Filed by Bowne Pure Compliance



 




Exhibit 10.8




AMENDMENT AND PARTIAL ASSIGNMENT OF LOANS, LIENS

AND DOCUMENTS




THIS AMENDMENT AND PARTIAL ASSIGNMENT OF LOANS, LIENS AND DOCUMENTS (this “Agreement”)
dated as of August 31, 2007, by and among KALLINA CORPORATION, a Delaware corporation
(“Assignor”) and VALENS U.S. SPV I, LLC, a Delaware limited liability company, as assignee
(“Assignee”).



BACKGROUND




Applied Digital Solutions, Inc. (the “Company”), and Assignor are parties to a
Securities Purchase Agreement dated as of August 31, 2007 (as amended, restated, modified and/or
supplemented from time to time, the “SPA”) and the Related Agreements as therein defined
(such Related Agreements together with the SPA, as each may be amended, restated modified and/or
supplemented from time to time, collectively, the “Loan Documents”)



In addition, Digital Angel Corporation (“DAC”), Digital Angel Technology Corporation (“DATC”),
Fearing Manufacturing Co., Inc. (“Fearing”) and Digital Angel International (“DAI”, and together
with the DAC, DATC and Fearing the “Subsidiaries”), are parties to that certain Guaranty, which
constitutes one of the Related Agreements referenced above; and the Assignor, the Company, DAC,
DATC, and Computer Equity Corporation are parties to that certain Stock Pledge Agreement which also
constitutes one of the Related Agreements referenced above.



Assignor has agreed to sell and assign, in accordance with the terms hereof, a portion of its
right, title, and interest in and to the Loan Documents (including, without limitation, a portion
of its funding and other obligations and commitments and thereunder) to Assignee and Assignee has
agreed to purchase the same from Assignor on the terms and conditions herein contained.



NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:




	1.	 	Definitions. Capitalized terms not otherwise defined herein shall have the meanings
set forth in the applicable Loan Documents.

	 
	2.	 	Assignment and Assumption.







	 	(a)	 	As of the date hereof, Assignor hereby TRANSFERS, ASSIGNS, SELLS, GRANTS and
CONVEYS, WITHOUT RECOURSE, REPRESENTATION OR WARRANTY OF ANY NATURE WHATSOEVER (except
as expressly set forth in Section 4(a) of this Agreement) unto Assignee and Assignee
hereby buys from Assignor, an undivided 1.43% interest in all of Assignor’s right,
title, and interest in and to the Loan Documents (which percentage is hereinafter
called the “Assigned Percentage”) (including, without limitation, a corresponding
proportionate interest in Assignor’s funding and other obligations and commitments
thereunder), together with a corresponding proportionate interest in all attendant
liens, rights, claims, title, assignments and interests (including security interests),
pertaining to or arising from the Loan Documents (the
“Assigned Rights”). Notwithstanding the foregoing, the parties hereto
hereby acknowledge that (a) the Escrow Agreement referred to in the Loan Documents
shall not be deemed to constitute a Loan Document assigned hereby and (b) all
references in the Loan Documents to the term “Escrow Agreement” shall mean the
Escrow Agreement dated as of the date hereof among Assignor, the Company and the
escrow agent referred to therein, and the Escrow Agreement dated as of the date
hereof among Assignee, the Company and the escrow agent referred to therein, as each
of the same may be amended, modified and supplemented from time to time.





 


 









 






	 	(b)	 	As of the Effective Date, Assignee hereby PURCHASES the Assigned Percentage of
all of the Assigned Rights and ASSUMES the Assigned Percentage of Assignor’s
obligations under and with respect to the Loan Documents as of the Effective Date
(including, without limitation, a corresponding proportionate interest in Assignor’s
funding and other obligations and commitments thereunder).







	3.	 	Payment of Purchase Price. In consideration for the Assigned Rights, Assignee shall on
the date hereof assume Assignor’s funding and other obligations and commitments under the Loan
Documents, but only to the extent of the Assigned Percentage therein, which such assumption shall
constitute payment in full of the purchase price for the Assigned Rights.







	4.	 	Representations and Warranties of Assignor.







	 	(a)	 	Assignor represents and warrants that (i) this Agreement has been duly
authorized, executed and delivered by Assignor, and is the legal, valid and binding
obligation of Assignor enforceable in accordance with its terms; (ii) it has title to
the Assigned Rights, (iii) it has not previously assigned, sold, sold a participation
interest in, hypothecated or otherwise transferred any interest that it had or may have
in the Assigned Rights or the Loan Documents , (iv) other than as set forth herein and
in that certain Amendment and Partial Assignment of Loans, Liens and Documents by and
among Assignor and Valens Offshore SPV II, Corp. (“Valens Offshore”), which is being
executed simultaneously herewith (the “Offshore Assignment”), no Loan Document has been
modified or amended in any manner and (v) it has not funded any amounts to the Company
or any of the Subsidiaries under the terms of the Loan Documents.







	 	(b)	 	Assignee hereby acknowledges that it is taking the Assigned Percentage of the
Loan Documents as is, without recourse to Assignor, without the benefit of any
representations or warranties from Assignor, except as expressly stated in Section 4(a)
above.







	 	(c)	 	Assignee represents and warrants that this Agreement has been duly authorized,
executed and delivered by it, and is the legal, valid and binding obligation of the
Assignee enforceable in accordance with its terms.





 


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	 	(d)	 	Assignor hereby represents and warrants as to all of the representations and
warranties set forth in Section 5 of the SPA (as hereby amended) to the same extent as
Assignee.







	5.	 	Amendment to SPA. The Company (by its signature below) and Assignee acknowledge that
immediately after giving effect to the assignment contemplated by this Agreement:







	 	(a)	 	Section 2(b) of the SPA is hereby amended in its entirety to provide as follows:







“The Company shall pay:




(i) to Laurus Capital Management, LLC (“LCM”), the investment manager of the Purchaser,
a non-refundable payment in an amount equal to $118,846.00 (the “LCM Payment”);




(ii) to Valens Capital Management, LLC (“VCM”), the investment manager of Valens U.S.
SPV I, LLC (“Valens U.S.”), and Valens Offshore SPV II, Corp. (“Valens Offshore”) a
non-refundable payment in an amount equal to $78,462.00 (the “VCM Payment”);




(iii) to Valens U.S.: (A) a non-refundable payment in an amount equal to $8,000 (the
“First Valens U.S. Payment”); and (B) an advance prepayment discount deposit equal to $8,000
(the “Second Valens U.S. Payment, and together with the First Valens U.S. Payment, the
“Valens U.S. Payments”); and




(iv) to Valens Offshore, a non-refundable payment in an amount equal to (A) $32,000
(the “First Valens Offshore Payment”); and (B) an advance prepayment discount deposit equal
to $32,000 (the “Second Valens Offshore Payment, and together with the First Valens Offshore
Payment, the “Valens Offshore Payments”).




The LCM Payment, the VCM Payment, the Valens U.S. Payments and the Valens Offshore
Payments are intended to defray certain of the due diligence, legal and other expenses
incurred by each of them in connection with the entering into of this Agreement and the
Related Agreements and all related matters. Each of the foregoing payments in clauses (i)
and (ii) above shall be deemed fully earned on the Closing Date and shall not be subject to
rebate or proration for any reason. The payments set forth in (b)(i) — (b)(iv) above (net
of any deposits previously paid by the Company) shall be paid at closing out of funds held
pursuant to (a) that certain Escrow Agreement by and among the Company, the Assignor and the
escrow agent referred to therein dated as of the date hereof, and (b) that certain Escrow
Agreement by and among the Company, Valens U.S. and the escrow agent referred to therein
dated as of the date hereof (c) that certain Escrow Agreement by and among the Company,
Valens Offshore and the escrow agent referred to therein dated as of the date hereof and
(iv) a disbursement letter (the “Disbursement Letter”) (net of the $13,461.54 deposit
previously paid by the Company).




	 	(b)	 	Section 2(c) of the SPA is hereby amended in its entirety to provide as
follows:







“[Intentionally Omitted].”


 


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6. By countersignature below, the Company and the Subsidiaries each acknowledge, ratify and
confirm that all security interests and liens granted pursuant to the Loan Documents have been and
hereby are granted in favor of Assignor and the Assignee, and that Assignor and Assignee are hereby
authorized to take such further action as shall be required to perfect their respective security
interests and liens in the Collateral and all other assets of the Company and the Subsidiaries
covered by the Loan Documents.



7. Further Assurances. Assignor agrees to execute and deliver all such further
documents, to do or cause to be done all such further acts and things, and to obtain all consents
reasonably requested by Assignee, in order to effect the transactions contemplated by this
Agreement and to otherwise grant to the Assignee the intended benefit of this Agreement. Such
actions include without limitation delivering any documents necessary to effect the transactions
contemplated by this Agreement and to otherwise grant to Assignee the intended benefit of this
Agreement, the delivery of which Assignee expressly waives on the date hereof.




	8.	 	GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.







	9.	 	WAIVER OF JURY TRIAL. EACH OF ASSIGNOR AND ASSIGNEE HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.







	10.	 	Counterparts. This Agreement may be executed in one or more counterparts, each of
which when so executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same agreement. Any signature delivered by facsimile
transmission shall be deemed an original signature hereto.






[Signatures appear on the following page]


 


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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto on the date first
written above.



	 	 	 	 	 	 	 
	ASSIGNOR:	 	ASSIGNEE:
	 
	 	 	 	 	 	 
	KALLINA CORPORATION	 	VALENS U.S. SPV I, LLC

By: Valens Capital Management, LLC, its Investment Manager
	 
	 	 	 	 	 	 
	By:
	 	/s/ David Grin	 	By:	 	/s/ David Grin
	 
	 	 	 	 	 	 
	Name:
	 	David Grin	 	Name:	 	David Grin
	 
	 	 	 	 	 	 
	Title:
	 	Director	 	Title:	 	Director
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	ACCETPTED AND AGREED TO:	 	 	 	 
	 
	 	 	 	 	 	 
	APPLIED DIGITAL SOLUTIONS, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Name:
	 	Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Title:
	 	SVP, ACFO	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	DIGITAL ANGEL CORPORATION	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Name:
	 	Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Title:
	 	VP, ACFO	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	DIGITAL ANGEL TECHNOLOGY CORPORATION	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Name:
	 	Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Title:
	 	VP, ACFO	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	FEARING MANUFACTURING CO., INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Name:
	 	Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Title:
	 	VP, ACFO	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	DIGITAL ANGEL INTERNATIONAL	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Name:
	 	Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Title:
	 	VP, ACFO	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	COMPUTER EQUITY CORPORATION	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Name:
	 	Lorraine M. Breece	 	 	 	 
	 

	 	 	 	 	 	 
	Title:
	 	VP	 	 	 	 
	 

	 	 	 	 	 	 







 


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