EXHIBIT 2.10
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[LAURUS logo]
June 1, 2004
Via Telecopier (000) 000-0000
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Digital Angel Corporation
000 Xxxxxxxx Xxxxxx
Xxxxx Xx. Xxxx XX 00000
Attention: Xxxxx Xxxxxxxx
Re: Letter Agreement
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Dear Xx. Xxxxxxxx:
Reference is hereby made to (i) that certain Securities Purchase
Agreement dated July 31, 2003 by and between Digital Angel Corporation (the
"Company") and Laurus Master Fund, Ltd. ("Laurus") (as amended, the "July
2003 Agreement"), (ii) the other Transaction Documents referred to in the
July 2003 Agreement, (as amended, the "Related July 2003 Documents"), (iii)
that certain Security Agreement dated August 28, 2003 by and between the
Company and Laurus (as amended, the "August 2003 Agreement") and (iv) the
Ancillary Agreements referred to in the August 2003 Agreement, (as amended,
the "Related August 2003 Documents") (the July 2003 Agreement, the Related
July 2003 Documents, the August 2003 Agreement and the Related August 2003
Documents, as each may be amended, restated, modified and/or supplemented
from time to time, the "Documents"). Capitalized terms used but not defined
herein shall have the meanings ascribed them in the July 2003 Agreement and
the August 2003 Agreement, respectively.
This letter sets forth below Laurus' understanding of the
agreements reached with the Company and its parent corporation, Applied
Digital Solutions Inc. ("ADSX"), as to certain amendments and agreements
reached regarding the Documents and related issues. Notwithstanding anything
to the contrary contained in the Documents, Laurus hereby agrees, and by the
Company's signature below, the Company hereby agrees, and, by signature
below, solely with respect to paragraphs 3 and 5 below, ADSX hereby agrees,
in each case, as follows:
1. The Company shall not have the ability prior to maturity to
optionally prepay in cash any outstanding principal amounts
evidenced by the Note (as defined in the July 2003 Agreement)
(the "July 2003 Note") or any Minimum Borrowing Note (as defined
in the August 2003 Agreement).
2. Laurus hereby agrees, so long as the initial registration
statement filed in connection with the August 2003 Agreement and
the Related August 2003
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Documents (the "August 2003 Agreement Registration Statement") becomes
effective on or prior to 60 days after the date hereof, any and all
fees alleged to be incurred by the Company and due to Laurus prior
to the date of effectiveness of the August 2003 Agreement Registration
Statement as a result of the failure of the Company to timely cause
the registration statements referred to in the Documents (including
certain registration rights agreements) to be filed or become effective
with the Securities and Exchange Commission prior to the dates
required by such Documents shall, in each case, be waived.
3. Within two (2) business days after the date hereof Laurus hereby
agrees to convert (such conversion, the "Initial Conversion") a
portion of the July 2003 Note equal to 150,000 shares of the
Company's common stock at the fixed conversion price applicable
to said Note and as promptly as practicable following such
conversion, ADSX hereby agrees to purchase such shares of the
Company's common stock from Laurus at a purchase price equal to
the Volume Weighted Average Price (" VWAP") of the Company's
common stock for the three (3) trading days immediately preceding
the Initial Conversion.
4. Laurus hereby agrees that its conversions of the outstanding
principal amount of the July 2003 Note, any Minimum Borrowing
Note or any other outstanding note or other obligation issued by
the Company to Laurus will not exceed twenty-five percent (25%)
of the aggregate dollar trading volume of the Company's common
stock for the thirty (30) day trading period immediately
preceding a delivery by Laurus of a notice of conversion to the
Company.
5. Laurus hereby agrees that with respect to each conversion by Laurus of
an outstanding amount of the July 2003 Note or a Minimum Borrowing Note
into the Company's common stock occurring after the Initial Conversion,
the Company and ADSX shall have the right to purchase all of such
common stock converted by Laurus at a price per share equal to the VWAP
of the Company's common stock for the three (3) trading days
immediately preceding such conversion, which right shall terminate (the
"Termination Time") at the end of the third (3rd) business hour (with a
"business hour" consisting of any hour between 9 a.m. and 5 p.m. New
York time) following provision by Laurus to the Company and ADSX of
written or email notification of such conversion (it being understood
that the Company and ADSX shall, at the time of any such notification,
determine among themselves the manner in which such purchase right
shall be allocated between the Company and ADSX). Notice of any such
conversion shall be made in the manner provided for in the Documents,
but in addition, Laurus agrees to telecopy and email a copy of each
such notice of conversion to:
Mr. Xxxxx XxXxxxx, xxxxxxxx@xxxxxxxxxxxxxxxx.xxx, 000-000-0000
Xx. Xxxxx X. Xxxxxxxx, xxxxxxxxx@xxxxxxxxxxxxxxxx.xxx, 000-000-0000
Xx. Xxxxxx Xxxxxx, xxxxxxx@xxxxxxxx.xxx, 000-000-0000
Mr. Xxxxx Xxxxxxxxx, xxxxxxxxxx@xxxx.xxx, 561-805-8001
Xx. Xxxxxxx Xxxxxxx, xxxxxxxx@xxxx.xxx, 000-000-0000
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In the event that the Company and/or ADSX has not informed Laurus
in writing of its exercise of its right to purchase such
converted common stock of the Company prior to the respective
Termination Time, Laurus shall be permitted to transfer the
shares of the Company's common stock referred to in this
paragraph 5 in any manner which it so chooses.
6. Laurus hereby agrees that it will not convert into common stock
of the Company any amount outstanding under the August 2003
Agreement or the Related August 2003 Documents prior to the
repayment in full (either in cash or by way of conversion into
common stock of the Company) of all obligations outstanding under
the July 2003 Agreement and the Related July 2003 Documents.
This letter shall be governed by, and construed in accordance with,
the laws of the State of New York.
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
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Xxxxx Grin
Director
Agreed and accepted on the date hereof:
DIGITAL ANGEL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Its Chief Financial Officer
APPLIED DIGITAL SOLUTIONS INC.
By: /s/Xxxx X. XxXxxxx
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Name: Xxxx X. XxXxxxx
Title: Chief Financial Officer
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