EXHIBIT 10.7
TERM NOTE
Effective
$490,423 DALLAS, TEXAS September 20, 1996
For value received, Teltronics, Inc., a Florida corporation, whose
address is 0000 Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx 00000 and SRX of
Florida, Inc., a Florida corporation whose address is 0000 Xxxxxxxxx
Xxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx 00000 (collectively referred to herein as
"Borrowers" and individually referred to herein as "Borrower"), jointly and
severally, promise to pay to the order of Solecton Texas, L.P., a Delaware
limited partnership (herein called "Lender"), at its offices at 00000
Xxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxx 00000, in lawful money of the United States
of America, the sum of FOUR HUNDRED NINETY THOUSAND FOUR HUNDRED TWENTY-THREE
AND 00/100 DOLLARS ($490,423.00), payable as provided herein, with no
interest accruing thereon through the date of maturity.
1. PAYMENT TERMS. The principal amount of this Note shall be due and
payable in three (3) equal monthly installments of $163,474.33. The first
installment shall be due on or before January 23, 1997, and shall be made by
check (addressed to Solectron Texas, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxx
00000, Attention Credit Manager) or wire transfer. Each of the two (2)
remaining installments shall be due and payable on the 23rd day of February
and March, 1997, respectively.
2. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under this Note and the SRX Documents (as
herein defined):
(a) Failure by Borrower or any other Obligated Party (as herein
defined) to pay any principal of this Note (or any renewal, substitution,
extension, modification or rearrangement thereof or therefor) when due or
declared due; or,
(b) A default in the observance or performance of any of the
covenants, conditions, terms, or agreements of this Note or the SRX
Documents; or,
(c) Xxxxxxxx is not paying any of their indebtedness as the same
becomes due (other than indebtedness being actively contested in good faith)
or any default is declared by C.I.T. Group/Credit Finance, Inc. (or successor
lender) in respect of any loans to Teltronics, Inc.; or
(d) Filing by Borrower of a voluntary petition or any answer
seeking reorganization, arrangement or readjustment of its debts or for any
other relief under any applicable bankruptcy act or law, or under any other
insolvency act or law, now or hereafter existing, or any action by Borrower
consenting to, approving of, or acquiescing in, any such petition or
proceeding; the application by Borrower for, or the appointment by consent or
acquiescence of, a receiver or trustee for Borrower or for all or a
substantial part of its properties; the making by Borrower of an assignment
for the benefit of creditors; or the inability of Borrower or the admission
by Xxxxxxxx, in writing, of its inability, to pay its debts as they mature
(the term "acquiescence" as used in this paragraph (f) shall mean the failure
to file a petition or motion in opposition to such petition or proceeding or
to vacate or discharge any order, judgment or decree providing for such
appointment within five (5) days after the appointment of a receiver or
trustee); or,
(e) Filing of an involuntary petition against Borrower in
bankruptcy seeking reorganization, arrangement or readjustment of its debts or
for any other relief under any applicable bankruptcy act or law, or under any
other insolvency act or law, now or hereafter existing, and such petition
remains undismissed or unanswered for a period of thirty (30) days from such
filing, or the involuntary appointment of a receiver or trustee for Borrower
or for all or a substantial part of its property, and such appointment remains
unvacated for a period of thirty (30) days or unopposed for a period of
thirty (30) days after such appointment; or the issuance of a warrant of
attachment, execution or similar process against any substantial part of the
property of Borrower and such warrant remains unbonded or undismissed for a
period of thirty (30) days after notice to Borrower of its issuance; or,
(f) Final judgment for the payment of money is rendered against
Xxxxxxxx and the same shall remain undischarged for a period during which
execution shall not be effectively stayed; or,
(g) The occurrence of an event occurs which has a material adverse
effect on the financial condition or operation of Borrower, or the Lender in
good xxxxx xxxxx itself insecure.
3. REMEDIES. Upon the occurrence of any Event of Default and at any
time thereafter, thereupon at the option of Lender (i) all obligations, if
any, of the Lender hereunder, shall immediately cease and terminate unless
and until the Lender shall reinstate same in writing; (ii) the entire
principal of the Note then remaining unpaid shall be immediately DEMANDED
and forthwith due without notice of any kind; (iii) the Lender may commence
collection and/or other proceedings under the terms and conditions of the SRX
Documents or under applicable laws; and (iv) Lender may exercise its rights
of set-off against any deposits held by Lender. The remedies of Lender
hereunder are cumulative, and the exercise of any one or more of the remedies
provided for herein shall not be construed as a waiver of any of the other
remedies of the Lender. The Lender may exercise its rights against one
Borrower without enforcing its rights against any other Obligated Party.
4. DEFAULT RATE INTEREST. All past due principal shall bear interest
at the Highest Lawful Rate (as herein defined) from its due date until paid.
5. COLLECTION COSTS. If this Note is not paid at maturity whether by
acceleration or otherwise and is placed in the hands of an attorney for
collection, or suit is filed hereon, or proceedings are had in probate,
bankruptcy, receivership, reorganization, arrangement or other legal
proceedings for collection hereof, Borrower and each other Obligated Party
agree to pay Lender its collection costs, including a reasonable amount for
attorney's fees, but in no event to exceed the maximum amount permitted by
law or otherwise allowed by a court of competent jurisdiction in an
unappealable judgment. Borrower and each other Obligated Party are and shall
be directly and primarily, jointly and severally, liable for the payment of
all such collection costs called for hereunder, and Xxxxxxxx and each other
Obligated Party hereby expressly waive bringing of suit and diligence in
taking any action to collect any sums owing hereon and in the handling of any
collateral or security.
6. USURY SAVINGS. It is the intention of Borrowers and Lender to
conform strictly to applicable usury laws. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law, then, in that
event, notwithstanding anything to the contrary herein or in any agreement
entered into in connection with or as security for this Note, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest
under applicable law that is taken, reserved, contracted for, charged or
received under this Note or under any of the other Loan Documents or
otherwise in connection with this Note shall under no circumstances exceed
the maximum amount of nonusurious interest allowed by applicable law, and any
excess shall be credited on this Note by the holder hereof (or, to the extent
that this Note shall have been or would thereby be paid in full, then it
shall be applied to any other indebtedness of Borrower to Lender, or to the
extent all other indebtedness has been or would thereby be paid in full,
refunded to Borrower); and (ii) in the event that maturity of this Note is
accelerated by reason of an election by the holder hereof resulting from any
default hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never
include more than the maximum amount of nonusurious interest allowed by
applicable law, and excess interest, if any, provided for in this Note or
otherwise shall be canceled automatically as of the date of such acceleration
or prepayment and, if theretofore prepaid, shall be credited on this Note
(or, to the extent that this Note shall have been or would thereby be paid in
full, then it shall be applied to any other indebtedness of Borrower to
Lender, or to the extent all other indebtedness has been or would thereby be
paid in full, refunded to Borrower).
7. PREPAYMENT. The Borrower reserves the option of prepaying the
principal of this Note, in whole or in part, at any time after the date
hereof without penalty. All amounts of principal so prepaid and received by
the holder of this Note shall be applied to the principal installments of
this Note in their inverse order of maturity.
8. WAIVERS BY XXXXXXXX. The Borrower and each Obligated Party waive
presentment, protest, notice of acceleration, demand, notice of intent to
accelerate, notice of protest and all other notices of any kind all of which
are hereby expressly waived by each Borrower and each Obligated Party, and
Borrower and each other Obligated Party hereby consent to and agree to remain
liable hereon regardless of any renewals, extensions for any period or
rearrangements hereof, or partial payments hereon, or any release or
substitution of any other Obligated Party or of any collateral or security
hereof, in whole or in part, with or without notice, from time to time,
before or after maturity. The Borrower expressly waives: (1) surrender,
release, exchange, substitution, dealing with or taking additional
collateral, (2) abstaining from taking advantage of or realizing upon any
security interest of the collateral, and (3) any impairment of collateral
including, but not limited to, failure to perfect a security interest in the
collateral.
9. GOVERNING LAW. This Note shall be construed under and governed by
the laws of the State of Texas (including applicable federal law).
10. DEFINITIONS.
(a) "HIGHEST LAWFUL RATE" shall mean the maximum rate of
nonusurious interest allowed from time to time by law. Unless changed in
accordance with law, the applicable rate ceiling under Texas law shall be
the indicated (weekly) rate ceiling from time to time in effect as provided
in Tex. Rev. Civ. Stat. Xxx. art. 5069-1.04, as amended; but in no event
shall Tex. Rev. Civ. Stat. Xxx. art. 5069 ch. 15 (which regulates certain
revolving loan accounts and revolving triparty accounts) apply to the loan
evidenced by this Note.
(b) "SRX DOCUMENTS" shall mean that certain Asset Sale Agreement
dated September 19, 1996 executed by Xxxxxx, the Borrowers and other parties
and all exhibits thereto.
(c) "OBLIGATED PARTY(IES)" shall mean the Borrowers, jointly and
severally, and any drawer, accepter, endorser, guarantor, surety,
accommodation party or any other person or entity now or hereafter primarily
or secondarily liable upon or for payment of all or any part of the
principal or interest of this Note.
11. FINAL AGREEMENT. THIS Note, AND ALL OTHER SRX DOCUMENTS EXECUTED
IN CONNECTION XXXXXXXX, REPRESENT THE FINAL AND ENTIRE AGREEMENT BETWEEN THE
PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, SUBSEQUENT OR
CONTEMPORANEOUS ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENT
BETWEEN THE PARTIES.
12. OTHER CONTROLLING AGREEMENTS. This Note is made in furtherance of
the terms and conditions of the SRX Documents, and specifically the
obligation of Borrowers to provide for designation of payments from the
Motorola Purchase Orders through Borrowers' primary lender, C.I.T
Group/Credit Finance, Inc., as provided in Section 2.2 of the Asset Sale
Agreement.
13. NON-ASSIGNMENT. This Note and the obligations created hereunder
may not be assigned or transferred to another party or a third party without
the express written consent of Xxxxxx.
EXECUTED as of, although not necessarily on, the date first written
above.
BORROWER: TELTRONICS, INC.
By: Xxxx X. Xxxxxxx
Its: President & CEO
BORROWER: SRX OF FLORIDA, INC.
By: Xxxx X. Xxxxxxx
Its: President
