exv10w11



 



Exhibit 10.11


PROMISSORY NOTE




	 	 	 
	$3,374,734.33	 	
October 1, 2003
	 	 	
Tulsa, Oklahoma



     FOR VALUE RECEIVED, the undersigned, XETA TECHNOLOGIES, INC., an Oklahoma
corporation (“Maker”), promises to pay to the order of BANK OF OKLAHOMA, N.A.
(“Lender”), at its offices in Tulsa, Oklahoma, the principal sum of Three
Million Three Hundred Seventy-Four Thousand Seven Hundred Thirty-Four and
33/100 Dollars ($3,374,734.33) under the terms of the Revolving Credit and Term
Loan Agreement (“Credit Agreement”) between Maker and Lender of even date
herewith, payable as follows (all capitalized terms used but not defined herein
shall have the meanings given in the Credit Agreement):



	 	 	Principal. Principal shall be shall be payable in consecutive monthly
installments on the 1st day of each month, commencing November, 2003,
with each installment except the last equal to $86,524.26. The last
installment, due September 30, 2006, shall equal the remaining balance of
principal hereunder.
	 
	 	 	Interest. Interest shall be payable on the first day of each month,
commencing the 1st day of November, 2003, and at maturity. Interest
shall accrue on the principal balance outstanding hereunder and on any
past due interest hereunder at a rate at all times equal to the Note Rate
(defined below).



        “Note Rate” shall mean a rate at all times equal to the Adjusted Prime
Rate or the Adjusted LIBOR Rate, as elected by Maker pursuant to a properly
made Interest Rate Election (defined below); provided, that at the end of any
applicable Interest Period (defined below), the Note Rate shall revert to the
Adjusted Prime Rate unless a new Interest Rate Election has been properly made
by Maker. The Adjusted Prime Rate and the Adjusted LIBOR Rate shall be
calculated, on any date of determination thereof, as follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Funded Debt to Cash Flow	 	Adjusted LIBOR Rate	Adjusted Prime Rate	 
	
	 	
	 	
	 
	Greater than or equal to 2.50 to 1
	 	LIBOR Rate plus 2.75%	 	Prime Rate plus .25%	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to 2.0 to 1 but less than 2.5 to 1
	 	LIBOR Rate plus 2.25%	 	Prime Rate	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to 1.50 to 1 but less than 2.0 to 1
	 	LIBOR Rate plus 2.00%	 	Prime Rate minus .25%	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to 1.0 to 1 but less than 1.5 to 1
	 	LIBOR Rate plus 1.75%	 	Prime Rate minus .50%	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Less than 1.0 to 1
	 	LIBOR Rate plus 1.50%	 	Prime Rate minus .75%	 	 



The Adjusted LIBOR Rate and Adjusted Prime Rate shall be recalculated on not
less than a quarterly basis, on the date on which the Lender is in receipt of
Maker’s most recent financial


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statements (and, in the case of the year-end financial statements, audit
report) for the fiscal quarter then ended (“Pricing Date”). From the date of
this Agreement to the first recalculation, the Adjusted LIBOR Rate shall be set
at the LIBOR Rate plus 2 percent (2.00%), and the Adjusted Prime Rate shall be
set at the Prime Rate minus .5 percent (-.50%). The Note Rate shall be
established based on the ratio of Funded Debt to Cash Flow for the most
recently completed fiscal quarter and the Note Rate established on a Pricing
Date shall remain in effect until the next Pricing Date. If the Maker has not
delivered its financial statements by the date such financial statements (and,
in the case of the year-end financial statements, audit report) are required to
be delivered under the Credit Agreement, until such financial statements and
audit report are delivered, the Note Rate shall be the LIBOR Rate plus one and
three quarters of one percent (1.75%). If the Maker subsequently delivers such
financial statements before the next Pricing Date, the Note Rate established by
such late delivered financial statements shall take effect from the date of
delivery until the next Pricing Date. In all other circumstances, the Note
Rate established by such financial statements shall be in effect from the
Pricing Date that occurs immediately after the end of the fiscal quarter
covered by such financial statements until the next Pricing Date. Each
determination of the Note Rate made by the Lender in accordance with the
foregoing shall be conclusive and binding on the Maker and the Lender if
reasonably determined. Any change in the Note Rate resulting from a change in
the Prime Rate shall be effective as of the opening of business on the day on
which such change in the Prime Rate becomes effective.


     “Funded Debt” (for purposes of this Note) shall mean all interest bearing
debt.


     “Cash Flow” (for purposes of this Note) shall mean EBITDA less Cash Taxes.


     “Interest Rate Election” means written notice from Maker to Lender no
earlier than twenty (20) days and no later than five (5) days prior to the
contemplated effective date, substantially in form and content as set forth on
Exhibit “A” hereto, whereby Maker may elect from time to time that interest
shall accrue hereunder at the Adjusted Prime Rate or the Adjusted LIBOR Rate.


     “LIBOR Rate” means the London Interbank Offered Rate composite rate per
annum for U.S. Dollars for the applicable Interest Period which appears on the
LIBOR 01 page of the Reuters information service on the day the Interest Rate
Election is received by Lender. The LIBOR Rate shall remain fixed during the
applicable Interest Period.


     “Interest Period” shall mean a period of time equal to the lesser of: (i)
at the election of the Maker, thirty (30), sixty (60), or ninety (90) days; or
(ii) the number of days between the contemplated effective date specified by
the Maker in the applicable Interest Rate Election and the maturity date
hereunder.


     “Prime Rate” shall mean a fluctuating interest rate per annum as in effect
from time to time, which interest rate per annum shall at all times be equal to
the rate of interest announced publicly from time to time (whether or not
charged in each instance), by JP Morgan Chase Bank, at New York, New York
(“Rate Bank”), as its base rate or general reference rate. Each change in the
Prime Rate (or any component thereof) shall become effective hereunder without
notice to Maker (which notice is hereby expressly waived by Maker), on the
effective date of each such change. Should the Rate Bank abolish or abandon
the practice of announcing or publishing a Prime Rate, then the Prime Rate used
during the remaining term of this Note shall be that interest rate or other
general reference rate then in effect at the Rate Bank which, from time to
time, in the reasonable judgment of Bank, most effectively approximates the
initial definition of
the “Prime Rate.” Maker acknowledges that Lender may, from time to time,
extend credit to other borrowers at rates of interest varying from, and having
no relationship to, the Prime Rate. The rate of interest payable


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upon the
indebtedness evidenced by this Note shall not, however, at any time exceed the
maximum rate of interest permitted under the laws of the State of Oklahoma for
loans of the type and character evidenced by this Note.


     If any payment shall be due on a Saturday or Sunday or upon any other day
on which state or national banks in the State of Oklahoma are closed for
business by virtue of a legal holiday for such banks, such payment shall be due
and payable on the next succeeding banking day and interest shall accrue to
such day. All interest due hereon shall be computed on the actual number of
days elapsed (365 or 366) based upon a 360-day year.


     All payments under this Note shall be made in legal tender of the United
States of America or in other immediately available funds at Lender’s office
described above, and no credit shall be given for any payment received by
check, draft or other instrument or item until such time as the holder hereof
shall have received credit therefor from the holder’s collecting agent or, in
the event no collecting agent is used, from the bank or other financial
institution upon which said check, draft or other instrument or item is drawn.


     From time to time the maturity date of this Note may be extended or this
Note may be renewed, in whole or in part, or a new note of different form may
be substituted for this Note and/or the rate of interest may be changed, or
changes may be made in consideration of loan extensions, and the holder, from
time to time, may waive or surrender, either in whole or in part, any rights,
guarantees, security interests or liens given for the benefit of the holder in
connection herewith; but no such occurrences shall in any manner affect, limit,
modify or otherwise impair any rights, guarantees or security of the holder not
specifically waived, released or surrendered in writing, nor shall any maker,
guarantor, endorser or any person who is or might be liable hereon, either
primarily or contingently, be released from such liability by reason of the
occurrence of any such event. The holder hereof, from time to time, shall have
the unlimited right to release any person who might be liable hereon; and such
release shall not affect or discharge the liability of any other person who is
or might be liable hereon.


     If any payment required by this Note to be made is not made when due, or
if any default occurs under any loan agreement or under the provisions of any
mortgage, security agreement, assignment, pledge or other document or agreement
which provides security for the indebtedness evidenced by this Note, the holder
hereof may, at its option, without notice or demand, declare this Note in
default and all indebtedness due and owing hereunder immediately due and
payable. Interest from the date of default on such principal balance and on
any past due interest hereunder shall accrue at the rate of five percent (5%)
per annum above the nondefault interest rate accruing hereunder. The Maker and
any endorsers, guarantors and sureties hereby severally waive protest,
presentment, demand, and notice of protest and nonpayment in case this Note or
any payment due hereunder is not paid when due; and they agree to any renewal,
extension, acceleration, postponement of the time of payment, substitution,
exchange or release of collateral and to the release of any party or person
primarily or contingently liable without prejudice to the holder and without
notice to the Maker or any endorser, guarantor or surety. Maker and any
guarantor, endorser, surety or any other person who is or may become liable
hereon will, on demand, pay all costs of collection, including reasonable
attorney fees of the holder hereof in attempting to enforce payment of this
Note and reasonable attorney fees for defending the validity of any document
securing this Note as a valid first and prior lien.


     Upon the occurrence of any default hereunder, Lender shall have the right,
immediately and without further action by it, to set off against this Note all
money owed by Lender in any capacity to the Maker or any guarantor, endorser or
other person who is or might be liable for payment hereof,


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whether or not due,
and also to set off against all other liabilities of Maker to Lender all money
owed by Lender in any capacity to Maker; and Lender shall be deemed to have
exercised such right of setoff and to have made a charge against such money
immediately upon the occurrence of such default even though such charge is made
or entered into the books of Lender subsequently thereto.


     The holder of this Note may collect a late charge not to exceed an amount
equal to five percent (5%) of the amount of any payment which is not paid
within ten (10) days from the due date thereof, for the purposes of covering
the extra expenses involved in handling delinquent payments. This late charge
provision shall not be applicable in the event the holder hereof, at its
option, elects to receive interest at the increased rate as provided hereunder
in the event of default.


     This Note is given for an actual loan of money for business purposes and
not for personal, agricultural or residential purposes, and is executed and
delivered in the State of Oklahoma and shall be governed by and construed in
accordance with the laws of the State of Oklahoma.



	 	 	 	 	 
	 	 	
XETA TECHNOLOGIES, INC.
	 
	 	 	
By
	 	/s/ Robert B. Wagner
	 	 	 	 	

	 	 	
Name
	 	Robert B. Wagner
	 	 	
Title
	 	CFO



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EXHIBIT “A”



(Interest Rate Election Notice)



Bank of Oklahoma, N.A.

P. O. Box 2300

Tulsa, Oklahoma 74192-2300

Attn: Mr. Stephen R. Wright, Senior Vice President




	 	 	 
	Re:	 	
Revolving Credit and Term Loan Agreement (“Loan Agreement”)
dated
October 1, 2003, between XETA TECHNOLOGIES, INC. (“Borrower”) and
BANK OF OKLAHOMA, N.A. — Interest Rate Election



Ladies and Gentlemen:



     Please be advised that no Initial Default or Matured Default exists under
the Loan Agreement, and the Borrower hereby provides the following interest
rate election:


     A.     Revolving Line. (Insert applicable information as to the (i) Adjusted
Prime Rate or (ii) Adjusted LIBOR Rate, including requested interest rate
period)


     B.     Term Loan. (Insert applicable information as to the (i) Adjusted Prime
Rate or (ii) Adjusted LIBOR Rate, including requested interest rate period)


     C.     Real Estate Loan. (Insert applicable information as to the (i)
Adjusted Prime Rate or (ii) Adjusted LIBOR Rate, including requested interest
rate period)



	 	 	 	 	 
	 	 	
“Borrower”
	 
	 	 	
XETA CORPORATION., an Oklahoma
corporation
	 
	 	 	
By	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	




	 	 	 
	Date Received by Bank of
Oklahoma:	 	 
	 	 	




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