Filed by Bowne Pure Compliance



 




Exhibit 10.3


THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO APPLIED DIGITAL SOLUTIONS,
INC. THAT SUCH REGISTRATION IS NOT REQUIRED.


Right to Purchase up to 1,269,431
Shares of Common Stock of

Applied Digital Solutions, Inc.

(subject to
adjustment as provided herein)


COMMON STOCK PURCHASE WARRANT


	 	 	 
	No.                                              
	 	Issue Date: October 31, 2007





APPLIED DIGITAL
SOLUTIONS, INC., a corporation organized under the laws of the State of
Delaware (the “Company”), hereby certifies that, for value
received, VALENS OFFSHORE SPV II, CORP., or assigns (the “Holder”),
is entitled, subject to the terms set forth below, to purchase from the Company
(as defined herein) from and after the Issue Date of this Warrant and at any
time or from time to time before 5:00 p.m., New York time, through the close of
business on October 31, 2014 (the “Expiration Date”), up to
1,269,431 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $0.01 par value per share, at the applicable Exercise Price per share
(as defined below). The number and character of such shares of Common Stock and
the applicable Exercise Price per share are subject to adjustment as provided
herein.


As used herein the
following terms, unless the context otherwise requires, have the following
respective meanings:


(a) The “Exercise Price” applicable under this
Warrant shall be $1.00 per share acquired hereunder.


(b) The term “Common Stock” includes
(i) the Company’s Common Stock, par value $0.01 per share; and (ii)
any other securities into which or for which any of the securities described in
the preceding clause (i) may be converted or exchanged pursuant to a plan
of recapitalization, reorganization, merger, sale of assets or otherwise.


(c) The term “Company” shall include Applied
Digital Solutions, Inc. and any person or entity which shall succeed, or assume
the obligations of, Applied Digital Solutions, Inc. hereunder.





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(d) The term “Other Securities” refers to any
stock (other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the holder of the Warrant at any
time shall be entitled to receive, or shall have received, on the exercise of
the Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement
of Common Stock or Other Securities pursuant to Section 4 or otherwise.


1. Exercise
of Warrant.


1.1. Number of
Shares Issuable upon Exercise. From and after the date hereof, through and
including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of (a) an
original or fax copy of an exercise notice in the form attached hereto as
Exhibit A (the “Exercise Notice”), and (b) an electronic
copy of the Exercise Notice to warrants@adsx.com, at any time prior to 5:00
p.m., eastern time, on the business day the Holder wishes to effect such
exercise, 1,269,431 shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4. Notwithstanding anything to the contrary
contained herein, the Holder hereby agrees that during the period on and after
the Issue Date and prior to the date that is the one year anniversary of the
Issue Date, it shall not sell any Common Stock acquired upon exercise of this
Warrant.


1.2. Fair Market
Value. For purposes hereof, the “Fair Market Value” of a share
of Common Stock as of a particular date (the “Determination Date”)
shall mean:


(a) If the Company’s Common Stock is traded on the
American Stock Exchange or another national exchange or is quoted on the
National or Capital Market of The Nasdaq Stock Market, Inc.
(“Nasdaq”), then the average of the daily VWAP for such security on
the Trading Day immediately preceding the Determination Date. “Trading
Day” means any day on which the Common Stock is purchased and sold on the
Principal Market. “Principal Market” means the principal exchange
or market on which the Common Stock is listed or traded. “VWAP” on
a Trading Day means the volume weighted average price of the Common Stock for
such Trading Day on the Principal Market as reported by Bloomberg Financial
Markets or, if Bloomberg Financial Markets is not then reporting such prices,
by a comparable reporting service of national reputation selected by the
Holders and reasonably satisfactory to the Company. If VWAP cannot be
calculated for the Common Stock on such date on any of the foregoing bases,
then the Company shall submit such calculation to an independent investment
banking firm of national reputation, and shall cause such investment banking
firm to perform such determination and notify the Company and each Holder of
the results of determination no later than two (2) business days from the
time such calculation was submitted to it by the Company. Such investment
banking firm’s determination shall be deemed conclusive absent manifest
error. All such determinations shall be appropriately adjusted for any stock
dividend, stock split or other similar transaction during such period.


(b) If the Company’s Common Stock is not traded on
the American Stock Exchange or another national exchange or on the Nasdaq but
is traded on the NASD Over the Counter Bulletin Board, then the mean of the
average of the closing bid and asked prices reported for the last business day
immediately preceding the Determination Date.


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(c) Except as provided in clause (d) below, if the
Company’s Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of agreement, by arbitration in accordance
with the rules then in effect of the American Arbitration Association, before a
single arbitrator to be chosen from a panel of persons qualified by education
and training to pass on the matter to be decided.


(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company’s charter,
then all amounts to be payable per share to holders of the Common Stock
pursuant to the charter in the event of such liquidation, dissolution or
winding up, plus all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the purposes of
this clause (d) that all of the shares of Common Stock then issuable upon
exercise of the Warrant are outstanding at the Determination Date.


1.3. Company
Acknowledgment. The Company will, at the time of the exercise of this
Warrant, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to
afford to such Holder any such rights.


1.4. Trustee for
Warrant Holders. In the event that a bank or trust company shall have been
appointed as trustee for the Holders of this Warrant pursuant to Subsection
3.2, such bank or trust company shall have all the powers and duties of a
warrant agent (as hereinafter described) and shall accept, in its own name for
the account of the Company or such successor person as may be entitled thereto,
all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.


2. Procedure for Exercise.


2.1. Delivery of
Stock Certificates, Etc., on Exercise. The Company agrees that the shares
of Common Stock purchased upon exercise of this Warrant shall be deemed to be
issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares in accordance herewith. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
three (3) business days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the Holder, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of
duly and validly issued, fully paid and nonassessable shares of Common Stock
(or Other Securities) to which such Holder shall be entitled on such exercise,
plus, in lieu of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is entitled
upon such exercise pursuant to Section 1 or otherwise.


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2.2.
Exercise.


(a) Payment may be made either (i) in cash by wire
transfer of immediately available funds or by certified or official bank check
payable to the order of the Company equal to the applicable aggregate Exercise
Price, (ii) by delivery of this Warrant, or shares of Common Stock and/or
Common Stock receivable upon exercise of this Warrant in accordance with the
formula set forth in subsection (b) below, or (iii) by a combination
of any of the foregoing methods, for the number of Common Shares specified in
such Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.


(b) Notwithstanding any provisions herein to the contrary,
if the Fair Market Value of one share of Common Stock is greater than the
Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof
being exercised) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Exercise Notice in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:



	 	 	 
	X=
	 	Y (A-B)
	 
	 	       A
	 	 	 
	Where X =	 	the number of shares of Common Stock to be issued to the Holder
	 	 	 
	Y =
	 	the number of shares of Common Stock purchasable under this Warrant or, if only a
portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the date of such
calculation)
	 	 	 
	A =
	 	the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation)
	 	 	 
	B =
	 	the Exercise Price per share (as adjusted to the date of such calculation)





Notwithstanding anything to the
contrary contained herein, the Holder hereby agrees that it may not utilize
this cashless exercise provision during the period on and after the Issue Date
and prior to the date that is the six month anniversary of the Issue Date.


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3. Reorganization, Consolidation, Merger,
Etc.


3.1.
Reorganization, Consolidation, Merger, Etc. If there occurs (i) any
capital reorganization or any reclassification of the Common Stock of the
Company; (ii) any consolidation or merger of the Company with or into
another person (A) where the Company is not the continuing entity;
(B) which results in any reorganization or reclassification of its
outstanding Common Stock; or (C) which results in the Common Stock of the
Company being changed into or exchanged for common stock or other securities of
any other entity or cash or any other assets, or (iii) the sale or
conveyance of all or substantially all of the assets of the Company to another
person, then, as a condition precedent to any such reorganization,
reclassification, consolidation, merger, sale or conveyance, proper and
adequate provision shall be made by the Company whereby the Holder will be
entitled to receive upon surrender of the Warrant to the Company (x) to
the extent there are cash proceeds resulting from the consummation of such
reorganization, reclassification, consolidation, merger, sale or conveyance, in
exchange for such Warrant, cash in an amount equal to the cash proceeds that
would have been payable to the Holder had the Holder exercised such Warrant
immediately prior to the consummation of such reorganization, reclassification,
consolidation, merger, sale or conveyance, less the aggregate Exercise Price
payable upon exercise of the Warrant, and (y) to the extent that the
Holder would be entitled to receive Common Stock (or Other Securities) (in
addition to or in lieu of cash in connection with any such reorganization,
reclassification, consolidation, merger, sale or conveyance), the same kind and
amounts of securities or other assets, or both, that are issuable or
distributable to the holders of outstanding Common Stock (or Other Securities)
of the Company with respect to their Common Stock (or Other Securities) upon
such reorganization, reclassification, consolidation, merger, sale or
conveyance, as would have been deliverable to the Holder had the Holder
exercised such Warrant immediately prior to the consummation of such
reorganization, reclassification, consolidation, merger, sale or conveyance
less an amount of such securities having a value equal to the aggregate
Exercise Price payable upon exercise of the Warrant. The Company shall provide
the Holder notice of its intent to affect such reorganization,
reclassification, consolidation, merger, sale or conveyance promptly after such
notice is mailed or otherwise provided to the holders of the Common Stock, but
in no event less than fifteen (15) days prior to the consummation of such
transaction. If Holder elects to exercise this Warrant in connection with the
consummation of such transaction, Holder shall promptly notify the Company,
provided, however, that such notification shall in no case be provided less
than five (5) days prior to the scheduled consummation or effective date,
as the case may be, of the transaction. If the Holder does not choose to
exercise this Warrant at the time such reorganization, reclassification,
consolidation, merger, sale or conveyance, then this Warrant shall continue in
full force pursuant to Section 3.3 below. Notwithstanding anything herein
to the contrary, the provisions in this Section 3.1 shall not be triggered
as a result of the transactions contemplated by that Agreement and Plan of
Reorganization dated August 8, 2007, among the Company, Digital Angel
Corporation, and Digital Angel Acquisition Corp.


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3.2.
Dissolution. In the event of any dissolution of the Company following
the transfer of all or substantially all of its properties or assets, the
Company, concurrently with any distributions made to holders of its Common
Stock, shall at its expense deliver or cause to be delivered to the Holder the
stock and other securities and property (including cash, where applicable)
receivable by the Holder pursuant to Section 3.1, or, if the Holder shall
so instruct the Company, to a bank or trust company specified by the Holder and
having its principal office in New York, NY as trustee for the Holder (the
“Trustee”).


3.3.
Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, so long as a portion of this Warrant remains unexercised, this
Warrant shall continue in full force and effect and the terms hereof shall be
applicable to the shares of stock and other securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms of
this Warrant as provided in Section 4. The Holder of this Warrant, on
exercise hereof at any time after the consummation or effective date of any
reorganization, consolidation, merger or transfer, shall receive, in lieu of
the Common Stock issuable on such exercise prior to the date of such
reorganization, the stock and other securities and property (including cash) to
which such holder would have been entitled upon the date of such transaction if
such holder had exercised this Warrant immediately prior thereto less an amount
of cash and/or securities having a value equal to the aggregate Exercise Price
payable upon exercise of the Warrant. In the event this Warrant does not
continue in full force and effect after the consummation of the transactions
described in this Section 3, then the Company’s securities and
property (including cash, where applicable) receivable by the Holder will be
delivered to the Holder or the Trustee as contemplated by Section 3.2.


4. Extraordinary Events Regarding Common Stock. In
the event that the Company shall (a) issue additional shares of the Common
Stock as a dividend or other distribution on outstanding Common Stock or any
preferred stock issued by the Company, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the
Common Stock into a smaller number of shares of the Common Stock, then, in each
such event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then applicable Exercise Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event, and the product so obtained shall thereafter be the Exercise Price then
in effect. The Exercise Price, as so adjusted, shall be readjusted in the same
manner upon the happening of any successive event or events described herein in
this Section 4. The number of shares of Common Stock that the Holder shall
thereafter, on the exercise hereof as provided in Section 1, be entitled
to receive shall be adjusted to a number determined by multiplying the number
of shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which
(a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator
is the Exercise Price in effect on the date of such exercise (taking into
account the provisions of this Section 4). Notwithstanding the foregoing,
in no event shall the Exercise Price be less than the par value of the Common
Stock.


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5. Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common Stock
(or Other Securities) issued or sold or deemed to have been issued or sold,
(b) the number of shares of Common Stock (or Other Securities) outstanding
or deemed to be outstanding, and (c) the Exercise Price and the number of
shares of Common Stock to be received upon exercise of this Warrant, in effect
immediately prior to such adjustment or readjustment and as adjusted or
readjusted as provided in this Warrant. The Company will forthwith mail a copy
of each such certificate to the Holder and any Warrant agent of the Company
(appointed pursuant to Section 11 hereof).


6. Reservation of Stock, Etc., Issuable on Exercise of
Warrant. The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of this Warrant, shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of this
Warrant.


7. Assignment; Exchange of Warrant. Subject to
compliance with applicable securities laws, this Warrant, and the rights and
obligations evidenced hereby, may be transferred by any registered holder
hereof (a “Transferor”) in whole or in part. On the surrender for
exchange of this Warrant, with the Transferor’s endorsement in the form
of Exhibit B attached hereto (the “Transferor Endorsement
Form”) and together with evidence reasonably satisfactory to the Company
demonstrating compliance with applicable securities laws, which shall include,
without limitation, the provision of a legal opinion from the
Transferor’s counsel (at the Company’s expense) that such transfer
is exempt from the registration requirements of applicable securities laws, the
Company at its expense (but with payment by the Transferor of any applicable
transfer taxes) will issue and deliver to or on the order of the Transferor
thereof a new Warrant of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a
“Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor.


8. Replacement of Warrant. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of
any such mutilation, on surrender and cancellation of this Warrant, the Company
at its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.


9. Registration Rights. The Holder has been granted
certain registration rights by the Company.


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10. Maximum
Exercise. Notwithstanding anything herein to the contrary, in no event
shall the Holder be entitled to exercise any portion of this Warrant in excess
of that portion of this Warrant upon exercise of which the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of this Warrant or the
unexercised or unconverted portion of any other security of the Holder subject
to a limitation on conversion analogous to the limitations contained herein)
and (2) the number of shares of Common Stock issuable upon the exercise of
the portion of this Warrant with respect to which the determination of this
proviso is being made, would result in beneficial ownership by the Holder and
its Affiliates of any amount greater than 9.99% of the then outstanding shares
of Common Stock (whether or not, at the time of such exercise, the Holder and
its Affiliates beneficially own more than 9.99% of the then outstanding shares
of Common Stock). As used herein, the term “Affiliate” means
any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
person or entity, as such terms are used in and construed under Rule 144
under the Securities Act.   For purposes of the second preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such sentence.
For any reason at any time, upon written or oral request of the Holder, the
Company shall within three (3) business days confirm orally and in writing
to the Holder the number of shares of Common Stock outstanding as of any given
date.  The limitations set forth herein (x) may be waived by the
Holder upon provision of no less than sixty-one (61) days prior written
notice to the Company and (y) shall automatically become null and void
following notice to the Company upon the occurrence and during the continuance
of an Event of Default (as defined in the Security Agreement), except that at
no time shall the Company be obligated to issue any shares of Common Stock
pursuant to the terms of this Warrant, the Purchase Agreement, any Related
Agreement (as defined in the Purchase Agreement) if the issuance of such shares
of Common Stock would exceed the aggregate number of shares of Common Stock
which the Company may issue pursuant to the terms of this Warrant, the Purchase
Agreement or any Related Agreement without violating the rules or regulations
of the Principal Market (the “Exchange Cap”), except that
such limitation shall not apply in the event that the Company obtains the
approval of its stockholders as required by the applicable rules or regulations
of the Principal Market for issuances of Common Stock in excess of such amount.
Notwithstanding anything contained herein to the contrary, the number of shares
of Common Stock issuable by the Company and acquirable by the Holder pursuant
to the terms of this Warrant, the Purchase Agreement, any Related Agreement (as
defined in the Purchase Agreement) or otherwise, shall not exceed an aggregate
of 13,567,898 shares of Common Stock (subject to appropriate adjustment for
stock splits, stock dividends, or other similar recapitalizations affecting the
Common Stock).” 


11. Warrant
Agent. The Company may, by written notice to the each Holder of the
Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.


12. Transfer on the Company’s Books. Until
this Warrant is transferred on the books of the Company, the Company may treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.


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13. Rights
of Shareholders. No Holder shall be entitled to vote or receive dividends
or be deemed the holder of the shares of Common Stock or any other securities
of the Company which may at any time be issuable upon exercise of this Warrant
for any purpose (the “Warrant Shares”), nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon the
recapitalization, issuance of shares, reclassification of shares, change of
nominal value, consolidation, merger, conveyance or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or
otherwise, in each case, until the earlier to occur of (x) the date of
actual delivery to Holder (or its designee) of the Warrant Shares issuable upon
the exercise hereof or (y) the third business day following the date such
Warrant Shares first become deliverable to Holder, as provided herein.


14. Notices, Etc. All notices and other
communications from the Company to the Holder shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such Holder or, until any such Holder
furnishes to the Company an address, then to, and at the address of, the last
Holder who has so furnished an address to the Company.


15. Miscellaneous. This Warrant and any term hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT CONCERNING THE
TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY IN THE STATE
COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND BRING
AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing this Warrant
on behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorneys’ fees and costs. In the event that
any provision of this Warrant is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Warrant. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision hereof.
The Company acknowledges that legal counsel participated in the preparation of
this Warrant and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Warrant to favor any party against the other
party.


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IN WITNESS WHEREOF,
the Company has executed this Warrant as of the date first written above.





	 	 	 	 	 
	 	 	APPLIED DIGITAL SOLUTIONS, INC.
	 
	 	 	 	 
	WITNESS:
	 	 	 	 
	 

	 	By:
	 	/s/ Lorraine M. Breece
	 

	 	 	 	 
	 

	 	Name:
	 	Lorraine M. Breece
	 

	 	 	 	 
	/s/ Alicia M. Harris

	 	Title:
	 	SVP, ACFO
	 

	 	 	 	 










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