Exhibit 10.4
(VERICHIP LOGO) [c71848c7184601.gif]
1690 South Congress Ave., Suite 200
Delray Beach, FL 33445
December 20, 2007
Mr. Michael Krawitz
President and Chief Executive Officer
1690 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
Dear Mr. Krawitz:
This letter confirms an agreement between VeriChip Corporation (“VeriChip”) and
Applied Digital Solutions, Inc. (“ADSX”) regarding the possible prepayment by
VeriChip of all principal amounts outstanding as of the date of this letter
agreement (the “Outstanding Principal Amount”) under that certain (i) Commercial
Loan Agreement dated December 27, 2005, as amended, between VeriChip and ADSX,
(ii) Security Agreement dated December 27, 2005, as amended, between VeriChip
and ADSX, and (iii) Third Amended and Restated Revolving Line of Credit Note
dated as of February 8, 2007, from VeriChip in favor of ADSX (collectively, the
“VeriChip Loan Documents”). The Outstanding Principal Amount on the date hereof
is $12,.873,346.
You have further advised us that ADSX is willing to extend to VeriChip the right
to prepay its obligations under the VeriChip Loan Documents at a discounted
principal amount pursuant to the terms set forth herein.
1. In consideration for entering into this letter agreement, VeriChip agrees to
pay ADSX $500,000 in immediately available funds prior to close of business on
December 21, 2007, all of which amount shall be applied to reduce the
Outstanding Principal Amount, if a prepayment is made pursuant to paragraph 2
below. If VeriChip does not elect to prepay pursuant to paragraph 2, ADSX shall
have the right to retain the $500,000 fee and it shall not be applied to
principal.
2. Until 5:00 p.m. EST on March 31, 2008, VeriChip shall have the right,
exercisable in its sole discretion, to prepay in full the entire Outstanding
Principal Amount to ADSX by paying to ADSX $10 million, less the $500,000 paid
pursuant to paragraph 1 above, less any other principal payments made to reduce
the Outstanding Principal Amount between the date of this letter agreement and
the date of such prepayment, plus any accrued and unpaid interest between
October 1, 2007 and the date of such prepayment.
561.805.8008 • www.verichipcorp.com • NASDAQ:CHIP

 

 

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3. If VeriChip has not elected to prepay the entire Outstanding Principal Amount
to ADSX on or before March 31, 2008, VeriChip shall continue to have the right,
exercisable in its sole discretion, to prepay in full the entire Outstanding
Principal Amount to ADSX by paying to ADSX $10 million until 5:00 p.m. EST on
October 30, 2008, less any other principal payments made to reduce the
Outstanding Principal Amount between the date of this letter agreement and the
date of such prepayment, plus any accrued and unpaid interest between October 1,
2007 and the date of such prepayment. However, the $500,000 payment made
pursuant to paragraph 1 above shall not be used to reduce principal and shall be
retain by ADSX solely as a fee for entering into this agreement.
4. In further consideration for the agreements set forth in this letter
agreement, VeriChip agrees to take all actions reasonably required or
appropriate to register with the U.S. Securities and Exchange Commission and all
applicable states the resale of all shares of VeriChip common stock owned by
ADSX. VeriChip will use commercially reasonable efforts to cause such
registration(s) to be effective within 120 days following the prepayment of the
Outstanding Principal Amount.
5. Other than the right to prepay the Outstanding Principal Amount at a discount
as described above, nothing in this letter agreement effects, releases or
otherwise alters VeriChip’s obligations under the VeriChip Loan Documents,
including without limitation its obligation to make any scheduled payments
pursuant to the VeriChip Loan Documents, except as specifically set forth in
this letter agreement. If prepayment is not made by October 30, 2008, this
letter agreement will expire and the VeriChip Loan Documents will govern the
remaining payments due from VeriChip to ADSX.
6. ADSX shall allow VeriChip to replace the Third Amended and Restated Line of
Credit Note with another note identical in all respects other than that the
replacement note shall contain a statement that it may be prepaid at a discount
pursuant to the terms of this letter agreement.
7. Except as expressly modified hereby, all terms and provisions of the VeriChip
Loan Documents shall remain unchanged and in full force and effect. In the event
of an inconsistency between the terms of this letter agreement and the terms of
the VeriChip Loan Documents, the terms hereof shall control.

 

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If the foregoing is acceptable to you, please so indicate by signing the
counterpart in the space provided and return it to VeriChip by December 20,
2007.
Please do not hesitate to contact me if you have any questions regarding this
letter.
Sincerely,
VeriChip Corporation
/s/ William J. Caragol
William J. Caragol
President and Chief Financial Officer
Agreed to and Accepted by:
Applied Digital Solutions, Inc.

         
By:
  /s/ Michael Krawitz
 
   
Name:
  Michael Krawitz
 
   
Title:
  CEO
 
   
Date:
  12/20/07
 
   

 

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