Filed by Bowne Pure Compliance



 




Exhibit
10.10




LAURUS MASTER FUND, LTD.

c/o Laurus Capital Management, LLC

335 Madison Avenue, 10th Floor

New York, New York 10017




February 29, 2008




Applied Digital Solutions, Inc.

1690 South Congress Avenue, Suite 200

Delray Beach, FL 33445

Attention: President




Re: Amendment of $13,500,000 Note



Ladies and Gentlemen:



Reference is made to (a) the Securities Purchase Agreement dated as of August 24, 2006 by and
between Applied Digital Solutions, Inc. (the “Company”) and Laurus Master Fund, Ltd.
(“Laurus”) (as amended, restated, modified and/or supplemented from time to time, the
“2006 SPA”); (b) the Secured Term Note dated as of August 24, 2006 issued by the Company in
favor of Laurus in the original principal amount of $13,500,000 (as amended, restated, modified
and/or supplemented from time to time, the “2006 Note”); and (c) the Related Agreements
(as defined in the 2006 SPA and all agreements, documents and instruments executed in connection
with the 2006 SPA and the 2006 Note (all as amended, modified, restated and/or supplemented from
time to time, and collectively with the 2006 SPA and the 2006 Note, the “Transaction
Documents”).



Reference is further made to the fact that pursuant to one or more instruments of assignment,
Laurus assigned a portion of its interest in the Transaction Documents to Valens U.S. SPV I, LLC,
Valens Offshore SPV I, Ltd. and PSource Structured Debt Limited (each a “Laurus Assignee”
and collectively the “Laurus Assignees”).



The Company has requested that Laurus and the Laurus Assignees agree to a modification of the
payment terms under the 2006 Note and Laurus and the Laurus Assignees have agreed to do so on the
terms set forth herein, on the condition that the Company enter into this letter agreement and make
a prepayment of the 2006 Note in the amount of $1,866,376.



In consideration of the foregoing and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby agrees to, and acknowledges, the
following:



1. Subject to receipt by Laurus and the Laurus Assignees of the aggregate sum of $1,866,736 in
prepayment of the 2006 Note (to be applied first against all accrued but unpaid interest owing
thereon and then to the principal balance thereunder), the 2006 Note is amended by deleting Section
1.3 thereof in its in entirety and replacing such Section with the following:




“(a) Principal Payments. Amortizing payments of the Principal Amount shall be
made by the Company on October 1, 2008 and on the first business day of each succeeding
month thereafter through and including the Maturity Date (each, an
“Amortization Date”).



 


 









 






On the first Amortization Date, the Company shall make a payment
to the Holder of the outstanding Principal Amount of $21,884.34, and on each Amortization
Date thereafter, the Company shall make payments in the amount of $273,532. All payments of
the Principal Amount shall be accompanied by accrued and unpaid interest on such portion of
the Principal Amount plus any and all other unpaid amounts which are then owing under this
Note, the Purchase Agreement and/or any other Related Agreement (collectively, the “Monthly
Amount”). Any outstanding Principal Amount together with any accrued and unpaid interest
and any and all other unpaid amounts which are then owing by the Company to the Holder under
this Note, the Purchase Agreement and/or any other Related Agreement shall be due and
payable on the Maturity Date.”



2. From and after the execution and delivery hereof by the parties hereto, this letter shall
constitute a Related Agreement for all purposes of the Transaction Documents.



Except as specifically set forth herein, the Transaction Documents shall remain in full force
and effect, and are hereby ratified and confirmed. The execution, delivery and effectiveness of
this letter agreement shall not operate as a waiver of any right, power or remedy of Laurus and the
Laurus Assignees, nor constitute a waiver of any provision of any of the Transaction Documents,
except to the extent expressly provided for herein. This letter agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of New York.


 


2









 





This letter agreement may be executed by the parties hereto in one or more counterparts, each
of which shall be deemed an original and all of which when taken together shall constitute one and
the same agreement. Any signature delivered by a party by facsimile or electronic transmission
shall be deemed to be an original signature hereto.



	 	 	 	 	 	 	 
	 	 	 	 	Very truly yours,
	 
	 	 	 	 	 	 
	 	 	 	 	LAURUS MASTER FUND, LTD.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	LAURUS CAPITAL MANAGEMENT, LLC, its investment manager
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott Bluestein
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Scott Bluestein
	 

	 	 	 	 	 	Title: Authorized Signatory
	 
	 	 	 	 	 	 
	 	 	 	 	VALENS U.S. SPV I, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	VALENS CAPITAL MANAGEMENT, LLC, its investment manager
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott Bluestein
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Scott Bluestein
	 

	 	 	 	 	 	Title: Authorized Signatory
	 
	 	 	 	 	 	 
	 	 	 	 	VALENS OFFSHORE SPV I, LTD.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	VALENS CAPITAL MANAGEMENT, LLC, its investment manager
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Scott Bluestein
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Scott Bluestein
	 

	 	 	 	 	 	Title: Authorized Signatory






 


 









 





	 	 	 	 	 	 	 
	 	 	 	 	PSOURCE STRUCTURED DEBT LIMITED
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	LAURUS CAPITAL MANAGEMENT, LLC, its investment manager
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott Bluestein
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Scott Bluestein

Title: Authorized Signatory
	 
	 	 	 	 	 	 
	ACKNOWLEDGED AND AGREED:	 	 	 	 
	 
	 	 	 	 	 	 
	APPLIED DIGITAL SOLUTIONS, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Patricia Petersen	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name: Patricia Petersen	 	 	 	 
	 

	 	Title: Asst. Secretary