SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:...................................March 19, 1998
Date of Earliest Event Reported:..................March 6, 1998
TELTRONICS, INC.
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(Exact Name of Registrant as specified in its charter)
Delaware 0-17893 59-2937938
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(State or other (Commission File Number) (IRS Employer
jurisdiction Identification
of Incorporation) Number)
2150 Whitfield Industrial Way, Sarasota, Florida 34243-9706
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (941) 753-5000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 6, 1998, AT Supply, Inc. ("AT Supply") an
eighty percent owned subsidiary of the Registrant sold
substantially all of its assets to AT2 Communications,
Incorporated ("Buyer"), a Texas corporation owned by the holders
of twenty percent of AT Supply who were employed by AT Supply,
under an Agreement between AT Supply and the Buyer dated March 5,
1998 ("Agreement").
Under the Agreement, the Buyer paid AT Supply
approximately $375,000 cash and assumed all liabilities of AT
Supply including approximately $985,000 owed to The CIT
Group/Credit Finance, Inc., the Registrant's principal lender,
which was paid in cash at the closing. In addition, the buyer
delivered $50,000 cash and its unsecured promissory note in the
principal amount of $200,000 ("Note") to AT Supply in
consideration for AT Supply's agreement not to compete with the
Buyer for three years in the business conducted by AT Supply.
Principal and interest are payable monthly over the next three years;
the Note bears interest at the rate of twelve percent per annum;
is guaranteed by the two principals of the Buyer; and is subordinated
to the Buyer's lending institution.
There are numerous other provisions in the Agreement
filed as an Exhibit to this Report on Form 8-K which are
important in order to derive a full understanding of the
transaction. The above summary is qualified in its entirety by
reference to the text and the terms and conditions of the
Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired - Not
applicable.
(b) Pro Forma Financial Information.
(1) At the date of this Report on Form 8-K, it is
impracticable for Registrant to provide pro forma financial
information pertaining to the disposition of the assets of AT
Supply. Such pro forma financial information will be filed as
soon as reasonably practicable, but not later than sixty days
after the date on which this Report on Form 8-K must be filed.
(c) Exhibits
.
10.1 Agreement dated March 5, 1998 by and between
AT Supply, Inc. and AT2 Communications,
Incorporated with (a) description of Assets,
(b) Consent to Use of Assumed Name, and (c)
Assumed Liabilities, exhibits thereto.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
Teltronics, Inc.
(Registrant)
March 19, 1998 By: Ewen R. Cameron
President and CEO
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AGREEMENT
AGREEMENT IS made this 5th day of March, 1998, between A.T. SUPPLY,
INC, a corporation duly organized and existing under the laws of the State
of Texas (hereinafter referred to as "Seller") and Mr. John Stephenson
and Mr. Michael Godowns on behalf of AT2 Communications, Incorporated
(hereinafter referred to as the "Buyers"), which in there respective
positions may be referred to collectively hereinafter as the "parties."
WHEREAS, the Seller is a corporation organized under the laws of the
State of Texas, and
WHEREAS, the Buyers and Seller desire that Buyer acquire the assets
of the Seller; and
WHEREAS, the Buyers have arranged to provide the necessary funds to
acquire the assets of the Seller;
IT IS THEREFORE AGREED:
ARTICLE I
TIME OF CLOSING OF THE AGREEMENT
The Closing Date for the performance of the execution of this Agreement
shall be the date this Agreement is executed by the parties. The Closing
shall take place at a mutually acceptable location.
ARTICLE II
TERMS OF PURCHASE OF THE ASSETS OF SELLER
Upon the execution of this Agreement, the assets subject hereto
shall be transferred to the Buyers by the Seller as follows:
At the Closing of this AGREEMENT, Buyers shall acquire ownership
of the assets of the Seller identified in Exhibit "A", attached to this
agreement ("Assets").
Buyers shall receive the unconditional right to utilize the name
"A T SUPPLY, INC.". Attached to this AGREEMENT as Exhibit "B" is a
Consent Agreement for the use of the name "A T SUPPLY, INC." and
"ADVANTAGE TELCOM SUPPLY, INC." by Buyers. The Consent Agreement
is an express representation upon which the Buyers rely.
Buyers shall pay to Seller the sum of $374,836.36 ("Price").
The Price shall be paid at Closing as follows: (1) $374,836.36 to be
utilized to pay the debt owned by Seller to Teltronics, Inc. In
addition, Buyers shall pay to Seller the amount of $0.00 as additional
consideration for the purchase of the Assets as consideration for
Sellers agreement to sell to Buyers the Assets of the Seller in lieu
of a sale of the stock of the Seller.
In addition to the payment of the Price, Buyers shall assume any
and all liabilities, debts, obligations, and other contractual liabilities
of the Seller, whether matured or un-matured, contingent or otherwise,
including specifically but not exclusively the liabilities described in
Exhibit "C" to this Agreement ("Liabilities").
In satisfaction of Buyers obligations to Seller for the Liabilities,
Buyers shall perform the obligation under the Assumption of Liabilities
Agreement attached as Exhibit "D" to this Agreement including $984,710.19
payable in cash at closing to be applied to extinguish any and all liens
and security interests of CIT Group/Credit Finance Corporation against
the Assets that are the subject of this AGREEMENT.
In consideration of the AGREEMENT of Seller to enter into a Covenant
Not to Compete, the Buyers shall pay to Seller the total sum of $250,000.00
payable in the amount of $50,000.00 in cash at the time of the execution
of this AGREEMENT by Buyers to Seller and in the balance payable by
Buyers to Seller under the terms of a promissory in the form attached
as Exhibit "E" to this Agreement ("Note").
Seller expressly agrees to subordinate its lienholder interest under
the Note payable by Buyer to Seller in favor of the lienholder interest
of BROADWAY NATIONAL BANK, 1177 N.E. Loop 410, P.O. Box 17001, San Antonio,
Texas 78217 under a Subordination Agreement in the form attached as
Exhibit "F" to this Agreement.
ARTICLE III
WARRANTIES, REPRESENTATIONS, AND COVENANTS
OF THE SELLER AND BUYERS
Seller has provided to Buyers a true and correct copy of the financial
statements of Seller prior to the date of this AGREEMENT.
Seller warrants that all accounts receivable of the Company as
reflected on its books of accounts as of the date of the Closing of
this Agreement shall be assigned to Buyers.
Seller hereby warrants that it shall execute and deliver to Buyers
an Agreement Not to Compete contemporaneously with the execution of
this AGREEMENT in the form attached as Exhibit "G" to this AGREEMENT.
Seller warrants that the Seller is a company duly organized under the
laws of the State of Texas and is in good standing at the time of the
execution of this AGREEMENT.
Further Seller warrants that it has the authority to enter into
this AGREEMENT to sell the Assets of the Seller to the Buyers.
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Seller warrants that it has good title to the Assets transferred
to Buyers pursuant to this AGREEMENT. Further, except as described in
Exhibit "H" to this AGREEMENT, there are no encumbrances, contingent
or otherwise, against the Assets to be transferred to the Buyers
pursuant to this AGREEMENT.
ARTICLE IV
BUYERS REPRESENTATIONS AND WARRANTIES
Buyers represents and warrants to the Seller as follows:
1. Buyers is or will be a corporation duly organized and in
good standing under the laws of the State of Texas.
2. Buyers has the corporate power to acquire the Assets and
assume and discharge the Liabilities pursuant to this AGREEMENT
and to perform the transactions agreed upon herein.
3. At the closing, Buyer has transferred, conveyed and assigned
to Seller, all right, title and interest to twenty percent
(20%) of the outstanding capital shares of the Seller free
and clear of any claim, lien, pledge or restriction of any kind.
ARTICLE V
MISCELLANEOUS
All notices, writings, offers, acceptances, refusals, payments, or
agreements given or required to be given under this Agreement shall be
made in writing and sent by registered or certified mail, return receipt
requested, to the last known address of each. Any such notice or any
other writings shall be deemed given and received upon the expiration
of three days of such mailing with proper postage affixed.
This Agreement shall be construed and enforced in accordance with
the laws of the State of Texas.
Any headings are inserted solely for the convenience of reference,
and are not a part of this Agreement, and shall not affect its meaning,
construction or affect.
This Agreement revokes all previous agreements among the parties,
oral or written, regarding the subject of this Agreement.
This Agreement or any of its provisions may not be amended, changed
or modified unless in writing by the party to be charged.
This Agreement shall bind the undersigned parties and their
respective heirs, executors, and assigns, but nothing herein shall
be construed as an authorization to any member to assign his rights
or obligations hereunder.
IN WITNESS WHEREOF and in consideration of mutual promises
contained herein, the parties have hereunto set their hands and seals
this 5th day of March, 1998.
Dated: March 5, 1998 /s/ Michael D. Godowns
Michael Godowns for and on behalf
of AT2 Communications, Incorporated
Dated: March 5, 1998 /s/ John P. Stephenson
John P. Stephenson for and on behalf
of AT2 Communications, Incorporated
SUBSCRIBED AND SWORN TO BEFORE ME this 5th day of March, 1998,
appeared Michael Godowns and John P. Stephenson who personally and
freely executed the following Agreement on behalf of AT2 Communications,
Incorporated.
/s/ Diana L. Benetti
Notary Public in the State of Texas
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Dated: March 6, 1998 /s/ Ewen R. Cameron
Ewen R. Cameron, Chairman of
A T Supply, Inc.
SUBSCRIBED AND SWORN TO BEFORE ME this 6th day of March, 1998,
appeared Ewen R. Cameron, Chairman of A T Supply, Inc., who personally
and freely executed the following Agreement.
/s/ Susan D. Maslanka
Notary Public in the State of Florida
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EXHIBIT A
ASSETS
1. All assets of the Seller identified in the Pro Forma Balance
Sheet dated January 31, 1998 prepared by Buyers except any and
all funds in the CIT Cash Collateral Account.
2. Rights to the name "Advantage Telcom Supply".
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EXHIBIT B
CONSENT TO USE AF ASSUMED NAME
1. The assumed name under which the business or professional service
is to be conducted or rendered is "AT SUPPLY, INC." and "Advantage
Telcom Supply".
2. By affixing his hand and seal to this document, Ewen R. Cameron,
as Chairman of AT SUPPLY, INC., shall irrevocably agree to this
Consent to Use of Assumed Name. AT2 Communications, Incorporated
shall have the right to use for all purposes the name "AT SUPPLY,
INC." and "Advantage Telcom Supply".
Date: March 6, 1998
Signature: /s/ Ewen R. Cameron
Ewen R. Cameron, Chairman of AT Supply, Inc.
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EXHIBIT C
ASSUMED LIABILITIES
All debts, liabilities, taxes (including any sales or transfer taxes
on the sale of the Assets), obligations under contracts, leases,
agreements and commitments, and other obligations of every kind and
character of the Seller as the same may exist at the Closing (whether
accrued, absolute, contingent or otherwise, and whether due or to
become due) or which may arise in the future based upon events or a
state of facts existing at the Closing.
