EXHIBIT 10(b)
MODIFICATION NUMBER ONE
TO PROMISSORY NOTE
Farmstead Telephone Group, Inc.
00 Xxxxxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxx, Xxxxxxxxxxx 00000
(Individually and collectively, "Borrower")
Wachovia Bank, National Association
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
(Hereinafter referred to as "Bank")
THIS AGREEMENT is entered into as of October 9, 2002 by and between Bank
and Borrower.
RECITALS
Bank is the holder of a First Amended and Restated Promissory Note executed
and delivered by Borrower, dated June 4, 2002, in the original principal
amount of $4,000,000.00, as amended from time to time (the "Note");
Borrower and Bank have agreed to modify the terms of the Note.
In consideration of Bank's continued extension of credit and the agreements
contained herein, the parties agree as follows:
AGREEMENT
ACKNOWLEDGMENT OF BALANCE. Borrower acknowledges that the most recent
Commercial Loan Invoice sent to Borrower with respect to the Obligations
under this Note is correct.
MODIFICATIONS.
1. This Note is hereby modified by deleting the provisions in this Note
establishing the applicable interest rate and any indemnification or
prepayment obligations, and substituting the following in their place and
stead:
INTEREST RATE. Interest shall accrue on the unpaid principal balance of
this Note from the date hereof at the LIBOR Market Index Rate plus 6.0%, as
that rate may change from day to day in accordance with changes in the
LIBOR Market Index Rate ("Interest Rate"). "LIBOR Market Index Rate", for
any day, means 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 Bank from
another recognized source or interbank quotation).
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest Rate plus 3%
("Default Rate"). The Default Rate shall also apply from acceleration
until the Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any,
shall be computed on the basis of a 360-day year for the actual number of
days in the applicable period ("Actual/360 Computation"). The Actual/360
Computation determines the annual effective interest yield by taking the
stated (nominal) rate for a year's period and then dividing said rate by
360 to determine the daily periodic
rate to be applied for each day in the applicable period. Application of
the Actual/360 Computation produces an annualized effective rate exceeding
the nominal rate.
2. This Note is hereby modified by deleting the provisions in this Note
establishing the repayment terms and substituting the following in their
place and stead:
REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing on July 1, 2002, and
continuing on the same day of each month thereafter until fully paid. In
any event, all principal and accrued interest shall be due and payable on
February 28, 2003.
3. This Note is hereby modified by deleting the provisions in this Note
establishing the line of credit advances and substituting the following in
their place and stead:
LINE OF CREDIT ADVANCES. Borrower may borrow, repay and reborrow, and Bank
may advance and readvance under this Note respectively from time to time
until the maturity hereof (each and "Advance" and together the "Advances"),
so long as the total principal balance outstanding under this Note at any
one time does not exceed the principal amount of $500,000.00, subject to
the limitations described in any loan agreement to which this Note is
subject. Bank's obligation to make Advances under this Note shall
terminate if Borrower is in Default. As of the date of each proposed
Advance, Borrower shall be deemed to represent that each representation
made in the Loan Documents is true as of such date.
If Borrower subscribes to Bank's cash management services and such services
are applicable to this line of credit, the terms of such service shall
control the manner in which funds are transferred between the applicable
demand deposit account and the line of credit for credit or debit to the
line of credit.
ACKNOWLEDGMENTS AND REPRESENTATIONS. Borrower acknowledges and represents
that this Note and other Loan Documents, as amended hereby, are in full
force and effect without any defense, counterclaim, right or claim of set-
off; that, after giving effect to this Agreement, no default or event that
with the passage of time or giving of notice would constitute a default
under the Loan Documents has occurred, all representations and warranties
contained in the Loan Documents are true and correct as of this date, all
necessary action to authorize the execution and delivery of this Agreement
has been taken; and this Agreement is a modification of an existing
obligation and is not a novation.
MISCELLANEOUS. This Agreement shall be construed in accordance with and
governed by the laws of the applicable state as originally provided in the
Loan Documents, without reference to that state's conflicts of law
principles. This Agreement and the other Loan Documents constitute the
sole agreement of the parties with respect to the subject matter thereof
and supersede all oral negotiations and prior writings with respect to the
subject matter thereof. No amendment of this Agreement, and no waiver of
any one or more of the provisions hereof shall be effective unless set
forth in writing and signed by the parties hereto. The illegality,
unenforceability or inconsistency of any provision of this Agreement shall
not in any way affect or impair the legality, enforceability or consistency
of the remaining provisions of this Agreement or the other Loan Documents.
This Agreement and the other Loan Documents are intended to be consistent.
However, in the event of any inconsistencies among this Agreement and any
of the Loan Documents, the terms of this Agreement, and then this Note,
shall control. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts. Each
such counterpart shall be deemed an original, but all such counterparts
shall together constitute one and the same agreement. Terms used in this
Agreement which are capitalized and not otherwise defined herein shall have
the meanings ascribed to such terms in this Note.
DEFINITIONS. The term "Loan Documents", as used in this Agreement and the
other Loan Documents, refers to all documents, agreements, and instruments
executed in connection with any of the Obligations (as defined herein), and
may include, without limitation, modification agreements, a commitment
letter that survives closing, a loan agreement, any note, guaranty
agreements, security agreements, security instruments, financing
statements, mortgage instruments, letters of credit and any renewals or
modifications, whenever any of the foregoing are executed, but does not
include swap agreements (as
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defined in 11 U.S.C. Section 101). The term "Obligations", as used in this
Agreement and the other Loan Documents, refers to any and all indebtedness
and other obligations of every kind and description of the Borrower to the
Bank or to any Bank affiliate, whether or not under the Loan Documents, and
whether such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several, secured or
unsecured, due or to become due, contractual, including, without
limitation, swap agreements (as defined in 11 U.S.C. Section 101), arising
by tort, arising by operation of law, by overdraft or otherwise, or now or
hereafter existing, including, without limitation, principal, interest,
fees, late fees, expenses, attorneys' fees and costs that have been or may
hereafter be contracted or incurred.
CONNECTICUT PREJUDGMENT REMEDY WAIVER. EACH BORROWER ACKNOWLEDGES THAT THE
TRANSACTIONS REPRESENTED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS AND
HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING
ON PREJUDGMENT REMEDIES UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL
STATUTES OR OTHER STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES
THE BANK'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT
ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER
BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS AGREEMENT.
BORROWER AND BANK AGREE THAT THEY SHALL NOT HAVE A REMEDY OF PUNITIVE OR
EXEMPLARY DAMAGES AGAINST THE OTHER IN ANY DISPUTE AND HEREBY WAIVE ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY
ARISE IN THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS
RESOLVED BY ARBITRATION OR JUDICIALLY.
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement
the day and year first above written.
PLACE OF EXECUTION AND DELIVERY. Borrower hereby certifies that this
Agreement and the Loan Documents were executed in the State of Connecticut
and delivered to Bank in the State of Connecticut.
Farmstead Telephone Group, Inc.
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxxxx X. XxXxxxx (SEAL)
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Xxxxxx X. XxXxxxx, Executive Vice
President and Chief Financial Officer
Wachovia Bank, National Association
By: /s/ Xxxx Xxxxxxxxx (SEAL)
-------------------------------------
Xxxx Xxxxxxxxx, Vice President
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