Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.10

AMENDMENT

This Amendment (this “Amendment”), dated August 31, 2007, by and between Applied Digital
Solutions, Inc., a Delaware corporation (the “Company”), Laurus Master Fund, Ltd. (“Laurus”),
Valens Offshore SPV I, Ltd. (“VOF”) and Valens U.S. SPV I, LLC (“VON” and together with Laurus and
VOF, the “Required Purchasers” and each, a “Required Purchaser”), amends that certain Common Stock
Purchase Warrant, issued as of August 24, 2006 by the Company in favor of Laurus Master Fund, Ltd.
and exercisable into up to 1,719,745 shares of Common Stock of the Company (as amended, modified or
supplemented from time to time, the “Warrant”). Capitalized terms used but not defined herein
shall have the meanings given them in the Securities Purchase Agreement, dated as of August 24,
2006, by and between the Company and Laurus (as amended, modified or supplemented from time to
time, the “Purchase Agreement”).

PREAMBLE

WHEREAS, pursuant to the terms of the Purchase Agreement, the Company issued and sold the
Warrant to Laurus;

WHEREAS, Laurus subsequently assigned a portion of the Warrant to each of VOF, VON and PSOURCE
STRUCTURED DEBT LIMITED; and

WHEREAS, the Required Purchasers and the Company desire to amend Warrant.

NOW, THEREFORE, in consideration of the covenants, agreements and conditions hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1. The “Exercise Price” of the Warrant is hereby amended by deleting the price “$1.88”
appearing therein and inserting the price “$1.35” in lieu thereof.

2. Effective on the Waiver Effective Date (as defined below), Section 10 of the Warrant is
hereby deleted in its entirety and the following new Section 10 is hereby inserted in lieu thereof:

“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).”

3. The Company understands that it has an affirmative obligation to make prompt public
disclosure of material agreements and material amendments to such agreements. The Company agrees
to file an 8-K within 4 business days of the date hereof and in the form otherwise prescribed by
the SEC.

4. This Amendment shall be effective as of the date hereof following the execution and
delivery of this Amendment by each of the Company, Laurus, VON and VOF.

5. The Company and Required Purchasers agree that, upon execution of this Amendment by the
Company and the Required Purchasers (the “Waiver Effective Date”), the Company will be deemed to
have received notice from the Required
Purchasers of the Required Purchasers’ waiver of the 4.99% conversion limitation set forth in
Section 10 of the Warrant, which waiver shall become effective on the 61st day following
the Waiver Effective Date.

 

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

7. From and after the Amendment Effective Date, all references in the Purchase Agreement and
the Related Agreement referred to therein to the “Warrant” shall be deemed to be references to the
“Warrant” as modified hereby.

8. 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.

[signature page follows]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment or has caused this
Amendment to be executed on its behalf by a representative duly authorized, all as of the date
first above set forth.

	 	 	 	 	 	 	 
	COMPANY:	 	PURCHASER:
	 
	 	 	 	 	 	 
	Applied Digital Solutions, Inc.	 	Laurus Master Fund, Ltd.
	 
	 	 	 	 	 	 
	By:
	 	/s/ Lorraine M. Breece	 	By:	 	/s/ David Grin
	 
	 	 	 	 	 	 
	Name:
	 	Lorraine M. Breece	 	Name:	 	David Grin
	 
	 	 	 	 	 	 
	Title:
	 	SVP, ACFO	 	Title:	 	Director
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Valens Offshore SPV I, Ltd.
	 	 	 	 	By:
Valens Capital Management, LLC, its Investment Manager
	 
	 	 	 	 	 	 
	 
	 	 	 	By:	 	/s/ David Grin
	 
	 	 	 	 	 	 
	 
	 	 	 	Name:	 	David Grin
	 
	 	 	 	 	 	 
	 
	 	 	 	Title:	 	Authorized Signatory
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Valens U.S. SPV I, LLC 
	 	 	 	 	By:
Valens Capital Management, LLC, its Investment Manager
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ David Grin
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	David Grin
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	Authorized Signatory
	 

	 	 	 	 	 	 

 

4Filed by Bowne Pure Compliance

 

Exhibit 10.11

INTELLECTUAL PROPERTY SECURITY AGREEMENT

THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (the “Agreement”), dated as of August
31, 2007, is made by APPLIED DIGITAL SOLUTIONS, INC., a Delaware corporation (“Grantor”),
in favor of LAURUS MASTER FUND, LTD. (“Laurus”).

WHEREAS, pursuant to that certain Securities Purchase Agreement dated as of the date hereof by
and between Grantor and Laurus (as from time to time amended, restated, supplemented or otherwise
modified, the “Purchase Agreement”), Laurus has agreed to provide financial accommodations
to Grantor;

WHEREAS, Laurus is willing to enter into the Purchase Agreement, but only upon the condition,
among others, that Grantor shall have executed and delivered to Laurus this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees as follows:

Section 1. DEFINED TERMS.

(a) When used herein the following terms shall have the following meanings:

“Copyrights” means all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications in the United States
Copyright Office, and the right to obtain all renewals of any of the foregoing.

“Copyright Licenses” means all written agreements naming any Grantor as licensor or
licensee granting any right under any Copyright, including the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright.

“General Intangibles” shall have the meaning provided thereto in Section 9-102 of the
UCC, as amended, restated or otherwise modified from time to time.

“Master Security Agreement” shall have the meaning provided thereto in Section 5
hereof.

“Obligations” shall have the meaning provided thereto in the Master Security
Agreement.

“Patents” means (a) all letters patent of the United States, any other country or any
political subdivision thereof, and all reissues and extensions of such letters patent, (b) all
applications for letters patent of the United States or any other county and all divisions,
continuations and continuations-in-part thereof, and (c) all rights to obtain any reissues or
extensions of the foregoing.

 

 

 

“Patent Licenses” means all agreements, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole
or in part by a Patent.

“Trademarks” means (a) all trademarks, trade names, corporate names, business names,
fictitious business names, trade styles, services marks, logos and other source or business
identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all applications in connection therewith, whether in
the United States Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or political subdivision thereof, or otherwise, and
all common-law rights thereto, and (b) the right to obtain all renewals thereof.

“Trademark Licenses” means, collectively, each agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark.

“UCC” shall have the meaning provided thereto in the Master Security Agreement.

(b) All capitalized terms used but not otherwise defined herein have the meanings given to
them in the Security Agreement.

Section 2. GRANT OF SECURITY INTEREST IN INTELLECTUAL PROPERTY COLLATERAL. To secure
the complete and timely payment of all the Obligations of the Grantor now or hereafter existing
from time to time, Grantor hereby grants to Laurus a continuing first priority security interest in
all of Grantor’s right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the “Collateral”):

(a) all of its Patents and Patent Licenses to which it is a party including
those referred to on Schedule I hereto;

(b) all of its Trademarks and Trademark Licenses to which it is a party
including those referred to on Schedule II hereto;

(c) all of its Copyrights and Copyright Licenses to which it is a party
including those referred to on Schedule III hereto;

(d) all reissues, continuations or extensions of the foregoing;

(e) all goodwill of the business connected with the use of, and symbolized by,
each Patent, each Patent License, each Trademark, each Trademark License, each
Copyright and each Copyright License; and

(f) all products and proceeds of the foregoing, including, without limitation,
any claim by Grantor against third parties for past, present or future (i)
infringement or dilution of any Patent or Patent licensed under any Patent License,
(ii) injury to the goodwill associated with any Patent or any Patent licensed under
any Patent License, (iii) infringement or dilution of any Trademark or Trademark
licensed under any Trademark License, (iv) injury to the goodwill

 

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associated with any Trademark or any Trademark licensed under any Trademark
License, (v) infringement or dilution of any Copyright or Copyright licensed under
any Copyright License, and (vi) injury to the goodwill associated with any Copyright
or any Copyright licensed under any Copyright License.

Section 3. REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants that
Grantor does not have any interest in, or title to, any Patent, Trademark or Copyright except as
set forth in Schedule I, Schedule II and Schedule III, respectively,
hereto. Grantor’s Patents, Trademarks and Copyrights are valid and enforceable, are solely owned
by Grantor and there is no claim that the use of any of them violates the rights of any third
person. Subject to any previously perfected security agreements previously recorded at the U.S.
Patent and Trademark Office, this Agreement is effective to create a valid and continuing lien on
and perfected security interests in favor of Laurus in all of Grantor’s Patents, Trademarks and
Copyrights and such perfected security interests are enforceable as such as against any and all
creditors of, and purchasers from, Grantor. Upon filing of this Intellectual Property Security
Agreement with the United States Patent and Trademark Office and the United States Copyright Office
and the filing of appropriate financing statements, all action necessary or desirable to protect
and perfect Laurus’ Lien on each Grantor’s Patents, Trademarks and Copyrights shall have been duly
taken.

Section 4. COVENANTS. Grantor covenants and agrees with Laurus that from and after
the date of this Agreement:

(a) Grantor shall notify Laurus promptly if it knows or has reason to know that
any application or registration relating to any Patent, Trademark or Copyright (now
or hereafter existing) may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding
Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the
same, or to keep and maintain the same.

(b) In no event shall Grantor, either directly or through any agent, employee,
licensee or designee, file an application for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency without giving Laurus
prior written notice thereof, and, upon request of Laurus, Grantor shall execute and
deliver a supplement hereto (in form and substance satisfactory to Laurus) to
evidence Laurus’ lien on such Patent, Trademark or Copyright, and the General
Intangibles of Grantor relating thereto or represented thereby.

(c) Grantor shall take all actions necessary or requested by Laurus to maintain
and pursue each application, to obtain the relevant registration and to maintain the
registration of each of the Patents or Trademarks (now or hereafter existing),
including the filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation proceedings.

 

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(d) In the event that any of the Collateral is infringed upon, or
misappropriated or diluted by a third party, Grantor shall notify Laurus promptly
after Grantor learns thereof. Grantor shall, unless it shall reasonably determine
that such Collateral is in no way material to the conduct of its business or
operations, promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution, and
shall take such other actions as Laurus shall deem appropriate under the
circumstances to protect such Collateral.

Section 5. MASTER SECURITY AGREEMENT. The security interests granted pursuant to this
Agreement are granted in conjunction with the security interests granted to Laurus by Grantor
pursuant to the Master Security Agreement. Grantor hereby acknowledges and affirms that the rights
and remedies of Laurus with respect to the security interest in the Collateral made and granted
hereby are more fully set forth in the Master Security Agreement, the terms and provisions of which
are incorporated by reference herein as if fully set forth herein.

Section 6. REINSTATEMENT. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Grantor for liquidation or
reorganization, should Grantor become insolvent or make an assignment for the benefit of any
creditor or creditors or should a receiver or trustee be appointed for all or any significant part
of Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or
returned.

Section 7. INDEMNIFICATION. (A) Grantor assumes all responsibility and liability
arising from the use of the Patents, Trademarks and/or Copyrights and Grantor hereby indemnifies
and holds Laurus harmless from and against any claim, suit, loss, damage or expense (including
reasonable attorneys’ fees) arising out of Grantor’s operations of its business from the use of the
Patents, Trademarks and/or Copyrights. (B) In any suit, proceeding or action brought by Laurus
under any Patent License, Trademark License or Copyright License for any sum owing thereunder, or
to enforce any provisions of such license, Grantor will indemnify and keep Laurus harmless from and
against all expense, loss or damage suffered by reason of any defense, set off, counterclaim,
recoupment or reduction or liability whatsoever of the obligee thereunder, arising out of a breach
of Grantor of any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligee or its successors from Grantor, and all
such obligations of Grantor shall be and remain enforceable against and only against Grantor and
shall not be enforceable against Laurus.

Section 8. NOTICES. Whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to give and serve upon
any other party any communication with respect to this Agreement, each such

 

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notice, demand, request, consent, approval, declaration or other communication shall be in
writing and shall be given in the manner, and deemed received, as provided for in the Purchase
Agreement.

Section 9. TERMINATION OF THIS AGREEMENT. Subject to Section 6 hereof, this
Agreement shall terminate upon payment in full in cash of all Obligations and irrevocable
termination of the Purchase Agreement.

Section 10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall constitute one instrument.
It is understood and agreed that if facsimile copies of this Agreement bearing facsimile
signatures are exchanged between the parties hereto, such copies shall in all respects have the
same weight, force and legal effect and shall be fully as valid, binding, and enforceable as if
such signed facsimile copies were original documents bearing original signature.

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, Grantor has caused this Intellectual Property Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.

	 	 	 	 	 
	 	 	APPLIED DIGITAL SOLUTIONS, INC.
	 
	 	 	 	 
	 
	 	By:	 	/s/ Lorraine M. Breece
	 
	 	 	 	 
	 
	 	Name:	 	Lorraine M. Breece
	 
	 	 	 	 
	 
	 	Title:	 	SVP, ACFO
	 
	 	 	 	 

ACCEPTED and ACKNOWLEDGED by:

LAURUS MASTER FUND, LTD.

	 	 	 	 	 
	By:
	 	/s/ David Grin	 	 
	 
	 	 

Name:   David Grin	 	 
	 
	 	Title:     Director

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