EXHIBIT 10.2

 
AMENDMENT NUMBER NINE TO CREDIT AGREEMENT
 
This Amendment Number Nine to Credit Agreement (“Amendment”) is entered into as
of November 15, 2010, by and among the lenders identified on the signature pages
hereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), and WELLS FARGO CAPITAL FINANCE, INC., a
California corporation, formerly known as Wells Fargo Foothill, Inc., as the
arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, “Agent”), on the one hand, and
TELTRONICS, INC., a Delaware corporation (“Borrower”), on the other hand, with
reference to the following facts:
 
A.    Borrower, Agent, and Lenders have previously entered into that certain
Credit Agreement, dated as of May 31, 2007 (as amended and modified, from time
to time, the “Agreement”).
 
B.    Borrower has requested that Agent and Lenders make certain amendments to
the Agreement as provided for and on the conditions set forth herein.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby amend and supplement
the Agreement as follows:
 
1.    DEFINITIONS.  All initially capitalized terms used in this Amendment shall
have the meanings given to them in the Agreement unless specifically defined
herein.
 
2.    AMENDMENTS.
 
(a)    The principal amortization set forth in the table under Section 2.2 (Term
Loan) of the Agreement is hereby amended by deleting such table in its entirety
and replacing it with the following:
 
Date
Installment Amount
July 1, 2007 and the first day of each month thereafter
through and including October 1, 2010
$97,366.67
February 1, 2011 and the first day of each month
thereafter
$116,855.00

 
(b)    Clause (a) of Section 6.16 (Minimum EBITDA) of the Agreement is hereby
amended by deleting the financial covenants for October 31, 2010 through
December 31, 2010 set forth therein in their entirety and replacing them with
the following for such months:
 
Required Amount
Applicable Period
Not Applicable
For the 12 month period ending 10/31/10
Not Applicable
For the 12 month period ending 11/30/10
Not Applicable
For the 12 month period ending 12/31/10

 
 
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(c)    Clause (e) of Section 6.16 (Minimum Total Sales) of the Agreement is
hereby amended by deleting such clause in its entirety and replacing it with the
following:
 
(e)           Minimum Total Billings. Fail to achieve Total Billings, measured
on a bi-weekly basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:
 
Required Amount
Period Ending
$200,000
For the 2 week period ending 11/26/10
$1,000,000
For the 4 week period ending 12/10/10
$1,950,000
For the 6 week period ending 12/24/10
$2,150,000
For the 8 month period ending 1/7/10
$2,300,000
For the 10 week period ending 1/21/11

 
Minimum Total Billings for the applicable period in any fiscal year commencing
with fiscal year 2011 shall be determined by Agent, based upon the latest
Projections for such fiscal year delivered to Agent in accordance with
Section 5.3.  Such Projections must credibly reflect expected performance by
Borrower in each such period of such fiscal year and shall otherwise be
satisfactory to Agent in its reasonable credit judgment.
 
(d)    The definition of “Borrowing Base” set forth in Schedule 1.1 to the
Agreement is hereby amended by deleting such definition in its entirety and
replacing it with the following:
 
“Borrowing Base” means, as of any date of determination, the result of:
 
(a)           the lesser of:
 
(i)           85% of the amount of Eligible Accounts, less the amount, if any,
of the Dilution Reserve, and
 
(ii)           an amount equal to Borrower’s Collections with respect to
Accounts for the collection period set forth in the following table for the
weekly period ending on the date set forth opposite thereto, plus
 
Week Ending
Collection Period
November 19, 2010
For the immediately preceding 55 day period
November 26, 2010
For the immediately preceding 55 day period
December 3, 2010
For the immediately preceding 65 day period
December 12, 2010
For the immediately preceding 65 day period
December 17, 2010
For the immediately preceding 65 day period

 
 
 
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December 24, 2010
For the immediately preceding 65 day period
December 31, 2010
For the immediately preceding 65 day period
January 7, 2010
For the immediately preceding 55 day period
January 14, 2010 and for each day thereafter
For the immediately preceding 55 day period

 
(b)           the lower of:
 
(i)           $1,000,000, and
 
(ii)           15% of the value of Inventory valued at cost, plus
 
(c)           solely during the Overadvance Period, the aggregate amount of
Limited Overadvances outstanding at any given time in an amount not to exceed
the Overadvance Limit (as such terms are defined in Amendment Number Nine to
Credit Agreement), minus
 
    (d)           the sum of (i) the Bank Product Reserve, and (ii) the
aggregate amount of reserves, if any, established by Agent under Section 2.1(b).
 
(e)    The definition of “Eligible Accounts” set forth in Schedule 1.1 to the
Agreement is hereby amended by deleting subparagraph (a) therefrom in its
entirety and replacing it with the following:
 
(a)           Accounts that the Account Debtor has failed to pay within 90 days
(120 days if the Account Debtor is either the New York City Board of Education
or the New York City Department of Corrections, or their respective Affiliates)
of original invoice date or Accounts with selling terms of more than 60 days;
provided, however, notwithstanding the foregoing, solely during the period
commencing on the Effective Date (as such term is defined in Amendment Number
Nine to Credit Agreement) and ending on January 31, 2011, up to $600,000 of
Accounts owed by the New York City Board of Education and the New York City
Department of Corrections, and their respective Affiliates, not otherwise
fulfilling the terms in this subparagraph (a) shall be considered Eligible
Accounts so long as such Accounts (x) have selling terms of 60 days or less, (y)
are no older than 180 days from their invoice date, and (z) meet all other
eligibility criteria set forth in this definition,
 
(f)    The definition of “Total Sales” set forth in Schedule 1.1 to the
Agreement is hereby deleted in its entirety without replacement.  Schedule 1.1
to the Agreement is hereby amended by adding the following new definition
thereto in proper alphabetical order:
 
 
“Total Billings” mean, with respect to any period of measurement, Borrower’s
consolidated total Accounts invoiced during such period.

 
(g)    Exhibit B-1 (form of Borrowing Base Certificate) currently attached to
the Agreement is hereby amended by deleting such exhibit in its entirety and
replacing it with Exhibit B-1 attached hereto.
 
3.    LIMITED OVERADVANCES.
 
(a)    Borrower has requested that Lenders make Advances during the Overadvance
Period (as defined below) in excess of the Borrowing Base less the Letter of
Credit Usage (such Advances in excess
 
 
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of the Borrowing Base less the Letter of Credit Usage, each a “Limited
Overadvance” and collectively, the “Limited Overadvances”).  Each Lender with a
Revolver Commitment agrees (severally, not jointly or jointly and severally) to
make such Lender’s Pro Rata Share of the Limited Overadvances on the following
terms and conditions:
 
(1)    Limited Overadvances may only be made: (i) during the period commencing
on the Effective Date (as defined below) and ending on the earliest of (x) the
occurrence of an Event of Default, or (y) January 31, 2011 (the “Overadvance
Period”); and (ii) subject to all of the other terms and conditions of the
Credit Agreement (other than the limitation on the aggregate outstanding amount
of the Advances set forth in clause (ii) of Section 2.1(a) of the Agreement);
 
(2)    The outstanding balance of all Limited Overadvances must be repaid in
full by the last day of the Overadvance Period or, if earlier, on the date on
which all Advances are declared due and payable pursuant to the terms of the
Agreement;
 
(3)    The aggregate amount of Limited Overadvances outstanding at any given
time may not exceed $500,000 (the “Overadvance Limit”);
 
(4)    So long as the Overadvance Period is in effect, Lenders waive the
requirement in Section 2.5 of the Credit Agreement regarding payment of
Overadvances, but only to the extent of the Limited Overadvance Amount;
 
(5)    The extension of the Limited Overadvances shall not cause the outstanding
Revolver Usage (including the Limited Overadvances) to exceed the Maximum
Revolver Amount and, while any Limited Overadvance remains outstanding, at no
time shall any Advance be requested or made which would cause the outstanding
Revolver Usage (including the Limited Overadvances) to exceed the Maximum
Revolver Amount; and
 
(b)    Borrower acknowledges and agrees that: (i) the Limited Overadvances shall
be deemed Advances under the Agreement; (ii) the Limited Overadvances and
interest accruing thereon constitute part of the Obligations under the
Agreement, are secured by the Collateral, and, except as expressly provided
herein, are governed by all of the terms and conditions of the Agreement; and
(iii) the amount of Limited Overadvances available to Borrower shall not be
considered when calculating “Excess Availability” under the Agreement.
 
4.    [RESERVED].
 
5.    REPRESENTATIONS AND WARRANTIES.  Borrower hereby affirms to Agent and
Lenders that all of Borrower’s representations and warranties set forth in the
Agreement are true, complete and accurate in all respects as of the date hereof.
 
6.    NO DEFAULTS.  Borrower hereby affirms to Agent and Lenders that no Event
of Default has occurred and is continuing as of the date hereof.
 
7.    CONDITIONS PRECEDENT.  The effectiveness of this Amendment is hereby
conditioned upon receipt by Agent of (i) a copy of this Amendment duly executed
by each party hereto, (ii) a copy of the Fourth Amended and Restated Fee Letter
of even date herewith duly executed by each party thereto, and (iii) a copy of
the Side Letter Agreement of even date herewith duly executed by each party
thereto, each in form and substance satisfactory to Agent.  The date upon which
such conditions precedent are fully satisfied is referred to herein as the
“Effective Date”.
 
8. REAFFIRMATION.  Borrower hereby acknowledges and reaffirms (i) all of its
obligations and duties under the Loan Documents, and (ii) that the Agent, for
the ratable benefit of the Lender Group, has
 
 
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and shall continue to have valid, perfected Liens in the Collateral as provided
in Section 5.2(d) of the Security Agreement.
 
9.    COSTS AND EXPENSES.  Borrower shall pay to Agent and Lenders all of
Agent’s and Lenders’ out-of-pocket costs and expenses (including, without
limitation, the fees and expenses of its counsel, which counsel may include any
local counsel deemed necessary, search fees, filing and recording fees,
documentation fees, appraisal fees, travel expenses, and other fees) arising in
connection with the preparation, execution, and delivery of this Amendment and
all related documents.
 
10.     LIMITED EFFECT. In the event of a conflict between the terms and
provisions of this Amendment and the terms and provisions of the Agreement, the
terms and provisions of this Amendment shall govern.  In all other respects, the
Agreement, as amended and supplemented hereby, shall remain in full force and
effect.
 
11.    GENERAL RELEASE.  IN CONSIDERATION OF AGENT AND LENDERS AGREEING TO ENTER
INTO THIS AMENDMENT AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, BORROWER
HEREBY RELEASES AND DISCHARGES AGENT AND LENDERS, THEIR AGENTS, REPRESENTATIVES,
OFFICERS, DIRECTORS, AND ASSIGNS, FROM ANY AND ALL CLAIMS, LIABILITIES, RIGHTS
AND OBLIGATIONS, OF ANY NATURE WHATSOEVER, WHETHER SOUNDING IN TORT OR CONTRACT,
ARISING PRIOR TO THE DATE HEREOF RELATING TO THE OBLIGATIONS, THE LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS RELEASE SHALL BE EFFECTIVE
NOTWITHSTANDING, AND BORROWER HEREBY WAIVES ANY AND ALL RIGHTS ARISING UNDER OR
WITH RESPECT TO, CALIFORNIA CIVIL CODE SECTION 1542 (OR ANY NEW YORK LAW
EQUIVALENT) WHICH PROVIDES:
 
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”
 
12.    COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number
of counterparts and by different parties on separate counterparts, each of which
when so executed and delivered shall be deemed to be an original.  All such
counterparts, taken together, shall constitute but one and the same
Amendment.  This Amendment shall become effective upon the execution of a
counterpart of this Amendment by each of the parties hereto.  This Amendment is
a Loan Document and is subject to all the terms and conditions, and entitled to
all the protections, applicable to Loan Documents generally.
 
[remainder of page left blank intentionally; signatures to follow]

BN
7613274v5                                                                     
 
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first set forth above.
 
 

 
TELTRONICS, INC.,
a Delaware corporation
         
 
By:
/s/ Ewen R. Cameron     Name:  Ewen R. Cameron        Title:  President & CEO  
                 
WELLS FARGO CAPITAL FINANCE, INC.,
a California corporation,
as Agent, Lender and Required Lender
            By:   /s/Tiffany Ormon     Name:  Tiffany Ormon        Title:
 Director  

 
 
 
 
 
 
 
 
S-
Amendment Number Nine
 
 

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