EXHIBIT 10.3
IFD-002
(8/91)
Agreement for
Wholesale Financing
Date: June 6, 1997
TO: AT&T COMMERCIAL FINANCE CORPORATION ("AT&T"), which has its principal
place of business in Morristown, New Jersey.
The undersigned entity or person ("Dealer") agrees as follows:
1. Discretionary Financing. Dealer desires that AT&T finance the
acquisition of inventory by paying the manufacturer, distributor or
other seller thereof ("Vendor," collectively, the "Vendors"), and/or
issue letters of credit, and/or otherwise provide financing to or for
the benefit of Dealer. AT&T SHALL HAVE THE SOLE AND ABSOLUTE DISCRETION
whether or not to advance funds, and the amounts advanced by AT&T, at
any time, and from time to time, shall be such sums as AT&T may
determine in AT&T'S SOLE AND ABSOLUTE DISCRETION. In addition to, and
not in diminution of, the foregoing and the other rights and remedies of
AT&T hereunder, any failure by Dealer to fully and faithfully perform
and observe all provisions of this Agreement for Wholesale Financing
("Agreement") shall constitute grounds for AT&T to refuse to extend any
further credit to Dealer and/or reduce the amounts of credit made
available to Dealer.
2. Financing Acquisition of Inventory; Dealer's Obligations. If AT&T is
notified in any manner by any Vendor that Dealer desires AT&T to finance
the acquisition of any inventory, AT&T may rely upon such notice as a
request from Dealer to finance the acquisition of such inventory. Any
invoice or other Vendor document relating to any inventory that
indicates AT&T has financed the acquisition of inventory shall be
conclusive evidence against Dealer that AT&T has financed the
acquisition of such inventory. In any event, and under all
circumstances, Dealer shall be indebted and obligated to AT&T for all
commitments for the financing of inventory of Dealer and payments by
AT&T to any Vendor for inventory of Dealer. All such commitments and
payments shall constitute Indebtedness (as defined in Section 4 of this
Agreement), secured by the Collateral (as defined in Section 3 of this
Agreement). AT&T may, but shall not be required to, forward a statement
with respect to inventory it has financed for Dealer. Dealer shall be
bound by the contents of such statement if Dealer does not notify AT&T
in writing of any correction with respect to any data shown thereon
within twenty-five (25) days of the date of such statement.
Dealer understands and agrees that AT&T, at its election, may deal
with Vendors on the basis of electronic data interchange or other forms
of electronic transmissions of data whereby paper-based invoices and
other documents are not created. Dealer understands and agrees that
AT&T's statements of inventory for which AT&T has provided any financing
or extension of credit and amounts due with respect thereto, or
summaries or extracts thereof, shall be conclusive as to, and binding
upon, Dealer if such statements are prepared by AT&T in the ordinary
course of its business activities.
3. Dealer's Grant of Security Interest. Dealer hereby grants to AT&T a
security interest ("Security Interest") in all of Dealer's inventory,
equipment, fixtures, accounts, contract rights, leases, chattel paper,
documents, instruments, general intangibles, documents of title, letters
of credit and books and records relating to the foregoing, wherever
located and whether now or hereafter owned or acquired by Dealer,
whether or not affixed to realty, and in all proceeds and products of
all of the foregoing, including, without limitation, amounts payable
under any insurance policy, and in all returned and repossessed goods,
all parts, accessories, attachments, additions, replacements,
substitutions and accessions thereto or therefor, and in all increases
or profits received therefrom (collectively, the "Collateral").
4. Indebtedness Secured. The Security Interest secures payment of any
and all indebtedness of Dealer to AT&T ("Indebtedness"), whether such
Indebtedness is now existing or hereafter incurred, of every kind and
character, direct or indirect, and whether such Indebtedness is incurred
under this Agreement or otherwise, and whether any Indebtedness is from
time to time reduced and thereafter increased, or entirely extinguished
and thereafter reincurred.
5. Payments. All amounts outstanding with respect to inventory shall be
due and payable as set forth in AT&T's statements and xxxxxxxx with
respect thereto. From time to time, Dealer and AT&T may agree to
Program Schedule(s) with respect to inventory and certain terms and
conditions relating thereto; provided, however, if no applicable
Program Schedule has been agreed to by AT&T with respect to any
inventory financed by AT&T, or if an Event of Default (as defined in
Section 8 of this Agreement) occurs, all Indebtedness outstanding with
respect to a unit of inventory shall be due and payable immediately
upon the earlier of (a) the sale, lease or other disposition of such
inventory; or (b) the passage of sixty (60) days from AT&T's financing
of such inventory; provided, further, that if an Event of Default
occurs, in addition to the foregoing, all remedies set forth in Section
9 of this Agreement shall be available to AT&T (including, but not
limited to, the right, notwithstanding the preceding, to declare all or
any part of the Indebtedness to be immediately due and payable).
In no event shall Dealer, upon demand by AT&T for payment of the
Indebtedness, by acceleration of the maturity thereof or otherwise, be
obligated to pay any interest or other amount in excess of the maximum
amounts permitted by applicable law. AT&T will provide Dealer with
monthly (or at such other interval as AT&T may elect) xxxxxxxx of
Indebtedness due or to become due. Amounts reflected in such xxxxxxxx
are due upon receipt by Dealer or as otherwise indicated in such
xxxxxxxx; provided, however, Dealer shall be responsible for all
Indebtedness when due, whether or not any billing is sent or received.
Dealer recognizes and acknowledges that this Agreement and all matters
hereunder are intended to comply strictly with applicable usury laws
such that no amounts due under this Agreement deemed interest which are
contracted for, charged or collected shall exceed the maximum
nonusurious interest rate or amount. Any amounts collected hereunder in
excess of any maximum lawful amount shall be applied against
Indebtedness remaining to be paid or, if no Indebtedness remains to be
paid, refunded to Dealer.
AT&T shall have the right, at any time, to apply and reapply all
payments made by Dealer to any part or portion of the Indebtedness as
AT&T shall determine in its sole and absolute discretion, including,
without limitation, application or reapplication of payments for
inventory financed hereunder on a first-financed, first-paid basis.
6. Representations and Warranties of Dealer. Dealer represents and
warrants and shall continuously represent and warrant that: (a) Dealer
is the owner of the Collateral; (b) AT&T's Security Interest shall be
valid, enforceable and continuing and AT&T shall have a first lien and
first priority security interest in all inventory for which AT&T has
provided any financing or extension of credit, and in all cash proceeds
thereof in any form; (c) Dealer is authorized to enter into this
Agreement and is not thereby violating its charter or by-laws, any law
or regulation, or any agreement with third parties, and has taken all
such actions as may be necessary or appropriate to make this Agreement
legally binding upon it; (d) all information supplied by Dealer in any
financial, credit or accounting statement or application for credit
prior to, contemporaneously with, or subsequent to the execution of this
Agreement, is true, correct, valid, genuine and fairly represents
Dealer's financial condition; (e) Dealer is engaged in business
operations and Dealer's principal place of business is at the location
specified on the reverse hereof. Dealer's records concerning the
Collateral are kept at the principal place of business specified on the
reverse hereof, and all trade names, division names, or other names
under which Dealer transacts any part of its business are specified in
an appropriate schedule annexed hereto and made a part thereof; and (f)
all Collateral will be kept at the Dealer's principal place of business
specified on the reverse hereof and at any addresses listed on a
schedule to this Agreement, and at such additional addresses as Dealer
shall advise AT&T from time to time in writing prior to commencing any
business activities thereat.
7. Additional Covenants of Dealer. Dealer covenants and agrees: (a) to
defend at Dealer's own cost any action, proceeding or claim affecting
the Collateral; (b) not to transfer, deliver or alienate any Collateral
except in the ordinary course of Dealer's business and except for liens
granted to First Union Bank of Connecticut and ICON Funding Corporation;
(c) to keep accurate and complete records of the Collateral and to keep
the Collateral in good condition and repair, and not to subject any
Collateral to waste or use any Collateral in violation of any provision
of this Agreement or of any applicable law or regulation or of any
policy of insurance regarding the Collateral; (d) not to acquire by
secured financing obtained from any other person or entity, inventory
within any of the product lines of inventory for which AT&T has provided
financing or extended credit without AT&T's prior written consent; (e)
not to change its name or to merge or consolidate with any other firm or
corporation without AT&T's prior written consent; and not to change
Dealer's principal place of business without AT&T's prior written
consent; (f) to pay promptly when due all taxes, assessments, fees and
other public or private charges imposed, levied or assessed against the
Collateral or this Agreement; (g) to insure all Collateral against
risks, in coverage, form, amount and by insurer satisfactory to AT&T and
to promptly deliver each policy to AT&T with a standard long form
endorsement showing AT&T and its assigns as loss payee, as respective
interests may appear (all such policies shall provide for prior written
notification to AT&T before amendment or cancellation); (h) that AT&T,
or its designee or agent, may enter upon Dealer's premises or wherever
the Collateral may be located at any time to inspect, appraise or verify
the Collateral and to inspect Dealer's books and records; (i) the
Security Interest and Indebtedness shall not be diminished or impaired
by any payment to the Vendor, by or on behalf of Dealer, for any
inventory financed by AT&T; (j) to furnish to AT&T financial statements
concerning Dealer's business, in such form, concerning such matter, and
at such intervals as AT&T may request; (k) not to place any collateral
in a warehouse that issues a negotiable document with respect thereto
without the prior written consent of AT&T; (l) to execute and deliver
to AT&T such financing statements and other documents relating to the
perfection of the Security Interest and do such other things relating to
the Collateral and the Security Interest as AT&T reasonably may request
from time to time; and (m) to observe and perform all covenants set
forth on any Schedule of Additional Covenants now or hereafter executed
and delivered by Dealer.
8. Events of Default. Each of the following shall constitute an "Event
of Default" under this Agreement; (a) nonpayment when due of any
Indebtedness, whether under this Agreement, any other agreement with
AT&T, or otherwise due or owing to AT&T by Dealer; (b) Dealer's breach
of any representation, warranty, covenant, provision, term or condition
of this Agreement, any Program Schedule, any Schedule of Additional
Covenants or any other agreement between Dealer and AT&T; (c) the filing
by or against Dealer of a request, petition or pleading for liquidation,
reorganization, arrangement, adjustment of debts, adjudication
asabankrupt, relief as a debtor or other relief under the bankruptcy,
insolvency or similar laws of the United States or any state or
territory thereof or any foreign country; (d) Dealer becomes insolvent,
ceases to do business as a going concern or admits an inability to pay
debts as they become due or, generally, is not paying debts as they
become due; (e) Dealer is in default of any obligation to any person or
entity when such obligation is secured by any Collateral; (f) Dealer has
given AT&T materially false information regarding Dealer's financial
condition; (g) any Collateral is attached, seized or repossessed, or a
trustee, receiver or custodial of any of Dealer's property is appointed
or Dealer makes any assignment for the benefit of creditors; (h) the
making or sending of notice of any bulk sale or the transfer, assignment
or delivery of a major part of the inventory of Dealer without the prior
written consent of AT&T; (i) the existence of any formal or informal
proceeding for settlement of claims against, or winding up of affairs
of, Dealer; (j) the entry of judgment against Dealer in excess of
$100,000 that has become enforceable under applicable law (other than a
judgment that is fully insured) if within twenty (20) days thereafter
such judgment is not satisfied, vacated, bonded or stayed pending
appeal; or (k) any event specified in subparagraphs (a) through (j)
hereof occurs with respect to any guarantor of Dealer's obligations to
AT&T, or any guaranty provided to AT&T in connection with any
indebtedness is terminated or breached.
9. Remedies. Upon the existence or occurrence of an Event of Default,
and at any time thereafter so long as such Event of Default is
continuing, AT&T (a) at its sole election, may declare all or any part
of the Indebtedness to be immediately due and payable without demand or
notice of any kind (the provisions of this clause (a) are not intended
in any way to affect rights of AT&T with respect to any Indebtedness
that may now or hereafter be payable on demand); (b) shall have all of
the rights and remedies of a secured party under the Uniform Commercial
Code and any other applicable laws, including, without limitation, the
right to any deficiency remaining after sale or other disposition of any
Collateral; (c)(i) may require Dealer to assemble all or any portion of
the Collateral and return it to AT&T at a place designated by AT&T,
and/or (ii) by itself or its agent, without notice to anyone and without
judicial process of any kind, may enter any premises or upon any land
owned, leased or otherwise under the real or apparent control of Dealer
or any agent of Dealer, and AT&T may repossess the Collateral or any
part thereof; and/or (d) may notify any or all account debtors and may
demand, collect, enforce and xxx on any of Dealer's accounts, contract
rights, leases, chattel paper, general intangibles, instruments, letters
of credit, documents or other Collateral (in either Dealer's or AT&T's
name, at AT&T's election) and all payment from and on the Collateral
shall be applied to the Indebtedness in such order and in any manner as
AT&T, in its sole and absolute discretion, may determine. AT&T may
compromise, settle or discharge such Collateral without thereby
releasing or discharging any Indebtedness. AT&T may endorse Dealer's
name on all checks or other Instruments constituting or relating to the
Collateral.
A public or private sale of any Collateral is a commercially
reasonable disposition thereof. A disposition of Collateral or interest
in Collateral pursuant to a Vendor repurchase agreement shall
constitute a commercially reasonable disposition thereof.
Without in any way requiring notice to be given, Dealer agrees that
any notice by AT&T of the sale or other disposition of any Collateral
shall constitute reasonable notice to Dealer if such notice is mailed to
the Dealer, at the address specified below or to such other address as
Dealer may specify in writing to AT&T, by regular or certified mail,
postage prepaid, or by reputable overnight delivery service, posted or
dispatched at least ten (10) days prior to such action.
Dealer agrees to pay on demand all costs and expenses incurred by
AT&T in enforcing this Agreement, in realizing upon or protecting any
Collateral and in enforcing or collecting any Indebtedness or any
guaranty thereof, including without limitation, if AT&T retains legal
counsel for advice, suit, appeal, insolvency or bankruptcy proceedings,
the attorneys' fees and disbursements of such legal counsel. All such
sums shall constitute Indebtedness hereunder secured by the Collateral.
10. Selection of Inventory; Risk of Loss; Indemnity. Dealer is solely
responsible for the selection of inventory. AT&T shall have no
responsibility, risk or liability as to the existence, delivery, amount
or number, description, quality, character, suitability, condition or
performance of any inventory or other Collateral. AT&T HAS NOT MADE AND
DOES NOT NOW MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE INVENTORY, AND HEREBY EXPRESSLY DISCLAIMS ANY AND
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS OF THE INVENTORY FOR A
PARTICULAR PURPOSE. Any claims that Dealer may at any time possess
against any Vendor or any other person or entity with respect to
inventory shall not be asserted against AT&T and shall not diminish,
excuse or impair any Indebtedness or the Security Interest. Dealer
hereby indemnifies AT&T and holds AT&T harmless from and against all
claims and/or defenses asserted by any Vendor or buyer of any inventory
or any other Collateral for any reason. As between AT&T and Dealer, all
risk of loss with respect to the Collateral is, and shall remain, at all
times with Dealer.
11. Waiver of Jury Trial. DEALER AND AT&T HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING WHETHER IN
TORT, CONTRACT OR OTHERWISE, IN WHICH DEALER OR AT&T, OR ANY SUCCESSOR
OR ASSIGN OF EITHER OF THE FOREGOING, ARE PARTIES AS TO ALL MATTERS AND
THINGS ARISING OUT OF OR RELATING, DIRECTLY OR INDIRECTLY, TO THIS
AGREEMENT AND THE RELATIONS BETWEEN THE PARTIES HEREUNDER.
12. AT&T Insecurity. Whenever AT&T in good faith believes that the
prospect of Dealer's payment or performance hereunder is impaired, or
that any Collateral is at risk, AT&T shall be entitled to exercise any
one or more of the remedies provided in Section 9 of this Agreement.
13. Choice of Law. THE VALIDITY, INTERPRETATION, ENFORCEABILITY AND
OTHER LEGAL QUESTIONS RELATING TO THIS AGREEMENT, AND THE EXISTENCE AND
VALIDITY OF ANY CLAIMS OR DEFENSES CONCERNING OR RELATING THERETO, SHALL
IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAW PROVISION) OF THE STATE OF
NEW JERSEY. IN ADDITION, DEALER CONSENTS TO THE JURISDICTION OF STATE
AND FEDERAL COURTS LOCATED IN THE STATE OF NEW JERSEY TO ADJUDICATE ALL
MATTERS CONCERNING OR RELATING TO THIS AGREEMENT.
14. Additional Provisions.
(a) If an Event of Default has occurred and is continuing, Dealer
hereby irrevocably appoints AT&T as Dealer's attorney-in-fact to
execute such financing statements or other documents relating to
the Collateral in Dealer's name, to supply any omitted
information and correct errors in any documents executed by
Dealer or on Dealer's behalf and to endorse all checks or other
instruments constituting or relating to the Collateral and
to execute, endorse or assign all papers and documents concerning
or relating to the Collateral. This power of attorney shall be
durable and irrevocable and shall survive any legal disability of
Dealer. If an Event of Default has occurred and is continuing,
where permitted by law, AT&T may file financing statements signed
only by AT&T to perfect the Security Interest. A carbon,
photographic or other reproduction of this security
agreement is sufficient as a financing statement.
(b) Upon Dealer's failure to perform any of its obligations or
duties hereunder, AT&T may, but shall not be required to, perform
any such obligations or duties, including, without limitation,
the payment of taxes, assessments or other charges or expenses
and the placement of insurance with respect to the Collateral.
Dealer shall pay on demand all such costs, charges or expenses so
incurred by AT&T and all such sums shall constitute Indebtedness
hereunder secured by the Collateral.
(c) AT&T, or its designee or agent, shall have the right to
inspect, verify and appraise the Collateral, or any part thereof,
and to verify its condition and Dealer agrees to furnish all
assistance and perform such acts as AT&T may reasonably request
in connection therewith. If such inspection, verification or
appraisal of the Collateral is conducted by AT&T upon the
existence or occurrence of any Event of Default hereunder, or at
any time thereafter, Dealer agrees to pay on demand all of AT&T's
expenses therefor. All such sums shall constitute Indebtedness
hereunder secured by the Collateral.
(d) AT&T is authorized to provide to others any information
supplied by Dealer or relating to Dealer and not marked
"confidential" by Dealer, and any public financial and credit
information relating to Dealer, without regard to the source of
such information.
(e) No delay or omission by AT&T in exercising any right or remedy
hereunder shall operate as a waiver thereof or of any other right
or remedy; and no single or partial exercise of any right or
remedy shall preclude any other or further exercise thereof or
the exercise of any other right or remedy. All rights and
remedies of AT&T hereunder are cumulative and not alternative.
(f) The terms "Dealer" and "AT&T" as used herein shall include the
successors or assigns of those parties. In the event more than
one person or entity executes this Agreement as a Dealer, the
term Dealer as used herein, and the provisions of this Agreement,
shall be binding upon each such person or entity, jointly and
severally.
(g) This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof and no modification,
rescission, waiver, release or amendment of any provision of this
Agreement shall be effective unless made in a writing executed by
Dealer and AT&T.
(h) Terms used in this Agreement, unless otherwise defined herein,
shall have the meanings ascribed to them in the Uniform
Commercial Code adopted in New Jersey.
(i) AT&T may assign this Agreement, but Dealer must have AT&T's
prior written consent to assign this Agreement. If assigned,
this Agreement shall be for the benefit of each assignee or other
successor in interest of each party and shall be binding upon
them.
(j) If after receipt of any payment AT&T is for any reason
compelled to surrender any payment to any person or entity
because such payment is determined to be void or voidable, or for
any other reason, this Agreement shall continue in full force and
effect notwithstanding any contrary action that may have been
taken by AT&T, which shall be without prejudice to AT&T's rights
under this Agreement and shall at all times be deemed to have
been conditioned upon such payment having become complete, final
and irrevocable. No refinancing, consolidation, renewal,
forbearance or other change of, or with respect to, any
Indebtedness shall constitute a novation or result in any
impairment of the (i) Security Interest, or (ii) effect,
perfection or priority of the Security Interest.
(k) If any provision of this Agreement shall be adjudged by any
court of competent jurisdiction to be invalid, such judgment
shall not affect, impair or invalidate the remainder hereof, but
shall be confined in its operation to the specific provision of
this Agreement so invalidated.
IN WITNESS WHEREOF, this Agreement for Wholesale Financing has been duly
executed by and on behalf of the undersigned as of the date specified on
the front page hereof.
Witness
Attest:__________________ and Dealer: Farmstead Telephone Group, Inc.
-------------------------------
(Corporate, Partnership or Sole
Proprietor's Name)
By: /s/ Xxxxxx X. XxXxxxx
[Corporate Seal] Title: Vice President
Dealer's Principal Place of Business is:
AT&T COMMERCIAL FINANCE CORPORATION 00 Xxxxxxxx Xxxx Xxxxxx
--------------------------------
Street Address
By: Xxxx Xxxxxxxx, XX 00000-0000
----------------------------- --------------------------------
Authorized Representative City State Zip Code
--------------------------------
County
[Any additional Dealer locations
are shown on an attachment hereto]
Mr. Xxxxxx XxXxxxx Exhibit 10.3
Chief Financial Officer
Farmstead Telephone Group, Inc.
00 Xxxxxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxx, XX 00000-0000
Cc: Xxxx Xxxxxxxx
Xxxx Xxxx
Re: Approval of Line of Credit with AT&T Commercial Finance Corporation
Dear Xx. XxXxxxx:
AT&T Commercial Finance Corporation ("AT&T-CFC") is pleased to
advise you of our commitment to offer Farmstead Telephone Group, Inc.
(the "Borrower") a line of credit in an amount not to exceed
$2,000,000.00 (the "Line of Credit"). This commitment is made subject
to the following terms and conditions;
1. Amount of Line of Credit
The Line of Credit shall be in a maximum amount of $2,000,000.00 (as
described above). AT&T-CFC may from time to time finance sums above the
committed line at its sole discretion. Further, any such additional
advances are not intended to be and should not be construed as a
permanent commitment above the approved line and are subject to
immediate repayment, at our sole option, upon notice by AT&T-CFC. There
shall be no minimum extension of credit required of AT&T-CFC under this
commitment. All extensions of credit shall be made in the sole and
complete discretion of AT&T-CFC. The outstanding balance under the Line
of Credit shall be computed by adding the principal outstanding amount
and the amount of unpurchased approvals.
2. Line of Credit Utilization
AT&T-CFC will set aside up to $500,000 of Farmstead's line of credit.
This portion of the Line of Credit will be used to finance Borrower's
open account inventory purchases (Other Eligible Inventory).
3. Other Eligible Inventory
AT&T-CFC will finance Other Eligible Inventory as follows:
* Repayment terms shall be 1/2 30, 1/2 60 from the advance date
* Rate of Prime plus 1.5 percent ADB
* Advances shall be in AT&T-CFC's sole discretion and shall be made
directly to Farmstead on a per invoice basis upon AT&T-CFC's receipt
of all appropriate support documentation.
* Advance rate shall be up to 50 percent of the wholesale value of the
invoice.
* AT&T-CFC reserves to right to approve vendors for advances on Other
Eligible Inventory
* There shall be a .10 percent of invoice amount transaction fee per
advance
* Acceptability of Other Eligible Inventory to be determined by
prefunding audit
* No minimum balance requirement
4. Duration of Line of Credit
The term of the Line of Credit shall commence on June 1, 1997 and shall
continue through April 30, 1998 ("Expiration") at which time the Line of
Credit shall terminate and expire. AT&T-CFC will annually review the
line for renewal based on our receipt and satisfactory review of your
next fiscal year end financial statement. AT&T-CFC may, in its sole and
absolute discretion extend the Line of Credit for such additional
periods of time and under such terms and conditions as AT&T-CFC
determines to be appropriate. No advances will be made by AT&T-CFC until
AT&T-CFC actually receives executed copies of any and all documentation
required by AT&T-CFC.
5. Early Termination
The Line of Credit may be terminated by AT&T-CFC at any time prior to
the Expiration specified above if;
a.) The Borrower fails to execute and/or deliver any and all
financing documents required by AT&T-CFC, which financing
documents shall include, but shall not be limited to, an
Agreement for Wholesale Financing.
b.) The Borrower is in breach of any of the provisions of any
of the financing documents required by AT&T-CFC or is in default
under any such document.
c.) There has occurred any adverse change in the financial
condition or business prospects of the Borrower or any guarantor
of the Borrower's indebtedness to AT&T-CFC or if AT&T-CFC shall
learn of any misrepresentation or omission of a fact or
circumstance by the Borrower (or any guarantor of the Borrower's)
indebtedness to AT&T-CFC) or if AT&T-CFC shall learn of any
misrepresentation or omission of a fact or circumstance by the
Borrower (or any guarantor) that AT&T-CFC deems to be material.
The Borrower and all guarantors shall be obligated to notify
AT&T-CFC in writing of any change in either of their financial
condition, structure, ownership, or business prospects.
5. No Assignment
This commitment may not be assigned by the Borrower without the prior
written consent of AT&T-CFC, which consent shall be granted or withheld
in the sole and absolute discretion of AT&T-CFC.
6. Conditions
i) This commitment for a Line of Credit is subject to receiving
a satisfactory intercreditor agreement from First Union Bank
N.A.
ii) Collateral Covenants
a) The ratio of total collateral available to AT&T-CFC after
deduction of senior liens, to total AT&T-CFC indebtedness must be
at least 1.5 to 1.
b) The ratio of Other Eligible Inventory to advances on Other
Eligible Inventory must be at least 2 to 1.
In the event of a short fall of either collateral coverage ratio, an
immediate paydown shall be required such that Farmstead would thereafter
be in compliance with both ratios.
We look forward to working with you.
Sincerely,
Xxxx Xxxx
Portfolio Manager
Accepted: Xxxxxx X. XxXxxxx
(Name)
Vice President/CFO
(Title)
June 6, 1997
(Date)
Schedule of Additional Covenant (s)
Terms defined in the Agreement for Wholesale Financing between AT&T
and Dealer (the "Agreement") and not otherwise defined herein have those
meanings assigned to them in the Agreement. Notwithstanding anything
contained in the Agreement or otherwise to the contrary, Dealer hereby
covenants and agrees that at all times Dealer will maintain on its
premises or otherwise in its possession, or under its custody or control,
Collateral subject to the first lien and first priority security interest
of AT&T, having an actual value from time to time equal to at least one
hundred fifity percent (150%) of the Indebtedness outstanding from time to
time. Within fifteen (15) days after the end of each month, Dealer shall
provide AT&T with evidence satisfactory to At&T in all respects that
Dealer is in compliance with this covenant, and Indebtedness outstanding
from time to time to an amount whereby Dealer shall be in compliance wit
this covenant at all times.
Notwithstanding anything contained in the Agreement or otherwise to
the contrary, Dealer hereby covenants and agrees that at all times Dealer
will maintain on its premises or otherwise in its possession, or under its
custody or control, Inventory purchased on open account from vendors not
financed by AT&T ("Other Eligible Inventory Collateral") subject to the
first lien and first priority security interest of AT&T, having an actual
value from time to time equal to a t least two hundred (200%) of the Other
Eligible Inventory Indebtedness outstanding from time to time. Within
five (5) days after the end of each month, Dealer shall provide AT&T with
evidence satisfactory to AT&T in all respects that Dealer is in compliance
wit this covenant, and from time to time Dealer shall pay AT&T such
amounts as are necessary to reduce the Indebtedness outstanding from time
to time to an amount whereby Dealer shall be in compliance with this
covenant at all times.
Date: June 6, 1997
Farmstead Telephone Group, Inc.
By: Xxxxxx X. XxXxxxx
Title: Vice President
00 Xxxxxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxx, XX 00000
AT&T COMMERCIAL FINANCE CORPORATION
By: _______________________________________
Title: ____________________________________
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
