October 17, 2005

VIA FEDERAL EXPRESS
AND FACSIMILE (310) 752-1486
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Digicorp
100 Wilshire Boulevard, Suite 1750
Santa Monica, CA 90401
Attn: William B. Horne, CEO

Re: Exchange of Warrants

Dear Will:

This letter documents the agreement among Bodnar Capital Management, LLC
("Bodnar Capital") and Digicorp to cancel certain warrants owned by Bodnar
Capital in exchange for the issuance by Digicorp of a replacement warrant, as
further described below. Pursuant to a Subscription Agreement dated May 18, 2005
between Digicorp and Bodnar Capital (the "Subscription Agreement"), Bodnar
Capital purchased 2,941,176 shares of Digicorp's common stock ("Common Stock")
and warrants to purchase an aggregate of 3,000,000 shares of Common Stock with
exercise prices ranging from $0.25 to $1.50 per share (the "May Warrants").

Bodnar Capital and Digicorp hereby agree to cancel all of the May Warrants
in exchange for the issuance by Digicorp to Bodnar Capital of a warrant to
purchase 500,000 shares of Common Stock with an exercise price of $0.01 per
share exercisable for a period of five years (the "October Warrant"). Bodnar
Capital is delivering herewith the original May Warrants for cancellation by
Digicorp. Upon receipt of the original May Warrants, Digicorp shall immediately
issue and deliver the October Warrant to Bodnar Capital.

Bodnar Capital and Digicorp hereby represent and warrant that each of the
representations and warranties of each respective party contained in Articles I
and II of the Subscription Agreement are true and correct in all material
respects on and as of the date of this letter.

If you agree with the foregoing, please indicate your approval of same by
signing this letter in the space provided below.

Very truly yours,

/s/ Steven J. Bodnar
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Steven J. Bodnar
Managing Member

ACCEPTED AND AGREED TO:

Digicorp

/s/ William B. Horne (10/27/05)
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William B. Horne
Chief Executive Officer