EXHIBIT 10.9.1
Porta Systems Corp.
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December 18, 1996
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Principal
KPMG BayMark Strategies LLC
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Dear Ed:
This letter by KPMG BayMark Strategies LLC's ("BayMark") signature and
return shall constitute the amendment to the letter agreement (the "Agreement"),
dated October 2, 1995, effective November 3, 1995, between BayMark and Porta
Systems Corp. (the "Company"). Capitalized terms used herein without definition
shall have the meanings assigned thereto in the Agreement.
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby amend the Agreement as follows:
1. The termination dare under the Agreement is January 31, 1997. The
Agreement may be extended by the Company, one or more times, on a month-by-month
basis, for an aggregate of up to six (6) months beyond the expiration date of
January 31, 1997. Each month for which the Agreement is extended is an
"Extension Month". If the Company exercises its right to extend the Agreement,
the Company will pay BayMark fifteen thousand dollars ($15,000) for each
Extension Month, plus reimbursement of mutually agreed upon out-of-pocket
expenses.
2. The success fees (the "Success Fees") payable to BayMark on the
Company's Earning Before Interest and Taxes ("EBIT") shall be reduced during the
entire term of the Agreement and during any extension thereof to four percent
(4%) of the Company's EBIT. The Success Fee for the year ended December 31, 1996
shall be computed on an annual basis. The Success Fees for (i) the year ended
December 31, 1997, and (ii) the ten (10) months ended October 31, 1998, and
(iii) one additional month for each Extension Month shall be computed based on
calendar quarters of March 31, June 30, September 30 and December 31, during
each such period. In the event any period contains less than a full calendar
quarter, EBIT for such period shall be a fraction of the EBIT for the calendar
quarter containing such period, the numerator of which shall be the number of
full months contained in such period and the denominator of which shall be
three. The parties agree that no Success Fee is due for 1995 or any period other
than those stated above. The EBIT shall be determined in a manner consistent
with the operating income or loss, as reported in the Company's annual 1996 Form
10-K report or the relevant Form 10-Q quarterly report for the calendar quarters
during 1997 and 1998 and, if applicable, 1999 and shall be determined prior to
any deduction for
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December 18, 1996
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interest and taxes, but after depreciation and amortization, and shall exclude
any one-time credits such as reversal of the Ireland ▇▇▇ obligation or gain on
sale of the MRV Corporaiion common stock.
3. The Success Fee, if any, for the year ended December 31, 1996, shall be
paid in eight consecutive, equal monthly installments, without interest, due on
the first day of the month, the first such payment being due on May 1, 1997. The
Success Fees, if any, due for any calendar quarter occurring during 1997, 1998
or, if applicable, 1999, shall be aggregated during each such year (but shall
not be reduced by any EBIT loss reported for any calendar quarter occurring
during each such year) and shall be paid for each such year in eight consecutive
equal monthly installments, without interest, commencing on May 1, 1998, 1999
and, if applicable, 2000, for the Success Fee due for any preceding year.
Provided, however, no monthly payment shall be less than $20,000. In the event
the monthly payment is less than $20,000, the monthly payment schedule shall be
accelerated by dividing the Success Fee due with respect to such period by
$20,000, with the last month's payment being any remaining amount due; provided,
further, in no event shall such aggregate monthly payments exceed the total
Success Fee due for any period.
4. The Success Fee relating to inventory is eliminated.
5. The Success Fee of one-half of one percent (.5%) relating to debt
restructuring will only apply if (a) Foothill Capital Corporation is replaced by
another lender and (b) BayMark is an active pariicipant in such restructuring.
6. BayMark and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ hereby agree to keep secret and retain in
the strictest confidence all confidential matters which relate to the Company or
any affiliate, including, without limitation, customer lists, trade secrets,
pricing policies and other business affairs of the Company or affiliate learned
by it or him from the Company or any affiliate or otherwise heretofore or
hereafter, and not use or disclose any such confidential matter to anyone
outside the Company or any affiliate, whether during or after BayMark's period
of service with the Company, except in the course of performing its duties.
Furthermore, BayMark and ▇▇. ▇▇▇▇▇ hereby agree not to make any statement which
is directly or indirectly damaging to the reputation or standing of the Company
or any affiliate.
7. This Agreement and the rights and obligations of the parties set forth
in this Agreement are personal to the parties and may not be transferred or
assigned except to a successor in interest which acquires the Company's or
BayMark's assets and assumes its liabilities; provided, however, that any
services to be performed pursuant to this Agreement shall be performed by ▇▇.
▇▇▇▇▇; and provided, further, that in connection with any assignment by BayMark
any assignment shall be accompanied by (a) a certificate executed by all of the
members of BayMark which states that (i) they are all of the members of BayMark;
(ii) they consent to the assignment of this
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December 18, 1996
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Agreement, and (iii) the assignment is not being made with the view to hinder,
delay or defraud creditors, and (b) an indemnity executed by the transferee in
form and substance satisfactory to the Company, agreeing to indemnify the
Company and hold the Company harmless from and against any and all claims and
any and all manner of loss, liability, damage or expense (including fees and
expenses of counsel) incurred by the Company which arise out of or in connection
with any moneys previously paid or to be paid by the Company to such transferee.
8. In the event of any inconsistency between the Agreement and this
Amendment, this Amendment shall prevail.
If the foregoing terms meet with your approval, please indicate your
acceptance by signing and returning to the Company the enclosed copy of this
letter.
Very truly yours,
PORTA SYSTEMS CORP.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
Agreed and Accepted:
KPMG BAYMARK STRATEGIES LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Principal
Date: 12/18/96
Agreed for Purposes of Section 6, Only.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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