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Exhibit 99.1
AMENDMENT AND FORBEARANCE AGREEMENT
AMENDMENT
AND FORBEARANCE AGREEMENT, dated as of October 17, 2006, by and
among ONE IP VOICE, INC. (f/k/a Farmstead Telephone Group, Inc.), a
Delaware
corporation ("Parent"), OIPV CORP. (f/k/a One IP Voice, Inc.), a
Delaware
corporation ("OIPV" and together with Parent, each a "Company" and
collectively
the "Companies"), and LAURUS MASTER FUND, LTD. ("Laurus").
W I T N E S S E T H:
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WHEREAS,
Laurus and each Company have entered into certain financing
arrangements pursuant to a Security Agreement, dated as of March
31, 2005, by
and among Laurus and each Company (as amended hereby, and as the
same may have
heretofore been or may hereafter be further amended, modified,
supplemented,
extended, renewed, restated or replaced from time to time, the
"Security
Agreement", and together with all Ancillary Agreements (as defined
in the
Security Agreement) and all other agreements, documents and
instruments at any
time executed and/or delivered in connection therewith or related
thereto,
collectively, the "Financing Agreements"); and
WHEREAS,
as of the date hereof, the Designated Defaults (as hereafter
defined) have occurred and are continuing under the Financing
Agreements by
reason of which Laurus has no obligation to make any additional
Loans and Laurus
has the full legal right to exercise its rights and remedies under
the Financing
Agreements and applicable law; and
WHEREAS,
each Company has requested that Laurus forbear for a period of
time from exercising Laurus' rights and remedies under the
Financing Agreements
and that Laurus continue to make Loans under the Financing
Agreements; and
WHEREAS,
each Company has in addition requested that Laurus,
notwithstanding the occurrence of the Designated Defaults, provide
additional
financial accommodations to each Company pursuant to and in
accordance with the
terms of the Additional Financing Agreements (as hereafter
defined), which
provide for, among other things, that Laurus advance $500,000 to
Companies on
October 18, 2006 and advance up to an additional $500,000 in the
aggregate
thereafter in accordance with the express terms of the Additional
Financing
Agreements; and
WHEREAS,
Laurus is willing to agree to establish a period of forbearance
and provide certain additional financial accommodations to each
Company, in each
case, on the terms and conditions specified herein;
NOW,
THEREFORE, in consideration of the foregoing, and the
respective
agreements, warranties and covenants contained herein, the parties
hereto hereby
agree, covenant and warrant as follows:
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SECTION 1.
DEFINITIONS
1.1.
Interpretation. All capitalized terms used herein (including
the
recitals hereto) shall have the respective meanings assigned
thereto in the
Financing Agreements and Additional Financing Agreements, as
applicable, unless
otherwise defined herein.
1.2.
Additional Definitions. As used herein, the following terms
shall
have the respective meanings given to them below:
(a) "Additional Financing Agreements" shall mean those
documents,
instruments and agreements set forth on Exhibit A hereto, as the
same may
be
amended, modified, supplemented, extended, renewed, restated or
replaced
from time to time.
(b) "Designated Defaults" shall mean all Events of Default that
have
occurred
through the date hereof and, other than with respect to
Forbearance Defaults, during the Forbearance Period.
(c) "Event of Default" shall have the meaning given to such
term
under the
Financing Agreements and the Additional Financing Agreements,
as
applicable.
(d) "Forbearance Default" shall have the meaning set forth in
Section
3.2(c) hereof
(e) "Forbearance Period" shall have the meaning set forth in
Section
3.2(a)
hereof.
SECTION 2.
ACKNOWLEDGMENT
2.1.
Acknowledgment of Obligations. Each Company hereby
acknowledges,
confirms and agrees that as of the close of business on October 17,
2006, (a)
each Company is indebted to Laurus for loans and advances in the
aggregate
principal amount of $1,191,337.99, together with interest accrued
thereon, and
fees, costs, expenses and other charges payable by each Company to
Laurus
pursuant to the terms of the Financing Documents (collectively,
"the Amount")
and (b) the Amount is a valid and unconditional obligation of each
Company to
Laurus and is due and owing without offset, defense or counterclaim
of any kind,
nature or description whatsoever.
2.2.
Acknowledgment of Security Interests. Each Company hereby
acknowledges, confirms and agrees that Laurus has and shall
continue to have
valid, enforceable and perfected first-priority liens upon and
security
interests in the Collateral heretofore granted to Laurus pursuant
to the
Financing Agreements, the Additional Financing Agreements or
otherwise granted
to or held by Laurus. Each Company hereby expressly waives any and
all rights to
contest and/or challenge in any manner whatsoever Laurus'
perfected
first-priority liens upon and security interests in the Collateral
and will
execute any and all documents, instruments and agreements as shall
be required
by Laurus from time to time to further evidence, acknowledge and
confirm the
same.
2.3.
Binding Effect of Documents. Each Company hereby acknowledges,
confirms and agrees that: (a) each of the Financing Agreements and
Additional
Financing Agreements to which it is a party has been duly executed
and delivered
to Laurus by such Company, and each is
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in full force and effect as of the date hereof, (b) the agreements
and
obligations of each Company contained in the Financing Agreements,
the
Additional Financing Agreements and this Agreement constitute the
legal, valid
and binding obligations of each Company, enforceable against it in
accordance
with their respective terms, and no Company has any valid defense
to the
enforcement of such obligations, and (c) Laurus is and shall be
entitled to the
rights, remedies and benefits provided for in the Financing
Agreements, the
Additional Financing Agreements, this Agreement and applicable
law.
SECTION 3. FORBEARANCE
IN RESPECT OF CERTAIN EVENTS OF DEFAULT
3.1.
Acknowledgment of Default. Each Company hereby acknowledges and
agrees that the Designated Defaults have occurred and are
continuing, each of
which entitles Laurus to exercise its rights and remedies under the
Financing
Agreements the Additional Financing Agreements, applicable law or
otherwise.
Laurus has not waived, presently does not intend to waive and may
never waive
such Designated Defaults and nothing contained herein or the
transactions
contemplated hereby shall be deemed to constitute in any manner
whatsoever any
such waiver. Each Company hereby acknowledges and agrees that
Laurus has the
presently exercisable right to declare the Obligations to be
immediately due and
payable under the terms of the Financing Agreements and the
Additional Financing
Agreements.
3.2.
Forbearance.
(a) In
reliance upon the representations, warranties and covenants of
each
Company contained in this Agreement, during the period (the
"Forbearance
Period") commencing on the date hereof and ending on the earlier to
occur of (a)
January 15, 2007 and (ii) the occurrence of any Forbearance
Default, Laurus will
forbear from exercising its rights and remedies under the Financing
Agreements,
the Additional Financing Agreements and applicable law in respect
of or arising
out of any and all Designated Defaults. Notwithstanding the
foregoing, nothing
contained herein shall impair in any manner whatsoever Laurus'
right to
administer the credit facility and/or to collect, receive and/or
apply proceeds
of each Company's accounts receivable and/or any other Collateral
to the
Obligations, in each case, in accordance with the terms of the
Financing
Agreements and the Additional Financing Agreements.
(b) Upon
the termination of the Forbearance Period, the agreement of
Laurus to forbear with respect to such Designated Defaults existing
or
continuing as of such termination shall automatically and without
further action
terminate and be of no further force and effect, it being expressly
agreed that
the effect of such termination will be to permit Laurus to exercise
such rights
and remedies immediately, including, but not limited to (i) ceasing
to make any
further Loans and (ii) the acceleration of all Obligations
(including without
limitation the obligations and liabilities of Each Company to
Laurus under the
Additional Financing Agreements); in either case without any
further notice,
passage of time or forbearance of any kind.
(c) The
occurrence of any one or more of the following events during
the
Forbearance Period shall constitute a Forbearance Default: (i) the
existence of
any material Event of Default (other than a Designated Default)
under Section 19
of the Security Agreement (except for Sections 19(e), 19(g), 19(j)
and 19(o)) or
any Additional Financing Agreement; (ii) any Company's failure to
pay on demand
all amounts owing under the Additional Financing
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Agreements, (iii) any representation or warranty of any Company
herein, under
any Financing Agreement or under any Additional Financing Agreement
shall be
false, misleading or incorrect in any material respect; (iv) any
Company's
failure to comply with the covenants, conditions and agreements
contained
herein; (v) any Person, other than Laurus or ScanSource, Inc.,
shall at any time
exercise for any reason any of its rights or remedies against any
Company or any
Company's properties or assets; (vi) the applicable Company's
failure to deliver
to Laurus evidence reasonably satisfactory to Laurus of such
Company's receipt
of bridge financing and/or follow-on financing (as described in
Section
4.1hereof) of gross proceeds of at least $750,000 in the aggregate
by December
1, 2006; or (vii) the applicable Company's failure to deliver to
Laurus by
December 25, 2006 a fully executed term sheet setting forth the
terms,
conditions and pricing of such Company's proposed "Series B"
financing to
provided by one or more third party financing sources (the "Series
B
Financing"). Notwithstanding any other rights and remedies
available to Laurus
under the Financing Agreements, the Additional Financing Agreements
and
applicable law, in the event the indebtedness incurred by any
Company under the
Series B Financing shall at any time exceed $12,000,000, Laurus
shall have the
right to at any time to demand the immediate repayment in full of
all
Obligations under the Financing Agreements and the Additional
Financing
Agreements together with all fees, interest, default interest,
default payments
and prepayment fees relating thereto.
3.3.
Reservation of Rights.
Subject
only to Section 3.2 above and solely with respect to the
Designated Defaults, Laurus reserves the right, in its discretion,
to exercise
any or all of its rights and remedies under the Financing
Agreements and/or the
Additional Financing Agreements as a result of any Events of
Default which may
be continuing on the date hereof or any Event of Default which may
occur after
the date hereof, and Laurus has not waived any of such rights or
remedies, and
nothing in this Agreement, and no delay on its part in exercising
any such
rights or remedies, should be construed as a waiver of any such
rights or
remedies.
SECTION 4. AMENDMENTS
AND SUPPLEMENTARY PROVISIONS
4.1.
Bridge and Follow-on Financing. Notwithstanding anything contained
in
the Financing Agreements and/or Additional Financing Agreements the
contrary,
Laurus hereby acknowledges that Companies shall be permitted,
during the
Forbearance Period, to incur additional indebtedness for borrowed
money and/or
Parent may sell or issue its equity securities following the date
hereof and
such incurrence and/or issuance, as applicable, shall not
constitute an Event of
Default under the Financing Agreements and/or the Additional
Financing
Agreements so long as prior to the incurrence of any such
additional
indebtedness all such indebtedness and all attendant security
interests and
liens are subordinated in favor of and on terms and pursuant to
such
documentation reasonably acceptable to Laurus. Laurus hereby waives
the right of
first refusal
