-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AD/avf30mqr2o8D1IwxncX9tvOoA9gnNcF8Wk0fITS1+ZhQBhvnWK9kEdQ7bV1JX 7+Hq9AYb2++76pfVu7ZyMQ== 0000098618-06-000062.txt : 20060830 0000098618-06-000062.hdr.sgml : 20060830 20060829182911 ACCESSION NUMBER: 0000098618-06-000062 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060828 ITEM INFORMATION: Entry into a Material Definitive Agreement FILED AS OF DATE: 20060830 DATE AS OF CHANGE: 20060829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALANCO TECHNOLOGIES INC CENTRAL INDEX KEY: 0000098618 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 860220694 STATE OF INCORPORATION: AZ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09347 FILM NUMBER: 061063688 BUSINESS ADDRESS: STREET 1: 15575 N 83RD WAY STREET 2: SUITE 3 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 4806071010 MAIL ADDRESS: STREET 1: 15575 N 83RD WAY STREET 2: SUITE 3 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO ENVIRONMENTAL RESOURCES CORP DATE OF NAME CHANGE: 19930708 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO RESOURCES CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO LTD DATE OF NAME CHANGE: 19901004 8-K 1 k82806.txt INTERIM FINANCE SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 August 28,2006 ------------ (Date of Report) ALANCO TECHNOLOGIES, INC. ------------------------- (Exact name of Registrant as specified in its charter) 0-9437 --------- (Commission File No.) ARIZONA 86-0220694 --------------------------- --------------------------------- (State of other jurisdiction( (IRS Employer Identification No.) 15575 N 83RD WAY, SUITE 3, SCOTTSDALE, ARIZONA 85260 ------------------------------------------------------- (Address of Principal Executive Office) (Zip Code) (480) 607-1010 ---------------------------------------------------- (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously safisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ( ) Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ( ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement Item 2.03 Creation of a Direct Financial Obligation On August 28, 2006, Alanco Technologies, Inc. (the "Registrant") completed agreements whereby the Registrant raised $1.3 million in debt financing from certain officers and members of the Board of Directors of the Registrant. The funds will be used to fund working capital requirements related primarily to the acquisition of StarTrak Systems, Inc., an acquisition that was effective on June 30, 2006. A copy of the form of agreements to the transaction, including the form of notes, is attached. Item 9.01 Financial Statements and Exhibits Exhibits 99.1 Form of Security Agreement 99.2 Form of Security Participation Agreement 99.3 Form of Promissory Note SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: August 28, 2006 ALANCO TECHNOLOGIES, INC. By: /s/John A Carlson ----------------------- Chief Financial Officer EX-99 2 secagree.txt SECURITY AGREEMENT SECURITY AGREEMENT THIS SECURITY AGREEMENT ("Agreement") is made and entered into this - ---day of --------, 2006, by and between ------------------------------------- and -----------------------------------are collectively referred to as the ("Secured Party"), ALANCO TECHNOLOGIES, INC., an Arizona corporation ("Debtor"), and STARTRAK SYSTEMS, LLC, a Delaware limited liability company ("StarTrak"). RECITALS: Secured Party and Debtor have entered into a transaction pursuant to which Secured party has loaned monies to Debtor in accordance with the terms of Promissory Notes, of even date herewith, aggregating $1,300,000 (the "Notes"). The Notes are secured by the security interests granted herein. StarTrak is Debtor's wholly owned subsidiary and will benefit from the proceeds of the loans represented by the Notes. NOW, THEREFORE, in consideration of the loans, the Notes and the mutual covenants contained herein, the parties agree as follows: 1. Grant of Security Interest. The Debtor and StarTrak hereby grant to the Secured Party a security interest in the Collateral described below to secure the payment and performance of the obligations set out in this Agreement. 2. Collateral. The property serving as collateral and subject to the above security interest is as follows: All personal property of StarTrak Systems, LLC, a Delaware limited liability company (StarTrak"), including without limitation each and all of the following: all of StarTrak's accounts, inventory, general intangibles, negotiable collateral, books, all deposit accounts; all investment property (including without limitation securities and securities entitlements); all goods, instruments, documents, policies and certificates of insurance, deposits, money or other personal property of StarTrak, all of StarTrak's equipment and fixtures; all additions, accessions, attachments, parts, replacements, substitutions, renewals, interest, dividends, distributions or rights of any kind for or with respect to any of the foregoing; any supporting obligations for any of the foregoing; and the products and proceeds of any of the foregoing Notwithstanding anything to the contrary contained herein, Collateral shall not include any waste or other materials which have been or may be designated as toxic or hazardous by Secured Party. 3. Obligations of Debtor. The obligations of the Debtor that are subject to this Security Agreement are as follows: This Security Agreement secures repayment of 1 the Notes in the aggregate amount of $1,300,000.00, together with interest on the outstanding balance existing from time to time at the rate stated in the Notes. 4. Warranties and Commitments. a. Title. The StarTrak is the owner of the Collateral, which is free and clear of any and all liens, claims, encumbrances, and the like, other than an existing first priority security interest in favor of Donald E. Anderson and Rebecca E. Anderson, Trustees of the Anderson Family Trust, dated December 20, 1993, and has all authority to use the same as Collateral. b. Liens and Encumbrances. The Debtor and StarTrak agree that during the course of this Agreement, the Debtor will keep the Collateral free from any and all other liens, encumbrances, and the like. c. Sale of Collateral. The Debtor and StarTrak will not sell, offer for sale, transfer, or dispose of the Collateral or any interest in the Collateral, other than in the ordinary course of Debtor's business, without the prior written consent of the Secured Party, which shall not be unreasonably withheld. d. Unlawful Uses of Collateral. The Debtor and StarTrak will not use or permit any person to use the Collateral in a manner prohibited by law, in violation of any insurance policy, or in any manner inconsistent with the Secured Party's security interest. e. Care of Collateral. The Debtor and StarTrak agree to maintain the Collateral in good order and repair at all times, reasonable wear and tear excepted, and will not waste or destroy the Collateral or any part of it. f. Insurance. The Debtor and StarTrak shall procure insurance insuring the Collateral against loss through theft, fire, or casualty. g. Location of Collateral. The Debtor and StarTrak agree not to remove the Collateral from its business premises located at 106 American Road, Morris Plains, NJ, or at Ridge Manufacturing, 5 Astro Place, Rockaway, NJ, without the Secured Party's written permission. Secured Party's consent shall not be required for the replacement of the Collateral with reasonably equivalent Collateral of like description. 5. Financing Statements. The Debtor and StarTrak authorize Secured Party to file one or more financing statements in a form satisfactory to the Secured Party in any location deemed necessary or advisable to perfect the Secured Party's security interest in the Collateral or proceeds. The Debtor and StarTrak also agree to cooperate fully with the Secured Party in executing additional financing statements, amendments to financing statements, and the like as may be deemed necessary or advisable by the Secured Party in order to maintain and continue the security interest created by this Security Agreement. 6. Default. It is agreed that the following events shall constitute a default under this Agreement: 2 a. Nonpayment. Any failure of the Debtor to pay when due any obligation secured by this Agreement shall constitute a default. This includes, but is not limited to, any failure to pay principal or interest when due in connection with the Notes or other document evidencing obligations contained in this Agreement. b. Nonperformance. Any failure of the Debtor or StarTrak to perform or observe fully and in a satisfactory manner the material terms of this Agreement shall constitute a default. c. Levy and Attachments. Seizure, attachment, or levy on any property of the Debtor or StarTrak whether or not such property is covered by this Agreement shall operate as a default under this Agreement. d. Insolvency and the Like. It shall operate as a default under this Agreement if for any reason: (1) The Debtor becomes unable to pay its obligation as they become due; (2) The Debtor becomes subject to any proceeding under the bankruptcy or insolvency laws, including an assignment for the benefit of creditors; or (3) The Debtor has his property placed under the custody of a receiver or trustee. 7. Acceleration on Default. In the event of any default under this Agreement, the entire indebtedness secured by this Agreement shall become immediately due and payable. 8. Secured Party's Remedies. On default or acceleration, the Secured Party shall have the following rights and remedies, which are cumulative in nature and are immediately available to the Secured Party: (1) All rights and remedies provided by law, including but not limited to those provided by the Uniform Commercial Code, especially those provided in Part 5 of Article 9; (2) All rights and remedies provided in this Agreement; (3) All rights and remedies provided in the Notes or other instrument secured by this Agreement. 9. Waiver of Rights. a. All rights and remedies of the Secured Party as provided in this Agreement, or as found in any promissory note or other instrument executed in connection with this Agreement, or arising by operation of law shall continue in full force and effect during the full course of this Agreement unless specifically waived by the Secured Party in a signed writing to that effect. 3 b. Forbearance, failure, or delay on the part of the Secured Party in the exercise of any such right or remedy shall not constitute a waiver of that right or remedy. Such a waiver may be effected only by a specific written agreement to that effect which is signed by the Secured Party. c. The exercise or partial exercise of any right or remedy shall not preclude the further exercise of such right or remedy. 10. Choice of Law. This Agreement shall be governed by and interpreted in accordance with the law of the state of Arizona. 11. Severability. In the event that any provision of this Agreement shall be found to be unenforceable in any legal proceeding, the remaining provisions shall remain in force and effect. IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written. DEBTOR: ALANCO TECHNOLOGIES, INC. an Arizona corporation By: ------------------------------------ Its: -------------------------------- STARTRAK: STARTRAK SYSTEMS, LLC a Delaware limited liability company By: ------------------------------------ Its: -------------------------------- 4 SECURED PARTY: - ------------------------------ - ------------------------------ - ------------------------------ - ------------------------------ PARTIAL SUBORDINATION - -------------------------------------------------, holders of a first priority security interest in the StarTrak Collateral described in the foregoing Security Agreement ("First Lien"), hereby agree to limit the First Lien as against the StarTrak Collateral to the amount of $500,000 and to subordinate the remaining portion of the First Lien as against the StarTrak Collateral to the security interest in favor of the Secured Party granted in the foregoing Security Agreement. 5 - ------------------------------ - ------------------------------ EX-99 3 secpart.txt SECURITY PARTICIPATION AGREEMENT SECURITY PARTICIPATION AGREEMENT THIS SECURITY PARTICIPATION AGREEMENT ("Participation Agreement") is made to be effective ----------, 2006, by and among-------------------------- and -------------------------------- are sometimes collectively referred to as the "Participants," or individually as a "Participant.") RECITALS: The Participants have collectively agreed to loan $1,300,000 to Alanco Technologies, Inc., an Arizona corporation ("Alanco"), which aggregate loan will be represented by individual promissory notes in favor of each Participant in the amount of said Participant's individual loan amount, and all of the Participants' promissory notes are to be secured on an equal priority basis by a second lien against the assets of Alanco's wholly owned subsidiary StarTrak Systems, LLC, a Delaware limited liability company ("StarTrak"). The Participants desire to record their understanding and agreement concerning the mechanics of their participation in the security for their loans, and to appoint a representative, when necessary, to exercise their rights and remedies concerning the security. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the Participants agree as follows: 1. As used in this Agreement, the following terms shall have the respective meanings indicated: "Loan" or "Loans": The sums advanced and to be advanced by the Participants to or for the benefit of Alanco under and pursuant to the Loan Documents. "Promissory Note(s)": The promissory notes issued by Alanco to each of the Participants representing Alanco's obligation to repay the Loan made by each Participant to Alanco. The Promissory Notes shall be in the form of Exhibit "A" attached hereto. The amount of each Participant's Promissory Note shall be as follows: ---------- $----------- ---------- $----------- ---------- $----------- ---------- $----------- "Security Agreement": The agreement by which Alanco and StarTrak grant a security interest in all of the assets of StarTrak, subordinate only to a first priority security interest previously granted to Alanco's existing senior lender in the amount of $500,000, to the Participants to secure repayment of the Loans. The Security Agreement shall be in the form of Exhibit "B" attached hereto. 1 "Representative": The person or entity described in section 2 below that shall have the authority of the Participants to exercise the rights of the Participants under the Security Agreement on behalf of the Participants. "Loan Documents": This Agreement, the Promissory Notes, and the Security Agreement. "Majority of the Participants": Participants having a majority of the vote of the Participants whereby each Participant has one vote for each principal dollar (or fraction thereof) owed by Alanco to such Participant pursuant to their individual Promissory Note at the time that a vote or action is taken. "Collections": All moneys received by the Representative as reimbursement of costs, principal or interest under the Security Agreement whether paid by or on behalf of Alanco or StarTrak, received as proceeds of Collateral or otherwise received. "Collateral": All property real, personal or mixed tangible or intangible which secures the payment of the Loans as described in the Security Agreement. 2. At any time, by written action by a Majority of the Participants, the Participants shall appoint a Representative, or remove and replace the existing Representative with another person or entity. The Participants exercising the right to appoint a Representative or replacement Representative shall promptly notify all of the Participants of such appointment, including the identity, address and phone number for the Representative, and shall forward to each Participant the Representative's written confirmation to be bound by the terms and conditions of this Participation Agreement. 3. The Representative shall have all authority and power of the Participants to exercise the rights and remedies of the secured party under the Security Agreement. The Representative shall have no further responsibility and shall not be liable for any delay or failure to make Collections, any act or omission under the Loan Documents, or any loss resulting from any of the above. Without limitation of the generality of the above, the Representative (a) may consult with legal counsel (including counsel for Alanco), independent public accountants and other experts selected by the Representative and shall not be liable for any action taken or omitted to be taken in good faith by the Representative in accordance with the advice of such counsel, accountants or experts, (b) makes no warranty or representation and shall not be responsible for any statement, warranty or representation made in or in connection with the Loan Documents or for the financial condition of Alanco or for the value of any Collateral, (c) shall not be responsible for the performance or observance of any of the terms, covenants or conditions of the Loan Documents on the part of Alanco or others and shall not have a duty to inspect the property of Alanco or StarTrak, (d) makes no warranty or representation and shall not be responsible for the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of the Loans or Loan Documents, or any Collateral therefor, and (e) shall incur no liability under or in respect of the Loan Documents or Collateral by acting upon any notice, consent, certificate or other instrument or writing believed by Representative to be genuine and signed or sent by the proper parties. 2 4. The Participants' Representative shall not initiate any action to foreclose the security interest granted by the Security Agreement unless and until the Representative receives written notice from a Majority of the Participants that a default has occurred under the Loan Documents and that such foreclosure action should be initiated. Following receipt of such notice, the Representative shall take such actions that the Representative deems necessary and appropriate to foreclose the security interest and to collect monies due to the Participants under the Loan Documents. The Representative shall be subject to written instructions received from a Majority of the Participants, including an instruction to cease foreclosure proceedings. 5. In the event any of the Collateral is foreclosed upon in any manner or sold in lieu of foreclosure, the Representative may purchase any such Collateral on behalf of all of the Participants. Further, any Participant (including Representative if Representative is a Participant) may purchase any of the Collateral at any foreclosure sale or sale in lieu of foreclosure on its own behalf for cash to the same extent as any third party. 6. All losses incurred in connection with the Loans or the enforcement thereof shall be borne by the Participants on a pro rata basis in accordance with their respective interests in the Loans. The Participants will, upon Representative's request, reimburse the Representative for Participant's proportionate share of any expenses not paid or provided for by Alanco (i) incurred by Representative in connection with any such default, (ii) any other expenses incurred in connection with the enforcement of any provisions of the Loan Documents, and (iii) any expenses incurred by Representative (including reasonable attorneys' fees) due to any action, suit or proceeding in which Representative is a party. Representative shall be entitled to offset against each Participant's share of Collections such Participant's proportionate share (as defined in the preceding sentence) of such expenses until reimbursed therefor by such Participant. If Representative is otherwise reimbursed for any such expenses by or for the account of Alanco, Representative will refund to any Participant that Participant's proportionate share of such amount previously paid by such Participant. 7. Neither the execution of this Participation Agreement, the sharing in the Loans, nor any agreement to share in profits or losses arising as a result of this transaction is intended to be or to create, and the above shall not be construed to be, any partnership, joint venture or other joint enterprise between Representative and the Participants or among the Participants. 8. This agreement shall be construed in accordance with and governed by the laws of the State of Arizona. 3 IN WITNESS WHEREOF, this Participation Agreement is executed to be effect the date first above written. - ------------------------------ - ------------------------------ - ------------------------------ - ------------------------------ - ------------------------------ 4 EX-99 4 note.txt PROMISSORY NOTE PROMISSORY NOTE Scottsdale, Arizona $ ----------------------- -------------------- FOR VALUE RECEIVED, the undersigned, ALANCO TECHNOLOGIES, INC., an Arizona corporation (hereinafter the "Maker"), promises and agrees to pay to the order of ------------------------------------------------("Holder"), at Scottsdale, Arizona, or at such other place as the Holder hereof may designate, the principal sum of ----------------------------------------- and No/100 Dollars ($-----------------), together with interest thereon at the rate of twelve (12%) percent per annum, payable in full on or before one year from the date hereof. In addition, Maker has paid to Holder an origination fee of two (2%) percent of the principal amount of this note upon the execution hereof. 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 fifteen (15%) 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. ALANCO TECHNOLOGIES, INC. an Arizona corporation By: ---------------------------------- Its: --------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----