U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1997
-----------------------------
or
( ) TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
EXCHANGE ACT
For the transition period from ____________ to _____________
Commission file number: 0-17893
-----------------------------------------
TELTRONICS, INC.
- ----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 59-2937938
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2150 Whitfield Industrial Way, Sarasota, FL 34243-4046
- ----------------------------------------------------------------
(Address or principal executive offices)
Issuer's telephone number: (941) 753-5000
--------------------------------------
Not Applicable
- ----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last year)
Check whether the issuer: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 4,016,013
-----------
Exhibit index appears on page 12. Total pages - 13.
<PAGE> 2
PART I - FINANCIAL INFORMATION
TELTRONICS, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 400,625 $ 0
Receivable from escrow agent 1,250,000 0
Accounts receivable, net of
allowance for doubtful
accounts of $151,297 at
June 30, 1997 and $125,250
at December 31, 1996 5,534,965 5,732,356
Subscription receivable 0 24,125
Inventories 7,923,293 7,642,205
Prepaid expenses and
other current assets 735,408 494,051
----------- -----------
Total current assets 15,844,291 13,892,737
----------- -----------
PROPERTY AND EQUIPMENT, NET 3,036,622 2,723,825
----------- -----------
OTHER ASSETS:
Prepaid lease guarantee, net 228,690 242,688
Software development costs, net 83,280 83,280
Other 218,962 70,555
----------- -----------
Total other assets 530,932 396,523
----------- -----------
TOTAL ASSETS $19,411,845 $17,013,085
=========== ===========
</TABLE>
see accompanying notes
<PAGE> 3
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
============= ============
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Cash overdraft $ 0 $ 25,180
Current portion of long-term debt 4,669,359 4,225,407
Current portion of capital lease
obligations 129,574 129,574
Accounts payable 5,552,993 8,321,876
Accrued expenses 1,411,347 1,377,700
Deferred income 180,219 252,356
Other current liabilities 149,249 42,218
----------- -----------
Total current liabilities 12,092,741 14,374,311
----------- -----------
LONG-TERM LIABILITIES:
Long-term debt, less
current portion 4,733,777 799,986
Capital lease obligations,
less current portion 36,031 121,754
----------- -----------
Total long-term liabilities 4,769,808 921,740
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par,
40,000,000 shares authorized,
3,866,013 issued and outstanding 3,867 3,367
Non-voting common stock, $.001 par,
5,000,000 shares authorized,
0 issued and outstanding 0 0
Preferred stock, $.001 par value,
5,000,000 shares authorized,
100,000 issued and outstanding 100 100
Additional paid-in capital 14,434,772 13,185,272
Accumulated deficit (11,889,443) (11,471,705)
----------- -----------
Total stockholders' equity 2,549,296 1,717,034
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $19,411,845 $17,013,085
=========== ===========
</TABLE>
see accompanying notes
<PAGE> 4
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30, JUNE 30,
====================== ========================
1997 1996 1997 1996
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $8,488,426 $6,284,190 $16,586,798 $13,309,261
COST OF GOODS SOLD 5,343,319 4,127,083 10,962,078 8,957,747
---------- ---------- ----------- -----------
GROSS PROFIT 3,145,107 2,157,107 5,624,720 4,351,514
---------- ---------- ----------- ----------
OPERATING EXPENSES
General and
administrative 1,134,727 543,966 1,862,426 1,014,527
Research and
development 715,762 469,378 1,182,689 669,322
Selling and marketing
expenses 1,170,072 1,256,576 2,297,570 2,563,627
---------- ---------- ----------- -----------
3,020,561 2,269,920 5,342,685 4,247,476
---------- ---------- ----------- -----------
OPERATING INCOME (LOSS) 124,546 (112,813) 282,035 104,038
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSES)
Interest expense (294,755) (134,069) (514,222) (259,863)
Finance expense (29,975) 0 (76,363) 0
Litigation expense (3,672) 0 (80,396) 0
Miscellaneous 8,073 27,103 (28,792) 20,910
---------- ---------- ----------- -----------
(320,329) (106,966) (699,773) (238,953)
---------- ---------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES (195,783) (219,779) (417,738) (134,915)
PROVISION FOR
INCOME TAXES 0 0 0 0
---------- ---------- ----------- -----------
NET PROFIT (LOSS) $ (195,783) $ (219,779) $ (417,738) $ (134,915)
========== ========== =========== ===========
NET PROFIT (LOSS)
PER SHARE $ (0.05) $ (0.08) $ (0.12) $ (0.05)
========== ========== =========== ===========
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 3,618,760 2,610,168 3,493,085 2,610,168
========== ========== =========== ===========
</TABLE>
see accompanying notes
<PAGE> 5
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
<TABLE>
<CAPTION>
RETAINED
COMMON STOCK PREFERRED STOCK ADDITIONAL EARNINGS
============ =============== PAID-IN (ACCUMULATED
ISSUED AMOUNT ISSUED AMOUNT CAPITAL DEFICIT) TOTAL
------ ------ ------ ------ ---------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1996 3,366,013 $3,367 100,000 $100 $13,185,272 $(11,471,705) $1,717,034
Net loss 0 0 0 0 0 (221,955) (221,955)
--------- ------ ------- ---- ----------- ------------ ----------
Balance at
March 31, 1997 3,366,013 $3,367 100,000 $100 $13,185,272 $(11,693,660) $1,495,079
Shares issued pursuant
to the Employee Stock
Payment Plan at an average
price of $2.50 Per share 500,000 500 0 0 1,249,500 0 1,250,000
Net loss 0 0 0 0 0 (195,783) (195,783)
--------- ------ ------- ---- ----------- ------------ ----------
Balance at
June 30, 1997 3,866,013 $3,867 100,000 $100 $14,434,772 $(11,889,443) $2,549,296
========= ====== ======= ==== =========== ============ ==========
</TABLE>
see accompanying notes
<PAGE> 6
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
6 MONTHS ENDED
-----------------------------
June 30, 1997 June 30, 1996
============= =============
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (417,738) $ (134,915)
Adjustments to reconcile net
income (loss) to net cash:
Depreciation and amortization 344,242 297,798
Changes in assets and liabilities:
Accounts receivable and
prepaid expenses (43,966) (1,630,108)
Inventories (281,088) 171,078
Accounts payable and
accrued liabilities (2,628,205) 801,699
Deferred income (72,137) 29,868
Increase in other assets (134,409) (257,069)
----------- -----------
Net cash flows from
operating activities (3,233,301) (721,649)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (657,039) (473,969)
Capitalized software development costs 0 (212,687)
----------- -----------
Net cash flows from
investing activities (657,039) (686,656)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 12,519,581 10,631,951
Repayment on line of credit (12,075,629) (9,432,176)
Proceeds from Debenture issuance 4,250,000 0
Repayment of notes payable and
other long-term debt (401,932) (254,861)
Cash received from Preferred
Stock issuance 24,125 0
Proceeds from notes payable 0 261,382
----------- -----------
Net cash flows from
financing activities 4,316,145 1,206,296
----------- -----------
Net increase (decrease) in cash 425,805 (202,009)
Cash and cash equivalents,
beginning of period (25,180) 264,379
----------- -----------
Cash and cash equivalents,
end of period $ 400,625 $ 62,370
=========== ===========
SUPPLEMENTAL NON-CASH FINANCING AND
INVESTING ACTIVITIES:
Issuance of shares pursuant to the
Employee Stock Payment Plan at an
average price of $2.50 per share $ 1,250,000 $ 0
=========== ===========
</TABLE>
see accompanying notes
<PAGE> 7
TELTRONICS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - GENERAL
The financial statements as of June 30, 1997 and for the six month
period then ended are unaudited and, in the opinion of the Company,
reflect all adjustments necessary for a fair presentation of such
data and have been prepared on a basis consistent with the December
31, 1996 Audited Financial Statements. All such adjustments were
of a normal recurring nature. The unaudited results of operations
for the interim periods reported are not necessarily indicative of
expected results for the year.
The year-end condensed balance sheet data included in the condensed
financial statements were derived from audited financial
statements, but does not include all disclosures required by
generally accepted accounting principles. The statements should be
read in conjunction with the financial statements and related notes
included in the Company's Form 10-KSB for the year ended December
31, 1996.
NOTE B - COMMON STOCK
During the three (3) month period ended June 30, 1997, the Company
issued 500,000 shares of its Common Stock registered on Form S-8 to
its employees for future services under the Company's Employee
Stock Payment Plan in an aggregate amount of $1,250,000. The
shares are held under an Escrow Agreement. As the shares are sold,
proceeds are placed in an escrow account and used to fund the
Company's payroll. The Company has recorded $1,250,000 as a
receivable from the Escrow Agent as of June 30, 1997. The shares
were issued at $2.50 per share and no expense was recorded under
this arrangement.
NOTE C - SUBSEQUENT EVENTS
Subsequent to June 30, 1997, the Company issued an additional
150,000 shares of its Common Stock registered on Form S-8 under the
Employee Stock Payment Plan to employees for future services. The
shares are held under an Escrow Agreement. As the shares are sold,
the proceeds are placed in an escrow account and used to fund the
Company's payroll. The shares were issued at $2.50 per share and
no expense was recorded under this arrangement.
On August 1, 1997, the Company's principal lender, The CIT
Group/Credit Finance ("CIT") entered into a Ninth Amendment to the
Company's Line of Credit Facility and Term Loan. The Amendment
reduced the interest rate from 2.5% to 2.0% above prime rate,
increased maximum availability from $4,950,000 to $7,000,000,
increased the prepayment penalty for any payment prior to October
28, 1998 from 1% to 1.5%, extended the Initial Term by one year,
and added the Company's subsidiary, Interactive Solutions, Inc., as
a co-borrower on the Line of Credit Facility and Term Loan.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL OVERVIEW
The first six months of 1997 reflected sales of $16,587,000
compared to $13,309,000 for the first six months of 1996. This
sales variance was due to increased sales by AT Supply, Inc. ("AT
Supply") and additional sales by Teltronics/SRX, Inc. ("SRX"). The
SRX business was purchased in September, 1996. Gross profit
increased to $5,625,000 from $4,352,000 for the first six months
of 1996, primarily as a result of the increased sales and improved
margins. Total operating expenses increased to $5,343,000 from
$4,247,000 for the first six months of 1996. The increased
operating expenses related to SRX and research and development and
sales expenses recorded by the Company's subsidiaries, Interactive
Solutions, Inc. ("ISI") and SRX. The first six months of 1997
reflected a net loss of $(418,000) compared to a net loss of
$(135,000) for the first six months of 1996. The loss for the
first six months is the direct result of the research and sales
expenses incurred by ISI, litigation expenses at AT Supply and
severance paid due to personnel reductions at the Company.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996.
Total sales for the three months ended June 30, 1997 increased by
approximately $2,204,000 over the same period of 1996. This
variance was due to increased sales by AT Supply and additional
sales by SRX.
Gross profit for the three months ended June 30, 1997 increased to
$3,145,000 from $2,157,000 for the same quarter of 1996. The
increase in gross profit was the result of increased sales and
improved margins. The gross profit percentage of sales increased
to 37.1% from 34.3% for the same quarter of 1996. The increase was
due to product mix, with increased SRX sales and reduced electronic
contract manufacturing.
Total operating expenses for the three months ended June 30, 1997
were $3,021,000 as compared to $2,270,000 for the same quarter of
1996. General and administrative expenses were $1,135,000 for the
quarter compared to $544,000 for the same quarter of 1996. This
increase is due to expenditures related to SRX.
Research and development expenses were $716,000 for the quarter
compared to $469,000 for the same quarter of 1996. This increase
is the result of the Company's continuing research funding in ISI
and SRX.
Selling and marketing expenses were $1,170,000 for the quarter
compared to $1,257,000 for the same quarter of 1996. This decrease
relates to personnel reductions.
Operating income was $125,000 for the quarter compared to
$(113,000) for the same quarter of 1996. This increase relates to
improved sales and margins.
<PAGE> 9
Interest expense for the quarter was $295,000 compared to $134,000
for the same period of 1996. This increase resulted from increased
borrowings related to AT Supply and borrowings for SRX and ISI.
Net loss was $(196,000) compared to $(220,000) for the same period
of 1996. The loss was primarily the result of the Company's
decision to pursue opportunities associated with research and
development of ISI.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996.
Total sales for the six months ended June 30, 1997 increased by
approximately $3,278,000 over the same period of 1996. This
variance was due to increased sales by AT Supply and additional
sales by SRX.
Gross profit for the six months ended June 30, 1997 increased to
$5,625,000 from $4,352,000 for the same quarter of 1996. The
increase in gross profit was the result of increased sales. The
gross profit percentage of sales increased to 33.9% from 32.7% for
the same period of 1996. This increase was due to product mix,
with increased SRX sales and reduced electronic contract
manufacturing.
Total operating expenses for the six months ended June 30, 1997
were $5,343,000 as compared to $4,247,000 for the same period of
1996. General and administrative expenses were $1,862,000 for the
six months compared to $1,015,000 for the same period of 1996.
This increase is due to expenditures related to SRX.
Research and development expenses were $1,183,000 for the six
months compared to $669,000 for the same quarter of 1996. This
increase is the result of the Company's continuing research funding
in ISI and SRX.
Selling and marketing expenses were $2,298,000 for the six months
compared to $2,564,000 for the same period of 1996. This decrease
relates to personnel reductions.
Operating income was $282,000 for the six months compared to
$104,000 for the same period of 1996. This increase related to
improved sales and margins.
Interest expense was $514,000 for the six months compared to
$260,000 for the same period of 1996. This increase resulted from
increased borrowings related to AT Supply and borrowings for SRX
and ISI.
Net loss for the six months was $(418,000) compared to $(135,000)
for the same period of 1996. The loss was primarily the result of
the Company's decision to pursue opportunities associated with
research and development of ISI, litigation expenses at AT Supply
and severance paid due to personnel reductions at Teltronics.
FINANCIAL CONDITION
Total assets at June 30, 1997 were $19,411,845 compared to
$17,013,085 at December 31, 1996. The Company's current ratio at
June 30, 1997 was 1.31:1, compared to .966:1 at December 31, 1996.
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
Cash requirements were met with cash provided primarily by
borrowings from CIT and the Debentures discussed below. The CIT
facility provides for borrowings by the Company, ISI and AT Supply up
to $7,000,000, which includes $1,500,000 allocated to AT Supply.
$346,000 of this total was a term loan secured by assets at an interest
rate of 2% above the prime rate to be repaid monthly until fully paid
on October 28, 2000. The remaining line facility is a revolving loan
secured by assets at an interest rate of prime plus 2%.
The Company's current ratio at June 30, 1997 was 1.31:1. Net
working capital was $3,751,550 at June 30, 1997. Short term
requirements are expected to be met through cash flows from
operations and by the credit line facility.
On February 13, 1997, the Company entered into a Debenture Purchase
Agreement and sold $4,250,000 aggregate principal amount of its
11% Subordinated Convertible Debentures Due on February 13, 2002 to
Sirrom Capital Corporation. The Debentures bear interest at the
rate of 11% per annum, payable quarterly commencing May 1, 1997.
Fees in connection with the Debentures totaled $106,250.
The Debentures are subordinated to certain other indebtedness of
the Company. Subject to and upon compliance with certain
provisions of the Agreement, the holder of the Debentures has the
right, at its option, at anytime, to convert the principal amount
of the Debenture, or any portion thereof, into shares of the
Company's Voting Common Stock, par value $.001 per share at a
conversion price (subject to adjustment under certain conditions)
of $4.00 per share.
In addition, the Company is exploring the possibility of other
equity or debt financing.
CURRENT OUTLOOK
The Company has successfully integrated the business of SRX,
transferring the majority of manufacturing from an outside
contractor to the Company's own facility. Sales of the SRX Vision
PBX continue to increase monthly as the Company re-establishes the
distributor network and adds new customers. The majority of the
loss during the second quarter is due to the continued funding of
ISI. The Company is producing the first hundred, pre-production
run of the ISI product, which should be available for sale in the
third quarter.
The Company continues to evaluate its businesses in order to focus
on the higher margin areas. Generally, the Company should be
better positioned in a number of different markets to improve its
profitability later in the year. In addition, The Company
implemented a personnel reduction plan in the first six months of
1997 which will reduce annual expenses by approximately $750,000.
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On or about September 12, 1995, Commstar, Ltd., a Canadian
corporation, commenced an action in the Circuit Court of
the Thirteenth Judicial District, Hillsborough County,
Florida, against the Company, a director of the Company,
and a former majority owned subsidiary of the Company,
seeking damages in connection with a sale of shares of the
former subsidiary in 1993. The complaint, which seeks
rescission, damages in excess of $15,000, as well as costs
and attorneys fees, was dismissed on February 9, 1996
without prejudice. The complaint was subsequently refiled
and discovery in the action has commenced. Although the
complaint does not set forth precisely the damages sought
by Commstar, the complaint alleges that Commstar agreed
to pay $600,000 for the shares of the former subsidiary
and that Commstar owed the Company approximately $98,700.
The Company believes that it has meritorious defenses to
the allegations and is vigorously defending the refiled
complaint.
In November, 1995, C&L Communications commenced an action
in the District Court, 37th Judicial District Bexar
County, Texas against AT Supply, two AT Supply officers
and a former employee. In April, 1997, the Company was
named as an additional Defendant. The claims against AT
Supply are for misappropriation/conversion of C&L's trade
secrets, conspiracy, and acceptance of the benefits of an
alleged breach of fiduciary duty by the individual
defendants. The Complaint seeks damages equal to profits
allegedly lost as a result of disclosure of the
confidential information allegedly diverted to the
Defendants and for exemplary damages. All Defendants have
denied liability and are vigorously defending the
allegations. Trial is scheduled for January, 1998.
ITEM 2. CHANGES IN SECURITIES - None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of shareholders on June 26, 1997,
the shareholders of the Company:
(1) Elected Norman R. Dobiesz, Ewen R. Cameron, Craig
Macnab and Carl S. Levine directors to serve until
the next annual meeting of the shareholders (2,406,543
Common Stock votes and all of the Series A Preferred
Stock votes in favor, 22,712 votes withheld/abstentions,
25,897 non-votes):
(2) Ratified the appointment of Millward & Co. as the
Company's independent auditors for the 1997 fiscal
year (2,416, 429 Common Stock votes and all of the
Series A Preferred Stock votes in favor, 4,262
votes opposed, 8,276 abstentions); and
<PAGE> 12
(3) Approved an amendment increasing the number of
shares of Common Stock available for option grants
under the Company's 1995 Incentive Stock Option
Plan from 250,000 to 1,250,000 (1,714,807 Common
Stock votes and all of Series A Preferred Stock
votes in favor, 29,370 votes opposed and 40,574
abstentions).
ITEM 5. OTHER INFORMATION - None
ITEM 6A. EXHIBITS
10.158 Ninth Amendment to Loan and Security Agree-
ment and First Note Modification Agreement dated
July 23, 1997 between The CIT Group/Credit
Finance, Inc. and Teltronics, Inc., AT Supply,
Inc. and Interactive Solutions, Inc. . .... . . . .. . .(a)
27 Financial Data Schedule (for SEC purposes only) ..... . .(a)
ITEM 6B. REPORTS ON FORM 8-K - None
________________________
(a) Filed as an Exhibit to this Quarterly Report on Form 10-QSB
for the six month period ended June 30, 1997.
<PAGE> 13
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TELTRONICS, INC.
August 11, 1997 Ewen Cameron
President and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB FOR QUARTERLY PERIOD ENDED JUNE 30,
1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 400,625
<SECURITIES> 0
<RECEIVABLES> 6,784,965
<ALLOWANCES> 0
<INVENTORY> 7,923,293
<CURRENT-ASSETS> 15,844,291
<PP&E> 6,129,805
<DEPRECIATION> 3,093,183
<TOTAL-ASSETS> 19,411,845
<CURRENT-LIABILITIES> 12,092,741
<BONDS> 4,769,808
0
100
<COMMON> 3,867
<OTHER-SE> 2,549,296
<TOTAL-LIABILITY-AND-EQUITY> 19,411,845
<SALES> 16,586,798
<TOTAL-REVENUES> 16,586,798
<CGS> 10,962,078
<TOTAL-COSTS> 5,292,692
<OTHER-EXPENSES> 185,551
<LOSS-PROVISION> 49,993
<INTEREST-EXPENSE> 514,222
<INCOME-PRETAX> (417,738)
<INCOME-TAX> 0
<INCOME-CONTINUING> (417,738)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (417,738)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
EXHIBIT 10.158
NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
AND FIRST NOTE MODIFICATION AGREEMENT
THIS NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND
FIRST NOTE MODIFICATION AGREEMENT (this "Amendment") is made and
entered into as of July 23, 1997, by and among TELTRONICS, INC.,
a Delaware corporation (hereinafter referred to as "Teltronics"),
with its chief executive office and principal place of business
at 2150 Whitfield Industrial Way, Sarasota, Florida 34243; AT
SUPPLY, INC., a Texas corporation with its chief executive office
and principal place of business at 4706 Shavano Oak, Suite 104,
San Antonio, Texas 78249 (hereinafter referred to "ATS"); and
INTERACTIVE SOLUTIONS, INC., a Delaware corporation (hereinafter
referred to as "Interactive"), with its chief executive office
and principal place of business at 2150 Whitfield Industrial Way,
Sarasota, Florida 34243 (Teltronics, ATS and Interactive are
sometimes 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 1211 Avenue of the Americas, New
York, New York 10036.
RECITALS:
Lender, Teltronics and ATS 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 and a certain Eighth
Amendment to Loan and Security Agreement dated February 11, 1997
(as at any time amended, the "Loan Agreement"), pursuant to which
Lender has made revolving credit and term loans to Borrowers.
On October 18, 1996, Borrowers executed a certain Secured
Promissory Note in favor of Lender in the original principal
amount of $616,300 (the "Term Note") to evidence a term loan made
by Lender to Borrowers.
In order to utilize the financial powers of Borrowers in the
most efficient and economic manner and as a matter of
administrative convenience, Teltronics, ATS and Interactive
desire that Interactive become a party to the Loan Agreement and
that Lender make revolving loans thereunder to Borrowers based
upon the value of the assets of Borrowers.
Borrowers' business is a mutual and collective enterprise
and Borrowers believe that the consolidation of all loans and
other financial accommodations under the Loan Agreement will
enhance the aggregate borrowing powers of Borrowers and ease the
administration of their loan relationships with Lender, all to
the mutual advantage of Borrowers.
As an accommodation to Borrowers and at Borrowers' request
in furtherance of Borrowers' mutual and collective enterprise,
Lender is willing to extend credit to Borrowers and to administer
Borrowers' collateral security therefor on a combined basis in
accordance with the terms of the Loan Agreement as amended
hereby.
The parties now desire to further amend the Loan Agreement
and to modify the Term Note 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. ASSUMPTION OF LOANS. In consideration of Lender's
consent to Interactive becoming a party to the Loan Agreement,
Interactive assumes and agrees to be jointly and severally liable
with Teltronics and ATS for all Revolving Loans and the Term Loan
outstanding on the date of this Agreement and hereafter
outstanding from time to time under the Loan Agreement, together
with all fees, expenses and other charges payable in the
collection thereof or otherwise in connection therewith.
3. CO-BORROWING ARRANGEMENT. Borrowers acknowledge
that they have requested Lender to extend financial
accommodations to them, on a combined basis, in accordance with
the provisions of the Loan Agreement as hereby amended.
Borrowers shall be jointly and severally liable for the payment
of the Term Loan and all Revolving Loans heretofore or hereafter
made by Lender under the Loan Agreement and all interest, fees
and other charges payable in connection with the Term Loan and
the Revolving Loans. A request by Teltronics for a Revolving
Loan shall be deemed to be a request for a Revolving Loan by each
Borrower, and each shall be an agent for the other for such
purposes, and each Revolving Loan made by Lender under the Loan
Agreement, whether or not advanced to a bank account in the name
of only one of them, shall be deemed to be for the account and
mutual benefit of each of them. Interactive hereby appoints
Teltronics as, and Teltronics shall act under the Loan Agreement
as, the representative of Interactive for all purposes, including
requesting borrowings and receiving account statements and other
notices and communications to Borrowers (or any of them) from
Lender. Lender may rely, and shall be fully protected in relying
on any request for borrowing, disbursement instructions, reports,
information or any other notice or communication made or given by
Teltronics, whether in its own name, on behalf of Interactive or
on behalf of the "Borrowers" and Lender shall have no obligation
to make any inquiry or request any confirmation from or on behalf
of Interactive as to the binding effect on Interactive of any
such request, instruction, report, information, notice or
communication, nor shall the joint and several character of
Borrowers' liability for the Obligations be affected. Each loan
made by Lender shall be disbursed to the loan account of the
Borrower for whom such loan was requested, and each Borrower
confirms that such arrangement shall have no effect on the joint
and several character of their liability for the Obligations to
the extent provided herein and in the Loan Agreement.
4. CONFORMING GLOBAL AMENDMENTS. The Loan Agreement
is hereby amended to effect the following conforming global
amendments:
(a) All references to "Borrower" shall mean each of
Teltronics, ATS and Interactive, or any of them;
(b) All references to Eligible Accounts or Eligible
Inventory shall be understood to mean and include any accounts of
Teltronics, ATS or Interactive that meet the criteria for
Eligible Accounts pursuant to subsection 2.1(d) of the Loan
Agreement and any inventory of Teltronics, ATS or Interactive
that meets the criteria for Eligible Inventory under subsection
2.1(e) of the Loan Agreement; and
(c) Any requirement for the giving by Lender of any
notice to Borrowers shall be deemed fully complied with and
discharged by the giving of such notice to Teltronics, and notice
to Teltronics shall be deemed to constitute an effective notice
to all.
5. SPECIFIC AMENDMENTS TO LOAN AGREEMENT. The Loan
Agreement is hereby amended as follows:
(a) By adding the following new Section 1.5 to the
Loan Agreement:
1.5. "INTERACTIVE" means Interactive Solutions,
Inc., a Delaware corporation, and its successors and
assigns.
(b) By deleting Section 9.1 of the Loan Agreement in
its entirety and by substituting the following new Section 9.1 in
lieu thereof:
9.1 This Agreement shall continue in full force
and effect until October 28, 2000 (the "INITIAL TERM")
and shall be deemed automatically renewed for
successive terms of two (2) years each thereafter (each
a "RENEWAL TERM") unless terminated as of the end of
the Initial Term or any Renewal Term by either party
giving the other written notice at least sixty (60)
days' prior to the end of the Initial Term or such
Renewal Term.
(c) By deleting Section 9.2 of the Loan Agreement in
its entirety and by substituting the following new Section 9.2 in
lieu thereof:
9.2 Borrowers may also terminate this Agreement
by giving Lender at least thirty (30) days prior
written notice at any time upon payment in full of all
of the Obligations as provided herein, including the
early termination fee provided below. Lender shall
also have the right to terminate this Agreement at any
time upon or after the occurrence of an Event of
Default. If Lender terminates this Agreement upon or
after the occurrence of an Event of Default, or if
Borrowers shall terminate this Agreement as permitted
herein effective prior to the end of the Initial Term
or any Renewal Term, as applicable, in addition to all
other Obligations, Borrowers jointly and severally
shall pay to Lender, upon the effective date of
termination, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual
agreement of the parties as to a reasonable calculation
of Lender's lost profits, an early termination fee
equal to (a) four percent (4%) of the Maximum Credit if
termination occurs at any time prior to October 28,
1995, (b) two percent (2%) of the Maximum Credit if
termination occurs during the period from October 28,
1995 through October 28, 1996; (c) one and one-half
percent (1.5%) of the Maximum Credit if termination
occurs during the period from October 29, 1996 through
October 28, 1998; and (d) one percent (1.0%) of the
Maximum Credit if termination occurs at any time after
October 28, 1998.
(d) By deleting Sections 9.12 and 9.13 of the Loan
Agreement in their entireties and by substituting the following
new Sections 9.12 and 9.13 in lieu thereof:
9.12. JOINT AND SEVERAL LIABILITY.
(a) JOINT AND SEVERAL LIABILITY. All of the
Obligations shall constitute the joint and several,
direct and general obligation of each Borrower, and
Borrowers shall be jointly and severally, directly and
unconditionally liable to Lender for all of the
Obligations, it being agreed that the advances to any
of Teltronics, ATS or Interactive inure to the benefit
of each Borrower, and that the Lender is relying on the
joint and several liability of Borrowers in extending
Revolving Loans and other financial accommodations
hereunder. Teltronics, ATS and Interactive each hereby
unconditionally and irrevocably agrees that upon
default in the payment when due (whether at stated
maturity, by acceleration or otherwise) of any
principal of, or interest owed on, any Revolving Loan
or other Obligation payable to Lender, it will
forthwith pay the same, without notice or demand.
(b) NO REDUCTION IN OBLIGATIONS. No payment
or payments made by Teltronics, ATS or Interactive or
any other Person or received or collected by Lender
from Teltronics, ATS or Interactive or any other Person
by virtue of any action or proceeding or any setoff or
appropriation or application at any time or from time
to time in reduction of or in payment of the
Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of Teltronics, ATS or
Interactive under this Agreement, each of whom shall
remain jointly and severally liable for the payment of
all of the Obligations until paid in full and this
Agreement is terminated.
9.13. WAIVER OF SURETYSHIP DEFENSES.
Teltronics, ATS and Interactive each agree that the
joint and several liability of Borrowers provided for
in subsection 9.12 of this Agreement shall not be
impaired or affected by any modification, supplement,
extension or amendment or any contract or agreement to
which Teltronics, ATS or Interactive may hereafter
agree (other than an agreement signed by the Lender
specifically releasing such liability), nor by any
delay, extension of time for the payment of, renewal,
compromise or other indulgence granted by Lender with
respect to any of the Obligations, nor by any release
of subordination of any Lien with respect to any or all
of the Collateral other agreements or arrangements
whatever with the other or with anyone else, each
hereby waiving all notices of such delay, extension,
release, substitution, renewal, compromise or other
indulgence, and hereby consenting to be bound thereby
as fully and effectually as if it had expressly agreed
thereto in advance. The liability of Teltronics, ATS
and Interactive is direct and unconditional as to all
of the Obligations, and may be enforced without
requiring Lender first to resort to any other right,
remedy or security. Teltronics, ATS and Interactive
each expressly waives promptness, diligence, notice of
acceptance and any other notice with respect to any of
the Obligations, this Agreement or any other loan
documents and any requirement that Lender protect,
secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action
against Teltronics, ATS, Interactive or any Person or
any Collateral.
(c) By deleting Section 10.1(a) of the Loan Agreement
and by substituting the following new Section 10.1(a) in lieu
thereof:
10.1(a) Maximum Credit: $7,000,000
(d) By inserting the following new text immediately
after Section 10.1(e) and immediately preceding Section 10.2:
In the event that Teltronics sells all of the
outstanding capital stock of ATS owned by Teltronics,
or sells all or substantially all of the assets of ATS,
on or before July 23, 1998, then Teltronics and
Interactive may (without incurring any additional
premiums or fees) elect to reduce the Maximum Credit
under Section 10.1(a) from $7,000,000 to $5,500,000. If
such reduction in the Maximum Credit occurs, then the
Minimum Borrowing under Section 10.1(e) shall be
reduced from $4,000,000 to $3,500,000.
(e) By deleting Sections 10.4(a),(b),(c) and (d) of
the Loan Agreement in their entirety and by substituting the
following new Sections 10.4(a),(b), (c) and (d) in lieu thereof:
(a) Interest Rate: A variable rate per
annum equal to the Prime Rate in
effect from time to time plus two
and one-half percent (2.5%) per
annum; provided, however that
effective August 1, 1997, the
interest rate hereunder shall be a
variable rate per annum equal to
the Prime Rate plus two percent
(2%) per annum. The Prime Rate in
effect on July 23, 1997, is 8.5%
and therefore the Interest Rate in
effect on and as of July 23, 1997,
expressed in simple interest terms,
is 11.0%.
(b) Facility Fee:
(i) INITIAL TERM. In
consideration of Lender's
willingness to make
advances to Borrowers
from time to time under
the credit facility,
Borrowers jointly and
severally shall pay to
Lender, a fee in the
amount of $70,000 for
each year during the
Initial Term, which fees
shall be fully earned
upon execution and
delivery of the Ninth
Amendment to Loan and
Security Agreement by
Borrowers, and shall be
payable on October 28,
1997 and each subsequent
anniversary.
(ii) Renewal Terms. If the Maximum
Credit is renewed after the Initial
Term, then Borrowers jointly and
severally shall pay to Lender an
additional Facility Fee of $70,000
for each year during such Renewal
Term, which fees shall be fully
earned on the first day of each
such Renewal Term and shall be
payable on the first day of each
such Renewal Term and on the first
anniversary of each such Renewal
Term.
(c) Minimum Loan Fee: If the average
outstanding amount of the loans
(including all Revolving Loans and
any Term Loan) in any Loan Year (as
defined below) is less than
$4,000,000, then Lender shall be
entitled to receive a fee, payable
as of the last day of each Loan
Year, equal to the difference
between $4,000,000 and the actual
annual average daily loan balance
for the Loan Year in question,
multiplied by the Interest Rate in
effect on the last day of the Loan
Year in question. As used herein,
the term "Loan Year" shall mean a
year beginning on November 1 of a
year in which this Agreement is in
effect and ending on October 31st
of the next year.
(d) Unused Line Fee: .5% per annum
payable monthly, in arrears, on the
first day of each month, based upon
the difference between (i) the
Maximum Credit and (ii) the greater
of (A) the Minimum Borrowing in
effect at the date of determination
or (B) the Average Monthly Loan
Balance each month (including all
Revolving Loans and any Term Loan).
For purposes hereof, "Average
Monthly Loan Balance" shall mean,
for any month, the amount obtained
by adding the unpaid balance of all
Revolving Loans and any Term Loan
owing by Borrowers to Lender at the
end of each day during the month in
question and by dividing such sum
by the number of days in such month
that the credit facility is in
effect.
(f) By deleting Section 10.6(a) of the Loan Agreement
in its entirety and by substituting the following new Section
10.6(a) in lieu thereof:
10.6(a) Lender's Office and Telecopy:
1211 Avenue of the Americas
21st Floor
New York, New York 10036
Telecopy: (212) 790-9123
(g) By deleting Section 10.6(c) of the Loan Agreement
in its entirety and by substituting the following new Section
10.6(c) in lieu thereof:
(c) Borrowers:
Teltronics, Inc.
AT Supply, Inc.
Interactive Solutions, Inc.
(h) By adding the following Chief Executive Office and
Telecopier Number to Section 10.6(d):
Interactive Solutions, Inc.
2150 Whitfield Industrial Way
Sarasota, Florida 34243
Telecopy: (813) 751-7724
(i) By adding the following additional location to
Section 10.6(f):
Interactive Solutions, Inc. - 2150 Whitfield Industrial Way
Sarasota, Florida 34243
Teltronics/SRX, Inc. - 4115 Keller Springs
Suite 166
Dallas, Texas 75244
(j) By initialing below, a duly authorized officer of
Interactive acknowledges and agrees that such officer of
Interactive has read and understands Section 12 of the Loan
Agreement:
ERC (Initials)
6. MODIFICATIONS TO TERM NOTE. The Term Note is
hereby modified as follows:
(a) By deleting clause (ii) that is contained in the
first paragraph on page 1 of the Term Note and by substituting
the following in lieu thereof:
(ii) from November 1, 1996 through July 31,1997,
2.5% above the Prime Rate; and (iii) on and after
August 1, 1997, 2.0% above the Prime Rate.
(b) By deleting clauses (b) and (c) and the paragraph
immediately following clause (c) on page 2 of the Term Note and
by substituting the following in lieu thereof:
(b) Principal shall be due and payable
monthly commencing on November 1, 1996,
and continuing on the first day of each
month thereafter to and including
October 1, 2000, in installments of
$10,271.67 each; and
(c) The entire remaining principal amount
then outstanding together with any and
all other amounts due hereunder, shall
be due and payable on October 28, 2000.
If, prior to the date on which this Note is
required to be paid in full in accordance
with the foregoing provisions, the Loan
Agreement is terminated pursuant to Section
9.1 or 9.2 of the Loan Agreement, then the
entire unpaid principal balance and accrued
interest on this Note shall be immediately
due and payable in full and shall be paid on
the effective date of such termination.
7. GRANT OF SECURITY INTEREST BY INTERACTIVE. To
secure the payment and performance in full of all Obligations,
Interactive hereby grants to Lender a continuing security
interest in and lien upon, and a right of setoff against, and
Interactive hereby assigns and pledges to Lender, all of the
following:
(a) All now owned and hereafter acquired right, title
and interest of Interactive in, to and in respect of all:
accounts, interests in goods represented by accounts,
returned, reclaimed or repossessed goods with respect
thereto and rights as an unpaid vendor; contract rights;
chattel paper; general intangibles (including, but not
limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights,
trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists,
licenses, whether as licensor or licensee, choses in action
and other claims, and existing and future leasehold
interests in equipment, real estate and fixtures);
documents; instruments; letters of credit, bankers'
acceptances or guaranties; cash monies, deposits,
securities, bank accounts, deposit accounts, credits and
other property now or hereafter held in any capacity by
Lender, its affiliates or any entity which, at any time,
participates in Lender's financing of Interactive or at any
other depository or other institution; agreements or
property securing or relating to any of the items referred
to above;
(b) All now owned and hereafter acquired right, title
and interest of Interactive in, to and in respect of goods,
including, but not limited to:
(i) All inventory, wherever located, whether now
owned or hereafter acquired, of whatever kind, nature
or description, including all raw materials, work-in-
process, finished goods, and materials to be used or
consumed in Interactive' business; and all names or
marks affixed to or to be affixed thereto for purposes
of selling same by the seller, manufacturer, lessor or
licensor thereof;
(ii) All equipment and fixtures, wherever located,
whether now owned or hereafter acquired, including,
without limitation, all machinery, equipment, motor
vehicles, furniture and fixtures, and any and all
additions, substitutions, replacements (including spare
parts), and accessions thereof and thereto;
(iii) All consumer goods, farm products, crops,
timber, minerals or the like (including oil and gas),
wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description;
(c) All now owned and hereafter acquired right, title
and interests of Interactive in, to and in respect of any
real or other personal property in or upon which Lender has
or may hereafter have a security interest, lien or right of
setoff;
(d) All present and future books and records relating
to any of the above including, without limitation, all
computer programs, printed output and computer readable data
in the possession or control of the Interactive, any
computer service bureau or other third party;
(e) All products and proceeds of the foregoing in
whatever form and wherever located, including, without
limitation, all insurance proceeds and all claims against
third parties for loss or destruction of or damage to any of
the foregoing.
8. 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.
9. CONDITIONS PRECEDENT. The effectiveness of the
amendments contained herein are subject to the satisfaction of
each of the following conditions precedent, in form and substance
satisfactory to Lender, unless satisfaction thereof is
specifically waived in writing by Lender:
(i) Borrowers shall have executed this Amendment
and returned a fully executed original of this Amendment to
Lender on or before August 1, 1997;
(ii) Lender shall have received fully executed
originals of the Certified Board Resolutions for each of the
Borrowers on or before August 1, 1997;
(iii) Interactive shall have executed and returned
to Lender such UCC financing statements as are necessary to
ensure that Lender has a perfected security interest in that
portion of the Collateral that is the property of
Interactive;
(iv) Lender shall have received a copy of the
Articles or Certificate of Incorporation of Interactive, and
all amendments thereto, certified by the Secretary of State
or other appropriate official of the jurisdiction of
Interactive's incorporation;
(v) Lender shall have received good standing
certificates for Interactive, issued by the Secretary of
State or other appropriate official of Interactive's
jurisdiction of incorporation and each jurisdiction where
the conduct of Interactive's business activities or
ownership of its property necessitates qualification; and
(vi) Lender shall have received copies of the
casualty insurance policies of Interactive, together with
loss payable endorsements on Lender's standard form of loss
payee endorsement naming Lender as loss payee and copies of
Interactive's liability insurance policies, together with
endorsements naming Lender as co-insured.
10. 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.
11. 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.
12. 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.
13. 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.
14. SUCCESSORS AND ASSIGNS. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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.
20. 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: Ewen R. Cameron,
President
AT SUPPLY, INC.
("Borrower")
By: Ewen R. Cameron,
Chairman of the Board
INTERACTIVE SOLUTIONS, INC.
("Borrower")
By: Ewen R. Cameron,
Chairman of the Board
ACCEPTED IN NEW YORK, NEW YORK:
THE CIT GROUP/CREDIT FINANCE,
INC. ("Lender")
By: ___________________________
Title:_____________________
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 Ninth Amendment to Loan and
Security Agreement and First Note Modification 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
Ninth Amendment to Loan and Security Agreement and First Note
Modification Agreement.
TTG ACQUISITION CORP.
By: Ewen R. Cameron,
Chairman of the Board
Norman R. Dobiesz (SEAL)
INTERACTIVE SOLUTIONS, INC.
By: Ewen R. Cameron,
Chairman of the Board
TELTRONICS/SRX, INC.
By: Ewen R. Cameron,
Chairman of the Board
