Exhibit 10.1
EIGHTH AMENDMENT
TO
LOAN AGREEMENT
 

 
    This Eighth Amendment to Loan Agreement is entered into as of December 10,
2009 (the “Amendment”), by and between AGILITY CAPITAL, LLC (“Agility”) and
PEPPERBALL TECHNOLOGIES-CA, INC., a Delaware corporation formerly known as
Pepperball Technologies, Inc. (“Borrower”).
 
RECITALS
 
    Borrower and Agility are parties to that certain Loan Agreement dated as of
November 18, 2005, as amended on April 12, 2006, September 8, 2006, April 20,
2007, October 19, 2007, April 25, 2008, November 26, 2008, and December 12, 2008
and as may be further amended from time to time (collectively, the
“Agreement”).  The parties desire to amend the Agreement in accordance with the
terms of this Amendment.
 
    Now, Therefore, the parties agree as follows:
 
1.     
Section 1(a) (Advances) of this Agreement to read as follows:

 
 
(a)       Borrower may request one or more advances (each, an “Advance” and
collectively, the “Advances”) on a non-revolving basis, up to the following
maximum outstanding amounts:

 
(i)   
Upon execution of this Agreement, Advances of up to $160,000, less expenses
associated with the documentation of this Agreement (approximately $5,000) and
$5,000 for the Loan Modification Fee to increase the total outstandings to
$250,000;

 
(ii)  
Upon receipt by Borrower of a minimum of $500,000, an additional $250,000 shall
be available to be drawn, bringing the entire Loan Amount to $500,000.  No
Advances shall be available after May 10, 2010.

 
2.   
Section 1(b) (Interest) of the Agreement to read as follows:

 
The Credit Facility shall be interest-only through January 31, 2010, amortizing
thereafter at $20,000 per month (in addition to the monthly interest payments)
for the first month, then $40,000 per month thereafter through Maturity (See
Amortization and Fee Payment Schedule below).
 
3   .
Section 1(c) (Fees) of the Agreement to read as follows:

 
 
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Borrower shall pay Agility a Facility Origination Fee of $12,500 ($5,000 due
payable on the date of this Agreement which shall be net-funded from initial
Advance, the balance due payable under the Amortization and Fee Payment Schedule
below), plus a monthly Loan Management Fee of $850 per month, payable on the
first day of each month while any Advances are outstanding.
 
Borrower shall pay the earned Loan Fee ($50,000) associated with the Seventh
Loan Modification consistent with the Amortization and Fee Payment Schedule
below.
 
4.    
Section 1(d) (Warrants) of the Agreement to read as follows:

 
Borrower is concurrently issuing to Agility a Warrant to Purchase Stock on the
terms and conditions set forth therein (the “Warrant”), dated December __, 2009.
 
5.    
Section 1(e) (Maturity Date) of the Agreement to read as follows:

 
All amounts outstanding hereunder are due and payable on December 10, 2010.
 
6.    
Section 4(f) (Amortization & Fee Payment Schedule) of the Agreement to be added
and to read as follows:

 
The amortization and fees associated with this Credit Facility shall be made as
follows (all dates below are 2010 calendar dates).  The Amortization Percentage
(below) is defined as the amount due payable monthly as a percent of all
combined Advances as of the date due:
 
 

Month   Amortization Percentage     8th Loan Mod Fee     7th Loan Mod Fee  
February     4%       $7,500           March     8%               $10,000  
April     8%               $10,000   May     8%               $10,000   June    
8%               $10,000   July     8%               $10,000   August     8%    
              September     8%                   October     8%                
  November     8%                                                              
       

 
7.    
Section 4(g) (Covenants) of the Agreement to be added and to read as follows:

 
Borrower shall receive a minimum of $500,000 in equity or subordinated debt by
April 30, 2010.
 
8.   
Section 4(h) (Covenants) of the Agreement to be added and to read as follows:

 
Borrower shall cause all depository and operational bank accounts to be
transferred to Silicon Valley Bank and initiate an account control agreement on
all accounts prior to March 31, 2010.
 
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9.    
Section 6(e) (Loan Default) of the Agreement to be added and to read as follows:

 
Upon the occurrence of an Event of Default under the loan agreement, Lender may
acquire an additional 50,000 warrant shares of Borrower for the first 30 day
period the Default remains uncured and an additional 75,000 warrant shares equal
of Borrower for each subsequent 30 day period the Default remains
uncured.  Additionally, in the event of a default, the interest rate will
increase to 18% until the default is cured, and a default fee of $10,000 will be
charged.
 
10.    
Unless otherwise defined, all initially capitalized terms in this Amendment
shall be as defined in the Agreement.  The Agreement, as amended hereby, shall
be and remain in full force and effect in accordance with its respective terms
and hereby is ratified and confirmed in all respects.  Except as expressly set
forth herein, the execution, delivery, and performance of this Amendment shall
not operate as a waiver of, or as an amendment of, any right, power, or remedy
of Agility under the Agreement, as in effect prior to the date hereof.  Borrower
ratifies and reaffirms the continuing effectiveness of all instruments,
documents and agreements entered into in connection with the Agreement.

 
11.    
Borrower represents and warrants that the representations and warranties
contained in the Agreement are true and correct as of the date of this
Amendment, and that no Event of Default has occurred and is continuing.

 
12.    
This Amendment may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one
instrument.

 
13.    
As a condition to the effectiveness of this Amendment, Agility shall have
received, in form and substance satisfactory to Agility, the following:

 
i)
    this Amendment, duly executed by Borrower;

 
ii)
    a Warrant to Purchase Stock in substantially the form attached in addition
to the Warrants to Purchase Stock dated December 12, 2008;

 
iii)
    Corporate Resolutions to Borrow;

 
iv)
    a Guaranty (Pepperball Technologies, Inc., a Colorado corporation, Vizer
Group, Inc., and Veritas Tactical, Inc.);

 
v)
    a Personal Guaranty for the entire loan amount executed by John Stiska,
Chief Executive Officer of Borrower;

 
vi)
    payment of a loan modification fee of $12,500, $5,000 of which due and
payable on execution of this agreement, the balance due payable consistent with
the Amortization and Fee Payment Schedule, indicated above; and

 
vii)
    such other documents, and completion of such other matters, as Agility may
reasonably deem necessary or appropriate.

 
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In Witness Whereof, the undersigned have executed this Amendment as of the first
date above written.
 
 

 
PEPPERBALL TECHNOLOGIES-CA, INC.
         
 
By:
/s/ Christin Lewis       Title:  Asst Secretary                  

 

  AGILITY CAPITAL, LLC          
 
By:
/s/ Jeffrey Carmody       Title:  C.O.O.                  

 
 
 
 
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CORPORATE RESOLUTIONS TO BORROW
 
        Borrower: Pepperball Technologies-CA, Inc.

I, the undersigned Secretary or Assistant Secretary of Pepperball
Technologies-CA, Inc. (the “Corporation”), HEREBY CERTIFY that the Corporation
is organized and existing under and by virtue of the laws of the State of
Delaware.
 
I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Incorporation, as amended, and Bylaws of
the Corporation, each of which is in full force and effect on the date hereof.
 
I FURTHER CERTIFY that by unanimous written consent of the Directors of the
Corporation, (or by other duly authorized corporate action in lieu of a
meeting), the following resolutions were adopted.
 
“BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
 
Names
 
Position
 
Actual Signatures
 
 
                                                                               
       

acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
 
Borrow Money.  To borrow from time to time from Agility Capital, LLC
(“Agility”), on such terms as may be agreed upon between the officers,
employees, or agents and Agility, such sum or sums of money as in their judgment
should be borrowed, without limitation, including such sums as are specified in
that certain Loan Agreement dated as of November 18, 2005, as amended from time
to time, including by that certain Seventh Amendment to Loan Agreement dated as
of December 12, 2008 (collectively, the “Agreement”).
 
Execute Agreement.  To execute and deliver the Agreement to Agility, and also
one or more renewals, extensions, modifications, refinancings, consolidations,
or substitutions for one or more of the notes, or any portion of the notes.
 
Grant Security.  To grant a security interest to Agility in the Collateral
described in the Agreement, which security interest shall secure all of the
Corporation’s obligations, as described in the Agreement.
 
 
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Issue Warrants.  To issue warrants to purchase stock of the Corporation to
Agility of the type, and in the number specified in the Warrant to Purchase
Stock.
 
Further Acts.  To do and perform such other acts and things, to pay any and all
fees and costs, and to execute and deliver such other documents and agreements
as they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
 
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Agility may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Agility.  Any such
notice shall not affect any of the Corporation’s agreements or commitments in
effect at the time notice is given.
 
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.
 
IN WITNESS WHEREOF, I have hereunto set my hand as of December 10, 2009 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
 

   
CERTIFIED AND ATTESTED BY:
               
X                                                               
     

 

 
 
 
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