Exhibit 10.1

 

THIS FIRST AMENDMENT TO TERM LOAN AGREEMENT AND RELATED LOAN DOCUMENTS WITH
CONSENT OF GUARANTORS IS SUBJECT TO ARBITRATION PURSUANT TO THE FEDERAL
ARBITRATION ACT AND/OR §15-48-10 OF THE SOUTH CAROLINA CODE OF LAWS (1976), AS
AMENDED.

 

FIRST AMENDMENT TO TERM LOAN AGREEMENT AND RELATED LOAN DOCUMENTS WITH CONSENT
OF GUARANTORS

 

THIS FIRST AMENDMENT TO TERM LOAN AGREEMENT AND RELATED LOAN DOCUMENTS WITH
CONSENT OF GUARANTORS (the “Amendment”) effective as of March 4, 2020, by and
among Vicon Industries, Inc., (the “Borrower”), NIL Funding Corporation (the
“Lender”), IQinVision, Inc., (“IQin”), TeleSite U.S.A., Inc., (“TeleSite”),
Vicon Industries Limited (“Vicon Industries”), and Vicon Systems Ltd., (“Vicon
Systems” and collectively with IQin, TeleSite, and Vicon Industries, the
“Guarantors”).

 

W I T N E S S E T H:

 

WHEREAS, Borrower and Lender executed that certain Term Loan Agreement, dated as
of September 21, 2018 (the “Loan Agreement”) pursuant to which Lender agreed to
loan to Borrower Five Million Six Hundred Thousand and No/100 Dollars
($5,600,000.00) in accordance with the terms set forth therein (the “Loan”);

 

WHEREAS, the Borrower executed that certain Promissory Note [Facility A], dated
as of September 21, 2018, in the original principal amount of One Million Seven
Hundred Ninety-Six Thousand and No/100 Dollars ($1,796,000.00) in favor of
Lender (the “Facility A Note”);

 

WHEREAS, the Borrower executed that certain Promissory Note [Facility B], dated
as of September 21, 2018, in the original principal amount of Three Million
Eight Hundred Four Thousand and No/100 Dollars ($3,804,000.00) in favor of
Lender (the “Facility B Note”);

 

WHEREAS, the Guarantors each executed a Continuing Guaranty, dated as of
September 21, 2018 (collectively, the “Guaranty Agreements”), pursuant to which
the Guarantors jointly and severally guaranteed all obligations of the Borrower
to the Lender;

 

WHEREAS, the Borrower, Lender, and Citibank, N.A. executed those three (3)
certain Deposit Account Control Agreements, dated as September 28, 2018
(collectively, the “DACAs”);

 

WHEREAS, the Guarantors each executed a Security Agreement, dated as of
September 21, 2018 (collectively, the “Security Agreements,” and collectively
with the Loan Agreement, Facility A Note, Facility B Note, Guaranty Agreements,
the DACAs, and all other documents executed in connection with the foregoing,
the “Loan Documents”), pursuant to which the Guarantors each granted security
interests in the collateral more particularly described therein to Lender; and

 

WHEREAS, Borrower, Lender, and Guarantors now desire to modify and amend certain
terms of the Loan Documents as hereinafter provided.

 

NOW, THEREFORE, in consideration of the premises and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

 

 

 

 

1. Capitalized terms used herein but not defined shall have the meaning ascribed
to them in the Loan Documents.

 

2. The Loan Documents are hereby amended as follows:

 

  a. The Maturity Date of the Facility A Note is extended to March 30, 2022, but
all other terms of the Facility A Note, including monthly payment terms, shall
remain the same.         b. The Maturity Date of the Facility B Note is extended
to March 30, 2022, but all other terms of the Facility B Note, including monthly
payment terms, shall remain the same.         c. Section 4.3(a) of the Loan
Agreement is hereby amended and restated with the following:         (a) not
later than thirty (30) days after the end of each month, a financial statement
of Borrower, prepared by Borrower, to include balance sheet, income statement
and statement of cash flows and sources together with a certificate, executed by
the President or Chief Financial Officer of Borrower, that lists and describes
in any detail that Lender may require in Lender’s sole and absolute discretion,
any related party transactions that involve the Borrower or any of its parents
or subsidiaries, including, without limitation, any transactions with Cemtrex,
Inc. (“Cemtrex”) or any affiliate or subsidiary of Cemtrex, that occurred in the
previous calendar month;         d. The borrowing base certificate attached as
Exhibit A to the Loan Agreement is hereby replaced with the borrowing base
certificate attached as Exhibit A to this Amendment.         e. Section 4.9 of
the Loan Agreement is hereby amended and restated with the following:          
SECTION 4.9. BORROWER INVENTORY AND LIQUIDITY COVENANT. Borrower shall cause, as
of the end of each month hereafter, the sum of (i) the Qualified Inventory,
valued at the lower of cost or market value, plus (ii) Unencumbered Liquid
Assets, valued at the fair market thereof, to be not less than Four Million
Eight Hundred Seventy Five Thousand and No/100 Dollars ($4,875,000.00).
“Qualified Inventory” means finished goods inventory that are (1) subject to the
first lien security interests in favor of Lender created by the Loan Documents,
(2) held by Borrower for sale in the ordinary course of the Borrower’s business,
(3) located at the Borrower’s facility at the address set forth herein or at
other facilities the addresses of which have been provided to Lender, (4) free
and clear of all liens and encumbrances in favor of any person other than the
Lender, and (5) otherwise acceptable to the Lender in its sole discretion but
excluding obsolete and damaged inventory, work in process, raw materials,
inventory that fails to meet government standards, and inventory otherwise not
saleable at market value. “Unencumbered Liquid Assets” shall mean the following
assets owned by Borrower (excluding assets of any retirement plan established
pursuant to the Internal Revenue Code, any employee pension plan or similar plan
established pursuant to the provisions of Section 408 the Internal Revenue Code,
or any other retirement plan or arrangement established pursuant to any other
federal or state statute) which (i) are not the subject of any lien, mortgage,
encumbrance, security interest, pledge, conditional sale, set-off right, title
retention arrangement, or any other arrangement with any creditor (other than
any set-off or similar rights afforded to the financial institution with whom
such assets are maintained, so long as the Borrower has no funded indebtedness
with such financial institution) to have its claim satisfied out of the asset
(or proceeds thereof) prior to the general creditors of the Borrower, and (ii)
may be converted to cash by sale or other means within five (5) business days:

 

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  (a) Cash;       (b) Demand deposits or interest-bearing time deposits,
certificates of deposit or similar banking arrangements held in the United
States where either (i) such deposits or other arrangements are held with banks
or other financial institutions which have capital and surplus of not less than
$100,000,000 or (ii) such deposits are fully FDIC-insured;       (c) Direct
obligations of the United States of America in the form of United States
Treasury obligations or any governmental agency or instrumentality, whose
obligations constitute full faith and credit obligations of the United States of
America and which are regularly traded on a public market or exchange;       (d)
Bonds and other fixed income instruments (including tax-exempt bonds) from
companies or public entities rated investment grade by one of the major rating
agencies, and mutual funds that invest substantially all of their assets in such
bonds and other fixed income instruments, either owned directly by the Borrower
or managed on the Borrower’s behalf by (i) any nationally recognized investment
advisor or (ii) any investment advisor who or which has assets under management
in excess of $250,000,000;       (e) Any common or preferred stock which is
traded on a U.S. national stock exchange or included in the National Market tier
of NASDAQ and which (x) is issued by a company with a market capitalization, as
of the close of the most recent trading day, of at least $500,000,000, (y) has,
as of the close of the most recent trading day, a per share price of at least
$10, and (z) is not subject to any restriction or limitation by applicable laws
or agreements governing the sale, transfer or other disposition thereof in the
public market;       (f) Mutual funds or money market funds (but excluding
“hedge funds”) that invest substantially all of their assets in instruments
described above in (a), (b), (c), (d), and/or (e) above and which are quoted in
either the Wall Street Journal or Barron’s; and       (g) Fifty Percent (50%) of
Borrower’s eligible accounts receivable (as that term is defined in Section
1.1(b) of the Loan Agreement) that are less than sixty (60) days old.

 

  f. On the date hereof, Borrower shall deliver to Lender all source code,
object code, script, html files, and all supporting files and documents related
to all versions of the current software, including all associated with
peripherals, storage devices, endpoints, and similar remote, network devices
related to the most recent version of Valerus Video Management Software
(“Valerus”) and the most recent version of ViconNet Video Management Software
(“ViconNet”), which the Lender shall hold in escrow. Further, in the event there
are any publicly available updates of any kind related to any of the foregoing,
such updates shall be promptly delivered to Lender on a semiannual basis, with a
description thereof, and Lender shall hold such in escrow. In the event Borrower
or any of its subsidiaries develops any other software, regardless of whether it
is similar to Valerus or ViconNet, Borrower shall promptly deliver to Lender all
of the foregoing items related to such software, as well as all modifications
and updates thereto on an annual basis. Lender shall hold all of the foregoing
in escrow, and Borrower shall grant Lender a security interest in the same, in
form and substance satisfactory to Lender in Lender’s sole discretion. Any
source code, object code, script, html files, and all supporting files and
documents related to all versions of the current software delivered to Lender
shall be kept in strict confidence.

 

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  g. On or before March 3, 2021, Borrower shall pay to Lender an additional Five
Hundred Thousand and No/100 Dollars ($500,000.00) principal payment (the
“Additional Principal Payment”). Failure to make the Second Principal Payment by
March 3, 2021, shall be an automatic Event of Default. Upon Lender’s receipt of
the Additional Principal Payment, the first sentence of Section 4.9 of the Loan
Agreement shall be automatically amended and restated with the following:      
    Borrower shall cause, as of the end of each month hereafter, the sum of (i)
the Qualified Inventory, valued at the lower of cost or market value, plus (ii)
Unencumbered Liquid Assets, valued at the fair market thereof, to be not less
than Four Million Five Hundred Thousand and No/100 Dollars ($4,500,000.00).    
    h. Section 5.11 of the Loan Agreement is hereby added and provides:        
  SECTION 5.11 RELATED PARTY TRANSACTIONS. Directly or indirectly, make any loan
or advance to, purchase, assume or guarantee any note to or from any of its
officers, directors, shareholders or affiliates, including, but not limited to
Cemtrex, or to or from any member of the immediate family of any of its
officers, directors, shareholders or affiliates, including, but not limited to,
Cemtrex, or contract any operations to any officer, director, affiliate,
including, but not limited to, Cemtrex, or shareholder, except in the ordinary
course of business and pursuant to the reasonable requirements of the Borrower’s
business and upon fair and reasonable terms which are fully disclosed to the
Lender; or enter into, or be a party of, any transaction with any officer,
director, affiliate, including, but not limited to Cemtrex, or shareholder of
the Borrower, except in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower’s business and upon fair and reasonable
terms which are fully disclosed to the Lender and are no less favorable to the
Borrower than would obtain in a comparable arm’s length transaction with a
person not an officer, director, affiliate or shareholder of the Borrower.

 

3. Each of the existing Loan Documents is hereby further amended to provide that
each reference to any one or more of the Loan Documents is deemed to refer to
such documents as modified by this Amendment. In addition, this Amendment shall
be deemed to be included as a “Loan Document” in any and all references to the
“Loan Documents” contained in any of the Loan Documents existing as of the date
hereof or which are executed following the date hereof.

 

4. Except as specifically amended herein, all terms and conditions of the Loan
Documents shall remain in full force and effect, without waiver or modification.

 

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5. Lender agrees to waive all Events of Default (as defined in the Loan
Documents) directly related to the Borrowing Base Certificate that was delivered
by Borrower to Lender on February 19, 2020 (the “February 2020 Borrowing Base
Default”). For clarification and avoidance of doubt, Lender does not waive any
other Event of Default that may exist on the date hereof or in the future.
Borrower and Guarantors each hereby remake all of their respective
representations and warranties contained in the Loan Documents and reaffirm all
respective covenants set forth therein. Borrower and Guarantors each further
certify that as of the date of this Amendment, with the exception of the
February 2020 Borrowing Base Default, there exists no Event of Default, nor any
condition, act or event which with the giving of notice or the passage of time
or both would constitute any such Event of Default. As a further inducement to
the Lender to enter into this Amendment, Borrower and each Guarantor further
represents, warrants, covenants and acknowledges (as applicable) as follows (it
being acknowledged by all parties that each such representation, warranty,
covenant and acknowledgment relates to material matters upon which Lender has
relied):

 

  (a) There are no defenses, offsets or counterclaims or other claims, legal or
equitable, available to Borrower, any Guarantor, or any other person or entity
with respect to this Amendment, the Loan Documents, or any other instrument,
document and/or agreement described herein or therein, as modified and amended
hereby, or with respect to the obligation of Borrower to repay the Loan, as the
case may be.       (b) The Borrower and Guarantors each has the right and power
and has obtained all authorizations necessary to execute and deliver this
Amendment and all documents required to be delivered in connection herewith and
to perform its respective obligations hereunder and under the Loan Documents in
accordance with their respective terms. This Amendment and all documents
required to be delivered in connection herewith has been duly executed and
delivered by duly authorized officers, managers, partners, trustee(s), or
directors (as applicable) of the Borrower and Guarantors and is a legal, valid
and binding obligation of the Borrower and/or Guarantors (as applicable),
enforceable against each party thereto in accordance with their respective
terms, except as the same may be limited by bankruptcy, insolvency, and other
similar laws affecting the rights of creditors generally and the availability of
equitable remedies for the enforcement of certain obligations contained herein
or therein may be limited by equitable principles generally.       (c) There is
no action, suit, investigation or proceeding, pending or threatened, in any
court or before any arbitrator or governmental authority, that has a reasonable
probability of materially adversely affecting Borrower or Guarantors or any
transaction contemplated hereby or by the Loan Documents, or the ability of
Borrower or Guarantors to perform their respective obligations under this
Amendment or the other Loan Documents as modified and amended hereby.       (d)
Each of the Borrower and Guarantors is duly organized and validly existing in
its state of organization. The undersigned persons are duly authorized to
execute and deliver, on behalf of the Borrower and Guarantor, as applicable,
this Amendment and all documents required to be delivered in connection
herewith.       (e) The amendments to the Loan Documents set forth in this
Amendment are not intended as and do not constitute novations of any of the
obligations reflected in the Loan Documents.

 

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6. The effectiveness of this Amendment is subject to receipt by the Lender of
each of the following, each in form and substance satisfactory to the Lender:

 

  (a) a counterpart of this Amendment duly executed by the Borrower and
Guarantors;       (b) payment by Borrower of Twenty Thousand and No/100 Dollars
($20,000.00) to reimburse Lender for fees incurred in connection with this
Amendment;       (c) payment by Borrower of Five Hundred Thousand and No/100
Dollars ($500,000.00), which amount shall be credited towards the outstanding
principal balance of the Loan;       (d) a current Certificate of Existence/Good
Standing for the Borrower and Guarantors issued by the jurisdiction in which
such entity is organized;       (e) original counterparts of resolutions from
the Borrower and Guarantors authorizing the execution and delivery of this
Amendment;       (f) an opinion of counsel to Borrower and Guarantors in form
and content reasonably satisfactory to Lender and its counsel;       (g) the
items described in Section 2f of the Amendment; and       (h) such other
documents, instruments and agreements as the Lender may reasonably request.

 

7. The failure of the Borrower or Guarantors to perform any of their respective
obligations under this Amendment or the falsity of any representation or
warranty made herein shall, at the option of the Lender, constitute an Event of
Default the Loan Documents.

 

8. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF SOUTH CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE
FULLY PERFORMED, IN SUCH STATE. In the event no party makes demand for
arbitration pursuant to Section 7.11 of the Loan Agreement, any legal suit,
action or proceeding arising out of or relating to this Amendment, the Loan
Agreement, any of the Loan Documents, the transactions contemplated hereby or
thereby shall be instituted in the Federal Courts of the United States of
America or the State Courts of the State of South Carolina and County of
Charleston, and the Borrower and Guarantors irrevocably submit to the exclusive
jurisdiction of such courts in any such suit, action, or proceeding. The
Borrower and Guarantors irrevocably waive and agree not to plead or claim in any
such court that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.

 

9. This Amendment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. No party shall
transfer or assign any of their respective rights or obligations hereunder
without the prior written consent of the Lender.

 

10. Except as expressly herein amended, the terms and conditions of the Loan
Documents remain in full force and effect. The amendments and modifications
contained herein shall be deemed to have prospective application only, unless
otherwise specifically stated herein. If any provision of any of this Amendment
or of any Loan Document, as amended hereby, is determined to be illegal, invalid
or unenforceable, such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions. The Borrower
and Guarantors will execute such additional documents as are reasonably
requested by the Lender to reflect the terms and conditions of this Amendment,
and will cause to be delivered such additional certificates, legal opinions and
other documents as are reasonably required by the Lender.

 

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11. The Borrower hereby agrees that all fees, expenses and costs incurred by the
Lender (including, without limitation, fees, expenses and costs of Lender’s
counsel) in negotiating, preparing, reviewing and granting the amendment set
forth herein shall, to the extent not paid or invoiced as of the date hereof, be
paid by it upon demand as fees, costs and expenses incurred in connection with
the Loan Agreement.

 

12. This Amendment may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Amendment to produce or account for more than one such counterpart
for each of the parties hereto. Delivery by facsimile by any of the parties
hereto of an executed counterpart of this Amendment shall be as effective as an
original executed counterpart hereof and shall be deemed a representation that
an original executed counterpart hereof will be delivered. Each counterpart
hereof shall be deemed to be an original and shall be binding upon all parties,
their successors and assigns.

 

13. In consideration of the modifications set forth in this Amendment, Borrower
and Guarantors each releases and holds harmless the Lender and its officers,
employees, agents, affiliates, parent companies, and subsidiaries from and
against any claim, action, suit, demand, cost expense or liability of any kind
relating to the transactions contemplated by the Loan Documents, the
administration thereof or any business communications and dealings among
Borrower, and/or Guarantors and the Lender concerning the Loan through the date
of execution hereof.

 

14. The Guarantors, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each hereby consent to and join in this Amendment
and hereby declare to and agree with the Lender that: (a) the Guaranty
Agreements and Security Agreements entered into by the Guarantors, are and shall
continue in full force and effect for the benefit of Lender with respect to the
obligations guaranteed and secured thereby, as amended by this Agreement, (b)
there are no offsets, claims, counterclaims, cross-claims or defenses of the
Guarantors with respect to such Guaranty Agreements or Security Agreements nor,
with respect to the obligations guaranteed and secured thereby, (c) that the
Guaranty Agreements and Security Agreements are not released, diminished or
impaired in any way by this Amendment or the transactions contemplated hereby,
and (d) such Guaranty Agreements and Security Agreements, as amended by this
Agreement, are hereby ratified and confirmed in all respects. Guarantors each
acknowledge that without this consent and reaffirmation, the Lender would not
execute this Agreement or otherwise consent to its terms.

 

15. This Amendment shall, upon satisfaction of the items set forth in Section 6
above, be effective as of the date set forth above. Thereafter, this Amendment
shall be binding upon and inure to the benefit of the Borrower, the Lender, each
of the other parties to the Loan Documents and each of their respective
successors and assigns.

 

(SIGNATURE PAGE(S) ATTACHED)

 

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IN WITNESS WHEREOF, Borrower and Lender have set their respective hands and
seals as of March 4, 2020.

 

BORROWER:

      Vicon Industries, Inc.         By: /s/ Saagar Govil   Name: Saagar Govil  
Title: CEO         GUARANTORS:         IQinVision, Inc.         By: /s/ Saagar
Govil   Name: Saagar Govil   Title: CEO         TeleSite U.S.A., Inc.        
By: /s/ Saagar Govil   Name: Saagar Govil   Title: CEO         Vicon Industries
Limited         By: /s/ Saagar Govil   Name: Saagar Govil   Title: CEO        
Vicon Systems Ltd.         By: /s/ Saagar Govil   Name: Saagar Govil   Title:
CEO         LENDER:         NIL Funding Corporation         By: /s/ Michael
Bender   Name: Michael Bender   Title: Secretary  

 

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