Securities Purchase Agreement - DIGITAL ANGEL CORP - 12-11-2003

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Securities Purchase Agreement - DIGITAL ANGEL CORP - 12-11-2003 Powered By Docstoc
					Exhibit 10.45 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "AGREEMENT") is entered into as of May 22, 2003, between Applied Digital Solutions, Inc., a Missouri corporation (the "COMPANY"), and Magellan International Ltd. (the "PURCHASER"). WHEREAS, the Company has registered with the Securities and Exchange Commission (the "COMMISSION") the issuance of certain shares (the "SHARES") of its common stock, $0.001 par value per share (the "COMMON STOCK"), under a registration statement on Form S-1 (Registration No. 333-102165) (the "REGISTRATION STATEMENT"). WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to sell to the Purchaser and the Purchaser desires to purchase from the Company up to eight million five hundred thousand (8,500,000) Shares currently available under the Registration Statement. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained in this Agreement and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows: 1. SETTLEMENT DATES. (a) Settlement Dates. The closing, if any, of the purchase and sale of the Shares under this Agreement will take place at the offices of Bryan Cave LLP ("BRYAN CAVE"), 1290 Avenue of the Americas, New York, New York 10104, on the settlement dates set forth below. Subject to the terms and conditions of this Agreement, the Shares will be issued, delivered and paid for on up to three settlement dates (if any). (1) The first settlement date (if any) will occur on the fourth (4th) Trading Day (as defined below) following (and including) the Press Release Date (the "FIRST SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the First Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 2,833,333 Shares (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (2) The second settlement date (if any) will occur on the seventh (7th) Trading Day following (and including) the Press Release Date (the "SECOND SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the Second Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 5,666,666 Shares less the number of any Shares purchased by the Purchaser on the First Settlement Date (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (3) The third settlement date (if any) will occur on the tenth (10th) Trading Day following (and including) the Press Release Date (the "THIRD SETTLEMENT DATE" and together with the First Settlement Date and the Second Settlement Date, collectively, a

"SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the Third Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 8,500,000 Shares less the number of any Shares purchased by the Purchaser on the First Settlement Date and the Second Settlement Date (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (b) Per Share Purchase Price; Additional Share Elections. (1) The purchase price for each Share issuable under this Agreement on a Settlement Date (the "PER SHARE PURCHASE PRICE") shall equal 87.25% of the average of the VWAP's for the three Trading Days immediately preceding such Settlement Date, but in no event less than the Floor Price (as defined below). (2) The Company is not required to sell, and the Purchaser is not required to purchase, any Shares at a price that is less than the Floor Price. If the Per Share Purchase Price with respect to a particular Settlement Date is less than the Floor Price: (a) the Purchaser may, but is not required to, require the Company to issue and sell to it up to the maximum aggregate amount of Shares to be sold hereunder (it being understood that not more than an aggregate of 8,500,000 Shares will be issued and sold under this Agreement), and (b) if Purchaser elects to acquire such Shares under (a) above, then the per share purchase price for such Shares shall equal the Floor Price. (3) At any time prior to 6:00 p.m. (New York time) on the day preceding a Settlement Date, the Purchaser may elect by written notice to the Company, to acquire (in addition to the Shares which it may be obligated to acquire at such time) up to the maximum aggregate amount of Shares to be sold hereunder (it being understood that not more than an aggregate of 8,500,000 Shares will be issued and sold under this Agreement). (4) Notwithstanding anything herein to the contrary, if the VWAP on two consecutive Settlement Dates is less than $0.42, then, at any time thereafter, Purchaser shall be entitled to terminate any and all of its obligations under this Agreement by delivery of a written notice to the Company to such effect. (5) The Purchaser is not permitted to acquire Shares hereunder to the extent that, giving effect to such proposed acquisition, the beneficial ownership of the Common Stock by the Purchaser (together with its affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Purchaser's for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), would exceed 9% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock potentially issuable upon such acquisition). Notwithstanding anything herein to the contrary, the obligations of the parties hereto is subject to the immediately preceding sentence and will be deemed automatically modified so as to avoid any contravention thereof. (c) Deliveries on each Settlement Date. Subject to the terms and conditions of this Agreement, on each Settlement Date: (x) the Company will deliver to the Purchaser, (A) via such Purchaser's DTC Account through the Depository Trust Company DWAC system, a 2

number of Shares equal to the applicable number of Shares being acquired on such Settlement Date, and (B) a certificate, executed by the President of the Company, to the effect that the Company has and is in compliance with all of the conditions set forth in Section 2, and (y) the Purchaser will, upon receipt of such Shares in the DWAC system, deliver to the Company, an amount in United States dollars equal to the product of (i) such number of Shares, and (ii) the Per Share Purchase Price applicable to such Settlement Date, via wire transfer of immediately available funds to an account designated in writing by the Company for such purpose. (d) Certain Defined Terms. As used in this Agreement, unless otherwise defined, the following terms shall have the respective meanings set forth in this Section 1(d): 1. "COMPANY REGISTRATION STATEMENT" means the Registration Statement, including the Prospectus, amendments and supplements to the Registration Statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material and exhibits incorporated by reference or deemed to be incorporated by reference in such registration statement. 2. "FLOOR PRICE" means $0.35, subject to equitable adjustment for stock splits, recombinations and similar events. 3. "PERSON" means any court or other federal, state, local or other governmental authority or other individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 4. "PRESS RELEASE DATE" means May 23, 2003; provided, that the Company shall file the press release contemplated by Section 2(d) on such date not later than 8:30 a.m. (New York time). 5. "PROSPECTUS" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Shares covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material or exhibits incorporated by reference or deemed to be incorporated by reference in the Prospectus. 6. "SECURITIES ACT" means the Securities Act of 1933, as amended. 7. "TRADING DAY" means (a) a day on which the Common Stock is traded on the Nasdaq SmallCap Market, Nasdaq National Market, New York Stock Exchange or American Stock Exchange, or (b) if the Common Stock is not listed on any of the Nasdaq SmallCap Market, Nasdaq National Market, New York Stock Exchange or American Stock Exchange, a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as 3

reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a), (b) and (c) above, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. 8. "VWAP" means on any Trading Day, the volume weighted average trading price (as reported by Bloomberg Financial L.P. using the VAP function) of the Common Stock for such Trading Day. 2. CONDITIONS. The obligation of the Purchaser to purchase and acquire Shares under this Agreement is subject to the fulfillment (or waiver by the Purchaser) of each of the following conditions: (a) The Company Registration Statement: (x) shall be effective as to all Shares, not subject to any threatened or actual stop order and (y) will not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Company shall have secured the listing of the Shares on the Nasdaq SmallCap Market (subject to official notice of issuance). (c) The representations and warranties of the Company made in this Agreement shall be true and correct as of and on each of the date of this Agreement and each Settlement Date, as if first made and restated on each such date. (d) The Company shall have issued a press release reasonably acceptable to the Purchaser, disclosing the existence of this Agreement and the material terms hereof. The Purchaser may terminate its obligation to acquire Shares under this Agreement if the Company shall not have issued such press release by 8:30 a.m. (New York time) on May 9, 2003. (e) There shall be no litigation, investigation, inquiry or proceeding pending or threatened in writing (including without limitation with the Commission, the Nasdaq Stock Market, or the NASD) that challenges or calls into the question the transactions contemplated hereby or, if determined in a manner adverse to the Company, that could reasonably be expected to result in a material and adverse effect on the Company, its business or its prospects or impose liability upon the Purchaser. (f) On the first Settlement Date, the Company shall file with the Commission a prospectus supplement to the Company Registration Statement, in agreed form, in order to evidence and disclose the offer and sale of the Shares issued hereunder (the "SUPPLEMENT"). 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes the following representations and warranties to the Purchaser: 4

(a) Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Missouri with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transactions contemplated hereby. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. (b) Authorization. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement by the Company and the consummation of the transaction contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company or its shareholders for the Company to execute and consummate this Agreement and the transactions contemplated hereby. This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, and assuming the valid execution hereof by the Purchaser, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby does not and will not: (i) conflict with or violate any provision of the Company's certificate of incorporation or bylaws (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment or acceleration (with or without notice, lapse of time or both) of, any agreement or indebtedness to which the Company is a party or by which any property or asset of the Company is bound or affected, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby or (iii) result in a violation of any law, rule, regulation, order, judgment, decree or other restriction of any court, governmental authority or stock market to which the Company or the Common Stock is subject, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. There are no notices to or approvals or consents required to be made by the Company of the NASD, any stock market, the Commission or any other Person that have not been made and obtained (and any so obtained are in full force and effect), except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. 5

(d) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with the terms hereof, will be legally issued, fully paid and nonassessable, free and clear of all liens and encumbrances. The Shares have been approved for issuance on and by the Nasdaq SmallCap Market (subject to official notice of issuance). (e) Company Registration Statement. The Company Registration Statement is effective and the Company has not received notice that the Commission has issued or intends to issue a stop order with respect to the Company Registration Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the Company Registration Statement, either temporarily or permanently, or intends or has threatened in writing to do so. The Company Registration Statement (including the information or documents incorporated by reference therein and all supplements, including the Supplement, and prospectus thereunder), at the time it was first declared effective, on the date of this Agreement, and on each Settlement Date, did not, do not and will not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Shares are registered under the Securities Act by the Company Registration Statement. (f) Listing and Maintenance Requirements. None of the offer, sale or issuance to the Purchaser of the maximum number of Shares issuable under this Agreement require any approval of the shareholders of the Company and do not violate the rules of the Nasdaq Stock Market. (g) Certain Fees. Except with respect to certain arrangements between the Company and J.P. Carey Securities Inc. with respect to the transactions contemplated by this Agreement, no fees or commissions will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchaser will have no obligation with respect to any fees incurred by the Company or any other Person or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. The Company will indemnify and hold harmless the Purchaser, its employees, officers, directors, agents, partners, and affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and reasonable attorney's fees) and expenses suffered in respect of any such claimed or existing fees incurred by the Company or any other Person, as such fees and expenses are incurred. (h) Disclosure. Neither the Company nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or may, in the Company's opinion, constitute material nonpublic information. (i) SEC Reports; Financial Statements. Except with respect to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2002 which was not timely filed, the Company has filed all reports required to be filed by it under the Exchange Act, for the twelve months preceding the date hereof (collectively, "SEC REPORTS") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC 6

Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments. 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to the Company as follows: (a) Organization; Authorization. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Purchaser or the transactions contemplated hereby. The Purchaser is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Purchaser or the transaction contemplated hereby. The Purchaser has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement by the Purchaser and the consummation by it of the transaction contemplated hereby have been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser and, when delivered in accordance with the terms hereof, and assuming the valid execution hereof by the Company, will constitute the valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) Other Agreements; Status of Purchaser. The Purchaser is not party to any agreement or arrangement with respect to a disposition of Shares other than this Agreement. The Purchaser is an accredited investor as defined in Rule 501 of the Securities Act and is not registered as a broker-dealer under the Exchange Act. 7

(c) Financial Capacity. The Purchaser has financial capacity to satisfy its obligations under this Agreement. 5. CERTAIN DISCLOSURES. The Company will not and will cause each of its affiliates and other Persons acting on behalf of the Company not to divulge to the Purchaser any information that it believes to be material non-public information unless the Purchaser has agreed in writing to receive such information prior to such divulgence. Neither the Company nor the Purchaser will issue any press release or make any other public announcement relating to this Agreement unless the form thereof is mutually agreed to by the Company and the Purchaser, or if the Company is advised in writing by its counsel that such press release or public announcement is required by law. Except with respect to the press release to be issued pursuant to Section 2(d), and other than with respect to: (i) the filing of the Supplement, and (ii) the filing of a Current Report on Form 8-K to furnish an opinion of counsel as to the legality of the Shares, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or trading market, without the prior written consent of the Purchaser, except to the extent such disclosure is required by law or trading market regulations, in which case the Company shall provide the Purchaser with prior notice of such disclosure. 6. INDEMNIFICATION. The Company will indemnify the Purchaser as provided in Exhibit "A" attached hereto against liability with respect to the Company Registration Statement (including, without limitation, the prospectus supplement) relating to the Shares sold by the Company to the Purchaser hereunder. For purposes of said Exhibit A, capitalized terms used therein without definition shall have the same meanings therein as are ascribed to said terms in this Agreement. 7. MISCELLANEOUS. (a) Fees and Expenses. Each party will pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company will pay all stamp and other taxes and duties levied in connection with the sale of the Shares. (b) Entire Agreement; Amendments. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement. This Agreement may not be modified or amended except in a writing for such purpose signed by the Company and the Purchaser. The waiver by either party hereto of any right hereunder or the failure to perform or of a breach by the other party will not be deemed a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. (c) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder must be in writing and will be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or email, (ii) the Trading Day following the date of mailing, if sent by 8

nationally recognized overnight courier service, or (iii) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications will be as follows (or such other address as may be designated in writing hereafter, in the same manner, by such Person):
If to the Company: Applied Digital Solutions, Inc. 400 Royal Palm Way, Suite 410 Palm Beach, FL 33480 Facsimile No.: (561) 805-0002 Attn: Chief Financial Officer with a copy to: Holland & Knight 701 Brickell Ave. Miami, FL 33131 Attention: Harvey Goldman, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature page hereto.

(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) will be exclusively commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each party irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder, and irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such courts are an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service will constitute good and sufficient service of process and notice thereof. Nothing contained herein will be deemed to limit in any way any right to serve process in any manner permitted by law. Each party irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding will be reimbursed by the other party for its reasonable attorneys fees and other reasonable costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 9

(e) Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will each be entitled to specific performance of the others obligations under this Agreement. In furtherance thereof, the parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any such breach and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. (f) Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. (g) Assignment. Neither party shall assign this Agreement without the prior written consent of the other party hereto. ********* 10

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed as of the date first indicated above. APPLIED DIGITAL SOLUTIONS, INC. By: Name: Title: MAGELLAN INTERNATIONAL LTD. By: Name: Anna Marie Lowe Title: Authorized Signatory Address for Notice:

Charlotte House Charlotte Street Nassau, Bahamas P.O. Box N9204 Facsimile No.: (242) 323-7918 Attn: With a copy to: Bryan Cave LLP 1290 Avenue of the Americas New York, NY 10104 Facsimile No.: (212) 541-4630 and (212) 541-1432 Attn: Eric L. Cohen, Esq. DWAC instructions for delivery of shares: DWAC 5029 F/O Magellan International LTD. 2132FF0 11

EXHIBIT `A' TERMS OF INDEMNIFICATION (a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold harmless the Purchaser and the officers, directors, employees and agents of the Purchaser, and each person, if any, who controls the Purchaser within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act, as amended (the "EXCHANGE ACT"), from and against any losses, claims, damages, liabilities, costs and expenses (including, without limitation, reasonable costs of defense and investigation and all attorneys' fees and expenses) to which the Purchaser and the officers, directors, employees and agents of the Purchaser, and each person, if any, who controls the Purchaser may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact contained, or incorporated by reference, in the Company Registration Statement or any amendment or supplement to the Registration Statement, or (ii) the omission or alleged omission to state in that Registration Statement a material fact required to be stated therein or necessary to make the statements therein not misleading (an "INDEMNIFIABLE MATTER"). The Company will reimburse the Purchaser and the officers, directors, employees and agents of the Purchaser and each such controlling person promptly upon demand for any legal or other costs or expenses reasonably incurred by the Purchaser and the officers, directors, employees and agents of the Purchaser or the controlling person in investigating, defending against, or preparing to defend against any claim relating to an Indemnifiable Matter, except that the Company will not be liable to the extent such claim, suit or proceeding which results in a loss, claim, damage, liability or expense arises out of, or is based upon, an untrue statement, alleged untrue statement, omission or alleged omission, included in the Supplement in reliance upon, and in conformity with, written information furnished by the Purchaser to the Company for inclusion in the Supplement. (b) CONTRIBUTION. If for any reason the indemnification provided for in this Agreement is not available to, or is not sufficient to hold harmless, an indemnified party in respect of any loss, claim, damage, liability, cost or expense referred to in Paragraph (a), each indemnifying party will, in lieu of indemnifying the indemnified party, contribute to the amount paid or payable by the indemnified party, contribute to the amount paid or payable by the indemnified party as a result of the loss, claim, damage, liability, cost or expense: (i) in the proportion which is appropriate to reflect the relative benefits received by the indemnifying party, on the one hand, and by the indemnified party, on the other hand, from the sale of stock which is the subject of the claim, action, suit or proceeding which resulted in the loss, claim, liability, cost or expense or (ii) if that allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits of the sale of stock, but also the relative fault of the indemnifying party and the indemnified party with respect to the statements or omissions which are the subject of the claim, action, suit or proceeding that resulted in the loss, claim, damage, liability, cost or expense as well as any other relevant equitable considerations. 12

Exhibit 10.46 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "AGREEMENT") is entered into as of June 4, 2003, between Applied Digital Solutions, Inc., a Missouri corporation (the "COMPANY"), and Cranshire Capital, L.P. (the "PURCHASER"). WHEREAS, the Company has registered with the Securities and Exchange Commission (the "COMMISSION") the issuance of certain shares (the "SHARES") of its common stock, $0.001 par value per share (the "COMMON STOCK"), under a registration statement on Form S-1 (Registration No. 333-102165) (the "REGISTRATION STATEMENT"). WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to sell to the Purchaser and the Purchaser desires to purchase from the Company up to four million (4,000,000) Shares currently available under the Registration Statement. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained in this Agreement and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows: 1. SETTLEMENT DATES. (a) Settlement Dates. The closing, if any, of the purchase and sale of the Shares under this Agreement will take place at the offices of Bryan Cave LLP ("BRYAN CAVE"), 1290 Avenue of the Americas, New York, New York 10104, on the settlement dates set forth below. Subject to the terms and conditions of this Agreement, the Shares will be issued, delivered and paid for on up to three settlement dates (if any). (1) The first settlement date (if any) will occur on the fourth (4th) Trading Day (as defined below) following (and including) the Press Release Date (the "FIRST SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the First Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 1,333,333 Shares (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (2) The second settlement date (if any) will occur on the seventh (7th) Trading Day following (and including) the Press Release Date (the "SECOND SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the Second Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 2,666,666 Shares less the number of any Shares purchased by the Purchaser on the First Settlement Date (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (3) The third settlement date (if any) will occur on the tenth (10th) Trading Day following (and including) the Press Release Date (the "THIRD SETTLEMENT DATE" and together with the First Settlement Date and the Second Settlement Date, collectively, a

"SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the Third Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 4,000,000 Shares less the number of any Shares purchased by the Purchaser on the First Settlement Date and the Second Settlement Date (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (b) Per Share Purchase Price; Additional Share Elections. (1) The purchase price for each Share issuable under this Agreement on a Settlement Date (the "PER SHARE PURCHASE PRICE") shall equal 87.25% of the average of the VWAP's for the three Trading Days immediately preceding such Settlement Date, but in no event less than the Floor Price (as defined below). (2) The Company is not required to sell, and the Purchaser is not required to purchase, any Shares at a price that is less than the Floor Price. If the Per Share Purchase Price with respect to a particular Settlement Date is less than the Floor Price: (a) the Purchaser may, but is not required to, require the Company to issue and sell to it up to the maximum aggregate amount of Shares to be sold hereunder (it being understood that not more than an aggregate of 4,000,000 Shares will be issued and sold under this Agreement), and (b) if Purchaser elects to acquire such Shares under (a) above, then the per share purchase price for such Shares shall equal the Floor Price. (3) At any time prior to 6:00 p.m. (New York time) on the day preceding a Settlement Date, the Purchaser may elect by written notice to the Company, to acquire (in addition to the Shares which it may be obligated to acquire at such time) up to the maximum aggregate amount of Shares to be sold hereunder (it being understood that not more than an aggregate of 4,000,000 Shares will be issued and sold under this Agreement). (4) Notwithstanding anything herein to the contrary, if the VWAP on two consecutive Settlement Dates is less than $0.42, then, at any time thereafter, Purchaser shall be entitled to terminate any and all of its obligations under this Agreement by delivery of a written notice to the Company to such effect. (5) The Purchaser is not permitted to acquire Shares hereunder to the extent that, giving effect to such proposed acquisition, the beneficial ownership of the Common Stock by the Purchaser (together with its affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Purchaser's for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), would exceed 9% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock potentially issuable upon such acquisition). Notwithstanding anything herein to the contrary, the obligations of the parties hereto is subject to the immediately preceding sentence and will be deemed automatically modified so as to avoid any contravention thereof. (c) Deliveries on each Settlement Date. Subject to the terms and conditions of this Agreement, on each Settlement Date: (x) the Company will deliver to the Purchaser, (A) via such Purchaser's DTC Account through the Depository Trust Company DWAC system, a 2

number of Shares equal to the applicable number of Shares being acquired on such Settlement Date, and (B) a certificate, executed by the President of the Company, to the effect that the Company has and is in compliance with all of the conditions set forth in Section 2, and (y) the Purchaser will, upon receipt of such Shares in the DWAC system, deliver to the Company, an amount in United States dollars equal to the product of (i) such number of Shares, and (ii) the Per Share Purchase Price applicable to such Settlement Date, via wire transfer of immediately available funds to an account designated in writing by the Company for such purpose. (d) Certain Defined Terms. As used in this Agreement, unless otherwise defined, the following terms shall have the respective meanings set forth in this Section 1(d): 1. "COMPANY REGISTRATION STATEMENT" means the Registration Statement, including the Prospectus, amendments and supplements to the Registration Statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material and exhibits incorporated by reference or deemed to be incorporated by reference in such registration statement. 2. "FLOOR PRICE" means $0.35, subject to equitable adjustment for stock splits, recombinations and similar events. 3. "PERSON" means any court or other federal, state, local or other governmental authority or other individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 4. "PRESS RELEASE DATE" means June 5, 2003; provided, that the Company shall file the press release contemplated by Section 2(d) on such date not later than 9:30 a.m. (New York time). 5. "PROSPECTUS" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Shares covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material or exhibits incorporated by reference or deemed to be incorporated by reference in the Prospectus. 6. "SECURITIES ACT" means the Securities Act of 1933, as amended. 7. "TRADING DAY" means (a) a day on which the Common Stock is traded on the Nasdaq SmallCap Market, Nasdaq National Market, New York Stock Exchange or American Stock Exchange, or (b) if the Common Stock is not listed on any of the Nasdaq SmallCap Market, Nasdaq National Market, New York Stock Exchange or American Stock Exchange, a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as 3

reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a), (b) and (c) above, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. 8. "VWAP" means on any Trading Day, the volume weighted average trading price (as reported by Bloomberg Financial L.P. using the VAP function) of the Common Stock for such Trading Day. 2. CONDITIONS. The obligation of the Purchaser to purchase and acquire Shares under this Agreement is subject to the fulfillment (or waiver by the Purchaser) of each of the following conditions: (a) The Company Registration Statement: (x) shall be effective as to all Shares, not subject to any threatened or actual stop order and (y) will not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Company shall have secured the listing of the Shares on the Nasdaq SmallCap Market (subject to official notice of issuance). (c) The representations and warranties of the Company made in this Agreement shall be true and correct as of and on each of the date of this Agreement and each Settlement Date, as if first made and restated on each such date. (d) The Company shall have issued a press release reasonably acceptable to the Purchaser, disclosing the existence of this Agreement and the material terms hereof. The Purchaser may terminate its obligation to acquire Shares under this Agreement if the Company shall not have issued such press release by 8:30 a.m. (New York time) on June 5, 2003. (e) There shall be no litigation, investigation, inquiry or proceeding pending or threatened in writing (including without limitation with the Commission, the Nasdaq Stock Market, or the NASD) that challenges or calls into the question the transactions contemplated hereby or, if determined in a manner adverse to the Company, that could reasonably be expected to result in a material and adverse effect on the Company, its business or its prospects or impose liability upon the Purchaser. (f) On the first Settlement Date, the Company shall file with the Commission a prospectus supplement to the Company Registration Statement, in agreed form, in order to evidence and disclose the offer and sale of the Shares issued hereunder (the "SUPPLEMENT"). 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes the following representations and warranties to the Purchaser: 4

(a) Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Missouri with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transactions contemplated hereby. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. (b) Authorization. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement by the Company and the consummation of the transaction contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company or its shareholders for the Company to execute and consummate this Agreement and the transactions contemplated hereby. This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, and assuming the valid execution hereof by the Purchaser, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby does not and will not: (i) conflict with or violate any provision of the Company's certificate of incorporation or bylaws (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment or acceleration (with or without notice, lapse of time or both) of, any agreement or indebtedness to which the Company is a party or by which any property or asset of the Company is bound or affected, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby or (iii) result in a violation of any law, rule, regulation, order, judgment, decree or other restriction of any court, governmental authority or stock market to which the Company or the Common Stock is subject, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. There are no notices to or approvals or consents required to be made by the Company of the NASD, any stock market, the Commission or any other Person that have not been made and obtained (and any so obtained are in full force and effect), except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. 5

(d) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with the terms hereof, will be legally issued, fully paid and nonassessable, free and clear of all liens and encumbrances. The Shares have been approved for issuance on and by the Nasdaq SmallCap Market (subject to official notice of issuance). (e) Company Registration Statement. The Company Registration Statement is effective and the Company has not received notice that the Commission has issued or intends to issue a stop order with respect to the Company Registration Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the Company Registration Statement, either temporarily or permanently, or intends or has threatened in writing to do so. The Company Registration Statement (including the information or documents incorporated by reference therein and all supplements, including the Supplement, and prospectus thereunder), at the time it was first declared effective, on the date of this Agreement, and on each Settlement Date, did not, do not and will not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Shares are registered under the Securities Act by the Company Registration Statement. (f) Listing and Maintenance Requirements. None of the offer, sale or issuance to the Purchaser of the maximum number of Shares issuable under this Agreement require any approval of the shareholders of the Company and do not violate the rules of the Nasdaq Stock Market. (g) Certain Fees. Except with respect to certain arrangements between the Company and J.P. Carey Securities Inc. with respect to the transactions contemplated by this Agreement, no fees or commissions will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchaser will have no obligation with respect to any fees incurred by the Company or any other Person or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. The Company will indemnify and hold harmless the Purchaser, its employees, officers, directors, agents, partners, and affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and reasonable attorney's fees) and expenses suffered in respect of any such claimed or existing fees incurred by the Company or any other Person, as such fees and expenses are incurred. (h) Disclosure. Neither the Company nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or may, in the Company's opinion, constitute material nonpublic information. (i) SEC Reports; Financial Statements. Except with respect to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2002 which was not timely filed, the Company has filed all reports required to be filed by it under the Exchange Act, for the twelve months preceding the date hereof (collectively, "SEC REPORTS") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC 6

Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments. 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to the Company as follows: (a) Organization; Authorization. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Purchaser or the transactions contemplated hereby. The Purchaser is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Purchaser or the transaction contemplated hereby. The Purchaser has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement by the Purchaser and the consummation by it of the transaction contemplated hereby have been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser and, when delivered in accordance with the terms hereof, and assuming the valid execution hereof by the Company, will constitute the valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) Other Agreements; Status of Purchaser. The Purchaser is not party to any agreement or arrangement with respect to a disposition of Shares other than this Agreement. The Purchaser is an accredited investor as defined in Rule 501 of the Securities Act and is not registered as a broker-dealer under the Exchange Act. 7

(c) Financial Capacity. The Purchaser has financial capacity to satisfy its obligations under this Agreement. 5. CERTAIN DISCLOSURES. The Company will not and will cause each of its affiliates and other Persons acting on behalf of the Company not to divulge to the Purchaser any information that it believes to be material non-public information unless the Purchaser has agreed in writing to receive such information prior to such divulgence. Neither the Company nor the Purchaser will issue any press release or make any other public announcement relating to this Agreement unless the form thereof is mutually agreed to by the Company and the Purchaser, or if the Company is advised in writing by its counsel that such press release or public announcement is required by law. Except with respect to the press release to be issued pursuant to Section 2(d), and other than with respect to: (i) the filing of the Supplement, and (ii) the filing of a Current Report on Form 8-K to furnish an opinion of counsel as to the legality of the Shares, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or trading market, without the prior written consent of the Purchaser, except to the extent such disclosure is required by law or trading market regulations, in which case the Company shall provide the Purchaser with prior notice of such disclosure. 6. INDEMNIFICATION. The Company will indemnify the Purchaser as provided in Exhibit "A" attached hereto against liability with respect to the Company Registration Statement (including, without limitation, the prospectus supplement) relating to the Shares sold by the Company to the Purchaser hereunder. For purposes of said Exhibit A, capitalized terms used therein without definition shall have the same meanings therein as are ascribed to said terms in this Agreement. 7. MISCELLANEOUS. (a) Fees and Expenses. Each party will pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company will pay all stamp and other taxes and duties levied in connection with the sale of the Shares. (b) Entire Agreement; Amendments. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement. This Agreement may not be modified or amended except in a writing for such purpose signed by the Company and the Purchaser. The waiver by either party hereto of any right hereunder or the failure to perform or of a breach by the other party will not be deemed a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. (c) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder must be in writing and will be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or email, (ii) the Trading Day following the date of mailing, if sent by 8

nationally recognized overnight courier service, or (iii) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications will be as follows (or such other address as may be designated in writing hereafter, in the same manner, by such Person):
If to the Company: Applied Digital Solutions, Inc. 400 Royal Palm Way, Suite 410 Palm Beach, FL 33480 Facsimile No.: (561) 805-0002 Attn: Chief Financial Officer with a copy to: Holland & Knight 701 Brickell Ave. Miami, FL 33131 Attention: Harvey Goldman, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature page hereto.

(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) will be exclusively commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each party irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder, and irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such courts are an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service will constitute good and sufficient service of process and notice thereof. Nothing contained herein will be deemed to limit in any way any right to serve process in any manner permitted by law. Each party irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding will be reimbursed by the other party for its reasonable attorneys fees and other reasonable costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 9

(e) Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will each be entitled to specific performance of the others obligations under this Agreement. In furtherance thereof, the parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any such breach and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. (f) Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. (g) Assignment. Neither party shall assign this Agreement without the prior written consent of the other party hereto. ********* 10

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed as of the date first indicated above. APPLIED DIGITAL SOLUTIONS, INC. By: Name: Title: Cranshire Capital, L.P. By: Name: Mitchell P. Kopin Title: President- Downsview Capital, Inc., The General Partner Address for Notice:

666 Dundee Road, Suite 1901 Northbrook, IL 60062 Facsimile No.: (847) 562-9031 Attn: Mitchell P. Kopin With a copy to: Bryan Cave LLP 1290 Avenue of the Americas New York, NY 10104 Facsimile No.: (212) 541-4630 and (212) 541-1432 Attn: Eric L. Cohen, Esq. DWAC instructions for delivery of shares: DWAC 5029 F/O Magellan International LTD. 2132FF0 11

EXHIBIT `A' TERMS OF INDEMNIFICATION (a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold harmless the Purchaser and the officers, directors, employees and agents of the Purchaser, and each person, if any, who controls the Purchaser within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act, as amended (the "EXCHANGE ACT"), from and against any losses, claims, damages, liabilities, costs and expenses (including, without limitation, reasonable costs of defense and investigation and all attorneys' fees and expenses) to which the Purchaser and the officers, directors, employees and agents of the Purchaser, and each person, if any, who controls the Purchaser may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact contained, or incorporated by reference, in the Company Registration Statement or any amendment or supplement to the Registration Statement, or (ii) the omission or alleged omission to state in that Registration Statement a material fact required to be stated therein or necessary to make the statements therein not misleading (an "INDEMNIFIABLE MATTER"). The Company will reimburse the Purchaser and the officers, directors, employees and agents of the Purchaser and each such controlling person promptly upon demand for any legal or other costs or expenses reasonably incurred by the Purchaser and the officers, directors, employees and agents of the Purchaser or the controlling person in investigating, defending against, or preparing to defend against any claim relating to an Indemnifiable Matter, except that the Company will not be liable to the extent such claim, suit or proceeding which results in a loss, claim, damage, liability or expense arises out of, or is based upon, an untrue statement, alleged untrue statement, omission or alleged omission, included in the Supplement in reliance upon, and in conformity with, written information furnished by the Purchaser to the Company for inclusion in the Supplement. (b) CONTRIBUTION. If for any reason the indemnification provided for in this Agreement is not available to, or is not sufficient to hold harmless, an indemnified party in respect of any loss, claim, damage, liability, cost or expense referred to in Paragraph (a), each indemnifying party will, in lieu of indemnifying the indemnified party, contribute to the amount paid or payable by the indemnified party, contribute to the amount paid or payable by the indemnified party as a result of the loss, claim, damage, liability, cost or expense: (i) in the proportion which is appropriate to reflect the relative benefits received by the indemnifying party, on the one hand, and by the indemnified party, on the other hand, from the sale of stock which is the subject of the claim, action, suit or proceeding which resulted in the loss, claim, liability, cost or expense or (ii) if that allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits of the sale of stock, but also the relative fault of the indemnifying party and the indemnified party with respect to the statements or omissions which are the subject of the claim, action, suit or proceeding that resulted in the loss, claim, damage, liability, cost or expense as well as any other relevant equitable considerations. 12

Exhibit 10.47 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "AGREEMENT") is entered into as of June 4, 2003, between Applied Digital Solutions, Inc., a Missouri corporation (the "COMPANY"), and Magellan International Ltd. (the "PURCHASER"). WHEREAS, the Company has registered with the Securities and Exchange Commission (the "COMMISSION") the issuance of certain shares (the "SHARES") of its common stock, $0.001 par value per share (the "COMMON STOCK"), under a registration statement on Form S-1 (Registration No. 333-102165) (the "REGISTRATION STATEMENT"). WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to sell to the Purchaser and the Purchaser desires to purchase from the Company up to eight million five hundred thousand (8,500,000) Shares currently available under the Registration Statement. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained in this Agreement and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows: 1. SETTLEMENT DATES. (a) Settlement Dates. The closing, if any, of the purchase and sale of the Shares under this Agreement will take place at the offices of Bryan Cave LLP ("BRYAN CAVE"), 1290 Avenue of the Americas, New York, New York 10104, on the settlement dates set forth below. Subject to the terms and conditions of this Agreement, the Shares will be issued, delivered and paid for on up to three settlement dates (if any). (1) The first settlement date (if any) will occur on the fourth (4th) Trading Day (as defined below) following (and including) the Press Release Date (the "FIRST SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the First Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 2,833,333 Shares (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (2) The second settlement date (if any) will occur on the seventh (7th) Trading Day following (and including) the Press Release Date (the "SECOND SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the Second Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 5,666,666 Shares less the number of any Shares purchased by the Purchaser on the First Settlement Date (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (3) The third settlement date (if any) will occur on the tenth (10th) Trading Day following (and including) the Press Release Date (the "THIRD SETTLEMENT DATE" and together with the First Settlement Date and the Second Settlement Date, collectively, a

"SETTLEMENT DATE"). Subject to the terms and conditions of this Agreement, on the Third Settlement Date, the Company will issue and deliver to the Purchaser and the Purchaser shall pay for 8,500,000 Shares less the number of any Shares purchased by the Purchaser on the First Settlement Date and the Second Settlement Date (subject to adjustment, at the sole option of the Purchaser, in accordance with and subject to the provisions of Sections 1(b)(2) or (3)). (b) Per Share Purchase Price; Additional Share Elections. (1) The purchase price for each Share issuable under this Agreement on a Settlement Date (the "PER SHARE PURCHASE PRICE") shall equal 87.25% of the average of the VWAP's for the three Trading Days immediately preceding such Settlement Date, but in no event less than the Floor Price (as defined below). (2) The Company is not required to sell, and the Purchaser is not required to purchase, any Shares at a price that is less than the Floor Price. If the Per Share Purchase Price with respect to a particular Settlement Date is less than the Floor Price: (a) the Purchaser may, but is not required to, require the Company to issue and sell to it up to the maximum aggregate amount of Shares to be sold hereunder (it being understood that not more than an aggregate of 8,500,000 Shares will be issued and sold under this Agreement), and (b) if Purchaser elects to acquire such Shares under (a) above, then the per share purchase price for such Shares shall equal the Floor Price. (3) At any time prior to 6:00 p.m. (New York time) on the day preceding a Settlement Date, the Purchaser may elect by written notice to the Company, to acquire (in addition to the Shares which it may be obligated to acquire at such time) up to the maximum aggregate amount of Shares to be sold hereunder (it being understood that not more than an aggregate of 8,500,000 Shares will be issued and sold under this Agreement). (4) Notwithstanding anything herein to the contrary, if the VWAP on two consecutive Settlement Dates is less than $0.42, then, at any time thereafter, Purchaser shall be entitled to terminate any and all of its obligations under this Agreement by delivery of a written notice to the Company to such effect. (5) The Purchaser is not permitted to acquire Shares hereunder to the extent that, giving effect to such proposed acquisition, the beneficial ownership of the Common Stock by the Purchaser (together with its affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Purchaser's for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), would exceed 9% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock potentially issuable upon such acquisition). Notwithstanding anything herein to the contrary, the obligations of the parties hereto is subject to the immediately preceding sentence and will be deemed automatically modified so as to avoid any contravention thereof. (c) Deliveries on each Settlement Date. Subject to the terms and conditions of this Agreement, on each Settlement Date: (x) the Company will deliver to the Purchaser, (A) via such Purchaser's DTC Account through the Depository Trust Company DWAC system, a 2

number of Shares equal to the applicable number of Shares being acquired on such Settlement Date, and (B) a certificate, executed by the President of the Company, to the effect that the Company has and is in compliance with all of the conditions set forth in Section 2, and (y) the Purchaser will, upon receipt of such Shares in the DWAC system, deliver to the Company, an amount in United States dollars equal to the product of (i) such number of Shares, and (ii) the Per Share Purchase Price applicable to such Settlement Date, via wire transfer of immediately available funds to an account designated in writing by the Company for such purpose. (d) Certain Defined Terms. As used in this Agreement, unless otherwise defined, the following terms shall have the respective meanings set forth in this Section 1(d): 1. "COMPANY REGISTRATION STATEMENT" means the Registration Statement, including the Prospectus, amendments and supplements to the Registration Statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material and exhibits incorporated by reference or deemed to be incorporated by reference in such registration statement. 2. "FLOOR PRICE" means $0.35, subject to equitable adjustment for stock splits, recombinations and similar events. 3. "PERSON" means any court or other federal, state, local or other governmental authority or other individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 4. "PRESS RELEASE DATE" means June 5, 2003; provided, that the Company shall file the press release contemplated by Section 2(d) on such date not later than 9:30 a.m. (New York time). 5. "PROSPECTUS" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Shares covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material or exhibits incorporated by reference or deemed to be incorporated by reference in the Prospectus. 6. "SECURITIES ACT" means the Securities Act of 1933, as amended. 7. "TRADING DAY" means (a) a day on which the Common Stock is traded on the Nasdaq SmallCap Market, Nasdaq National Market, New York Stock Exchange or American Stock Exchange, or (b) if the Common Stock is not listed on any of the Nasdaq SmallCap Market, Nasdaq National Market, New York Stock Exchange or American Stock Exchange, a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as 3

reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a), (b) and (c) above, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. 8. "VWAP" means on any Trading Day, the volume weighted average trading price (as reported by Bloomberg Financial L.P. using the VAP function) of the Common Stock for such Trading Day. 2. CONDITIONS. The obligation of the Purchaser to purchase and acquire Shares under this Agreement is subject to the fulfillment (or waiver by the Purchaser) of each of the following conditions: (a) The Company Registration Statement: (x) shall be effective as to all Shares, not subject to any threatened or actual stop order and (y) will not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Company shall have secured the listing of the Shares on the Nasdaq SmallCap Market (subject to official notice of issuance). (c) The representations and warranties of the Company made in this Agreement shall be true and correct as of and on each of the date of this Agreement and each Settlement Date, as if first made and restated on each such date. (d) The Company shall have issued a press release reasonably acceptable to the Purchaser, disclosing the existence of this Agreement and the material terms hereof. The Purchaser may terminate its obligation to acquire Shares under this Agreement if the Company shall not have issued such press release by 8:30 a.m. (New York time) on June 5, 2003. (e) There shall be no litigation, investigation, inquiry or proceeding pending or threatened in writing (including without limitation with the Commission, the Nasdaq Stock Market, or the NASD) that challenges or calls into the question the transactions contemplated hereby or, if determined in a manner adverse to the Company, that could reasonably be expected to result in a material and adverse effect on the Company, its business or its prospects or impose liability upon the Purchaser. (f) On the first Settlement Date, the Company shall file with the Commission a prospectus supplement to the Company Registration Statement, in agreed form, in order to evidence and disclose the offer and sale of the Shares issued hereunder (the "SUPPLEMENT"). 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes the following representations and warranties to the Purchaser: 4

(a) Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Missouri with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transactions contemplated hereby. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. (b) Authorization. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement by the Company and the consummation of the transaction contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company or its shareholders for the Company to execute and consummate this Agreement and the transactions contemplated hereby. This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, and assuming the valid execution hereof by the Purchaser, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby does not and will not: (i) conflict with or violate any provision of the Company's certificate of incorporation or bylaws (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment or acceleration (with or without notice, lapse of time or both) of, any agreement or indebtedness to which the Company is a party or by which any property or asset of the Company is bound or affected, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby or (iii) result in a violation of any law, rule, regulation, order, judgment, decree or other restriction of any court, governmental authority or stock market to which the Company or the Common Stock is subject, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. There are no notices to or approvals or consents required to be made by the Company of the NASD, any stock market, the Commission or any other Person that have not been made and obtained (and any so obtained are in full force and effect), except where the failure to do so would not reasonably be expected to have a material adverse effect on the Company or the transaction contemplated hereby. 5

(d) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with the terms hereof, will be legally issued, fully paid and nonassessable, free and clear of all liens and encumbrances. The Shares have been approved for issuance on and by the Nasdaq SmallCap Market (subject to official notice of issuance). (e) Company Registration Statement. The Company Registration Statement is effective and the Company has not received notice that the Commission has issued or intends to issue a stop order with respect to the Company Registration Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the Company Registration Statement, either temporarily or permanently, or intends or has threatened in writing to do so. The Company Registration Statement (including the information or documents incorporated by reference therein and all supplements, including the Supplement, and prospectus thereunder), at the time it was first declared effective, on the date of this Agreement, and on each Settlement Date, did not, do not and will not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Shares are registered under the Securities Act by the Company Registration Statement. (f) Listing and Maintenance Requirements. None of the offer, sale or issuance to the Purchaser of the maximum number of Shares issuable under this Agreement require any approval of the shareholders of the Company and do not violate the rules of the Nasdaq Stock Market. (g) Certain Fees. Except with respect to certain arrangements between the Company and J.P. Carey Securities Inc. with respect to the transactions contemplated by this Agreement, no fees or commissions will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchaser will have no obligation with respect to any fees incurred by the Company or any other Person or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. The Company will indemnify and hold harmless the Purchaser, its employees, officers, directors, agents, partners, and affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and reasonable attorney's fees) and expenses suffered in respect of any such claimed or existing fees incurred by the Company or any other Person, as such fees and expenses are incurred. (h) Disclosure. Neither the Company nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or may, in the Company's opinion, constitute material nonpublic information. (i) SEC Reports; Financial Statements. Except with respect to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2002 which was not timely filed, the Company has filed all reports required to be filed by it under the Exchange Act, for the twelve months preceding the date hereof (collectively, "SEC REPORTS") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC 6

Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments. 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to the Company as follows: (a) Organization; Authorization. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Purchaser or the transactions contemplated hereby. The Purchaser is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to do so would not reasonably be expected to have a material adverse effect on the Purchaser or the transaction contemplated hereby. The Purchaser has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement by the Purchaser and the consummation by it of the transaction contemplated hereby have been duly authorized by all necessary action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser and, when delivered in accordance with the terms hereof, and assuming the valid execution hereof by the Company, will constitute the valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) Other Agreements; Status of Purchaser. The Purchaser is not party to any agreement or arrangement with respect to a disposition of Shares other than this Agreement. The Purchaser is an accredited investor as defined in Rule 501 of the Securities Act and is not registered as a broker-dealer under the Exchange Act. 7

(c) Financial Capacity. The Purchaser has financial capacity to satisfy its obligations under this Agreement. 5. CERTAIN DISCLOSURES. The Company will not and will cause each of its affiliates and other Persons acting on behalf of the Company not to divulge to the Purchaser any information that it believes to be material non-public information unless the Purchaser has agreed in writing to receive such information prior to such divulgence. Neither the Company nor the Purchaser will issue any press release or make any other public announcement relating to this Agreement unless the form thereof is mutually agreed to by the Company and the Purchaser, or if the Company is advised in writing by its counsel that such press release or public announcement is required by law. Except with respect to the press release to be issued pursuant to Section 2(d), and other than with respect to: (i) the filing of the Supplement, and (ii) the filing of a Current Report on Form 8-K to furnish an opinion of counsel as to the legality of the Shares, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or trading market, without the prior written consent of the Purchaser, except to the extent such disclosure is required by law or trading market regulations, in which case the Company shall provide the Purchaser with prior notice of such disclosure. 6. INDEMNIFICATION. The Company will indemnify the Purchaser as provided in Exhibit "A" attached hereto against liability with respect to the Company Registration Statement (including, without limitation, the prospectus supplement) relating to the Shares sold by the Company to the Purchaser hereunder. For purposes of said Exhibit A, capitalized terms used therein without definition shall have the same meanings therein as are ascribed to said terms in this Agreement. 7. MISCELLANEOUS. (a) Fees and Expenses. Each party will pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company will pay all stamp and other taxes and duties levied in connection with the sale of the Shares. (b) Entire Agreement; Amendments. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement. This Agreement may not be modified or amended except in a writing for such purpose signed by the Company and the Purchaser. The waiver by either party hereto of any right hereunder or the failure to perform or of a breach by the other party will not be deemed a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. (c) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder must be in writing and will be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or email, (ii) the Trading Day following the date of mailing, if sent by 8

nationally recognized overnight courier service, or (iii) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications will be as follows (or such other address as may be designated in writing hereafter, in the same manner, by such Person):
If to the Company: Applied Digital Solutions, Inc. 400 Royal Palm Way, Suite 410 Palm Beach, FL 33480 Facsimile No.: (561) 805-0002 Attn: Chief Financial Officer with a copy to: Holland & Knight 701 Brickell Ave. Miami, FL 33131 Attention: Harvey Goldman, Esq. If to the Purchaser: To the address set forth under the Purchaser's name on the signature page hereto.

(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) will be exclusively commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each party irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder, and irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such courts are an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service will constitute good and sufficient service of process and notice thereof. Nothing contained herein will be deemed to limit in any way any right to serve process in any manner permitted by law. Each party irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding will be reimbursed by the other party for its reasonable attorneys fees and other reasonable costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 9

(e) Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will each be entitled to specific performance of the others obligations under this Agreement. In furtherance thereof, the parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any such breach and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. (f) Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. (g) Assignment. Neither party shall assign this Agreement without the prior written consent of the other party hereto. ********* 10

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed as of the date first indicated above. APPLIED DIGITAL SOLUTIONS, INC. By: Name: Title: MAGELLAN INTERNATIONAL LTD. By: Name: Deirdre M. McCoy Title: Authorized Signatory Address for Notice:

Charlotte House Charlotte Street Nassau, Bahamas P.O. Box N9204 Facsimile No.: (242) 323-7918 Attn: With a copy to: Bryan Cave LLP 1290 Avenue of the Americas New York, NY 10104 Facsimile No.: (212) 541-4630 and (212) 541-1432 Attn: Eric L. Cohen, Esq. DWAC instructions for delivery of shares: DWAC 5029 F/O Magellan International LTD. 2132FF0 11

EXHIBIT `A' TERMS OF INDEMNIFICATION (a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold harmless the Purchaser and the officers, directors, employees and agents of the Purchaser, and each person, if any, who controls the Purchaser within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act, as amended (the "EXCHANGE ACT"), from and against any losses, claims, damages, liabilities, costs and expenses (including, without limitation, reasonable costs of defense and investigation and all attorneys' fees and expenses) to which the Purchaser and the officers, directors, employees and agents of the Purchaser, and each person, if any, who controls the Purchaser may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact contained, or incorporated by reference, in the Company Registration Statement or any amendment or supplement to the Registration Statement, or (ii) the omission or alleged omission to state in that Registration Statement a material fact required to be stated therein or necessary to make the statements therein not misleading (an "INDEMNIFIABLE MATTER"). The Company will reimburse the Purchaser and the officers, directors, employees and agents of the Purchaser and each such controlling person promptly upon demand for any legal or other costs or expenses reasonably incurred by the Purchaser and the officers, directors, employees and agents of the Purchaser or the controlling person in investigating, defending against, or preparing to defend against any claim relating to an Indemnifiable Matter, except that the Company will not be liable to the extent such claim, suit or proceeding which results in a loss, claim, damage, liability or expense arises out of, or is based upon, an untrue statement, alleged untrue statement, omission or alleged omission, included in the Supplement in reliance upon, and in conformity with, written information furnished by the Purchaser to the Company for inclusion in the Supplement. (b) CONTRIBUTION. If for any reason the indemnification provided for in this Agreement is not available to, or is not sufficient to hold harmless, an indemnified party in respect of any loss, claim, damage, liability, cost or expense referred to in Paragraph (a), each indemnifying party will, in lieu of indemnifying the indemnified party, contribute to the amount paid or payable by the indemnified party, contribute to the amount paid or payable by the indemnified party as a result of the loss, claim, damage, liability, cost or expense: (i) in the proportion which is appropriate to reflect the relative benefits received by the indemnifying party, on the one hand, and by the indemnified party, on the other hand, from the sale of stock which is the subject of the claim, action, suit or proceeding which resulted in the loss, claim, liability, cost or expense or (ii) if that allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits of the sale of stock, but also the relative fault of the indemnifying party and the indemnified party with respect to the statements or omissions which are the subject of the claim, action, suit or proceeding that resulted in the loss, claim, damage, liability, cost or expense as well as any other relevant equitable considerations. 12

Exhibit 10.48 USPS Contract

ORDER/SOLICITATION/OFFER/AWARD --------------------------------------------------------------------------------------------------------1. REQUISITION NO. OFFEROR TO COMPLETE BLOCKS 13, 14, 16, 18, 23, 24 AND 28 03-13188 --------------------------------------------------------------------------------------------------------2. CONTRACT/ORDER NO. 3. AWARD/EFFECTIVE DATE 4. MASTER/AGENCY CONTRACT NO. 5. SOLICITATION NO. 6 3AABRD-03-P-6080 06/16/2003 3AAERD-03-A-1200 --------------------------------------------------------------------------------------------------------7. FOR SOLICITATION a. NAME b. TELEPHONE NO. c. FAX NO. 8 INFORMATION CALL Thomas Fallon (703) 280-7934 (703) 280-8428 --------------------------------------------------------------------------------------------------------9. ISSUED BY: 10. ACO 11. SOLICITATION 12. DELIVERY FOR FOB 1 U.S. POSTAL SERVICE CODE METHOD DESTINATION AUTOMATION CMC UNLESS BLOCK IS 8403 LEE HIGHWAY DEWEY BLDG 3AABRD / / RFQ CHECKED MERRIFIELD VA 22082-8150 /X/ RFP EMAIL: tfallon@email.usps.gov / / ORAL / / SEE SCHEDULE --------------------------------------------------------------------------------------------------------14a. SUPPLIER 15a. BILLING ADDRESS Government Telecommunications, Inc. Thomas Cuneo 4500 Southgate Place U.S. POSTAL SERVICE Suite 300 TECH. ACQ. MGT. - LINDA HUNT Chantilly VA 20151 8403 LEE HIGHWAY DEWEY BLDG MERRIFIELD VA 22082-8148 TEL: (703) 631-5155 FAX: EMAIL: --------------------------------------------------------------------------------------------------------14b. / / CHECK BOX IF REMITTANCE IS DIFFERENT 15b. SUBMIT INVOICES TO ADDRESS SHOWN IN B AND PUT SUCH ADDRESS IN OFFER UNLESS BLOCK IS CHECKED / / SEE ADDE --------------------------------------------------------------------------------------------------------16. TYPE OF BUSINESS ORGANIZATION (Check all that apply) 17a. DELIVERY ADDRESS WOMAN-OWNED See Part 1 SMALL BUSINESS EDUCATIONAL INSTITUTION NON-PROFIT ORGANIZATION MERRIFIELD VA 22082-8148 NONE OF THE ABOVE ENTITIES 17b. TELEPHONE NO.: -------------------------------------------------------------18. TAXPAYER IDENTIFICATION NO.: 52-1467966 17c. DELIVER BY/END DATE: --------------------------------------------------------------------------------------------------------19. 20. 21. 22. 23. ITEM NO. SCHEDULE OF SUPPLIES/SERVICES QUANTITY UNIT UNIT PRIC --------------------------------------------------------------------------------------------------------0001 MPI Structured Wiring 1,000 DO $15,000,000 Installation. The contractor shall design, install, and test a structured wiring system as directed in task orders in accordance with the unit priced schedule on page 3-1. a. / / / / / / / / / / MINORITY BUSINESS BLACK AMERICAN HISPANIC AMERICAN NATIVE AMERICAN ASIAN AMERICAN b. c. d. e. f. / / /X/ / / / / / /

--------------------------------------------------------------------------------------------------------25. TOTAL AWARD AMOUNT (USPS Use Only) --------------------------------------------------------------------------------------------------------26. / / The supplier is required to sign this document and 27. /X/ Award of Contract: Your offer on return ___ copies to the issuing office. The supplier (block 5) is accepted as to items See agrees, subject to the terms and conditions specified --herein, to provide and deliver all items identified above and on any additional sheets. --------------------------------------------------------------------------------------------------------28a. SIGNATURE OF SUPPLIER 29a. UNITED STATES POSTAL SERVICE (SIGNAT OFFICER) /s/ Thomas M. Cuneo /s/ Robert D. D'Orso --------------------------------------------------------------------------------------------------------28b. PRINTED NAME AND TITLE OF SUPPLIER 28c. DATE SIGNED 29b. PRINTED NAME OF CONTRACTING OFFICER Thomas M. Cuneo, Vice President 6/13/03 Robert D. D'Orso C.P.M. --------------------------------------------------------------------------------------------------------PS FORM 8203 (MARCH 2002)

AWARD DATA SHEET CONTRACT 3AAERD-03-P-6080 The parties agree that the contractor's offer on Solicitation 3AAERD-03-A-1200 includes all Amendments 001 through 005 and included the following additional modifications: A. ADDED CLAUSES CLAUSE B-26 PROTECTION OF POSTAL SERVICE BUILDINGS, EQUIPMENT, AND VEGETATION (JANUARY 1997) The supplier must use reasonable care to avoid damaging buildings, equipment, and vegetation (such as trees, shrubs, and grass) on the Postal Service installation. If the supplier fails to do so and damages any buildings, equipment, or vegetation, the supplier must replace or repair the damage at no expense to the Postal Service, as directed by the contracting officer. If the supplier fails or refuses to make repair or replacement, the supplier will be liable for the cost of repair or replacement, which may be deducted from the contract price. CLAUSE B-27 PERFORMANCE AT OCCUPIED POSTAL PREMISES (JANUARY 1997) a. In performing this contract, the supplier must: (1) Comply with applicable Occupational Safety and Health Standards (29 CFR 1910) promulgated pursuant to the authority of the Occupational Safety and Health Act of 1970; (2) Comply with any other applicable federal, state, or local regulations governing work-place safety to the extent they do no conflict with a.1 above; and (3) Take all other proper precautions to protect the safety and health of the supplier's employees, Postal Service employees, and the public. b. The supplier must coordinate its use of the premises with the installation head or other representative designated by the contracting officer. Subjects of this coordination include the designation of work and storage areas; the extent, if any, of use by the supplier of Postal Service tools and equipment; the furnishing by the supplier of appropriate signs and barricades to exclude unauthorized personnel from the work areas and to call attention to hazards and dangers; and other matters relating to the protection of Postal Service employees and property. CLAUSE 7-4 INSURANCE (JANUARY 1997) a. During the term of this contract and any extension, the supplier must maintain at its own expense the insurance required by this clause. Insurance companies must be acceptable to the Postal Service. Policies must include all terms and provisions required by the Postal Service. Page 1 of 3

b. The supplier must maintain and furnish evidence of workers' compensation, employers' liability insurance, and the following general public liability and automobile liability insurance:
Bodily Property Damage Injury ---------------------------------------------$100,000 Per occurrence (as set forth in per person* the Schedule) $500,000 Aggregate (as set forth in the per Schedule) accident* $100,000 $10,000 per occurrence per person* $500,000 $10,000 aggregate* per accident*

General Liability

Automobile Liability

*Unless modified in the Schedule c. Each policy must include substantially the following provision: "It is a condition of this policy that the company furnish written notice to the U.S. Postal Service 30 days in advance of the effective date of any reduction in or cancellation of this policy." b. The supplier must furnish a certificate of insurance or, if required by the contracting officer, true copies of liability policies and manually countersigned endorsements of any changes. Insurance must be effective, and evidence of acceptable insurance furnished, before beginning performance under this contract. Evidence of renewal must be furnished not later than five days before a policy expires. c. The maintenance of insurance coverage as required by this clause is a continuing obligation, and the lapse or termination of insurance coverage without replacement coverage being obtained will be ground for termination for default: CLAUSE 6-1 CONTRACTING OFFICER'S REPRESENTATIVE (JANUARY 1997) The contracting officer will appoint a contracting officer's representative (COR), responsible for the day-to-day administration of the contract, who will serve as the Postal Service's point of contact with the supplier on all routine technical and program management matters. The COR will be authorized to issue and approve task orders under this contract in addition to the usual responsibilities and authorities of the COR. The COR for this contract is Linda Hunt, Technology Acquisition Management. She can be contacted as follows: 8403 Lee Highway (Dewey) Merrifield, Virginia 22082-8148 (703) 280-7878 B. REVISED DELIVERY SCHEDULE The parties agree to replace Appendix A of the SOW with the attached delivery schedule. Page 2 of 3

C. LINE ITEMS INCLUDED IN THE AWARD The Postal Service accepts the contractor's final offer only on items relating to Category Six wiring. That is to say the funded contract award is only for items 0142-0282. The Postal Service also includes Option Items for Category Six wiring in the contract but is not yet exercising these Option items identified in Items 0424-0564. The Postal Service hereby accepts Items 0565-0577 for inclusion in the contract. These items will be in effect throughout the term of the contract, including the additional term for any option items. The Contract Line Item schedule attached reflects the above changes. D. SOW CHANGE The last line of paragraph 1 of Section A.7 of the SOW has changed. There are no other changes except as may have been in Amendments to the RFP. Replace the SOW with Attachment Three to this Award Data Sheet. E. ATTACHMENTS 1. Revised Line Item Schedule, Pages 3-1 -- 3-8 2. Revised Final Delivery Schedule, Two Pages 3. Revised SOW Page 3 of 3

PAGE OF PAGES U.S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION 1 1 1. MODIFICATION NO. M 005 CONTRACT/ORDER/AGREEMENT: 3AAERD-03-P-6080
2. a. DATE ISSUED: 09/25/2003 b. PR NO.: 03-26396 c. FINANCE NO.: 660794 d. TIN/SSN: 52-1467966 ------------------------------------------------------------------------------3. SUPPLIER: 4. ISSUED BY: Government Telecommunications Inc. U.S. POSTAL SERVICE 4500 Southgate Place AUTOMATION CMC Suite 300 8403 LEE HIGHWAY DEWEY BLDG Chantilly VA 20151 MERRIFIELD VA 22082-8150 ATTENTION: Bill Leonard (703) 631-5155 FOR INFORMATION CALL: [OMITTED FOR CONFIDENTIALITY]

ACO CODE: 3AAERD -------------------------------------------------------------------------------

5. The above numbered contract/order/agreement is modified as set forth in Block 6, by modification issued pursuant to authority of the Changes clause. 6. DESCRIPTION OF MODIFICATION: This modification directs the attached changes to the SOW affecting paragraph B.5. and Attachment B-3. It also adds the requirement to install an MPI Network at the Engineering Center in Merrifield, VA. This work is funded under Finance Number 66-0007, PCN 3900.34. USPS 1.013.00 RECEIVED 10/6/03 Except as provided herein, all terms and conditions of the document referenced in Block 1, as heretofore changed, remain unchanged and in full force and effect.
7. ACCOUNTS PAYABLE DATA / / is not, /X/ is changed, see

Previous Grand Total: $15,000,000.00 Value of Modification: $1,611,467.00 New Grand Total: $16,611,467.00 ------------------------------------------------------------------------------The supplier /X/ is not / / is required to sign and return an original and copy(ies) of this modification to the Issuing Office (See Block 4). ------------------------------------------------------------------------------8. SIGNATURES: SUPPLIER U.S. POSTAL SERVICE [OMITTED FOR CONFIDENTIALITY] 9/25/03 ----------------------------- -------Signature Date [OMITTED FOR CONFIDENTIALITY] -------------------------------------Contracting Officer

----------------------------Signature

-------Date

--------------------------------------Name of Person Authorized to Sign

-------------------------------------Title -------------------------------------------------------------------------------

------------------------------------------------------------------------------PAGE OF PAGES

U.S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION 1 1 1. MODIFICATION NO. M 006 CONTRACT/ORDER/AGREEMENT: 3AAERD-03-P-6080
2. a. DATE ISSUED: 10/28/2003 b. PR NO.: 04-01546 c. FINANCE NO.: 660794 d. TIN/SSN: 52-1467966 ------------------------------------------------------------------------------3. SUPPLIER: 4. ISSUED BY: Government Telecommunications Inc. U.S. POSTAL SERVICE 4500 Southgate Place AUTOMATION CMC Suite 300 8403 LEE HIGHWAY DEWEY BLDG Chantilly VA 20151 MERRIFIELD VA 22082-8150 ATTENTION: Thomas Cuneo (703) 631-5155 FOR INFORMATION CALL: [OMITTED FOR CONFIDENTIALITY]

ACO CODE: 3AAERD -------------------------------------------------------------------------------

5. The above numbered contract/order/agreement is modified as set forth in Block 6, by supplemental agreement entered into pursuant to authority of mutual agreement of the parties. 6. DESCRIPTION OF MODIFICATION: This modification definitizes previously unpriced line items, makes changes to the SOW, and changes the payment terms. In Block 13 of the PS Form 8203 change the contents to read "1/2 percent 15, Net 30." Replace the Contract Line Item Schedule with the attached. Replace the existing SOW with the attached Revision 2.0. Except as provided herein, all terms and conditions of the document referenced in Block 1, as heretofore changed, remain unchanged and in full force and effect.
7. ACCOUNTS PAYABLE DATA /X/ is not, / / is changed, see

Previous Grand Total: $1,611,467.00 Value of Modification: $0.00 New Grand Total: $1,611,467.00 -------------------------------------------------------------------------------

The supplier / / is not /X/ is required to sign and return an original and 1 copy(ies) of this modification to the Issuing Office (See Block 4).
8. SIGNATURES: SUPPLIER /s/ Judith McCune ----------------------------Signature 10/29/03 -------Date U.S. POSTAL SERVICE [OMITTED FOR CONFIDENTIALITY] 10/29/03 ----------------------------- -------Signature Date [OMITTED FOR CONFIDENTIALITY] -------------------------------------Contracting Officer

Judith McCune --------------------------------------Name of Person Authorized to Sign V.P. Operations --------------------------------------Title

-------------------------------------------------------------------------------

------------------------------------------------------------------------------PAGE OF PAGES

CONTRACT/ORDER MODIFICATION DESCRIPTION - CONTINUATION 2 2 1. MODIFICATION NO. M 007 CONTRACT/ORDER/AGREEMENT: 3AAERD-03-P-6080 6. DESCRIPTION OF MODIFICATION: All wiring shall be installed under the raised floor by use of consolidation points at the USPS Engineering Building. All wiring at the Dewey Building shall be installed above the existing suspended ceiling. This work is funded under Finance Number 66-0007. Correct the PCN in Modification 005 to read 3910.20. The definitized firm fixed price for this work is $1,558,889. See attached revision to the Contract Line Item Schedule incorporating the definitized items.

PAGE OF PAGES U.S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION 1 2 1. MODIFICATION NO. M 007 CONTRACT/ORDER/AGREEMENT: 3AAERD-03-P-6080
2. a. DATE ISSUED: 11/05/2003 b. PR NO.: 04-02284 c. FINANCE NO.: 660794 d. TIN/SSN: 52-1467966 ------------------------------------------------------------------------------3. SUPPLIER: 4. ISSUED BY: Government Telecommunications Inc. U.S. POSTAL SERVICE 4500 Southgate Place AUTOMATION CMC Suite 300 8403 LEE HIGHWAY DEWEY BLDG Chantilly VA 20151 MERRIFIELD VA 22082-8150 ATTENTION: Bill Leonard (703) 631-5155 FOR INFORMATION CALL: [OMITTED FOR CONFIDENTIALITY]

ACO CODE: 3AAERD -------------------------------------------------------------------------------

5. The above numbered contract/order/agreement is modified as set forth in Block 6, by supplemental agreement entered into pursuant to authority of the Changes clause. 6. DESCRIPTION OF MODIFICATION: The purpose of this modification is to definitize Modification 005 for the design, engineering, installation and test of an infrastructure replacement of the local area network wiring system supporting the Engineering and Dewey Buildings at the Merrifield USPS facility, in accordance with GTI Quotes GTI031016Rev2 and GTI031017Rev2. Work shall commence on November 10, 2003 and shall be completed not later than January 31, 2004. Work may be performed during the blackout period, although otherwise prohibited by the contract, because these facilities are not mail processing facilities. Work shall involve multiple shifts in order to minimize disruption to USPS personnel and their mission. Except as provided herein, all terms and conditions of the document referenced in Block 1, as heretofore changed, remain unchanged and in full force and effect.
7. ACCOUNTS PAYABLE DATA | | is not, |X| is changed, see

Previous Grand Total: $16,611,467.00 Value of Modification: -$52,578.00 New Grand Total: $16,558,889.00 -------------------------------------------------------------------------------

The supplier | | is not |X| is required to sign and return an original and 1 copy(ies) of this modification to the Issuing Office (See Block 4).
8. SIGNATURES: SUPPLIER U.S. POSTAL SERVICE

/s/ Judith McCune 11/6/03 ------------------------- ---------Signature Date Judith McCune -----------------------------------Name of Person Authorized to Sign V.P. Operations -----------------------------------Title

/s/ Robert P. D'Orso C.P.M. 11/6/03 ------------------------------- -------Signature Date Robert P. D'Orso C.P.M. ---------------------------------------Contracting Officer

-------------------------------------------------------------------------------

------------------------------------------------------------------------------PAGE OF PAGES

U.S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION 1 1 1. MODIFICATION NO. M 008 CONTRACT/ORDER/AGREEMENT: 3AAERD-03-P-6080
2. a. DATE ISSUED: 11/20/2003 b. PR NO.: 04-03276 c. FINANCE NO.: 670040 d. TIN/SSN: 52-1467966 ------------------------------------------------------------------------------3. SUPPLIER: 4. ISSUED BY: Government Telecommunications Inc. U.S. POSTAL SERVICE 4500 Southgate Place AUTOMATION CMC Suite 300 8403 LEE HIGHWAY DEWEY BLDG Chantilly VA 20151 MERRIFIELD VA 22082-8150 ATTENTION: Bill Leonard (703) 631-5155 FOR INFORMATION CALL: [OMITTED FOR CONFIDENTIALITY]

RECEIVED 11/20/03 USPS3.063.00 ACO CODE: 3AAERD -------------------------------------------------------------------------------

5. The above numbered contract/order/agreement is modified as set forth in Block 6, by modification issued pursuant to authority of the Changes clause. 6. DESCRIPTION OF MODIFICATION: This modification adds the requirement for the W.F. Bolger Leadership Development Center to the MPI contract. The contractor shall begin work immediately and the work will be completed within 10 weeks of the execution date of this modification as proposed by the contractor in the attached proposal. The prices for elements of the work not already on the MPI contract remain undefinitized, and these additional line items shall be definitized within 30 days of receipt of this modification. The Finance Number for this action is 67-0040, PCN: 3600.10. Attachment: Contractor's proposal, two pages. Except as provided herein, all terms and conditions of the document referenced in Block 1, as heretofore changed, remain unchanged and in full force and effect.
7. ACCOUNTS PAYABLE DATA | | is not, |X| is changed, see

Previous Grand Total: $16,558,889.00 Value of Modification: $2,257,531.00 New Grand Total: $18,816,420.00 -------------------------------------------------------------------------------

The supplier |X| is not | | is required to sign and return an original and copy(ies) of this modification to the Issuing Office (See Block 4).
8. SIGNATURES: SUPPLIER U.S. POSTAL SERVICE

------------------------- ---------Signature Date

/s/ Mark Guilfoil ------------------------Signature

NOV. 20, 2003 ------------Date

------------------------------------

Mark Guilfoil ----------------------------------------

Name of Person Authorized to Sign Contracting Officer Title

USDA - Nationwide Maint. Contract

THIS NUMBER MUST APPEAR ON ALL INVOICES, UNITED STATES DEPARTMENT OF AGRICULTURE PACKAGES, AND PAPERS RELATING PURCHASE ORDER TO THIS ORDER ------------------------------------------------------------------------------PAGE NO. CONTRACT NUMBER ORDER DATE ORDER NUMBER SUB. 1 OF 1 GS00T97NSD0112 05/21/03 43-3151-3-8117 -------------------------------------------------------------------------------

TYPE PURCHASE (Check one) SELLER'S IDENT. NO. FORM 1099 TAXPAYER'S IDE | | PURCHASE ORDER |X| DELIVERY ORDER TIN 52 1467966 | | NO | | YES (See reverse) --------------------------------------------------------------------------------------------------------TO: (Seller's Name, Address, City, State, Zip Code, and Phone No.) Consignee, Address, Zip Code, and and Acceptance Government Telecommunications, Inc. SHIP USDA/FSA/KCITSIO/TD VID 52 1467966A TO 6501 BEACON DRIVE 4500 Southgate Place Suite 300 KANSAS CITY MO 64133-4675 Chantilly VA 20151-1720 Attn: Bill Leonard 571-323-1312 --------------------------------------------------------------------------------------------------------LINE ACT UNIT ITEM CODE DESCRIPTION QUANTITY ISSUE --------------------------------------------------------------------------------------------------------01 Maintenance and support services for the USDA Partner S 4 mos Agency Telephone Systems for the period June 1, 2003, E through September 30, 2003, in accordance with the L attached Statement of Work (pages 1 through 17), the L contractor's proposal dated March 3, 2003, and E April 16, 2003, as amended. Note: Sections L and M R have been removed from the attached Statement of Work. ' S TA# 03-0206 O R COR Appointment: I [OMITTED FOR CONFIDENTIALITY] G I N CONTRACT SPECIALIST: [OMITTED FOR CONFIDENTIALITY] A L ----------------------------------------------------------------------------------------------------THIS PURCHASE ORDER NEGOTIATED PURSUANT TO AUTHORITY OF 41 U.S.C. 252(c)( ). --------------------------------------------------------------------------------------------------------F.O.B. POINT DISCOUNT AND/OR NET PAYMENT TERMS Destination Net 30 --------------------------------------------------------------------------------------------------------DELIVER TO F.O.B. POINT ON OR BEFORE (Date) SHIP VIA September 30, 2003 Best way ---------------------------------------------------------------------------------------------------------

DO NOT SHIP ORDER TO THIS ADDRESS (SHIP TO CONSIGNEE ADDRESS ABOVE) ------------------

BILLING INSTRUCTIONS: NO BILLING WILL BE SUBMITTED IN ADVANCE OF SHIPMENT Furnish Invoice With Our ORDER NUMBER To: [OMITTED FOR CONFIDENTIALITY]

FAILURE TO SHOW OUR PURCHASE ORDER NUMBER ON INVOICE WILL DELAY PAYMENT FREIGHT CHARGE OVER $100 REQUIRES BILL OF LADING IF AVAILABLE, INCLUDE YOUR NINE POSITION DUNS NUMBER ON EACH INVOICE
------------------------------------------------------------------------------ISSUING OFFICE NAME AND ADDRESS ORDERED BY (Name and Title) USDA/FSA/MSD/AMB/SPS 1400 Independence Ave SW Stop 0567 Washington DC 20250-0567 [OMITTED FOR CONFIDENTIALITY] -------------------------------------COMMERCIAL PHONE (Area Code and Number)

[OMITTED FOR CONFIDENTIALITY] -------------------------------------AUTHORIZED SIGNATURE [OMITTED FOR CONFIDENTIALITY]

SELLER'S ORIGINAL FORM AD-838-5PE (Rev. 7/90)

53000 USDA3.001 THIS NUMBER MUST APPEAR ON ALL INVOICES, UNITED STATES DEPARTMENT OF AGRICULTURE PACKAGES, AND PAPERS RELATING PURCHASE ORDER TO THIS ORDER ------------------------------------------------------------------------------PAGE NO. CONTRACT NUMBER ORDER DATE ORDER NUMBER SUB. 1 OF 1 GS00T97NSD0112 06/02/03 43-3151-3-8117 01 -------------------------------------------------------------------------------

TYPE PURCHASE (Check one) SELLER'S IDENT. NO. FORM 1099 TAXPAYER'S IDE | | PURCHASE ORDER |X| DELIVERY ORDER TIN 52 146 7966 | | NO | | YES (See Reverse) --------------------------------------------------------------------------------------------------------TO: (Seller's Name, Address, City, State, Zip Code, and Phone No.) Consignee, Address, Zip Code, and and Acceptance Government Telecommunications, Inc. SHIP USDA/FSA/KCITSIO/TD VID 52 146 7966A TO 6501 BEACON DRIVE 4500 Southgate Place Suite 300 KANSAS CITY MO 64133-4675 Chantilly VA 20151-1720 Attn: Bill Leonard 571-323-1312 --------------------------------------------------------------------------------------------------------LINE ACT UNIT ITEM CODE DESCRIPTION QUANTITY ISSUE --------------------------------------------------------------------------------------------------------This delivery order is hereby modified to add CLIN 2 S as shown below: E L 02 CPU Battery Replacement L 400 ea E TA# 03-0206 R ' S Original DO Amount: $393,347.60 Increase DO amount: $120,000.00 O New DO amount: $513,347.60 R I G I N Technical contact: Deborah Pruett 816-926-2696 A L ----------------------------------------------------------------------------------------------------THIS PURCHASE ORDER NEGOTIATED PURSUANT TO AUTHORITY OF 41 U.S.C. 252(c)( ). --------------------------------------------------------------------------------------------------------F.O.B. POINT DISCOUNT AND/OR NET PAYMENT TERMS Destination Net 30 --------------------------------------------------------------------------------------------------------DELIVER TO F.O.B. POINT ON OR BEFORE (Date) SHIP VIA September 30, 2003 Best way ---------------------------------------------------------------------------------------------------------

-----------------DO NOT SHIP ORDER TO THIS ADDRESS (SHIP TO CONSIGNEE ADDRESS ABOVE) ------------------

BILLING INSTRUCTIONS: NO BILLING WILL BE SUBMITTED IN ADVANCE OF SHIPMENT Furnish Invoice With Our ORDER NUMBER To: [OMITTED FOR CONFIDENTIALITY]

FAILURE TO SHOW OUR PURCHASE ORDER NUMBER ON INVOICE WILL DELAY PAYMENT FREIGHT CHARGE OVER $100 REQUIRES BILL OF LADING IF AVAILABLE, INCLUDE YOUR NINE POSITION DUNS NUMBER ON EACH INVOICE
------------------------------------------------------------------------------ISSUING OFFICE NAME AND ADDRESS ORDERED BY (Name and Title) USDA/FSA/MSD/AMB/SPS 1400 Independence Ave SW Stop 0567 [OMITTED FOR CONFIDENTIALITY] --------------------------------------

Washington DC 20250-0567

COMMERCIAL PHONE (Area Code and Number) 202-720-3736 -------------------------------------AUTHORIZED SIGNATURE [OMITTED FOR CONFIDENTIALITY]

SELLER'S ORIGINAL FORM AD-838-5PE (Rev. 7/90)

AMENDMENT OF SOLICITATION / MODIFICATION OF CONTRACT Page 2 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. [ ] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO THE CHANGES CLAUSE. THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT/ORDER NO. IN ITEM 10A. [ ] B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). [ ] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: [X] D. OTHER EXERCISE OF OPTION - FAR 52.217-5 E. IMPORTANT: Contract [x] is not, [ ] is required to sign this document and return _____ copies to the issuing office. 14. DESCRIPTION OF AMENDMENT/MODIFICATION -The purpose of this modification is to Exercise Option I of said contract for the period of performance October 1, 2003 thru September 30, 2004. -The funding for this action is subject to the Availability of Funds clause FAR 52-232-19. -All other terms and conditions remain unchanged.
---------------------------------------------------------------------------15A. NAME AND TITLE OF SIGNER 16A. NAME AND TITLE OF CONTRACTING (Type or print) OFFICER (Type or print) [OMITTED FOR CONFIDENTIALITY] ------------------------------------- -------------------------------------15B. CONTRACTOR/OFFEROR 16B. UNITED STATES OF AMERICA [OMITTED FOR CONFIDENTIALITY] ----------------------------(Signature of person (Signature of Contracting authorized to sign) Officer) ------------------------------------- -------------------------------------15C. DATE SIGNED 16C. DATE SIGNED 9/22/03 ----------------------------------------------------------------------------------------------------

EXCEPTION TO STANDARD FORM 30 APPROVED BY GSA/IRMS 9-89

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1. CONTRACT ID CODE 2. AMENDMENT/ MODIFICATION NO. 3. EFFECTIVE DATE 01 October 1, 2003 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable) N/A 6. ISSUED BY CODE: 7. ADMINISTERED BY (If other than Item 6) USDA/FSA/MSD/AMB/SPS MAIL STOP 0567, ATTN: C. PHELPS
1400 Independence Ave, SW, Washington, DC 20250-0567 ------------------------------------- -------------------------------------8. NAME AND ADDRESS OF CONTRACTOR 9A. AMENDMENT OF SOLICITATION NO. (No., Street, County, State and FSA-R-00019-00DC Zip Code) 9B. DATED (See Item 11) Government Telecommunications, Inc 4500 Southgate Place, Suite 300 Chantilly, VA 20151-1720

Code: FACILITY CODE: ------------------------------------- -------------------------------------

10A. MOD. OF CONTRACT / ORDER NO. GS00T97NSD0112 10B. DATED (See Item 13) 5/21/03

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended, [ ] is not extended. Offerors must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by one of the following methods: (a) By completing Items 8 and 15, and returning _____ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (C) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.
12. ACCOUNTING AND APPROPRIATION DATA (If required) RECEIVED SEP 25 2003

043A0318500 ---------------------------------------------------------------------------EXCEPTION TO STANDARD FORM 30 STANDARD FORM 30 (REV 10-83) APPROVED BY GSA/IRMA 9-87 FAR (48 CFR) 53.243

041TCCE THIS NUMBER MUST APPEAR ON ALL INVOICES, UNITED STATES DEPARTMENT OF AGRICULTURE PACKAGES, AND PAPERS RELATING PURCHASE ORDER TO THIS ORDER ------------------------------------------------------------------------------PAGE NO. CONTRACT NUMBER ORDER DATE ORDER NUMBER SUB. 1 OF 1 GS00T97NSD0112 10/01/03 43-3151-4-8007 -------------------------------------------------------------------------------

TYPE PURCHASE (Check one) SELLER'S IDENT. NO. FORM 1099 TAXPAY | | PURCHASE ORDER |X| DELIVERY ORDER TIN# 52 1467966 VID# 52 1467966A (See Reverse) --------------------------------------------------------------------------------------------------------TO: (Seller's Name, Address, City, State, Zip Code, and Phone No.) Consignee, Address, Zip Code, and and Acceptance GOVERNMENT TELECOMMUNICATIONS, INC. SHIP USDA/FSA/KCITSIO/TD 4500 Southgate Place Suite 300 TO 6501 BEACON DRIVE Chantilly VA 20151-1720 KANSAS CITY MO 64133-4675 Attn: Bill Leonard 571-323-1312 --------------------------------------------------------------------------------------------------------LINE ACT UNIT ITEM CODE DESCRIPTION QUANTITY ISSUE --------------------------------------------------------------------------------------------------------01 Maintenance and support services for USDA Partner S 12 MO Agency Telephone Systems for the period October 1, E 2003, through September 30, 2004 in accordance with L Vendor's proposal dated March 3, 2003, and April 16, L 2003 E R 02 CPU Card Battery Replacement ' 2,000 EA ----------------------------------------------------------------------S ---------------------------O R I G I N A L

SUBJECT TO THE AVAILABILITY OF FY2004 FUNDS

CONTRACTING POC: CAROLYNN J. PHELSP 202-205-5649

RECEIVED 7/25/03 53000.USDA 4 ----------------------------------------------------------------------------------------------------THIS PURCHASE ORDER NEGOTIATED PURSUANT TO AUTHORITY OF 41 U.S.C. 252(c)( ). --------------------------------------------------------------------------------------------------------F.O.B. POINT DISCOUNT AND/OR NET PAYMENT TERMS DESTINATION NET 30 --------------------------------------------------------------------------------------------------------DELIVER TO F.O.B. POINT ON OR BEFORE (Date) SHIP VIA SEPTEMBER 30, 2004 IAW CONTRACT ---------------------------------------------------------------------------------------------------------

-----------------DO NOT SHIP ORDER TO THIS ADDRESS (SHIP TO CONSIGNEE ADDRESS ABOVE) ------------------

BILLING INSTRUCTIONS: NO BILLING WILL BE SUBMITTED IN ADVANCE OF SHIPMENT Furnish Invoice With Our ORDER NUMBER To: [OMITTED FOR CONFIDENTIALITY]

FAILURE TO SHOW OUR PURCHASE ORDER NUMBER ON INVOICE WILL DELAY PAYMENT FREIGHT CHARGE OVER $100 REQUIRES BILL OF LADING IF AVAILABLE, INCLUDE YOUR NINE POSITION DUNS NUMBER ON EACH INVOICE
------------------------------------------------------------------------------ISSUING OFFICE NAME AND ADDRESS ORDERED BY (Name and Title)

USDA/FSA/MSD/AMB/SPS 1400 INDEPENDENCE AVE SW WASHINGTON DC 20250-0567

[OMITTED FOR CONFIDENTIALITY] -------------------------------------COMMERCIAL PHONE (Area Code and Number) 202-205-5646 -------------------------------------AUTHORIZED SIGNATURE

[OMITTED FOR CONFIDENTIALITY] -------------------------------------------------------------------------------

SELLER'S ORIGINAL FORM AD-838-5PE (Rev. 7/90)

FSA-R-005-03DC Page 1 of 17 SECTION B PRICE SCHEDULE B.1. PRICES The contractor shall provide the services identified in the Section C, Description of Work, on a fixed price, monthly basis, as shown below, based on a quantity of 3,970 sites (refer to Section C.2).
CLIN ---01 Monthly Price ------------FY 2003: $98,336.90 ---------(06/01/03 through 9/30/03) FY 2004: $95,478.50 ---------(10/01/03 through 9/30/04) FY 2005: $93,096.50 ---------(10/01/04 through 9/30/05) FY 2006: $91,984.90 ---------(10/01/05 through 9/30/06) FY 2007: $90,198.40 ---------(10/01/06 through 9/30/07) Extended Price -------------FY 2003: $393,347.60 ----------Per Site Price -------------$24.77 ------

02

FY 2004: $1,145,742.00 -------------

$24.05 ------

03

FY 2005: $1,117,158.00 -------------

$23.45 ------

04

FY 2006: $1,103,818.80 -------------

$23.17 ------

05

FY 2007: $1,082,380.80 -------------

$22.72 ------

Total Price* $4,842,447.20 *If all option periods exercised, exclusive of telephone system CPU battery replacement costs discussed below. The base period commenced on June 1, 2003. B.1.2. TELEPHONE SYSTEM CPU BATTERY REPLACEMENT PRICE: In addition to the above prices, the government will pay $300 for each CPU battery replacement. The $300 per CPU battery replacement represents the unit price for the base and all option periods, if exercised. SECTION C DESCRIPTION OF WORK (January 10, 2003) C.1 INTRODUCTION The Government requires contractor services in providing maintenance and support services on telephone systems for United States Department of Agriculture (USDA) Partner Agencies in the Field Service Centers, State and County Offices. These agencies include: * Farm Service Agency (FSA)

FSA-R-005-03DC Page 2 of 17 * Natural Resource Conservation Service (NRCS) * Rural Development (RD) C.2 BACKGROUND (a) USDA has approximately 3,970 sites that are Field Service Centers, State Offices or County Offices throughout the 48 contiguous states, including Hawaii, Alaska, the Pacific Basin and Caribbean area (referred to hereafter as "entire geographically covered area"). These sites consist of one or more of the above agencies listed in Section C.1. At these sites, one agency is designated as the lead agency. The lead agency is responsible for contacting the National Help Desk (NHD) to request all telephone service needed for that site. (b) The majority of phone systems in these areas consist of NEC Electra Pro II and NEAX2000 IVS phone systems. All other are various types, i.e., AT&T Partner Plus, Comdial, Executone, etc. See Attachment 1, "Telephone System Inventory" for the most recent available information of systems identified at USDA sites. (c) USDA has an existing 5-year warranty contract with both Computer Consulting Operations Specialists, Inc. (CCOPS), and Advanced Communications, Inc. (ACI) on the NEC and NEAX2000 phone systems. There are approximately 1,934 NEC phone systems currently covered under this warranty. See Attachment 2, "System Warranty Information", for the list of systems currently under warranty and warranty expiration date. See Attachment 3 for a copy of CCOPS' NEC Warranty Support Plan, and Attachment 4 for a copy of ACI's NEC Warranty Support Plan. Also see Attachment 5 for USDA Warranty Procedures. C.3 REQUIREMENTS (a) The Contractor shall provide support for moves, additions, changes, or disconnects to the USDA's Partner Agency voice systems for the entire geographically covered area. The Contractor shall also provide remote and on-site system programming, on-site end-user training, monthly reports on services provided, and product installation. DURING FY 2002, APPROXIMATELY 3,000 CALLS WERE RECEIVED TO PROVIDE MAINTENANCE SUPPORT. (b) All service requests for moves, adds, changes or disconnects will be submitted to the Contractor's Service Dispatch System via the NHD (refer to Section C.3.7). (c) Each service request will identify a USDA Site Coordinator's name and phone number. The Site Coordinator will be physically located at the site where the work is to be performed and will be able to provide the Contractor information on the exact location where the work is to be completed. (d) The Contractor shall have the ability to deploy certified technicians nationwide to meet maximum period downtime requirements specified in Section C.3.11.

FSA-R-005-03DC Page 3 of 17 C.3.1 MOVES, ADDS, CHANGES, DISCONNECTS (a) The Contractor shall perform the following as requested by the NHD. (1) Moves: (i) Disconnect, move, and re-connect telephone systems and/or associated telephone equipment to new office location. (ii) Perform internal office moves on telephone systems and/or associated telephone equipment. (2) Adds: Install additional telephones/cards to telephone systems and/or associated telephone equipment. (3) Changes: (i) Change configuration of phone systems and/or associated telephone equipment (including disconnects and reconnects). (ii) Change program features on phone systems and/or associated telephone equipment. (4) Disconnects: (i) Disconnect phones/cards from telephone systems. (ii) Disconnect phone systems. C.3.2 REMOTE AND ON-SITE SYSTEM PROGRAMMING: (a) The Contractor shall perform system software programming on KSU's and PBX's via each system's remote programming capability or, for minor changes, via the system's terminal set Program Mode. USDA may perform all other programming defined as "End-User" programming that does not necessitate going into the system Program Mode. (b) The Contractor shall perform on-site software programming and/or system parts replacement, as necessary. (c) The Contractor shall also provide updated programming and system configuration information to the warranty vendor on all systems under warranty when changes are made. The Contractor shall provide this information via soft copy or diskette in Microsoft Office 97 Word or Excel Spreadsheet format within 5 days following completion of work. The Contractor shall notify the Contracting Officer's Representative (COR), within the same 5 days, via e-mail or fax, when the information has been provided to the warranty vendor. The Government's service request number shall be referenced in this notification.

FSA-R-005-03DC Page 4 of 17 C.3.3 END-USER TRAINING: (a) The Contractor shall provide End-User training on the operation of telephones and available programming features, as requested by the COR or NHD. Contractor provided videos, user guides, supplemental training materials, and on-site training are all viable resources which may be used to ensure proper training. (b) Onsite training shall include "hands-on training for new users. Classes shall be conducted at the trainee's site. Each class shall not exceed twelve students. (c) From fiscal year 2000 through fiscal year 2002, approximately two user calls were received to provide enduser training. Under this contract, the government anticipates minimal requests for end-user training. The price for this training is part of the per-site charge. C.3.4 REPORTS (a) The Contractor shall provide monthly reports to the Contracting Officer (CO), COR, NHD and the following Government contacts detailing the services provided to each agency. These reports shall include the following: * Site Name, Address and ID * NHD Service Request Number * Date/Time Service was Ordered * Date/Time Service was Completed * Type of Telephone System * Current Number of Lines and Telephone Ports Active on System * Service Performed * Any calls covered by the warranty vendor and verification (who, what, when, where, how) the warranty vendor was notified prior to service worked. (b) These reports may be soft copy or on diskette in Microsoft Office 97 Word or Excel Spreadsheet format and shall be submitted by the 15th of each month (or next business day if the 15th falls on a Sat/Sun or Federal holiday) and submitted to the appropriate agency listed below: * FARM SERVICE AGENCY U.S. Dept. of Agriculture Telecommunications Division [OMITTED FOR CONFIDENTIALITY]

FSA-R-005-03DC Page 5 of 17 * NATURAL RESOURCE CONSERVATION SERVICE Natural Resource Conservation Service [OMITTED FOR CONFIDENTIALITY] * RURAL DEVELOPMENT Rural Development [OMITTED FOR CONFIDENTIALITY] C.3.5 SYSTEM MAINTENANCE FOR NON-WARRANTY EQUIPMENT: The Contractor shall install any telephone product resulting from equipment failures, natural disasters, or accidental user damage for which replacement is not covered under warranty. C.3.6 SYSTEM MAINTENANCE FOR WARRANTY EQUIPMENT (a) The Contractor shall install any telephone product from equipment failures for which replacement is covered under warranty. Some NEC telephone equipment is still under warranty. If a piece of equipment that is still under NEC warranty goes bad, the warranty vendor sends a replacement part to the site at no cost to the Government. The piece of equipment still has to be "installed" once it arrives at the site. The installer (contractor) must be "NEC Certified" so as not to void the manufacturer's warranty. NEC certified technicians must install the warranted equipment. (b) The Contractor shall communicate with the warranty vendor on any work required on systems covered under warranty and comply with warranty provisions so as not to void the warranty contract. The Contractor shall keep a record of the following information for each service request to confirm communication with the warranty vendor: * NHD Service Request Number * Date of Call * Time of Call * Warranty Vendor's Representative * Contractor's Servicing Technician * Approval Status/Conditions (c) If the Contractor fails to communicate with the warranty vendor on any work, and ultimately the warranty is voided as a result of actions or inaction taken by the Contractor, the Contractor shall return the equipment to Original Equipment Manufacture (OEM) standards within three days. The Contractor shall be responsible for the remaining warranty period for that telephone system at no additional cost to the Government and shall be maintained at

FSA-R-005-03DC Page 6 of 17 OEM standards. C.3.7 TROUBLE CALL DISPATCH SYSTEM (a) The Contractor shall provide a service dispatch system with a toll-free number for the National Help Desk (NHD) to report maintenance service requests. The Contractor shall also provide an answering service or other form of continuous telephone coverage to permit NHD to make contact 24 hours a day, 7 days a week. The NHD Technician will report all trouble calls to the Contractor's service dispatch system, rating the trouble calls as follows:

FSA-R-005-03DC Page 7 of 17 (1) Critical: System Failures Disaster Recovery Problems that affect the operational functions of the KSU or PBX. (2) Non-critical: All other repairs that do not affect the operational functionality of the KSU or PBX. C.3.8 NATIONAL HELP DESK DATABASE: The Contractor will be given access to the USDA National Help Desk Database within five (5) business days after contract award. The Contractor shall enter all associated technical notes into the database as they occur. COmpletion dates of all service requests must be entered into the database within one day of completion. C.3.9 PRINCIPLE PERIOD OF MAINTENANCE: The Principle Period of Maintenance (PPM), is any nine (9) consecutive hours per day, including an official meal period not to exceed one hour per day, between the hours of 7 am and 7 pm local time for which work is to be performed, Monday through Friday, excluding holidays observed at the site. C.3.10 RESPONSE TIME (a) All critical trouble calls received shall be responded to within one hour of receipt. This response may take the form of a return telephone call to the site. Critical requests may require work to be performed on evenings, weekends or holidays as directed by the NHD. (b) All non-critical trouble calls received shall be responded to within four (4) hours of receipt. This response may take the form of a return telephone call to the site. C.3.11 MAXIMUM PERIOD OF MAINTENANCE DOWNTIME (a) The Contractor shall complete maintenance within the maximum period of maintenance downtime. The maximum period of maintenance downtime is the number of hours - during the Principle Period of Maintenance (PPM) - the equipment being maintained is unavailable for use. The Maximum Period of Maintenance Downtime begins when the NHD makes a bonafide attempt: * To electronically transmit problems or service request to the Contractor's service dispatch system; * To contact the Contractor's Project Manager and/or Lead Service Technician by telephone or e-mail; or * To contact the Contractor's answering service or other continuous telephone coverage provided to permit USDA to make such contact.

FSA-R-005-03DC Page 8 of 17 (b) The Maximum Period of Maintenance Downtime shall stop when the Contractor completes the repair or notifies the NHD that replacement equipment is required to complete maintenance in accordance with USDA Warranty Procedures in Attachment 5. The Maximum Period of Maintenance Downtime shall continue when the NHD notifies the Contractor in accordance with C.3.11 (a) that replacement equipment has been received at the site. (c) USDA maximum downtime periods are set as follows: * 5 Hours - CRITICAL repairs that DO NOT require part replacement or a technician to be onsite (defined in Sect. C.3.7). * 10 Hours - CRITICAL repairs that DO require part replacement or a technician to be onsite (defined in Sect. C.3.7). (20 Hours downtime allowed for repairs in Guam) * 10 Hours - NON-CRITICAL repairs that DO NOT require part replacement or a technician to be onsite (defined in Sect. C.3.7). * 18 Hours - NON-CRITICAL repairs that DO require part replacement or a technician to be onsite (defined in Sect. C.3.7). (36 Hours downtime allowed for repairs in Guam). (d) Non-critical repairs will be performed during Principle Period of Maintenance. Critical repairs, including moves or programming changes needed for Disaster Recovery may require work to be performed on evenings, weekends, or holidays as directed by the NHD. C.3.12 KEY PERSONNEL (AGAR 452.237-74) (FEB 1988): The Contractor shall appoint a single point of contact to correspond directly with the COR and/or NHD to dispatch and process all service requests received. (a) The Contractor shall assign to this contract the following key personnel: * PROJECT MANAGER (individual's name will be inserted at time of contract award) * LEAD SERVICE TECHNICIAN (individual's name will be inserted at time of contract award) (b) During the first ninety (90), days of performance, the Contractor shall make no substitutions of key personnel unless the substitution is necessitated by illness, death, or termination of employment. The Contractor shall notify the Contracting Officer within 15 calendar days after the occurrence of any of these events and provide the information required by paragraph (c) below. After the initial 90-day period, the Contractor shall submit the information required by paragraph (c) to the Contracting Officer at least 15 days prior to making any permanent substitutions.

FSA-R-005-03DC Page 9 of 17 (c) The Contractor shall provide a detailed explanation of the circumstances necessitating the proposed substitutions, complete resumes for the proposed substitutes, and any additional information requested by the Contracting Officer. Proposed substitutes shall have comparable qualifications to those of the persons being replaced. The Contracting Officer will notify the Contractor within 15 calendar days after receipt of all required information of the decision on substitutions. The contract will be modified to reflect any approved changes of key personnel. (1) GENERAL QUALIFICATIONS: The PROJECT MANAGER must have a minimum ---------------------of six (6) years general experience which includes the following: (i) Effective oral, written communications and management skills to organize, plan and direct maintenance support activities for a multiple agency environment including the requirements of Section C herein. Project Manager shall be responsible for resolving escalated problems. The Project Manager shall meet the qualification identified below: (A) GENERAL EXPERIENCE: The project manager shall have at least six (6) years of telephone maintenance management experience: (B) SPECIALIZED EXPERIENCE: The project manager shall have at least three (3) years of management and supervision of maintenance projects. (These 3 years may be a part of the 6 years general experience). This experience shall include two years of managing maintenance contract involving a nationwide multi-site distributed system. (C) EDUCATION: The project manager shall have earned a four-year college degree or equivalent. Experience beyond the above general and specialist experience may be substituted for the formal education requirements at the rate of 12 calendar months of work experience for each 32-semester hours of college credit. (2) GENERAL QUALIFICATIONS: The LEAD SERVICE TECHNICIAN must have a --------------------- minimum of four- (4) years of general experience, which includes the following: (i) Effective oral, written communications and management skills to organize, plan and direct maintenance support activities, along with the project manager, for a multiple agency environment including the requirements of Section C herein. The Lead Service Technician must meet the qualifications below: (A) GENERAL EXPERIENCE: The lead service technician shall have at least four (4) years of telephone maintenance management experience.

FSA-R-005-03DC Page 10 of 17 (B) SPECIALIZED EXPERIENCE: The lead service technician shall have at least three- (3) years of supervision of telephone maintenance projects. (These 3 years may be a part of the 4 years general experience). This experience shall include two years of supervising personnel on a telephone maintenance contract involving a nationwide multi-site distributed system. (C) EDUCATION: The lead service technician shall have earned a four-year college degree or equivalent. Experience beyond the above general and specialist experience may be substituted for the formal education requirement at the rate of 12 calendar months of work experience for each 32-semester hours of college credit. C.3.13 TRANSITION: This contract requires a Transition Plan. A smooth and orderly transition following contract award between the incoming and outgoing Contractor is necessary to assure minimum disruption to vital Government business. (a) TRANSITION TO MAINTENANCE UNDER THIS CONTRACT: FSA requires transition from the current maintenance contract to maintenance provided under this contract. Transition will be accomplished by the incoming Contractor performing 50% of the maintenance under this contract for a period of not less than 14 calendar days. The intent of FSA is to provide 14 calendar days from the date of contract award to the start of full contract performance or March 1, 2003, whichever is the later date. During the 14 calendar day transition period, the incumbent contractor will receive 50% of their normal monthly invoice amount for acceptable performance. During the transition period, the incoming contractor will receive 50% of their monthly invoice amount for acceptable performance. Upon completion of the transition period, the incoming contractor will begin to receive 100% of the monthly invoice amount. (b) TRANSITION FROM MAINTENANCE UNDER THIS CONTRACT: FSA requires transition from maintenance provided under this contract to maintenance provided under a successor contract. Transition will be accomplished by the incumbent Contractor providing 50% of the maintenance under the current contract for a period of not less than 14 calendar days, but not more than 30 calendar days. The outgoing Contractor shall cooperate to the extent required to permit an orderly changeover to the successor Contractor. The incumbent Contractor shall continue performance to completion on any assigned, open service request. During the 14 calendar day transition period, the incumbent contractor will receive 50% of their normal monthly invoice amount for acceptable performance. During the transition period, the incoming contractor will receive 50% of their monthly invoice amount for acceptable performance. Upon completion of the transition period, the incoming contractor will begin to receive 100% of the monthly invoice amount. SECTION D RESERVED

FSA-R-005-03DC Page 11 of 17 SECTION E CONTRACTOR PERFORMANCE REQUIREMENTS
--------------------------------------------------------------------------------------------------------PERFORMANCE REQUIREMENT PERFORMANCE STANDARD PERFORMANCE MEASUREMENT DEDUCTION FR INVOICE FO EXCEEDING MEASUREMEN --------------------------------------------------------------------------------------------------------1. The contractor shall The contractor shall not The COR will periodically deploy certified technicians have more than three survey sites to determine 1% nationwide to perform instances in any if performance was Moves, Adds, Changes, consecutive three-month successful. Disconnects, Remote and period of inaccurate or Offsite System incomplete performance. Programming, and EndUser Training. --------------------------------------------------------------------------------------------------------2. Deliver required reports. A Monthly Report shall COR will review report be delivered by the 15th for accuracy and content 0.25% of the month following as required. The report is the end of the previous returned to the contractor month's reporting for corrections no more period. than once a quarter. --------------------------------------------------------------------------------------------------------3. Enter ALL associated Technical notes shall be COR will review data technical notes into the entered as they occur. entered into the NHD 5% NHD database. Completion dates shall database periodically, and be entered within one make RANDOM follow up day of completion. calls for verification. The contractor shall exceed 80% overall of the sampling. Measurement will be done randomly by the COR or designee and substantiated by follow up surveying of the customer(s) called. --------------------------------------------------------------------------------------------------------4. Respond to all trouble Critical - Within one COR or Designee will calls according to priority. hour of receipt. produce reports from the 1% Non-critical - Within call tracking system and four hours of receipt. verify. --------------------------------------------------------------------------------------------------------5. Complete all trouble calls Critical (not requiring COR or Designee will within maximum period of part replacement ) - 5 produce reports from the 1.2% maintenance downtime hours. call tracking system and (C.3.11). Critical (requiring part verify. replacement) - 10 hours. Non-critical (not ---------------------------------------------------------------------------------------------------------

FSA-R-005-03DC Page 12 of 17 --------------------------------------------------------------------------------------------------------PERFORMANCE REQUIREMENT PERFORMANCE STANDARD PERFORMANCE MEASUREMENT DEDUCTION FR INVOICE FO EXCEEDING MEASUREMEN --------------------------------------------------------------------------------------------------------requiring part replacement) - 10 hours. Non-critical (requiring part replacement) - 18 hours. --------------------------------------------------------------------------------------------------------6. Provide courteous Receive no more than COR will review data 0.25% service. two valid complaints entered into the NHD during the month. database periodically, and make RANDOM follow up calls for verification. ---------------------------------------------------------------------------------------------------------

SECTION F RESERVED SECTION G CONTRACT ADMINISTRATION G.1 CONTRACTING OFFICER (a) The Contracting Officer is the only person authorized to approve changes in any of the requirements under this contract, and notwithstanding any clause contained elsewhere in this contract, the said authority remains solely with the Contracting Officer. In the event the Contractor effects any changes at the direction of any person other than the Contracting Officer, the change will be considered to have been made without authority, and no adjustment will be made in the contract prices to cover any increase in charges incurred as a result thereof.

FSA-R-005-03DC Page 13 of 17 (b) Copies of all correspondence concerning this contract must be provided to the Contracting Officer/Specialist at the address below and shall make reference to the contract number. (1) The Contracting Officer is [OMITTED FOR CONFIDENTIALITY] The Contract Specialist is [OMITTED FOR CONFIDENTIALITY] When using regular mail, use the following address: USDA/FSA/MSD/AMB/SPS Stop 0567 1400 Independence Ave., S.W. Washington, D.C. 20250-0567 (2) When express mailing or hand delivering to the Contracting Officer/ Contract Specialist, use the following address: USDA/FSA/MSD/AMB/SPS 1280 Maryland Avenue, S.W., Suite 580 Washington, D.C. 20024 [OMITTED FOR CONFIDENTIALITY] G.2 CONTRACTING OFFICER REPRESENTATIVE RESPONSIBILITIES (a) A Contracting Officer's Representative (COR) will be designated, on authority of the Contracting Officer, to monitor all technical aspects and assist in administering the contract. The types of actions within the purview of the COR's authority are to assure that the contractor performs the technical requirements of the contract; to perform inspections necessary in connection with performance of the contract; to monitor the contractor's performance under the contract and notify the contractor and the Contracting Officer of any deficiencies observed. The COR shall be the single coordinating point of contact with the contractor, other than the Contracting Officer and National Help Desk. A more comprehensive list of responsibilities and limitations will be provided to the Contractor after contract award. Within five business days after contract award, the contractor will be provided with a copy of the COR appointment letter. The contractor shall review the letter, address any questions to the Contracting Specialist regarding the appointment letter, and return a signed original of the letter to the Contracting Specialist within 15 calendar days after contract award. Failure by the contractor to return a signed copy of the appointment letter within the above required time frame will indicate the contractor's acceptance of the COR appointment letter terms. (b) The COR assigned to this contract is: Deborah Pruett (816) 926-2696; USDA/FSA/KCITSTO; 6501 Beacon Drive, Kansas City MO 64133-4675

FSA-R-005-03DC Page 14 of 17 SECTION H SPECIAL CONTRACT REQUIREMENTS H.1 452.211-75 - EFFECTIVE PERIOD OF THE CONTRACT (FEB 1988): The effective period of this contract is from the date of contract award through September 30, 2003, with four, 12 month option periods. If all option periods are exercised, the contract will end September 30, 2007. H.2 TYPE OF CONTRACT: This is a Firm Fixed-Price type of contract. Refer to Section H.4 for option period information. H.3 INVOICES: The Contractor shall submit original invoices to the individual identified under "Billing Instructions" of the AD-838 (delivery order). Invoices shall only include the fixed prices for deliverables identified herein. Invoices should be submitted on a monthly basis and should only invoice for the prior, completed month. (a) The contractor shall include the following documentation with all invoices: * Contract number * Name and payment address of contractor * Invoice date and period invoice covers * Delivery order number * Site name, address and ID * Date/time service was ordered and completed * Type of service performed, i.e., move, add, change, etc. * Type of telephone system * Any parts repaired * Any calls covered by warranty and verification (who, what, when, where, how) the warranty vendor was notified prior to service worked. (b) Invoices containing errors will not be corrected by the Government. The invoices will be returned to the contractor for correction. An invoice resubmitted after the error is corrected shall have the annotation "Corrected Invoice" on its face and a new invoice date. (c) Invoice Submission: The contractor shall submit all invoices to the following address: USDA/FSA/TD Attn: TBD, COR Mail Stop: 8288 6501 Beacon Drive Kansas City, MO 64133-4675

FSA-R-005-03DC Page 15 of 17 H.4 OPTION TO EXTEND THE TERM OF THE CONTRACT - FIXED PRICE CONTRACT

(AGAR 452.217-78) (MAR 2000) (a) The Government has the option to extend for four additional period(s). If more than 60 days remain in the contract period of performance, the Government, without prior written notification, may exercise this option by issuing a contract modification. To exercise this option within the last 60 days of the period of performance, the government must provide the Contractor written notification prior to that last 60-day period. This preliminary notification does not commit the Government to exercising the option. (b) Exercise of an option will result in the following contract modification: The "period of performance" clause will be modified as follows:
==================================================== START END PERIOD DATE DATE ---------------------------------------------------Option Period I 10/01/2003 09/30/2004 ---------------------------------------------------Option Period II 10/01/2004 09/30/2005 ---------------------------------------------------Option Period III 10/01/2005 09/30/2006 ---------------------------------------------------Option Period IV 10/01/2006 09/30/2007 ====================================================

H.5 RESERVED. H.6 POST AWARD CONFERENCE: A post award conference may be held to review the contract, answer questions, and initiate the contract activity. The date, time, and location for the post award meeting will be provided to the contractor at time of contract award. H.7 CONTRACTOR'S RELEASE FORM: A Contractor Release is required under this contract. The form shall be submitted using the format established in Attachment 6, Contractor's Release. The Government may withhold final payment until receipt of the completed Contractor Release document. The contractor is encouraged to submit the release form with the final invoice, or within thirty (30) calendar days of completion of the contract, to the Contracting Officer. H.8 CONTRACTOR PERFORMANCE (a) PERFORMANCE AT GOVERNMENT SITES The Contractor shall abide by USDA/FSA/NRCS/RD policies regarding provisions for authorized entrance and exit at Government facilities.

FSA-R-005-03DC Page 16 of 17 (b) IDENTIFICATION BADGES All Contractor employees shall be required to wear visitor badges when working in Government facilities.

FSA-R-005-03DC Page 17 of 17 (c) PERSONNEL REMOVAL AND REPLACEMENT Contractor employees may be subject to investigation by the Government for security purposes. Contractor employees who undergo Minimum Background Investigations, which reveal any of the following, may be unacceptable under this contract: * conviction of a felony, * crime of violence * a serious misdemeanor, * a record of arrests for continuing offenses. The Government reserves the right to determine if a Contractor (including Subcontractors) employee assigned under this contract shall continue under the contract. The contractor shall agree to remove the person assigned within one day of official notification by the Government. New hires or substitutions of personnel are subject to the Minimum Background Investigation requirement. SECTION I I.1 52.217-8 OPTION TO EXTEND SERVICES (NOV 1999) The Government may require continued performance of any services within the limits and at the rates specified in the contract. These rates may be adjusted only as a result of revisions to prevailing labor rates provided by the Secretary of Labor. The option provision may be exercised more than once, but the total extension of performance hereunder shall not exceed 6 months. The Contracting Officer may exercise the option by written notice to the Contractor within ten calendar days for the end of the current period of performance. SECTION J LIST OF ATTACHMENTS The following attachments are part of the above Statement of Work. Attachments 1 and 2 are attached Excel spreadsheets. Attachments 3, 4 and 5 are provided at the bottom of this document. The attachment titles are as follows: Attachment 1 - Telephone System Inventory Attachment 2 - Telephone System Warranty Information Attachment 3 - CCOPS NEC Warranty Support Plan for the USDA Attachment 4 - ACI NEC Warranty Support Plan for the USDA Attachment 5 - USDA Warranty Procedures Attachment 6 - Contractor's Release SECTION K RESERVED

Exhibit 10.49 BEST VALUE BLANKET PURCHASE AGREEMENT (BPA) NO. 45-3142-3-04051 WIRE AND CABLE SERVICE CONTRACT UNITED STATES DEPARTMENT OF AGRICULTURE NATIONAL FINANCE CENTER In the spirit of the Federal Acquisition Streamlining Act the United States Department of Agriculture and Government Telecommunications, Inc. (GTI) enter into a blanket purchase agreement to further reduce the administrative costs of acquiring commercial items from the Wire and Cable Services Contract(s) WACS GS00T97NSD0112, Modification P0006. Wire and Cable Service Contract BPAs eliminate contracting and open market costs such as: the search for sources; the development of technical documents and solicitations; and the evaluation of bids and offers. Contractor Team Arrangements are permitted with Federal Supply Schedule contractors in accordance with Federal Acquisition Regulation (FAR) Subpart 9.6. This BPA is for VOICE REPLACEMENT SYSTEM at the NATIONAL FINANCE CENTER FACILITIES (NFC) per USDA's Statement of Work (SOW) enclosed as Attachment 1
Signatures: --------------------------------RICHARD STORIE DATE Contracting Officer ----------------------------------JUDITH McCUNE DATE Vice-President Operations

United States Department of Agriculture Government Telecommunications, Inc.

BPA NUMBER 45-3142-3-04051 UNITED STATES DEPARTMENT OF AGRICULTURE BLANKET PURCHASE AGREEMENT Pursuant to WACS Contract Number GS00T97NSD0112, P0006, the Contractor agrees to the following terms of a Blanket Purchase Agreement (BPA) EXCLUSIVELY WITH USDA, OPPM: 1) The Government estimates, but does not guarantee, that the volume of purchases through this agreement. Under WAC Contract GS00T97NSD0112, P0006, This BPA 45-3142-3-04051 is issued as a Firm Fixed Price with a Lease to Own purchase that contains a Performance SOW and full Maintenance Contract. 2) Contractor: Government Telecommunications, Inc.
---------4500 Southgate Place, Suite 300 Chantilly, VA 20151 DUNS NO. 17-796-0275, Tax ID. 52-1467966

3) GTI's proposal received Sep 17, 2003 confirms governments selection of Base and Option items to be included in BPA with analysis of lease cost and savings if full funding for Capital assets were to become available in the future. 4) The Contract line items (CLINS) for Base & Option with lease to own with projected funding needs and projected payment years are shown in the following firm budget projections: (a) Firm Budget Projections Matrix
-----------------------------------------------------------------------------------------------Fiscal Base Option * CLIN Year Installation (Tano TSPD) Maintenance -----------------------------------------------------------------------------------------------1 FY 2003 [Omitted for Confidentiality] -----------------------------------------------------------------------------------------------2 FY 2004 -----------------------------------------------------------------------------------------------3 FY 2005 -----------------------------------------------------------------------------------------------4 FY 2006 -----------------------------------------------------------------------------------------------5 FY 2007 -----------------------------------------------------------------------------------------------6 FY 2008 -----------------------------------------------------------------------------------------------7 FY 2009 -----------------------------------------------------------------------------------------------8 FY 2010 -----------------------------------------------------------------------------------------------Total Price -----------------------------------------------------------------------------------------------*Estimated

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BPA NUMBER 45-3142-3-04051 5) This BPA does not obligate any funds. The Base, Option and Maintenance packages are to be funded as funds are available, summary as follows:
ITEM ITEM DESCRIPTION GTI BASE ORDER Initial Task Order OPTION ORDER Future Task Order MAINTENANCE

1 5 6 12 13 7 A B C D 14 15 16

BASE COST VOIP TEST LAN ADD'L HDW OPTIONS SPARES BILLING TRAINING OPTION 1 COST RECORDING REPL OPTIONS SPARES TRAINING OVERALL OPTIONS SOLDER FRAME MAINT - BASE MAINT - TSPD TOTALS

[Omitted for Confidentiality]

6) The following office(s) is hereby authorized to place orders under this BPA: POINT OF CONTACT
USDA, OPPM, POD USDA, OCIO, NFC Richard Storie, Contracting Officer Thomas Lutman, Contracting Officer Technical Representative (COTR)

7) Orders will be placed against this BPA via Purchase Card, FAX, or paper. 8) Unless otherwise agreed to, all deliveries under this BPA must be accompanied by delivery tickets or sales slips that must contain the following information as a minimum: (a) Name of Contractor; (b) Contract Number; (c) BPA Number; (d) Model Number or National Stock Number (NSN); (e) Task/Delivery Order Number; (f) Date of Purchase; (g) Quantity, Unit Price, and Extension of Each Item (unit prices and extensions need not be shown when incompatible with the use of automated systems; provided, that the invoice is itemized to show the information); and 3

BPA NUMBER 45-3142-3-04051 (h) Date of Shipment. 9) The requirements of a proper invoice are as specified in the contract. Invoices will be submitted to the address specified within the task/delivery order transmission issued against this BPA. 10) The terms and conditions included in this BPA apply to all purchases made pursuant to it. In the event of an inconsistency between the provisions of this BPA and the Contractor's invoice, the provisions of this BPA will take precedence. 11) Government shall keep the Asset(s) free and clear of all levies, liens and encumbrances, except those in favor of Contractor and its assigns, in accordance with the provisions of FAR 52.229-1. 12) Prompt Payment: Prompt Payment Act shall apply to Leasing (incorporate FAR 52.232-25). 13) Prepayment Option: Upon ninety (90) days written notice, the Government has the right to pre-pay the remaining Payments for the Asset(s). Such pre-payment price will be the discounted value of all the remaining Payments under this Agreement at the annual rate of 5% or actual leasing rate together with the Residual Value plus any payments then due and owing. 14) The Warranty is two (2) years under the GSA WACS contracts GS00T97NSD0112. The warranty will include all software patches and updates for a particular release level at no additional cost to the Government during the warranty period. 15) Maintenance Contract: This contract has a full Maintenance Service, which includes all manufacturers' recommended preventative and scheduled maintenance. The maintenance contract provides a toll-free (1-800) trouble reporting number, which will be answered 24x7. SWITCH troubles will be automatically reported, on a 24-hour basis, to the GTI Team's Remote Maintenance Administration Center (RMAC) in Atlanta, GA, through the installed Site Event Buffer (SEB). Any other troubles may also be called in on the 1-800 number. 16) When on-site assistance is requested, a GTI Team service technician will be on-site within two hours after the Government notifies the GTI Team's designated point of contact of any major or critical problem. The GTI service technician will identify all affected components and take all necessary steps required to restore the system (s) to operating condition. Escalation will ensure that close monitoring of service call events will be conducted. For this project, the GTI Team's escalation process for NFC will be established at two hour intervals for emergency and priority service calls after which time at eight hours, the CEO of GTI will be the Government's Point of Contact until the problem is resolved. After award, the GTI Program Manager will provide the government with the specific name, official work hours, telephone numbers, and contact information for periods outside of official work hours. Any changes to the information on the escalation list will be updated with the NFC. 4

BPA NUMBER 45-3142-3-04051
--------------------------------------------------------------------------------------------------------NOTIFICATION OF FIELD SERVICE TYPE/ SERVICE TIER 2 SUPPORT TIER 3 SUPPORT OEM TECH SUPPOR RETURN TO SERVICE TIER 1 SUPPORT SUPERVISOR DISPATCHED/ DISPATCHED/ INITIATED/ TIME DISPATCHED AND GTI PM CONTACTED CONTACTED DISPATCHED --------------------------------------------------------------------------------------------------------Emergency/4 Hr Immediate Immediate 1 Hour after Tier 2 Hours after 3 Hours after 1 on-site Tier 1 on-site Tier 1 on-site --------------------------------------------------------------------------------------------------------Priority/8 Hr Within 1 Hr of Within 2 Hrs 2 Hours after 4 Hours after 6 Hours after Notification of event Tier 1 on-site Tier 1 on-site Tier 1 on-site --------------------------------------------------------------------------------------------------------Routine/24 Hr Within 8 Hr or As Required 4 Hours after 6 Hours after 8 Hours after Next Business Day Tier 1 Tier 1 on-site Tier 1 on-site on-site without without without resolution resolution resolution ---------------------------------------------------------------------------------------------------------

17) It is the intent of the Government by placing this Order to exercise each renewal option and to extend the lease until completion of the full Lease Term so long as the bona fide needs of the Government for the products or functionally similar products continues to exist. The Total Contract Price shall be defined as the sum of all lease payments. 18) FAR 52.229-1, State and Local Taxes (April 1984) is incorporated by reference. The Government agrees to prove exemption from all taxes on the sale, use, or value of the equipment and/or software lease hereunder. 19) Performance Matrix is as follows:
========================================================================================================= PERFORMANCE PERFORMANCE STANDARD PERFORMANCE MEASUREMENT DEDU REQUIREMENT FOR ========================================================================================================= 1. Technical The contractor shall deliver the The COR will verify 0.5% Requirements system IAW the Technical Requirements IAW the acceptance test, cuto specified in Sections 3 and 4 of as specified in beca Attachment 1 Section 11 of Attachment 1. acti ========================================================================================================= 2. System The contractor shall meet the Test results will be as Free Performance performance criteria in Para. 3.6 specified in Para. 3.6 mont requ ========================================================================================================= 3. Maintenance The contractor shall respond on-site The contractor will not miss the 1. 0 to critical outages within two hours performance standard more than paym of the reported outage. three times during the contract by o year. duri 2. 0 cont warr =========================================================================================================

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EXHIBIT 31.1 APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Scott R. Silverman, certify that: 1. I have reviewed this quarterly report on Form 10-Q/A Amendment No. 1 of Applied Digital Solutions, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 11, 2003 /s/ Scott R. Silverman Scott R. Silverman Chairman and Chief Executive Officer

EXHIBIT 31.2 APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Evan C. McKeown, certify that: 1. I have reviewed this report on Form 10-Q/A Amendment No. 1 of Applied Digital Solutions, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 11, 2003 /s/ Evan C. McKeown Evan C. McKeown Senior Vice President and Chief Financial Officer

EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Applied Digital Solutions, Inc. (the "Company") on Form 10-Q/A Amendment No. 1 for the quarter ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott R. Silverman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Scott R. Silverman ---------------------Scott R. Silverman Chief Executive Officer December 11, 2003

A signed original of this written statement required by Section 906 has been provided to Applied Digital Solutions, Inc. and will be retained by Applied Digital Solutions, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Applied Digital Solutions, Inc. (the "Company") on Form 10-Q/A Amendment No. 1 for the quarter ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Evan C. McKeown, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Evan C. McKeown ------------------Evan C. McKeown Chief Financial Officer December 11, 2003

A signed original of this written statement required by Section 906 has been provided to Applied Digital Solutions, Inc. and will be retained by Applied Digital Solutions, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.