Document:

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                                                                Exhibit 10.8

                                                              EXECUTION COPY

                        SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "AGREEMENT") is entered
into as of December 2, 2003, between Applied Digital Solutions, Inc., a
Missouri corporation (the "COMPANY"), and Elliott International, L.P. (the
"PURCHASER").

         WHEREAS, the Company has registered with the Securities and
Exchange Commission (the "COMMISSION") the issuance of certain shares (the
"SHARES") of its common stock, $0.001 par value per share (the "COMMON
STOCK"), under a registration statement on Form S-1 (Registration No.
333-106300) (the "REGISTRATION STATEMENT").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to sell to the Purchaser and the Purchaser
desires to purchase from the Company up to 800,000 Shares currently
available under the Registration Statement.

         NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants contained in this Agreement and for other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
Company and the Purchaser agree as follows:

         1.       Settlement Dates.

         (a)      Settlement Dates. The closing, if any, of the purchase and
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sale of the Shares under this Agreement will take place at the offices of
Proskauer Rose LLP, 1585 Broadway, New York, New York 10036, on the
settlement dates set forth below. Subject to the terms and conditions of
this Agreement, the Shares will be issued, delivered and paid for on up to
ten settlement dates (if any) as follows:

                  (1)      The first settlement date (if any) will occur on
the fourth (4th) Trading Day (as defined below) following (and including)
the Press Release Date (the "FIRST SETTLEMENT DATE"). Subject to the terms
and conditions of this Agreement, on the First Settlement Date, the Company
will issue and deliver to the Purchaser, and the Purchaser shall purchase
from the Company, 200,000 Shares (subject to adjustment, at the sole option
of the Purchaser, in accordance with and subject to the provisions of
Sections 1(b)(2) and (3)).

                  (2)      The second settlement date (if any) will occur on
the seventh (7th) Trading Day following (and including) the Press Release
Date (the "SECOND SETTLEMENT DATE"). Subject to the terms and conditions of
this Agreement, on the Second Settlement Date, the Company will issue and
deliver to the Purchaser, and the Purchaser shall purchase from the Company,
400,000 Shares less the number of any Shares purchased by the Purchaser on
the First Settlement Date (subject to adjustment, at the sole option of the
Purchaser, in accordance with and subject to the provisions of Sections
1(b)(2) and (3)).

                  (3)      The third settlement date (if any) will occur on
the tenth (10th) Trading Day following (and including) the Press Release
Date (the "THIRD SETTLEMENT DATE"). Subject to the terms and conditions of
this Agreement, on the Third Settlement Date, the

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Company will issue and deliver to the Purchaser, and the Purchaser shall
purchase from the Company, 600,000 Shares less the aggregate number of
Shares purchased by the Purchaser on all previous Settlement Dates (as
defined below) (subject to adjustment, at the sole option of the Purchaser,
in accordance with and subject to the provisions of Sections 1(b)(2) and
(3)).

                  (4)      The fourth settlement date (if any) will occur on
the thirteenth (13th) Trading Day following (and including) the Press
Release Date (the "FOURTH SETTLEMENT DATE", and together with the First
Settlement Date, Second Settlement Date, Third Settlement Date and Fourth
Settlement Date, collectively, the "SETTLEMENT DATES", and each
individually, a "SETTLEMENT DATE"). Subject to the terms and conditions of
this Agreement, on the Fourth Settlement Date, the Company will issue and
deliver to the Purchaser, and the Purchaser shall purchase from the Company,
800,000 Shares less the aggregate number of Shares purchased by the
Purchaser on all previous Settlement Dates (subject to adjustment, at the
sole option of the Purchaser, in accordance with and subject to the
provisions of Sections 1(b)(2) and (3)).

         (b)      Per Share Purchase Price; Additional Share Elections.

                  (1)      The purchase price for each Share issuable under
this Agreement on a Settlement Date (the "PER SHARE PURCHASE PRICE") shall
equal 87.00% of the average of the VWAP for the three Trading Days
immediately preceding such Settlement Date.

                  (2)      The Company is not required to sell, and the
Purchaser is not required to purchase, any Shares at a price that is less
than the Floor Price. If the Per Share Purchase Price with respect to a
particular Settlement Date is less than the Floor Price: (a) the Purchaser
shall be under no further obligation to purchase any Shares that would have
been purchased on the applicable Settlement Date, but may, at its option,
require the Company to issue and sell to it up to the maximum aggregate
amount of Shares to be sold hereunder (it being understood that not more
than an aggregate of 800,000 Shares will be issued and sold under this
Agreement), and (b) if Purchaser elects to acquire such Shares under (a)
above, then the per share purchase price for such Shares shall equal the
Floor Price.

                  (3)      At any time prior to 6:00 p.m. (New York time) on
the day preceding a Settlement Date, the Purchaser may elect by written
notice to the Company, to acquire (in addition to the Shares which it may be
obligated to acquire at such time) up to the maximum aggregate amount of
Shares to be sold hereunder (it being understood that not more than an
aggregate of 800,000 Shares will be issued and sold under this Agreement).

                  (4)      Notwithstanding anything herein to the contrary,
if the VWAP on two consecutive Settlement Dates is less than $0.42, then, at
any time thereafter, Purchaser shall be entitled to terminate any and all of
its obligations under this Agreement by delivery of a written notice to the
Company to such effect.

                  (5)      The Purchaser is not permitted to acquire Shares
hereunder to the extent that, giving effect to such proposed acquisition,
the beneficial ownership of the Common Stock by the Purchaser (together with
its affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Purchaser's for purposes of Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
would exceed

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4.999% of the total number of issued and outstanding shares of Common Stock
(including for such purpose the shares of Common Stock potentially issuable
upon such acquisition). Notwithstanding anything herein to the contrary, the
obligations of the parties hereto is subject to the immediately preceding
sentence and will be deemed automatically modified so as to avoid any
contravention thereof.

         (c)      Deliveries on each Settlement Date.
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                  (1)      Subject to the terms and conditions of this
Agreement, on each Settlement Date: (x) the Company will deliver to the
Purchaser, (A) via such Purchaser's DTC Account through the Depository Trust
Company DWAC system, a number of Shares equal to the applicable number of
Shares being acquired on such Settlement Date, and (B) a certificate,
executed by the President of the Company, to the effect that the Company has
complied with and is in compliance with all of the conditions set forth in
Section 2, and (y) the Purchaser will, upon receipt of such Shares in the
DWAC system, deliver to the Company, an amount in United States dollars
equal to the product of (i) such number of Shares, and (ii) the Per Share
Purchase Price applicable to such Settlement Date, via wire transfer of
immediately available funds to an account designated in writing by the
Company for such purpose.

                  (2)      In addition to any other rights available to the
Purchaser, if on a Settlement Date, the Company fails to deliver to such
Purchaser's DTC Account the number of Shares being acquired on such
Settlement Date, and if the Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Purchaser of the shares that the Purchaser anticipated
receiving from the Company (a "Buy-In"), then, in the Purchaser's sole
discretion, the Company shall, within three Trading Days after the
Purchaser's request, either (i) pay cash to the Purchaser in an amount equal
to the Purchaser's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the "Buy-In Price"), at
which point the Company's obligation to deliver such Shares shall terminate,
or (ii) promptly honor its obligation to deliver to the Purchaser a
certificate or certificates representing such Common Stock and pay cash to
the Purchaser in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock, times (B) the
Closing Price on the date of the event giving rise to the Company's
obligation to deliver such certificate.

         (d)      Certain Defined Terms. As used in this Agreement, unless
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otherwise defined, the following terms shall have the respective meanings
set forth in this Section 1(d):

                  (1)      "COMPANY REGISTRATION STATEMENT" means the
Registration Statement, including the Prospectus, amendments and supplements
to the Registration Statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material and
exhibits incorporated by reference or deemed to be incorporated by reference
in such registration statement.

                  (2)      "FLOOR PRICE" means $0.35, subject to equitable
adjustment for stock splits, recombinations and similar events.

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                  (3)      "PERSON" means any court or other federal, state,
local or other governmental authority or other individual or corporation,
partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.

                  (4)      "PRESS RELEASE DATE" means the date on which as
of 9:20 a.m. (New York time) the press release or Form 8-K contemplated by
Section 2(d) has been filed and is available to the public through the
Commission's EDGAR system.

                  (5)      "PROSPECTUS" means the prospectus included in the
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part
of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Shares covered by the Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material or exhibits incorporated by reference or deemed
to be incorporated by reference in the Prospectus.

                  (6)      "SECURITIES ACT" means the Securities Act of 1933,
as amended.

                  (7)      "TRADING DAY" means (a) a day on which the Common
Stock is traded on the Nasdaq SmallCap Market, Nasdaq National Market, New
York Stock Exchange or American Stock Exchange, or (b) if the Common Stock
is not listed on any of the Nasdaq SmallCap Market, Nasdaq National Market,
New York Stock Exchange or American Stock Exchange, a day on which the
Common Stock is traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (c) if the Common Stock is not quoted on the OTC
Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions
of reporting prices); provided, however, that in the event that the Common
Stock is not listed or quoted as set forth in (a), (b) and (c) above, then
Trading Day shall mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State
of New York are authorized or required by law or other government action to
close.

                  (8)      "VWAP" means on any Trading Day, the volume
weighted average trading price (as reported by Bloomberg Financial L.P.
using the VAP function) of the Common Stock for such Trading Day.

         2.       CONDITIONS. The obligation of the Purchaser to purchase and
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acquire Shares under this Agreement is subject to the fulfillment (or waiver
by the Purchaser) of each of the following conditions:

         (a)      The Company Registration Statement: (x) shall be effective
as to all Shares, not subject to any threatened or actual stop order and (y)
will not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.

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         (b)      The Company shall have secured the listing of the Shares
on the Nasdaq SmallCap Market (subject to official notice of issuance).

         (c)      The representations and warranties of the Company made
in this Agreement shall be true and correct as of and on each of the date of
this Agreement and each Settlement Date, as if first made and restated on
each such date.

         (d)      The Company shall have issued a press release or filed a
current report on Form 8-K, in each case reasonably acceptable to the
Purchaser, disclosing the existence of this Agreement and the material terms
hereof. The Purchaser may terminate its obligation to acquire Shares under
this Agreement if, by 9:20 a.m. (New York time) on December 3, 2003, neither
(i) the Company has issued such press release, nor (ii) such current report
on Form 8-K is available to the public through the Commission's EDGAR
system.

         (e)      There shall be no litigation, investigation, inquiry or
proceeding pending or threatened in writing (including without limitation
with the Commission, the Nasdaq Stock Market, or the NASD) that challenges
or calls into the question the transactions contemplated hereby or, if
determined in a manner adverse to the Company, that could reasonably be
expected to result in a material and adverse effect on the Company, its
business or its prospects or impose liability upon the Purchaser.

         (f)      The Company shall file with the Commission a prospectus
supplement to the Company Registration Statement (a "Supplement"), in agreed
form, within one Trading Day of the date of this Agreement, in order to
evidence and disclose the offer and sale of the Shares issued hereunder. In
addition, the Company shall file a Supplement, in agreed form, on each
Settlement Date to disclose the number Shares sold on such Settlement Date
and the corresponding Per Share Purchase Price.

         3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
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hereby makes the following representations and warranties to the Purchaser:

         (a)      Organization and Qualification. The Company is a corporation
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duly incorporated, validly existing and in good standing under the laws of
the State of Missouri with the requisite corporate power and authority to
own and use its properties and assets and to carry on its business as
currently conducted, except where the failure to do so would not reasonably
be expected to have a material adverse effect on the Company or the
transactions contemplated hereby. The Company is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to
do so would not reasonably be expected to have a material adverse effect on
the Company or the transaction contemplated hereby.

         (b)      Authorization. The Company has the requisite corporate power
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and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations thereunder. The
execution and delivery of this Agreement by the Company and the consummation
of the transaction contemplated hereby have been duly authorized by all
necessary action on the part of the Company and no further action is
required

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by the Company or its shareholders for the Company to execute and consummate
this Agreement and the transactions contemplated hereby. This Agreement has
been duly executed by the Company and, when delivered in accordance with the
terms hereof, and assuming the valid execution hereof by the Purchaser, will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (a) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (b) as enforceability of
any indemnification and contribution provisions may be limited under the
federal and state securities laws and public policy, and (c) that the remedy
of specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

         (c)      No Conflicts. The execution, delivery and performance of
                  ------------
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby does not and will not: (i) conflict with or
violate any provision of the Company's certificate of incorporation or
bylaws (each as amended through the date hereof), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment or acceleration (with or without notice, lapse of time or both)
of, any agreement or indebtedness to which the Company is a party or by
which any property or asset of the Company is bound or affected, except
where the failure to do so would not reasonably be expected to have a
Material adverse effect on the Company or the transaction contemplated
hereby or (iii) result in a violation of any law, rule, regulation, order,
judgment, decree or other restriction of any court, governmental authority
or stock market to which the Company or the Common Stock is subject, except
where the failure to do so would not reasonably be expected to have a
Material adverse effect on the Company or the transaction contemplated
hereby. There are no notices to or approvals or consents required to be made
by the Company of the NASD, any stock market, the Commission or any other
Person that have not been made and obtained (and any so obtained are in full
force and effect), except where the failure to do so would not reasonably be
expected to have a material adverse effect on the Company or the transaction
contemplated hereby.

         (d)      Filings, Consents and Approvals. The Company is not required
                  -------------------------------
to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of this
Agreement, other than (i) the required filing of the Supplements, (ii)
applicable Blue Sky filings, and (iii) in all other cases where the failure
to obtain such consent, waiver, authorization or order, or to give such
notice or make such filing or registration could not have or result in,
individually or in the aggregate, a Material adverse effect.

         (e)      Issuance of the Shares. The Shares are duly authorized and,
                  ----------------------
when issued and paid for in accordance with the terms hereof, will be
legally issued, fully paid and nonassessable, free and clear of all liens
and encumbrances. The Shares have been approved for issuance on and by the
Nasdaq SmallCap Market (subject to official notice of issuance).

         (f)      Company Registration Statement. The Company Registration
                  ------------------------------
Statement is effective and the Company has not received notice that the
Commission has issued or intends

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to issue a stop order with respect to the Company Registration Statement or
that the Commission otherwise has suspended or withdrawn the effectiveness
of the Company Registration Statement, either temporarily or permanently, or
intends or has threatened in writing to do so. The Company Registration
Statement (including the information or documents incorporated by reference
therein and all supplements, including the Supplements, and prospectus
thereunder), at the time it was first declared effective, on the date of
this Agreement, and on each Settlement Date, did not, do not and will not
contain any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Shares are registered under the Securities Act by the
Company Registration Statement.

         (g)      Listing and Maintenance Requirements. None of the offer,
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sale or issuance to the Purchaser of the maximum number of Shares issuable
under this Agreement require any approval of the shareholders of the Company
and do not violate the rules of the Nasdaq Stock Market.

         (h)      Certain Fees. Except with respect to certain arrangements
                  ------------
between the Company and J.P. Carey Securities Inc. with respect to the
transactions contemplated by this Agreement, no fees or commissions will be
payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by this Agreement. The Purchaser
will have no obligation with respect to any fees incurred by the Company or
any other Person or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement. The Company
will indemnify and hold harmless the Purchaser, its employees, officers,
directors, agents, partners, and affiliates, from and against all claims,
losses, damages, costs (including the costs of preparation and reasonable
attorney's fees) and expenses suffered in respect of any such claimed or
existing fees incurred by the Company or any other Person, as such fees and
expenses are incurred.

         (i)      Disclosure. Neither the Company nor any other Person acting
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on its behalf has provided the Purchaser or its agents or counsel with any
information that constitutes or may, in the Company's opinion, constitute
material non-public information.

         (j)      SEC Reports; Financial Statements. Except with respect to
                  ---------------------------------
(i) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 30, 2002, which was not timely filed and (ii) two statements of
changes in beneficial ownership in Digital Angel Corporation filed on Form
4, which were not timely filed, the Company has filed all reports required
to be filed by it under the Exchange Act, for the twelve months preceding
the date hereof (collectively, "SEC REPORTS") on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the
Company included in the SEC

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Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal year-end audit
adjustments.

         (k)      Acknowledgment Regarding Purchaser's Purchase of Shares.
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The Company acknowledges and agrees that the Purchaser is acting solely in
the capacity of an arm's length purchaser with respect to this Agreement and
the transactions contemplated hereby. The Company further acknowledges that
Purchaser is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by the Purchaser or
any of its representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Purchaser's
purchase of the Shares. The Company further represents to the Purchaser that
the Company's decision to enter into this Agreement has been based solely on
the independent evaluation of the proposed transactions by the Company and
its representatives.

         4.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
                  -----------------------------------------------
Purchaser hereby represents and warrants to the Company as follows:

         (a)      Organization; Authorization. The Purchaser is a corporation
                  ---------------------------
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation with the requisite corporate power and
authority to own and use its properties and assets and to carry on its
business as currently conducted, except where the failure to do so would not
reasonably be expected to have a material adverse effect on the Purchaser or
the transactions contemplated hereby. The Purchaser is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to do so would not reasonably be expected to have a material adverse
effect on the Purchaser or the transaction contemplated hereby. The
Purchaser has the requisite power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations thereunder. The execution and delivery of this
Agreement by the Purchaser and the consummation by it of the transaction
contemplated hereby have been duly authorized by all necessary action on the
part of the Purchaser. This Agreement has been duly executed by the
Purchaser and, when delivered in accordance with the terms hereof, and
assuming the valid execution hereof by the Company, will constitute the
valid and binding obligation of the Purchaser enforceable against it in
accordance with its terms, except (a) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification
and contribution provisions may be limited under the federal and state
securities laws and public policy, and (c) that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.

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         (b)      Other Agreements; Status of Purchaser. The Purchaser is not
                  -------------------------------------
party to any agreement or arrangement with respect to a disposition of
Shares other than this Agreement. The Purchaser is an accredited investor as
defined in Rule 501 of the Securities Act and is not registered as a
broker-dealer under the Exchange Act.

         (c)      Financial Capacity. The Purchaser has financial capacity to
                  ------------------
satisfy its obligations under this Agreement.

         5.       CERTAIN DISCLOSURES. The Company will not and will cause
                  -------------------
each of its affiliates and other Persons acting on behalf of the Company not
to divulge to the Purchaser any information that it believes to be material
non-public information unless the Purchaser has agreed in writing to receive
such information prior to such divulgence. Neither the Company nor the
Purchaser will issue any press release or make any other public announcement
relating to this Agreement unless the form thereof is mutually agreed to by
the Company and the Purchaser, or if the Company is advised in writing by
its counsel that such press release or public announcement is required by
law. Except with respect to the press release to be issued pursuant to
Section 2(d), and other than with respect to: (i) the filing of the
Supplements, and (ii) the filing of a Current Report on Form 8-K to furnish
an opinion of counsel as to the legality of the Shares, the Company shall
not publicly disclose the name of the Purchaser, or include the name of the
Purchaser in any filing with the Commission or any regulatory agency or
trading market, without the prior written consent of the Purchaser, except
to the extent such disclosure is required by law or trading market
regulations, in which case the Company shall provide the Purchaser with
prior notice of such disclosure.

         6.       RESERVATION AND LISTING OF SHARES. The Company shall
                  ---------------------------------
maintain a reserve from its duly authorized shares of Common Stock for
issuance of the Shares pursuant to this Agreement in such amount as may be
required to fulfill its obligations in full under this Agreement. The
Company shall take such steps as may be required to cause and maintain the
listing of the Shares on the Trading Market and such other exchange, market
or quotation facility on which the Common Stock is traded.

         7.       INDEMNIFICATION. The Company will indemnify the Purchaser
                  ---------------
and the officers, directors, employees and agents of the Purchaser, and each
person, if any, who controls the Purchaser within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act (a "RELATED
PERSON"), as provided in Exhibit "A" attached hereto against liability with
respect to the Company Registration Statement (including, without
limitation, the prospectus supplement) relating to the Shares sold by the
Company to the Purchaser hereunder. For purposes of said Exhibit A,
capitalized terms used therein without definition shall have the same
meanings therein as are ascribed to said terms in this Agreement.

         8.       MISCELLANEOUS.
                  -------------

         (a)      Fees and Expenses. Each party will pay the fees and expenses
                  -----------------
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company will pay
all stamp and other taxes and duties levied in connection with the sale of
the Shares.

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         (b)      Entire Agreement; Amendments. This Agreement contains the
                  ----------------------------
entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have
been merged into this Agreement. This Agreement may not be modified or
amended except in a writing for such purpose signed by the Company and the
Purchaser. The waiver by either party hereto of any right hereunder or the
failure to perform or of a breach by the other party will not be deemed a
waiver of any other right hereunder or of any other breach or failure by
said other party whether of a similar nature or otherwise.

         (c)      Notices. Any and all notices or other communications or
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deliveries required or permitted to be provided hereunder must be in writing
and will be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section, or via email, prior to 4:30
p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Agreement later than
4:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New
York City time) on such date, (iii) the Trading Day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications will be as follows
(or such other address as may be designated in writing hereafter, in the
same manner, by such Person):

         If to the Company:    Applied Digital Solutions, Inc.
                               400 Royal Palm Way, Suite 410
                               Palm Beach, FL 33480
                               Facsimile No.: (561) 805-0002
                               Attn: Chief Financial Officer

                               with a copy to:

                               Holland & Knight
                               701 Brickell Ave.
                               Miami, FL 33131
                               Attention: Harvey Goldman, Esq.

         If to the Purchaser:  To the address set forth under the
                               Purchaser's name on the signature page hereto.

         (d)      Governing Law. All questions concerning the construction,
                  -------------
validity, enforcement and interpretation of this Agreement will be governed
by and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflict of laws
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) will be
exclusively commenced in the state and federal courts sitting in the City of
New York, Borough of

                                     10

<PAGE>
<PAGE>

Manhattan. Each party irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, Borough of
Manhattan for the adjudication of any dispute hereunder, and irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such
court or that such courts are an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service will constitute good
and sufficient service of process and notice thereof. Nothing contained
herein will be deemed to limit in any way any right to serve process in any
manner permitted by law. Each party irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action
or proceeding to enforce any provisions of this Agreement, then the
prevailing party in such action or proceeding will be reimbursed by the
other party for its reasonable attorneys fees and other reasonable costs and
expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.

         (e)      Remedies. In addition to being entitled to exercise all
                  --------
rights provided herein or granted by law, including recovery of damages, the
Purchaser and the Company will each be entitled to specific performance of
the others obligations under this Agreement. In furtherance thereof, the
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any such breach and hereby agrees to waive in any
action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

         (f)      Execution. This Agreement may be executed in two or more
                  ---------
counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart.

         (g)      Assignment. Neither party shall assign this Agreement
                  ----------
without the prior written consent of the other party hereto.

         (h)      Adjustments in Share Numbers and Prices. In the event of
                  ---------------------------------------
any stock split, subdivision, dividend or distribution payable in shares of
Common Stock (or other securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring
after the date hereof, each reference in this Agreement to a number of
shares or a price per share shall be amended to appropriately account for
such event.

    *        *        *       *        *        *        *        *       *

                                     11

<PAGE>
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed as of the date first indicated above.

                       APPLIED DIGITAL SOLUTIONS, INC.

                       By:
                          --------------------------------------------
                          Name:
                          Title:

                       ELLIOTT INTERNATIONAL, L.P.

                       By:
                          --------------------------------------------
                          Name:
                          Title: Authorized Signatory

                       Address for Notice:

                          --------------------------------------------

                          --------------------------------------------

                          --------------------------------------------
                          Facsimile:
                                    ----------------------------------
                          Phone:
                                --------------------------------------
                          Attention:
                                    ----------------------------------

                          DWAC instructions for delivery of shares:

                                     12

<PAGE>
<PAGE>

                                 EXHIBIT 'A'

                          TERMS OF INDEMNIFICATION

         (a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and
             ------------------------------
hold harmless the Purchaser and any Related Persons, from and against any
losses, claims, damages, liabilities, costs and expenses (including, without
limitation, reasonable costs of defense and investigation and all attorneys'
fees and expenses) to which the Purchaser and the officers, directors,
employees and agents of the Purchaser, and each person, if any, who controls
the Purchaser may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Company Registration Statement or any
amendment or supplement to the Registration Statement, or (ii) the omission
or alleged omission to state in that Registration Statement a material fact
required to be stated therein or necessary to make the statements therein
not misleading (an "INDEMNIFIABLE MATTER"). The Company will reimburse the
Purchaser and the officers, directors, employees and agents of the Purchaser
and each such controlling person promptly upon demand for any legal or other
costs or expenses reasonably incurred by the Purchaser and the officers,
directors, employees and agents of the Purchaser or the controlling person
in investigating, defending against, or preparing to defend against any
claim relating to an Indemnifiable Matter, except that the Company will not
be liable to the extent such claim, suit or proceeding which results in a
loss, claim, damage, liability or expense arises out of, or is based upon,
an untrue statement, alleged untrue statement, omission or alleged omission,
included in the Supplement in reliance upon, and in conformity with, written
information furnished by the Purchaser to the Company for inclusion in the
Supplement.

         (b) CONTRIBUTION. If for any reason the indemnification provided
             ------------
for in this Agreement is not available to, or is not sufficient to hold
harmless, an indemnified party in respect of any loss, claim, damage,
liability, cost or expense referred to in Paragraph (a), each indemnifying
party will, in lieu of indemnifying the indemnified party, contribute to the
amount paid or payable by the indemnified party, contribute to the amount
paid or payable by the indemnified party as a result of the loss, claim,
damage, liability, cost or expense: (i) in the proportion which is
appropriate to reflect the relative benefits received by the indemnifying
party, on the one hand, and by the indemnified party, on the other hand,
from the sale of stock which is the subject of the claim, action, suit or
proceeding which resulted in the loss, claim, liability, cost or expense or
(ii) if that allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits of
the sale of stock, but also the relative fault of the indemnifying party and
the indemnified party with respect to the statements or omissions which are
the subject of the claim, action, suit or proceeding that resulted in the
loss, claim, damage, liability, cost or expense as well as any other
relevant equitable considerations.

                                    A-1EXHIBIT 10.10
                                                                   -------------

               PATENTS PURCHASE, ASSIGNMENT AND LICENSE AGREEMENT

     This Patents Purchase, Assignment and License Agreement, entered into on
November 18, 2003 ("Effective Date"), is by and between MERLOT COMMUNICATIONS,
INC., with a principal place of business at 4 Berkshire Boulevard, Bethel,
Connecticut ("Seller"), and NETWORK-1 SECURITY SOLUTIONS, INC., with a principal
place of business at 445 Park Avenue, Suite 1028, New York, New York, its
successors and assigns ("Buyer").

     WHEREAS, Seller represents that it owns all right, title, and interest to,
and wishes to sell and assign to Buyer all right, title and interest in and to,
the inventions, patents and patent applications specified on Exhibit A annexed
hereto and incorporated herein by reference (each of which shall individually be
referred to as a "Patent" and collectively as the "Patents"), under the terms
and conditions set forth herein; and

     WHEREAS, Buyer wishes to purchase the Patents and accept such assignment.

     NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:

     1.   Assignment of Patents

          a. Seller hereby assigns to Buyer, and Buyer hereby accepts, all of
Seller's right, title and interest in and to, the Patents (including any
reissues, continuations-in-part, revisions, extensions, and reexaminations
thereof), all related documentation, including, without limitation, all related
copyrights, if any, and the exclusive right to enforce the Patents in the United
States and throughout the world in the sole name of Buyer, its successors or
assigns, including all rights to profits and damages

<PAGE>

by reason of past infringement by any party or parties, including the right to
sue and collect same for Buyer's and Buyer's successors and assigns own use and
benefit, free and clear of any and all liens, encumbrances, or third party
claims. Seller shall execute the form of Assignment for each of the Patents
annexed hereto as Exhibit B simultaneously with Seller's execution hereof.

          b. Other than the rights expressly set forth herein, Seller shall
hereinafter have no further or continuing interest in the Patents. In addition,
Seller represents that it has no interest in any other patent or technology
related to the Patents.

          c. Upon the closing hereof, Seller shall provide to Buyer the original
certificates reflecting the registrations of the Patents, as well as all files
in Seller's possession or under its control regarding the technology embodied in
the Patents including, without limitation, its work, design, engineering and
search files for each Patent, all of Seller's files regarding the prosecution of
the Patents, and all documentation, including without limitation, instruction
manuals, relating to the Patents.

          d. Seller appoints Buyer and Buyer's successors and assigns as its
attorney-in-fact to act in Seller's name and place to execute, deliver and
record any document or instrument of assignment or conveyance necessary to
perfect, grant and confirm the rights granted in paragraph 1(a) hereof, and
Seller conveys to the Buyer the right to make application in, prosecute, receive
and enforce in its own behalf and name the Patents.

          e. Seller further agrees at any time to execute and to deliver upon
request of the Buyer, at Buyer's expense, such additional documents, if any, as
are necessary or desirable to secure patent protection on said inventions,
discoveries and

                                        2
<PAGE>

applications throughout all countries of the world (including, without
limitation, all documents relating to any reexaminations or reissuances), and
otherwise to do the necessary to give full effect to and to perfect the rights
of the Buyer to the Patents under this Agreement, including the execution,
delivery and procurement of any and all further documents evidencing this
assignment, transfer and sale as reasonably may be necessary or desirable.

          f. Seller hereby covenants that no assignment, sale, agreement or
encumbrance has been or will be made or entered into by Seller which would
conflict with this assignment.

          g. Seller further covenants that Buyer will, upon its request and at
its expense, be provided promptly with all pertinent facts and documents
relating to said invention and said Patents and legal equivalents as may be
known and accessible to Seller and will testify at Buyer's expense as to the
same in any interference, litigation or proceeding related thereto.

     2.   Payments to Seller

          a. Upon the execution hereof, Buyer shall pay or cause to be paid to
Seller the sum of One Hundred Thousand ($100,000) Dollars.

          b. In addition to the sum set forth is paragraph 2(a) above, for the
term of each Patent Buyer shall pay Seller [THIS MATERIAL HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.] of the Net Income (as defined
below) realized by Buyer from the sale or licensing of the Patent, which shall
be separately calculated for each Patent which comprises the Patents, [THIS
MATERIAL HAS BEEN OMITTED

                                        3
<PAGE>

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.] realized by Buyer from the sale or
licensing of each Patent.

          c. For purposes of this Agreement, "Net Income" shall be defined as
gross income received from the licensing or sale of any Patent, less the costs
and expenses incurred by Buyer in licensing, selling, developing, enforcing, and
protecting said Patent. Buyer may not include its general overhead in the
calculation of "Net Income."

          d. For the avoidance of doubt, there shall be no minimum amounts due
to Seller, nor is Buyer obligated to invest in, develop, or make any use of the
Patents. [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

          e. Buyer shall make payment of Net Income to Seller on a quarterly
basis as follows: No later than forty five (45) days after the end of each
calendar quarter in which any payment is due to Seller, Buyer shall submit to
Seller a written report which shall include a written statement of Buyer's Net
Income during such quarterly period for each Patent, and showing a calculation
of the payment due based thereon. Each Quarterly Report shall be accompanied by
the remittance to Seller of the payment shown to be due on the report.

          f. Seller shall have the right to audit the books and records of Buyer
relating to Seller's Net Income upon reasonable advance notice to Buyer at the
place such books and records are normally maintained during normal business
hours not

                                        4
<PAGE>

more than one time per year. Seller shall keep all information to which it has
access in any such audit strictly confidential.

          g. Subject to the notice requirements set forth in paragraph 3 below,
Seller may sell, transfer or assign its right to receive payments as set forth
in this paragraph 2 to any third party.

     3.   Notice of Intention To Transfer Rights. Each of the parties hereto
shall provide the other with no less then 30 days advance notice prior to
entering into any binding agreement for the sale, transfer, or assignment of any
of its rights hereunder which may be sold, transferred, or assigned. This shall
not apply to Buyer's licensing of any Patent rights on a nonexclusive basis.

     4.   [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

          a. [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]

          b. Unless agreed to otherwise in writing by the Buyer and the Seller,
upon the sale of all or substantially all of the assets of Seller or upon the
acquisition of at least a controlling interest in Seller by any third party
which would itself or which has any affiliated entity which would, but for the
investment, require a license from the Buyer, [THIS MATERIAL HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.]

                                        5
<PAGE>

          c. [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]

     5. Buyer's Right To Terminate Payments To Seller . Commencing with January
1, 2007 through March 31, 2007, and from each January 1 through March 31
thereafter, Buyer shall have the option to terminate Seller's right to receive
payments on Net Income for each Patent as set forth in section 2(b) above by
notifying Seller that it wishes to do so in writing by no later than March 31
each year (the "Notice"), and agreeing to pay Seller the greater of: (i) [THIS
MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.], such
payment to be made in four (4) quarterly installments together with the
regularly scheduled payments under section 2 hereof during such twelve (12)
month period; and (ii) [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.] after the closing hereof for each Patent. For
clarification, payments will continue during the notice year, but will be
credited against the final purchase price and the cash alternative referred to
in (ii) above shall be the applicable amount for the year in which the Notice is
given by the Buyer. After the payment of all amounts owed hereunder, Buyer will
have no further obligation to make payments as set forth in paragraph 2(b)
above, to provide reports as set forth in paragraph

                                        6
<PAGE>

2(e) above, to provide the notice required by paragraph 3 above, or to meet with
Seller as required by paragraph 7 below.

     6. Support By Seller. Seller shall provide Buyer reasonable access to and
assistance from Seller's employees and independent contractors as requested by
Buyer at the sole cost and expense of Buyer to assist Buyer in creating or
filing enhancements to the Patents or any Patent, or in licensing or enforcing
the Patents or any Patent.

     7. Regular Updates. The parties agree that they shall regularly meet,
either in person or telephonically, on dates and at times to be mutually agreed
upon but no less then at one time per calendar quarter to discuss the status of
the Patents, and Buyer's licensing and enforcement efforts.

     8. Confidential Information. The parties hereto shall regard and preserve
as confidential all Confidential Information (defined below) related to the
business of the other party, except that information which is public knowledge,
which may be obtained by it from any source as a result of this Agreement, or
otherwise. The parties agree that they shall not and they shall cause their
employees, representatives, agents and licensees not to divulge, furnish or make
accessible to anyone such Confidential Information, except as may be necessary
from time to time in performance of their duties hereunder on a limited "need to
know" basis. This provision shall survive the termination of this Agreement.
"Confidential Information" shall be written information marked confidential and
oral information designated confidential and confirmed as such in writing
delivered not later than ten (10) days after such disclosure,

                                        7
<PAGE>

and shall include this Agreement, customer/account lists, and marketing plans,
whether or not marked as confidential or confirmed as such in writing.

     9. Choice of Law and Jurisdiction. This Agreement shall be deemed to have
been made and delivered in New York City and will be governed as to validity,
interpretation, construction, effect and in all other respects by the internal
laws of the State of New York without giving effect the conflict of laws.

     10. Arbitration. Any controversy or claim arising under or in relation to
this Agreement, or the breach thereof, or the relations between Buyer and Seller
shall be submitted to arbitration by a panel of three arbitrators (unless the
amount in dispute is less than Twenty-Five Thousand Dollars ($25,000) in which
case there shall be only one arbitrator) in the City of New York, New York,
administered by the American Arbitration Association under the then applicable
Commercial Rules, and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof; provided however, that the
arbitrator(s) shall be bound by the laws of the State of New York and, regarding
any questions related thereto, the trademark statutes of the United States of
America, and shall have no power to extend this Agreement beyond its termination
date, nor to order reinstatement or other continuation of the parties'
relationship after termination, nor to award punitive, consequential, multiple,
incidental or any other damages in excess of the economic damages actually
sustained by the claimant. If, and only if, the arbitrator(s) shall determine
that either party's position in arbitration was not maintained in good faith,
then the arbitrators shall award the other party a reasonable attorney's fee.

                                        8
<PAGE>

     11. Notices. Notices to either party shall be in writing and shall be
deemed delivered when served in person or within three (3) business days after
being deposited in the mail, first class certified mail, postage prepaid return
receipt requested or one (1) business day after being dispatched by a one day
express courier service addressed as follows:

                              to: Seller

                                  George Conant
                                  Chief Executive Officer
                                  Merlot Communications, Inc.
                                  4 Berkshire Blvd., Berkshire Corporate Park
                                  Bethel, CT  06801

                              to: Buyer

                                  Sam Schwartz, Esq.
                                  Olshan Grundman Frome Rosenzweig & Wolosky LLP
                                  505 Park Avenue
                                  New York, New  York 10022

     12. Miscellaneous

     a. Waiver of Rights. The failure of a party to insist upon strict adherence
to any provision of this Agreement on any occasion shall not be considered or
deemed to be a waiver nor considered or deemed to deprive that party of the
right thereafter to insist upon strict adherence to that provision or any other
provision of this Agreement. Any waiver must be in writing.

     b. Currency. All calculations and payments required under this Agreement
shall be in United States Dollars.

     c. Complete Agreement & No Oral Modification. This Agreement is a complete
statement of all agreements among the parties with respect to

                                        9
<PAGE>

the subject matter hereof. Any amendment, modification, alteration or change
must be in writing signed by the parties.

     d. Warranties of Fitness. The parties each warrant the following: (1) that
the delivery of this Agreement has been duly authorized; (2) that the execution
and delivery of this Agreement does not contravene any contract or commitment to
which it is a party or by which it is bound; and (3) that it is not a party to
any suit, action, administrative proceeding, or investigation which, if
successful, would have a material, adverse effect on its properties, financial
conditions or business.

     e. Construction and Headings. This Agreement's terms and conditions were
freely negotiated. The language shall be interpreted without regard to any rule,
law or presumption requiring the language to be construed, interpreted or
applied for or against either party. The headings contained in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
any of the terms or provisions of this Agreement.

     f. Independent Parties. The parties hereto acknowledge that the
relationship created between them by this Agreement is that of independent
contractors. As a result of this Agreement, no agency relationship or
association or partnership is created between them. Neither party is authorized
to and shall not incur any liability for the other. Neither party may become
directly, indirectly or contingently liable for nor shall it hold itself out as
having authority to represent or act for the other in any capacity whatsoever.
The relationship between the parties shall not be construed as a co-partnership
or joint venture or that of agent and principal.

                                       10
<PAGE>

     g. Severability. In the event that any part of this Agreement should be
declared illegal for any reason by any legally constituted court or government
authority, the remaining portions shall not be invalidated on account thereof
and shall remain in full force and effect provided, however, that if as a result
of a declaration of illegality of a party of this Agreement the essential
purposes of this Agreement cannot be fulfilled, the Agreement shall terminate
forthwith, and all provisions of this Agreement relating to or governing
termination thereof shall come into effect.

     h. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between Buyer and Seller, and supersedes and cancels any and all
previous negotiations, representations, undertakings, understanding and
agreements heretofore made between them with respect to the subject matter
hereof.

     i. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

     j. Use of Counsel. The parties hereto represent that they have each
consulted with counsel of their own choosing in connection with the negotiation
and execution of this Agreement or have knowingly chosen not to do so.

                                       11
<PAGE>

     IN WITNESS WHEREOF, the parties hereto are duly authorized to and do hereby
execute this Agreement as of the Effective Date.

MERLOT COMMUNICATIONS, INC.

By:  /s/ George Conant
     -------------------------
Name: George Conant
     -------------------------
Title: President & CEO
     -------------------------
Date: November 18, 2003
     -------------------------

NETWORK-1 SECURITY SOLUTIONS, INC.

By:  /s/ Edward James
     -------------------------
Name: Edward James
     -------------------------
Title: Interim CEO & CFO
     -------------------------
Date: November 18, 2003
     -------------------------

                                       12
<PAGE>

                                   EXHIBIT A
                                   ---------

1. 6,577,631: Communication switching module for the transmission and control of
audio, video, and computer data over a single network fabric

2. 6,574,242: Method for the transmission and control of audio, video, and
computer data over a single network fabric

3. 6,570,890: Method for the transmission and control of audio, video, and
computer data over a single network fabric using Ethernet packets

4. 6,539,011: Method for initializing and allocating bandwidth in a permanent
virtual connection for the transmission and control of audio, video, and
computer data over a single network fabric

5. 6,218,930: Apparatus and method for remotely powering access equipment over a
10/100 switched Ethernet network

6. 6,215,789: Local area network for the transmission and control of audio,
video, and computer data

<PAGE>

                                   EXHIBIT B
                                   ---------

                                   ASSIGNMENT
                                   ----------

WHEREAS, Merlot Communications Inc. ("Assignor"), a Delaware corporation with an
office at 4 Berkshire, Blvd., Berkshire Corporate Park, Bethel, CT 06801, owns
or has rights to United Status Patent No. [              ], issued [         ].

          WHEREAS, Network-1 Security Solutions, Inc. ("Assignee"), a Delaware
corporation with a headquarters mailing address at 445 Park Avenue, Suite 1028,
New York, N.Y. 10022, wishes to acquire full rights and ownership of United
Status Patent No. [               ], issued [          ]

          NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor grants, conveys, assigns
and transfers to the Assignee and the Assignee's successors and assigns,
Assignor's entire right, title and interest in and to United States Patent No.
[           ], including all corresponding applications such as continuations,
continuations-in-part, divisionals, provisionals, renewals, revivals, reissues,
reexaminations, extensions, and foreign counterparts thereof, along with the
subject matter of any and all claims which may be obtained in the
aforementioned, in the United States and every foreign country, including all
rights to profits and damages by reason of past infringement by any party or
parties, either the right to sue and collect same for Assignee's, and Assignee's
successors and assigns own use and benefit.

          UPON SAID CONSIDERATION, Assignor appoints Assignee and Assignee's
successors and assigns as its attorney-in-fact to act in Assignor's name and
place to execute, deliver and record any document or instrument of assignment or
conveyance necessary to perfect, grant and confirm the rights granted herein,
and Assignor conveys to the Assignee the right to make application in,
prosecute, receive and enforce in its own behalf and name United States Patent
No.[           ] , Issued [            ].

          IN WITNESS WHEREOF, Assignor has caused its Assignment to be duly
executed by one of its officers on the date shown below.

MERLOT COMMUNICATIONS INC.                   NETWORK- 1 SECURITY
                                             SOLUTIONS, INC.

-------------------------                    -------------------------
BY                                           BY
-------------------------                    -------------------------
GEORGE CONANT                                COREY M. HOROWITZ
PRESIDENT AND CEO

DATE: __________________                     DATE: ___________________

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