Payoff and Release Agreement between Laurus Master Fund, Ltd. and Secured Digital Applications, Inc. (August 1, 2005)

Summary

This agreement is between Laurus Master Fund, Ltd. and Secured Digital Applications, Inc. (SDGL). SDGL agrees to repay all outstanding obligations to Laurus under a prior note, preferred stock, and securities purchase agreement, totaling $7,143,527.81 if paid by August 1, 2005. Payment will be made through a combination of cash, release of restricted cash, and conversion of debt to equity. Upon receipt, Laurus will release all security interests and terminate related agreements, except for any options or warrants. The agreement is governed by New York law and expires August 12, 2005.

EX-10.2 3 ex102.txt AGU 3, 2005 SECURED DIGITAL 8K EX 10.2 LAURUS MASTER FUND, LTD. c/o M&C Corporate Services Limited P.O. Box 309 GT, Ugland House South Church Street George Town Grand Cayman, Cayman Islands August 1, 2005 SECURED DIGITAL APPLICATIONS, INC. 11, Jalan 51A/223 46100 Petaling Jaya Selangor, Malaysia Attention: Patrick Lim Chief Executive Officer Re: Payoff ------ Ladies and Gentlemen: The undersigned, Laurus Master Fund, Ltd. ("Laurus"), has been advised by SECURED DIGITAL APPLICATIONS, INC. ("SDGL") and its subsidiaries and affiliates (collectively, the "Company") that the Company intends to repay all outstanding obligations (collectively, the "Obligations") of the Company to Laurus under the Secured Convertible Term Note (the "Note"), the Series A Cumulative Convertible Preferred Stock (the "Preferred Stock") and Securities Purchase Agreement dated August 31, 2004. It is agreed that the terms and conditions of this letter replaces the payoff letter of July 15, 2005 previously executed by the parties hereto Based on Laurus' books and records, the total amount of the Obligations if paid prior to 5:00 p.m. (New York time) on August 1, 2005 (the "Payoff Date") is $7,143,527.81 (the "Payoff Amount"), which amount includes all principal, interest, fees, costs, redemption costs, expenses and liquidated damages as of such date; provided, however, that if the Payoff Amount is not received by 5:00 p.m. on the Payoff Date, per diem interest at $1,448.36 per day shall be due until payment is so received. The terms of this letter expire on August 12, 2005. Laurus and the Company hereby agree that the payment of the Payoff Amount shall be satisfied in the following manner: (i) the Company shall wire a cash payment in the amount of $238,389.49 plus any per diem amounts due to the deposit account designated by Laurus as follows: Bank: North Fork Bank ABA #: 021407912 Account #: 2704048053 Account Name: Laurus Master Fund - P&I Reference: SDGL - Payoff 1 (ii) Laurus shall instruct North Fork Bank to wire the restricted cash amount of $6,105,138.29 to a deposit account designated by Laurus, and (iii) Laurus shall convert an amount of the Obligations under the Note and or the Preferred Stock equal to $800,00.00 at a conversion price equal to $0.082 per share into shares of common stock of the Company (the "Payoff Common Stock"), which shares of Payoff Common Stock shall be freely tradeable and resold by Laurus without restriction of any kind, and the Company shall deliver the shares evidencing the Payoff Common Stock to Laurus. The Company and Laurus hereby acknowledge that the $6,105,138.29 currently in the restricted account and the $800,000 currently reflected as the amount that will be converted into equity are subject to adjustment depending on the actual date of the receipt of the Payoff Amount. Laurus hereby (i) acknowledges and agrees that payment of the Payoff Amount will constitute payment in full of all of the Obligations, (ii) represents that it has no other credit arrangements with, loans outstanding to, guaranties by, or interests or liens against the Company or any of the Company's personal or real property, (iii) releases, effective upon the receipt of the Payoff Amount (including the shares evidencing Payoff Common Stock), all security interests, liens, and guarantees which the Company may have granted to Laurus, and (iv) agrees that it will, at the Company's expense, terminate all of its agreements with the Company, other than in respect of any options and/or warrants received by Laurus from the Company. Laurus further agrees, from time to time after receipt of the Payoff Amount (including the shares evidencing Payoff Common Stock), at the Company's expense, to execute and deliver to the Company such further instruments and documents that are provided to Laurus and to take such further actions as may be reasonably necessary to fully effect the foregoing releases, discharges and terminations. This letter agreement shall be governed by and construed in accordance with the laws of the State of New York. 2 This letter agreement may be executed in one or more counterparts each of which taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed an original signature hereto. Very truly yours, LAURUS MASTER FUND, LTD. By: /s/ David Grin ---------------- Name: David Grin Acknowledged and Agreed to as of this 1st day of August 2005: SECURED DIGITAL APPLICATIONS, INC. By: /s/ Patrick Soon-Hock Lim ---------------------------- Name: Patrick Soon-Hock Lim Title: Chief Executive Officer 3