Exhibit 10.5
Execution
Copy
INTEREST WAIVER AND WARRANT
RESET AGREEMENT
THIS INTEREST WAIVER AND WARRANT
RESET AGREEMENT, dated as of December 29, 2005 (this “
Agreement ”), is made by and among Applied
Digital Solutions, Inc. (the “ Company
”), Satellite Strategic Finance Partners, Ltd. (“
SSFP ”) and Satellite Strategic Finance
Associates, LLC (“ SSFA ” and, together
with SSFP, the “ Purchasers
”).
A.
The Company issued (i) a Senior
Unsecured Note dated June 10, 2005 to SSFA in the principal
amount of $1,986,000 (the “ SSFA Note ”),
and (ii) a Senior Unsecured Note dated June 10, 2005 to
SSFP in the principal amount of $3,364,000 (the “ SSFP
Note ” and, together with the SSFA Note, the “
Notes ”).
B.
The Company issued (i) a
Series E Warrant dated June 10, 2005 to SSFA for the
purchase of 436,559 shares of the Company’s common stock (the
“ SSFA Warrant ”), and (ii) a
Series E Warrant dated June 10, 2005 to SSFP for the
purchase of 739,516 shares of the Company’s common stock (the
“ SSFP Warrant ” and, together with the
SSFA Warrant, the “ Warrants
”).
C.
The Company desires to reduce the
exercise price of the Warrants with respect to an aggregate of
200,000 Warrant shares in consideration for the forgiveness and
waiver by the Purchasers of an aggregate of $37,004 of accrued
interest on the Notes.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Purchasers hereby agree as
follows:
1.
Adjustment to the Warrant
Exercise Price .
(a)
The last sentence of
Section 1(a) of the SSFA Warrant is hereby amended and
restated in its entirety as follows:
The exercise price for each of
(i) 74,240 Warrant Shares purchased by the Holder upon the
exercise of this Warrant shall be equal to $3.75 (the “
Adjusted Exercise Price ”), and (ii) the
remaining 362,319 Warrant Shares purchased by the Holder upon the
exercise of this Warrant shall be equal to $4.09 (the “
Unadjusted Exercise Price ”). As used
herein, the term “ Exercise Price ” means
the Adjusted Exercise Price or the Unadjusted Exercise Price, as
applicable. The Holder may exercise this Warrant at the
Adjusted Exercise Price or the Unadjusted Exercise Price in any
order or increment, subject to the number of Warrant Shares
allocated to each such Exercise Price. The Exercise Price is
subject to adjustment for the events specified in Section 6
below, provided that any adjustment to the Exercise Price
shall be calculated separately for the Adjusted Exercise Price and
the Unadjusted Exercise Price.
(b)
The last sentence of
Section 1(a) of the SSFP Warrant is hereby amended and
restated in its entirety as follows:
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