AMENDMENT
Exhibit
10.1
AMENDMENT
This
AMENDMENT (“Amendment”) is made as of May 15, 2007 by
and among CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company (the “Lender”), and TELTRONICS,
INC., a Delaware corporation (the “Borrower”). This
Amendment is effective May 15, 2007 (the “Effective Date”).
Recitals:
A. Lender
has loaned money and made credit available to the Borrower in accordance with
the terms of that Revolving Credit, Term Loan and Security Agreement, dated
as
of July 6, 2005 (as amended to date and as may be amended, restated or otherwise
modified from time to time, the “Loan Agreement”), among Lender and the
Borrower. The Loan Agreement and the other documents executed in
connection with the Loan Agreement, including this Amendment, may be
collectively referred to herein as the “Loan Documents.”
B. As
a
result of the occurrence of certain business conditions, Lender and the Borrower
have agreed to enter into this Amendment on or before May 15, 2007 pursuant
to
which, inter alia, Lender agrees to extend, in accordance with and
pursuant to the terms herein, the payment date provided for in Section 2.11(c)
of the Loan Agreement by which Borrower must remit the Excess Cash Flow
Percentage for 2006 to June 15, 2007 (the “Extension”).
C. The
Borrower hereby acknowledges and agrees that failure to remit the Excess Cash
Flow Percentage for 2006 on or before June 15, 2007 shall constitute an
immediate Event of Default under the Loan Agreement as of the Extension Date
(the “Default”).
D. As
of the date of execution of this Amendment, the aggregate outstanding principal
balance of (i) the Term Loan is $2,083,333.26, and (ii) the outstanding Advances
under the Revolving Facility total $3,608,911.09. Collectively, the indebtedness
owed as of the date of execution of this Amendment under the Term Loan and
the
Revolving Facility (excluding attorneys’ fees (for both in-house and outside
counsel of Lender), accrued interest and fees and expenses of the Lender) is
$5,692,244.35 (the “Entire Indebtedness”).
E. The
payment of the Obligations (as defined in the Loan Agreement) of Borrower is
secured by the Collateral pledged under the Loan Agreement.
F. The
Borrower hereby acknowledges and agrees that in the event of the occurrence
of
the Default, among other things: (i) Lender is entitled to accelerate the
Obligations, to seek immediate payment in full of the Obligations and to
exercise its rights and remedies under the Loan Documents; (ii) Lender has
no
obligation to make further Advances or otherwise extend credit to the Borrower
under the Loan Documents or otherwise; and (iii) with respect to the Loans,
Lender has the right to charge interest at the Default Rate (as defined in
the
Loan Agreement) pursuant to Section 3.6 of the Loan Agreement.
G. The
Borrower has informed Lender that it intends to refinance and pay in full,
in
immediately available funds, all Obligations on or before June 15,
2007.
H. The
Borrower has requested that Lender extend the payment date described above
1462637.6
and
continue to fund operations while the Borrower attempts to refinance the
Obligations, and Lender has agreed to do so to the extent provided for under,
and pursuant to, the terms and conditions set forth in this
Amendment.
NOW,
THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, Lender and the Borrower agree
as follows:
1. Incorporation
of Recitals; Definitions. Each of the foregoing
recitals is hereby acknowledged and affirmed as being accurate and complete
and
is hereby incorporated as part of this Amendment. Capitalized terms
used and not defined in this Amendment shall have the meanings assigned to
such
terms in the Loan Documents.
2. Extension. Subject
to the satisfaction of the terms and conditions set forth herein, until that
date (the “Extension Termination Date”), which is the earliest to occur
of (a) 4:00 p.m. (Eastern) on June 15, 2007, or (b) the date of the occurrence
of any one or more of the Events of Termination (defined below) set forth in
this Amendment (the period commencing on the Effective Date and ending on June
15, 2007, the “Extension Period”), Lender will not exercise or enforce
its rights or remedies against the Borrower which Lender would be entitled
to
exercise or enforce under the terms of the Loan Documents but for the Extension;
provided, however, that such forbearance shall not act as a waiver
of Lender’s right to enforce any other claims, rights or remedies at any time
and from time to time on or after the Extension Termination
Date. Furthermore, nothing contained herein shall be construed as
requiring Lender to extend the Extension Termination Date.
3. Advances
Under Revolving Facility Prior to Extension Termination
Date. The commitment to continue to
provide Advances under the Revolving Facility shall continue during the
Extension Period. Availability under the Revolving Facility shall be subject
to
the terms and conditions of the Loan Agreement. In addition, Advances
shall be further conditioned on the following:
a. Reports.
Beginning fourteen (14) days following execution of this Amendment, and then
every other week, on Tuesday during the Extension Period (the “Update”),
the Borrower shall provide to the Lender the following reports:
(i)
reports, agreements or other materials provided to or generated by any
consultant or advisor who may assist with a re-financing so long as Borrower
is
not prohibited to do so by the terms of any confidentiality agreement executed
by and among Borrower and any such consultant or advisor prior to the Effective
Date, in which case Borrower shall use its best efforts to secure the consent
of
such consultant or advisor to provide such reports, agreements or other similar
materials to Lender;
(ii)
periodic (as requested by Lender) telephonic update on the efforts of the
Borrower to progress toward a re-financing or other strategic alternative,
including any preliminary assessment by the consultant or advisor; reports
on
indications of interest; the identities of prospects for a transaction; on
the
date of execution or receipt by the consultant or advisor, copies of letters
of
intent, term sheets, draft asset purchase agreements or similar agreements
and
documents, the final version of such agreements, and any analysis of the likely
return on a sale or transaction.
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4. Interest. During
the Extension Period, interest on the Loans shall accrue and be due and payable
in accordance with the terms of the Loan Agreement, except as specifically
provided otherwise herein. Section 2.3 of the Loan Agreement is
hereby amended to provide that interest on outstanding Advances shall be payable
monthly in arrears at an annual rate of Prime Rate plus 5.5%. Section
2.7 of the Loan Agreement is hereby amended to provide that interest on the
outstanding balance of the Term Loan shall be payable monthly in arrears on
the
first day of each calendar month at an annual rate of Prime Rate plus
6.5%.
5. Extension
Fee. An Extension Fee of $10,000 (the “Extension Fee”) shall
be paid by Borrower upon execution of this Amendment. The Borrower
hereby agrees to pay to Lender upon demand in accordance with the Loan Documents
all costs, fees and expenses incurred by Lender arising in connection with
this
Amendment, including all of Lender’s reasonable attorneys’ fees and expenses,
whether incurred by in-house or outside counsel.
6. Acknowledgement
of Indebtedness, Liens. Borrower
acknowledges and agrees that it is unconditionally liable to Lender on a joint
and several basis under the Loan Documents for the payment of the principal
amount of the Term Loan and Revolving Facility, plus all accrued and unpaid
interest, plus all expenses incurred by Lender, including reasonable attorneys’
fees and expenses and all other Obligations, and that the Borrower has no
defenses, counterclaims, deductions, credits, claims or rights of setoff or
recoupment with respect to the Obligations. The Borrower covenants,
confirms and agrees that Lender has, and will continue to have, a continuing
first priority, perfected Lien on the Collateral, whether now owned or hereafter
acquired, created or arising, as set forth in the Loan Documents, subject to
no
Liens other than Liens expressly permitted under the Loan
Documents. The Borrower acknowledges and agrees that nothing herein
contained in any way impairs Lender’s existing rights and first priority Lien
status in the Collateral.
7. Ratification
of Existing Agreements. Borrower hereby
reaffirms (a) all of the terms, conditions, representations, warranties and
covenants contained in each of the Loan Documents (except as expressly modified
by this Amendment, in which case they represent, warrant and covenant as to
the
modified terms) and (b) acknowledges that all of the Obligations and liens
granted under all such Loan Documents are, by the Borrower’s execution of this
Amendment, ratified and confirmed to the Lender as accurate and valid in all
respects. Except as expressly modified or provided herein or in any
other instruments or documents executed in connection herewith, all of the
terms, conditions, representations, warranties and covenants contained in each
of the Loan Documents shall remain in full force and effect in accordance with
their original tenor. Except as expressly provided herein, each
representation, warranty, covenant and agreement of the Borrower hereunder
shall
be deemed to be in addition to, and not in substitution for, the
representations, warranties, covenants and agreements made by the Borrower
in
the other Loan Documents.
8. Conditions
Precedent. The Borrower shall be bound
by this Amendment upon execution and delivery hereof to Lender. The
obligations of Lender set forth in this Amendment shall become effective upon:
(1) Borrower’s remittance of the Extension Fee and payment of all Lender’s
reasonable legal fees and expenses, whether incurred by in-house or outside
counsel, and (2) Borrower’s execution and delivery of any and all documents
deemed necessary by Lender and requested to further document and/or secure
Borrower’s obligations under this Amendment and the other Loan
Documents. Borrower hereby expressly authorizes Lender to file any
UCC-1 financing statements and/or amendments thereto, that the Bank deems
appropriate. Borrower shall bear the expense of any such filings by
Lender.
9. Representations
and Warranties. Borrower hereby
represents and warrants that:
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a. it
is duly formed, validly existing and in legal good standing in its state of
formation as set forth in the preamble to this Amendment and that Borrower
has
the power and authority to enter into this Amendment;
b. it
has duly executed and delivered this Amendment, that the signer of this
Amendment on behalf of Borrower is duly authorized to execute this Amendment,
that this Amendment was fully reviewed by and its execution approved by Borrower
executing this Amendment, and this Amendment constitutes the valid, binding
and
legal obligation of the Borrower;
c. this
Amendment is not being entered into with the intent to hinder or defraud any
person; and
d. no
Default or Event of Default has occurred and is continuing and no Default or
Event of Default would result from the execution and delivery of, or
consummation of the transactions contemplated by, this Amendment or the other
agreements, instruments and documents referred to herein.
Further,
the Borrower confirms,
reaffirms and restates to the Lender, on and as of the Effective Date, the
representations and warranties set forth in the Loan Agreement and the other
Loan Documents, except to the extent that such representations and warranties
solely relate to a specific earlier date in which case such Borrower confirms,
reaffirms and restates such representations and warranties as of such earlier
date. Each request for an Advance under the Revolving Facility shall
constitute Borrower’s confirmation, reaffirmation and restatement of the
representations and warranties set forth in the this Amendment, the Loan
Agreement and the other Loan Documents as of the date of each such request,
except to the extent that such representations and warranties relate to a
specific earlier date in which case each such request shall constitute
Borrower’s confirmation, reaffirmation and restatement of such representations
and warranties as of such earlier date.
10. Covenants. The
Borrower covenants and agrees with Lender as follows:
a. Refinancing. The
Borrower shall use its best efforts to consummate Refinancing of all Obligations
owed Lender on or before June 15, 2007 (the “Proposed Refinancing”) and
such Proposed Refinancing shall satisfy, in full, in immediately available
funds, all Obligations owed by the Borrower as of the date payment is made
(the
“Refinancing Event”).
11. Events
of Termination. The occurrence of any one or more
of the following events shall constitute an event of termination (each an
“Event of Termination”) hereunder, it being expressly acknowledged and
agreed that TIME IS OF THE ESSENCE:a.
a. Default
or Event of Default under the Loan Documents or under this
Amendment;
b. Extension
Termination Date occurs;
c. failure
of the Borrower to comply with the terms of this Amendment;
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d. the failure
of any covenant (whether required to by performed by the Borrower or any
third-party) set forth in this Amendment to be satisfied in accordance with
the
terms of this Amendment;
e. any
representation or warranty made or deemed made by the Borrower in this Amendment
or any other Loan Document to which it is a party is determined by Lender to
have been false or misleading in any respect when made or deemed
made;
f. the
initiation of any federal or state bankruptcy, insolvency or similar proceeding
by or against the Borrower;
g. the
commencement of litigation or legal proceedings by the Borrower against Lender
or any of its directors, agents, officers, or employees;
h. the
commencement of litigation or legal proceedings (including arbitration) by
a
vendor, supplier or employee of Borrower whose claim is equal to or greater
than
$1,000,000.00;
i. the claim,
initiation or commencement of any claim or proceeding in favor of, through
or by
the Borrower which alleges that the release of Lender set forth herein is
invalid or unenforceable; and
j. the
filing or
commencement of any criminal indictment, charge or proceeding pursuant to
Federal or state law against Borrower, its officers, directors, or any
manager.
Upon the occurrence of any Event of Termination, Lender may, at its option and without notice to the Borrower or any other Person, exercise any and all rights
and remedies
pursuant to the Loan Documents in such manner as Lender in its sole and
exclusive discretion determines.
12. Release
of Lender. Borrower hereby releases, waives and forever
relinquishes all claims, counterclaims, demands, obligations, liabilities and
causes of action of whatever kind or nature, whether known or unknown, including
any so-called “lender liability” claims or defenses which it has, may have, or
might assert now or in the future against the Lender and/or its affiliates,
predecessors in interest, participants, officers, directors, employees, agents,
attorneys, accountants, consultants, successors or assigns (individually, a
“Releasee” and collectively, the “Releasees”), directly or
indirectly, arising out of, based upon, or in any manner connected with (i)
any
transaction, event circumstance, action, omission, failure to act or occurrence
of any sort or type, whether known or unknown, which occurred, existed, or
was
taken or permitted prior to the execution of this Amendment with respect to
the
Obligations, the Loan Documents, or the administration thereof (ii) any
discussions, commitments, negotiations, conversations or communications, whether
orally or evidenced by a writing of any sort prior to the execution of this
Amendment with respect to the Obligations, the collateral, or the general
business operations of the Borrower, or (iii) any thing or matter related to
any
of the foregoing prior to the execution of this Amendment. The Borrower
acknowledges and agrees that the inclusion of this paragraph in this Amendment
and the execution of this Amendment by the Lender do not constitute an
acknowledgment or admission by the Lender of liability for any matter, or a
precedent upon which any liability may be asserted. If the Borrower asserts
or
commences any claim, counter-claim, demand, obligation, liability or cause
of
action in derogation of the foregoing release or challenges the enforceability
of the foregoing release (in each case, a “Violation”), then
the Borrower agrees to pay in addition to such other damages as any Releasee
may
sustain as a result of such Violation, all reasonable attorneys’ fees and expenses, whether incurred by in-house
or
outside counsel, incurred by such Releasee as a result of such
Violation.
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13. No
Waiver by Lender. Nothing in this
Amendment shall extend to or affect in any way any of the Obligations or any
of
the rights of Lender and remedies of Lender arising under the Loan Documents,
and Lender shall not be deemed to have waived any or all of such rights or
remedies with respect to any default or event or condition which, with notice
or
the lapse of time, or both, would become a default under the Loan Documents
and
which upon Borrower’s execution and delivery of this Amendment otherwise exist
or which might hereafter occur. The failure of Lender at any time or
times hereafter to require strict performance by Borrower of any of the
provisions, warranties, terms and conditions contained herein in this Amendment
or in the other Loan Documents shall not waive, affect or diminish any right
of
Lender at any time or times thereafter to demand strict performance thereof;
and, no rights of Lender hereunder shall be deemed to have been waived by any
act or knowledge of Lender, its agents, officers or employees, unless such
waiver is contained in an instrument in writing signed by an authorized officer
of Lender and directed to such Person specifying such waiver. No
waiver by Lender of any of its rights shall operate as a waiver of any other
of
its rights or any of its rights on a future occasion at any time and from time
to time.
14. Acknowledgment/Waiver
of Legal Counsel; Drafting of
Amendment. Borrower represents and
warrants that it is represented by legal counsel of its choice, is fully aware
of the terms contained in this Amendment and has voluntarily and without
coercion or duress of any kind, entered into this Amendment and the documents
executed in connection with this Amendment. Borrower further
represents and warrants and acknowledges and agrees that it has participated
in
the drafting of this Amendment.
15. Entire
Agreement; No Third-Party Beneficiaries; Binding
Affect. This Amendment, together with
the other Loan Documents, constitutes the entire and final agreement among
the
parties and there are no agreements, understandings, warranties or
representations among the parties except as set forth herein. This
Amendment may be amended, modified, waived, discharged or terminated only by
a
writing signed by the Borrower and Lender. This Amendment and all
agreements, instruments and documents delivered in connection with this
Amendment shall constitute Loan Documents and all references to “Loan Documents”
contained in the Loan Documents shall be deemed to include this Amendment and
all such agreements, instruments and documents. This Amendment will
inure to the benefit and bind the respective heirs, administrators, executors,
representatives, successors and permitted assigns of the parties
hereto. Nothing in this Amendment or in the Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Amendment or the Loan Documents.
16. Governing
Law. This Amendment is executed and
delivered in the State of Maryland (the “State”) and it is the desire and
intention of the parties that it be in all respects interpreted and construed
according to the laws of the State, without reference to its conflicts of law
principles. Borrower specifically and irrevocably consents to the
jurisdiction and venue of the federal and state courts of the State with respect
to all matters concerning this Amendment or the Loan Documents or the
enforcement of any of the foregoing. Borrower agrees that the
execution and performance of this Amendment shall have a State situs and
accordingly, consents to personal jurisdiction in the State.
17. Counterparts.
This Amendment may be executed in counterparts, each of which will
be
deemed an original document, but all of which will constitute a single
document. This document will not be binding on or constitute evidence
of a contract between the parties until such time as a counterpart of this
document has been executed by each of the parties and a copy thereof delivered
to each party under this Amendment.
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18. WAIVER
OF JURY TRIAL. EACH PARTY TO THIS AMENDMENT KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE OR HEREAFTER HAVE
TO
A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR
RELATING TO THIS AMENDMENT OR THE UNDERLYING TRANSACTIONS. BORROWER
CERTIFIES THAT NEITHER THE LENDER NOR ANY OF ITS REPRESENTATIVES, AGENTS OR
COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT IN THE
EVENT OF ANY SUCH SUIT, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY
JURY.
19. Amendment
Controls. In the event of any inconsistency
between this Amendment and any of the other Loan Documents, the terms of this
Amendment shall control.
[Signature
page follows.]
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IN
WITNESS WHEREOF, the parties have executed this Amendment under seal as
of the day and year first written above.
TELTRONICS,
INC.
By:
/s/ Xxxx
Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
& CEO
CAPITALSOURCE
FINANCE LLC
By:_____________________________
Name:
Title:
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REAFFIRMATION
OF CONTINUING GUARANTY
The
undersigned, Guarantor of the Obligations and all other debts, liabilities
and
obligations under any of the Loan Documents and/or Loans
(“Guarantor”) pursuant to that Continuing Guaranty Agreement
dated September 15, 2005 (the “Guaranty”), hereby acknowledges
and reaffirms the terms of the Guaranty and acknowledges and confirms that
the
Guaranty is in full force and effect and shall remain in full force and effect
notwithstanding the execution and delivery of the Amendment to which this
Reaffirmation is attached and confirms that the Guaranty shall remain in full
force and effect following the execution and delivery of such
Amendment.
GUARANTOR:
TELTRONICS
LIMITED,
an
English company
(registered
number 04248637)
By:
/s/ Xxxx Xxxxxxx
Name:
Xxxx Xxxxxxx
Title:
Director
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