Filed by Bowne Pure Compliance



 




Exhibit 10.1


OMNIBUS AMENDMENT AND WAIVER


This OMNIBUS
AMENDMENT AND WAIVER (this “Amendment”), dated as of
October 31, 2007, is entered into by and among APPLIED DIGITAL SOLUTIONS,
INC., a Delaware corporation (the “Company”), VERICHIP
CORPORATION, a Delaware corporation (“VeriChip”), LAURUS MASTER
FUND, LTD. (“Laurus”), KALLINA CORPORATION, a Delaware
corporation (“Kallina”), VALENS U.S. SPV I, LLC, a Delaware
corporation (“Valens U.S.”), VALENS OFFSHORE SPV II, CORP.,
a Delaware corporation (“Valens Offshore”), and PSOURCE
STRUCTURED DEBT LIMITED, a Guernsey limited liability closed-ended company
(“PSource”, and together with Kallina, Valens U.S. and
Valens Offshore, the “Lenders”), for the purpose of amending
and restating and waiving certain terms of (a) that certain Secured Term
Note, dated as of August 24, 2006 (as amended, modified or supplemented
from time to time, the “2006 Note”); (b) that certain
Securities Purchase Agreement, dated as of August 24, 2006 (as amended,
modified or supplemented from time to time, the “2006 Purchase
Agreement”); (c) the other Related Agreements, as such term is
defined in the 2006 Purchase Agreement (together with the 2006 Note, the
“2006 Related Agreements”); (d) that certain Secured
Term Note, dated as of August 31, 2007 (as amended, modified or
supplemented from time to time, the “2007 Note”);
(e) that certain Securities Purchase Agreement, dated as of
August 31, 2007 (as amended, modified or supplemented from time to time,
the “2007 Purchase Agreement”); and (f) the other
Related Agreements, as such term is defined in the 2007 Purchase Agreement
(together with the 2007 Note, the “2007 Related
Agreements”). Capitalized terms used herein without definition shall
have the meanings ascribed to such terms in the applicable 2006 Purchase
Agreement, 2006 Related Agreements, 2007 Purchase Agreement or 2007 Related
Agreements (collectively, the “Transaction Documents”).


WHEREAS, the
Company and the Lenders have agreed to make certain changes to the Transaction
Documents as set forth herein.


NOW, THEREFORE, in
consideration of the above, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:


AMENDMENTS


1. The Lenders
and the Company hereby agree that, effective November 1, 2007, the
aggregate of the Monthly Amount (as such term is defined in the 2006 Note) and
the Monthly Amount (as such term is defined in the 2007 Note) shall be reduced
by a total of $50,000 per month.


2. The
Maturity Date (as such term is defined in the 2006 Note) shall hereby be
amended to February 1, 2010. Additionally, the Maturity Date (as such term
is defined in the 2007 Note) shall hereby be amended to February 1, 2010.


3. The Lenders
hereby agree in principle that Perimeter Acquisition Corp, a Delaware
corporation, shall be permitted to sell that certain division of Perimeter
Acquisition Corp relating to its Contact Center Value Added Reseller business
(the “VAR Sale”), provided that the Lenders shall
have reviewed and approved the terms and sale documentation for the VAR Sale
prior to consummation of such transaction. The proceeds of the VAR Sale shall
be in cash of which up to $300,000 may be kept by the Company.





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4. The Company
is issuing warrants to the Lenders herewith (divided between the Lenders in
such amounts as the Lenders may require) for 2,976,198 shares of the
Company’s Common Stock, at a price of $1.00 which warrants shall be
exercisable as of the date hereof (such warrants, the “New
Warrants”), and shall be exercisable for seven (7) years thereafter.


5. The Company
currently has a loan of $12,536,572 outstanding including accrued interest to
VeriChip Corporation (the “VeriChip Loan”). The Lenders hereby
agree that the VeriChip Loan may be satisfied VeriChip for no less than
$10,000,000, plus accrued interest on the VeriChip Loan (the “Settlement
Event”); provided that (i) the payment of such
settlement is made on or prior to November 1, 2008; and (ii) $6,000,000 of
such settlement amount is paid to the Lenders in satisfaction of the 2006 Note
and the 2007 Note.


6. The Lenders
hereby agree that the prepayment penalties pursuant to Section 2.1 of the
2006 Note and Section 2.1 of the 2007 Note shall no longer be applicable.


7. The Lenders
hereby agree that the definition of “Filing Date” in that certain
Registration Rights Agreement dated August 31, 2007, between Kallina and
VeriChip (as such agreement has been amended, modified or supplemented to date)
is hereby amended in its entirety and shall be replaced with the following:


“Filing
Date” means, with respect to the Registration Statement required to
be filed in connection with the Grant Shares, April 30, 2008.


8. To the
extent the Company may do so without violating registration rights of others
which exist as of the date of this Amendment, the Company hereby agrees that
all of the shares for which the New Warrants are or shall be exercisable (the
“Registrable Securities”) shall be registered on the
Company’s next new registration statement filed after December 31,
2007. The Company shall use commercially reasonable efforts to cause each
registration statement to be declared effective under the Securities Act of
1933, as amended (the “Securities Act”), as promptly as possible
after the filing thereof. The Company shall use commercially reasonable efforts
to keep each registration statement continuously effective under the Securities
Act until the date which is the earlier date of when (i) all Registrable
Securities covered by such registration statement have been sold or
(ii) all Registrable Securities covered by such registration statement may
be sold immediately without registration under the Securities Act and without
volume restrictions pursuant to Rule 144(k), as determined by the counsel
to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Company’ s transfer agent and the affected holders.
In no event will the Company be required (i) to pay a penalty for failure
to cause each registration statement to be declared effective or for failure to
cause each registration statement to remain effective; (ii) to pay
liquidating damages in connection with the New Warrants; and (iii) to make
a cash payment in connection with the settlement of the New Warrants.


9. The Lenders
and the Company hereby agree that after the Settlement Event, the aggregate of
the Monthly Amount (as such term is defined in the 2006 Note) and the Monthly
Amount (as such term is defined in the 2007 Note) shall be reduced by an
additional $50,000 per month.


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MISCELLANEOUS


10. Laurus
understands that the Company has an affirmative obligation to make prompt
public disclosure of material agreements and material amendments to such
agreements. The Company hereby covenants to report the terms and provisions of
this Amendment on a current report on Form 8-K within five (5) business
days of the date executed by all parties.


11. Each
amendment and waiver set forth herein shall be effective as of the date first
above written (the “Amendment Effective Date”) on the date when
each of the Company and Laurus shall have executed and the Company shall have
delivered to Laurus its respective counterpart to this Amendment.


12. Except as
specifically set forth in this Amendment, there are no other amendments,
modifications or waivers to the Transaction Documents, and all of the other
forms, terms and provisions of the Transaction Documents remain in full force
and effect.


13. The
Company hereby represents and warrants to Lenders that as of the date hereof,
there is no Event of Default under the Transaction Documents.


14. From and
after the Amendment Effective Date, any references to any Transaction Document
shall be deemed to be references to such Transaction Document as modified
hereby.


15. This
Amendment shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of and be
enforceable by each of the parties hereto and their respective successors and
permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This
Amendment may be executed in any number of counterparts, each of which shall be
an original, but all of which shall constitute one instrument.


[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]


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IN WITNESS
WHEREOF, each of the parties hereto has caused this Amendment to be signed
in its name effective as of this 31st day of October 2007.


APPLIED DIGITAL
SOLUTIONS, INC.


By: /s/
Lorraine M.
Breece                                    

Name:
Lorraine M. Breece

Title: SVP, ACFO




VERICHIP
CORPORATION


By: /s/
Michael
Feder                                            

Name:
Michael Feder

Title: SVP of Operations and Strategic Initiatives




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KALLINA
CORPORATION


By: LAURUS CAPITAL
MANAGEMENT, LLC 

Its: Investment Manager


By: /s/
Scott
Bluestein                                         

Name:
Scott Bluestein

Title: Senior Managing Director




VALENS U.S. SPV
I, LLC


By: VALENS CAPITAL
MANAGEMENT, LLC 

Its: Investment Manager


By: /s/
Scott
Bluestein                                      

Name:
Scott Bluestein

Title: Senior Managing Director




VALENS OFFSHORE
SPV II, CORP.


By: VALENS CAPITAL
MANAGEMENT, LLC



Its:
Investment Manager


By: /s/
Scott
Bluestein                                        

Name:
Scott Bluestein

Title: Senior Managing Director




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PSOURCE
STRUCTURED DEBT LIMITED


By: LAURUS CAPITAL
MANAGEMENT, LLC 

Its: Investment Manager


By: /s/
Scott
Bluestein                                           

Name:
Scott Bluestein

Title: Senior Managing Director




LAURUS MASTER
FUND, LTD


By: LAURUS CAPITAL
MANAGEMENT, LLC



Its:
Investment Manager


By: /s/
Scott
Bluestein                                         

Name:
Scott Bluestein

Title: Senior Managing Director




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