CONSENT AND WAIVER TO ASSET SALE
Exhibit 1
CONSENT AND WAIVER TO ASSET SALE
THIS CONSENT AND WAIVER TO ASSET SALE (the “Consent and Waiver”) is made and entered into
effective as of December 13, 2007, by and among LAURUS MASTER FUND, LTD. (“Laurus”), XXXXXXX
CORPORATION, a Delaware corporation (“Xxxxxxx”), VALENS U.S. SPV I, LLC, a Delaware corporation
(“Valens U.S.”), VALENS OFFSHORE SPV I, LLC, a Cayman Islands company (“Valens Offshore I”), VALENS
OFFSHORE SPV II, CORP., a Delaware corporation (“Valens Offshore II”) and PSOURCE STRUCTURED DEBT
LIMITED, a Guernsey limited liability closed-ended company (“PSource”, and, together with Xxxxxxx,
Xxxxxx U.S., Xxxxxx Offshore I and Valens Offshore II, the “Lenders") in favor of APPLIED DIGITAL
SOLUTIONS, INC., a Delaware corporation (the “Company”). Capitalized terms used but not defined
herein shall have the meanings given them in the Omnibus Amendment (as defined below).
WHEREAS, Laurus and the Company are parties to that certain Securities Purchase Agreement,
Secured Term Note, Master Security Agreement, Stock Pledge Agreement, and other Related Agreements
(as such term is defined in the Securities Purchase Agreement) all of which are dated as of August
24, 2006 (collectively, as amended, modified or supplemented to date, the “2006 Agreements”); and
WHEREAS, the Lenders and the Company are parties to that certain Securities Purchase
Agreement, Secured Term Note, Master Security Agreement, Stock Pledge Agreement, Intellectual
Property Security Agreement and the other Related Agreements (as such term is defined in the
Securities Purchase Agreement), all of which are dated as of August 31, 2007 (collectively, as
amended, modified or supplemented to date, the “2007 Agreements”); and
WHEREAS, Laurus, the Lenders and the Company are parties to that certain Omnibus Amendment and
Waiver dated as of October 31, 2007 (“Omnibus Amendment”, and together with the 2006 Agreements and
the 2007 Agreements, the “Transaction Documents”), which amends the 2006 Agreements and 2007
Agreements; and
WHEREAS, subject to the approval of the board of directors of InfoTech USA, Inc., a Delaware
corporation (“InfoTech Delaware”), as well as InfoTech Delaware’s stockholders, InfoTech Delaware
will sell all of its fixed assets and related purchased assets pursuant to that certain Asset
Purchase and Sale Agreement among InfoTech Delaware, InfoTech USA, Inc., a New Jersey corporation,
and Information Technology Services, Inc., a New York corporation, and Corporate Technologies LLC,
a Minnesota limited liability company, dated November 13, 2007, and attached hereto as Exhibit
A (the “Purchase Agreement”) (the consummation of such transaction, the “Purchase Closing
Date”); and
WHEREAS, pursuant to Section 6.12(d) of the Securities Purchase Agreement dated as of August
24, 2006 and the Securities Purchase Agreement dated August 31, 2007, since InfoTech Delaware
constitutes a Pledged Subsidiary (as defined within such Securities Purchase Agreement), the
consummation of the transactions contemplated by the Purchase Agreement requires the prior written
consent of Laurus and the Lenders.
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NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good
and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto do hereby agree as follows:
1. Subject to Section 2 hereof, Laurus and the Lenders hereby waive violations of any and all
restrictions, notification requirements or affirmative or negative covenants as well as any events
of default set forth in the Transaction Documents, as well as any other agreements entered into
between the Company, Laurus and the Lenders, solely to the extent such violations or events of
default arise as a result of the consummation of the transactions contemplated by the Purchase
Agreement.
2. The consents and waivers set forth in this Consent shall cease to be effective if:
(a) (i) the transaction whereby InfoTech Delaware is to seek to acquire an operating
business unrelated to its current business (the “Transaction”) as described in InfoTech
Delaware’s Preliminary Proxy Statement on Form 14A dated as of November 21, 2007 (the “Proxy
Statement”) have not been consummated within ninety (180) days (six months) after the
Purchase Closing Date (such date, the “Transaction Date”), and (ii) InfoTech
Delaware is not liquidated, and its assets are not distributed to its shareholders, within
thirty (30) days after the Transaction Date;
(b) immediately following the Purchase Closing Date, the financial statements of
InfoTech are not substantially similar to the pro forma information set forth in Exhibit
A hereto,
(c) between (i) the Purchase Closing Date and (ii) the Transaction Date, more than
$200,000 is spent by InfoTech Delaware. .
3. Each consent and waiver set forth herein shall be effective as of the date first above
written (the “Effective Date”) on the date when each of the Company, Laurus and each Lender shall
have executed and the Company shall have delivered to Laurus its respective counterpart to this
Consent and Waiver.
4. Except as specifically set forth in this Consent and Waiver, there are no other amendments,
modifications or waivers to the Transaction Documents, and all of the other forms, terms and
provisions of the Transaction Documents remain in full force and effect.
5. The Company hereby represents and warrants to Laurus and the Lenders that as of the date
hereof, upon the Effective Date, there is no Event of Default under the Transaction Documents.
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6. This Consent and Waiver shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of and be enforceable by each of
the parties hereto and their respective successors and permitted assigns. THIS
AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. This Consent and Waiver may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
[The remainder of this page has been left intentionally blank. Signature page follows.]
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IN WITNESS WHEREOF, Laurus and the Lenders have executed and delivered this Consent and Waiver
as of the date first above written.
LAURUS MASTER FUND, LTD
By: LAURUS CAPITAL MANAGEMENT, LLC
Its: Investment Manager
Its: Investment Manager
By:/s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
XXXXXXX CORPORATION
By: LAURUS CAPITAL MANAGEMENT, LLC
Its: Investment Manager
Its: Investment Manager
By:/s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
VALENS U.S. SPV I, LLC
By: VALENS CAPITAL MANAGEMENT, LLC
Its: Investment Manager
Its: Investment Manager
By:/s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
VALENS OFFSHORE SPV I, LLC
By: VALENS CAPITAL MANAGEMENT, LLC
Its: Investment Manager
Its: Investment Manager
By:/s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
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VALENS OFFSHORE SPV II, CORP.
By: VALENS CAPITAL MANAGEMENT, LLC
Its: Investment Manager
Its: Investment Manager
By:/s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
PSOURCE STRUCTURED DEBT LIMITED
By: LAURUS CAPITAL MANAGEMENT, LLC
Its: Investment Manager
Its: Investment Manager
By:/s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
ACKNOWLEDGED AND AGREED:
APPLIED DIGITAL SOLUTIONS, INC.
By:/s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: CEO
Name: Xxxxxxx Xxxxxxx
Title: CEO
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