EXHIBIT 10(v)
As of September 29, 1998
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 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 and August 24, 1998 (collectively, the "Loan
Agreement"), a $3,500,000 Third Amended and Restated Revolving Promissory
Note dated June 6, 1997 (the "Third Amended and Restated Revolving
Promissory Note"), and a $500,000 Revolving Promissory Note dated August
24, 1998 (the "$500,000 Note") (the Third Amended and Restated Revolving
Promissory Note and the $500,000 Note are collectively referred to herein
as the "Notes"). The current principal balance of the Notes as of September
23, 1998 is $3,380,505.08, 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.
Xxxxxxxx has requested that First Union extend the availability of
the $500,000 temporary increase in the maximum dollar amount of
indebtedness that may be outstanding under the Loan Agreement, and
evidenced by the $500,000 Note, for the period through October 31, 1998
(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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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) except as expressly
waived herein, 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
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) The definition of "Borrowing Base" is hereby deleted in
its entirety and the following is substituted in lieu thereof:
""Borrowing Base" shall mean an amount equal to the lesser of.
(i) (1) from September 30, 1998 through October 31, 1998, FOUR
MILLION DOLLARS ($4,000,000), and (2) from and after November
1, 1998, THREE MILLION FIVE HUNDRED THOUSAND DOLLARS and (ii)
an amount equal to the aggregate of (1) seventy-five percent
(75%) of Eligible Accounts (not including AT&T Coupons (as
defined below)), plus (2) the lesser of (A) ONE HUNDRED FIFTY
THOUSAND DOLLARS ($150,000), or (B) fifty percent (50%) of the
amount due to Borrower from American Telephone & Telegraph
Company ("AT&T") in connection with the coupons issued in the
so-called SPIRIT Communications System Class Action Settlement
("AT&T Coupons") (it being expressly agreed and understood that
only the amount by which AT&T's obligations with respect to
AT&T Coupons together with all accounts due from AT&T to
Borrower exceeds the then amount due from Borrower to AT&T
shall be eligible pursuant to this subsection (2)(B))."
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3. Borrower acknowledges and affirms that it shall be able to
request the Additional Accommodation only to the extent that Borrower has
borrowing availability pursuant to Section (ii) of the definition of
"Borrowing Base" as currently set forth in the Loan Agreement.
4. 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 promissory note from FAMS, LLC to Borrower
dated December 1, 1997 and all security therefor.
5. 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:
--------------------------------
Xxxxxx X. XxXxxxx
Its Executive Vice President & CFO
Reviewed and Agreed to:
FIRST UNION NATIONAL BANK
By:
-------------------------------
Its
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STATE OF CONNECTICUT
ss: East Hartford
COUNTY OF HARTFORD
On this the 30th day of September, 1998 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 4/30/2003
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