LOAN MODIFICATION AGREEMENT
Exhibit
10.13
| March 30, 2006 |
THIS
AGREEMENT is by and among Xxxxxxxxxx Bank & Trust Company, having an office
at 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the “Bank”), and Zoom
Telephonics, Inc., a Delaware corporation, having a principal place of business
and chief executive office at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(the
“Borrower”).
Recitals
A.
The Bank is the holder of a Commercial Real Estate Promissory Note from the
Borrower dated January 10, 2001, in the original principal amount of
$6,500,000.00, as amended by First Amendment to Commercial Real Estate
Promissory Note dated March 28, 2005 (the “Note”). The Note is secured, in part,
by that certain Mortgage, Security Agreement and Assignment from the Borrower
to
the Bank dated January 10, 2001, and recorded with the Suffolk County Registry
of Deeds in Book 25763, Page 284, and filed with the Suffolk County Registry
District of the Land Court (the “Registry District”) as Document No. 609541 (the
“Mortgage”), which Mortgage covers the land and premises known as and located at
000-000 Xxxxx Xxxxxx, 50 Utica Street, 000-000 Xxxxx Xxxxxx, and 000-000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (the “Mortgaged Property”). The Note, the
Mortgage, and all other instruments, including but not limited to, an Assignment
of Leases and Rents from the Borrower to the Bank dated January 10, 2001, and
recorded with the Suffolk County Registry of Deeds in Book 25763, Page 315,
and
filed with the Registry District as Document No. 609542, given to the Bank
heretofore or hereafter as security for the Note or in connection with the
indebtedness evidenced thereby are herein referred to collectively as the “Loan
Documents”. All capitalized terms used herein without definition that are
defined in the Note or in the Mortgage shall have the same meaning herein as
in
the Note or in the Mortgage, as the case may be, as herein modified.
B.
The Note matured on January 10, 2006, but has not been paid in full. The
Borrower has continued to make, and the Bank has continued to receive, payments
on a monthly basis as if the Note had not matured, without the Bank waiving
or
modifying said maturity. The Borrower has requested certain modifications to
the
Note, including an extension of said Maturity Date of January 10, 2006. The
Bank
is willing to agree to such modifications, subject to the terms and conditions
of this Agreement.
IN
CONSIDERATION OF the foregoing and the sum of Ten Dollars ($10.00), and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto do hereby agree as follows:
1. Effective
as of the date hereof, the Note is hereby amended as follows:
(a)
The
Maturity Date is hereby extended and changed to April 10, 2007. The Borrower
may
elect further to extend the Maturity Date to April 10, 2008, by notifying the
Bank of such election and paying the Bank an extension fee of $36,750.00 on
or
before March 10, 2007, provided that (i) prior to the time of such election,
the
Bank has not exercised its right to accelerate the maturity of the Note
following any default, and (ii) at the time of such election, no Event of
Default then exists and no other event, set of facts or circumstances has then
occurred and is then continuing which, with the giving of notice or the passage
of time, or both, would constitute such an Event of Default.
(b)
Commencing on the date hereof, the Interest Rate on the Note shall be changed
to
a fluctuating rate of interest equal to the from time to time prime rate
published in The Wall Street Journal (the “Prime Rate”), it being understood
that if more than one such rate is published, the highest of such rates will
be
used. Currently, the Prime Rate is 7.75% per annum. The effective rate of
interest on the Note shall change on each day that the Prime Rate
changes.
(c)
Payments of principal and interest shall continue to be due monthly in arrears
on the tenth (10th) day of each calendar month (with the next such payment
due
on April 10, 2006) until the Maturity Date (as herein provided) in an amount
from time to time as determined by the Bank, in its sole discretion (absent
manifest error), equal to the monthly payment required as of each such payment
day to amortize the then current outstanding principal balance of the Note
at
the then applicable Interest Rate over the then remaining portion of the
original twenty-year amortization period.
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(d)
Each of the following additional events shall constitute an Event of Default
under the Note:
(o)
If the amount of the outstanding principal balance of the Note plus all
interest, fees, and charges due thereunder or in connection therewith shall
at
any time exceed fifty percent (50%) of the value of the Mortgaged Property,
as
determined by the Bank in its sole discretion (and such event shall constitute
an Event of Default notwithstanding the terms of Section 4-27 (a) of the
Mortgage).
(p)
The failure of the Borrower to maintain and hold at all times, in its name,
cash
and cash equivalents, free from any and all encumbrances, in an amount not
less
than $1,000,000.00 (and such event shall constitute an Event of Default
notwithstanding the terms of Section 4-27 (c) of the Mortgage).
(q)
The failure of the Borrower to maintain at all times a Tangible Net Worth of
not
less than $7,000,000.00. “Tangible Net Worth” means the amount equal to the
Borrower’s stockholders’ equity, minus the sum of its intangible assets
(patents, goodwill, etc.) and amounts due Borrower from any employee or parent,
subsidiary or other affiliate of Borrower, all determined in accordance with
generally accepted accounting principles consistently applied
(“GAAP”).
2.
The
Borrower shall establish on the date hereof, fund and maintain with the Bank,
an
account (the “Debt Service Reserve Account”) in an amount satisfactory to the
Bank and equal to at least six (6) times the monthly payment due on the Note
from time to time. Initially, the sum of $211,000.00 shall be maintained in
the
Debt Service Reserve Account. If from time to time the Bank determines that
the
amount then in the Debt Service Reserve Account is less than six (6) times
the
then monthly payment due on the Note, upon notice to the Borrower, the Borrower
shall be required to deposit into the Debt Service Reserve Account the amount
of
such deficiency. The Debt Service Reserve Account shall not constitute a trust
fund and may be commingled with other monies held by the Bank. The Borrower
hereby pledges to the Bank and grants to the Bank a security interest in any
and
all monies now or hereafter deposited in the Debt Service Reserve Account as
additional security for the payment of the Note. Upon the occurrence of an
Event
of Default, the Bank may apply any sums then present in the Debt Service Reserve
Account to the payment of the Note in any order in its sole
discretion.
3.
All
obligations and representations of the Borrower under this Agreement shall
be
secured by the Mortgage and the Loan Documents and a default with respect to
such obligations or representations shall be a default under the Mortgage and
the Loan Documents.
4.
The
Borrower hereby warrants that all of the representations and warranties
contained in the Loan Documents are true and correct as of the date hereof
(except for Borrower's representation with respect to its financial condition,
which is accurately reflected on Borrower's most recent financial statements
provided to the Bank) and that no Event of Default has occurred and is
continuing under the Note or the other Loan Documents or would constitute such
an Event of Default but for the requirement that notice be given or time elapse
or both.
5.
The
Borrower hereby agrees to pay all reasonable fees and expenses incurred by
the
Bank in connection with the transaction contemplated by this Agreement,
including reasonable attorneys' fees.
6.
The
Borrower acknowledges and agrees that as of the date of this Agreement, the
Borrower is indebted to the Bank under the Note, without limitation, for the
unpaid principal balance of $3,675,000.00, plus accrued interest on the
principal balance, and, if any, other charges, fees and expenses as provided
in
the Note and the other Loan Documents. It is understood and agreed that such
principal balance reflects a substantial principal paydown made by the Borrower
recently as a condition of the Bank entering into this Agreement. The Borrower
expressly acknowledges that the Note, as herein modified, provides for a balloon
payment upon maturity of sums equal to the unpaid principal and interest due
under the Note, as modified by this Agreement, and all other costs, expenses
and
charges due thereon, and the Bank has no obligation to the Borrower to extend
or
renew the Note beyond the Maturity Date herein provided.
7.
The
Borrower acknowledges that the Bank and its representatives, including but
not
limited to its officers, employees and any independent contractors, has
fulfilled all of its obligations to it under the Loan Documents and that the
amount of principal recited herein together with accrued interest is due and
owing as of the date of this Agreement. The Borrower represents and warrants
that it has no defenses, set-offs or counterclaims to the payment of its
liabilities and obligations to the Bank as set forth in the Loan Documents,
as
modified by this Agreement, with respect to any actions, inactions or statements
of fact arising or existing prior and up to the date of this Agreement, and
to
the extent that the Borrower has any defense, set-off or counterclaim, the
Borrower hereby affirmatively WAIVES any such claim. The Borrower hereby
releases and forever discharges the Bank and its representatives from any and
all claims, defenses, actions, causes of action, suits, controversies,
agreements, provisions and demands in law or in equity which the Borrower ever
had, now has or now may have against the Bank or its representatives, including,
but not limited to, claims relating to and arising out of the Loan Documents
or
the administration of the Note to date.
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8.
The
Bank
does not hereby waive any defaults now existing or hereinafter arising under
the
Loan Documents or any of its rights and remedies upon the occurrence of any
Event of Default under the Loan Documents.
9.
This
Agreement and all other documents, instruments, and agreements executed in
connection herewith represent the entire agreement of the parties hereto and
incorporate the final results of all discussions and negotiations between the
undersigned and the Bank, either express or implied, concerning the matters
included herein and in such other documents, instruments and agreements, any
custom, usage, or course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings shall limit,
modify, or otherwise affect the provisions hereof. Any modification, amendment,
or waiver of any provision of this Agreement or of any provision of any other
agreement between the undersigned and the Bank must be executed in writing
by
the Bank and the party against which/whom enforcement is sought.
10.
Each
of
the Note and the other Loan Documents are hereby amended to be consistent with
the terms and provisions of this Agreement. All references in the Note and
the
other Loan Documents to each of the others shall be deemed to refer to such
document(s) as amended by this Agreement
11.
Except
as
modified and amended by this Agreement, the Note shall remain in full force
and
effect as originally written and the same, as so modified, is hereby ratified
and confirmed.
12.
All
the
other Loan Documents are hereby ratified and confirmed as if said instruments
were executed this day in connection with the Note as modified by this
Agreement.
[here
ends this page; the next page is the signature page]
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EXECUTED
as a sealed instrument as of the date first above written.
| XXXXXXXXXX BANK & TRUST COMPANY | ||
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| /s/ X. Xxxxxx | By: | /s/ Xxxxxx X. Xxxx |
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Witness
X.
Xxxxxx
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Name: Xxxxxx
X. Xxxx
Title:
Senior Vice-President
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| ZOOM TELEPHONICS, INC. | ||
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| /s/ Xxxx Xxxxxx | By: | /s/ Xxxxx X. Xxxxxxx |
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Witness
Xxxx
Xxxxxx
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Xxxxx
X. Xxxxxxx, President
duly
authorized
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| /s/ Xxxx Xxxxxx | By: | /s/ Xxxxxx Xxxxx |
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Witness
Xxxx
Xxxxxx
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Xxxxxx
X. Xxxxx, Treasurer
duly
authorized
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