pball_8k-ex10x1.htm


    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:

            


    

     

     

    1

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      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.

     

    2

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

    
      	
              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.

                    


            

          

        

      

    

     

    3

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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.	 
	 	 	 	 
	 	 	 	 


      

    

     

     

     

     

    4


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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.

     

     

    5

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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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