LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is entered into this 25th day of
June, 2006, between ALANCO TECHNOLOGIES, INC., an Arizona corporation
("Alanco"), and STARTRAK SYSTEMS, LLC, a Delaware limited liability company
("StarTrak").
RECITALS:
Alanco and StarTrak have entered into an agreement pursuant to which
Alanco will acquire StarTrak through a triangular merger involving a subsidiary
of Alanco ("Acquisition Agreement").
StarTrak is in need of additional funds prior to the closing of the
Acquisition Agreement, and Alanco is willing to advance $100,000 to StarTrak
prior to the closing of the Acquisition Agreement upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:
1. Loan. StarTrak agrees to borrow from Alanco and Alanco agrees to
loan to StarTrak $100,000 upon the terms and conditions set forth herein. The
loan shall be evidenced by StarTrak's Promissory Note in the amount of $100,000
in the form attached hereto as Exhibit A (the "Note"), which shall be executed
and delivered to Alanco upon the execution hereof.
2. Security; Assignment of StarTrak Interests. The Note shall be
secured by the guaranty of Timothy P. Slifkin ("Slifkin") and Thomas A. Robinson
("Robinson") (the "Guaranty"), which shall be secured by the collateral
assignment of 25% of the membership units owned by them in StarTrak (the
"Assignment"), duly acknowledged by StarTrak through StarTrak's execution of a
control agreement (the "Control Agreement"). The Guaranty, Assignment and
Control Agreement shall be in the forms of Exhibit B, Exhibit C and Exhibit D
attached hereto, respectively, and shall be duly executed and delivered to
Alanco upon the execution hereof.
3. Uses of Loan Proceeds. StarTrak shall only use the proceeds of the
loan to pay creditors that would otherwise be paid within 45 days following the
Closing as shown on Schedule 2.6 to the Acquisition Agreement, excluding amounts
due to Slifkin or Robinson.
4. Warranties and Representations of StarTrak. StarTrak represents and
warrants to Alanco as follows, and acknowledges and confirms that Alanco is
relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by Alanco or on its behalf:
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4.1. Organization and Standing. StarTrak is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, has all of the requisite power and authority
and has all of the licenses, permits, authorities and consents that are
necessary to own, operate and lease its properties and to carry on its business
as now being conducted, except where failure to be so qualified would not result
in a material adverse effect.
4.2. Capitalization. The outstanding Units of StarTrak
consists solely of: 85,752 Class A Units, all of which are owned by Tenix;
490,719 Class B Units, all of which are owned by Slifkin and Robinson; and
70,340 Class C Units, all of which are owned by the StarTrak Employee Members.
4.3. Authorization. StarTrak has all the requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All action on the part of StarTrak and its
officers, directors and members necessary for the authorization, execution,
delivery, and performance of all obligations of StarTrak under this Agreement
has been taken. This Agreement, the Note and the Control Agreement constitute
legal, valid and binding obligations of StarTrak, enforceable in accordance with
their terms. The Guaranty and Assignment constitute legal, valid and binding
obligations of Slifkin and Robinson, enforceable in accordance with their terms.
4.4. Governmental Consents. No consent, approval, order, or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of StarTrak in connection with the execution, delivery or performance
of this Agreement or consummation of the transactions contemplated hereby.
4.5. Compliance with Other Instruments. StarTrak will not be,
as a result of the execution, delivery or performance of this Agreement, in
violation of or default under any provision of its Certificate of Formation or
Operating Agreement, as amended and in effect on the date hereof, or of any
provision of any material instrument, contract or lease to which it is a party,
or to its knowledge, of any provision of any federal or state judgment, writ,
decree, order, statute, rule, or governmental regulation applicable to StarTrak.
5. Notices. Any notice or demand to be given by any party shall be
given in writing and delivered in person; by courier service during days other
than legal holidays; by facsimile transmission between 8:00 a.m. and 5:00 p.m.,
local time of the recipient; or by certified mail, postage prepaid, to the
recipient at their respective addresses set forth below. Any such notices or
demands shall be deemed effective on the date of receipt if delivered in person,
by courier service or by facsimile transmission posting, and three business days
following posting if mailed by certified mail, provided, however, any notice
sent by facsimile transmission shall be given by overnight delivery or other
personal delivery on the next business day. Any recipient may change its address
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for notices by notice given in accordance herewith.:
If to Alanco: 15575 North 83rd Way, Suite 3
Scottsdale, AZ 85260
Attn: Robert R. Kauffman, President
(Facsimile Number (480) 607-1515)
If to StarTrak: StarTrak Systems, LLC
106 American Road
Morris Plains, NJ 07950
Attn: Timothy P. Slifkin
(Facsimile Number (973) 993-1765)
6. General Provisions.
6.1 In the event of any controversy, claim or dispute between
the parties hereto, arising out of or relating to this Agreement or the breach
thereof, the prevailing party shall be entitled to recover from the losing party
reasonable expenses, attorneys' fees and costs.
6.2 This Agreement is being executed and delivered and is
intended to be performed in the State of Arizona, and shall be construed and
enforced in accordance with the laws of such State.
6.3 Time is of the essence of this Agreement and each
and every term and provision hereof.
6.4 It is expressly agreed that failure to exercise any right
hereunder shall not constitute a waiver of the right to the later exercise
thereof.
6.5 Any provision hereof which may be invalid or unenforceable
under any applicable law or governmental regulation shall be omitted herefrom or
be deemed modified as appropriate, but such omission shall not invalidate the
remaining provisions of this Agreement.
6.6 This Agreement may not be changed orally but only by an
agreement in writing and signed by the party against whom enforcement of waiver,
change, modification or discharge is sought; and
6.7 This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their heirs, personal representatives, successors
and assigns.
(See Next Page for Signatures)
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IN WITNESS WHEREOF, the parties have executed this Agreement the day
herein first above written.
STARTRAK SYSTEMS, LLC
a Delaware limited liability company
By: /s/ Timothy P. Slifkin
-----------------------
Timothy P. Slifkin, Chief Executive Officer
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By: /s/John A. Carlson
------------------
John A. Carlson, Chief Financial Officer
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PROMISSORY NOTE EXHIBIT A
100,000.00 Scottsdale, Arizona
June 25, 2006
FOR VALUE RECEIVED, the undersigned, STARTRAK SYSTEMS, LLC, a Delaware limited
liability company (hereinafter the "Maker"), promises and agrees to pay to the
order of ALANCO TECHNOLOGIES, INC., an Arizona corporation ("Holder"), at
Scottsdale, Arizona, or at such other place as the Holder hereof may designate,
the principal sum of One Hundred Thousand and No/100 Dollars ($100,000.00),
together with interest thereon at the rate of two (2%) percent in excess of the
prime rate announced by Wells Fargo Bank, N.A. from time-to-time per annum,
payable in full on or before September 30, 2006.
All sums payable hereunder shall be paid in lawful money of the United States of
America. This Note may be prepaid, in whole or in part, at any time and from
time to time, without penalty. Payments shall be applied first to accrued
interest and then to principal.
If payment provided for herein is not paid when due, such delinquent payment
shall bear interest at a rate (the "Default Rate") which shall be twelve (12%)
per annum, such interest being due from the due date of the delinquent payment
until the date of receipt by Holder of the delinquent payment.
In the event Holder utilizes the services of any attorney in attempting to
collect the amounts due hereunder or to enforce the terms hereof or if any
holder hereof becomes party plaintiff or defendant in any legal proceeding in
relation to this Note or for the recovery or protection of the indebtedness
evidenced hereby, Maker agrees to pay, in addition to the principal and interest
due hereunder, all reasonable costs and a reasonable amount as attorneys' fees,
whether or not suit is brought, and shall further pay all reasonable costs,
expenses and attorneys' fees incurred after the filing by or against the Maker
of any proceeding under any Chapter of the Bankruptcy Code, or any similar
federal or state statute. This Note shall be governed by, construed and
interpreted in accordance with the laws of the state of Arizona.
All endorsers, guarantors, and all other persons liable or to become liable on
this Note, agree that, without notice to or consent from any of them and without
affecting their obligations hereunder, (a) this Note may from time to time be
extended or renewed; (b) any of the provisions of this Note may be waived or any
departure herefrom consented to or any other forbearance or indulgence exercised
with respect thereto; (c) any collateral now or hereafter securing this Note may
be exchanged, substituted, realized upon, released, compromised, extended or
otherwise dealt with or disposed of.
The Maker and all guarantors and endorsers hereof and all others who may become
liable for all or any part of these obligations hereby severally waive demand,
presentment for payment, protest and demand, notice of protest, demand and
dishonor, and nonpayment of this Note and all other notice and specifically
agree that the maturity of this Note or any payment hereunder may be extended
from time to time without in any way affecting the liability of Maker or any
endorses or guarantors.
STARTRAK SYSTEMS, LLC
a Delaware limited liability company
By: /s/ Timothy P. Slifkin
----------------------
Timothy P. Slifkin, Chief Executive Officer
EXHIBIT B
COMMERCIAL UNCONDITIONAL CONTINUING GUARANTY
BORROWER: STARTRAK SYSTEMS, LLC
106 American Road
Morris Plains, NJ 07950
GUARANTORS: TIMOTHY P. SLIFKIN
THOMAS A. ROBINSON
c/o Startrak Systems, LLC
106 American Road
Morris Plains, NJ 07950
LENDER: ALANCO TECHNOLOGIES, INC.
15575 N. 83rd Way, Suite 3
Scottsdale, AZ 85260
AMOUNT OF GUARANTY. The amount of this Guaranty is One Hundred Thousand
and No/100 Dollars ($100,000.00), and costs and expenses, including Lender's
reasonable attorney's fees in collecting such sums and such sums as are
otherwise set forth hereinafter.
CONTINUING GUARANTY. For good and valuable consideration, the above
identified Guarantors ("Guarantor") absolutely and unconditionally, guarantee
and promise to pay to ALANCO TECHNOLOGIES, INC. ("Lender") or order, in legal
tender of the United States of America, the Indebtedness (as the term is defined
below) of STARTRAK SYSTEMS, LLC ("Borrower") to Lender on the terms and
conditions set forth in this Guaranty. The obligations of Guarantor under this
Guaranty are continuing, provided, however, this Guaranty shall terminate and be
of no further force or effect upon Lender's acquisition of Borrower in
accordance with the Agreement and Plan of Reorganization between Borrower,
Lender, Guarantor and others pursuant to which Lender is to acquire Borrower, of
even date herewith.
DEFINITIONS. The following words shall have the following
meanings when used in this Guaranty:
Indebtedness. The word "Indebtedness" means the
obligations under the Note.
Note. The word "Note" means that certain
promissory note in the original principal
amount of One Hundred Thousand and No/100
Dollars ($100,000.00) dated of even date
herewith, made by Borrower to the order of
Lender, and all extensions or renewals
thereof.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be
open and continuous for so long as this Guaranty remains in force. Subject to
the following paragraph, Guarantor intends to guarantee at all times the
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performance and prompt payment when due, whether at maturity or earlier by
reason of acceleration or otherwise, of all Indebtedness. Accordingly, no
payments made upon the Indebtedness will discharge or diminish the continuing
liability of Guarantor in connection with any remaining portions of the
Indebtedness. All Guarantors agree that their liability under this Guaranty
shall be joint and several with all other Guarantors of the Indebtedness.
DURATION OF GUARANTY. This Guaranty will take effect when received by
Lender without the necessity of any acceptance by Lender, or any notice to
Guarantor or to Borrower, and will continue in full force until the Indebtedness
shall have been fully and finally paid and satisfied and all other obligations
of Guarantor under this Guaranty shall have been performed in full, provided,
however, this Guaranty shall terminate and be of no further force or effect upon
Lender's acquisition of Borrower in accordance with the Agreement and Plan of
Reorganization between Borrower, Lender, Guarantor and others pursuant to which
Lender is to acquire Borrower, of even date herewith.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender,
without notice or demand and without lessening Guarantor's liability under this
Guaranty, from time to time: (a) to compromise, renew, extend the Indebtedness;
(b) to release, substitute, agree not to sue, or deal with any one or more of
Borrower's sureties, endorsers, or other guarantors on any terms or in any
manner Lender may choose; (c) to determine how, when and what application of
payments and credits shall be made on the Indebtedness; and (d) to assign or
transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Lender that (a) no representations or agreements of any kind have
been made to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Lender has made no representation to Guarantor as to the
creditworthiness of Borrower; and (d) Guarantor has established adequate means
of obtaining from Borrower on a continuing basis information regarding
Borrower's financial condition. Guarantor agrees to keep adequately informed
from such means of any facts, events, or circumstances which might in any way
affect Guarantor's risks under this Guaranty, and Guarantor further agrees that,
absent a request for information, Lender shall have no obligation to disclose to
Guarantor any information or documents acquired by Lender in the course of its
relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor
waives any right to require Lender (a) to continue lending money or to extend
other credit to Borrower; (b) to make any presentment, protest, demand, or
notice of any kind, including notice of any nonpayment of the Indebtedness, or
notice of any action or nonaction on the part of Borrower, Lender, any surety,
endorser, or other guarantor in connection with the Indebtedness; (c) to resort
for payment or to proceed directly or at once against any person, including
Borrower or any other guarantor; or (d) to pursue any remedy within Lender's
power.
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Guarantor also waives any and all rights or defenses arising by reason
of (a) any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; or (d) any defenses given to guarantors at law or in equity
other than actual payment and performance of the Indebtedness. If payment is
made by Borrower, whether voluntarily or otherwise, or by any third party, on
the Indebtedness and thereafter Lender is forced to remit the amount of that
payment to Borrower's trustee in bankruptcy or to any similar person under any
federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty. To the extent permitted by applicable law, Guarantor hereby waives any
and all rights of Guarantor under A.R.S. ss.12-1641 et seq., A.R.S. ss.47-3414
et seq., and Arizona Rules of Civil Procedure 17(f).
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar rights, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants
and agrees that each of the waivers set forth above is made with Guarantor's
full knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
EVENTS OF DEFAULT. At the option of the holder hereof, upon the
occurrence of any of the following, all obligations hereunder shall become
immediately fixed, due and payable, the same as if the Indebtedness guaranteed
had become in default or past due, without demand or notice of any kind, all of
which are hereby expressly waived: (a) the Indebtedness, or any portion thereof,
is not paid as agreed; (b) any petition or application for a custodian, as
defined by Title 11, United States Code, as amended from time to time (the
"Bankruptcy Code") or for any form of relief under any provision of the
Bankruptcy Code or any other law pertaining to reorganization, insolvency or
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readjustment of debt is filed by or against Guarantor or Borrower, or their
respective assets or affairs; (c) Guarantor or Borrower makes an assignment for
the benefit of creditors, is not paying debts as they become due, or is granted
an order for relief under any chapter of the Bankruptcy Code; (d) a custodian,
as defined by the Bankruptcy Code, takes charge of any property of Guarantor or
Borrower; (e) any material garnishment, attachment, levy or execution is issued
against any of the property or effects of Guarantor or Borrower; (f) the death,
dissolution or termination of existence of Guarantor; or (g) there is any
material default or breach of any representation, warranty or covenant, or any
false statement or material omission by Guarantor under any document forming
part of the transaction in respect of which this Guaranty is made or forming
part of any other transaction under which Guarantor is indebted to Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that
the Indebtedness of Borrower to Lender, whether now existing or hereafter
created, shall be prior to any claim that Guarantor may now have or hereafter
acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor
hereby expressly subordinates any claim Guarantor may have against Borrower,
upon any account whatsoever, to any claim that Lender may now or hereafter have
against Borrower. In the event of insolvency and consequent liquidation of the
assets of Borrower, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of the Borrower
applicable to the payment of the claims of both Lender and Guarantor shall be
paid to Lender and shall be first applied by Lender to the Indebtedness of
Borrower to Lender. Guarantor does hereby assign to Lender all claims which it
may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring to Lender full payment in legal
tender of the Indebtedness. If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender reasonably deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
LIMITED RECOURSE. Notwithstanding anything contained herein to the
contrary, this Guaranty shall be nonrecourse to Guarantors and their respective
successors and assigns, and the Holder agrees that it will not exercise any
right to institute any action against Guarantors or any successors or assigns
for the payment of any sum of money or the performance of any other obligation
which is, or may be, payable or due under this Guaranty, except as against the
following membership Units owned by the Guarantors in Borrower:
Guarantor Class B Units
- --------- -------------
Slifkin 73,608
Robinson 49,072
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Notwithstanding the foregoing, nothing contained herein shall be deemed to
prejudice the rights of the Lender (a) to foreclose by UCC sale or judicial
foreclosure the Assignment of Limited Liability Company Interests made in
connection with this Guaranty or to enforce any of its other rights or remedies
under any documents securing the Note; or (b) to recover from Guarantors any
damages or costs incurred as a result of fraud or intentional misrepresentation
of Guarantors.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are
part of this Guaranty:
Amendments. This Guaranty constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Guaranty.
No alteration of or amendment to this Guaranty shall be effective
unless given in writing and signed by the party or parties sought to be
charged or bound by the alteration or amendment.
Applicable Law. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Arizona. If there is a lawsuit, Guarantor
agrees upon the Lender's request to submit to the jurisdiction of the
courts of Maricopa County, State of Arizona. Lender and Guarantor
hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Guarantor against the other.
This Guaranty shall be governed by and construed in accordance with the
laws of the State of Arizona.
Attorneys' Fees; Expenses. In any action brought to enforce the
provisions of this Agreement, the prevailing party shall be entitled to
recover its attorneys' fees and costs as determined by the court and
not the jury.
Notices. All notices required to be given by either party to the other
under this Guaranty shall be in writing and shall be effective when
actually delivered (by personal delivery or by courier service such as
Federal Express) or three (3) days after deposit in the United States
mail, registered or certified, first class postage prepaid, addressed
to the party to whom the notice is to be given at the address shown
above or to such other addresses as either party may designate to the
other in writing. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall
be deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower
named in this Guaranty or when this Guaranty is executed by more than
one Guarantor, the words "Guarantor," "Borrower," and "Lender" include
the successors, assigns, and transferees of each of them. Caption
headings in this Guaranty are for convenience purposes only and are not
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to be used to interpret or define the provisions of this Guaranty. If a
court of competent jurisdiction finds any provision of this Guaranty to
be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to
any other persons or circumstances, and all provisions of this Guaranty
in all other respects shall remain valid and enforceable. It is not
necessary for Lender to inquire into the powers of Borrower or
Guarantor or of the officers, directors, partners, members or agents
acting or purporting to act on their behalf, and any indebtedness made
or created in reliance upon the professed exercise of such powers shall
be guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Guaranty shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this Guaranty
shall not prejudice or constitute a waiver of Lender's right otherwise
to demand strict compliance with that provision or any other provision
of this Guaranty. No prior waiver by Lender, nor any course of dealing
between Lender and Guarantor, shall constitute a waiver of any of
Lender's rights or of any of Guarantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Guaranty, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
THE UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, THE GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL THE NOTE AND ALL
OTHER INDEBTEDNESS IS FULLY SATISFIED. NO FORMAL ACCEPTANCE BY LENDER IS
NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.
THIS GUARANTY IS DATED JUNE 25, 2006.
GUARANTOR:
- ------------------------------------------
TIMOTHY P. SLIFKIN
- ------------------------------------------
THOMAS A. ROBINSON
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EXHIBIT C
ASSIGNMENT
OF LIMITED LIABILITY COMPANY INTERESTS
This assignment ("Assignment") is made effective June 25, 2006, by the
undersigned Timothy P. Slifkin and Thomas A. Robinson (jointly referred to
herein as "Assignors") to Alanco Technologies, Inc., an Arizona corporation
("Assignee"), relating StarTrak Systems, LLC, a Delaware limited liability
company (referred to herein the "Company").
RECITALS
Assignors are now the owners of certain membership interests in the Company (the
"Assigned Interests"), as set forth below:
Assignor Class B Units
- -------- -------------
Slifkin 73,608
Robinson 49,072
Assignee has entered into a Loan Agreement (the "Loan Agreement") and Promissory
Note (the "Note") with the Company, both of even date herewith, under which
Assignee agreed to loan to the Company the principal amount of $100,000, which
Note is due to be repaid in full, with interest, on or before September 30,
2006.
Assignors own interests in the Company, and benefit from the agreements of
Assignee under the Loan Agreement and Note and have guaranteed the same.
As security for the faithful performance of the terms of the Note by the
Company, Assignors have executed this Assignment.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. Definitions. The following terms shall have the following meanings herein:
1.1 Company Assets. All assets, properties, rights and powers of the
Company, whether real, personal or mixed, whether tangible or intangible and
whether held solely by the Company or jointly with others.
1.2 Company Income. All earnings, income, revenues, issues, proceeds,
profits, damages, awards and other payments now or hereafter due to or received
by the Company and all present and future rights to and interest in all of the
foregoing.
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1.3 Company Distributions. All losses, credits, deductions and
distributions (whether in cash or otherwise) of the Company.
1.4 Company Capital Account. All right, title and interest in and
to Assignor's capital account with and capital contribution to the Company,
together with Assignor's right to return of capital (whether in cash or
otherwise).
1.5 Company Voting and Ownership Rights. All present and future rights
and interests of Assignor as a member in the Company, whether existing under an
operating agreement or under applicable law, and including, without limiting the
generality of the foregoing, all present and future rights and powers to vote on
or consent to Company matters or otherwise to determine action to be taken by
the Company or to be omitted or to do all things which a member may do as to
Company affairs.
1.6 Event of Default. Any failure on the part of the Company or
Assignors under the Loan Agreement or Note, including but not limited to the
obligations to pay interest and principal when due.
2.0 Assignment. Assignors hereby assign, and transfer to Assignee, and grant
Assignee a security interest in all of Assignors' present and future right,
title and interest in and to the Assigned Interests, including but not limited
to all of Assignors' Company Capital Accounts, Company Assets, Company Voting
and Ownership Rights, Company Income and Company Distributions in any form
attributable to the Assigned Interests in the Company (the "Collateral"). This
assignment is not to be considered a transfer of LLC interests that would
trigger the requirements of IRC ss.708(b).
This Assignment is a present assignment, effective immediately upon the
execution and delivery hereof by Assignors, and shall continue in effect until
the Note is finally and irrevocably paid in full, provided, however, this
Assignment shall terminate and be of no further force or effect upon Assignee's
acquisition of the Company in accordance with the Agreement and Plan of
Reorganization between the Company, Assignor and Assignee and others pursuant to
which Assignee is to acquire the Company, of even date herewith. . However, so
long as no Event of Default shall exist, Assignee temporarily waives Assignee's
right to the Collateral and hereby gives Assignors a revocable license to enjoy,
use and receive the same, including but not limited to Assignors' Company
Capital Accounts, Company Assets, Company Voting and Ownership Rights, Company
Income and Company Distributions in any form attributable to the Assigned
Interests in the Company. This license given to Assignor shall be revoked, in
the sole discretion of Assignee, upon the existence or occurrence of an Event of
Default.
3. Representations, Warranties and Covenants of Assignors. Each Assignor, with
respect to himself and the Assigned Interests owned by such Assignor,
represents, warrants and covenants, and so long as the Note remains unpaid shall
be deemed to continuously represent, warrant and covenant, that:
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3.1 Legal Right and Authority. Assignor has full legal right and
authority to execute and deliver this Assignment;
3.2 Sole Owner. Each Assignor is the sole owner of the Collateral to be
assigned by such Assignor hereunder and all right, title and interest therein is
solely and absolutely vested in such Assignor in the Assignor's name exactly as
it appears at the end of this Assignment, subject to the voting and/or proxy
rights granted to Tenix Holding, Inc., under the Voting Agreement among
Assignors and Tenix Holding, Inc.;
3.3 No Future Encumbrances. Assignor shall not pledge, assign,
mortgage or otherwise encumber all or any part of the Collateral without the
express written consent of Assignee;
3.4 Setoff. No setoff or counterclaim or other right to the Collateral
exists as of the date of this Assignment and no agreement or understanding has
been or will be made by Assignor with any person, other than Assigneee, under
which any claim, setoff, deduction or discount may be claimed with respect to
the Collateral;
3.5 Requirement of Consent. Assignor shall not cause, permit or consent
to any amendments to the operating agreements of the Company that would reduce
Assignor's Assigned Interest or the Collateral without consent of Assignee;
3.6 Compliance With Obligations. Assignor shall use reasonable
commercial efforts to comply with all of Assignor's obligations under the
operating agreement of the Company and shall not take any action that would
result in a forfeiture or lien against the Collateral; and
3.7 Benefit of Assignee. Assignor shall hold any payment of the
Collateral in trust for the benefit of Assignee if a default under the Note or
an Event of Default occurs.
4. Assignee's Remedies for Events of Default. Upon the occurrence of any Event
of Default, Assignee shall have the right to cancel the license granted herein,
and to retain the Collateral free of any right or interest of Assignors.
Assignee may, but shall not be required to sell the Collateral at public or
private sale, and if Assignee elects to sell the Collateral, Assignee shall have
the right to sell all or any part of the Collateral for such prices and on such
terms and conditions as Assignee shall in Assignee's sole discretion deem
appropriate. Upon consummation of any such sale, Assignee shall have the right
to assign, transfer and deliver to the purchaser the Collateral so sold.
Assignors hereby waive (a) any right to require Assignee to proceed against any
person, exhaust the Collateral or pursue any other remedy available to Assignee
and (b) any defenses available to Assignors in connection with the matters
covered by this Assignment.
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5. Miscellaneous.
5.1 Counterparts. This Agreement may be executed in counterparts, each
of which will be considered an original and all of which together will
constitute one and the same agreement.
5.2 Facsimile Signatures. Facsimile transmission of any signed original
document, and retransmission of any signed facsimile transmission, shall be the
same as delivery of an original. At the request of either party, the parties
shall confirm facsimile transmitted signatures by signing an original document.
5.3 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona, and jurisdiction and venue
shall be deemed proper in Maricopa County, Arizona, without regard to
conflict-of-laws principles.
5.4 Attorney Fees. If any arbitration, suit, or action is instituted to
interpret or enforce the provisions of this Agreement, to rescind this
Agreement, or otherwise with respect to the subject matter of this Agreement,
the party prevailing on an issue shall be entitled to recover with respect to
such issue, in addition to costs, reasonable attorney fees incurred in
preparation or in prosecution or defense of such arbitration, suit, or action as
determined by the arbitrator or trial court, and if any appeal is taken from
such decision, reasonable attorney fees as determined on appeal.
IN WITNESS WHEREOF, Assignor has executed this Assignment effective the day and
year first set forth above.
ASSIGNORS:
---------------------------------
TIMOTHY P. SLIFKIN
---------------------------------
THOMAS A. ROBINSON
ASSIGNEE:
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By
----------------------------
John A. Carlson,
Chief Financial Officer
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AUTHORIZATION OF ASSIGNMENT
TENIX HOLDINGS INC. a Delaware corporation, and a Member of StarTrak Systems,
LLC, a Delaware limited liability company ("StarTrak"), hereby authorize the
actions of Timothy P. Slifkin and Thomas A. Robinson ("Assignors") under the
Assignment of LLC Interests made June 25, 2006 ("Assignment"), by them to Alanco
Technologies, Inc., an Arizona corporation ("Alanco"), relating to a portion of
their ownership interests in StarTrak, and agree that in the event of a default
as described in said Assignment, that Alanco may become the owner of such
assigned LLC Interests and shall be admitted as a member of StarTrak with full
voting and membership rights as attached to the assigned membership interests,
subject, however, to the voting and/or proxy rights granted to Tenix Holding,
Inc., under the Voting Agreement among Assignors and Tenix Holding, Inc..
TENIX HOLDINGS INC.
a Delaware corporation
By:
--------------------------------
Its: ----------------------------
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CONTROL AGREEMENT EXHIBIT D
This Control Agreement ("Agreement") is made and entered into as of the
25th day of June, 2006, by and among StarTrak Systems, LLC (referred to herein
as the "Issuer"), Alanco Technologies, Inc., an Arizona corporation ("Lender"),
and Timothy P. Slifkin and Thomas A. Robinson (referred to herein as
"Assignors") .
RECITALS:
Assignors own all of the Class B Membership Units in the Issuer (the "Assigned
Interest").
A. Lender has entered into a Loan Agreement (the "Loan Agreement") and
Promissory Note (the "Note") with the Issuer, both of even date herewith, under
which Lender agreed to loan Issuer the principal amount of $100,000, which Note
is due to be repaid in full, with interest, on or before September 30, 2006.
B. As security for the faithful performance of the terms of the Note by Issuer,
Assignors have executed an Assignment of Limited Liability Company Interest (the
"Assignment Agreement") under which Assignors have assigned to Lender all of
Assignors' Assigned Interest and have granted Lender a security interest in the
Assigned Interest.
C. The parties wish to acknowledge such security interest and assignment and
Lender's control over the Assigned Interest for purposes of the provisions of
Article 8 and Article 9 of the Uniform Commercial Code as enacted and in effect
in the State of New Jersey (the "UCC").
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Incorporation of Recitals. The Recitals above are incorporated herein by this
reference.
2. Acknowledgment of Security Interest. Issuer hereby acknowledges and agrees
that, pursuant to the Assignment Agreement, Lender has been granted and
continues to hold a security interest in and to the Assigned Interest as
collateral security for the obligations of Assignors under the Note and Loan
Agreement, and that Issuer holds the Assigned Interest for the benefit of
Lender.
3. Agreement to Follow Instructions; Agreement Not to Register Transfer. Issuer,
as issuer of the Assigned Interest, hereby agrees to comply with any
"instructions" (as defined in sections 8-102(A)(12) and 8-106(c)(2) of the
Uniform Commercial Code) originated by Lender without further consent of the
Assignors, including, without limitation, instructions regarding the transfer,
redemption or other disposition of the Assigned Interest or the proceeds
thereof, including any distributions with respect thereto. Further, Issuer and
Assignors agree that they shall not register any transfer of the Assigned
Interest to any person other than Lender without the prior written consent of
Lender.
4. Agreement not to Further Encumber Property. Issuer and Assignors hereby agree
that other than the existing debt on the property of Issuer, no additional debt
or liens shall be placed on the property of Issuer without Lender's consent.
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5. Intent of the Parties. By executing and delivering this Agreement, the
parties hereto intend to establish Lender's control over the Assigned Interests
for purposes of the provisions of 8-106(c)(2) and 9-106(A) of the Uniform
Commercial Code.
6. Consent. Assignors hereby consent to the execution and delivery of this
Agreement by Issuer and Lender.
7. Choice of Law. This Agreement shall be construed and enforced under the laws
of the State of Delaware.
8. Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.
9. Amendments. No amendment, waiver, termination or other modification to this
Agreement shall be effective unless the same is in writing and is signed by each
of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
ISSUER:
StarTrak Systems, LLC
a Delaware limited liability company
By: /s/ Timothy P. Slifkin
---------------------------
Timothy P. Slifkin, Chief Executive Officer
LENDER:
Alanco Technologies, Inc.
an Arizona corporation
By: /s/ John A. Carlson
-------------------
John A. Carlson, Chief Financial Officer
ASSIGNORS:
/s/ Timothy P. Slifkin
- ------------------------------------
Timothy P. Slifkin
/s/ Thomas A. Robinson
- ------------------------------------
Thomas A. Robinson
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