FIRST AMENDEMENT TO LOAN AGREEMENT
Exhibit
10.18
FIRST
AMENDEMENT TO LOAN AGREEMENT
The First
Amendment to Loan Agreement (“First Amendment”) dated February 13, 2009
references and amends a certain Loan Agreement dated as of February 13,2008
(“Loan Agreement”) between Enterprise Bank & Trust (“Lender”) and Digital
Ally, Inc. (“Borrower”).
RECITALS
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A.
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Lender
and Borrower have previously entered into the above reference Loan
Agreement.
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B.
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Lender
and Borrower wish to modify and amend the terms and conditions of the Loan
Agreement as hereinafter provided.
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NOW
THEREFORE, in consideration of the covenants and mutual agreements of the
parties contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
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1.
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The
following is hereby deleted in its
entirety:
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Borrowing
Base. The words “Borrowing Base” mean, as determined by Lender from time to
time, the lesser of (1) $1,500,00.00 or (2) the sum of (a) 75.000% of the
aggregate amount of Eligible Accounts, plus (b) 50.000% of the aggregate amount
of Eligible Inventory.
The
following is hereby substituted for the above deletion:
Borrowing
Base. The words “Borrowing Base” mean, as determined by Lender from time to
time, the lesser of (1) $2,500,000.00 or (2) the sum of (a) 75.000% of the
aggregate amount of the Eligible Accounts, plus (b) 50.000% of the aggregate
amount of Eligible Inventory.
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2.
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The
following is hereby added:
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Other
Requirements. Tangible Net Worth
Borrower
shall maintain a minimum Tangible Net Worth of not less than $15,000,000.00.
This covenant will be tested on a quarterly basis.
“Tangible Net Worth”
means the book value of the Borrower’s total assets less total liabilities,
excluding from such assets all Intangibles.
“Intangibles” means
and includes general intangibles (as that term is defined in the Uniform
Commercial Code); software (purchased or developed in-
house);
accounts receivable and advances due from officers, directors, employees,
stockholders and affiliates; leasehold improvements net of depreciation;
licenses; good will; prepaid expenses; escrow deposits; covenants not to
compete; the excess of cost over book value of acquired assets; franchise fees;
organizational costs; finance reserves held for recourse obligations;
capitalized research and development costs; the capitalized cost of patents,
trademarks, service marks and copyrights net of amortization; and such other
similar items as Enterprise Bank & Trust may from time to time determine in
the banks sole discretion.
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3.
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The
Loan Agreement as amended hereby shall continue in full force and effect
until such time as all of Borrower’s obligations and indebtedness to Bank
have been paid in full, including principal, interest, costs and
expenses.
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4.
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Borrower
confirms and acknowledges to Bank that (i) all of the representations,
warranties and covenants contained in the Loan Agreement as of
the date of this First Amendment are true and correct in all material
respects and (ii) there now exists no event of default under the Loan
Agreement or any event or omission that with the giving of notice or the
passage of time would constitute an event of default under the Loan
Agreement.
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5.
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Except
as expressly set forth in this First Amendment, all terms and conditions
of the Loan Agreement and all other instruments, agreements and documents
executed in connection with the loan Agreement and the Notes shall remain
unmodified and in full force and
effect.
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IN
WITNESS WHEREOF, the undersigned have executed this First Amendment as of the
date and year first above written.
ENTREPRISE
BANK &
TRUST DIGITAL
ALLY, INC.
By: ____________________
By: ____________________
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇▇▇▇
▇▇. Vice
President Chairman
and CEO
EX-10.17
7 dex1017.htm PROMISSORY NOTE WITH ENTERPRISE BANK DATED FEBRUARY 13,
2009
PROMISSORY
NOTE
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Principal
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Loan
Date
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Maturity
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Loan
No
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Call / Coll
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Account
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Officer
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Initials
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$2,500,000.00
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02-13-2009
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02-13-2010
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8126863
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20
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TDM
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References
in the boxes above are for Lender’s use only and do not limit the applicability
of this document
to any
particular loan or item.
Any item
above containing “***” has been omitted due to text length
limitations.
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Borrower:
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DIGITAL
ALLY, INC. (TIN: ▇▇-▇▇▇▇▇▇▇)
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
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Lender:
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Enterprise
Bank & Trust
E
▇▇▇▇▇▇▇ / Independence
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Principal
Amount: $2,500,000.00
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Initial
Rate: 5.500%
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Date
of Note: February 13, 2009
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PROMISE
TO PAY. DIGITAL ALLY, INC. (“Borrower”) promises to pay to Enterprise
Bank & Trust (“Lender”), or order, in lawful money of the United States
of America, the principal amount of Two Million Five Hundred Thousand &
00/100 Dollars ($2,500,000.00) or so much as may be outstanding, together with
interest on the unpaid outstanding principal balance of each advance. Interest
shall be calculated from the date of each advance until repayment of each
advance.
PAYMENT.
Borrower will pay this loan in one payment of all outstanding principal plus all
accrued unpaid interest on February 13, 2010. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning March 13, 2009, with all subsequent interest
payments to be due on the same day of each month after that. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
accrued unpaid Interest; then to principal; then to any unpaid collection costs;
and then to any late charges. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing.
VARIABLE INTEREST RATE. The
Interest rate on this Note is subject to change from time to time based on
changes in an index which is the Enterprise Bank Prime Rate (the “Index”). The
Index is not necessarily the lowest rate charged by Lender on its loans and is
set by Lender in its sole discretion. If the Index becomes unavailable during
the term of this loan, Lender may designate a substitute Index after notifying
Borrower. Lender will tell Borrower the current index rate upon Borrower's
request. The interest rate change will not occur more often than each day.
Borrower understands that Lender may make loans based on other rates as well.
The Index currently is
4.000% per annum. The interest rate to be applied to the unpaid
principal balance during this Note will be calculated as described in the
“INTEREST CALCULATION METHOD” paragraph resulting in an initial rate of 5.500%
per annum based on a year of 360 days. . NOTICE: Under no circumstances will the
interest rate on this Note be less than 5.500% per annum or more than the
maximum rate allowed by applicable law.
INTEREST
CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that
is, by applying the ratio of the interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. All interest payable under this
Note is computed using this method.
PREPAYMENT. Borrower may pay
without penalty all or a portion of the amount owed earlier than it is due.
Early payments will not, unless agreed to by Lender in writing, relieve Borrower
of Borrower’s obligation to continue to make payments of accrued unpaid
interest. Rather, early payments will reduce the principal balance due. Borrower
agrees not to send Lender payments marked “paid in full”, “without recourse”, or
similar language. If Borrower sends such a payment, Lender may accept it without
losing any of Lender’s rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes “payment in full” of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: Enterprise Bank &
Trust, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
LATE CHARGE. If a payment is
15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the
regularly scheduled payment or $100.00, whichever is
greater.
INTEREST AFTER DEFAULT. Upon
default, including failure to pay upon final maturity, the interest rate on this
Note shall be increased by adding a 3.000 percentage point margin (“Default Rate
Margin”). The Default Rate Margin shall also apply to each succeeding interest
rate change that would have applied had there been no default. However, in no
event will the interest rate exceed the maximum interest rate limitations under
applicable law.
DEFAULT. Each of the following
shall constitute an event of default (“Event of Default”) under this
Note:
Payment Default. Borrower
fails to make any payment when due under this Note.
Other Defaults. Borrower fails
to comply with or to perform any other term, obligation, covenant or condition
contained in this Note or in any of the related documents or to comply with or
to perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
False Statements. Any
warranty, representation or statement made or furnished to Lender by Borrower or
on Borrower's behalf under this Note or the related documents is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or
termination of Borrower’s existence as a going business, the insolvency of
Borrower, the appointment of a receiver for any part of Borrower’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against Borrower.
Creditor or Forfeiture
Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by
any creditor of Borrower or by any governmental agency against any collateral
securing the loan any suit or arbitration proceeding is commenced against
Borrower, or any judgment or arbitration award is entered against Borrower. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if there
Is a good faith dispute by Borrower as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.
Events Affecting Guarantor.
Any of the preceding events occurs with respect to any guarantor, endorser,
surety, or accommodation party of any of the indebtedness or any guarantor,
endorser, surety, or accommodation party dies or becomes incompetent, or revokes
or disputes the validity of, or liability under, any guaranty of the
indebtedness evidenced by this Note.
Change In Ownership. Any
change in ownership of twenty-five percent (25%) or more of the common
stock of Borrower.
Adverse Change. A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of this Note is impaired.
Insecurity. Lender in good
faith believes itself insecure.
LENDER’S RIGHTS. Upon default,
Lender may declare the entire unpaid principal balance under this Note and all
accrued unpaid interest immediately due, and then Borrower will pay that
amount.
ATTORNEYS' FEES; EXPENSES.
Lender may hire or pay someone else to help collect this Note if Borrower does
not pay. Borrower will pay Lender that amount. This includes, subject to any
limits under applicable law, Lender’s attorneys’ fees and Lender’s legal
expenses whether or not there is a lawsuit, including attorneys’ fees and
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or Injunction), and appeals. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums provided
by law.
GOVERNING
LAW. This Note will be governed by federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the State of Missouri without
regard to its conflicts of law provisions. This Note has been accepted by Lender
In the State of Missouri.
CHOICE OF VENUE. Borrower
agrees that the sole jurisdiction of any lawsuit arising hereunder shall be the
state or federal courts having jurisdiction over any county in which the Lender
has an office.
DISHONORED ITEM FEE. Borrower
will pay a fee to Lender of $20.00 if Borrower makes a payment on Borrower’s
loan and the check or preauthorized charge with which Borrower pays is later
dishonored.
RIGHT OF SETOFF. To the extent
permitted by applicable law, Lender reserves a right of setoff in all Borrower’s
accounts with Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else and all accounts
Borrower may open in the future. However, this does not include any ▇▇▇ or ▇▇▇▇▇
accounts, or any trust accounts for which setoff would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the indebtedness against any and all such accounts,
and, at Lender’s option, to administratively freeze all such accounts to allow
Lender to protect Lender’s charge and setoff rights provided in this
paragraph.
COLLATERAL. Borrower
acknowledges this Note is secured by a Commercial Security Agreement on all
Corporate Assets. Failure to identify collateral for this note shall not
constitute a waiver of such collateral.
LINE OF CREDIT. This Note
evidences a revolving line of credit. Advances under this Note, as well as
directions for payment from Borrower's accounts, may be requested orally or in
writing by Borrower or by an authorized person. Lender may, but need not,
require that all oral requests be confirmed in writing. Borrower agrees to be
liable for all sums either: (A) advanced in accordance with the
instructions of an authorized person or (B) credited to any of Borrower’s
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender’s internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (A) Borrower or any guarantor is in
default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (B) Borrower or any guarantor ceases doing business
or Is insolvent; (C) any guarantor seeks, claims or otherwise attempts to
limit, modify or revoke such guarantor’s guarantee of this Note or any other
loan with Lender; (D) Borrower has applied funds provided pursuant to this
Note for purposes other than those authorized by Lender; or (E) Lender in
good faith believes itself insecure.
SUCCESSOR INTERESTS. The terms
of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal
representatives, successors and assigns, and shall inure to the benefit of
Lender and its successors and assigns.
GENERAL PROVISIONS. If any
part of this Note cannot be enforced, this fact will not affect the rest of the
Note. Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
FAILURE TO PROVIDE INSURANCE.
Borrower agrees to deliver to Lender by the loan closing date evidence of the
required insurance as set forth in the security documents for the loan. Unless
Borrower provides evidence of the insurance coverage required by Lender, Lender
may purchase insurance at Borrower’s expense to protect Lender’s interest in the
collateral. This insurance may, but need not, protect Borrower’s interest. The
coverage that Lender purchases may not pay any claim that Borrower makes, or any
claim that is made against Borrower in connection with the collateral. Borrower
may later cancel any insurance purchased by Lender, but only after providing
evidence that Borrower has obtained Insurance as required by Lender. if Lender
purchases insurance for the collateral, Borrower will be responsible for the
cost of that Insurance, including the insurance premium, interest and any other
charges Lender may impose in connection with placement of the insurance, until
the effective date of the cancellation or expiration of the insurance. The cost
of the insurance may be more than the cost of insurance Borrower may be able to
obtain on Borrower’s own. In addition, the insurance may not provide any public
liability or property damage indemnification and may not meet the requirements
of any financial responsibility laws.
ORAL
AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT
IS IN ANY WAY RELATED TO 'THE CREDIT AGREEMENT, TO PROTECT YOU (BORROWER(S)) AND
US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE
CONTAINED
IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT
BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
JURY WAIVER. Borrower hereby
waives the right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Borrower against the other.
PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE
TERMS OF THE NOTE.
BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
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DIGITAL ALLY,
INC.
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By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman and CEO of DIGITAL
ALLY,
INC.
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DISBURSEMENT
REQUEST AND AUTHORIZATION
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Principal
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Loan
Date
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Maturity
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Loan
No
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Call / Coll
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Account
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Officer
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Initials
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$2,500,000.00
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02-13-2009
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02-13-2010
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8126863
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20
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TDM
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Borrower:
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DIGITAL
ALLY, INC. (TIN: ▇▇-▇▇▇▇▇▇▇)
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
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Lender:
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Enterprise
Bank & Trust
E
▇▇▇▇▇▇▇ / Independence
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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LOAN TYPE. This is a Variable
Rate Nondisclosable Revolving Line of Credit Loan to a Corporation for
$2,500,00.00 due on February 13, 2010.
PRIMARY PURPOSE OF LOAN. The
primary purpose of this loan is for:
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[
]ƒ
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Personal,
Family, or Household Purposes or Personal
Investment.
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[
]ƒ
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Business
(including Real Estate Investment).
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SPECIFIC PURPOSE. The specific
purpose of this loan is: renew and increase existing line of
credit.
DISBURSEMENT INSTRUCTIONS.
Borrower understands that no loan proceeds will be disbursed until all of
lender’s conditions for making the loan have been satisfied. Please disburse the
loan proceeds of $2,500,000.00 as follows:
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Other
Disbursements:
$2,500,000.00 to borrower upon request
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$2,500,00.00
_________
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$2,500,000.00
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CHARGES PAID IN CASH. Borrower
has paid or will pay in cash as agreed the following charges:
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Prepaid
Finance Charges Paid in Cash:
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$0.00
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Other
Charges Paid in Cash:
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$150.00
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$150.00 Loan Fee to Enterprise Bank &
Trust
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__________
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Total
Charges Paid in Cash:
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$150.00
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FINANCIAL
CONDTION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND WARRANTS TO
LENDER THAT THE INFORMATION PROVBIDED ABOVE IS TRUE AND CORRECT AND THAT THERE
HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER’S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER’S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED FEBRUARY 13, 2009.
BORROWER:
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DIGITAL ALLY,
INC.
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By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman and CEO of
DIGITAL ALLY, INC.
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