ELEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS ELEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is made and entered into as of February 25, 1998, by
and among TELTRONICS, INC., a Delaware corporation (hereinafter
referred to as "Teltronics"), with its chief executive office and
principal place of business at 0000 Xxxxxxxxx Xxxxxxxxxx Xxx,
Xxxxxxxx, Xxxxxxx 00000; AT SUPPLY, INC., a Texas corporation
(hereinafter referred to as "ATS"), with its chief executive
office and principal place of business at 0000 Xxxxxxx Xxx, Xxxxx
000, Xxx Xxxxxxx, Xxxxx 00000; and INTERACTIVE SOLUTIONS, INC.,
a Delaware corporation (hereinafter referred to as
"Interactive"), with its chief executive office and principal
place of business at 0000 Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx,
Xxxxxxx 00000 (Teltronics, ATS and Interactive are hereinafter
referred to collectively as "Borrowers" and individually as a
"Borrower"); and THE CIT GROUP/CREDIT FINANCE, INC., a Delaware
corporation (hereinafter referred to as "Lender"), with an office
at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
RECITALS:
Lender and Borrowers are parties to a certain Loan and
Security Agreement dated October 28, 1994, as amended by a
certain letter agreement dated December 27, 1994, a certain
Second Amendment to Loan and Security Agreement dated as of
December 29, 1995, a certain letter agreement dated March 11,
1996, a certain letter agreement dated May 14, 1996, a certain
letter agreement dated June 4, 1996, a certain letter agreement
dated July 31, 1996, a certain Seventh Amendment to Loan and
Security Agreement dated January 13, 1997, a certain Eighth
Amendment to Loan and Security Agreement dated February 11, 1997,
a certain Ninth Amendment to Loan and Security Agreement and
First Note Modification Agreement dated July 23, 1997, and a
certain Tenth Amendment to Loan and Security Agreement dated
January 16, 1998 (as at any time amended, the "Loan Agreement"),
pursuant to which Lender has made revolving credit and term loans
to Borrowers.
The parties now desire to further amend the Loan Agreement
as hereinafter set forth.
NOW, THEREFORE, for and in consideration of TEN DOLLARS
($10.00) in hand paid and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as
follows:
1. DEFINITIONS. All capitalized terms used in this
Amendment, unless otherwise defined herein, shall have the
meaning ascribed to such terms in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is
hereby amended as follows:
(a) Subsections (a), (b) and (c) of Section 6.12 of the
Loan Agreement are hereby deleted in their entirety and the
following new subsections (a), (b) and (c) are hereby substituted
in lieu thereof:
(a) lend or advance money or property to,
guarantee or assume indebtedness of, or invest (by
capital contribution or otherwise) in any person,
firm, corporation or other entity; provided,
however, Borrowers may incur indebtedness to
Sirrom Capital Corporation d/b/a Tandem Capital
("Sirrom") pursuant to the terms of that certain
Loan and Security Agreement by and among
Borrowers, TTG Acquisition Corp. and Sirrom dated
February __, 1998 and that certain Debenture
Purchase Agreement by and between Teltronics and
Sirrom dated February __, 1998, as such agreements
are in effect on the date hereof; or
(b) declare, pay or make any dividend,
redemption or other distribution on account of any
shares of any class of stock of Borrower now or
hereafter outstanding; provided, however, that for
so long as no default or Event of Default exists,
on the date of or after giving effect to such
dividend, redemption or other distribution and
Borrowers have positive Net Availability on the
date of and after giving effect to such dividend,
redemption or other distribution, then Teltronics
may make distributions to Sirrom with respect to
the Series B Convertible Preferred Stock of
Teltronics in accordance with its terms; or
(c) make any payment of the principal amount
of or interest on any indebtedness owing to any
officer, director, shareholder or affiliate of any
Borrower, except to the extent expressly permitted
pursuant to subsection (b) above; or
(b) Subsection (n) of Section 7.1 of the Loan
Agreement is hereby deleted in its entirety and the following new
subsection (n) is hereby substituted in lieu thereof:
(n) Any default or event of default occurs
under any of the Sirrom Documents. For purposes
hereof, the term "Sirrom Documents" shall mean any
and all documents, agreements or instruments by
and among any or all Borrowers and Sirrom,
including, without limitation, (i) that certain
Loan and Security Agreement dated February 25,
1998 by and among Borrowers, TTG Acquisition Corp.
and Sirrom ( the "Sirrom Loan Agreement"), (ii)
that certain Senior Secured Promissory Note dated
February 25, 1998 by and among Borrowers, TTG
Acquisition Corp. and Sirrom, (iii) that certain
Preferred Stock Purchase Agreement dated February
25, 1998 by and between Teltronics and Sirrom and
(iv) that certain Debenture Purchase Agreement
dated February 25, 1998 by and between Teltronics
and Sirrom (the "Debenture Agreement").
(c) Subsection (ix) of Appendix A to the Loan
Agreement is hereby renumbered subsection (x) and the following
new subsection (ix)is hereby inserted into Appendix A:
(ix) lien in favor of Sirrom pursuant to the
terms of the Sirrom Loan Agreement and the
Debenture Agreement; provided, however, such lien
shall be subject to the terms of that certain
Intercreditor Agreement between Lender and Sirrom
dated February 25, 1998; and
3. CONSENT TO TRANSACTIONS WITH SIRROM CAPITAL. Borrowers
have advised Lender that Teltronics proposes to (i) sell to
Sirrom Capital Corporation d/b/a Tandem Capital ("Sirrom") 25,000
shares of Series B Convertible Preferred Stock of Teltronics for
an aggregate purchase price of $2,500,000; (ii) sell to Sirrom a
twelve percent (12%), subordinated, secured debenture due on
February 13, 2002, in the principal amount of $1,750,000; (iii)
grant to Sirrom a warrant for the purchase of 525,000 shares of
Teltronics common stock; (iv) repurchase from Sirrom the eleven
percent (11%) Subordinated Convertible Debenture due February 13,
2000, in the principal amount of $4,250,000; and (v) grant to
Sirrom a warrant for the purchase of 325,000 shares of the common
stock of Teltronics. Sections 6.5 and 6.12 of the Loan Agreement
may prohibit the foregoing transactions. Subject to Lender's
receipt of (i) a duly executed original of this Amendment from
Borrowers and Guarantors, (ii) a duly executed original of the
Intercreditor Agreement between Lender and Sirrom, and (iii)
$280,000 in immediately available funds, in connection with
Borrowers' payment in full of the outstanding principal balance,
togther with accrued interest thereon, of the Term Loan, Lender
hereby consents to the foregoing transactions.
4. RATIFICATION AND REAFFIRMATION. Each Borrower hereby
ratifies and reaffirms each of the loan documents executed in
connection with or pursuant to the Loan Agreement (collectively,
the "Loan Documents") and all of each Borrower's covenants,
duties, indebtedness and liabilities thereunder.
5. ACKNOWLEDGMENTS AND STIPULATIONS. Each Borrower
acknowledges and stipulates that the Loan Agreement and the other
Loan Documents executed by Borrowers are legal, valid and binding
obligations of each Borrower that are enforceable against each
Borrower in accordance with the terms thereof; all of the
Obligations are owing and payable without defense, offset or
counterclaim (and to the extent there exists any such defense,
offset or counterclaim on the date hereof, the same is hereby
waived by each Borrower); and the security interests and liens
granted by each Borrower in favor of Lender are duly perfected,
first priority security interests and liens.
6. REPRESENTATIONS AND WARRANTIES. Each Borrower
represents and warrants to Lender, to induce Lender to enter into
this Amendment, that no default or Event of Default exists on the
date hereof; the execution, delivery and performance of this
Amendment have been duly authorized by all requisite corporate
action on the part of each Borrower and this Amendment has been
duly executed and delivered by each Borrower; and all of the
representations and warranties made by each Borrower in the Loan
Agreement are true and correct on and as of the date hereof.
7. EXPENSES OF LENDER. Each Borrower jointly and
severally agrees to pay, on demand, all costs and expenses
incurred by Lender in connection with the preparation,
negotiation and execution of this Amendment and any other Loan
Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including, without
limitation, the costs and fees of Lender's legal counsel and any
taxes or expenses associated with or incurred in connection with
any instrument or agreement referred to herein or contemplated
hereby.
8. EFFECTIVENESS; GOVERNING LAW. This Amendment shall be
effective upon acceptance by Lender in New York, New York (notice
of which acceptance is hereby waived), whereupon the same shall
be governed by and construed in accordance with the internal laws
of the State of New York.
9. SUCCESSORS AND ASSIGNS. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
10. NO NOVATION, ETC.. Except as otherwise expressly
provided in this Amendment, nothing herein shall be deemed to
amend or modify any provision of the Loan Agreement or any of the
other Loan Documents, each of which shall remain in full force
and effect. This Amendment is not intended to be, nor shall it
be construed to create, a novation or accord and satisfaction,
and the Loan Agreement as herein modified shall continue in full
force and effect.
11. ENTIRE AGREEMENT. This Amendment and the other Loan
Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to
the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or
implied, oral or written.
12. COUNTERPARTS; TELECOPIED SIGNATURES. This Amendment
may be executed in any number of counterparts and by different
parties to this Agreement on separate counterparts, each of
which, when so executed, shall be deemed an original, but all
such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission
shall be deemed to be an original signature hereto.
13. FURTHER ASSURANCES. Each Borrower agrees to take such
further actions as Lender shall reasonably request from time to
time in connection herewith to evidence or give effect to the
amendments set forth herein or any of the transactions
contemplated hereby.
14. SECTION TITLES. Section titles and references used in
this Amendment shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreements among
the parties hereto.
15. RELEASE OF CLAIMS. To induce Lender to enter into this
Amendment, each Borrower hereby releases, acquits and forever
discharges Lender, and all officers, directors, agents,
employees, successors and assigns of Lender, from any and all
liabilities, claims, demands, actions or causes or actions of any
kind or nature (if there be any), whether absolute or contingent,
disputed or undisputed, at law or in equity, or known or unknown,
that such Borrower now has or ever had against Lender arising
under or in connection with any of the Loan Documents or
otherwise.
16. WAIVER OF JURY TRIAL. To the fullest extent permitted
by applicable law, the parties hereto each hereby waives the
right to trial by jury in any action, suit, counterclaim or
proceeding arising out of or related to this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed under seal, and delivered by their
respective duly authorized officers as of the date first written
above.
TELTRONICS, INC.
("Borrower")
By: Xxxx X. Xxxxxxx,
President
AT SUPPLY, INC.
("Borrower")
By: Xxxx X. Xxxxxxx,
Chairman of the Board
INTERACTIVE SOLUTIONS, INC.
("Borrower")
By: Xxxx X. Xxxxxxx,
Chairman of the Board
Accepted in New York, New York:
THE CIT GROUP/CREDIT FINANCE, INC.
("Lender")
By: Xxx Xxxxx
Title: Assistant Secretary
CONSENT AND REAFFIRMATION
The undersigned guarantors of the Obligations of each
Borrower at any time owing to Lender hereby (i) acknowledge
receipt of a copy of the foregoing Eleventh Amendment to Loan and
Security Agreement; (ii) consent to Borrowers' execution and
delivery thereof and of the other documents, instruments or
agreements Borrowers agree to execute and deliver pursuant
thereto; (iii) agree to be bound thereby; and (iv) affirm that
nothing contained therein shall modify in any respect whatsoever
its respective guaranty of the Obligations and reaffirm that such
guaranty is and shall remain in full force and effect.
IN WITNESS WHEREOF, each of the undersigned has executed
this Consent and Reaffirmation on and as of the date of such
Eleventh Amendment to Loan and Security Agreement.
TTG ACQUISITION CORP.
By: Xxxx X. Xxxxxxx,
Chairman of the Board
XXXXXX X. XXXXXXX (SEAL)
TELTRONICS/SRX, INC.
By: Xxxx X. Xxxxxxx,
Chairman of the Board
