Exhibit 10.6
LAURUS MASTER FUND, LTD.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
August 19, 0000
XXX XXXXXXX, INC.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxx XxXxxxxx
Re: Restricted Account: Account Number 2704051693,
Account Name: SDA America, Inc., maintained at North Fork Bank (the
"Restricted Account").
This letter will amend, restate and replace our letter agreement of May 28,
2004 concerning the use of funds in the Restricted Account (the "Existing
Restricted Account Side Letter"). Reference is made to (i) that certain
Securities Purchase Agreement, dated as of May 28, 2004 (as amended on August
19, 2004, the "Purchase Agreement"), by and among Secured Digital Applications,
Inc., a Delaware corporation (the "Parent"), SDA AMERICA, INC., a Delaware
corporation (the "Company"), and Laurus Master Fund, Ltd. (the "Purchaser")
relating to the issuance of the Series A Preferred referred to therein and (ii)
that certain Restricted Account Agreement, dated as of May 28, 2004 (as amended,
modified or supplemented from time to time, the "Restricted Account Agreement"),
by and among the Company, Laurus and North Fork Bank (the "Bank"). Capitalized
terms used but not defined herein shall have the meanings ascribed them in the
Purchase Agreement or the Restricted Account Agreement, as applicable. Pursuant
to the Section 3.2 of the Purchase Agreement, the Company has placed $6,500,000
in the Restricted Account, and, subject to the provisions of this letter, the
Purchase Agreement and any Related Agreement, maintained such amount in the
Restricted Account for as long as the Purchaser shall hold any outstanding
Series A Preferred. Furthermore, the Company has pledged the Restricted Account
for the benefit of the Purchaser as security for the performance of the
Parent's, the Company's and each of their respective Subsidiaries' obligations
to the Purchaser under the Purchase Agreement, the Related Agreements and
certain other agreements between the Parent, certain of its Subsidiaries and the
Purchaser.
The Purchaser and the Company desire to clarify certain aspects regarding
the use of funds contained in the Restricted Account, and for good
consideration, the receipt and sufficiency of which is here acknowledged, the
Company and the Purchaser agree that, (x) to the extent that either the Parent
or any of its Subsidiaries wish to utilize the proceeds of the Series A
Preferred for the purposes set forth in Section 6.5(a) of the Purchase Agreement
or (y) promptly following any conversion of any amount of the outstanding Series
A Preferred into Common Stock of the Company (such event, a "Conversion"), the
Purchaser shall direct the Bank, pursuant to a Release Notice (as defined in the
Restricted Account Agreement), to wire an amount of funds equal to (i) amount of
the funds to be utilized in the acquisition or (ii) the corresponding dollar
amount by which the aggregate Stated Value of all outstanding Series A Preferred
Shares has been reduced pursuant to such a Conversion from the Restricted
Account to such bank account as the Company may direct the Purchaser in writing.
Notwithstanding anything to the contrary contained in the Restricted
Account Agreement, Laurus will not exercise its right under the Restricted
Account Agreement to direct payments from the Restricted Account to third
parties so as to cause a payment to be made to any party other than the Parent
unless (a) an Event of Default has occurred pursuant to the terms of the Master
Security Agreement or (b) SDA America has dissolved in accordance with its
bylaws.
The Company and Laurus further agree that they will execute such
amendments to the Restricted Account Agreement, and will use commercially
reasonable efforts to cause the Bank to execute such amendments (which
commercially reasonable efforts shall not include the payment of any monies) as
are necessary and appropriate to affect the procedures contained in this side
letter agreement.
This letter may not be amended or waived except by an instrument in
writing signed by the Company and the Purchaser. This letter may be executed in
any number of counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one agreement. Delivery of an executed
signature page of this letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof or thereof, as the case may
be. This letter shall be governed by, and construed in accordance with, the laws
of the State of New York. This letter sets forth the entire agreement between
the parties hereto as to the matters set forth herein and supersede all prior
communications, written or oral, with respect to the matters herein.
If the foregoing meets with your approval please signify your acceptance of
the terms hereof by signing below.
Signed,
Laurus Master Fund, Ltd.
By: /s/Xxxx Xxxxxx
---------------
Name: Xxxx Xxxxxx
Title: Counsel
Agreed and Accepted this 19th day of August, 2004.
SDA AMERICA, INC.
By: /s/Xxxxxxx Soon-Xxxx Xxx
-------------------------
Name: Xxxxxxx Soon-Xxxx Xxx
Title: President
