$4,000,000 September 28 2006
TERM NOTE
FOR VALUE RECEIVED, ALANCO TECHNOLOGIES, INC., an Arizona corporation
(the "Maker"), hereby promises to pay to the order of ComVest Capital LLC, a
Delaware limited liability company (together with any subsequent holder hereof,
the "Payee"), the sum of Four Million 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 the Payee (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 Term Note (this "Note") are to be made in lawful money of the
United States of America.
1. Payments.
(a) Interest. This Note shall bear interest ("Interest") on Principal amounts
outstanding from time to time from the date hereof at the Interest Rate as in
effect from time to time under the Loan Agreement; provided, however, that
during the continuance of any Event of Default under the Loan Agreement, the
interest rate hereunder shall be the Default Rate as in effect from time to time
under the Loan Agreement. 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 last day of each calendar month
commencing October 31, 2006.
(b) Principal. The outstanding Principal of this Note shall be payable (i) in
monthly installments due and payable on the last day of each calendar month
commencing October 31, 2007 through and continuing through and including August
31, 2010, with each such installment in an amount equal to one thirty-sixth
(1/36th) of the original Principal amount of this Note, and (ii) a final
installment due and payable on September 30, 2010, in an amount equal to the
entire remaining Principal balance of this Note.
(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 unpaid Principal balance of this Note,
together with all accrued and unpaid Interest, may at the Maker's option be
prepaid in whole or in part, at any time or from time to time upon fifteen (15)
days' prior written notice to the Payee.
(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. In addition, this Note
shall be subject to mandatory prepayment, in whole or in part, under the
circumstances provided in Section 2.02(b) of the Loan Agreement.
(c) Prepayment Premium. Any prepayment of Principal, however arising and whether
voluntary or mandatory (other than a prepayment which is paid when due pursuant
to Section 2.02(b) of the Loan Agreement), shall be subject to a prepayment
premium as provided in Section 2.03(b) of the Loan Agreement.
(d) Application of Payments. Any and all prepayments hereunder shall be applied
first to any prepayment premium required under Section 2(c) above, then to
unpaid accrued Interest on the Principal amount being prepaid, and finally 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
IN WITNESS WHEREOF, the Maker has executed this Note on the date first
above written.
ALANCO TECHNOLOGIES, INC.
By:
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Name:
Title: