EXHIBIT 99.4
AMENDMENT NO. 5 TO LOAN AGREEMENT
AGREEMENT (this "Agreement"), made as of the 22nd day of August, 2008,
by and between COMVEST CAPITAL LLC, a Delaware limited liability company (the
"Lender"), and ALANCO TECHNOLOGIES, INC., an Arizona corporation (the
"Borrower");
W I T N E S S E T H:
WHEREAS, the Lender and the Borrower are parties to a Loan Agreement
dated as of September 28, 2006 (as heretofore amended by Amendment No. 1 dated
as of May 4, 2007 ("Amendment No. 1"), Amendment No. 2 dated as of July 20, 2007
("Amendment No. 2"), Amendment No. 3 dated as of December 27, 2007
("Amendment No. 3"), and Amendment No. 4 dated February 5, 2008 ("Amendment No.
4"), the "Loan Agreement"), the terms and conditions of which are hereby
incorporated herein by reference); and
WHEREAS, the Borrower plans to (a) increase the maximum permitted
principal amount of Line of Credit Obligations from $2,000,000 to $2,500,000,
and (b) issue shares of Series D preferred stock of the Borrower for aggregate
gross proceeds ("Equity Proceeds") of approximately $2,000,000 but in no event
less than $1,500,000 (the "Equity Closing"), which is targeted to occur not
later than August 29, 2008; and
WHEREAS, by reason of the foregoing, and to ▇▇▇▇▇▇ further orderly
development of the Borrower's business, the Borrower has requested certain
modifications to the Loan Agreement as set forth herein; and
WHEREAS, the Lender is willing to make such modifications to the Loan
Agreement, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree, subject to and effective
on and as of the date of the Equity Closing, as follows:
1. Definitions.
(a) Except as otherwise defined herein, all capitalized terms used in this
Agreement have the respective meanings ascribed to them in the Loan Agreement.
(b) The definitions of "Default Rate", "Interest Rate", "Maturity Date" and
"Note" contained in the Loan Agreement are hereby amended so as to read in full
as follows:
"Default Rate" shall mean the increased rate of interest in effect from
time to time under the Note during the continuance of an Event of Default.
"Interest Rate" shall mean, at any time, the rate of interest (other
than the Default Rate) then in effect under the Note.
"Maturity Date" shall mean June 1, 2010.
"Note" shall mean the Amended and Restated Convertible Term Note of the
Borrower in the principal amount of $1,000,000 issued to the Lender pursuant to
Amendment No. 5.
(c) The following new definition is hereby added to Section 1.01 of the Loan
Agreement in the appropriate alphabetical location:
"Amendment No. 5" shall mean the Amendment No. 5 to Loan Agreement
dated as of August 22, 2008 by and between the Lender and the Borrower.
(d) The definitions of "Bank" and "Prime Rate" are hereby deleted from the Loan
Agreement.
2. Partial Prepayment of Note.
(a) Simultaneously with the Equity Closing, the Borrower shall make a prepayment
of the principal of the Note (as in effect prior to this Agreement) in an amount
sufficient to cause the outstanding principal balance of such Note to be reduced
to $1,000,000. No prepayment premium shall be required in respect of such
prepayment.
(b) Simultaneously with the Equity Closing and the prepayment described in
Section 2(a) above, the Borrower shall issue to the Lender an Amended and
Restated Convertible Term Note in substantially the form annexed hereto, and
Section 2.01(c) of the Loan Agreement shall thereupon be deleted from the Loan
Agreement.
(c) All provisions of the Loan Agreement providing conversion rights in respect
of the Note (as in effect prior to this Agreement) shall, upon the execution and
delivery of the Amended and Restated Convertible Term Note described in Section
2(b) above, be superseded in their entirety by the provisions of such Amended
and Restated Convertible Term Note.
3. Elimination of Voluntary and Certain Mandatory Prepayments.
(a) Section 2.01(b) of the Loan Agreement is hereby amended so as to read in
full as follows:
"(b) The principal of the Loan shall be repayable in installments in
accordance with the Note. Any principal amounts repaid or prepaid may not be
reborrowed."
(b) Section 2.02 of the Loan Agreement is hereby amended so as to read in full
as follows:
"Section 2.02. Prepayments. The Borrower shall be required to prepay
the Obligations in full simultaneously with the consummation of any Sale. The
Borrower shall not be permitted voluntarily to prepay all or any portion of the
Note without the prior written consent of the Lender, which consent may be
withheld in the Lender's sole and absolute discretion."
(c) Section 2.03(b) is hereby deleted from the Loan Agreement in its entirety.
4. Additional Permitted Indebtedness.
(a) Pursuant to Sections 6.01(f) and 6.12 of the Loan Agreement, the Lender
hereby consents to an increase in the maximum permitted principal amount of Line
of Credit Obligations from $2,000,000 to $2,500,000; and accordingly, Section
6.01(f) of the Loan Agreement is hereby amended so as to increase the dollar
amount stated therein to $2,500,000.
(b) The following new Section 6.01(j) is hereby added to the Loan Agreement:
"(j) unsecured Indebtedness in such amounts and on such terms and
conditions as the Borrower may determine, provided that the incurrence of such
Indebtedness does not otherwise constitute an Event of Default and would not
reasonably be expected to result in or give rise to an Event of Default."
5. Substitution of Collateral; Release of Blanket Liens. Anything contained in
any of the Loan Documents to the contrary notwithstanding, in the event that the
Lender refuses to accept prepayment in full of the Obligations at any time when
no Event of Default has occurred and is continuing, the Borrower may provide to
the Lender Collateral consisting of cash, or a certificate of deposit qualifying
as a Cash Equivalent under clause (b) of the definition thereof, in an amount or
a principal amount equal to the sum of the then-outstanding principal balance of
the Note plus all other monetary Obligations then outstanding, and upon receipt
by the Lender of such cash or certificate of deposit (including any instruments
of assignment or control, with rights of rollover and reinvestment, as
reasonably required by the Lender), (a) the Lender shall release its Liens on
all other Collateral, and shall deliver to the Borrower and the other "Grantors"
under and as defined in the Collateral Agreement any and all release documents
as may be necessary or appropriate to give effect to such Lien releases, all at
the Borrower's expense, and (b) the non-default interest rate applicable under
the Note shall be reduced to the interest earned by the Lender on or payable in
respect of the substitute Collateral provided to the Lender in accordance to
this Section 5. If, for any reason, the Lender shall be required to surrender or
return such substitute Collateral (including, without limitation, to any
trustee, receiver or other Person under any state or federal bankruptcy or other
such law), then (i) the Lender shall be restored to its prior Lien position with
respect to all of the Collateral, and (ii) the effective non-default interest
rate applicable under the Note shall be restored, retroactively to the date on
which such rate was changed under this Section 5, to the rate(s) that would have
been in effect but for the provisions of this Section 5.
6. Additional Permitted Dividends. The following is hereby added at the end of
Section 6.08 of the Loan Agreement: ", (d) cash dividends on Series D
preferred stock of the Borrower, payable in arrears at a rate not exceeding
that stated in the description of the Series D preferred stock attached hereto
as Exhibit A, or (e) provided that no Event of Default exists at the time of
such payment and such payment would not reasonably be expected to result in or
give rise to an Event of Default, the redemption price (other than upon
liquidation of the Borrower, unless the Loan and all other Obligations have
been paid in full) in respect of any or all of the Series D preferred stock in
accordance with the terms stated in Exhibit A.
7. Other Amendments. Section 5.13(b) is hereby deleted from the Loan Agreement
in its entirety.
8. No Novation. The Borrower hereby acknowledges, confirms and agrees that none
of the amendments effected by this Agreement constitutes or shall constitute a
novation of any of the Obligations.
9. Ongoing Force and Effect. Except as and to the extent expressly provided in
this Agreement, all covenants, terms and conditions of the Loan Documents
shall remain unchanged and in full force and effect. From and after the
effectiveness of this Agreement, all references to the Loan Agreement
contained in the Loan Documents shall mean and refer to the Loan Agreement as
amended by this Agreement, and all references to the Note contained in the
Loan Documents shall mean and refer to the Amended and Restated Convertible
Term Note described in Section 2(b) above.
10. Expenses. The Borrower shall pay or reimburse the Lender on demand for all
out-of-pocket costs, charges and expenses of the Lender (including reasonable
attorneys' fees) in connection with the preparation, execution and delivery of
this Agreement.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except by means of a written agreement signed by the party to be
charged therewith, and then only in the specific instance and for the specific
purpose stated therein.
(c) This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Borrower shall have no right to assign any of its rights or obligations
hereunder or any interest herein without the prior written consent of the
Lender.
(d) The paragraph headings in this Agreement are included for convenience of
reference only, and shall not affect the construction or interpretation of any
of the provisions hereof.
12. Failure of Full Equity Closing. In the event that the Borrower has not
received Equity Proceeds of at least $1,500,000 on or prior to August 29,
2008, then this Agreement shall be null and void ab initio, and the Loan
Agreement shall be restored to and remain in effect as it was prior to this
Agreement (including the requirement to make prepayment in respect of Equity
Proceeds actually received and a prepayment premium thereon). This Section 12
shall be effective notwithstanding the condition stated above that this
Agreement is subject to the Equity Closing.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first set forth above.
COMVEST CAPITAL LLC
By: _________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice Chairman
ALANCO TECHNOLOGIES, INC.
By: _________________________________
Name:
Title:
$1,000,000 August __, 2008
AMENDED AND RESTATED
CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, ALANCO TECHNOLOGIES, INC., an Arizona corporation
(the "Maker"), hereby promises to pay to ComVest Capital LLC, a Delaware limited
liability company ("ComVest"), or registered assigns (hereinafter, collectively
with ComVest, the "Payee"), the sum of One Million ($1,000,000) Dollars (the
"Principal"), with interest thereon, on the terms and conditions set forth
herein and in the Loan Agreement dated as of September 28, 2006 by and between
the Maker and ComVest (as amended from time to time, the "Loan Agreement").
Terms defined in the Loan Agreement and not otherwise defined herein shall have
the meanings assigned thereto in the Loan Agreement.
Payments of principal of, interest on and any other amounts with
respect to this Convertible Term Note (this "Note") are to be made in lawful
money of the United States of America.
Principal and accrued interest of this Note may be convertible into
common stock of the Maker as provided in Section 3 below.
1. Payments.
(a) Interest. This Note shall bear interest ("Interest") on Principal amounts
outstanding from time to time from and after August 1, 2008 at the rate of (i)
seven and one-half (7.5%) percent per annum during the period from August 1,
2008 through and including October 31, 2008, (ii) eight and one-half (8.5%)
percent per annum during the period from November 1, 2008 through and including
January 31, 2009, (iii) nine and one-half (9.5%) percent per annum during the
period from February 1, 2009 through and including April 30, 2009, and (iv) ten
and one-half (10.5%) percent per annum at all times from and after May 1, 2010;
provided, however, that during the continuance of any Event of Default under the
Loan Agreement, the interest rate hereunder shall be increased by five hundred
basis points (5%) per annum over the rate that would otherwise be applicable
hereunder. All Interest shall be computed on the daily unpaid Principal balance
of this Note based on a three hundred sixty (360) day year, and shall be payable
monthly in arrears on the first day of each calendar month commencing September
1, 2008.
(b) Principal. The outstanding Principal of this Note shall be payable in ten
(10) equal monthly installments of $100,000 each due and payable on the first
day of each calendar month commencing September 1, 2009 through and including
June 1, 2010.
(c) Non-Business Day. If any scheduled payment date as aforesaid is not a
business day in either the State of Florida or the State of Arizona, then the
payment to be made on such scheduled payment date shall be due and payable on
the next succeeding business day, with additional interest on any Principal
amount so delayed for the period of such delay.
2. Prepayment.
(a) Optional Prepayment of Principal. The Maker shall not prepay any portion of
the Principal without the Payee's prior written consent, which consent may be
withheld in the Payee's sole and absolute discretion.
(b) Mandatory Prepayments of Principal. The entire Principal balance of this
Note, and all accrued and unpaid Interest hereunder, (i) shall be required to be
prepaid upon the consummation of any Sale, and (ii) may be required to be
prepaid upon the occurrence of any Event of Default.
(c) Application of Payments. Any and all prepayments hereunder shall be applied
first to unpaid accrued Interest on the Principal amount being prepaid, and then
to Principal. Any and all prepayments of Principal hereunder shall be applied to
the installments under Section 1(b) above in the inverse order of their
maturity; provided, however, that any and all prepayments which are deemed to
occur by reason of partial conversions of Principal pursuant to Section 3 below
may, at the sole option of the Payee, be applied to such installments in direct
order of maturity.
3. Conversion.
(a) Optional Conversion. The Payee may, at its option, upon written notice to
the Maker given at any time and from time to time, convert all or any portion of
the unpaid Principal balance of this Note, and/or any accrued Interest thereon,
into shares of common stock of the Maker ("Common Stock"), at a price of $1.21
per share of Common Stock (as same may be adjusted from time to time in
accordance herewith, the "Conversion Price"). The date on which the Maker
receives a conversion election is herein referred to as the "Conversion Date."
To the extent that the Principal of this Note is converted only in part, then
such conversion shall be treated as a prepayment of the Principal amount
converted in accordance with Section 2(c) above.
(b) Mechanics of Conversion. Upon notice to the Maker of the Payee's conversion
election as provided in Section 3(a), the Maker shall, in accordance with
Section 3(c), issue to the Payee (or to the Payee's designee(s) set forth in the
Payee's conversion election) the number of shares of Common Stock to which the
Payee shall be entitled upon such conversion, and shall deliver or cause to be
delivered to the Payee or such designee(s) the certificates representing such
shares of Common Stock. All shares of Common Stock issued or delivered upon any
conversion hereunder shall, when issued or delivered, be duly authorized,
validly issued, fully paid and nonassessable. In lieu of any fractional shares
to which the Payee would otherwise be entitled, the Maker shall pay cash equal
to such fraction multiplied by the per share Conversion Price.
(c) Issuance of Common Stock Upon Conversion. Within a reasonable time, not
exceeding five (5) Business Days after the Conversion Date, the Maker shall
deliver or cause to be delivered, to or upon the written order of the Payee of
this Note so converted, certificates representing the number of fully paid and
nonassessable shares of Common Stock into which this Note has been converted in
accordance with the provisions of this Section 3. If so requested by the Maker,
the Payee shall, within a reasonable time (not exceeding five (5) Business Days
after receipt by the Payee of such certificates), surrender this Note to the
Maker for cancellation, against delivery of a replacement Note representing the
remaining balance (if any) of this Note which has not been converted. Subject to
the following provisions of this Section 3, such conversion shall be deemed to
have occurred on the Conversion Date, so that the Payee or the Payee's
designee(s) shall be treated for all purposes as having become the record holder
of such shares of Common Stock at such time.
(d) Taxes on Conversion. The issuance of certificates for shares for Common
Stock upon the conversion of this Note shall be made without charge by the Maker
to the converting Payee for any tax in respect of the issuance of such
certificates and such certificates shall be issued in the name of, or in such
names as may be directed by, the Payee; provided, however, that the Maker shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance or delivery of any such certificate in a name other
than that of the Payee, and the Maker shall not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Maker the amount of any such tax or shall have
established to the satisfaction of the Maker that any such tax has been paid.
(e) Adjustment of Shares.
(i) Stock Dividends, Distributions or Subdivisions.
In the event that, at any time and from time to
time from and after the date of this Note, the Maker shall issue additional
shares of Common Stock (or securities convertible into Common Stock) in a stock
dividend, stock distribution or subdivision paid with respect to Common Stock,
or declare any dividend or other distribution payable in additional shares of
Common Stock (or securities convertible into Common Stock) or effect a split or
subdivision of the outstanding shares of Common Stock, then, concurrently with
the effectiveness of such stock dividend, stock distribution or subdivision, the
then-effective Conversion Price shall be proportionately decreased, and the
number of shares of Common Stock issuable upon conversion of this Note shall
thus be proportionately increased.
(ii) Combinations or Consolidations. In the event
that, at any time and from time to time from and
after the date of this Note, the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, then, concurrently with the effectiveness of such
combination or consolidation, the then-effective Conversion Price shall be
proportionately increased, and the number of shares of Common Stock issuable
upon conversion of this Note shall thus be proportionately decreased.
(iii) Other Dividends or Distributions. If the Maker,
at any time or from time to time after the issuance of this Note, makes a
distribution to the holders of Common Stock which is payable in securities of
the Maker other than Common Stock, then, in each such event, provision shall be
made so that the Payee shall receive upon conversion of this Note, in addition
to the number of shares of Common Stock, the amount of such securities of the
Maker which would have been received if the portion of this Note so converted
had been exercised for Common Stock on the date of such event, subject to
adjustments subsequent to the date of such event with respect to such
distributed securities which shall be on terms as nearly equivalent as
practicable to the adjustments provided in this Section 3(e)(iii) and all other
adjustments under this Section 3(e). Nothing contained in this Section 3(e)(iii)
shall be deemed to permit the payment of any distribution in violation of the
Loan Agreement.
(iv) Merger, Consolidation or Exchange. If, at any
time or from time to time after the date of this Note, there occurs any merger,
consolidation, arrangement or statutory share exchange of the Maker with or into
any other person or entity, then, in each such event, provision shall be made so
that the Payee shall receive upon conversion of this Note the kind and amount of
shares and other securities and property (including cash) which would have been
received upon such merger, consolidation, arrangement or statutory share
exchange by the Payee if the portion of this Note so converted had been
converted into shares of Common Stock immediately prior to such merger,
consolidation, arrangement or statutory share exchange, subject to adjustments
for events subsequent to the effective date of such merger, consolidation,
arrangement or statutory share exchange with respect to such shares and other
securities which shall be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3(e)(iv) and all other adjustments under
this Section 3(e). Nothing contained in this Section 3(e)(iv) shall be deemed to
permit any such transaction in violation of the Loan Agreement.
(v) Recapitalization or Reclassification. If, at any
time or from time to time after the date of this Note, the shares of Common
Stock issuable upon conversion of this Note are changed into the same or a
different number of securities of any class of the Maker, whether by
recapitalization, reclassification or otherwise (other than a merger,
consolidation, arrangement or statutory share exchange provided for
elsewhere in this Section 3(e)), then, in each such event, provision shall be
made so that the Payee shall receive upon conversion of this Note the kind and
amount of securities or other property which would have been received in
connection with such recapitalization, reclassification or other change by the
Payee if the portion of this Note so converted had been converted immediately
prior to such recapitalization, reclassification or change, subject to
adjustments for events subsequent to the effective date of such
recapitalization, reclassification or other change with respect to such
securities which shall be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3(e)(v) and all other adjustments under
this Section 3(e).
(vi) Extraordinary Dividends or Distributions. If, at
any time or from time to time after the date of this Note, the Maker shall
declare a dividend or any other distribution upon the Common Stock payable
otherwise than out of current earnings, retained earnings or earned surplus and
otherwise than in shares of Common Stock, then the Conversion Price in effect
immediately prior to such declaration shall be reduced by an amount equal, in
the case of a dividend or distribution in cash, to the amount thereof payable
per share of Common Stock or, in the case of any other dividend or distribution,
to the value thereof per share of Common Stock at the time such dividend or
distribution was declared, as determined by the Board of Directors of the Maker
in good faith. Such reductions shall take effect as of the date on which a
record is taken for the purposes of the subject dividend or distribution, or, if
a record is not taken, the date as of which the holders of record of Common
Stock entitled to such dividend or distribution are to be determined. Nothing
contained in this Section 3(e)(vi) shall be deemed to permit the payment of any
dividend or distribution in violation of the Loan Agreement.
(vii) Certificate of Adjustment. Whenever the
Conversion Price and/or the number of shares of Common Stock receivable upon
conversion of this Note is adjusted, the Maker shall promptly deliver to the
Payee a certificate of adjustment, setting forth the Conversion Price and/or
shares of Common Stock issuable after adjustment, a brief statement of the facts
requiring the adjustment and the computation by which the adjustment was made.
The certificate of adjustment shall be prima facie evidence of the correctness
of the adjustment.
(viii) Successive Application. The provisions of this
Section 3(e) shall be applicable successively to each event described herein
which may occur subsequent to the date of this Note and prior to the conversion
in full of this Note.
(ix) Fractional Shares. No fractional shares of
Common Stock shall be issuable by reason of any adjustments made pursuant to
this Section 3(e); and in lieu of any such fractional shares, the Maker shall
pay cash therefor in accordance with Section 3(b) above.
(f) No Impairment. The Maker will not, by amendment of its Organic Documents or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder but will at all times in good faith assist in the
carrying out of all the provisions of this Section 3 and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the Payee against impairment. In the event of any merger or
consolidation in which the Maker is not the surviving entity, the Maker shall
make appropriate arrangements in order that, upon any subsequent conversion of
this Note, the Payee shall become entitled to receive the same securities or
other consideration that the Payee would have received had such conversion been
made immediately prior to the consummation of such merger or consolidation,
subject to further adjustments, of the type provided in this Note, with respect
to any events relating to any such securities occurring subsequent to the
consummation of such merger or consolidation.
(g) Common Stock Reserved. The Maker shall at all times reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect the full
conversion of this Note into Common Stock.
4. Events of Default. The occurrence or existence of an Event of Default under
the Loan Agreement shall constitute a default under this Note and shall entitle
the Payee to accelerate the entire indebtedness hereunder and take such other
action as may be provided for in the Loan Agreement and/or in any and all other
instruments evidencing and/or securing the indebtedness under this Note, or as
may be provided under the law.
5. Assignment. This Note shall be binding upon and shall inure to the benefit of
the respective successors and permitted assigns of the parties hereto, provided
that the Maker may not assign any of its rights or obligations hereunder without
the prior written consent of the Payee.
6. Waiver and Amendment. No waiver of a right in any instance shall constitute a
continuing waiver of successive rights, and any one waiver shall govern only the
particular matters waived. Neither any provision of this Note nor any
performance hereunder may be amended or waived except pursuant to an agreement
in writing signed by the party against whom enforcement thereof is sought.
Except as otherwise expressly provided in this Note, the Maker hereby waives
diligence, demand, presentment for payment, protest, dishonor, nonpayment,
default, notice of any and all of the foregoing, and any other notice or action
otherwise required to be given or taken under the law in connection with the
delivery, acceptance, performance, default, enforcement or collection of this
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended, modified or subordinated (by forbearance or otherwise) from time to
time, without in any way affecting the liability of the Maker. The Maker further
waives the benefit of any exemption under the homestead exemption laws, if any,
or any other exemption, appraisal or insolvency laws, and consents that the
Payee may release or surrender, exchange or substitute any personal property or
other collateral security now held or which may hereafter be held as security
for the payment of this Note.
7. Governing Law. This Note shall be construed in accordance with and governed
by the laws of the State of New York, except to the extent superseded by Federal
enactments.
8. Consent to Jurisdiction; Waiver of Jury Trial. The Maker hereby consents to
the jurisdiction of all courts of the State of New York and the United States
District Court for the Southern District of New York, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of or with
respect to this Note. The Maker hereby waives the right to interpose any
counterclaims (other than compulsory counterclaims) in any action brought by the
Payee hereunder, provided that this waiver shall not preclude the Maker from
pursuing any such claims by means of separate proceedings. THE MAKER HEREBY
EXPRESSLY WAIVES ANY AND ALL OBJECTIONS WHICH IT MAY HAVE AS TO VENUE IN ANY OF
SUCH COURTS, AND ALSO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. The Payee may file a copy of this Note as evidence of the
foregoing waiver of right to jury trial.
9. Usury Savings Clause. All agreements between the Maker and the Payee are
hereby expressly limited to provide that in no contingency or event whatsoever,
whether by reason of acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid to the Payee for
the use, forbearance or detention of the indebtedness evidenced hereby exceed
the maximum amount which the Payee is permitted to receive under applicable law.
If, from any circumstances whatsoever, fulfillment of any provision hereof or of
the Loan Agreement or any Loan Document thereunder, at the time performance of
such provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall
automatically be reduced to the limit of such validity, and if from any
circumstance the Payee shall ever receive as interest an amount which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal balance of any of the Maker's
Obligations (as such term is defined in the Loan Agreement) to the Payee, and
not to the payment of interest hereunder. To the extent permitted by applicable
law, all sums paid or agreed to be paid for the use, forbearance or detention of
the indebtedness evidenced by this Note shall be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment in full,
to the end that the rate or amount of interest on account of such indebtedness
does not exceed any applicable usury ceiling. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof, provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this Note shall be governed by such
new law as of its effective date. This provision shall control every other
provision of all agreements between the Maker and the Payee.
10. Collection Costs. In the event that the Payee shall place this Note in the
hands of an attorney for collection during the continuance of any Event of
Default, the Maker shall further be liable to the Payee for all costs and
expenses (including reasonable attorneys' fees) which may be incurred by the
Payee in enforcing this Note, all of which costs and expenses shall be
obligations under and part of this Note; and the Payee may take judgment for all
such amounts in addition to all other sums due hereunder.
11. Effect on Prior Note. This Note amends, restates and supercedes in its
entirety the Term Note dated September 28, 2006 in the original principal amount
of $4,000,000 issued by the Maker to ComVest, provided that this Note does not
effect a novation of the outstanding obligations under such prior Term Note (all
of which obligations shall henceforth be evidenced by this Note).
IN WITNESS WHEREOF, the Maker has executed this Note on the date first
above written.
ALANCO TECHNOLOGIES, INC.
By:_______________________________________
Name:
Title: