EXHIBIT 99.3
SECOND AMENDMENT TO
RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO RESTATED LOAN AND SECURITY AGREEMENT
("Second Amendment") is entered into this ____ day of August, 2008, between
Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx, Trustees of the Xxxxxxxx Family
Trust, UTA dated December 20, 1993 ("Lender") as secured party, and Alanco
Technologies, Inc. ("ATI"), an Arizona corporation ("Borrower 1");
Excel/Meridian Data, Inc. ("EMD"), an Arizona corporation ("Borrower 2");
Alanco/TSI Prism, Inc. ("TSI"), an Arizona corporation ("Borrower 3"); StarTrak
Systems, LLC, a Delaware limited liability company ("Borrower 4"); and Xxx Xxx,
Inc., a Nevada corporation ("Borrower 5"). Borrower 1, Borrower 2, Borrower 3,
Borrower 4, and Borrower 5 jointly and severally, individually and collectively,
the "Borrower".
RECITALS:
The parties entered into that Amended and Restated Loan and Security
Agreement, dated December 21, 2007, pursuant to which Lender agreed to provide
certain funds to Borrower upon the terms and conditions set forth therein (the
"Agreement"), and that First Amendment to Restated Loan and Security Agreement,
dated February 26, 2008, amending the Agreement. The parties wish to modify the
Agreement, as previously amended, in certain respects as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. Definitions. The following subparagraph of Section 1 of the Agreement
corresponding to the subparagraph number set forth below shall be amended by
substituting the definition set forth below for the corresponding term
identified:
1.8 "Credit Limit" shall mean Two Million Five Hundred Thousand
Dollars ($2,500,000.00). Notwithstanding anything contained herein to
the contrary, ATI shall have the right to reduce the Credit Limit in
any multiple of $100,000 from time-to-time upon thirty (30) days
notice to Lender. Further, Lender shall have the right to reduce the
Credit Limit to $1,500,000 upon ninety (90) days written notice to
ATI.
2. Section 2.1 of the Agreement shall be amended to read as follows:
2.1 Upon the request of Borrower, made at any time and from time to
time during the term hereof, and so long as no Event of Default has
occurred, Lender shall lend to Borrower at Borrower's request an
amount up to the Credit Limit. If at any time for any reason, the
amount of Indebtedness owed by Borrower to Lender pursuant to this
Section 2.1 of this Agreement is greater than the aggregate amount
available to be drawn under this Section 2.1, Borrower shall
immediately pay to Lender, in cash, the amount of such excess.
Notwithstanding anything to the contrary herein, the amount drawn
under this Agreement by Borrower shall not be less than the sum of
$2,500,000 at any time during the term of this Agreement without
Lender's written consent. Provided, however, in the event that either
Lender or ATI exercises its right to reduce the Credit Limit in
accordance with section 1.8 hereof, then the amount drawn under this
Agreement shall not be less than the revised Credit Limit at any time
thereafter without the Lender's written agreement.
3. The first sentence of Section 2.2 shall be replaced with the following:
2.2 Except as provided below, the Credits shall bear interest, on
the Daily Balance owing up to $2,000,000 at a fluctuating rate of
interest equal to the Base Rate plus three (3%) percentage points per
annum, and shall bear interest on the amount of the Daily Balance
owing in excess of $2,000,000 at a fixed rate of interest equal to
twelve (12%) percent per annum.
4. Section 6B.1 of the Agreement shall be amended to read as follows:
6B.1 At any time prior to the full repayment of the Credit, Lender
shall have the right and option to convert up to $1,000,000 of the
outstanding Credit into shares of Class A Common Stock of the ATI at
the conversion rate of $1.25 of the Credit to be converted for each
share of Class A Common Stock, without the payment of any additional
consideration, subject to readjustment as provided herein below. All
principal payments hereafter made with respect to the Loan shall be
deemed to be applied in respect of the non-convertible portion of the
Loan until the non-convertible portion has been paid in full, and
then to the convertible portion. Anything contained in this Agreement
to the contrary notwithstanding, the Borrower shall be required to
give the Lender thirty (30) days' notice prior to any prepayment of
any convertible portion of the Loan, and the Lender shall retain the
right to elect to convert all or any portion of such convertible
principal prior to the date fixed by the Borrower for prepayment.
5. Borrower agrees that (a) except as expressly provided herein to the contrary,
this Second Amendment shall not modify the Agreement as previously amended, (b)
all of the collateral described in the Agreement shall remain in all respects
subject to the lien or charge of the security interest set forth in the
Agreement, and (c) nothing contained herein and nothing done pursuant hereto,
shall effect or be construed as affecting the lien or charge of said security
interest, or the priority thereof over other liens or charges, or as releasing
or affecting the liability of any party or parties who may now or hereafter be
liable under or on account of the Agreement. The provisions of this Second
Amendment are modifications only and except as provided herein all of the terms
and conditions of the Agreement as previously amended remain in full force and
effect and the parties hereto ratify and confirm the security, priority and
enforceability of the Agreement, as expressly modified by this Second Amendment.
6. This Second Amendment shall bind and inure to the benefit of the respective
successors and assigns of each of the parties. This First Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed to be effective as of the date first above written.
BORROWERS:
"Borrower l":
Alanco Technologies, Inc., an Arizona Corporation
By: ________________________________________
Xxxx X. Xxxxxxx, Chief Financial Officer
"Borrower 2":
Excel/Meridian Data, an Arizona corporation
By: ________________________________________
Xxxx X. Xxxxxxx, Chief Financial Officer
"Borrower 3":
Alanco/TSI Prism, Inc., an Arizona corporation
By: ________________________________________
Xxxx X. Xxxxxxx, Chief Financial Officer
"Borrower 4":
StarTrak Systems, LLC
a Delaware limited liability company
By: ____________________________________
Xxxx X. Xxxxxxx, Manager
"Borrower 5":
Xxx Xxx, Inc.
a Nevada corporation
By: ________________________________________
Xxxx X. Xxxxxxx, Chief Financial Officer
LENDER:
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XXXXXX X. XXXXXXXX
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XXXXXXX X. XXXXXXXX
Trustees of the Xxxxxxxx Family Trust, UTA
dated December 20, 1993
3401\031\Second Amendment to Restated Loan Agreement
