Exhibit 10.2
EXECUTION COPY
For Discussion Purposes Only;
Not a Commitment;
Subject to IBM Credit's Internal Credit Approval Process
APPLIED DIGITAL SOLUTIONS, INC.
DIGITAL ANGEL SHARE TRUST
FORBEARANCE AGREEMENT
SUMMARY OF TERMS AND CONDITIONS
MARCH 24, 2003
This Summary of Terms and Conditions (the "Term Sheet") sets
----------
forth the indicative terms and conditions of the Forbearance Agreement (the
"Forbearance Agreement") among IBM Credit LLC, Applied Digital Solutions, Inc.,
---------------------
Digital Angel Share Trust and the other Loan Parties party to the Third Amended
and Restated Credit Agreement, dated as of March 1, 2002 (as amended through the
date hereof, the "Credit Agreement"), among IBM Credit LLC, Applied Digital
----------------
Solutions, Inc., Digital Angel Share Trust and the other Loan Parties party
thereto. Terms used but not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
THIS TERM SHEET DOES NOT CONSTITUTE A COMMITMENT OF IBM CREDIT
TO LEND OR AN AGREEMENT OF IBM CREDIT TO PREPARE, NEGOTIATE, EXECUTE OR DELIVER
SUCH A COMMITMENT.
1. PARTIES TO FORBEARANCE AGREEMENT
--------------------------------
Borrowers: Digital Angel Share Trust, a Delaware
statutory business trust (in such capacity,
the "Trust" and in its capacity as a
-----
Borrower, the "Tranche A Borrower"); and
------------------
Applied Digital Solutions, Inc., a Missouri
corporation ("ADS" or the "Tranche B
--- ---------
Borrower").
--------
Guarantors: Each of the Tranche B Borrower and its
Subsidiaries (other than Digital Angel
Corporation), as a guarantor for the
Tranche A Borrower's obligations under
the Tranche A Facility (as described below)
(in such capacity, the "Tranche A
---------
Guarantors"); and
----------
The Tranche A Borrower, as a guarantor for
the Tranche B Borrower's obligations under
the Tranche B Facility (as described below)
(in such capacity, the "Tranche B
---------
Guarantor"; together with
---------
the Tranche A Guarantors, the
"Guarantors").
----------
Lender: IBM Credit LLC, a Delaware limited
liability company ("IBM Credit").
----------
2. FORBEARANCE PROVISIONS
----------------------
Forbearance: Notwithstanding the occurrence and
continuance of the Specified Events of
Default (as defined below), subject to the
terms and conditions hereof and of the
Forbearance Agreement, IBM Credit will
agree to forbear, during the Forbearance
Period, from the exercise of any or all
rights and remedies under the Credit
Agreement, the other applicable
Restructuring Documents and applicable law
solely in respect of the Specified Events
of Default; it being understood that the
foregoing is not and shall not be construed
as an amendment, waiver or modification of
the Credit Agreement except as expressly
provided herein and in the Forbearance
Agreement.
Forbearance Period: The period beginning on the Effective
Date (as defined below) and ending on
the Termination Date (as defined below).
Specified Events of Default: "Specified Events of Default" are:
---------------------------
(i) the Events of Default occurring and
continuing under Section 8.1(A) of the
Credit Agreement as a result of the
Borrowers' failure to pay to IBM Credit in
immediately available funds the amounts
due and payable in accordance with Section
2.3(B) and 2.4(B), respectively, of the
Credit Agreement or, alternatively, forty
percent (40%) of the original principal
amount of the Loans and interest and
expenses ($46,228,415.89) due and payable
since February 28, 2003, in accordance
with Section 2.8 of the Credit Agreement
and IBM Credit's letter to the Borrowers,
dated March 3, 2003 and (ii) any Events
of Default existing on the date hereof
which IBM Credit is aware of (including
the Events of Default resulting from the
failure to comply with the financial
conditions covenants set forth in
Section 7.1 of the Credit Agreement for
the applicable period ending December 31,
2002).
In the Notice of Default, dated March 6,
2003, IBM Credit notified the Borrowers and
the other Loan Parties of the Specified
Events of Default and that all Obligations
are immediately due and payable in
accordance with Section 8.2 of the Credit
Agreement.
2
All the Loans and other Obligations remain
outstanding and continue to be due and
payable.
Termination Date: The earlier to occur of (i) the date
on which the Loans and other Obligations
are repaid in full or otherwise satisfied
under "Payment Provisions" or (ii) a
Termination Event.
Termination Events: The occurrence of any of the following
events is a "Termination Event": (i)
-----------------
failure of ADS to be cash flow positive on
a consolidated operational basis (excluding
Digital Angel) at all times on and after
the 30-day anniversary of the Effective
Date; or (ii) failure to deliver the Budget
(as defined below) to IBM Credit within
one (1) Business Day of the date when due
in form and substance satisfactory to IBM
Credit; or (iii) the filing of any ADS or
Digital Angel shareholder lawsuit deemed
to be material, as determined by IBM Credit
in its sole and absolute discretion, or any
lawsuit by or on behalf of ADS or Digital
Angel or any other Loan Party against the
Tranche A Borrower, IBM Credit, IBM or any
Affiliate thereof; or (iv) the occurrence
of an Event of Default other than a
Specified Event of Default after the date
hereof or an Event of Default existing on
or prior to the date hereof and continuing
after the date hereof which IBM Credit is
not aware of; or (v) failure to repay the
Loans when due as set forth under
"Payment Provisions" below (subject to the
exercise of purchase rights set forth
under "Purchase Rights" thereunder); or
(vi) breach of any other covenant or
agreement set forth herein or in the
Forbearance Agreement and the
Restructuring Documents.
3. PAYMENT PROVISIONS
------------------
Repayment: The Tranche A Loan must be repaid in full
no later than September 30, 2003 provided
--------
that all but $3 million of the Tranche A
Loan (the "Tranche A Deficiency Amount")
---------------------------
will be deemed to be paid in full on such
date if less than the full amount of
the Tranche A Loan is repaid but all of
the net cash proceeds of the Digital Angel
Share Sale (as defined below) on terms
satisfactory to IBM Credit are applied to
the repayment of the Tranche A Loan. The
Tranche A Deficiency Amount (if any) must
be repaid no later than March 31, 2004.
The Tranche B Loan must be repaid in full
no later than March 31, 2004. All legal
fees incurred by IBM Credit as set forth in
"Expenses" will be capitalized as
additional principal under the Tranche B
Loan. From and after the date of this Term
Sheet, the
3
Tranche B Loan will bear interest at seven
percent (7%) per annum.
Purchase Rights: The Loans may be purchased by or on behalf
of the Borrowers as follows:
1. The Loans and all the other Obligations
may be purchased on or before June 30, 2003
for $30 million cash.
2. The Loans and all the other Obligations
may be purchased on or before September 30,
2003 for $50 million cash.
3. Notwithstanding anything to the contrary
stated above, the Tranche A Loan may be
purchased on or before September 30, 2003
for $40 million cash with an additional $10
million cash payment in respect of the
Tranche A Deficiency Amount and the Tranche
B Loan due on or before December 31, 2003.
Payment of $50 million in aggregate by the
date set forth above shall constitute
satisfaction of the Obligations.
4. DIGITAL ANGEL SHARE SALE The following conditions must be satisfied
------------------------ in respect of the sale under the Trust
Agreement of the Digital Angel shares held
by the Trust (the "Digital Angel Share
-------------------
Sale"). Such engagement will include
----
provision of a fairness opinion, if
requested by the Trust.
1. Promptly, and in any event within 30
days of the Effective Date, the Trust shall
engage an investment bank (the "Investment
----------
Bank") reasonably acceptable to IBM Credit
----
to conduct the Digital Angel Share Sale.
2. The Investment Bank fee structure will
be on customary terms and based upon the
success of the Digital Angel Share Sale,
such fees to be reasonably acceptable to
IBM Credit. IBM Credit will not be required
to indemnify the Investment Bank.
3. Within 30 days of the Effective Date,
the Investment Bank will have prepared and
delivered to IBM Credit, the Trust and ADS
a report, in form and substance
satisfactory to IBM Credit in its
reasonable discretion, in respect of the
Digital Angel Share Sale process
(including, without limitation, a timetable
to conduct such sale, the persons
responsible for managing such process, the
parameters of the expected transaction
terms and the Investment Bank's expected
range of proceeds). Any Digital Angel Share
Sale must be consummated without any
indemnification claims or contingencies
against the proceeds.
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4. (a) Unanimous written consent of the
Advisory Board Members (as defined in the
Trust Agreement) approving pursuit of the
Digital Angel Share Sale on the terms
proposed by the Investment Bank will have
been delivered to IBM Credit. Upon such
approval, the Trust will diligently and
expeditiously pursue the Digital Angel
Share Sale consistent with its obligations
under the Trust Agreement.
(b) Other required consents to the
Digital Angel Share Sale (including any
consents required under the Digital
Angel/▇▇▇▇▇ Fargo Credit Agreement, dated
as of October 30, 2002) will have been
obtained.
5. Digital Angel will agree to cooperate
(including, without limitation, assisting
and preparation of road show materials and
making senior management of Digital Angel
available to participate in meetings with
any prospective investors in a road show)
with the Investment Bank and the Trust to
facilitate the Digital Angel Share Sale.
6. All proceeds of the Digital Angel Share
Sale will be applied to the Loans and other
Obligations to the extent required under
the "Repayment" paragraph of the "Payment
Provisions" section above.
5. CASH COLLATERAL
---------------
Budget: On a weekly basis, IBM Credit will receive
a detailed budget (the "Budget") in respect
------
of each operating company of ADS (including
Digital Angel, SysComm and Computer
Equity) on both a consolidated and an
entity-by-entity basis. The Budget will be
provided to IBM Credit on a rolling 13-week
basis itemizing all revenues projected to
be received and all expenses proposed to
be made in the ordinary course of business
of such entities, such as expenses incurred
or payable in respect of vendors,
materialmen and payroll (it being expressly
understood by the parties hereto that any
legal and other professional fees
(including, without limitation, retainers
and expenses incurred or paid) in
connection with a defense of any
shareholder suit are not ordinary course
business expenses) during such periods and
other cash flow and financial projections,
all in form and substance satisfactory to
IBM Credit in its reasonable discretion.
Deposit Accounts: Collateral consisting of collected funds
deposited (whether directly or transmitted
from lockboxes) in Deposit Accounts shall
remain subject to the control of IBM Credit
in accordance with the
5
Contingent Blocked Account Agreement or
the other Deposit Account Control
Agreements, as applicable (including,
without limitation, any Deposit Account
and related Deposit Account Control
Agreement replacing or in substitution of
the Contingent Blocked Account Agreement
and the Deposit Accounts thereunder) (such
Collateral, the "Cash Collateral").
---------------
Usage: IBM Credit will make available Cash
Collateral from the Deposit Accounts to
ADS to pay expenses of ADS and its
Subsidiaries (excluding Digital Angel and
SysComm) in accordance with the Budget.
The Budget (excluding the budget in respect
of Digital Angel and SysComm) may be
adjusted on a week-to-week basis by an
amount equal to 10% of permitted
expenditures in the aggregate (the
"Maximum Adjustment Amount") provided that
------------------------- --------
no single line item for permitted
expenditures in the Budget may be adjusted
on a week-to-week basis by an amount in
excess of 20% of the Maximum Aggregate
Adjustment Amount.
6. OTHER COLLATERAL Tranche A Facility: The Borrowers and the
---------------- ------------------
other Loan Parties hereby confirm and
reaffirm that the Tranche A Facility and
the Obligations will continue to be secured
by a perfected first priority security
interest in the Digital Angel shares held
by the Trust for the benefit of IBM Credit
up to the aggregate amount of the
outstanding Tranche A Loan and Tranche B
Loan.
Tranche B Facility: The Borrowers and the
------------------
other Loan Parties hereby confirm and
reaffirm that the Tranche B Facility and
the Obligations will continue to be secured
by a perfected, first priority security
interest in (i) substantially all the
assets of the Tranche B Borrower and its
Subsidiaries, excluding the assets of
Digital Angel or its Subsidiaries, (ii) all
Capital Stock in Subsidiaries and other
investments held by the Tranche B Borrower,
and (iii) any notes or other securities
held by the Tranche B Borrower in
connection with the sale of assets or
investments.
The Borrowers and the other Loan Parties
hereby confirm and reaffirm that they will
take all necessary or reasonably desirable
actions to maintain and preserve IBM
Credit's prior perfected security interest
in the Collateral (including, without
limitation, in respect of any Collateral
consisting of Deposit Accounts pursuant to
any replacement or substitute cash
management system or arrangement).
6
7. CERTAIN CONDITIONS The Forbearance Agreement will be effective
------------------ on the date (the "Effective Date") on which
--------------
all of the following conditions precedent
to the Forbearance Agreement are satisfied
(such date to occur on or before March 31,
2003):
(a) IBM Credit shall have received a copy
of the Forbearance Agreement, all the
material terms of which shall be
substantially the same as the material
terms set forth in this Term Sheet and
otherwise in form and substance
satisfactory to IBM Credit, duly executed
by the parties thereto.
(b) IBM Corporation ("IBM") and IBM Credit
---
shall have received releases from each of
ADS (on behalf of itself and its officers
and directors), Digital Angel, the other
Loan Parties, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (in all
capacities relating to the Restructuring
Documents), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and the Advisory Board Members (as
defined in the Trust Agreement)
(collectively, the "Releasing Parties")
-----------------
satisfactory to IBM and IBM Credit forever
releasing and discharging IBM and IBM
Credit or any affiliate thereof, together
with their past and present officers,
directors, stockholders, employees,
subsidiaries, affiliates, related
companies, predecessors, successors,
assigns, agents, trustees, attorneys, or
other representatives and each of them from
all actions, causes of action, proceedings,
charges, complaints, claims, demands,
damages, costs, liabilities, agreements,
and obligations of every kind, which they
have ever had, now have or may have in the
future in respect of any matter under,
arising out of or relating to the
Restructuring Documents, this Term Sheet,
the Forbearance Agreement and the Lawsuit
(as defined below). Such releases shall
contain covenants not to ▇▇▇ IBM Credit,
IBM or any affiliate thereof in respect of
any matter under, arising out of or
relating to the Restructuring Documents,
this Term Sheet and the Forbearance
Agreement and the Lawsuit. Such releases
shall be duly authorized by all
organizational action (including Board
resolutions) as applicable, executed and
delivered by each of the Releasing Parties.
(c) The Advisory Board Members (as defined
in the Trust Agreement) will be
satisfactory to IBM Credit and duly
authorized by all applicable organizational
action of the Trust (including applicable
resolutions).
(d) The Advisory Board and Digital Angel
shall have agreed in writing that IBM
Credit is a third party beneficiary in the
Digital Angel Share Sale process.
7
(e) Each of ADS, Digital Angel, the
Advisory Board, the Trust and the other
Loan Parties shall have taken all necessary
organizational action (including applicable
applicable Board resolutions) authorizing
the transactions contemplated by this Term
Sheet and the Forbearance Agreement
(including, without limitation, any
releases and the Digital Angel Share Sale).
(f) ADS shall have delivered to IBM Credit
an initial Budget, satisfactory in form and
substance to IBM Credit in its reasonable
discretion.
(g) ADS shall take any actions requested by
IBM Credit to enable IBM Credit to continue
its "control" of Deposit Accounts.
8. CERTAIN ADDITIONAL COVENANTS
----------------------------
DISMISSAL OF LAWSUIT: ADS WILL CAUSE THE LAWSUIT, INITIALLY
FILED ON MARCH 7, 2003, AS CASE NO.
CA 03-02512AE IN THE FIFTEENTH JUDICIAL
CIRCUIT IN AND FOR PALM BEACH COUNTY,
FLORIDA AND REMOVED TO THE SOUTHERN
DISTRICT OF FLORIDA, CASE NO. 03-80186-
CIV-▇▇▇▇▇ ON MARCH 12, 2003 (THE
"LAWSUIT"), TO BE DISMISSED WITH PREJUDICE
-------
WITHIN ONE (1) BUSINESS DAY OF EXECUTION
OF THIS TERM SHEET BY THE PARTIES HERETO.
Press Releases: ADS and the other applicable Loan Parties
will deliver to IBM Credit prior to
the issuance thereof, any press releases
relating to the transactions contemplated
hereby (including, without limitation, the
Digital Angel Share Sale). IBM Credit will
review such press releases solely for
accuracy of the transactions contemplated
hereby. The Borrowers will have sole
liability in respect of any such press
releases.
9. ASSIGNMENTS IBM Credit may assign its Loans and other
----------- Obligations to any affiliate or any other
Person; provided that such Person agrees to
--------
be bound by the terms of the Forbearance
Agreement.
10. EXPENSES Each Borrower and each other Loan Party
-------- agrees to pay and reimburse IBM Credit for
all its reasonable costs and expenses
incurred in connection with the preparation
and delivery of this Term Sheet, the
Digital Angel Share Sale and the
Forbearance Agreement,
8
including, without limitation, the
reasonable fees and disbursements of ▇▇▇▇▇
Day, counsel to IBM Credit, and the
reasonable fees and costs and expenses of
the Investment Bank. Each Borrower and
each other Loan Party further agree to
pay all reasonable costs and expenses
incurred in connection with the Digital
Angel Share Sale (including, without
limitation, the reasonable fees and
disbursements of the Investment Bank and
▇▇▇▇▇ Day, counsel to IBM Credit)
regardless of any purchase of the Loans
and other Obligations under "Payment
Provisions - Purchase Rights." Legal fees
will be payable in accordance with the
provisions of "Payment Provisions -
Repayment."
11. INDEMNIFICATION Each Borrower and each other Loan Party
--------------- hereby agree to indemnify and hold
harmless IBM, IBM Credit and their
respective officers, directors,
consultants, advisors, agents and assigns
(collectively, the "Indemnified Persons")
-------------------
against all losses, claims, damages,
liabilities or other expenses (including
reasonable attorneys' fees and court costs
now or hereinafter arising from the
enforcement of this Term Sheet and the
Forbearance Agreement and the
documentation relating hereto, the
"Losses") to which any of them may become
------
subject insofar as such Losses arise out
of or are based upon any event,
circumstance or condition (a) occurring or
existing on or before the date of
this Term Sheet and the Forbearance
Agreement relating to any financing
arrangements IBM Credit may from time to
time have with (i) such Borrower, (ii)
any Person that shall be acquired by such
Borrower or (iii) any Person that such
Borrower may acquire all or substantially
all of the assets of, or (b) directly
or indirectly relating to the execution,
delivery or performance of this Term
Sheet and the Forbearance Agreement or the
consummation of the transactions
contemplated hereby or thereby or to any
of the Collateral or to any act or
omission of the Borrower in connection
therewith. Such indemnification will
include any Losses arising out of or
relating to any press releases as described
under "Certain Additional Covenants - Press
Releases." Notwithstanding the
foregoing, a Loan Party shall not be
obligated to indemnify IBM or IBM Credit
for any Losses incurred by IBM or IBM
Credit which are a result of IBM's or IBM
Credit's gross negligence or willful
misconduct. The indemnity provided herein
shall survive the termination of this Term
Sheet and the Forbearance Agreement
and shall be in addition to the indemnity
provisions set forth in Section 9.2 of
the Credit Agreement.
9
12. COUNTERPARTS This Term Sheet may be executed by one
------------ or more of the parties to this Term Sheet
on any number of separate counterparts
(including by telecopy), and all of said
counterparts taken together shall be deemed
to constitute one and the same
instrument. A set of the copies of this
Term Sheet signed by the parties hereto
shall be delivered to each Borrower and
IBM Credit.
13. GOVERNING LAW THIS TERM SHEET AND THE RIGHTS AND
------------- OBLIGATIONS OF THE PARTIES UNDER THIS TERM
SHEET SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK
INCLUDING WITHOUT LIMITATION SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW.
14. LIMITATION OF TRUSTEE It is expressly understood and agreed by
--------------------- the parties that (a) this document
LIABILITY is executed and delivered by Wilmington
--------- Trust Company, not individually or
personally, but solely as Trustee, in the
exercise of the powers and authority
conferred and vested in it, pursuant to the
Trust Agreement, (b) each of the
representations, undertakings and
agreements herein made on the part of the
Trust is made and intended not as personal
representations, undertakings and
agreements by Wilmington Trust Company but
is made and intended for the purpose for
binding only the Trust, (c) nothing herein
contained shall be construed as creating
any liability on Wilmington Trust Company,
individually or personally, to perform any
covenant either expressed or implied
contained herein, all such liability, if
any, being expressly waived by the parties
hereto and by any person claiming by,
through or under the parties hereto, and
(d) under no circumstances shall Wilmington
Trust Company be personally liable for the
payment of any indebtedness or expenses of
the Trust or be liable for the breach or
failure of any obligation, representation,
warranty or covenant made or undertaken by
the Trust under this Term Sheet or any
other related documents.
15. INTERPRETATION
--------------
Continuing Effect of the The Borrowers and each other Loan Party
Credit Agreement: hereby acknowledge and agree that the
Credit Agreement shall continue to be
and shall remain unchanged and in full
force and effect in accordance with its
10
terms, except as expressly modified hereby
and by the Forbearance Agreement.
No Limitation on Remedies after The Borrowers and each Loan Party hereby
Forbearance Period: acknowledge and agree that, at the end of
the Forbearance Period, the provisions
hereof and of the Forbearance Agreement
shall become of no force and effect and
IBM Credit shall be free, in accordance
with the Credit Agreement and the other
Restructuring Documents, to exercise and
enforce, or to take steps to exercise and
enforce, all rights, powers, privileges
and remedies available to them under the
Credit Agreement, any other Restructuring
Document or applicable law on account
of the Specified Events of Default (or any
other Default or Event of Default) as
if the Forbearance Agreement had not been
entered into by the parties hereto.
RESERVATION OF RIGHTS: NOTWITHSTANDING ANYTHING CONTAINED IN THIS
TERM SHEET OR THE FORBEARANCE AGREEMENT TO
THE CONTRARY, THE BORROWERS AND EACH
OTHER LOAN PARTY ACKNOWLEDGE THAT IBM
CREDIT DOES NOT WAIVE, AND EXPRESSLY
RESERVES, THE RIGHT TO EXERCISE, AT ANY
TIME DURING THE FORBEARANCE PERIOD, ANY
AND ALL OF ITS RIGHTS AND REMEDIES UNDER
(A) THE CREDIT AGREEMENT, ANY OTHER
RESTRUCTURING DOCUMENT AND APPLICABLE LAW
IN RESPECT OF THE SPECIFIED EVENTS OF
DEFAULT AGAINST ANY PERSON OTHER THAN THE
BORROWERS OR ANY SUCH LOAN PARTY AND
(B) THE CREDIT AGREEMENT, ANY OTHER
RESTRUCTURING DOCUMENT AND APPLICABLE LAW
IN RESPECT OF ANY DEFAULT OR EVENT OF
DEFAULT OTHER THAN THE SPECIFIED EVENTS OF
DEFAULT.
16. CONSENT Notwithstanding any provisions to the
------- contrary in the Credit Agreement, IBM
Credit hereby agrees to consent to the buy
out by ADS of the respective Employment
Agreements of each respective Employee
with ADS common stock with a current market
value not to exceed the required
buyout amount under the applicable
Employment Agreement.
11
IN WITNESS WHEREOF, each of IBM Credit, each Borrower, each
Guarantor and each other Loan Party hereto has read this entire Term Sheet, and
has caused their respective authorized representatives to execute this Term
Sheet and has caused its corporate seal, if any, to be affixed hereto as of the
date first written above.
IBM CREDIT CORPORATION, APPLIED DIGITAL SOLUTIONS, INC.,
as Lender as Tranche B Borrower and Tranche A Guarantor
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
DIGITAL ANGEL SHARE TRUST, ADS MONTEREY, INC.
as Tranche A Borrower and Tranche B Guarantor
By: Wilmington Trust Company, not in its By: _________________________________________________
individual capacity but solely as Trustee
Name:
By: ___________________________________________________
Title:
Name: Wilmington Trust Company
Title: Trustee
ADVANCED POWER SOLUTIONS, INC. THE AMERICOM GROUP, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
APPLIED DIGITAL SOLUTIONS FINANCIAL CORP. BALVA FINANCIAL CORPORATION
By: ___________________________________________________ By: __________________________________________________
Name: Name:
Title: Title:
COMPUTER EQUITY CORPORATION DIGITAL ANGEL CORPORATION
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
DIGITAL ANGEL HOLDINGS, LLC FEDERAL CONVENTION CONTRACTORS, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
FEDERAL SERVICES, INC. GOVERNMENT TELECOMMUNICATIONS, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
INFORMATION TECHNOLOGY SERVICES, INC. INFOTECH USA, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
PDS ACQUISITION CORP. PERIMETER ACQUISITION CORP.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
PRECISION POINT CORPORATION SYSCOMM INTERNATIONAL CORPORATION
By: ___________________________________________________ By: _________________________________________________
Name: Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Title: President
U.S. ELECTRICAL PRODUCTS CORP. VERICHIP CORPORATION
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
WEBNET SERVICES, INC. ACT COMMUNICATIONS INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
ACT-GFX CANADA, INC. ADS BAY AREA, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
ADSI TELECOMM SERVICES, INC. ADSI TELECOMM SERVICES OF MARYLAND, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
ADVANCED TELECOMM OF MARYLAND, INC. ADVANCED TELECOMM OF PITTSBURGH
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
ADVANCED TELECOMMUNICATIONS, INC. APPLIED DIGITAL ORACLE PRACTICE, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
ARJANG, INC. BLUE STAR ELECTRONICS, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
BOSTEK, INC. CYBERTECH STATION, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
ELITE COMPUTER SERVICES, INC. INDEPENDENT ACQUISITION, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
INTELLESALE, INC. MICRO COMPONENTS INTERNATIONAL INCORPORATED
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
NEIRBOD CORP. NORCOM RESOURCES INCORPORATED
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
▇▇▇▇▇▇▇ RE-MARKETING, INC. SERVICE TRANSPORT COMPANY
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
TELEDATA CONCEPTS, INC. WYR, INC.
By: ___________________________________________________ By: _________________________________________________
Name: Name:
Title: Title:
Acknowledged and agreed:
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