EXHIBIT 10.25.1
ABLE TELCOM HOLDING CORP.
0000 Xxxxx Xxxxx
Xxxxx 0000
Xxxx Xxxx Xxxxx, XX 00000
July 2, 1998
Xxxx Xxxxxxx Mutual Life Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, Esq.
Re: Note Agreement dated as of January 6, 1998 Among Able Telcom
Holding Corp. ("Able" or the "Company"), Xxxx Xxxxxxx Mutual Life
Insurance Company, Xxxx Xxxxxxx Variable Life Insurance Company and
Signature 1A (Cayman), Ltd. ("Note Agreement"), re $10 Million 12%
Senior Subordinated Notes Due January 6, 2005 (the "Notes")
Gentlemen:
You hold the Notes of Able pursuant to the Note Agreement Able proposes to close
on its acquisition of MFS Network Technologies, Inc. ("MFS") (the "MFS
Investment"), which is structured as a merger of MFS into a subsidiary of Able,
which will be the surviving corporation (the "Surviving Subsidiary"). Able has
already deposited $10 million toward the purchase price (as permitted by
our letter of May 29, 1998) and proposes to pay $5 million toward the purchase
price at closing, and to temporarily finance the balance of the purchase price,
up to $87 million, by a note (the "Seller Note") to the seller, MFS
Communications Company, Inc. ("MFSCC") in the form of Exhibit 1, with $20
million payable on the Note on July 31, 1998 and the balance payable August 31,
1998, with interest at 12% per annum. The Note will be secured by a pledge to
WorldCom, Inc. (parent of MFSCC) of all the shares of MFS to be acquired by Able
pursuant to the terms of a pledge agreement (the "Pledge Agreement") in the form
of Exhibit 2.
Capitalized terms used herein, and not defined herein, shall have the respective
meanings ascribed to them in the Note Agreement.
1. WAIVERS BY THE NOTEHOLDERS. Each of the holders of the Notes consent and
waive the provisions of:
(a) Section 4.3(a) of the Note Agreement to the extent necessary to permit
the pledge of the MFS shares acquired by Able and securing the Note;
July 2, 1998
Page 2
(b) Section 4.6 and Section 4.7 of the Note Agreement to the extent
necessary to permit Able to issue the Seller Note and permit to exist,
through but not including the Expiration Date (as defined below), the
indebtedness created thereby; and
(c) Section 4.8 of the Note Agreement to the extent necessary to permit the
MFS Investment;
and each holder of Notes waives any Event of Default which would result from
the making of the MFS Investment and the execution and delivery of the Seller
Note and the Pledge Agreement.
Each of the foregoing waivers and consents shall expire by its terms on the
earliest to occur of ("Expiration Date"):
(i) August 31, 1998;
(ii) the Payment Date (as defined in the Seller Note);
(iii) such earlier date as the holder of the Seller Note accelerates the
maturity thereof, demands payment thereof or exercises any other
Remedies in respect of the Seller Note or the Pledge Agreement; or
(iv) the date, if any, upon which the Company fails to comply with the
provisions of paragraph 4 hereof.
2. RANKING OF SELLER NOTE. Notwithstanding the waiver set forth in paragraph 1,
the Company and the holders of the Notes agree that the Seller Note is not
Senior Debt; that the subordination provisions in the Seller Note are, and
are intended to be, an inducement to and a consideration of the agreements of
the holders of Notes in paragraph 1; each holder of the Notes has
conclusively relied on such subordination provisions; and each holder of
Notes is intended to be, and is, a third party beneficiary of such
subordination provision.
3. PAYMENT OF NOTES. In consideration of the agreements of the holders of Notes
in paragraph 1 hereof, the parties agree that the Company shall pay on the
Expiration Date the entire principal amount of all the Notes, together with
an amount equal to the Prepayment Compensation Amount due at such time in
respect of the principal amount of the Notes being so paid and interest on
such principal amount then being paid accrued to the Expiration Date. In
connection with such prepayment, when, as and if made, each holder of Notes
waives the provisions of Section 1.9 of the Note Agreement. Such prepayment
shall be made in the manner provided in Section 1.10 of the Note Agreement.
July 2, 1998
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The Company acknowledges that the failure to make such prepayment when due
shall constitute an immediate Event of Default pursuant to Section 6.1(a)(i)
and Section 6.1(a)(ii) of the Note Agreement.
4. ADDITIONAL AGREEMENTS OF THE COMPANY; DESIGNATION OF SUBSIDIARIES.
(a) The Company designates the Surviving Subsidiary as an Unrestricted
Subsidiary pursuant to Section 4.10 of the Note Agreement. The Company
agrees not to designate the Surviving Corporation or any successor or
assign a Restricted Subsidiary.
(b) The Company further agrees that it will not, nor will it permit any
Restricted Subsidiary to, make any Investment in the Surviving
Corporation (other than the MFS Investment itself on the date hereof).
(c) The Company will not at any time exercise its right pursuant to
paragraph 2 of the Additional Terms and Conditions section of the Seller
Note to prepay the Seller Note, or otherwise prepay, retire, or
otherwise acquire for value all or any portion of the Seller Note.
The Company agrees and acknowledges that the failure to comply with any
provision of this paragraph 4 is an immediate Event of Default pursuant to
the Note Agreement.
5. CONDITIONS TO EFFECTIVENESS. The waiver and consent provisions of paragraph 1
hereof shall not become effective until or unless the following conditions
precedent have been satisfied:
(a) the holders of the Senior Debt shall have consented, on terms acceptable
to the holders of the Notes, to the incurrence and maintenance of the
Debt represented by the Seller Note, the execution and delivery of the
Pledge Agreement, the making of the Investment and any and all other
related transactions which would, but for the terms of such consent,
violate the Senior Credit Agreement;
(b) the holders of the Senior Debt shall have consented, on terms acceptable
to the holders of the Notes, to the terms of this consent;
(c) the Seller Note shall be in the form of Exhibit 1 hereto;
(d) the Pledge Agreement shall be in the form of Exhibit 2 hereto; and
July 2, 1998
Page 4
(e) the Company shall have paid, by wire transfer in immediately available
funds, the reasonable costs and expense (including reasonable fees and
disbursements of Xxxx & Xxxxxx, as counsel to the holders of the Notes)
incurred by the holders of the Notes in connection with the
consideration, negotiation, preparation or execution of this consent and
the transactions related thereto.
6. REPRESENTATION AND WARRANTY. The Company has obtained all consents of all
other Persons (including, without limitation, its creditors) necessary to
permit the incurrence and maintenance of the Debt represented by the Seller
Note, the execution and delivery of the Pledge Agreement, the making of the
Investment, the execution and delivery of this consent and any and all other
related transactions, without resulting in any breach of or default under any
agreement with any such other Person. Able is not in default under any
provision of the Note Agreement and does not expect to be in default under
any provision of its Senior Debt (as defined in the Note Agreement) at the
time of entering into the above-described transaction.
To be consistent, the expiration of the waivers set forth in our letters of May
29, 1998 and June 12, 1998 are extended through August 31, 1998.
Except as provided above, all terms of the Note Agreement, including the letter
agreements of May 29, 1998 and June 12, 1998, as amended, shall continue in full
force and effect.
Very truly yours
ABLE TELCOM HOLDING CORP.
By: /s/ XXXXXXX X. XXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxx, President
We the owners and holders of all of the Notes agree to the above.
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Investment Officer
July 2, 1998
Page 5
XXXX XXXXXXX VARIABLE LIFE INSURANCE COMPANY
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Officer
SIGNATURE 1A (CAYMAN), LTD
By: /s/ XXXX X. PLUTG
-------------------------------------
Name: Xxxx X. Plutg
Title: Authorized Officer
EXHIBIT A
JULY 2 LETTER
