10.4 Amendment No. 1 to Secured Convertible Term Note
AMENDMENT NO. 1 TO SECURED CONVERTIBLE TERM NOTE
This Amendment No. 1 to Secured Convertible Term Note (this "Amendment"),
dated as of January 28, 2005, is entered into by and between DATALOGIC
INTERNATIONAL, INC., a Delaware corporation (the "Company"), and LAURUS MASTER
FUND, LTD., a Cayman Islands company ("Laurus"), for the purpose of amending
the terms of (i) the Security Purchase Agreement,), (i) the Secured
Convertible Term Note, dated June 25, 2004 (as amended, modified or
supplemented from time to time, the "Secured Convertible Term Note") issued by
the Company pursuant to the Security Purchase Agreement dated as of June 25,
2004, by and between the Company and Laurus (as amended, modified or
supplemented from time to time, the "Securities Purchase Agreement", and (iii)
the Registration Rights Agreement by and between the Company and Laurus, dated
as of June 25, 2004 (as amended, modified or supplemented from time to time,
the "Registration Rights Agreement" and, together with the Security Purchase
Agreement and the Secured Convertible Term Note, the "Loan Documents").
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Secured Convertible Note.
WHEREAS, the Company and Laurus have agreed to make certain changes to
the Loan Documents as set forth herein; and
NOW, THEREFORE, in consideration of the above, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Section 2.1 (a) of the Secured Convertible Term Note is hereby
amended by deleting the said Section in its entirety and inserting the
following new Section 2.1(a) in lieu thereof:
"Section 2.1 (a) Payment of Monthly Amount in Cash or Common Stock.
Not later than the fifth (5th) business day prior to each Repayment Date (the
"Notice Date"), the Holder may deliver to Borrower a written notice in the
form of Exhibit B attached hereto directing the Borrower to pay the Monthly
Amount payable on the next Repayment Date in either cash or Common Stock, or a
combination of both (each, a "Repayment Notice"). If a Repayment Notice is
not delivered by the Holder on or before the applicable Notice Date for such
Repayment Date, then, subject to Section 2.1(b), the Borrower shall pay the
Monthly Amount due on such Repayment Date in cash. In the event the Borrower
shall be required to pay any portion of the Monthly Amount in cash, the
Borrower shall pay to the Holder in respect to such payment an amount equal to
102% of such Monthly Amount. If the Holder elects to convert all or a portion
of any Monthly Amount into shares of Common Stock as provided herein, the
number of such shares to be issued by the Borrower to the Holder on such
Repayment Date shall be the number determined by dividing (x) the portion of
the Monthly Amount to be paid in shares of Common Stock, by (y) the then
applicable Fixed Conversion Price. For purposes hereof, the initial "Fixed
Conversion Price" means $0.66, provided, however, that the first Four Hundred
Fifty Thousand Dollars ($450,000) aggregate principal amount of the Note
converted into shares of Common Stock on or after January 28, 2005 shall be
converted at a Fixed Conversion Price equal to $0.42; thereafter the Fixed
Conversion Price shall revert to $0.66, subject to adjustment as set forth
herein."
2. The Company hereby agrees to, on or prior to January 31, 2005, file
a Rule 424(b) supplement (the "Post-Effective Supplement") to its Registration
Statement with the Securities and Exchange Commission (the "SEC") relating to
the Secured Convertible Term Note and the warrants issued in connection
therewith (the "Existing Registration Statement"), which Post-Effective
Supplement stating the Fixed Conversion Price applicable to the Secured
Convertible Term Note, as set forth in Section 1 of this Amendment. .
3. Laurus and the Company hereby agree that as promptly as practicable
following receipt by Laurus of confirmation by the Securities and Exchange
Commission that the Existing Registration Statement is effective after giving
effect to this Amendment or remains effective after giving effect to the
filing by the Company of the Post Effective Supplement, Laurus shall convert
into Common Stock of the Company, outstanding Obligations of the Company in an
amount equal to $125,988 (to be applied first against the interest and then
principal portions of such outstanding Obligations), at a conversion price of
$0.42 per share. Laurus and the Company hereby agree that, notwithstanding any
prior agreement to the contrary, the shares of Common Stock issuable as a
result of such amendment and the change to the fixed conversion price shall be
registered in the Company's next registration statement on Form S-3 (or such
other appropriate form, excluding a Form S-8); provided, however, that the
Company shall register such shares immediately upon the written demand from
Laurus if registration does not occur on or before September 15, 2005.
4. Upon the execution and delivery of this Amendment No.1 by the
Company, Laurus hereby agrees to direct the North Fork Bank to release the sum
of Three Hundred Thousand Dollars ($300,000, less any accrued and unpaid
interest on such $300,000) to the Company, by wire transfer of immediately
available funds. Notwithstanding the foregoing, the entire sum of $300,000
referred to above shall for all purposes of the Secured Convertible Term Note
be deemed a Release Amount.
5. This Amendment shall be effective as of the date hereof following
(i) the execution and delivery of same by each of the Company and Laurus.
6. Except as specifically set forth in this Amendment, there are no
other amendments to the Loan Documents, and all of the other forms, terms and
provisions of the Loan Documents remain in full force and effect.
7. The Company hereby represents and warrants to Laurus that as of the
date hereof all representations, warranties and covenants made by Company in
connection with the Loan Documents are true, correct and complete and all of
Company's and its Subsidiaries' covenant requirements have been met.
8. This Amendment shall be binding upon the parties hereto and their
respective successors and permitted assigns and shall inure to the benefit of
and be enforceable by each of the parties hereto and its successors and
permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This
Amendment may be executed in any number of counterparts, each of which shall
be an original, but all of which shall constitute one instrument.
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IN WITNESS WHEREOF, each of the Company and Laurus has caused this
Amendment to the Loan Documents to be signed in its name effective as of this
28th day of January, 2005.
DATALOGIC INTERNATIONAL, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
LAURUS MASTER FUND, LTD.
/s/ ▇▇▇▇▇ Grin
By:______________________________
Name: ▇▇▇▇▇ Grin
Title: