Document:

Exhibit 10.8

    

      
        

      

      Exhibit
        10.8

       

      

       

      THIS
        WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
        BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
        OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
        TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
        STATE
        SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION
        FROM
        REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
        IS
        AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
        SUBJECT
        TO COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
        STATE
        SECURITIES LAWS, THIS
        WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE
        PLEDGED
        OR HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
        SECURED BY THIS WARRANT OR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF
        THIS
        WARRANT.

       

      

       

      FORM
        OF
        SERIES E WARRANT 

       

      TO
        PURCHASE COMMON STOCK 

      

      OF

      

      APPLIED
        DIGITAL SOLUTIONS, INC.

       

      

       

      Issue
        Date: June 10, 2005                                                                                Warrant
        No. 

       

      

      THIS
        CERTIFIES that _____________________
        or
        any
        subsequent holder hereof (the “Holder”),
        has
        the right to purchase from APPLIED DIGITAL SOLUTIONS, INC., a Missouri
        corporation (the “Company”),
        up to
        ______________ fully paid and nonassessable shares of the Company’s common
        stock, par value $0.01 per share (the “Common
        Stock”),
        subject to adjustment as provided herein, at a price per share equal to the
        Exercise Price (as defined below), at any time and from time to time beginning
        on the date on which this Warrant is issued (the “Issue
        Date”)
        and
        ending at 5:00 p.m., eastern time, on the fifth (5th)
        anniversary of the Issue Date (the “Expiration
        Date”).
        This
        Warrant is issued pursuant to a Securities Purchase Agreement, dated as of
        June
        9, 2005 (the “Securities
        Purchase Agreement”).
        Capitalized terms used herein and not otherwise defined shall have the
        respective meanings set forth in the Securities Purchase Agreement.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1.    Exercise.

      

      (a)   Right
        to Exercise; Exercise Price.
        The
        Holder shall have the right to exercise this Warrant at any time and from
        time
        to time during the period beginning on the Issue Date and ending on the
        Expiration Date as to all or any part of the shares of Common Stock covered
        hereby (the “Warrant
        Shares”).
        The
“Exercise
        Price”
        for
        each Warrant Share purchased by the Holder upon the exercise of this Warrant
        shall be equal to $[110%
        of the Market Price on the Closing Date],
        subject to adjustment for the events specified in Section 6 below. 

      

      (b)   Exercise
        Notice.
        In
        order to exercise this Warrant, the Holder shall (i) send by facsimile
        transmission, at any time prior to 5:00 p.m., eastern time, on the Business
        Day
        on which the Holder wishes to effect such exercise (the “Exercise
        Date”),
        to
        the Company an executed copy of the notice of exercise in the form attached
        hereto as Exhibit
        A
        (the
“Exercise
        Notice”),
        (ii)
        deliver the original Warrant and, in the case of a Cash Exercise (as defined
        below), the Exercise Price to the Company. The
        Exercise Notice shall also state the name or names (with address) in which
        the
        shares of Common Stock that are issuable on such exercise shall be issued.
        If
        shares are to be issued in the name of a person other than the Holder, the
        Holder will pay all transfer taxes payable with respect thereto. In
        the
        case of a dispute as to the calculation of the Exercise Price or the number
        of
        Warrant Shares issuable hereunder (including, without limitation, the
        calculation of any adjustment pursuant to Section 6 below), the Company shall
        promptly issue to the Holder the number of Warrant Shares that are not disputed
        and shall submit the disputed calculations to a certified public accounting
        firm
        of national recognition (other than the Company’s independent accountants)
        within two (2) Business Days following the date on which the Exercise Notice
        is
        delivered to the Company. The Company shall cause such accountant to calculate
        the Exercise Price and/or the number of Warrant Shares issuable hereunder
        and to
        notify the Company and the Holder of the results in writing no later than
        three
        (3) Business Days following the day on which such accountant received the
        disputed calculations (the “Dispute
        Procedure”).
        Such
        accountant’s calculation shall be deemed conclusive absent manifest error. The
        fees of any such accountant shall be borne by the party whose calculations
        were
        most at variance with those of such accountant.

      

      (c)   Holder
        of Record.
        The
        Holder shall, for all purposes, be deemed to have become the holder of record
        of
        the Warrant Shares specified in an Exercise Notice on the Exercise Date
        specified therein, irrespective of the date of delivery of such Warrant Shares,
        subject to, in the case of a Cash Exercise (as defined below), payment of
        the
        Exercise Price. Except as specifically provided herein, nothing in this Warrant
        shall be construed as conferring upon the Holder hereof any rights as a
        shareholder of the Company, including, without limitation, the right to vote,
        the right to receive dividends or other distributions made to shareholders
        of
        the Company, and the right to exercise preemptive rights, prior to the Exercise
        Date.

      

      (d)    Cancellation
        of Warrant.
        This
        Warrant shall be canceled upon its exercise and, if this Warrant is exercised
        in
        part, the Company shall, at the time that it delivers Warrant Shares to the
        Holder pursuant to such exercise as provided herein, issue a new warrant,
        and
        deliver to the Holder a certificate representing such new warrant, with terms
        identical in all respects to this Warrant (except that such new warrant shall
        be
        exercisable into the number of shares of Common Stock with respect to which
        this
        Warrant shall remain unexercised); provided,

       

      
        
          
          

        

        
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      however,
        that
        the Holder shall be entitled to exercise all or any portion of such new warrant
        at any time following the time at which this Warrant is exercised, regardless
        of
        whether the Company has actually issued such new warrant or delivered to
        the
        Holder a certificate therefor.

      

      2.    Delivery
        of Warrant Shares Upon Exercise.
        Upon
        receipt of an Exercise Notice pursuant to paragraph 1 above, the Company
        shall,
        (A) in the case of a Cash Exercise (as defined below) no later than the close
        of
        business on the later to occur of (i) the third (3rd) Business Day following
        the
        Exercise Date set forth in such Exercise Notice and (ii) the date on which
        the
        Company has received payment of the Exercise Price and the taxes specified
        in
        paragraph 1(b) above, if any, are paid in full, (B) in the case of a Cashless
        Exercise (as defined below), no later than the close of business on the third
        (3rd) Business Day following the Exercise Date set forth in such Exercise
        Notice, and (C) with respect to Warrant Shares that are the subject of a
        Dispute
        Procedure, the close of business on the third (3rd)
        Business Day following the determination made pursuant to paragraph 1(b)
        (each
        of the dates specified in (A), (B) or (C) being referred to as a “Delivery
        Date”),
        issue
        and deliver or cause to be delivered to the Holder the number of Warrant
        Shares
        as shall be determined as provided herein. The Company shall effect delivery
        of
        Warrant Shares to the Holder by, as long as the Transfer Agent participates
        in
        the Depository Trust Company (“DTC”)
        Fast
        Automated Securities Transfer program (“FAST”),
        crediting the account of the Holder or its nominee at DTC (as specified in
        the
        applicable Exercise Notice) with the number of Warrant Shares required to
        be
        delivered, no later than the close of business on such Delivery Date. In
        the
        event that the Transfer Agent is not a participant in FAST, or if the Warrant
        Shares are not otherwise eligible for delivery through FAST, or if the Holder
        so
        specifies in an Exercise Notice or otherwise in writing on or before the
        Exercise Date, the Company shall effect delivery of Warrant Shares by delivering
        to the Holder or its nominee physical certificates representing such Warrant
        Shares, no later than the close of business on such Delivery Date. 

      

      3.    Failure
        to Deliver Warrant Shares.
        

      

      (a)   In
        the
        event that the Company fails for any reason (other than as a result of the
        Holder’s failure to deliver the original Warrant to the Company or, in the case
        of a Cash Exercise (as defined below), to pay the aggregate Exercise Price
        for
        the Warrant Shares being purchased) to deliver to the Holder the number of
        Warrant Shares specified in the applicable Exercise Notice on or before the
        Delivery Date therefor (an “Exercise
        Default”),
        and
        such default continues for five (5) Business Days following delivery of a
        written notice of such default by the Holder to the Company, the Company
        shall
        pay to the Holder payments (“Exercise
        Default Payments”)
        in the
        amount of (i) (N/365) multiplied
        by
        (ii) the
        aggregate Exercise Price of the Warrant Shares which are the subject of such
        Exercise Default multiplied
        by
        (iii)
        the lower of fifteen percent (15%) and the maximum rate permitted by applicable
        law (the “Default
        Interest Rate”),
        where
“N” equals the number of days elapsed between the original Delivery Date of
        such
        Warrant Shares and the date on which all of such Warrant Shares are issued
        and
        delivered to the Holder. Cash amounts payable hereunder shall be paid on
        or
        before the fifth (5th) Business Day of each calendar month following the
        calendar month in which such amount has accrued. 

      

      (b)   The
        Holder’s rights and remedies hereunder are cumulative, and no right or remedy is
        exclusive of any other. In addition to the amounts specified herein, the
        Holder
        shall

       

      
        
          
          

        

        
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      have
        the
        right to pursue all other remedies available to it at law or in equity
        (including, without limitation, a decree of specific performance and/or
        injunctive relief). Nothing herein shall limit the Holder’s right to pursue
        actual damages for the Company’s failure to issue and deliver Warrant Shares on
        the applicable Delivery Date (including, without limitation, damages relating
        to
        any purchase of Common Stock by the Holder to make delivery on a sale effected
        in anticipation of receiving Warrant Shares upon exercise, such damages to
        be in
        an amount equal to (A) the aggregate amount paid by the Holder for the Common
        Stock so purchased minus
        (B) the
        aggregate amount of net proceeds, if any, received by the Holder from the
        sale
        of the Warrant Shares issued by the Company pursuant to such
        exercise). 

      

      4.    Exercise
        Limitations.
        

      

      (A)       
        In
        no
        event shall the Holder be permitted to exercise this Warrant, or part thereof,
        if, upon such exercise, the number of shares of Common Stock beneficially
        owned
        by the Holder (other than shares which would otherwise be deemed beneficially
        owned except for being subject to a limitation on conversion or exercise
        analogous to the limitation contained in this paragraph 4(a)), would
        exceed 4.99% of the number of shares of Common Stock then issued and
        outstanding. As used herein, beneficial ownership shall be determined in
        accordance with Section 13(d) of the Securities Exchange Act of 1934, as
        amended, and the rules thereunder. To the extent that the limitation contained
        in this paragraph 4(a) applies, the submission of an Exercise Notice by the
        Holder shall be deemed to be the Holder’s representation that this Warrant is
        exercisable pursuant to the terms hereof and the Company shall be entitled
        to
        rely on such representation without making any further inquiry as to whether
        this Section 4(a) applies. The
        Company shall have no liability to any person if the Holder’s determination of
        whether this Warrant is convertible pursuant to the terms hereof is incorrect.
        Nothing
        contained herein shall be deemed to restrict the right of a Holder to exercise
        this Warrant, or part thereof, at such time as such exercise will not violate
        the provisions of this Section 4(a). This Section 4(a) may not be amended
        unless
        such amendment is agreed to in writing by the Holder and approved by the
        holders
        of a majority of the Common Stock then outstanding; provided,
        however,
        that
        the
        Holder shall have the right to waive the provisions of this Section
        4(a)
        upon
        prior written notice to the Company following the announcement of a Major
        Transaction (as defined below), or otherwise upon sixty (60) days’ prior written
        notice to the Company.

      

      (B)         
        Until
        Shareholder Approval (as defined below) is obtained, or the Holder obtains
        an
        opinion of counsel reasonably satisfactory to the Company and its counsel
        that
        such approval is not required, the Holder shall be prohibited from exercising
        this Warrant if, as a result of such exercise, the number of (i) Warrant
        Shares
        issued pursuant to all exercises of the Warrants plus (ii) the number of
        shares
        of Common Stock issued pursuant to all conversions of the Preferred Stock
        plus
        (iii)
        the number of the shares of Common Stock issued by the Company to Perceptis,
        L.P. in connection with the acquisition of Instantel Inc. would
        exceed the Cap Amount (as defined below). If at any time the number of shares
        issued and issuable pursuant to this Warrant exceeds the Cap Amount, the
        Company
        shall, upon the written request of the Holder, hold a meeting of its
        shareholders within sixty (60) days following such request, and use its best
        efforts to obtain the approval of its shareholders for the transactions
        described herein and the other Transaction Documents (“Shareholder
        Approval”).
        In
        the event that Shareholder Approval is not obtained at a shareholder meeting
        held after such request by the Holder, the Company shall continue to
        use

       

      
        
          
          

        

        
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      its
        best
        efforts to seek Shareholder Approval as soon as practicable after such meeting
        but no less frequently than quarterly thereafter. For purposes hereof,
“Cap
        Amount”
        means
        19.99% of the Common Stock outstanding on the Initial Issue Date (subject
        to
        adjustment upon a stock split, stock dividend or similar event). In the event
        that the Holder shall sell or otherwise transfer all or any portion of this
        Warrant, the transferee shall be deemed to have been allocated a pro rata
        share
        of the Cap Amount. 

      

      5.     
        Payment
        of the Exercise Price; Cashless Exercise.
        The
        Holder may pay the Exercise Price in either of the following forms or, at
        the
        election of Holder, a combination thereof:

      

      (a)    through
        a
        cash exercise (a “Cash
        Exercise”)
        by
        delivering immediately available funds, or

      

      (b)    if,
        following the one-year anniversary of the Issue Date, an effective Registration
        Statement is not available for the resale of all of the Warrant Shares issuable
        hereunder at the time an Exercise Notice is delivered to the Company, through
        a
        cashless exercise (a “Cashless
        Exercise”).
        The
        Holder may effect a Cashless Exercise by surrendering this Warrant to the
        Company and noting on the Exercise Notice that the Holder wishes to effect
        a
        Cashless Exercise, upon which the Company shall issue to the Holder a number
        of
        Warrant Shares determined as follows:

      

       X
        =
        Y x (A-B)/A

       

      where:                                 
        X
        = the
        number of Warrant Shares to be issued to the Holder;

      

      
        	 	 	 	
                Y
                  =
                  the number of Warrant Shares with respect to which this Warrant
                  is being
                  exercised;

              

      

      

      
        	 	 	 	
                A
                  =
                  the Market Price as of the Exercise Date;
                  and

              

      

      

      
        	 	 	 	
                B
                  =
                  the Exercise Price.

              

      

      

      It
        is
        intended and acknowledged that the Warrant Shares issued in a Cashless Exercise
        transaction shall be deemed to have been acquired by the Holder, and the
        holding
        period for the Warrant Shares required by Rule 144 shall be deemed to have
        been
        commenced, on the Issue Date. For purposes hereof, (A) “Market
        Price”means,
        as
        of a particular date, the
        lesser of (i) the average of the daily VWAP for such security on each Trading
        Day occurring during the ten (10) Trading Day period ending on (and including)
        the Trading Day immediately preceding
        such
        date
        and (ii)
        the
daily
        VWAP for such security
        on the
        Trading Day immediately preceding such date,
        and (B)
“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

       

      
        
          
          

        

        
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      banking
        firm of national reputation, and shall cause such investment banking firm
        to
        perform such determination and notify the Company and each Investor 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.

      

      6.     
        Anti-Dilution
        Adjustments; Distributions; Other Events.
        The
        Exercise Price and the number of Warrant Shares issuable hereunder shall
        be
        subject to adjustment from time to time as provided in this Section 6.

      

      (a)    Subdivision
        or Combination of Common Stock.
        If the
        Company, at any time after the Issue Date, subdivides (by any stock split,
        stock
        dividend, recapitalization, reorganization, reclassification or otherwise)
        its
        shares of Common Stock into a greater number of shares, then after the date
        of
        record for effecting such subdivision, the Exercise Price in effect immediately
        prior to such subdivision will be proportionately reduced. If the Company,
        at
        any time after the Issue Date, combines (by reverse stock split,
        recapitalization, reorganization, reclassification or otherwise) its shares
        of
        Common Stock into a smaller number of shares, then, after the date of record
        for
        effecting such combination, the Exercise Price in effect immediately prior
        to
        such combination will be proportionally increased.

      

      (b)    Distributions.
        If the
        Company shall declare or make any distribution of its assets (or rights to
        acquire its assets) to holders of Common Stock as a partial liquidating dividend
        or otherwise (including without limitation any dividend or distribution to
        the
        Company’s stockholders in cash or shares (or rights to acquire shares) of
        capital stock of a subsidiary) (a “Distribution”),
        the
        Company shall deliver written notice of such Distribution (a “Distribution
        Notice”)
        to the
        Holder at least ten (10) Business Days prior to the earlier to occur of (i)
        the
        record date for determining stockholders entitled to such Distribution (the
        “Record
        Date”)
        and
        (ii) the date on which such Distribution is made (the “Distribution
        Date”).
        The
        Holder shall be entitled, at its option (to be exercised by written notice
        delivered to the Company on or before the tenth (10th)
        Business Day following the date on which a Distribution Notice is delivered
        to
        the Holder), either (A) upon any exercise of this Warrant on or after the
        Record
        Date, to be entitled to receive on the Distribution Date (for any exercise
        effected on or prior to the Distribution Date) or the applicable Delivery
        Date
        (for any exercise effected after the Distribution Date), the amount of such
        assets which would have been payable to the holder with respect to the shares
        of
        Common Stock issuable upon such exercise (without giving effect to any
        limitations on such exercise contained in this Warrant) had the Holder been
        the
        holder of such shares of Common Stock on the Record Date or (B) upon any
        exercise of this Warrant on or after the Record Date, to reduce the Exercise
        Price applicable to such exercise by reducing the Exercise Price in effect
        on
        the Business Day immediately preceding the Record Date by an amount equal
        to the
        fair market value of the assets to be distributed divided
        by
        the
        number of shares of Common Stock as to which such Distribution is to be made,
        such fair market value to be reasonably determined in good faith by the
        independent members of the Board of Directors of the Company. 

       

      
        
          
          

        

        
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      (c)    Dilutive
        Issuances.
        

      

      (i)    Adjustment
        Upon Dilutive Issuance.
        If, at
        any time after the Issue Date, the Company issues or sells, or in accordance
        with subparagraph (iii) of this paragraph (c), is deemed to have issued or
        sold,
        any shares of Common Stock for no consideration or for a consideration per
        share
        less than the Exercise Price on the date of such issuance or sale (or deemed
        issuance or sale) (a “Dilutive
        Issuance”),
        then
        the Exercise Price shall be adjusted as follows:

      

      (A)    If
        such
        Dilutive Issuance occurs prior to the Effective Date (as defined in the
        Registration Rights Agreement), then effective immediately upon the Dilutive
        Issuance, the Exercise Price shall be adjusted so as to equal the consideration
        received or receivable by the Company (on a per share basis) for the additional
        shares of Common Stock so issued, sold or deemed issued or sold in such Dilutive
        Issuance (which, in the case of a deemed issuance or sale, shall be calculated
        in accordance with subparagraph (ii) below). 

       

      (B)    If
        such
        Dilutive Issuance occurs on or after the Effective Date, then effective
        immediately upon the Dilutive Issuance, the Exercise Price shall be adjusted
        so
        as to equal an amount determined by multiplying such Exercise Price by the
        following fraction:

       

       

      N0
        +
        N1

      N0 +
        N2

      

      where:

       

                     N0
        =  
        the number of shares of Common Stock outstanding immediately prior to the
        issuance, sale or deemed issuance or sale of such additional shares of Common
        Stock in such Dilutive Issuance (without taking into account any shares of
        Common Stock issuable upon conversion, exchange or exercise of any securities
        or
        other instruments which are convertible into or exercisable or exchangeable
        for
        Common Stock (“Convertible
        Securities”)
        or
        options, warrants or other rights to purchase or subscribe for Common Stock
        or
        Convertible Securities (“Purchase
        Rights”),
        including the Preferred Stock, Additional Investment Rights and
        Warrants);

       

                      N1
        = 
        the number of shares of Common Stock which the aggregate consideration, if
        any,
        received or receivable by the Company for the total number of such additional
        shares of Common Stock so issued, sold or deemed issued or sold in such Dilutive
        Issuance (which, in the case of a deemed issuance or sale, shall be calculated
        in accordance with subparagraph (iii) below) would purchase at the Exercise
        Price in effect immediately prior to such Dilutive Issuance; and

       

      
        
          
          

        

        
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                      N2
        =
        the
        number of such additional shares of Common Stock so issued, sold or deemed
        issued or sold in such Dilutive Issuance.

       

      Notwithstanding
        the foregoing, no adjustment shall be made pursuant hereto if such adjustment
        would result in an increase in the Exercise Price.

       

      (ii)    Adjustment
        Upon Below Market Issuance.
        If, at
        any time after the Issue Date, the Company issues or sells, or in accordance
        with subparagraph (iii) of this paragraph (c), is deemed to have issued or
        sold,
        any shares of Common Stock for no consideration or for a consideration per
        share
        less than the Market Price on the date of such issuance or sale (or deemed
        issuance or sale) (a “Below
        Market Issuance”),
        then
        the Exercise Price shall be adjusted so as to equal an amount determined
        by
        multiplying such Exercise Price by the following fraction:

       

       

      N0
        +
        N1

      N0
        +
        N2

      

      where:

       

                     N0
        =  
        the number of shares of Common Stock outstanding immediately prior to the
        issuance, sale or deemed issuance or sale of such additional shares of Common
        Stock in such Below Market Issuance (without taking into account any shares
        of
        Common Stock issuable upon conversion, exchange or exercise of any Convertible
        Securities or Purchase Rights, including the Preferred Stock, Additional
        Investment Rights and Warrants);

       

                      N1
        = 
        the number of shares of Common Stock which the aggregate consideration, if
        any,
        received or receivable by the Company for the total number of such additional
        shares of Common Stock so issued, sold or deemed issued or sold in such Below
        Market Issuance (which, in the case of a deemed issuance or sale, shall be
        calculated in accordance with subparagraph (iii) below) would purchase at
        the
        Market Price in effect on the date of such Below Market Issuance;
        and

       

                      N2
        =
        the
        number of such additional shares of Common Stock so issued, sold or deemed
        issued or sold in such Below Market Issuance.

       

      Notwithstanding
        the foregoing, no adjustment shall be made pursuant to this paragraph (c)(ii)
        if
        such adjustment would result in an increase in the Exercise Price or if such
        adjustment would lead to a higher exercise price than an adjustment pursuant
        to
        paragraph c(i), in which case the provisions of paragraph (c)(i) shall
        apply.

       

      (iii)        
        Effect
        On Exercise Price Of Certain Events.
        For
        purposes of determining the adjusted Exercise Price under subparagraph (i)
        or
        (ii) of this paragraph (c), the following will be applicable:

       

      
        
          
          

        

        
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      (A)    Issuance
        Of Purchase Rights.
        If the
        Company issues or sells any Purchase Rights, whether or not immediately
        exercisable, and the price per share for which Common Stock is issuable upon
        the
        exercise of such Purchase Rights (and the price of any conversion of Convertible
        Securities, if applicable) is less than the Market Price in effect on the
        date
        of issuance or sale of such Purchase Rights, then the maximum total number
        of
        shares of Common Stock issuable upon the exercise of all such Purchase Rights
        (assuming full conversion, exercise or exchange of Convertible Securities,
        if
        applicable) shall, as of the date of the issuance or sale of such Purchase
        Rights, be deemed to be outstanding and to have been issued and sold by the
        Company for such price per share. For purposes of the preceding sentence,
        the
“price per share for which Common Stock is issuable upon the exercise of such
        Purchase Rights” shall be determined by dividing (x) the total amount, if any,
        received or receivable by the Company as consideration for the issuance or
        sale
        of all such Purchase Rights, plus the minimum aggregate amount of additional
        consideration, if any, payable to the Company upon the exercise of all such
        Purchase Rights, plus,
        in the
        case of Convertible Securities issuable upon the exercise of such Purchase
        Rights, the minimum aggregate amount of additional consideration payable
        upon
        the conversion, exercise or exchange thereof (determined in accordance with
        the
        calculation method set forth in subparagraph (iii)(B) below) at the time
        such
        Convertible Securities first become convertible, exercisable or exchangeable,
        by
        (y) the maximum total number of shares of Common Stock issuable upon the
        exercise of all such Purchase Rights (assuming full conversion, exercise
        or
        exchange of Convertible Securities, if applicable). No further adjustment
        to the
        Exercise Price shall be made upon the actual issuance of such Common Stock
        upon
        the exercise of such Purchase Rights or upon the conversion, exercise or
        exchange of Convertible Securities issuable upon exercise of such Purchase
        Rights.
        To the
        extent that shares of Common Stock or Convertible Securities are not delivered
        pursuant to such Purchase Rights, upon the expiration or termination of such
        Purchase Rights, the Exercise Price shall be readjusted to the Exercise Price
        that would then be in effect had the adjustments made upon the issuance of
        such
        Purchase Rights been made on the basis of delivery of only the number of
        shares
        of Common Stock actually delivered.

       

      (B)    Issuance
        Of Convertible Securities.
        If the
        Company issues or sells any Convertible Securities, whether or not immediately
        convertible, exercisable or exchangeable, and the price per share for which
        Common Stock is issuable upon such conversion, exercise or exchange is less
        than
        the Market Price in effect on the date of issuance or sale of such Convertible
        Securities, then the maximum total number of shares of Common Stock issuable
        upon the conversion, exercise or exchange of all such Convertible Securities
        shall, as of the date of the issuance or sale of such Convertible Securities,
        be
        deemed to be outstanding and to have been issued and sold by the Company
        for
        such price per share. If the Convertible Securities so issued or sold do
        not
        have a fluctuating conversion or exercise price or exchange ratio, then for
        the
        purposes of the immediately preceding sentence, the “price per share for which
        Common Stock is issuable upon such conversion, exercise or exchange” shall be
        determined by dividing (x) the total amount, if any, received or receivable
        by
        the Company as consideration for the issuance or sale of all such Convertible
        Securities, plus the minimum aggregate amount of additional consideration,
        if
        any, payable to the Company upon the conversion, exercise or exchange thereof
        (determined in accordance with the calculation method set forth in

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      this
        subparagraph (iii)(B)) at the time such Convertible Securities first become
        convertible, exercisable or exchangeable, by (y) the maximum total number
        of
        shares of Common Stock issuable upon the exercise, conversion or exchange
        of all
        such Convertible Securities. If the Convertible Securities so issued or sold
        have a fluctuating conversion or exercise price or exchange ratio (a
“Variable
        Rate Convertible Security”) provided,
        however, that if the conversion or exercise price or exchange ratio of a
        Convertible Security may fluctuate solely as a result of provisions designed
        to
        protect against dilution, such Convertible Security shall not be deemed to
        be a
        Variable Rate Convertible Security),
        then
        for purposes of the first sentence of this subparagraph (B), the “price per
        share for which Common Stock is issuable upon such conversion, exercise or
        exchange” shall be deemed to be the lowest price per share which would be
        applicable (assuming all holding period and other conditions to any discounts
        contained in such Variable Rate Convertible Security have been satisfied)
        if the
        conversion price of such Variable Rate Convertible Security on the date of
        issuance or sale thereof were seventy-five percent (75%) of the actual
        conversion price on such date (the “Assumed
        Variable Market Price”),
        and,
        further, if the conversion price of such Variable Rate Convertible Security
        at
        any time or times thereafter is less than or equal to the Assumed Variable
        Market Price last used for making any adjustment under this paragraph (c)
        with
        respect to any Variable Rate Convertible Security, the Exercise Price in
        effect
        at such time shall be readjusted to equal the Exercise Price which would
        have
        resulted if the Assumed Variable Market Price at the time of issuance of
        the
        Variable Rate Convertible Security had been seventy-five percent (75%) of
        the
        actual conversion price of such Variable Rate Convertible Security existing
        at
        the time of the adjustment required by this sentence. No further adjustment
        to
        the Exercise Price shall be made upon the actual issuance of such Common
        Stock
        upon conversion, exercise or exchange of such Convertible
        Securities.
        To the
        extent that shares of Common Stock are not delivered pursuant to conversion
        of
        such Convertible Securities, upon the expiration or termination of the right
        to
        convert such Convertible Securities into Common Stock, the Exercise
        Price
        shall be readjusted to the Exercise
        Price
        that would then be in effect had the adjustments made upon the issuance of
        such
        Convertible Securities been made on the basis of delivery of only the number
        of
        shares of Common Stock actually delivered.

       

      (C)    Change
        In Option Price Or Conversion Rate.
        If,
        following an adjustment to the Exercise Price upon the issuance of Purchase
        Rights or Convertible Securities pursuant to a Below Market Issuance, there
        is a
        change at any time in (x) the amount of additional consideration payable
        to the
        Company upon the exercise of any Purchase Rights; (y) the amount of additional
        consideration, if any, payable to the Company upon the conversion, exercise
        or
        exchange of any Convertible Securities; or (z) the rate at which any Convertible
        Securities are convertible into or exercisable or exchangeable for Common
        Stock
        (in each such case, other than under or by reason of provisions designed
        to
        protect against dilution), then in any such case, the Exercise Price in effect
        at the time of such change shall be readjusted to the Exercise Price which
        would
        have been in effect at such time had such Purchase Rights or Convertible
        Securities still outstanding provided for such changed additional consideration
        or changed conversion, exercise or exchange rate, as the case may be, at
        the
        time initially issued or sold.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (D)    Calculation
        Of Consideration Received.
        If any
        Common Stock, Purchase Rights or Convertible Securities are issued or sold
        for
        cash, the consideration received therefor will be the amount received by
        the
        Company therefor. In case any Common Stock, Purchase Rights or Convertible
        Securities are issued or sold for a consideration part or all of which shall
        be
        other than cash, including in the case of a strategic or similar arrangement
        in
        which the other entity will provide services to the Company, purchase services
        from the Company or otherwise provide intangible consideration to the Company,
        the amount of the consideration other than cash received by the Company
        (including the net present value of the consideration expected by the Company
        for the provided or purchased services) shall be the fair market value of
        such
        consideration, except where such consideration consists of securities, in
        which
        case the amount of consideration received by the Company will be the average
        of
        the last sale prices thereof on the principal market for such securities
        during
        the period of ten Trading Days immediately preceding the date of receipt.
        In
        case any Common Stock, Purchase Rights or Convertible Securities are issued
        in
        connection with any merger or consolidation in which the Company is the
        surviving corporation, the amount of consideration therefor will be deemed
        to be
        the fair market value of such portion of the net assets and business of the
        non-surviving corporation as is attributable to such Common Stock, Purchase
        Rights or Convertible Securities, as the case may be. Notwithstanding anything
        else herein to the contrary, if Common Stock, Purchase Rights or Convertible
        Securities are issued or sold in conjunction with each other as part of a
        single
        transaction or in a series of related transactions, the Holder may elect
        to
        determine the amount of consideration deemed to be received by the Company
        therefor by deducting the fair value of any type of securities (the
“Disregarded
        Securities”)
        issued
        or sold in such transaction or series of transactions. If the holder makes
        an
        election pursuant to the immediately preceding sentence, no adjustment to
        the
        Exercise Price shall be made pursuant to this paragraph (c) for the issuance
        of
        the Disregarded Securities or upon any conversion, exercise or exchange thereof.
        The independent members of the Company’s Board of Directors shall calculate
        reasonably and in good faith, using standard commercial valuation methods
        appropriate for valuing such assets, the fair market value of any consideration
        other than cash or securities.

       

      (E)    Issuances
        Pursuant To Existing Securities.
        If the
        Company issues (or becomes obligated to issue) shares of Common Stock pursuant
        to any antidilution or similar adjustments (other than as a result of stock
        splits, stock dividends and the like) contained in any Convertible Securities
        or
        Purchase Rights outstanding as of the date hereof but not included in the
        Disclosure Schedule to the Securities Purchase Agreement, then all shares
        of
        Common Stock so issued shall be deemed to have been issued for no consideration.
        If the Company issues (or becomes obligated to issue) shares of Common Stock
        pursuant to any antidilution or similar adjustments contained in any Convertible
        Securities or Purchase Rights disclosed in a schedule to the Securities Purchase
        Agreement as a result of the issuance of the Additional Investment Rights
        or
        Warrants and the number of shares that the Company issues (or is obligated
        to
        issue) as a result of such initial issuance exceeds the amount specified
        in such
        schedule, such excess shares shall be deemed to have been issued for no
        consideration.

       

      (iv)    Exceptions
        To Adjustment Of Exercise Price.
        Notwithstanding the foregoing, no adjustment to the Exercise Price shall
        be made
        pursuant to this paragraph (c) upon

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      the
        issuance of any Excluded Securities. For purposes hereof, “Excluded
        Securities”
        means
        (I) securities purchased under the Securities Purchase Agreement; (II)
        securities issued upon conversion of the Preferred Stock or exercise of the
        Warrants or the VeriChip Warrant; (III) the 2004 Warrants (as defined in
        the
        Securities Purchase Agreement) and securities issued or issuable thereunder;
        (IV) shares of Common Stock (or the common stock of any Subsidiary) issuable
        or
        issued to (x) employees or directors of the Company or any such Subsidiary
        from
        time to time either directly or upon the exercise of options, in such case
        granted or to be granted in the discretion of the Company’s or such Subsidiary’s
        Board of Directors (or a duly authorized committee thereof) as an inducement
        to
        join the Company or such Subsidiary or pursuant to one or more stock option
        plans or restricted stock plans in effect as of the Closing Date or adopted
        after the Closing Date by the Company’s or such Subsidiary’s Board of Directors
        (or a duly authorized committee thereof) or by the Company’s or such
        Subsidiary’s shareholders, or (y) vendors, service providers or consultants,
        either directly or pursuant to options or warrants to purchase Common Stock
        that
        are outstanding on the date hereof or issued hereafter, provided such issuances
        are approved by the Company’s or such Subsidiary’s Board of Directors (or a duly
        authorized committee thereof) or by the Company’s or such Subsidiary’s
        shareholders; (V) shares of Common Stock issued in connection with any stock
        split, stock dividend or recapitalization of the Company or any of its
        Subsidiaries; (VI) shares of Common Stock issued in connection with the
        acquisition by the Company of any corporation or other entity occurring after
        the Effective Date; (VII)
        shares
        of Common Stock issued in connection with any Convertible Securities or Purchase
        Rights outstanding on the date hereof
        and
        disclosed on Schedule
        3.5
        to the
        Securities Purchase Agreement;
        (IX)
        shares issued to Persons with whom the Company
        or any
        of its Subsidiaries is
        entering into a joint venture, strategic alliance or other commercial
        relationship in connection with the operation of the Company’s or any such
        Subsidiary’s business and not in connection with a transaction the primary
        purpose of which is to raise equity capital; (VIII) shares of Common Stock,
        Convertible Securities or Purchase Rights issued in connection with the
        settlement of a bona
        fide
        litigation approved by the Company’s or such Subsidiary’s Board of Directors and
        (IX) shares issued to a Subsidiary pursuant to a share exchange.

       

      (v)    Notice
        Of Adjustments.
        Upon
        the occurrence of one or more adjustments or readjustments of the Exercise
        Price
        pursuant to this paragraph (c) resulting in a change in the Exercise Price
        by
        more than one percent (1%) in the aggregate, or any change in the number
        or type
        of stock, securities and/or other property issuable upon exercise of this
        Warrant, the Company, at its expense, shall promptly compute such adjustment
        or
        readjustment or change and prepare and furnish to the Holder a certificate
        setting forth such adjustment or readjustment or change and showing in detail
        the facts upon which such adjustment or readjustment or change is based.
        The
        Company shall, upon the written request at any time of the Holder, furnish
        to
        the Holder a like certificate setting forth (i) such adjustment or readjustment
        or change, (ii) the Exercise Price at the time in effect and (iii) the number
        of
        shares of Common Stock and the amount, if any, of other securities or property
        which at the time would be received upon exercise of this Warrant.

       

      (d)    Major
        Transactions.
        In the
        event of a merger, consolidation, business combination, tender offer, exchange
        of shares, recapitalization, reorganization, redemption or other similar
        event,
        as a result of which shares of Common Stock shall be changed into the same
        or a
        different number of shares of the same or another class or classes of stock
        or
        securities or

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      other
        assets of the Company or another entity or the Company shall sell all or
        substantially all of its assets (each of the foregoing being a “Major
        Transaction”),
        the
        Company will give the Holder at least ten (10) Trading Days’ written notice
        prior to the earlier of (I) the closing or effectiveness of such Major
        Transaction and (II) the record date for the receipt of such shares of stock
        or
        securities or other assets, and the Holder shall be permitted to exercise
        this
        Warrant in whole or in part at any time prior to the record date for the
        receipt
        of such consideration and shall be entitled to receive, for each share of
        Common
        Stock issuable to the Holder upon such exercise, the same per share
        consideration payable to the other holders of Common Stock in connection
        with
        such Major Transaction. If and to the extent that the Holder retains this
        Warrant or any portion hereof following such record date, the Company will
        cause
        the surviving or, in the event of a sale of assets, purchasing entity, as
        a
        condition precedent to such Major Transaction, to assume the obligations
        of the
        Company with respect to this Warrant, with such adjustments to the Exercise
        Price and the securities covered hereby as may be necessary in order to preserve
        the economic benefits of this Warrant to the Holder.

      

      (e)    Adjustments;
        Additional Shares, Securities or Assets.
        In the
        event that at any time, as a result of an adjustment made pursuant to this
        paragraph 6, the Holder of this Warrant shall, upon exercise of this Warrant,
        become entitled to receive securities or assets (other than Common Stock)
        then,
        wherever appropriate, all references herein to shares of Common Stock shall
        be
        deemed to refer to and include such shares and/or other securities or assets;
        and thereafter the number of such shares and/or other securities or assets
        shall
        be subject to adjustment from time to time in a manner and upon terms as
        nearly
        equivalent as practicable to the provisions of this paragraph 6. Any adjustment
        made herein other than pursuant to Section 6(c) hereof that results in a
        decrease in the Exercise Price shall also effect a proportional increase
        in the
        number of shares of Common Stock into which this Warrant is exercisable.
        

      

      7.    Fractional
        Interests.

      

      No
        fractional shares or scrip representing fractional shares shall be issuable
        upon
        the exercise of this Warrant. If, on exercise of this Warrant, the Holder
        hereof
        would be entitled to a fractional share of Common Stock or a right to acquire
        a
        fractional share of Common Stock, the Company shall, in lieu of issuing any
        such
        fractional share, pay to the Holder an amount in cash equal to the product
        resulting from multiplying such fraction by the Market Price as of the Exercise
        Date. 

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      8.    Transfer
        of this Warrant.
        

      

      The
        Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant,
        in whole or in part, as long as such sale or other disposition is made pursuant
        to an effective registration statement or an exemption from the registration
        requirements of the Securities Act, and applicable state securities laws,
        and is
        otherwise made in accordance with the applicable provisions of the Securities
        Purchase Agreement. Upon such transfer or other disposition, the Holder shall
        deliver this Warrant to the Company together with a written notice to the
        Company, substantially in the form of the Transfer Notice attached hereto
        as
Exhibit
        B
        (the
“Transfer
        Notice”),
        indicating the person or persons to whom this Warrant shall be transferred
        and,
        if less than all of this Warrant is transferred, the number of Warrant Shares
        to
        be covered by the part of this Warrant to be transferred to each such person.
        Within ten (10) Business Days of receiving a Transfer Notice, an executed
        Investment Certificate and the original of this Warrant, the Company shall
        deliver to the each transferee designated by the Holder a Warrant or Warrants
        of
        like tenor and terms for the appropriate number of Warrant Shares and, if
        less
        than all this Warrant is transferred, shall deliver to the Holder a Warrant
        for
        the remaining number of Warrant Shares. 

      

      9.    Benefits
        of this Warrant.

      

      This
        Warrant shall be for the sole and exclusive benefit of the Holder of this
        Warrant and nothing in this Warrant shall be construed to confer upon any
        person
        other than the Holder of this Warrant any legal or equitable right, remedy
        or
        claim hereunder.

      

      10.         
        Loss,
        theft, destruction or mutilation of Warrant.

      

      Upon
        receipt by the Company of evidence of the loss, theft, destruction or mutilation
        of this Warrant, and (in the case of loss, theft or destruction) of indemnity
        reasonably satisfactory to the Company, and upon surrender of this Warrant,
        if
        mutilated, the Company shall execute and deliver a new Warrant of like tenor
        and
        date in replacement for the lost, stolen, destroyed or mutilated
        Warrant.

      

      11.         
        Notice
        or Demands.

      

      Any
        notice, demand or request required or permitted to be given by the Company
        or
        the Holder pursuant to the terms of this Warrant shall be in writing and
        shall
        be deemed delivered (i) when delivered personally or by verifiable facsimile
        transmission, unless such delivery is made on a day that is not a Business
        Day,
        in which case such delivery will be deemed to be made on the next succeeding
        Business Day, (ii) on the next Business Day after timely delivery to an
        overnight courier and (iii) on the Business Day actually received if deposited
        in the U.S. mail (certified or registered mail, return receipt requested,
        postage prepaid), addressed as follows:

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      If
        to
        the Company:

      

      Applied
        Digital Solutions Inc

      1690
        S.
        Congress Avenue, Suite 200 

      Delray
        Beach, FL 33445

      Attn: 
        Scott
        R.
        Silverman

      Tel:  
        561-805-8000

      Fax:
         561-805-0002 

       

      with
        a copy to:

       

      Holland
        & Knight LLP

      701
        Brickell Avenue, Suite 3000

      Miami,
        Florida 33131

      Mailing
        Address: P.O. Box 015441, Florida, 33101

      Attn:  
        Harvey
        A.
        Goldman, Esq.

      Tel:    
        305-374-8500

      Fax:    
        305-789-7799

      

      and
        if to
        the Holder, to such address as shall be designated by the Holder in writing
        to
        the Company. 

      

      12.    Taxes.

       

      (a)    The
        issue
        of stock certificates on exercises of this Warrant shall be made without
        charge
        to the exercising Holder for any tax in respect of the issue thereof. The
        Company shall not, however, be required to pay any tax which may be payable
        in
        respect of any transfer involved in the issue and delivery of stock in any
        name
        other than that of the Holder of any Warrant exercised, and the Company shall
        not be required to issue or deliver any such stock certificate unless and
        until
        the person or persons requesting the issue thereof shall have paid to the
        Company the amount of such tax or shall have established to the reasonable
        satisfaction of the Company that such tax has been paid.

      

      (b)    Notwithstanding
        any other provision of this Warrant or any other Transaction Document, for
        income tax purposes, any assignee or transferee shall agree that the Company
        and
        the Transfer Agent shall be permitted to withhold from any amounts payable
        to
        such assignee or transferee any taxes required by law to be withheld from
        such
        amounts. Unless exempt from the obligation to do so, each assignee or transferee
        shall, upon request, execute and deliver to the Company or the Transfer Agent,
        as applicable, a properly completed Form W-8 or W-9, indicating that such
        assignee or transferee is not subject to back-up withholding for United States
        Federal income tax purposes. 

      

      13.   Applicable
        Law.

      

      This
        Warrant is issued under and shall for all purposes be governed by and construed
        in accordance with the laws of the State of Delaware applicable to contracts
        made and to be performed entirely within the State of Delaware.

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      14.   Amendments.

       

      No
        amendment, modification or other change to, or waiver of any provision of,
        this
        Warrant may be made unless such amendment, modification or change is (A)
        set
        forth in writing and is signed by the Company and the Holder and (B) agreed
        to
        in writing by the holders of at least sixty-six percent (66%) of the number
        of
        shares into which the Warrants are exercisable (without regard to any limitation
        contained therein on such exercise), it being understood that upon the
        satisfaction of the conditions described in (A) and (B) above, each Warrant
        (including any Warrant held by the Holder who did not execute the agreement
        specified in (B) above) shall be deemed to incorporate any amendment,
        modification, change or waiver effected thereby as of the effective date
        thereof.

      

      

      

      [Signature
        Page to Follow]

      
        
          
             

          

          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the Company has duly executed and delivered this Warrant
        as of
        the Issue Date.

      

      

      

      APPLIED
        DIGITAL SOLUTIONS, INC.

      

      

      By:
        /s/
        Evan C. McKeown

                                      Name:
        Evan C. McKeown

                           Title:
        SVP, CFO

      
        
          
             

          

          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A to WARRANT

      

      EXERCISE
        NOTICE

      

      

      The
        undersigned Holder hereby irrevocably exercises the right to
        purchase                           
         of
        the shares of Common Stock (“Warrant
        Shares”)
        of
APPLIED
        DIGITAL SOLUTIONS, INC. evidenced
        by the attached Warrant (the “Warrant”).
        Capitalized terms used herein and not otherwise defined shall have the
        respective meanings set forth in the Warrant.

      

      1.
         Form
        of
        Exercise Price. The Holder intends that payment of the Exercise Price shall
        be
        made as:

      

      ______
        a
Cash
        Exercise
        with
        respect to _________________ Warrant Shares; and/or 

      

      ______
        a
Cashless
        Exercise
        with
        respect to _________________ Warrant Shares, as permitted by Section 5(b)
        of the
        attached Warrant.

      

      

      2.
         Payment
        of Exercise Price. In the event that the Holder has elected a Cash Exercise
        with
        respect to some or all of the Warrant Shares to be issued pursuant hereto,
        the
        Holder shall pay the sum of $________________ to the Company in accordance
        with
        the terms of the Warrant.

      

      

      Date:
        ______________________

      

      

      ___________________________________

      Name
        of
        Registered Holder

      

      By:
        _______________________________

            
        Name:

            
        Title:

      

      By
        tendering this Exercise Notice, the Holder represents to the Company that
        it is
an
        “accredited investor” as that term is defined in Rule 501 of Regulation D, and
        that it is acquiring the Warrants Shares solely for its own account, and
        not
        with a present view to the public resale or distribution of all or any part
        thereof, except pursuant to sales that are registered under the Securities
        Act
        or are exempt from the registration requirements of the Securities Act;
provided,
        however,
        that,
        in making such representation, the Holder
        does
        not
        agree to hold the Warrants Shares for any minimum or specific term and reserves
        the right to sell, transfer or otherwise dispose of the Warrants Shares at
        any
        time in accordance with the provisions of the Warrant and with Federal and
        state
        securities laws applicable to such sale, transfer or disposition.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

         

      

      EXHIBIT
        B to WARRANT

      

      TRANSFER
        NOTICE

      

      FOR
        VALUE
        RECEIVED, the undersigned Holder of the attached Warrant hereby sells, assigns
        and transfers unto the person or persons named below the right to purchase
                           
shares
        of
        the Common Stock of APPLIED
        DIGITAL SOLUTIONS, INC.
        evidenced by the attached Warrant. By signing this Transfer Notice, the
        transferee agrees to be legally bound by the terms of the attached Warrant
        and
        of the related Securities Purchase Agreement and Registration Rights Agreement
        applicable to an Investor.

      

      

      Date:
        ______________________

      

      

      ___________________________________

      Name
        of
        Registered Holder

      

      By:
        _______________________________

            
        Name:

            
        Title:

      

      Accepted
        and Agreed:

      

      ________________________

      Transferee
        Name 

      

      

      By: _________________________

            
Name:

            
Title:

      

      Address:

      

      ___________________________________

    

     

    ___________________________________
       

      ___________________________________

      

       

      
19Exhibit 10.9

    
      
        

      

      Exhibit
        10.9

       

       

      Exhibit
        E to the 

      Securities
        Purchase Agreement

       

      THIS
        WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
        BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
        OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
        TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
        STATE
        SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION
        FROM
        REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
        IS
        AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
        SUBJECT
        TO COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
        STATE
        SECURITIES LAWS, THIS
        WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE
        PLEDGED
        OR HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
        SECURED BY THIS WARRANT OR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF
        THIS
        WARRANT.

       

      

       

      FORM
        OF WARRANT 

       

      TO
        PURCHASE COMMON STOCK 

      

      OF

      

      VERICHIP
        CORPORATION

       

      

       

      Issue
        Date: June 10, 2005                                                                            Warrant
        No. 

       

      

      THIS
        CERTIFIES that _____________________
        or
        any
        subsequent holder hereof (the “Holder”),
        has
        the right to purchase from VERICHIP CORPORATION, a Delaware corporation (the
        “Company”),
        up to
        ______________ fully paid and nonassessable shares of the Company’s common
        stock, par value $0.001 per share (the “Common
        Stock”),
        subject to adjustment as provided herein, at a price per share equal to the
        Exercise Price (as defined below), at any time and from time to time beginning
        on the date on which this Warrant is issued (the “Issue
        Date”)
        and
        ending at 5:00 p.m., eastern time, (i) on the
        one
        (1) year anniversary of the date on which the Company completes an initial
        public offering of its common stock (the “IPO”)
        or
        (ii) if the Company does not commence the IPO on or before the two (2) year
        anniversary of the Closing Date, on such two year anniversary
        (the
“Expiration
        Date”).
        This
        Warrant is issued pursuant to a Securities Purchase Agreement, dated as of
        June
        9, 2005 (the “Securities
        Purchase Agreement”).
        Capitalized terms used herein and not otherwise defined shall have the
        respective meanings set forth in the Securities Purchase Agreement.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1. Exercise.

      

      (a)
         Right
        to Exercise; Exercise Price.
        The
        Holder shall have the right to exercise this Warrant at any time and from
        time
        to time during the period beginning on the Issue Date and ending on the
        Expiration Date as to all or any part of the shares of Common Stock covered
        hereby (the “Warrant
        Shares”).
        The
“Exercise
        Price”
        for
        each Warrant Share purchased by the Holder upon the exercise of this Warrant
        shall be equal to eight
        dollars ($8.00),
        subject
        to adjustment for the events specified in Section 6 below. 

      

      (b)
         Exercise
        Notice.
        In
        order to exercise this Warrant, the Holder shall (i) send by facsimile
        transmission, at any time prior to 5:00 p.m., eastern time, on the Business
        Day
        on which the Holder wishes to effect such exercise (the “Exercise
        Date”),
        to
        the Company an executed copy of the notice of exercise in the form attached
        hereto as Exhibit
        A
        (the
“Exercise
        Notice”),
        (ii)
        deliver the original Warrant and, in the case of a Cash Exercise (as defined
        below), the Exercise Price to the Company. The
        Exercise Notice shall also state the name or names (with address) in which
        the
        shares of Common Stock that are issuable on such exercise shall be issued.
        If
        shares are to be issued in the name of a person other than the Holder, the
        Holder will pay all transfer taxes payable with respect thereto. In
        the
        case of a dispute as to the calculation of the Exercise Price or the number
        of
        Warrant Shares issuable hereunder (including, without limitation, the
        calculation of any adjustment pursuant to Section 6 below), the Company shall
        promptly issue to the Holder the number of Warrant Shares that are not disputed
        and shall submit the disputed calculations to a certified public accounting
        firm
        of national recognition (other than the Company’s independent accountants)
        within two (2) Business Days following the date on which the Exercise Notice
        is
        delivered to the Company. The Company shall cause such accountant to calculate
        the Exercise Price and/or the number of Warrant Shares issuable hereunder
        and to
        notify the Company and the Holder of the results in writing no later than
        three
        (3) Business Days following the day on which such accountant received the
        disputed calculations (the “Dispute
        Procedure”).
        Such
        accountant’s calculation shall be deemed conclusive absent manifest error. The
        fees of any such accountant shall be borne by the party whose calculations
        were
        most at variance with those of such accountant.

      

      (c)
         Holder
        of Record.
        The
        Holder shall, for all purposes, be deemed to have become the holder of record
        of
        the Warrant Shares specified in an Exercise Notice on the Exercise Date
        specified therein, irrespective of the date of delivery of such Warrant Shares,
        subject to, in the case of a Cash Exercise (as defined below), payment of
        the
        Exercise Price. Except as specifically provided herein, nothing in this Warrant
        shall be construed as conferring upon the Holder hereof any rights as a
        shareholder of the Company, including, without limitation, the right to vote,
        the right to receive dividends or other distributions made to shareholders
        of
        the Company, and the right to exercise preemptive rights, prior to the Exercise
        Date.

      

      (d)
         Cancellation
        of Warrant.
        This
        Warrant shall be canceled upon its exercise and, if this Warrant is exercised
        in
        part, the Company shall, at the time that it delivers Warrant Shares to the
        Holder pursuant to such exercise as provided herein, issue a new warrant,
        and
        deliver to the Holder a certificate representing such new warrant, with terms
        identical in all respects to this Warrant (except that such new warrant shall
        be
        exercisable into the number of shares of

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      Common
        Stock with respect to which this Warrant shall remain unexercised); provided,
        however,
        that
        the Holder shall be entitled to exercise all or any portion of such new warrant
        at any time following the time at which this Warrant is exercised, regardless
        of
        whether the Company has actually issued such new warrant or delivered to
        the
        Holder a certificate therefor.

      

      2. Delivery
        of Warrant Shares Upon Exercise.
        Upon
        receipt of an Exercise Notice pursuant to paragraph 1 above, the Company
        shall,
        (A) in the case of a Cash Exercise (as defined below) no later than the close
        of
        business on the later to occur of (i) the third (3rd) Business Day following
        the
        Exercise Date set forth in such Exercise Notice and (ii) the date on which
        the
        Company has received payment of the Exercise Price and the taxes specified
        in
        paragraph 1(b) above, if any, are paid in full, (B) in the case of a Cashless
        Exercise (as defined below), no later than the close of business on the third
        (3rd) Business Day following the Exercise Date set forth in such Exercise
        Notice, and (C) with respect to Warrant Shares that are the subject of a
        Dispute
        Procedure, the close of business on the third (3rd)
        Business Day following the determination made pursuant to paragraph 1(b)
        (each
        of the dates specified in (A), (B) or (C) being referred to as a “Delivery
        Date”),
        issue
        and deliver or cause to be delivered to the Holder the number of Warrant
        Shares
        as shall be determined as provided herein. The Company shall effect delivery
        of
        Warrant Shares to the Holder by, as long as the Transfer Agent participates
        in
        the Depository Trust Company (“DTC”)
        Fast
        Automated Securities Transfer program (“FAST”)
        and
        the Warrant Shares are eligible for delivery through FAST, crediting the
        account
        of the Holder or its nominee at DTC (as specified in the applicable Exercise
        Notice) with the number of Warrant Shares required to be delivered, no later
        than the close of business on such Delivery Date. In the event that the Transfer
        Agent is not a participant in FAST, or if the Warrant Shares are not otherwise
        eligible for delivery through FAST, or if the Holder so specifies in an Exercise
        Notice or otherwise in writing on or before the Exercise Date, the Company
        shall
        effect delivery of Warrant Shares by delivering to the Holder or its nominee
        physical certificates representing such Warrant Shares, no later than the
        close
        of business on such Delivery Date. 

      

      3. Failure
        to Deliver Warrant Shares.
        

      

      (a) In
        the
        event that the Company fails for any reason (other than as a result of the
        Holder’s failure to deliver the original Warrant to the Company or, in the case
        of a Cash Exercise (as defined below), to pay the aggregate Exercise Price
        for
        the Warrant Shares being purchased) to deliver to the Holder the number of
        Warrant Shares specified in the applicable Exercise Notice on or before the
        Delivery Date therefor (an “Exercise
        Default”),
        and
        such default continues for five (5) Business Days following delivery of a
        written notice of such default by the Holder to the Company, the Company
        shall
        pay to the Holder payments (“Exercise
        Default Payments”)
        in the
        amount of (i) (N/365) multiplied
        by
        (ii) the
        aggregate Exercise Price of the Warrant Shares which are the subject of such
        Exercise Default multiplied
        by
        (iii)
        the lower of fifteen percent (15%) and the maximum rate permitted by applicable
        law (the “Default
        Interest Rate”),
        where
“N” equals the number of days elapsed between the original Delivery Date of
        such
        Warrant Shares and the date on which all of such Warrant Shares are issued
        and
        delivered to the Holder. Cash amounts payable hereunder shall be paid on
        or
        before the fifth (5th) Business Day of each calendar month following the
        calendar month in which such amount has accrued. 

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (b)
         The
        Holder’s rights and remedies hereunder are cumulative, and no right or remedy is
        exclusive of any other. In addition to the amounts specified herein, the
        Holder
        shall have the right to pursue all other remedies available to it at law
        or in
        equity (including, without limitation, a decree of specific performance and/or
        injunctive relief). Nothing herein shall limit the Holder’s right to pursue
        actual damages for the Company’s failure to issue and deliver Warrant Shares on
        the applicable Delivery Date (including, without limitation, damages relating
        to
        any purchase of Common Stock by the Holder to make delivery on a sale effected
        in anticipation of receiving Warrant Shares upon exercise, such damages to
        be in
        an amount equal to (A) the aggregate amount paid by the Holder for the Common
        Stock so purchased minus
        (B) the
        aggregate amount of net proceeds, if any, received by the Holder from the
        sale
        of the Warrant Shares issued by the Company pursuant to such
        exercise). 

      

      4.  Exercise
        Limitations.
        In no
        event shall the Holder be permitted to exercise this Warrant, or part thereof,
        if, at any time following the completion of the IPO, upon such exercise the
        number of shares of Common Stock beneficially owned by the Holder (other
        than
        shares which would otherwise be deemed beneficially owned except for being
        subject to a limitation on conversion or exercise analogous to the limitation
        contained in this paragraph 4), would exceed 4.99% of the number of
        shares
        of Common Stock then issued and outstanding. As used herein, beneficial
        ownership shall be determined in accordance with Section 13(d) of the Securities
        Exchange Act of 1934, as amended, and the rules thereunder. To the extent
        that
        the limitation contained in this paragraph 4 applies, the submission of an
        Exercise Notice by the Holder shall be deemed to be the Holder’s representation
        that this Warrant is exercisable pursuant to the terms hereof and the Company
        shall be entitled to rely on such representation without making any further
        inquiry as to whether this Section 4 applies. The
        Company shall have no liability to any person if the Holder’s determination of
        whether this Warrant is convertible pursuant to the terms hereof is incorrect.
        Nothing
        contained herein shall be deemed to restrict the right of a Holder to exercise
        this Warrant, or part thereof, at such time as such exercise will not violate
        the provisions of this Section 4. This Section 4 may not be amended unless
        such
        amendment is agreed to in writing by the Holder and approved by the holders
        of a
        majority of the Common Stock then outstanding; provided,
        however,
        that
        the
        Holder shall have the right to waive the provisions of this Section 4 upon
        prior
        written notice to the Company following the announcement of a Major Transaction
        (as defined below), or otherwise upon sixty (60) days’ prior written notice to
        the Company.

      

      5.
         Payment
        of the Exercise Price; Cashless Exercise.
        The
        Holder may pay the Exercise Price in either of the following forms or, at
        the
        election of Holder, a combination thereof:

      

      (a) through
        a
        cash exercise (a “Cash
        Exercise”)
        by
        delivering immediately available funds, or

      

      (b) at
        any
        time following the one year anniversary of the Issue Date and as long as
        the IPO
        has been completed, if an effective Registration Statement is not available
        for
        the resale of all of the Warrant Shares issuable hereunder at the time an
        Exercise Notice is delivered to the Company, through a cashless exercise
        (a
“Cashless
        Exercise”).
        The
        Holder may effect a Cashless Exercise by surrendering this Warrant to the
        Company and noting on the Exercise

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      Notice
        that the Holder wishes to effect a Cashless Exercise, upon which the Company
        shall issue to the Holder a number of Warrant Shares determined as
        follows:

      

      X
        = Y x
        (A-B)/A

      

      where:                                 
        X
        = the
        number of Warrant Shares to be issued to the Holder;

      

      
        	 	 	 	
                Y
                  =
                  the number of Warrant Shares with respect to which this Warrant
                  is being
                  exercised;

              

      

      

      
        	 	 	 	
                A
                  =
                  the Market Price as of the Exercise Date;
                  and

              

      

      

      
        	 	 	 	
                B
                  =
                  the Exercise Price.

              

      

      

      It
        is
        intended and acknowledged that the Warrant Shares issued in a Cashless Exercise
        transaction shall be deemed to have been acquired by the Holder, and the
        holding
        period for the Warrant Shares required by Rule 144 shall be deemed to have
        been
        commenced, on the Issue Date. For purposes hereof, (A) “Market
        Price” 
        means,
        as
        of a particular date, the
        average of the daily VWAP for the Common Stock occurring during the ten (10)
        Trading Day period ending on (and including) the Trading Day immediately
        preceding
        such
        date, and (B) “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 Trading Day on any of the foregoing bases, then the
        Company
        shall submit such calculation to an independent investment banking firm of
        national reputation reasonably acceptable to the Investors, and shall cause
        such
        investment banking firm to perform such determination as is necessary to
        establish the value of the Common Stock and notify the Company and the Investors
        of the results of determination no later than two (2) Business Days from
        the
        time such calculation was submitted to it by the Company. All such
        determinations shall be appropriately adjusted for any stock dividend, stock
        split or other similar transaction during such period.

      

      6. Anti-Dilution
        Adjustments; Distributions; Other Events.
        The
        Exercise Price and the number of Warrant Shares issuable hereunder shall
        be
        subject to adjustment from time to time as provided in this Section 6.

      

      (a) Subdivision
        or Combination of Common Stock.
        If the
        Company, at any time after the Issue Date, subdivides (by any stock split,
        stock
        dividend, recapitalization, reorganization, reclassification or otherwise)
        its
        shares of Common Stock into a greater number of shares, then after the date
        of
        record for effecting such subdivision, the Exercise Price in effect immediately
        prior to such subdivision will be proportionately reduced. If the Company,
        at
        any time after the Issue Date, combines (by reverse stock split,
        recapitalization, reorganization, reclassification or otherwise) its shares
        of
        Common Stock into a smaller number of shares, then, after the date of record
        for
        effecting such combination, the Exercise Price in effect immediately prior
        to
        such combination will be proportionally increased.

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (b)
         Distributions.
        If the
        Company shall declare or make any distribution of its assets (or rights to
        acquire its assets) to holders of Common Stock as a partial liquidating dividend
        or otherwise (including without limitation any dividend or distribution to
        the
        Company’s stockholders in cash or shares (or rights to acquire shares) of
        capital stock of a subsidiary) (a “Distribution”),
        the
        Company shall deliver written notice of such Distribution (a “Distribution
        Notice”)
        to the
        Holder at least ten (10) Business Days prior to the earlier to occur of (i)
        the
        record date for determining stockholders entitled to such Distribution (the
        “Record
        Date”)
        and
        (ii) the date on which such Distribution is made (the “Distribution
        Date”).
        The
        Holder shall be entitled, at its option (to be exercised by written notice
        delivered to the Company on or before the tenth (10th)
        Business Day following the date on which a Distribution Notice is delivered
        to
        the Holder), either (A) upon any exercise of this Warrant on or after the
        Record
        Date, to be entitled to receive on the Distribution Date (for any exercise
        effected on or prior to the Distribution Date) or the applicable Delivery
        Date
        (for any exercise effected after the Distribution Date), the amount of such
        assets which would have been payable to the holder with respect to the shares
        of
        Common Stock issuable upon such exercise (without giving effect to any
        limitations on such exercise contained in this Warrant) had the Holder been
        the
        holder of such shares of Common Stock on the Record Date or (B) upon any
        exercise of this Warrant on or after the Record Date, to reduce the Exercise
        Price applicable to such exercise by reducing the Exercise Price in effect
        on
        the Business Day immediately preceding the Record Date by an amount equal
        to the
        fair market value of the assets to be distributed divided
        by
        the
        number of shares of Common Stock as to which such Distribution is to be made,
        such fair market value to be reasonably determined in good faith by the
        independent members of the Board of Directors of the Company. 

       

      (c)
         Major
        Transactions.
        In the
        event of a merger, consolidation, business combination, tender offer, exchange
        of shares, recapitalization, reorganization, redemption or other similar
        event,
        as a result of which shares of Common Stock shall be changed into the same
        or a
        different number of shares of the same or another class or classes of stock
        or
        securities or other assets of the Company or another entity or the Company
        shall
        sell all or substantially all of its assets (each of the foregoing being
        a
“Major
        Transaction”),
        the
        Company will give the Holder at least ten (10) Trading Days’ written notice
        prior to the earlier of (I) the closing or effectiveness of such Major
        Transaction and (II) the record date for the receipt of such shares of stock
        or
        securities or other assets, and the Holder shall be permitted to exercise
        this
        Warrant in whole or in part at any time prior to the record date for the
        receipt
        of such consideration and shall be entitled to receive, for each share of
        Common
        Stock issuable to the Holder upon such exercise, the same per share
        consideration payable to the other holders of Common Stock in connection
        with
        such Major Transaction. If and to the extent that the Holder retains this
        Warrant or any portion hereof following such record date, the Company will
        cause
        the surviving or, in the event of a sale of assets, purchasing entity, as
        a
        condition precedent to such Major Transaction, to assume the obligations
        of the
        Company with respect to this Warrant, with such adjustments to the Exercise
        Price and the securities covered hereby as may be necessary in order to preserve
        the economic benefits of this Warrant to the Holder.

       

      (d)
         Adjustments;
        Additional Shares, Securities or Assets.
        In the
        event that at any time, as a result of an adjustment made pursuant to this
        paragraph 6, the Holder of this Warrant shall, upon exercise of this Warrant,
        become entitled to receive securities or assets (other than

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      Common
        Stock) then, wherever appropriate, all references herein to shares of Common
        Stock shall be deemed to refer to and include such shares and/or other
        securities or assets; and thereafter the number of such shares and/or other
        securities or assets shall be subject to adjustment from time to time in
        a
        manner and upon terms as nearly equivalent as practicable to the provisions
        of
        this paragraph 6. Any adjustment made herein other than pursuant to Section
        6(c)
        hereof that results in a decrease in the Exercise Price shall also effect
        a
        proportional increase in the number of shares of Common Stock into which
        this
        Warrant is exercisable. 

      

      6A. Registration
        Rights.
        

      

      If
        (i)
        the Company at any time after the completion of an IPO proposes to register
        shares of Common Stock under the Securities Act in connection with the public
        offering of such shares for cash (a “Proposed
        Registration”)
        other
        than a registration statement on Form S-8 or Form S-4 or any successor or
        other
        forms promulgated for similar purposes and (ii) a Registration Statement
        covering the sale of all of the Warrant Shares is not then effective and
        available for sales thereof by the Holder, the Company shall, at such time,
        promptly give each Holder written notice of such Proposed Registration. The
        Holder shall have ten (10) Business Days from its receipt of such notice
        to
        deliver to the Company a written request specifying the amount of Warrant
        Shares
        that the Holder intends to sell and the Holder’s intended method of
        distribution. Upon receipt of such request, the Company shall use its
        commercially reasonable efforts to cause all Registrable Securities which
        the
        Company has been requested to register to be registered under the Securities
        Act
        to the extent necessary to permit their sale or other disposition in accordance
        with the intended methods of distribution specified in the request of the
        Holder; provided,
        however,
        that
        the Company shall have the right to postpone or withdraw any registration
        effected pursuant to this Section 6A without obligation to the Holder.

      

      7. Fractional
        Interests.

      

      No
        fractional shares or scrip representing fractional shares shall be issuable
        upon
        the exercise of this Warrant. If, on exercise of this Warrant, the Holder
        hereof
        would be entitled to a fractional share of Common Stock or a right to acquire
        a
        fractional share of Common Stock, the Company shall, in lieu of issuing any
        such
        fractional share, pay to the Holder an amount in cash equal to the product
        resulting from multiplying such fraction by the Market Price as of the Exercise
        Date. 

      

      8. Transfer
        of this Warrant.
        

      

      The
        Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant,
        in whole or in part, as long as such sale or other disposition is made pursuant
        to an effective registration statement or an exemption from the registration
        requirements of the Securities Act, and applicable state securities laws,
        and is
        otherwise made in accordance with the applicable provisions of the Securities
        Purchase Agreement. Upon such transfer or other disposition, the Holder shall
        deliver this Warrant to the Company together with a written notice to the
        Company, substantially in the form of the Transfer Notice attached hereto
        as
Exhibit
        B
        (the
“Transfer
        Notice”),
        indicating the person or persons to whom this Warrant shall be transferred
        and,
        if less than all of this Warrant is transferred, the number of Warrant Shares
        to
        be covered by the part of

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      this
        Warrant to be transferred to each such person. Within ten (10) Business Days
        of
        receiving a Transfer Notice, an executed Investment Certificate and the original
        of this Warrant, the Company shall deliver to the each transferee designated
        by
        the Holder a Warrant or Warrants of like tenor and terms for the appropriate
        number of Warrant Shares and, if less than all this Warrant is transferred,
        shall deliver to the Holder a Warrant for the remaining number of Warrant
        Shares. 

      

      9. Benefits
        of this Warrant.

      

      This
        Warrant shall be for the sole and exclusive benefit of the Holder of this
        Warrant and nothing in this Warrant shall be construed to confer upon any
        person
        other than the Holder of this Warrant any legal or equitable right, remedy
        or
        claim hereunder.

      

      10. Loss,
        theft, destruction or mutilation of Warrant.

      

      Upon
        receipt by the Company of evidence of the loss, theft, destruction or mutilation
        of this Warrant, and (in the case of loss, theft or destruction) of indemnity
        reasonably satisfactory to the Company, and upon surrender of this Warrant,
        if
        mutilated, the Company shall execute and deliver a new Warrant of like tenor
        and
        date in replacement for the lost, stolen, destroyed or mutilated
        Warrant.

      

      11. Notice
        or Demands.

      

      Any
        notice, demand or request required or permitted to be given by the Company
        or
        the Holder pursuant to the terms of this Warrant shall be in writing and
        shall
        be deemed delivered (i) when delivered personally or by verifiable facsimile
        transmission, unless such delivery is made on a day that is not a Business
        Day,
        in which case such delivery will be deemed to be made on the next succeeding
        Business Day, (ii) on the next Business Day after timely delivery to an
        overnight courier and (iii) on the Business Day actually received if deposited
        in the U.S. mail (certified or registered mail, return receipt requested,
        postage prepaid), addressed as follows:

       

      If
        to
        the Company:

      

      VeriChip
        Corporation

      1690
        S.
        Congress Avenue, Suite 200 

      Delray
        Beach, FL 33445

      Attn:   
        Michael
        Krawitz

      Tel:     
        561-805-8000

      Fax:    
        561-805-0002 

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      with
        a copy to:

       

      Holland
        & Knight LLP

      701
        Brickell Avenue, Suite 3000

      Miami,
        Florida 33131

      Mailing
        Address: P.O. Box 015441, Florida, 33101

      Attn:   
        Harvey
        A.
        Goldman, Esq.

      Tel:     
        305-374-8500

      Fax:     
        305-789-7799

      

      and
        if to
        the Holder, to such address as shall be designated by the Holder in writing
        to
        the Company. 

      

      
        	 	
                12.

              	
                Taxes.

              

      

      

      (a)
         The
        issue
        of stock certificates on exercises of this Warrant shall be made without
        charge
        to the exercising Holder for any tax in respect of the issue thereof. The
        Company shall not, however, be required to pay any tax which may be payable
        in
        respect of any transfer involved in the issue and delivery of stock in any
        name
        other than that of the Holder of any Warrant exercised, and the Company shall
        not be required to issue or deliver any such stock certificate unless and
        until
        the person or persons requesting the issue thereof shall have paid to the
        Company the amount of such tax or shall have established to the reasonable
        satisfaction of the Company that such tax has been paid.

      

      (b) Notwithstanding
        any other provision of this Warrant or any other Transaction Document, for
        income tax purposes, any assignee or transferee shall agree that the Company
        and
        the Transfer Agent shall be permitted to withhold from any amounts payable
        to
        such assignee or transferee any taxes required by law to be withheld from
        such
        amounts. Unless exempt from the obligation to do so, each assignee or transferee
        shall, upon request, execute and deliver to the Company or the Transfer Agent,
        as applicable, a properly completed Form W-8 or W-9, indicating that such
        assignee or transferee is not subject to back-up withholding for United States
        Federal income tax purposes. 

      

      13. Applicable
        Law.

      

      This
        Warrant is issued under and shall for all purposes be governed by and construed
        in accordance with the laws of the State of Delaware applicable to contracts
        made and to be performed entirely within the State of Delaware.

      

      14. Amendments.

       

      No
        amendment, modification or other change to, or waiver of any provision of,
        this
        Warrant may be made unless such amendment, modification or change is (A)
        set
        forth in writing and is signed by the Company and the Holder.

      

      

      

      [Signature
        Page to Follow]

      
        
          
             

          

          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the Company has duly executed and delivered this Warrant
        as of
        the Issue Date.

      

      

      

      VERICHIP
        CORPORATION

      

      

      By:
        /s/
        Keith Bolton

                                                                                                     
        Name:
        Keith Bolton

                                                                                                     
        Title:
        President

      
        
          
             

          

          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A to WARRANT

      

      EXERCISE
        NOTICE

      

      

      The
        undersigned Holder hereby irrevocably exercises the right to
        purchase                       of
        the shares of Common Stock (“Warrant
        Shares”)
        of
VERICHIP
        CORPORATION evidenced
        by the attached Warrant (the “Warrant”).
        Capitalized terms used herein and not otherwise defined shall have the
        respective meanings set forth in the Warrant.

      

      1.
         Form
        of
        Exercise Price. The Holder intends that payment of the Exercise Price shall
        be
        made as:

      

      ______
        a
Cash
        Exercise
        with
        respect to _________________ Warrant Shares; and/or 

      

      ______
        a
Cashless
        Exercise
        with
        respect to _________________ Warrant Shares, as permitted by Section 5(b)
        of the
        attached Warrant.

      

      

      2.
         Payment
        of Exercise Price. In the event that the Holder has elected a Cash Exercise
        with
        respect to some or all of the Warrant Shares to be issued pursuant hereto,
        the
        Holder shall pay the sum of $________________ to the Company in accordance
        with
        the terms of the Warrant.

      

      

      Date:
        ______________________

      

      

      ___________________________________

      Name
        of
        Registered Holder

      

      By:
        _______________________________

           
        Name:

           
        Title:

      

      By
        tendering this Exercise Notice, the Holder represents to the Company that
        it is
an
        “accredited investor” as that term is defined in Rule 501 of Regulation D, and
        that it is acquiring the Warrants Shares solely for its own account, and
        not
        with a present view to the public resale or distribution of all or any part
        thereof, except pursuant to sales that are registered under the Securities
        Act
        or are exempt from the registration requirements of the Securities Act;
provided,
        however,
        that,
        in making such representation, the Holder
        does
        not
        agree to hold the Warrants Shares for any minimum or specific term and reserves
        the right to sell, transfer or otherwise dispose of the Warrants Shares at
        any
        time in accordance with the provisions of the Warrant and with Federal and
        state
        securities laws applicable to such sale, transfer or disposition.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

         

      

      EXHIBIT
        B to WARRANT

      

      TRANSFER
        NOTICE

      

      FOR
        VALUE
        RECEIVED, the undersigned Holder of the attached Warrant hereby sells, assigns
        and transfers unto the person or persons named below the right to
        purchase                         
         shares
        of
        the Common Stock of VERICHIP
        CORPORATION
        evidenced by the attached Warrant. By signing this Transfer Notice, the
        transferee agrees to be legally bound by the terms of the attached Warrant
        and
        of the related Securities Purchase Agreement and Registration Rights Agreement
        applicable to an Investor.

      

      

      Date:
        ______________________

      

      

      ___________________________________

      Name
        of
        Registered Holder

      

      By:
        _______________________________

      Name:

      Title:

      

      Accepted
        and Agreed:

      

      ________________________

      Transferee
        Name 

      

      

      By: _________________________

            
Name:

            
Title:

      

      Address:

      

      ___________________________________

    

     

    ___________________________________
       

      ___________________________________

      

       

      
12

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