AMENDMENT TO LETTER AGREEMENT
EXHIBIT 10.1
December 14, 2009
Re: Amendment to Prepayment Schedule in November 5, 2009 Letter Agreement
Ladies and Gentlemen:
Reference is made to the November 5, 2009 Letter Agreement (the “Letter Agreement”) entered
into among the signatories to this Amendment to Letter Agreement (this “Amendment”). All defined
terms used herein that are not defined shall have the meanings given to them in the Letter
Agreement.
Reference is also made to the August 31, 2007 Security Agreement (and ancillary agreements)
between Destron Fearing Corporation (f/k/a/ Digital Angel Corporation) (“DFC”) and certain of the
Laurus/Xxxxxxx Related Parties (the “Revolver”).
On November 20, 2009, the Company (and certain subsidiaries) completed the McMurdo Sale
Transaction pursuant to the terms of an Amended Sale Agreement. As a result of the final
transaction structure, trade payable balances and timing of payments, and increases in operating
requirements of Signature Industries, the Company did not receive the expected proceeds from the
transaction at closing, which proceeds were intended for payment to the Laurus/Xxxxxxx Related
Parties under the Letter Agreement.
The parties hereto wish to amend the Letter Agreement and otherwise agree as follows:
(a) The payment schedule set forth in paragraph (a) on page 2 of the Letter Agreement shall be
modified as follows:
(i) Upon execution of this Amendment, the Company shall pay to the Laurus/Xxxxxxx
Related Parties, and the Laurus/Xxxxxxx Related Parties will accept from the Company, in
partial satisfaction of the Existing Debt Obligations (as determined prior to application of
payment of the Deferred Monthly Amount) the amount of $3,000,000 in cash (“Partial
Prepayment”). The Company hereby agrees that the Partial Prepayment shall be paid by the
Company and/or its designee to the Laurus/Xxxxxxx Related Parties on the date hereof as
follows: $3,000,000, less the November 2009 principal payment of $208,333 already paid, (i.e. $2,791,667) in cash by wire transfer to the account set
forth on Exhibit A to this Amendment. A portion of the required Partial Prepayment may be
satisfied by DFC on behalf of the Company as follows: DFC by its signature below hereby
requests a borrowing of $1,400,000 under the Revolver (subject to unfunded borrowing base
availability as existing on the date of this Amendment) which borrowed amount DFC instructs
the Laurus/Xxxxxxx Related Parties to pay in cash by wire transfer to the account set forth
on Exhibit A to this Amendment on behalf of the Company and to apply such paid amount
against the Partial Payment. The Company and affiliated companies signing below (the
“Company Entities”) hereby authorize the Laurus/Xxxxxxx Related Parties to apply all
payments made pursuant to this subsection (i) against the scheduled amortizing principal
payments under the Existing Debt Obligations in inverse order of maturity; provided that,
notwithstanding the foregoing, the payments made pursuant to this subsection (i) may also be
applied against the principal portion of the outstanding Monthly Amounts due under the Notes
in December 2009 and January 2010. The Company hereby agrees to make all payments of
interest and principal under the Existing Debt Obligations (and otherwise) per the terms of
the Existing Agreements, including, without limitation unless otherwise expressly modified
herein.
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(ii) In addition to the payments described above in subsection (i), the Company hereby
agrees that within three (3) days after execution of this Amendment, the Company shall pay
the Deferral Payment to the Laurus/Xxxxxxx Related Parties in the form of cash payment or
common stock of the Company with an aggregate value of $800,000, calculated and issued in
accordance with the terms of the November 26, 2008 Letter Agreement among the parties;
(iii) The Company hereby agrees that on or before February 1, 2010, the Company shall
pay to the Laurus/Xxxxxxx Related Parties, and the Laurus/Xxxxxxx Related Parties will
accept from the Company, all remaining outstanding amounts in respect of the remaining
Existing Debt Obligations (upon payment per paragraphs (i) and (ii) above, the total
remaining Existing Debt Obligations which are then owing by the Company.
(b) Paragraph (b) on page 2 of the Letter Agreement shall have no further effect, the Company
having paid such November Monthly Amounts subsequent to execution of the Letter Agreement.
(c) Upon execution of this Amendment, the Laurus/Xxxxxxx Related Parties agree to immediately
resume funding under the Revolver in accordance with the terms thereof.
(d) As of the date of this Amendment and after giving full force and effect to this Amendment,
each of the Laurus/Xxxxxxx Related Parties (and their affiliates) hereby confirms that no known
default or known breach by the Company Entities under the Existing Agreements or the Revolver has
occurred prior to or exists as of the date hereof. For the avoidance of doubt, this Amendment and
the Letter Agreement shall be deemed to be Related Agreements and Ancillary Agreements as defined
in the Existing Agreements and any failure by the Company or its designees to make any of the
payments described in Section (a) above when due shall be deemed to be a payment event of default
under and as described in the Existing Agreements. Each of the Company Entities hereby confirms and agrees that no default or breach
by the Laurus/Xxxxxxx Related Parties under the Existing Documents or the Revolver has occurred
prior to or exists as of the date hereof.
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(e) The Company Entities hereby each represents and warrants to the Laurus/Xxxxxxx Related
Parties that: (i) the Existing Agreements (and each Related Agreement as defined therein) and the
Revolver (and each Ancillary Agreement as defined therein) shall remain in full force and effect,
and are hereby ratified and confirmed; (ii) no breach or default of any of its/their obligations
under the terms of the Existing Agreements or the Revolver or any other agreements between any of
the Laurus/Xxxxxxx Related Parties and the Company Entities exists as of the date hereof after
giving effect to the Amendment and (iii) each of the Company Entities has the corporate power and
authority to execute and deliver this Amendment; (iv) all corporate action on the part of each of
the Company Entities (including their respective officers and directors) necessary for the
authorization of this Amendment, the performance of all obligations of the undersigned hereunder
has been taken; and (v) this Amendment, when executed and delivered and, to the extent it is a
party thereto, will be valid and binding obligations of the Company Entities. The execution,
delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or
remedy of any Laurus/Xxxxxxx Related Party, nor constitute a waiver of any provision of any of the
Letter Agreement or Existing Agreements, except as specifically provided herein. This Amendment
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and shall be governed by and construed in accordance with the laws of the
State of New York.
(f) This Amendment may be executed by the parties hereto in one or more counterparts, each of
which shall be deemed an original and all of which when taken together shall constitute one and the
same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be
an original signature hereto.
[SIGNATURE PAGES FOLLOW]
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| Very truly yours, | ||||
| LAURUS MASTER FUND, LTD. (In Liquidation) | ||||
| By: | Laurus Capital Management, LLC, its investment manager | |||
| By: /s/ Xxxxx Xxxxxxxxx | ||||
| Name:Xxxxx Xxxxxxxxx | ||||
| Title: Authorized Signatory | ||||
| XXXXXXX CORPORATION | ||||
| By: | Laurus Capital Management, LLC, its investment manager | |||
| By: /s/ Xxxxx Xxxxxxxxx | ||||
| Name: Xxxxx Xxxxxxxxx | ||||
| Title: Authorized Signatory | ||||
| VALENS U.S. SPV I, LLC VALENS OFFSHORE SPV I, LTD. VALENS OFFSHORE SPV II, CORP. |
||||
| By: | Valens Capital Management, LLC, its investment manager | |||
| By: /s/ Xxxxx Xxxxxxxxx | ||||
| Name: Xxxxx Xxxxxxxxx | ||||
| Title: Authorized Signatory | ||||
| LV ADMINISTRATIVE SERVICES, INC., as Agent | ||||
| By: /s/ Xxxxx Xxxxxxxxx | ||||
| Name:Xxxxx Xxxxxxxxx | ||||
| Title: Authorized Signatory | ||||
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| PSOURCE STRUCTURED DEBT LIMITED | ||||
| By: | PSource Capital Limited, its investment consultant | |||
| By: /s/ Xxxxxxx Xxxxx | ||||
| Name: Xxxxxxx Xxxxx | ||||
| Title: Authorized Signatory | ||||
| CONSENTED AND AGREED TO: | ||||
| DIGITAL ANGEL CORPORATION (f/k/a Applied Digital Solutions, Inc.) |
||||
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
| Name: Xxxxxx X. Xxxxxx Title: President |
||||
| DESTRON FEARING CORPORATION (f/k/a Digital Angel Corporation) |
||||
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
| Name: Xxxxxx X. Xxxxxx Title: President |
||||
| DIGITAL ANGEL TECHNOLOGY CORPORATION | ||||
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
| Name: Xxxxxx X. Xxxxxx Title: President |
||||
| DIGITAL ANGEL INTERNATIONAL, INC. | ||||
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
| Name: Xxxxxx X. Xxxxxx Title: President |
||||
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| FEARING MANUFACTURING CO. INC. | ||||
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
| Name: Xxxxxx X. Xxxxxx Title: President |
||||
| FLORIDA DECISION CORPORATION (f/k/a Pacific Decision Sciences Corporation) |
||||
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
| Name: Xxxxxx X. Xxxxxx Title: President |
||||
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