EXHIBIT 10(w)

                                                         As of October 15, 1998

First Union National Bank
205 Church Street
New Haven, CT 06510

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").

      Borrower acknowledges that it is unconditionally indebted to First 
Union with respect to the revolving loan (the "Revolving Loan") extended by 
First Union to Borrower in the original principal amount of up to 
$4,000,000 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, August 24, 1998 and as of September 29, 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"). Borrower acknowledges that the aggregate 
outstanding principal balance of the Notes on October 13, 1998 was 
$3,644,360.48 ($3,500,000.00 with respect to the Third Amended and Restated 
Revolving Promissory Note and $ $144,360.48 with respect to the $500,000 
Note), 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.

<PAGE>  1

      Borrower has requested that First Union increase the maximum dollar 
amount of indebtedness that may be outstanding under the Loan Agreement 
from $4,000,000 to $6,000,000, and extend the Term of the Revolving Loan 
for the period through and including May 30, 2000 (the "Accommodation"'). 
Capitalized terms used herein that are not defined herein have the meanings 
ascribed to them in the Loan Agreement.

      First Union has agreed to extend the Accommodations but only on the 
following terms and conditions:

      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) 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 is a 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)  All references in the Loan Agreement to "$3,500,000" are 
      hereby deleted in their entirety and "$6,000,000" is substituted in 
      lieu thereof.

            (b)   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) SIX MILLION DOLLARS ($6,000,000), and

<PAGE>  2

            (ii)  an amount equal to seventy-five percent (75%) of Eligible 
      Accounts."

            (c)   Section 6.27 is hereby deleted in its entirety and the 
      following is substituted in lieu thereof-

                  "Section 6.27 Tangible Net Worth. Permit its Tangible Net 
                  Worth to be less than (a) $5,750,000 at any time through 
                  and including December 31, 1998, and (b) $600,000 at 
                  December 31, 1999 and any time thereafter. As used herein 
                  "Tangible Net Worth" shall mean at any time the sum of 
                  (i) the book value of total assets, minus (ii) total 
                  liabilities, minus (iii) all assets which are classified 
                  as intangible assets in accordance with generally 
                  accepted accounting principles, minus (iv) debt due from 
                  any shareholders of Borrower or other affiliates of 
                  Borrower, plus (v) all debt that has been subordinated to 
                  the Lender by express written agreement between the 
                  Lender and the holder of such debt."

            (d)   The reference to May 30, 1999 in Section 12.1 (a) is 
      hereby deleted and "May 30, 2000" is substituted in lieu thereof.

            (e)  All references in the Loan Agreement to the Third Amended 
      and Restated Revolving Promissory Note are hereby deleted and "Fourth 
      Amended and Restated Revolving Promissory Note" is substituted 
      therefor. The copy of the Third Amended and Restated Revolving 
      Promissory Note attached to the Loan Agreement as Exhibit A is hereby 
      deleted and a copy of the Fourth Amended and Restated Revolving 
      Promissory Note annexed hereto as Schedule A is attached in lieu 
      thereof.

      3.    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.

      4.    The Borrower has reviewed the areas within its business and 
operations which could be adversely affected by, and has developed or is 
developing a program to address on a timely basis, the risk that computer 
applications used by the Borrower may be unable to recognize and perform 
properly 

<PAGE>  3

date-sensitive functions involving certain dates prior to and any date 
after December 31, 1999 (the "Year 2000 Problem"). Based upon such review, 
the Borrower reasonably believes that the "Year 2000 Problem" will not have 
any materially adverse effect on the business or financial condition of the 
Borrower. Borrower shall take all action necessary to assure that 
Borrower's computer based systems are able to operate and effectively 
process data including dates on and after January 1, 2000. At the request 
of First Union, Borrower shall provide First Union with assurance 
acceptable to First Union of Borrower's Year 2000 compatibility.

      5.    On or before the date hereof, Borrower shall pay or have paid 
to First Union (i) a facility fee in the amount of $3,750 representing one 
quarter of one percent (0.25%) of the increased commitment under the 
Revolving Loan, and (ii) all fees and expenses and other costs incurred by 
First Union in connection with the Accommodations contemplated herein 
(including without limitation, all attorney's and other professional fees 
and expenses).

      6.    Disbursements of Revolving Loan advances shall be made by 
crediting the amount thereof to an account of Borrower maintained at First 
Union, as specified by Borrower.

      7.    Contemporaneously herewith, (a) the Borrower shall execute and 
deliver to First Union a $6,000,000 Fourth Amended and Restated Revolving 
Promissory Note (the "Fourth Amended and Restated Revolving Promissory 
Note"), which shall supersede and replace the Notes, and (b) the Borrower 
shall execute and deliver to 
First Union resolutions authorizing this Agreement and the transactions 
described herein, all of which shall be in form and content satisfactory to 
First Union.

      8.    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.

<PAGE>  4

      If the foregoing is in accordance with your agreement, please 
indicate the same by signing below.

                                       Very truly yours,

                                       FARMSTEAD TELEPHONE GROUP, INC.

                                       By:
                                           --------------------------------
                                           Its

Reviewed and Agreed to:

FIRST UNION NATIONAL BANK

By  
   --------------------------------
    Its Vice President

STATE OF CONNECTICUT )
                                       ss:    East Hartford
COUNTY HARTFORD

      On this the 19th day of October, 1998 before me, the undersigned 
officer, personally appeared Robert G. LaVigne, 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 5/31/2002

<PAGE>  5

                                                                     Schedule A
                                                                     ----------

                         FOURTH AMENDED AND RESTATED
                          REVOLVING PROMISSORY NOTE

$6,000,000                                               As of October 15, 1998

      For value received, the undersigned, FARMSTEAD TELEPHONE GROUP, INC., 
a Delaware corporation ("Maker"), promises to pay to FIRST UNION NATIONAL 
BANK (SUCCESSOR-IN-INTEREST TO AFFILIATED BUSINESS CREDIT CORPORATION), or 
order ("Lender") at its office at 205 Church Street, New Haven, Connecticut 
06510, or at such other place as the holder hereof (including Lender, 
hereinafter referred to as "Holder") may designate, the sum of up to SIX 
MILLION DOLLARS ($6,000,000), together with interest on the unpaid balance 
of this Note, beginning as of the date hereof, before or after maturity or 
judgment, at the rate of one half of one percentage point (0.5%) per annum 
above the Prime Rate on a floating basis, which rate shall be computed 
daily and payable monthly in arrears on the basis of a Three Hundred Sixty 
(360) day year and actual days elapsed, together with all taxes levied or 
assessed on this Note or the debt evidenced hereby against the Holder, and 
together with all costs, expenses and attorneys' and other professional 
fees incurred in any action to collect this Note or to enforce, preserve, 
realize or foreclose any mortgage, security agreement or other agreement 
securing this Note or to preserve, enforce, protect or sustain the lien of 
said mortgage, security agreement or other agreement or in any litigation 
or controversy arising from or connected with said mortgage, security 
agreement or other agreement or this Note. The term "Prime Rate" as used 
herein shall mean that rate announced by the Lender from time to time as 
its Prime Rate and is one of several interest rate bases used by Lender. 
Lender lends at rates both above and below Lender's Prime Rate, and Maker 
acknowledges that Lender's Prime Rate is not represented or intended to be 
the lowest or most favorable rate of interest offered by Lender. Any change 
in the interest rate because of a change in the Prime Rate shall become 
effective, without notice or demand, immediately following any change in 
the Prime Rate.

      The principal amount of this Note shall be advanced, at the sole 
discretion of Holder, pursuant to a Commercial Revolving Loan and Security 
Agreement between Maker and Lender dated June 5, 1995, as amended by 
various letter agreements between Maker and Lender dated March 11, 1996, 
May 1, 1996, September 6, 1996, as of May 30, 1997, as of December 1, 1997, 
May 6, 1998, August 24, 1998, September 29, 1998 and as of the date hereof 
(collectively, the "CRLSA") and is subject in all respects to the terms and 
conditions of the CRLSA, including, but not limited to, the repayment terms 
and the termination date set forth in the CRLSA. Advances and payments on 
this Note may be evidenced by borrowing certificates, a grid (if any) 
attached to this Note or 

<PAGE>  6

similar certificates or documents, or by an internal ledger account of 
Lender which shall set forth, among other things, the principal amount of 
any advances and payments thereof. Interest shall be paid on the first 
business day of each and every month commencing on November 1, 1998. Holder 
may, in its sole discretion, charge any amounts due hereunder to Maker's 
revolving loan account maintained with Holder pursuant to the CRLSA.

      Maker agrees that (i) if any installment of interest, principal or 
other sum due hereunder is not paid when it is due under this Note, the 
CRLSA or under any instrument evidencing any other obligation of Maker to 
Holder; or (ii) if Maker or Holder shall terminate the CRLSA; or (iii) if 
Maker or any guarantor of any obligation of Maker hereunder shall make an 
assignment for the benefit of creditors or suffer or permit the appointment 
of a receiver for any part of its property or suffer or permit the filing 
by or against it of any petition for adjudication, arrangement, 
reorganization or the like under any bankruptcy or insolvency law; or (iv) 
if an Event of Default shall occur under the CRLSA or any mortgage, 
security agreement or any other agreement securing this Note, any other 
note by Maker to Holder, or in the performance of any other obligation to 
Holder or any other entity or person; or (v) if there shall be any material 
adverse change from the present condition or affairs (financial or 
otherwise) of Maker or any of the guarantors of the obligations of Maker, 
that in Holder's reasonable opinion materially impairs its security or 
increases its risi; then an Event of Default shall have occurred hereunder 
and, upon the happening of any such event, the entire indebtedness with 
accrued interest thereon due under this Note shall, at the option of 
Holder, be immediately due and payable without notice. Failure to exercise 
such option shall not constitute a waiver of the right to exercise the same 
in the event of any subsequent default. Upon the occurrence and during the 
continuance of such an Event of Default, the interest rate on this Note 
shall automatically increase without notice to a floating per annum rate 
equal to two percentage points (2.0%) above the rate otherwise in effect 
hereunder.

      In the event of Maker's failure to pay any installment of interest, 
and/or to pay any other sum due hereunder or under the CRLSA for more than 
ten (10) days after the date it is due and payable, without in any way 
affecting Holder's right to declare an event of default to have occurred, a 
late charge equal to five percent (5%) of such late payment shall be 
assessed against Maker and shall be due and payable immediately.

      Notwithstanding any provisions of this Note, it is the understanding 
and agreement of Maker and Holder (and any guarantors of Maker's 
liabilities) that the maximum rate of interest to be paid by Maker (or 
guarantors of Maker's liabilities) to Holder shall not exceed the highest 
or the maximum rate of interest permissible to be charged by a commercial 
lender such as Lender to a commercial borrower such as Maker under the laws 
of the State of Connecticut.  

<PAGE>  7

Any amount paid in excess of such rate shall be considered to have been 
payments in reduction of principal.

      Maker, and each and all guarantors of this Note hereby give Holder a 
lien and right of setoff for all Maker's liabilities upon and against all 
the deposits, credits, collateral and property of Maker and guarantors, now 
or hereafter in the possession or control of Holder or in transit to it. 
Holder may, upon the occurrence of an event of default hereunder or upon 
demand for payment of any demand indebtedness owing from Maker to Holder, 
apply or set off the same, or any part thereof, to any liability of Maker 
even though unmatured.

      Failure by Holder to insist upon the strict performance by Maker of 
any terms and provisions herein shall not be deemed to be a waiver of any 
terms and provisions herein, and Holder shall retain the right thereafter 
to insist upon strict performance by Maker of any and all terms and 
provisions of this Note or any document securing the repayment of this 
Note.

      MAKER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT, 
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY 
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR 
THE ENFORCEMENT OF ANY OF HOLDER'S RIGHTS AND REMEDIES, INCLUDING WITHOUT 
LIMITATION, TORT CLAIMS.

      MAKER AND EACH AND ALL GUARANTORS OF THIS NOTE ACKNOWLEDGE THAT THE 
LOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL TRANSACTION AND WAIVES ITS 
RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL 
STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT 
TO ANY PREJUDGMENT REMEDY WHICH HOLDER MAY DESIRE TO USE, AND FURTHER 
WAIVES ITS RIGHTS TO REQUEST THAT HOLDER POST A BOND, WITH OR WITHOUT 
SURETY, TO PROTECT SAID MAKER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY 
PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY HOLDER. Maker further, waive 
diligence, demand, presentment for payment, notice of nonpayment, protest 
and notice of protest, and notice of any renewals or extensions of this 
Note, and all rights under any statute of limitations, and all guarantors 
agree that the time for payment of this Note may be extended at Holder's 
sole discretion, without impairing their liability thereon, and further 
consent to the release of all or any part of the security for the payment 
hereof, at the discretion of Holder, or the release of any party liable for 
this obligation without affecting the liability of the other parties 
hereto.

      MAKER ACKNOWLEDGES THAT IT MAKES THE WAIVERS SET FORTH IN THE TWO 
PRECEDING PARAGRAPHS KNOWINGLY, 

<PAGE>  8

VOLUNTARILY AND WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE 
RAMIFICATIONS OF SUCH WAIVERS WITH ITS ATTORNEYS. MAKER FURTHER 
ACKNOWLEDGES THAT LENDER HAS NOT AGREED WITH OR REPRESENTED TO MAKER THAT 
THE PROVISIONS OF THE TWO PRECEDING PARAGRAPHS WILL NOT BE FULLY ENFORCED 
IN ALL INSTANCES.


                                       FARMSTEAD TELEPHONE GROUP, INC.

                                       By:  
                                           --------------------------------
                                       Its

STATE OF CONNECTICUT )
ss:  East Hartford
COUNTY OF HARTFORD    )

On this the _____ day of October, 1998 before me, the undersigned officer, 
personally appeared Robert G. LaVigne 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:   

<PAGE>  9