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COLLATERAL ASSIGNMENT OF NOTE

Assignment Agreement

COLLATERAL ASSIGNMENT OF NOTE | Document Parties: INFOTECH USA INC You are currently viewing:
This Assignment Agreement involves

INFOTECH USA INC

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Title: COLLATERAL ASSIGNMENT OF NOTE
Governing Law: New York     Date: 7/8/2004
Industry: Computer Peripherals     Sector: Technology

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Exhibit 10.4

COLLATERAL ASSIGNMENT OF NOTE

        THIS COLLATERAL ASSIGNMENT OF NOTE (this “Assignment”), dated as of June 29, 2004, is made by and between INFOTECH USA, INC., a Delaware corporation (the “Assignor”), and WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the “Assignee”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement (as defined below).

        WHEREAS, the Assignee, InfoTech USA, Inc., a New Jersey corporation (the “Borrower”), Assignor and Information Technology Services, Inc., a New York corporation, are parties to that certain Credit and Security Agreement, dated as of the date hereof (as the same may hereafter be amended, modified, supplemented or restated from time to time, the “Credit Agreement”);

        WHEREAS, the Borrower is a wholly-owned subsidiary of the Assignor and Applied Digital Solutions, Inc., a Missouri corporation (“ADS”), owns a majority of the issued and outstanding shares of capital stock of the Assignor;

        WHEREAS, pursuant to that certain Guaranty by Corporations, dated as of the date hereof, made by Assignor and ITSI in favor of Assignee (the “Guaranty”), Assignor has unconditionally guaranteed the prompt payment and performance in full of all Obligations under the Credit Agreement;

        WHEREAS, pursuant to that certain Commercial Loan Agreement, dated June 27, 2003, between ADS and the Assignor (the “Loan Agreement”), ADS executed and delivered to the Assignor that certain Term Note, dated June 27, 2003, in the principal amount of $1,000,000 (the “Term Note”), and, as security for the payment thereof, ADS and Assignor entered into that certain Stock Pledge Agreement, dated June 27, 2003 (the “Stock Pledge Agreement”), pursuant to which ADS pledged to Assignor 750,000 shares of the common stock of Digital Angel Corporation owned by ADS, as evidenced by Certificate No. 3471 (the “Stock Certificate”; together with the Loan Agreement, the Term Note, the Stock Pledge Agreement, the First Amendment to Loan Documents dated as of June 29, 2004 between ADS and the Assignor (the “First Amendment”) and all other agreements, documents and instruments executed in connection with any of the foregoing, in each case as the same may be amended, modified, supplemented, restated or replaced from time to time, collectively, the “ADS Loan Documents”); and

        WHEREAS, as a condition to making any advances under the Credit Agreement, the Assignee is requiring that the Assignor grant the Assignee a security interest in all of the Assignor’s right, title and interest in and to the ADS Loan Documents.

        Accordingly, in consideration of the premises and in order to induce the Assignee to make advances under the Credit Agreement, the Assignor hereby agrees for the benefit of the Assignee as follows:

        SECTION 1. Collateral Assignment . The Assignor hereby pledges, collaterally assigns, transfers, and conveys to the Assignee, its successors and assigns, for its benefit, with full recourse, and grants to the Assignee a security interest in, all of Assignor’s right, title, and interest in and to the following (the “Assigned Collateral”):

        (a)     the Term Note;

        (b)     the Stock Certificate;

        (c)     the Loan Agreement;

        (d)     the Stock Pledge Agreement;

        (e)     the First Amendment;

        (f)     all of the other ADS Loan Documents;

        (g)     all interest, cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in exchange for all or any part of the Assigned Collateral or any security or collateral relating to the ADS Loan Documents; and

        (h)     all proceeds of any and all of the foregoing Assigned Collateral.

        SECTION 2. Security for Obligations . This Assignment (including the pledge of the Assigned Collateral made pursuant hereto and security interests hereunder) secures the payment of all Obligations of the Borrower now or hereafter existing under the Credit Agreement and all agreements, documents or instruments executed in connection therewith or relating thereto, (collectively, the “Loan Documents”), whether for principal, interest, fees, expenses, or otherwise, and all obligations of the Assignor now or hereafter existing under this Assignment or the Guaranty (all such obligations of the Borrower and the Assignor being the “Secured Obligations”). Without limiting the generality of the foregoing, this Assignment and the assignment of the Assigned Collateral made pursuant hereto secure the payment of all amounts that constitute part of the Secured Obligations and would be owed by the Borrower or the Assignor to the Assignee under the Credit Agreement and the other Loan Documents or this Assignment but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization, or similar proceeding involving the Borrower or the Assignor.

        SECTION 3. Delivery of Assigned Collateral . The Assignor shall tender immediate physical possession of the original of each of the ADS Loan Documents to the Assignee, together with, in the case of the Term Note, an allonge assigning the Term Note to the Assignee substantially in the form attached hereto as Exhibit A (the “Allonge”), and, in the case of the Stock Certificate, duly executed instruments of transfer or assignment in blank, in form and substance satisfactory to the Assignee.

        The Assignee shall have no duty or obligation to enforce the Term Note or any of the other ADS Loan Documents, protect or maintain any security for the payment of the Term Note or any of the other ADS Loan Documents, or provide any notices required by the Term Note or any of the other ADS Loan Documents, it being specifically acknowledged and agreed that the Assignee shall have no duty of care in regard to the Term Note or any of the other ADS Loan Documents or any security therefor other than the duty of the Assignee to maintain safe physical possession of the Term Note and the other Assigned Collateral in accordance with Section 11 hereof.

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        SECTION 4. Representations, Warranties and Covenants . The Assignor represents, warrants, and covenants as follows:

        (a)     The Term Note and each of the other ADS Loan Documents has been duly authorized, issued, and delivered, is the legal, valid, and binding obligation of ADS and is enforceable against ADS in accordance with its terms.

        (b)     The Assignor is and shall be the legal and beneficial owner of the Assigned Collateral free and clear of any lien, security interest, option, or other charge or encumbrance except for the security interest created by this Assignment.

        (c)     The pledge and assignment of the Assigned Collateral pursuant to this Assignment creates a valid and enforceable security interest in the Assigned Collateral, securing the payment of the Secured Obligations, and all filings and other actions necessary or desirable to perfect and protect such security interest (including the priority thereof) have been, or, upon (i) the filing of a Uniform Commercial Code financing statement in the office of the Secretary of State of Delaware, and (ii) the obtaining of possession of all Assigned Collateral the possession of which is lawfully required to perfect a security interest therein, will have been duly taken to create a valid, enforceable, and perfected first priority security interest in the Assigned Collateral.

        (d)     Except for the filing of the aforementioned Uniform Commercial Code financing statement in the office of the Secretary of State of Delaware, no consent of, authorization, approval, or other action by, notice to, or filing with any other person, entity, governmental authority or regulatory body is required for: (x) the pledge and assignment by the Assignor of the Assigned Collateral pursuant to this Assignment or for the execution, delivery, or performance of this Assignment by the Assignor; (y) the perfection or maintenance of the security interest created hereby (including the first priority nature of such security interest); or (z) the exercise by the Assignee of the rights provided for in this Assignment or the remedies in respect of the Assigned Collateral pursuant to this Assignment.

        (e)     The Assignor has full right, power, and authority to assign all of its right, title, and interest in and to the Assigned Collateral and to perform all other obligations required hereunder.

        (f)     The Assignor has previously delivered to the Assignee true, correct, and complete copies of any and all written agreements (and summaries of all oral agreements) to which it is a party that are presently in effect and that relate or pertain to the Assigned Collateral, and none of the terms and conditions of the Assigned Collateral have been varied, amended, or changed in any way except as stated therein.

        (g)     As of the date hereof, to the Assignor’s knowledge, there is no default or any action, event, or condition that would, with the giving of notice, the passage of time, or both, constitute a default under the Term Note or any of the other Assigned Collateral, and the Assignor will, until the Secured Obligations are paid in full, notify the Assignee in writing promptly after the Assignor obtains knowledge or receives notice of any default or any action, event, or condition that would, with the giving of notice, the passage of time, or both, constitute such a default.

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        (h)     To the Assignor’s knowledge, there are no defenses to or counterclaims or rights of setoff against the Assignor’s rights under the Assigned Collateral.

        (i)     Without the prior written consent of the Assignee, after the date hereof the Assignor shall not (i) extend the final maturity date of the Term Note or any other date fixed for payment of principal of the Term Note, (ii) reduce the amount of principal of, or interest rate under, the Term Note, (iii) cancel, terminate or release, or permit or consent to the cancellation, termination or release of, any part of the Assigned Collateral, (iv) take, permit or consent to any other action that could substantially interfere with the exercise of remedies by the Assignee under the Assigned Collateral, or (v) amend or waive any of the terms of, modify, settle, compromise, abate, discharge, release, terminate, arbitrate, set off, adjust, grant consents with respect to, waive any default or event of default under, or otherwise adversely affect (collectively, “Adjust” or “Adjustment”) the Assigned Collateral or the obligations of ADS or any other person thereunder in any way without the prior written consent of the Assignee.

        (j)  &


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