Document:

ex10-capsource_extension.htm

    

    Exhibit
      10.1

    

    AMENDMENT

    

    This
      AMENDMENT (“Amendment”) is made as of May 15, 2007 by
      and among CAPITALSOURCE FINANCE LLC, a Delaware limited
      liability company (the “Lender”), and  TELTRONICS,
      INC., a Delaware corporation (the “Borrower”).  This
      Amendment is effective May 15, 2007 (the “Effective Date”).

    

    Recitals:

     

    A.  Lender
      has loaned money and made credit available to the Borrower in accordance with
      the terms of that Revolving Credit, Term Loan and Security Agreement, dated
      as
      of July 6, 2005 (as amended to date and as may be amended, restated or otherwise
      modified from time to time, the “Loan Agreement”), among Lender and the
      Borrower.  The Loan Agreement and the other documents executed in
      connection with the Loan Agreement, including this Amendment, may be
      collectively referred to herein as the “Loan Documents.”

     

    B.  As
      a
      result of the occurrence of certain business conditions, Lender and the Borrower
      have agreed to enter into this Amendment on or before May 15, 2007 pursuant
      to
      which, inter alia, Lender agrees to extend, in accordance with and
      pursuant to the terms herein, the payment date provided for in Section 2.11(c)
      of the Loan Agreement by which Borrower must remit the Excess Cash Flow
      Percentage for 2006 to June 15, 2007 (the “Extension”).

     

    C.  The
      Borrower hereby acknowledges and agrees that failure to remit the Excess Cash
      Flow Percentage for 2006 on or before June 15, 2007 shall constitute an
      immediate Event of Default under the Loan Agreement as of the Extension Date
      (the “Default”).

     

    D.   As
      of the date of execution of this Amendment, the aggregate outstanding principal
      balance of (i) the Term Loan is $2,083,333.26, and (ii) the outstanding Advances
      under the Revolving Facility total $3,608,911.09. Collectively, the indebtedness
      owed as of the date of execution of this Amendment under the Term Loan and
      the
      Revolving Facility (excluding attorneys’ fees (for both in-house and outside
      counsel of Lender), accrued interest and fees and expenses of the Lender) is
      $5,692,244.35 (the “Entire Indebtedness”).

     

    E.  The
      payment of the Obligations (as defined in the Loan Agreement) of Borrower is
      secured by the Collateral pledged under the Loan Agreement.

     

    F.  The
      Borrower hereby acknowledges and agrees that in the event of the occurrence
      of
      the Default, among other things: (i) Lender is entitled to accelerate the
      Obligations, to seek immediate payment in full of the Obligations and to
      exercise its rights and remedies under the Loan Documents; (ii) Lender has
      no
      obligation to make further Advances or otherwise extend credit to the Borrower
      under the Loan Documents or otherwise; and (iii) with respect to the Loans,
      Lender has the right to charge interest at the Default Rate (as defined in
      the
      Loan Agreement) pursuant to Section 3.6 of the Loan Agreement.

     

    G.  The
      Borrower has informed Lender that it intends to refinance and pay in full,
      in
      immediately available funds, all Obligations on or before June 15,
      2007.

     

    
              H.  The
        Borrower has requested that Lender extend the payment date described above
        

        
          
                               

            1462637.6

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    and
      continue to fund operations while the Borrower attempts to refinance the
      Obligations, and Lender has agreed to do so to the extent provided for under,
      and pursuant to, the terms and conditions set forth in this
      Amendment.

     

            NOW,
      THEREFORE, for
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, and intending to be legally bound, Lender and the Borrower agree
      as follows:

     

    1.  Incorporation
      of Recitals; Definitions. Each of the foregoing
      recitals is hereby acknowledged and affirmed as being accurate and complete
      and
      is hereby incorporated as part of this Amendment.  Capitalized terms
      used and not defined in this Amendment shall have the meanings assigned to
      such
      terms in the Loan Documents.

     

    2.  Extension.  Subject
      to the satisfaction of the terms and conditions set forth herein, until that
      date (the “Extension Termination Date”), which is the earliest to occur
      of (a) 4:00 p.m. (Eastern) on June 15, 2007, or (b) the date of the occurrence
      of any one or more of the Events of Termination (defined below) set forth in
      this Amendment (the period commencing on the Effective Date and ending on June
      15, 2007, the “Extension Period”), Lender will not exercise or enforce
      its rights or remedies against the Borrower which Lender would be entitled
      to
      exercise or enforce under the terms of the Loan Documents but for the Extension;
      provided, however, that such forbearance shall not act as a waiver
      of Lender’s right to enforce any other claims, rights or remedies at any time
      and from time to time on or after the Extension Termination
      Date.  Furthermore, nothing contained herein shall be construed as
      requiring Lender to extend the Extension Termination Date.

     

    3.  Advances
      Under Revolving Facility Prior to Extension Termination
      Date.  The commitment to continue to
      provide Advances under the Revolving Facility shall continue during the
      Extension Period. Availability under the Revolving Facility shall be subject
      to
      the terms and conditions of the Loan Agreement.  In addition, Advances
      shall be further conditioned on the following:

     

    a.    Reports.
      Beginning fourteen (14) days following execution of this Amendment, and then
      every other week, on Tuesday during the Extension Period (the “Update”),
      the Borrower shall provide to the Lender the following reports:

     

     (i)
      reports, agreements or other materials provided to or generated by any
      consultant or advisor who may assist with a re-financing so long as Borrower
      is
      not prohibited to do so by the terms of any confidentiality agreement executed
      by and among Borrower and any such consultant or advisor prior to the Effective
      Date, in which case Borrower shall use its best efforts to secure the consent
      of
      such consultant or advisor to provide such reports, agreements or other similar
      materials to Lender;

     

    (ii)
      periodic (as requested by Lender) telephonic update on the efforts of the
      Borrower to progress toward a re-financing or other strategic alternative,
      including any preliminary assessment by the consultant or advisor; reports
      on
      indications of interest; the identities of prospects for a transaction; on
      the
      date of execution or receipt by the consultant or advisor, copies of letters
      of
      intent, term sheets, draft asset purchase agreements or similar agreements
      and
      documents, the final version of such agreements, and any analysis of the likely
      return on a sale or transaction.

    
      
        
                            

          1462637.6

        

        
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    4.  Interest.  During
      the Extension Period, interest on the Loans shall accrue and be due and payable
      in accordance with the terms of the Loan Agreement, except as specifically
      provided otherwise herein.  Section 2.3 of the Loan Agreement is
      hereby amended to provide that interest on outstanding Advances shall be payable
      monthly in arrears at an annual rate of Prime Rate plus 5.5%.  Section
      2.7 of the Loan Agreement is hereby amended to provide that interest on the
      outstanding balance of the Term Loan shall be payable monthly in arrears on
      the
      first day of each calendar month at an annual rate of Prime Rate plus
      6.5%.

     

    5.  Extension
      Fee. An Extension Fee of $10,000 (the “Extension Fee”) shall
      be paid by Borrower upon execution of this Amendment.  The Borrower
      hereby agrees to pay to Lender upon demand in accordance with the Loan Documents
      all costs, fees and expenses incurred by Lender arising in connection with
      this
      Amendment, including all of Lender’s reasonable attorneys’ fees and expenses,
      whether incurred by in-house or outside counsel.

     

    6.  Acknowledgement
      of Indebtedness, Liens.  Borrower
      acknowledges and agrees that it is unconditionally liable to Lender on a joint
      and several basis under the Loan Documents for the payment of the principal
      amount of the Term Loan and Revolving Facility, plus all accrued and unpaid
      interest, plus all expenses incurred by Lender, including reasonable attorneys’
fees and expenses and all other Obligations, and that the Borrower has no
      defenses, counterclaims, deductions, credits, claims or rights of setoff or
      recoupment with respect to the Obligations.  The Borrower covenants,
      confirms and agrees that Lender has, and will continue to have, a continuing
      first priority, perfected Lien on the Collateral, whether now owned or hereafter
      acquired, created or arising, as set forth in the Loan Documents, subject to
      no
      Liens other than Liens expressly permitted under the Loan
      Documents.  The Borrower acknowledges and agrees that nothing herein
      contained in any way impairs Lender’s existing rights and first priority Lien
      status in the Collateral.

     

    7.  Ratification
      of Existing Agreements.  Borrower hereby
      reaffirms (a) all of the terms, conditions, representations, warranties and
      covenants contained in each of the Loan Documents (except as expressly modified
      by this Amendment, in which case they represent, warrant and covenant as to
      the
      modified terms) and (b) acknowledges that all of the Obligations and liens
      granted under all such Loan Documents are, by the Borrower’s execution of this
      Amendment, ratified and confirmed to the Lender as accurate and valid in all
      respects.  Except as expressly modified or provided herein or in any
      other instruments or documents executed in connection herewith, all of the
      terms, conditions, representations, warranties and covenants contained in each
      of the Loan Documents shall remain in full force and effect in accordance with
      their original tenor.  Except as expressly provided herein, each
      representation, warranty, covenant and agreement of the Borrower hereunder
      shall
      be deemed to be in addition to, and not in substitution for, the
      representations, warranties, covenants and agreements made by the Borrower
      in
      the other Loan Documents.

     

    8.  Conditions
      Precedent.  The Borrower shall be bound
      by this Amendment upon execution and delivery hereof to Lender.  The
      obligations of Lender set forth in this Amendment shall become effective upon:
      (1) Borrower’s remittance of the Extension Fee and payment of all Lender’s
      reasonable legal fees and expenses, whether incurred by in-house or outside
      counsel, and (2) Borrower’s execution and delivery of any and all documents
      deemed necessary by Lender and requested to further document and/or secure
      Borrower’s obligations under this Amendment and the other Loan
      Documents.  Borrower hereby expressly authorizes Lender to file any
      UCC-1 financing statements and/or amendments thereto, that the Bank deems
      appropriate.  Borrower shall bear the expense of any such filings by
      Lender.

     

    9.  Representations
      and Warranties.  Borrower hereby
      represents and warrants that:

    

    
      
        
                       

          1462637.6

        

        
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    a.           it
      is duly formed, validly existing and in legal good standing in its state of
      formation as set forth in the preamble to this Amendment and that Borrower
      has
      the power and authority to enter into this Amendment;

     

    b.           it
      has duly executed and delivered this Amendment, that the signer of this
      Amendment on behalf of Borrower is duly authorized to execute this Amendment,
      that this Amendment was fully reviewed by and its execution approved by Borrower
      executing this Amendment, and this Amendment constitutes the valid, binding
      and
      legal obligation of the Borrower;

     

    c.           this
      Amendment is not being entered into with the intent to hinder or defraud any
      person; and

     

    d.           no
      Default or Event of Default has occurred and is continuing and no Default or
      Event of Default would result from the execution and delivery of, or
      consummation of the transactions contemplated by, this Amendment or the other
      agreements, instruments and documents referred to herein.

     

               Further,
      the Borrower confirms,
      reaffirms and restates to the Lender, on and as of the Effective Date, the
      representations and warranties set forth in the Loan Agreement and the other
      Loan Documents, except to the extent that such representations and warranties
      solely relate to a specific earlier date in which case such Borrower confirms,
      reaffirms and restates such representations and warranties as of such earlier
      date.  Each request for an Advance under the Revolving Facility shall
      constitute Borrower’s confirmation, reaffirmation and restatement of the
      representations and warranties set forth in the this Amendment, the Loan
      Agreement and the other Loan Documents as of the date of each such request,
      except to the extent that such representations and warranties relate to a
      specific earlier date in which case each such request shall constitute
      Borrower’s confirmation, reaffirmation and restatement of such representations
      and warranties as of such earlier date.

     

    10.  Covenants.  The
      Borrower covenants and agrees with Lender as follows:

     

    a.    Refinancing.  The
      Borrower shall use its best efforts to consummate Refinancing of all Obligations
      owed Lender on or before June 15, 2007 (the “Proposed Refinancing”) and
      such Proposed Refinancing shall satisfy, in full, in immediately available
      funds, all Obligations owed by the Borrower as of the date payment is made
      (the
“Refinancing Event”).

     

    11.  Events
      of Termination. The occurrence of any one or more
      of the following events shall constitute an event of termination (each an
“Event of Termination”) hereunder, it being expressly acknowledged and
      agreed that TIME IS OF THE ESSENCE:a.

     

    a.          Default
      or Event of Default under the Loan Documents or under this
      Amendment;

     

    b.          Extension
      Termination Date occurs;

     

    c.           failure
      of the Borrower to comply with the terms of this Amendment;

     

    
      
        1462637.6

      

      
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      d.           the failure
      of any covenant (whether required to by performed by the Borrower or any
      third-party) set forth in this Amendment to be satisfied in accordance with
      the
      terms of this Amendment;

     

     
      e.           any
      representation or warranty made or deemed made by the Borrower in this Amendment
      or any other Loan Document to which it is a party is determined by Lender to
      have been false or misleading in any respect when made or deemed
      made;

     

     
      f.           the
      initiation of any federal or state bankruptcy, insolvency or similar proceeding
      by or against the Borrower;

     

     
      g.           the
      commencement of litigation or legal proceedings by the Borrower against Lender
      or any of its directors, agents, officers, or employees;

     

     
      h.           the
      commencement of litigation or legal proceedings (including arbitration) by
      a
      vendor, supplier or employee of Borrower whose claim is equal to or greater
      than
      $1,000,000.00;

     

     
      i.           the claim,
      initiation or commencement of any claim or proceeding in favor of, through
      or by
      the Borrower which alleges that the release of Lender set forth herein is
      invalid or unenforceable; and

     

              j.    the
      filing or
      commencement of any criminal indictment, charge or proceeding pursuant to
      Federal or state law against Borrower, its officers, directors, or any
      manager.

    
             Upon
      the occurrence
      of any Event of Termination, Lender may, at its option and without notice to
      the
      Borrower or any other Person, exercise any and all rights

        and remedies
      pursuant to the Loan Documents in such manner as Lender in its sole and
      exclusive discretion determines.

     

    12.  Release
      of Lender.  Borrower hereby releases, waives and forever
      relinquishes all claims, counterclaims, demands, obligations, liabilities and
      causes of action of whatever kind or nature, whether known or unknown, including
      any so-called “lender liability” claims or defenses which it has, may have, or
      might assert now or in the future against the Lender and/or its affiliates,
      predecessors in interest, participants, officers, directors, employees, agents,
      attorneys, accountants, consultants, successors or assigns (individually, a
      “Releasee” and collectively, the “Releasees”), directly or
      indirectly, arising out of, based upon, or in any manner connected with (i)
      any
      transaction, event circumstance, action, omission, failure to act or occurrence
      of any sort or type, whether known or unknown, which occurred, existed, or
      was
      taken or permitted prior to the execution of this Amendment with respect to
      the
      Obligations, the Loan Documents, or the administration thereof (ii) any
      discussions, commitments, negotiations, conversations or communications, whether
      orally or evidenced by a writing of any sort prior to the execution of this
      Amendment with respect to the Obligations, the collateral, or the general
      business operations of the Borrower, or (iii) any thing or matter related to
      any
      of the foregoing prior to the execution of this Amendment. The Borrower
      acknowledges and agrees that the inclusion of this paragraph in this Amendment
      and the execution of this Amendment by the Lender do not constitute an
      acknowledgment or admission by the Lender of liability for any matter, or a
      precedent upon which any liability may be asserted. If the Borrower asserts
      or
      commences any claim, counter-claim, demand, obligation, liability or cause
      of
      action in derogation of the foregoing release or challenges the enforceability
      of the foregoing release (in each case, a “Violation”),  then
      the Borrower agrees to pay in addition to such other damages as any Releasee
      may
      sustain as a result of such Violation, all reasonable attorneys’ fees and expenses, whether incurred by in-house
      or
      outside counsel, incurred by such Releasee as a result of such
      Violation.

     

    
      
        1462637.6

      

      
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    13.  No
      Waiver by Lender.  Nothing in this
      Amendment shall extend to or affect in any way any of the Obligations or any
      of
      the rights of Lender and remedies of Lender arising under the Loan Documents,
      and Lender shall not be deemed to have waived any or all of such rights or
      remedies with respect to any default or event or condition which, with notice
      or
      the lapse of time, or both, would become a default under the Loan Documents
      and
      which upon Borrower’s execution and delivery of this Amendment otherwise exist
      or which might hereafter occur.  The failure of Lender at any time or
      times hereafter to require strict performance by Borrower of any of the
      provisions, warranties, terms and conditions contained herein in this Amendment
      or in the other Loan Documents shall not waive, affect or diminish any right
      of
      Lender at any time or times thereafter to demand strict performance thereof;
      and, no rights of Lender hereunder shall be deemed to have been waived by any
      act or knowledge of Lender, its agents, officers or employees, unless such
      waiver is contained in an instrument in writing signed by an authorized officer
      of Lender and directed to such Person specifying such waiver.  No
      waiver by Lender of any of its rights shall operate as a waiver of any other
      of
      its rights or any of its rights on a future occasion at any time and from time
      to time.

     

    14.  Acknowledgment/Waiver
      of Legal Counsel; Drafting of
      Amendment.  Borrower represents and
      warrants that it is represented by legal counsel of its choice, is fully aware
      of the terms contained in this Amendment and has voluntarily and without
      coercion or duress of any kind, entered into this Amendment and the documents
      executed in connection with this Amendment.  Borrower further
      represents and warrants and acknowledges and agrees that it has participated
      in
      the drafting of this Amendment.

     

    15.  Entire
      Agreement; No Third-Party Beneficiaries; Binding
      Affect.  This Amendment, together with
      the other Loan Documents, constitutes the entire and final agreement among
      the
      parties and there are no agreements, understandings, warranties or
      representations among the parties except as set forth herein.  This
      Amendment may be amended, modified, waived, discharged or terminated only by
      a
      writing signed by the Borrower and Lender.  This Amendment and all
      agreements, instruments and documents delivered in connection with this
      Amendment shall constitute Loan Documents and all references to “Loan Documents”
contained in the Loan Documents shall be deemed to include this Amendment and
      all such agreements, instruments and documents.  This Amendment will
      inure to the benefit and bind the respective heirs, administrators, executors,
      representatives, successors and permitted assigns of the parties
      hereto.  Nothing in this Amendment or in the Loan Documents, expressed
      or implied, is intended to confer upon any party other than the parties hereto
      and thereto any rights, remedies, obligations or liabilities under or by reason
      of this Amendment or the Loan Documents.

     

    16.  Governing
      Law.  This Amendment is executed and
      delivered in the State of Maryland (the “State”) and it is the desire and
      intention of the parties that it be in all respects interpreted and construed
      according to the laws of the State, without reference to its conflicts of law
      principles.  Borrower specifically and irrevocably consents to the
      jurisdiction and venue of the federal and state courts of the State with respect
      to all matters concerning this Amendment or the Loan Documents or the
      enforcement of any of the foregoing.  Borrower agrees that the
      execution and performance of this Amendment shall have a State situs and
      accordingly, consents to personal jurisdiction in the State.

     

    17.  Counterparts.
      This Amendment may be executed in counterparts, each of which will
      be
      deemed an original document, but all of which will constitute a single
      document.  This document will not be binding on or constitute evidence
      of a contract between the parties until such time as a counterpart of this
      document has been executed by each of the parties and a copy thereof delivered
      to each party under this Amendment.

     

    
      
        1462637.6

      

      
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    18.  WAIVER
      OF JURY TRIAL.  EACH PARTY TO THIS AMENDMENT KNOWINGLY,
      VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE OR HEREAFTER HAVE
      TO
      A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
      OR
      RELATING TO THIS AMENDMENT OR THE UNDERLYING TRANSACTIONS.  BORROWER
      CERTIFIES THAT NEITHER THE LENDER NOR ANY OF ITS REPRESENTATIVES, AGENTS OR
      COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT IN THE
      EVENT OF ANY SUCH SUIT, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY
      JURY.

     

    19.  Amendment
      Controls. In the event of any inconsistency
      between this Amendment and any of the other Loan Documents, the terms of this
      Amendment shall control.

    

    [Signature
      page follows.]

    

    
      
        
                

                     
      

             

             
      

                    
      
      

                    1462637.6      
    

          
          

        

        
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    IN
      WITNESS WHEREOF, the parties have executed this Amendment under seal as
      of the day and year first written above.

    

    TELTRONICS,
      INC.

     

    

                                                 By:
      /s/  Ewen
      Cameron  

    Name:  Ewen
      Cameron

                                                 Title:    President
      & CEO

     

    

     

    

     

    CAPITALSOURCE
      FINANCE LLC

     

    

     

    By:_____________________________

    Name:

    Title:

    

    
      
        
                

                    
      
      

                    
      
      

                    1462637.6      
    

          
          

        

        
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    REAFFIRMATION
      OF CONTINUING GUARANTY

     

    The
      undersigned, Guarantor of the Obligations and all other debts, liabilities
      and
      obligations under any of the Loan Documents and/or Loans
      (“Guarantor”) pursuant to that Continuing Guaranty Agreement
      dated September 15, 2005 (the “Guaranty”), hereby acknowledges
      and reaffirms the terms of the Guaranty and acknowledges and confirms that
      the
      Guaranty is in full force and effect and shall remain in full force and effect
      notwithstanding the execution and delivery of the Amendment to which this
      Reaffirmation is attached and confirms that the Guaranty shall remain in full
      force and effect following the execution and delivery of such
      Amendment.

    

    

    GUARANTOR:

    

    TELTRONICS
      LIMITED,

    an
      English company

    (registered
      number 04248637)

    

    

    By:
             /s/ Ewen Cameron                                                                    

    Name:
        Ewen Cameron 
                                                                   

    Title:
          Director         

    

    

     

     

     

     

     

     

     

     

     

     

    1462637.6

     

     

    9ex10-wff_amend1.htm

    Exhibit
      10.2

    

      AMENDMENT
        NUMBER ONE TO CREDIT AGREEMENT

       

      This
        Amendment Number One to Credit Agreement (“Amendment”) is entered into as
        of August 8, 2007, 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 FOOTHILL, INC., a
        California corporation, 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,
        Agent, and Lenders desire to amend 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
        definition of “Borrowing Base” set forth in Schedule 1.1 to the Agreement
        ishereby 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)           85%
        of the amount of Eligible Accounts, less the amount, if any, of the
        Dilution Reserve, plus

      

      (b)           the
        lower of

      

      (i)           $1,000,000,
        and

      

      (ii)           15%
        of the value of Inventory valued at cost, minus

      

      (c)           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).

      

      (b)           Schedule
        1.1 to the Agreement is hereby amended by adding the following newdefinition
        thereto in alphabetical order:

      

      “Amendment
        One Effective Date”
mean the date on which that certain Amendment Number One to Credit Agreement
        by
        and among Lenders, Agent and Borrower becomes effective pursuant to its
        terms.

      

      (c)           Clause
        (i) of Section 2.4(c) of the Agreement is hereby amended by deleting
        suchclause in its entirety and replacing it with the following:

      
        
               

              BN
              1306101v3

          

          1

        

        
          
          

          
            

          

        

         

      

              (i)           If,
        as of the last day of any month, (A) the outstanding principal balance of
        the
        Term Loan on such date exceeds (B) the product of (i) 0.70 times (ii) the
        difference of (x) TTM Recurring Revenues calculated as of the last month
        for
        which financial statements have most recently been delivered pursuant to
        Section 5.3, less (y) the outstanding balance of Maintenance Advances on
        such date (such difference being referred to as the “Loan Limit” and such excess
        being referred to as the “Limiter Excess”), then Borrower shall immediately
        prepay the Obligations in accordance with Section 2.4(d)(ii) in an
        aggregate amount equal to the Limiter Excess.

      

      (c)           Clause
        (e) as set forth in Schedule 5.19 to the Agreement is hereby amendedby
        deleting such clause in its entirety and replacing it with the
        following:

      

      (e)           Within
        15 days of the Amendment One Effective Date, Borrower shall deliver to Agent
        Schedule 3 (Intellectual Property Licenses) to the Security Agreement disclosing
        the information called in the Security Agreement in form and content reasonably
        acceptable to Agent.

      

      (d)           Clauses
        (f) as set forth in Schedule 5.19 to the Agreement is hereby deleted in
        its entirety without replacement.  Notwithstanding the aforementioned
        deletion of clause (f) to Schedule 5.19, Borrower hereby acknowledges
        that Agent retains the right pursuant to Section 6(g)(ii) of the Security
        Agreement, to require Borrower, upon the occurrence of a Default or an Event
        of
        Default, to promptly file an application with the United States Copyright
        Office
        with respect to any unregistered Copyright in which Borrower has an interest
        and
        shall execute and deliver to Agent a Copyright Security Agreement or such
        other
        documentation as Agent deems necessary in order to perfect and continue
        perfected Agent’s Liens on such Copyright following such
        registration.

      

      (e)           Clause
        (h) as set forth in Schedule 5.19 to the Agreement is hereby amended by
        deleting such clause in its entirety and replacing it with the
        following:

      

      (h)           No
        later than September 30, 2007, Borrower shall deliver a Collateral Access
        Agreement with respect to the leased facility located at 19-02 Whitestone
        Expressway, Suite 201 & 404, Whitestone, New York 11357.

      

      3.           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.

      

      4.           NO
        DEFAULTS.  Borrower hereby affirms to Agent and Lenders
        that no Event of Default has occurred and is continuing as of the date
        hereof.

      

      5.           CONDITIONS
        PRECEDENT.  The effectiveness of this Amendment is
        expressly conditioned upon receipt by Agent of a fully executed copy of this
        Amendment from each party hereto.

      

      6.           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 and shall continue to have valid, perfected Liens in the
        Collateral as provided in Section 5.2(d) of the Security
        Agreement.

      

      7.           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,

      
        
          
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              1306101v3

          

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      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.

      

      8.           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.

      

      9.           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
              1306101v3

          

          3

        

        
          
          

          
            

          

        

        
          
          

        

      

      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
	 	 	 
	 	 	 
	 	 	 
	 	
                WELLS
                  FARGO FOOTHILL, INC.,

                a California corporation, as Agent and as a
                  Lender

                 

                 

              
	 	By:	/s/
                Tiffany Ormon
	 	Name:	Tiffany
                Ormon
	 	Title:	Vice
                President

      

      
 

       

       

       

       

      S-1

      Amendment
        Number One

       

       

       

       

      BN
        1306101v3

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