AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the ___ day of
February, 2008, by and between ALANCO TECHNOLOGIES, INC., an Arizona corporation
("Alanco"), STARTRAK SYSTEMS, LLC, a Delaware limited liability company
("StarTrak"), and TENIX HOLDING INC., a Delaware corporation ("Tenix").
RECITALS:
The parties hereto and others entered into that certain Agreement and Plan of
Reorganization, dated June 25, 2006, pursuant to which Alanco acquired StarTrak.
Tenix was a member of StarTrak.
At the time of the acquisition of StarTrak by Alanco, StarTrak owed Tenix
$2,000,000 pursuant to that certain Promissory Note, dated June 21, 2006, in
said principal amount (the "Note"), and Alanco caused StarTrak to pay Tenix
$500,000 upon the closing of the acquisition. Alanco guaranteed payment of the
Note balance of $1,500,000 to Tenix.
The parties desire to convert a portion of the balance of the Note into shares
of Alanco's Class A Common Stock and to restructure payment of the balance of
the Note.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. Conversion of $1,000,000 of Note to Stock. Upon the date hereof, $1,000,000
of the Note shall be converted into 800,000 shares of Alanco's Class A Common
Stock (the "Shares").
2. Registration of Shares. As soon hereafter as practicable, but in no event
more than sixty (60) days following the date hereof, Alanco shall file an S-3
registration statement under the Securities Act of 1933 with respect to the
Shares, and use its best efforts to have the registration statement declared
effective by the SEC as soon as possible thereafter. All expenses of registering
said shares shall be borne by Alanco, excluding underwriting commissions, if
any.
3. Private Placement Status; Representations and Warranties of Tenix.
3.1 Tenix represents and warrants 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:
a. Tenix has such knowledge and experience in financial and
business matters, or has relied upon advisors who are so qualified, that is
capable of evaluating the merits and risks of the investment by it in Alanco as
contemplated by this Agreement and is able to bear the economic risk of such
investment for an indefinite period of time. Tenix has been furnished access to
such information and documents as it has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of
Alanco concerning the business and financial condition of Alanco and the terms
and conditions of this Agreement and the issuance of securities contemplated
hereby.
b. Tenix is acquiring the Shares for investment for its own
account and not with a view to, or for resale in connection with, any
distribution. Tenix understands that the Shares to be issued to it hereunder
have not been registered under the Securities Act of 1933 ("Act") by reason of a
specific exemption from the registration provisions of the Act which depends
upon, among other things, the accuracy of the representations expressed herein.
c. Tenix acknowledges that unless a registration statement
becomes effective with respect to the resale of the Shares, the Shares must be
held until qualified for resale under the rules of the Securities Exchange
Commission and may not be sold or offered for sale in the absence of an
effective registration statement as to such securities under said Act and any
applicable state securities laws or unless an exemption from such registration
is available.
3.2 Legend. Each certificate representing the Shares shall be endorsed
with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY OTHER SECURITIES LAWS,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND OTHER APPLICABLE SECURITIES
LAWS COVERING SUCH SECURITIES, OR THE ISSUER RECEIVES EVIDENCE SATISFACTORY TO
IT THAT ANOTHER EXEMPTION FROM REGISTRATION IS AVAILABLE.
4. Tenix Fee. Alanco shall pay Tenix a fee in the amount of $50,000 on or
before January 30, 2008.
5. Payment of Balance of Note. The remaining balance of the Note, $500,000 shall
be paid as follows:
5.1 Monthly installments of principal in the amount of $20,000,
commencing May 1, 2008, and continuing on the first day of each succeeding month
through November 1, 2008.
5.2 The balance of $360,000 shall be paid in full on December 1, 2008.
5.3 The Note may be pre-paid, in full or in part, at any time, without
premium or penalty.
5.4 All other terms and conditions of the Note shall remain in full
force and effect.
6. Alanco's Guarantee of Note. Alanco's guarantee of the Note, as amended
herein, shall remain in full force and effect.
7. Benefits of this Agreement. Nothing in this Agreement shall be construed to
give any benefits to any person, corporation or other entity, other than the
parties hereto, and this Agreement shall be for the sole and exclusive benefit
of the parties hereto.
8. Successors and Assigns. This Agreement shall inure to the benefit of, and be
binding upon, the successors, heirs, executors, administrators and permitted
assigns of the parties hereto. This Agreement may not be assigned by any of the
parties hereto without the prior written consent of the other parties.
9. 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 for
notices by notice given in accordance herewith.
(a) If to Alanco or StarTrak:
Alanco Technologies, Inc.
15575 North 83rd Way, Suite 3
Scottsdale, AZ 85260
Atttn: Robert R. Kauffman, President
(Facsimile Number (602) 607-1515)
(b) If to Tenix:
Tenix Holding Inc.
c/o Tenix Pty Ltd
141 Walker Street
North Sydney NSW 2060
Australia
Attn: Steven Hedge
(Facsimile Number +612 9963 9690)
10. Severability. In the event any covenant, condition or other provision of
this Agreement is held to be invalid or unenforceable by a final judgment of a
court of competent jurisdiction, then such covenant, condition or other
provision shall be automatically terminated and performance thereof waived, and
such invalidity or unenforceability shall in no way affect any of the other
covenants, conditions or provisions hereof, and the parties hereto shall
negotiate in good faith to agree to such amendments, modifications or
supplements of or to this Agreement or such other appropriate actions as, to the
maximum extent practicable, shall implement and give effect to the intentions of
the parties as reflected herein.
11. Entire Agreement. This Agreement and the Additional Agreements contain all
of the terms agreed upon by the parties with respect to the subject matter
hereof and thereof and there are no representations or understandings between
the parties except as provided herein and therein. This Agreement may not be
amended or modified in any way except by a written amendment to this Agreement
duly executed by the parties.
12. Waiver. No waiver of a breach of, or default under, any provision of this
Agreement shall be deemed a waiver of such provision or of any subsequent breach
or default of the same or similar nature or of any other provision or condition
of this Agreement.
13. Applicable Law. This Agreement shall be governed by and construed (both as
to validity and performance) and enforced in accordance with the laws of the
State of Arizona.
14. Attorneys' Fees. 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.
15. Equitable Relief. The parties agree that the remedies at law for any breach
of the terms of this Agreement are inadequate. Accordingly, the parties consent
and agree that an injunction may be issued to restrain any breach or alleged
breach of such provisions. The parties agree that terms of this Agreement shall
be enforceable by a decree of specific performance. Such remedies shall be
cumulative and not exclusive, and shall be in addition to any other remedies
which the parties may have at law or in equity.
16. Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the same
instrument, but all of such counterparts taken together shall be deemed to
constitute one and the same instrument. No party shall be bound until each party
has signed at least one (1) such counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their respective names as of the day and year first above written.
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By: _________________________________________
Robert R. Kauffman, Chief Executive Officer
STARTRAK SYSTEMS, LLC
a Delaware limited liability company
By: _______________________________________
Robert R. Kauffman, Manager
TENIX HOLDING, INC.
a Delaware corporation
By: _______________________________________
Its: ____________________________________