereby
deleted and a copy of the Fifth Amended and Restated Revolving
Promissory Note annexed hereto as Schedule A is attached in lieu
thereof.
(b) By deleting Section 3.1(a) in its entirety and
substituting therefor the following:
"(a) Interest Rate. The Revolving Loan shall bear
interest (from the date made through and including the date of
payment in full), at the per annum rates set forth in the
Note."
3. The Borrower acknowledges and agrees that all indebtedness,
liabilities and obligations of the Borrower to First Union, including
without limitation, the Indebtedness evidenced by the Notes, shall (except
as set forth in the Intercreditor Agreements) continue to be secured by a
first lien on and security interest in all of the Borrower's assets,
including without limitation the
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promissory note from FAMS, LLC to Borrower dated December 1, 1997 and all
security therefor.
4. On or before the date hereof, Borrower shall pay or have paid
to First Union all fees and expenses and other costs incurred by First
Union in connection with the Accommodation contemplated herein (including
without limitation, all attorney's and other professional fees and
expenses).
5. Contemporaneously herewith, (a) the Borrower shall execute and
deliver to First Union a $6,000,000 Fifth Amended and Restated Revolving
Promissory Note (the "Fifth Amended and Restated Revolving Promissory
Note"), which shall supersede and replace the Fourth Amended and Restated
Revolving Promissory Note, and (b) the Borrower shall execute and deliver
to First Union a certificate of Connecticut transaction, all of which shall
be in form and content satisfactory to First Union.
6. This Agreement and the other Loan Documents constitute the
entire understanding and agreement among the parties hereto and supersede
any prior or contemporaneous oral understanding with respect to the subject
matter hereof. Except as expressly modified herein, the Loan Documents
remain unmodified and in full force and effect in accordance with their
terms. To the extent that there is a conflict between this Agreement and
the Loan Documents, the terms of this Agreement shall prevail.
If the foregoing is in accordance with your agreement, please
indicate the same by signing below.
Very truly yours,
FARMSTEAD TELEPHONE GROUP, INC.
By:
--------------------------------
Its
Reviewed and Agreed to:
FIRST UNION NATIONAL BANK
By
--------------------------------
Its Vice President
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STATE OF CONNECTICUT )
ss: East Hartford
COUNTY HARTFORD
On this the 22nd day of January, 1999 before me, the undersigned
officer, personally appeared Xxxxxx X. XxXxxxx, who acknowledged that he is
the Executive Vice President and CFO of Farmstead Telephone Group, Inc., a
Delaware corporation, and that he as such officer, being authorized so to
do, executed the foregoing instrument for the purposes therein contained,
as his and its free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand
Notary Public
My Commission Expires 5/31/2002
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Schedule A
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FIFTH AMENDED AND RESTATED REVOLVING PROMISSORY NOTE
$6,000,000 As of January 1, 1999
For value received, the undersigned, FARMSTEAD TELEPHONE GROUP, INC.,
a Delaware corporation ("Maker"), promises to pay to FIRST UNION NATIONAL
BANK (SUCCESSOR-IN-INTEREST TO AFFILIATED BUSINESS CREDIT CORPORATION), or
order ("Lender") at its office at 000 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx
00000, or at such other place as the holder hereof (including Lender,
hereinafter referred to as "Holder") may designate, the sum of up to SIX
MILLION DOLLARS ($6,000,000), together with interest on the unpaid balance
of this Note, beginning as of the date hereof, before or after maturity or
judgment, beginning as of the date hereof, before or after maturity or
judgment, at the rate equal to the LIBOR Market Index Rate plus two and
three-quarters percent (2.75%) per annum, as that rate may change from day
to day in accordance with changes in the Libor Market Index Rate. Interest
shall be calculated daily on the basis of the actual number of days elapsed
over a 360 day year, together with all taxes levied or assessed on this
Note or the debt evidenced hereby against the Holder, and together with all
costs, expenses and attorneys' and other professional fees incurred in any
action to collect this Note or to enforce, preserve, realize or foreclose
any mortgage, security agreement or other agreement securing this Note or
to preserve, enforce, protect or sustain the lien of said mortgage,
security agreement or other agreement or in any litigation or controversy
arising from or connected with said mortgage, security agreement or other
agreement or this Note. As used herein, "LIBOR Market Index Rate" means,
for any day, the rate for 1-month U.S. dollar deposits as reported on
Telerate page 3750 as of 11:00 a.m., London time, on such day, or if such
day is not a London business day, then the immediately preceding London
business day (or if not so reported, then as determined by Lender from
another recognized source or interbank quotation).
The principal amount of this Note shall be advanced, at the sole
discretion of Holder, pursuant to a Commercial Revolving Loan and Security
Agreement between Maker and Lender dated June 5, 1995, as amended by
various letter agreements between Maker and Lender dated March 11, 1996,
May 1, 1996, September 6, 1996, as of May 30, 1997, as of December 1, 1997,
May 6, 1998, August 24, 1998, September 29, 1998, as of October 15, 1998
and as of the date hereof (collectively, the "CRLSA") and is subject in all
respects to the terms and conditions of the CRLSA, including, but not
limited to, the repayment terms and the termination date set forth in the
CRLSA. Advances and payments on this Note may be evidenced by borrowing
certificates, a grid (if any) attached to
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this Note or similar certificates or documents, or by an internal ledger
account of Lender which shall set forth, among other things, the principal
amount of any advances and payments thereof. Interest shall be paid on the
first business day of each and every month commencing on February 1, 1999.
Holder may, in its sole discretion, charge any amounts due hereunder to
Maker's revolving loan account maintained with Holder pursuant to the
CRLSA.
Maker agrees that (i) if any installment of interest, principal or
other sum due hereunder is not paid when it is due under this Note, the
CRLSA or under any instrument evidencing any other obligation of Maker to
Holder; or (ii) if Maker or Holder shall terminate the CRLSA; or (iii) if
Maker or any guarantor of any obligation of Maker hereunder shall make an
assignment for the benefit of creditors or suffer or permit the appointment
of a receiver for any part of its property or suffer or permit the filing
by or against it of any petition for adjudication, arrangement,
reorganization or the like under any bankruptcy or insolvency law; or (iv)
if an Event of Default shall occur under the CRLSA or any mortgage,
security agreement or any other agreement securing this Note, any other
note by Maker to Holder, or in the performance of any other obligation to
Holder or any other entity or person; or (v) if there shall be any material
adverse change from the present condition or affairs (financial or
otherwise) of Maker or any of the guarantors of the obligations of Maker,
that in , Xxxxxx's reasonable opinion materially impairs its security or
increases its risk; then an Event of Default shall have occurred hereunder
and, upon the happening of any such event, the entire indebtedness with
accrued interest thereon due under this Note shall, at the option of
Holder, be immediately due and payable without notice. Failure to exercise
such option shall not constitute a waiver of the right to exercise the same
in the event of any subsequent default. Upon the occurrence and during the
continuance of such an Event of Default, the interest rate on this Note
shall automatically increase without notice to a floating per annum rate
equal to two percentage points (2.0%) above the rate otherwise in effect
hereunder.
In the event of Maker's failure to pay any installment of interest,
and/or to pay any other sum due hereunder or under the CRLSA for more than
ten (10) days after the date it is due and payable, without in any way
affecting Xxxxxx's right to declare an event of default to have occurred, a
late charge equal to five percent (5%) of such late payment shall be
assessed against Maker and shall be due and payable immediately.
Notwithstanding any provisions of this Note, it is the understanding
and agreement of Maker and Holder (and any guarantors of Maker's
liabilities) that the maximum rate of interest to be paid by Maker (or
guarantors of Maker's liabilities) to Holder shall not exceed the highest
or the maximum rate of interest permissible to be charged by a commercial
lender such as Lender to a commercial borrower such as Maker under the laws
of the State of Connecticut.
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Any amount paid in excess of such rate shall be considered to have been
payments in reduction of principal.
Maker, and each and all guarantors of this Note hereby give Holder a
lien and right of setoff for all Maker's liabilities upon and against all
the deposits, credits, collateral and property of Maker and guarantors, now
or hereafter in the possession or control of Holder or in transit to it.
Holder may, upon the occurrence of an event of default hereunder or upon
demand for payment of any demand indebtedness owing from Maker to Holder,
apply or set off the same, or any part thereof, to any liability of Maker
even though unmatured.
Failure by Holder to insist upon the strict performance by Maker of
any terms and provisions herein shall not be deemed to be a waiver of any
terms and provisions herein, and Holder shall retain the right thereafter
to insist upon strict performance by Maker of any and all terms and
provisions of this Note or any document securing the repayment of this
Note.
MAKER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR
THE ENFORCEMENT OF ANY OF HOLDER'S RIGHTS AND REMEDIES, INCLUDING WITHOUT
LIMITATION, TORT CLAIMS.
MAKER AND EACH AND ALL GUARANTORS OF THIS NOTE ACKNOWLEDGE THAT THE
LOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL TRANSACTION AND WAIVES ITS
RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT
TO ANY PREJUDGMENT REMEDY WHICH HOLDER MAY DESIRE TO USE, AND FURTHER
WAIVES ITS RIGHTS TO REQUEST THAT HOLDER POST A BOND, WITH OR WITHOUT
SURETY, TO PROTECT SAID MAKER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY
PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY HOLDER. Maker further, waive
diligence, demand, presentment for payment, notice of nonpayment, protest
and notice of protest, and notice of any renewals or extensions of this
Note, and all rights under any statute of limitations, and all guarantors
agree that the time for payment of this Note may be extended at Holder's
sole discretion, without impairing their liability thereon, and further
consent to the release of all or any part of the security for the payment
hereof, at the discretion of Holder, or the release of any party liable for
this obligation without affecting the liability of the other parties
hereto.
MAKER ACKNOWLEDGES THAT IT MAKES THE WAIVERS SET FORTH IN THE TWO
PRECEDING PARAGRAPHS KNOWINGLY,
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VOLUNTARILY AND WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE
RAMIFICATIONS OF SUCH WAIVERS WITH ITS ATTORNEYS. MAKER FURTHER
ACKNOWLEDGES THAT XXXXXX HAS NOT AGREED WITH OR REPRESENTED TO MAKER THAT
THE PROVISIONS OF THE TWO PRECEDING PARAGRAPHS WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
This Note shall be governed by and construed in accordance with the
laws of the State of Connecticut (but not its conflicts of law provisions).
FARMSTEAD TELEPHONE GROUP, INC.
By:
--------------------------------
Its
STATE OF CONNECTICUT )
ss: East Hartford
COUNTY OF HARTFORD )
On this the _____ day of January, 1999 before me, the undersigned
officer, personally appeared ____________________________, who
acknowledged that he is the __________________________ of Farmstead
Telephone Group, Inc., a Delaware corporation, and that he as such officer,
being authorized so to do, executed the foregoing instrument for the
purposes therein contained, as his and its free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand.
Commissioner of the Superior Court
Notary Public
My Commission Expires:
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