EXECUTION COPY





                                 ADSX AGREEMENT

                                 BY AND BETWEEN

                         APPLIED DIGITAL SOLUTIONS, INC.

                                       AND

                                  MCY.COM, INC.

                          DATED AS OF OCTOBER 19, 2000


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                                                                  EXECUTION COPY

                                 ADSX AGREEMENT
                                 --------------

         ADSX AGREEMENT dated as of October 19, 2000 (this "Agreement"),  by and
between Applied Digital  Solutions,  Inc., a Missouri  corporation  ("ADSX") and
MCY.com, Inc., a Delaware corporation ("MCY").


                                    RECITALS

         WHEREAS,  ADSX owns or has exclusive rights in "Net-Vu",  a proprietary
technology (the "ADSX Technology"); and

         WHEREAS,  MCY Music World, Inc, a Delaware corporation and wholly-owned
subsidiary  of MCY  ("Music")  wishes  to  obtain  from  ADSX  a  non-exclusive,
perpetual,  fully  paid,  license  for the use of the ADSX  Technology  and ADSX
wishes to grant such a license to Music,  on the same basis,  for such  purposes
only; and

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
legal  adequacy of which is hereby  acknowledged,  the parties  hereby  agree as
follows:

1.       Grant of ADSX License; Consideration, etc.

         (a) Grant of ADSX  License to MCY. For the  consideration  set forth in
Section 1(b) hereof,  ADSX hereby  grants to Music a  non-exclusive,  perpetual,
fully paid,  personal,  limited and transferable license (the "ADSX License") of
the ADSX Technology  pursuant to the terms and conditions of a license agreement
between Music and ADSX in the form of Exhibit A attached hereto.

         (b)  Consideration.  In  consideration  for the ADSX  grant of the ADSX
License,  MCY will: (i) have an obligation to pay to ADSX  $9,000,000 (the "Cash
Consideration");  and (ii) [615,976]  shares of MCY.com,  Inc. common stock (the
"MCY Shares).  The Cash Consideration and the MCY Shares shall be paid by MCY as
invoiced by ADSX.

         (c) Registration  Rights. MCY shall grant to ADSX certain  registration
rights  with  respect to the MCY Shares  under the  Securities  Act of 1933,  as
amended (the "Securities Act"),  pursuant to a registration  rights agreement by
and  between  ADSX and MCY in the form  attached  hereto as  Exhibit B (the "MCY
Registration Rights Agreement").

2.       Representations and Warranties.

         2.1 MCY hereby represents and warrants to ADSX as follows:

         (a)  Organization,  Good Standing and Power.  MCY is a corporation duly
incorporated,  validly existing and in good standing under the laws of the State
of Delaware and has the requisite  corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being  conducted.
MCY does not have any subsidiaries  except as set forth on Schedule 2.1(a).  MCY
and each  such  subsidiary  is duly  qualified  as a foreign

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corporation  to do business  and is in good  standing in every  jurisdiction  in
which the nature of the business  conducted  or property  owned by it makes such
qualification  necessary except for any jurisdiction (alone or in the aggregate)
in which the failure to be so  qualified  will not have a MCY  Material  Adverse
Effect. For the purposes of this Agreement,  "MCY Material Adverse Effect" means
any  adverse  effect on the  business,  operations,  properties,  prospects,  or
financial condition of MCY and its subsidiaries taken as a whole.

         (b)  Authorization;  Enforceability.  MCY has the  requisite  corporate
power and authority to enter into and perform this Agreement,  the ADSX License,
the MCY Registration  Rights Agreement and the Escrow and Payment  Agreement and
all other  agreements,  certificates,  instruments  and  documents  executed  in
connection  therewith  (collectively,  the "MCY  Transaction  Documents") and to
issue  the MCY  Shares  in  accordance  with the terms  hereof.  The  execution,
delivery  and  performance  of the  MCY  Transaction  Documents  by MCY  and the
consummation by it of the transactions contemplated hereby and thereby have been
duly and validly  authorized by all necessary  corporate action,  and no further
consent or  authorization  of MCY or its Board of Directors or  stockholders  as
required. The MCY Transaction Documents have been duly executed and delivered by
MCY.  Each of the MCY  Transaction  Documents  constitutes  a valid and  binding
obligation of MCY enforceable  against MCY in accordance with its terms,  except
as such  enforceability  may be limited by  applicable  bankruptcy,  insolvency,
reorganization,   moratorium,  liquidation,  conservatorship,   receivership  or
similar laws relating to, or affecting  generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.

         (c) Capitalization.  The authorized capital stock of MCY and the shares
thereof currently issued and outstanding as of September 29, 2000, are set forth
on Schedule 2.1(c) hereto.  All of the outstanding  shares of MCY's common stock
have been duly and validly authorized.

         (d) Issuance of Shares. The MCY Shares have been duly authorized by all
necessary  corporate  action and, when paid for or issued in accordance with the
terms  hereof  shall  be  validly  issued  and   outstanding,   fully  paid  and
nonassessable.

         (e) No Conflicts.  The execution,  delivery and  performance of the MCY
Transaction  Documents by MCY or Music, as the case may be, and the consummation
by MCY of the transactions  contemplated  hereby and thereby do not and will not
(i) violate any provision of MCY's Certificate of Incorporation or Bylaws,  (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,   acceleration  or  cancellation  of,  any  agreement,
mortgage,  deed of trust,  indenture,  note,  bond,  license,  lease  agreement,
instrument  or  obligation  to  which  MCY  is a  party  or by  which  it or its
properties  or assets  are  bound,  (iii)  create  or  impose a lien,  mortgage,
security interest,  charge or encumbrance of any nature on any property or asset
of MCY under any agreement or any commitment to which MCY is a party or by which
MCY is bound or by which any of its  respective  properties or assets are bound,
or (iv) result in a violation of any federal,  state,  local or foreign statute,
rule,  regulation,  order,  judgment  or  decree  (including  federal  and state
securities laws and regulations) applicable to MCY or any of its subsidiaries or
by which any  property or asset of MCY or any of its  subsidiaries  are bound or
affected,  except,  in all cases  other than  violations  pursuant to clause (i)
above, for such conflicts,

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defaults, terminations,  amendments, acceleration,  cancellations and violations
as would not,  individually  or in the  aggregate,  have a MCY Material  Adverse
Effect.  The  business of MCY and its  subsidiaries  is not being  conducted  in
violation of any laws,  ordinances or  regulations of any  governmental  entity,
except for possible  violations  which singularly or in the aggregate do not and
will not have a MCY Material Adverse Effect.  MCY is not required under federal,
state or local law, rule or regulation to obtain any consent,  authorization  or
order of, or make any filing or  registration  with,  any court or  governmental
agency in order for it to  execute,  deliver or perform  any of its  obligations
under the MCY  Transaction  Documents  in  accordance  with the terms  hereof or
thereof (other than any filings which may be required to be made by MCY with the
Commission or state securities  administrators  pursuant to the terms hereof and
any registration statement which may be filed pursuant hereto).

         (f) Commission Documents, Financial Statements. The common stock of MCY
is registered  pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange  Act").  True and complete  copies of the all reports,
schedules, forms, statements and other documents required to be filed by it with
the Commission  pursuant to the reporting  requirements  of the Exchange Act are
available on the Commission's  "electronic data gathering and retrieval" service
("EDGAR").

         (g) No Material Adverse Change.  Since September 30, 2000,  neither MCY
nor its  subsidiaries  has  experienced  or suffered  any MCY  Material  Adverse
Effect, other than a general decline in the stock price of MCY.com,  Inc. common
stock and that MCY continues to incur losses as a result of its operations.

         (h) No Undisclosed Liabilities.  Except as disclosed on Schedule 2.1(h)
hereto,   neither  MCY  nor  any  of  its   subsidiaries  has  any  liabilities,
obligations,  claims or losses (whether  liquidated or unliquidated,  secured or
unsecured, absolute, accrued, contingent or otherwise) other than those incurred
in the ordinary course of MCY's or its subsidiaries  respective businesses since
December 31, 1999 and which,  individually or in the aggregate,  do not or would
not have a MCY Material Adverse Effect on MCY or its subsidiaries.

         (i) Actions Pending.  There is no action,  suit, claim,  investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the  knowledge of MCY,  threatened  against MCY or any  subsidiary  which
questions  the validity of this  Agreement  or any of the other MCY  Transaction
Documents  or any of the  transactions  contemplated  hereby or  thereby  or any
action taken or to be taken pursuant  hereto or thereto.  Except as set forth in
the Commission Filings or on Schedule 2.1(i) hereto,  there is no action,  suit,
claim,  investigation,  arbitration,  alternate dispute resolution proceeding or
other  proceeding  pending or, to the knowledge of MCY,  threatened,  against or
involving  MCY, any subsidiary or any of their  respective  properties or assets
which is likely to have a MCY Material Adverse Effect.  There are no outstanding
orders,  judgments,  injunctions,  awards or decrees of any court, arbitrator or
governmental or regulatory body against MCY or any subsidiary or any officers or
directors of MCY or subsidiary in their capacities as such.

         (j) Compliance with Law. The business of MCY and its subsidiaries  have
been and is presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances,  except as
set  forth on  Schedule  2.1(j)

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hereto  or such  that,  individually  or in the  aggregate,  do not  cause a MCY
Material Adverse Effect.  MCY and each of its subsidiaries  have all franchises,
permits, licenses,  consents and other governmental or regulatory authorizations
and approvals  necessary for the conduct of its business as now being  conducted
by it unless the failure to possess such franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals,  individually
or in the  aggregate,  could not  reasonably  be expected to have a MCY Material
Adverse Effect.

         (k) Certain Fees.  Except as set forth on Schedule  2.1(k)  hereto,  no
brokers,  finders or financial  advisory fees or commissions  will be payable by
MCY or any  subsidiary  with respect to the  transactions  contemplated  by this
Agreement.

         2.2  Representations and Warranties of ADSX. ADSX hereby represents and
warrants to MCY as follows:

         (a)  Organization,  Good Standing and Power. ADSX is a corporation duly
incorporated,  validly existing and in good standing under the laws of the State
of Missouri and has the requisite  corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being  conducted.
ADSX  does not have any  subsidiaries  except as set  forth on  Schedule  2.2(a)
hereto. ADSX and each such subsidiary is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the  business  conducted  or  property  owned by it makes such  qualification
necessary except for any  jurisdiction  (alone or in the aggregate) in which the
failure to be so qualified will not have an ADSX Material  Adverse  Effect.  For
the purposes of this Agreement, "ADSX Material Adverse Effect" means any adverse
effect  on  the  business,  operations,   properties,  prospects,  or  financial
condition of ADSX and subsidiaries taken as a whole.

         (b) Authorization;  Enforcement. ADSX has the requisite corporate power
and authority to enter into and perform this  Agreement,  the ADSX License,  the
ADSX Registration  Rights Agreement and the Escrow and Payment Agreement and all
other agreements, certificates, instruments and documents executed in connection
therewith  (collectively,  the "ADSX  Transaction  Documents").  The  execution,
delivery  and  performance  of the ADSX  Transaction  Documents  by ADSX and the
consummation by it of the transactions contemplated hereby and thereby have been
duly and validly  authorized by all necessary  corporate action,  and no further
consent or  authorization  of ADSX or its Board of Directors or  stockholders is
required.  The ADSX Transaction  Documents have been duly executed and delivered
by ADSX. Each of the ADSX Transaction  Documents constitutes a valid and binding
obligation of the ADSX  enforceable  against ADSX in accordance  with its terms,
except  as  such  enforceability  may  be  limited  by  applicable   bankruptcy,
insolvency,    reorganization,    moratorium,   liquidation,    conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor's  rights and remedies or by other equitable  principles of general
application.

         (c) No Conflicts.  The execution,  delivery and performance of the ADSX
Transaction  Documents by ADSX and the  consummation by ADSX of the transactions
contemplated hereby and thereby do not and will not (i) violate any provision of
the ADSX'  Certificate of  Incorporation  or its Bylaws,  (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

                                      -4-
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termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
mortgage,  deed of trust,  indenture,  note,  bond,  license,  lease  agreement,
instrument  or  obligation  to  which  ADSX is a  party  or by  which  it or its
properties  or assets  are  bound,  (iii)  create  or  impose a lien,  mortgage,
security interest,  charge or encumbrance of any nature on any property or asset
of ADSX under any  agreement  or any  commitment  to which ADSX is a party or by
which ADSX is bound or by which any of its  respective  properties or assets are
bound,  or (iv) result in a violation  of any federal,  state,  local or foreign
statute,  rule,  regulation,  order,  judgment or decree (including  federal and
state  securities  laws  and  regulations)  applicable  to  ADSX  or  any of its
subsidiaries  or by  which  any  property  or  asset  of  ADSX  or  any  of  its
subsidiaries are bound or affected,  except,  in all cases other than violations
pursuant  to clause  (i)  above,  for such  conflicts,  defaults,  terminations,
amendments,   acceleration,   cancellations   and   violations   as  would  not,
individually  or in the aggregate,  have an ADSX Material  Adverse  Effect.  The
business of ADSX and its subsidiaries is not being conducted in violation of any
laws,  ordinances or regulations of any governmental entity, except for possible
violations  which singularly or in the aggregate do not and will not have a ADSX
Material Adverse Effect. ADSX is not required under federal, state or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute,  deliver or perform any of its obligations  under the ADSX  Transaction
Documents in accordance with the terms hereof or thereof (other than any filings
which may be required to be made by ADSX with the Commission or state securities
administrators pursuant to the terms hereof and any registration statement which
may be filed pursuant hereto).

         (d) No Material Adverse Change. Since September 30, 2000, other than as
reported  by ADSX in its  Quarterly  Report  on Form 10-Q for the  period  ended
September  30,  2000,  as  amended  filed  with  the  Commission,  ADSX  has not
experienced or suffered any ADSX Material Adverse Effect.

         (e) Actions Pending.  There is no action,  suit, claim,  investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the knowledge of ADSX,  threatened  against ADSX or any subsidiary  which
questions  the validity of this  Agreement or any of the other ADSX  Transaction
Documents  or any of the  transactions  contemplated  hereby or  thereby  or any
action taken or to be taken pursuant  hereto or thereto.  Except as set forth in
the Commission Filings or on Schedule 2.2(e) hereto,  there is no action,  suit,
claim,  investigation,  arbitration,  alternate dispute resolution proceeding or
other proceeding  pending or, to the knowledge of ADSX,  threatened,  against or
involving ADSX, any subsidiary or any of their  respective  properties or assets
which  is  likely  to  have  an  ADSX  Material  Adverse  Effect.  There  are no
outstanding  orders,  judgments,  injunctions,  awards or  decrees of any court,
arbitrator or  governmental or regulatory body against ADSX or any subsidiary or
any officers or directors of ADSX or subsidiary in their capacities as such.

         (f) Compliance with Law. The business of ADSX and the  subsidiaries has
been and is presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances,  except as
set  forth on  Schedule  2.2(f)  hereto  or such  that,  individually  or in the
aggregate,  do not cause an ADSX Material  Adverse Effect.  ADSX and each of its
subsidiaries  have  all  franchises,   permits,  licenses,  consents  and  other
governmental  or  regulatory  authorizations  and  approvals  necessary  for the
conduct of its  business  as now being  conducted  by it unless  the  failure to
possess such franchises,  permits,

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<PAGE>

licenses,  consents and other  governmental  or  regulatory  authorizations  and
approvals, individually or in the aggregate, could not reasonably be expected to
have an ADSX Material Adverse Effect.

         (g) Certain Fees.  Except as set forth on Schedule  2.2(g)  hereto,  no
brokers,  finders or financial  advisory fees or commissions  will be payable by
ADSX or any subsidiary  with respect to the  transactions  contemplated  by this
Agreement.

         (h)  Acquisition  for  Investment.  ADSX is  purchasing  the MCY Shares
solely for its own account for the purpose of investment  and not with a view to
or for sale in  connection  with  distribution.  ADSX  does  not have a  present
intention  to sell the MCY  Shares,  nor a present  arrangement  (whether or not
legally  binding) or  intention to effect any  distribution  of MCY Shares to or
through  any  person  or  entity;   provided,   however,   that  by  making  the
representations  herein,  ADSX  does not  agree to hold the MCY  Shares  for any
minimum  or other  specific  term and  reserves  the right to dispose of the MCY
Shares  at any  time in  accordance  with  federal  and  state  securities  laws
applicable to such  disposition.  ADSX  acknowledges that it is able to bear the
financial risks associated with an investment in MCY Shares and that it has been
given  full  access  to such  records  of MCY and  the  subsidiaries  and to the
officers of MCY and the  subsidiaries as it has deemed  necessary or appropriate
to conduct its due diligence investigation.

         (i) Accredited Investor. ADSX is an "accredited investor" as defined in
Regulation D promulgated  under the  Securities  Act and has such  knowledge and
experience in financial and business  matters that ADSX is capable of evaluating
the merits and risks of ADSX' investment in MCY.

         (j)  Rule  144.  ADSX  understands  that  the MCY  Shares  must be held
indefinitely unless the MCY Shares are registered under the Securities Act or an
exemption from registration is available.  ADSX acknowledges that it is familiar
with  Rule 144 of the rules  and  regulations  of the  Commission,  as  amended,
promulgated  pursuant to the Securities Act ("Rule 144"), and that ADSX has been
advised that Rule 144 permits  resales only under  certain  circumstances.  ADSX
understands  that to the  extent  that Rule 144 is not  available,  ADSX will be
unable  to sell any of the MCY  Shares  without  either  registration  under the
Securities  Act or the  existence of another  exemption  from such  registration
requirement.

         (k)  No  Broker-Dealer   Affiliation.   ADSX  is  not  a  broker-dealer
registered  with the Commission or an affiliate (as such term is defined in Rule
144(a) promulgated under the Securities Act) of a broker-dealer  registered with
the Commission.

         (l) General. ADSX understands that the MCY Shares are being offered and
sold in reliance on a transactional exemption from the registration  requirement
of  federal  and state  securities  laws and MCY is  relying  upon the truth and
accuracy of the  representations,  warranties,  agreements,  acknowledgments and
understandings  of ADSX set forth herein in order to determine the applicability
of such exemptions and the  suitability of ADSX to acquire the MCY Shares.  ADSX
understands  that no United States  federal or state agency or any government or
governmental agency has passed upon or made any recommendation or endorsement of
the MCY Shares.

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<PAGE>

         (m) Opportunities for Additional Information. ADSX acknowledges that it
has had the  opportunity to ask questions of and receive answers from, or obtain
additional  information  from,  the  executive  officers of MCY  concerning  the
technology,  financial  and  other  affairs  of MCY,  and to the  extent  deemed
necessary  in light of ADSX'  knowledge  of MCY's  affairs,  ADSX has asked such
questions and received answers to the full satisfaction of MCY, and ADSX desires
to invest in MCY.

         (n) No General Solicitation. ADSX acknowledges that the MCY Shares were
not  offered  to it by means of any form of general  or public  solicitation  or
general   advertising,   or  publicly   disseminated   advertisements  or  sales
literature,   including  (i)  any  advertisement,   article,   notice  or  other
communication  published  in any  newspaper,  magazine,  or  similar  media,  or
broadcast over  television or radio,  or (ii) any seminar or meeting to which it
was invited by any of the foregoing means of communications.

3.       Conditions

         3.1 Conditions Precedent to the Obligations of ADSX. The obligations of
ADSX  hereunder  to grant the ADSX  License are subject to the  satisfaction  or
waiver,  at the Release Date (as such term is hereinafter  defined),  of each of
the conditions set forth below.  These conditions are for ADSX' sole benefit and
may be waived by ADSX at any time in its sole  discretion.  For the  purposes of
this Agreement,  the term "Release Date" shall mean the date on which all of the
conditions set forth in this Section 3 have been fully satisfied.

         (a)  Accuracy  of   Representations   and   Warranties.   Each  of  the
representations  and  warranties  of MCY shall have been true and correct in all
material  respects as of the date hereof and shall be true and correct as of the
Release Date.

         (b)  Performance.  MCY shall have performed,  satisfied and complied in
all respects with all  covenants,  agreements  and  conditions  required by this
Agreement to be  performed,  satisfied or complied with by MCY as of the Release
Date.

         (c) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

         (d) No Proceedings or Litigation.  No action, suit or proceeding before
any arbitrator or any governmental  authority shall have been commenced,  and no
investigation by any governmental authority shall have been threatened,  against
MCY or any subsidiary, or any of the officers, directors or affiliates of MCY or
any  subsidiary  seeking  to  restrain,   prevent  or  change  the  transactions
contemplated  by this  Agreement,  or seeking  damages in  connection  with such
transactions.

         (e)  ADSX  Agreement.  MCY  shall  have  executed  and  delivered  this
Agreement to ADSX.

         (f) MCY  Registration  Rights  Agreement.  MCY shall have  executed and
delivered the MCY Registration Rights Agreement to ADSX.

                                      -7-
<PAGE>

         (g)  Secretary's  Certificate.  MCY  shall  have  delivered  to  ADSX a
secretary's  certificate,  dated as of the Release Date,  as to (i)  resolutions
adopted by its the Board of Directors  approving the MCY  Transaction  Documents
and  the   transactions   contemplate   therewith,   (ii)  the   Certificate  of
Incorporation  of MCY as in effect as of the Release  Date,  (iii) the Bylaws of
MCY, as in effect as of the Release Date,  and (iv) the authority and incumbency
of the officers of MCY  executing  the MCY  Transaction  Documents and any other
documents required to be executed or delivered in connection therewith.

         3.2  Conditions  Precedent to the  Obligations  of MCY. The  obligation
hereunder  of MCY is subject  to the  satisfaction  or waiver,  at or before the
Release Date, of each of the  conditions set forth below.  These  conditions are
for  MCY's  sole  benefit  and may be  waived  by MCY at any  time  in its  sole
discretion.

         (a)  Accuracy  of   Representations   and   Warranties.   Each  of  the
representations  and  warranties of ADSX shall have been true and correct in all
material  respects as of the date hereof and shall be true and correct as of the
Release Date.

         (b) Performance.  ADSX shall have performed,  satisfied and complied in
all respects with all  covenants,  agreements  and  conditions  required by this
Agreement to be performed,  satisfied or complied with by ADSX as of the Release
Date.

         (c) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

         (d) No Proceedings or Litigation.  No action, suit or proceeding before
any arbitrator or any governmental  authority shall have been commenced,  and no
investigation by any governmental authority shall have been threatened,  against
ADSX or any subsidiary, or any of the officers,  directors or affiliates of ADSX
or any  subsidiary  seeking to  restrain,  prevent  or change  the  transactions
contemplated  by this  Agreement,  or seeking  damages in  connection  with such
transactions.

         (e)  Secretary's  Certificate.  ADSX  shall  have  delivered  to  MCY a
secretary's  certificate,  dated as of the Release Date,  as to (i)  resolutions
adopted by its the Board of Directors  approving the ADSX Transaction  Documents
and  the   transactions   contemplated   therewith,   (ii)  the  Certificate  of
Incorporation  of ADSX as in effect as of the Release Date,  (iii) the Bylaws of
ADSX, as in effect as of the Release Date, and (iv) the authority and incumbency
of the officers of ADSX executing the ADSX  Transaction  Documents and any other
documents required to be executed or delivered in connection therewith.

4.       Indemnification.

         (a) Survival of Representations and Warranties. The representations and
warranties set forth in Section 2 shall survive until the second  anniversary of
the Release Date.

         (b)  Indemnification  by MCY. MCY agrees to indemnify and hold harmless
ADSX and its directors,  officers,  affiliates,  agents,  successors and assigns
from and against any and all

                                      -8-
<PAGE>

losses,  liabilities,  deficiencies,  costs,  damages and  expenses  (including,
without  limitation,  reasonable  attorney's  fees,  charges and  disbursements)
incurred  by  ADSX  as  a  result  of  any   inaccuracy  in  or  breach  of  the
representations, warranties or covenants made by MCY herein.

         (c) Indemnification by ADSX. ADSX agrees to indemnify and hold harmless
MCY and its directors, officers, affiliates, agents, successors and assigns from
and against any and all losses,  liabilities,  deficiencies,  costs, damages and
expenses (including, without limitation, reasonable attorney's fees, charges and
disbursements) incurred by MCY as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by ADSX herein.

         (d)  Indemnification  Procedure.  Any party entitled to indemnification
under this Section 4 (an  "indemnified  party") will give written  notice to the
indemnifying  party of any matters  giving rise to a claim for  indemnification;
provided, that the failure of any party entitled to indemnification hereunder to
give notice as provided herein shall not relieve the  indemnifying  party of its
obligations  under  this  Section 4 except to the extent  that the  indemnifying
party is actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified  party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the indemnified party a
conflict  of  interest  between  it and the  indemnifying  party may exist  with
respect of such action,  proceeding or claim, to assume the defense thereof with
counsel reasonably  satisfactory to the indemnified party. In the event that the
indemnifying  party  advises an  indemnified  party that it will  contest such a
claim for  indemnification  hereunder,  or  fails,  within  thirty  (30) days of
receipt of any indemnification  notice to notify, in writing, such person of its
election to defend,  settle or  compromise,  at its sole cost and  expense,  any
action,  proceeding or claim (or  discontinues  its defense at any time after it
commences such defense),  then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying  party elects in writing to assume and does so assume
the defense of any such claim,  proceeding or action,  the  indemnified  party's
costs and expenses  arising out of the defense,  settlement or compromise of any
such action,  claim or  proceeding  shall be losses  subject to  indemnification
hereunder.  The indemnified  party shall  cooperate fully with the  indemnifying
party in connection  with any negotiation or defense of any such action or claim
by the  indemnifying  party  and shall  furnish  to the  indemnifying  party all
information  reasonably available to the indemnified party which relates to such
action or claim. The indemnifying  party shall keep the indemnified  party fully
apprised  at  all  times  as to the  status  of the  defense  or any  settlement
negotiations  with respect thereto.  If the indemnifying  party elects to defend
any such  action or claim,  then the  indemnified  party  shall be  entitled  to
participate  in such  defense  with  counsel  of its choice at its sole cost and
expense.  The  indemnifying  party shall not be liable for any settlement of any
action,  claim  or  proceeding  effected  without  its  prior  written  consent.
Notwithstanding  anything in this Section 4 to the  contrary,  the  indemnifying
party shall not, without the indemnified  party's prior written consent,  settle
or compromise  any claim or consent to entry of any judgment in respect  thereof
which imposes any future  obligation on the indemnified  party or which does not
include,  as an  unconditional  term thereof,  the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim.  The  indemnification  required  by this  Section 4 shall be made by
periodic  payments of the amount thereof during the course of  investigation  or
defense, as and when bills are received or expense, loss, damage or liability is
incurred,  so long as the indemnified  party  irrevocably  agrees to refund such
moneys if it is ultimately determined

                                      -9-
<PAGE>

by a court of  competent  jurisdiction  that  such  party  was not  entitled  to
indemnification.  The indemnity agreements contained herein shall be in addition
to (a) any cause of action or similar  rights of the  indemnified  party against
the indemnifying party or others, and (b) any liabilities the indemnifying party
may be subject to pursuant to the law.

5.       Miscellaneous.

         (a) Expenses.  All expenses  incurred in connection with this Agreement
shall be paid by the party incurring such expenses.

         (b) Assignment;  Pledge. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors (by merger,
consolidation or sale of all or  substantially  all of the assets of such party)
and  permitted  assigns.  This  Agreement  may not be assigned,  transferred  or
pledged by either party,  without the prior  written  consent of the other party
hereto.

         (c) Governing Law. This Agreement shall be governed by and construed in
accordance  with the laws of the State of New York applicable to agreements made
and to be performed in that state,  without  regard to any of its  principles of
conflicts  of laws or other laws which would  result in the  application  of the
laws of another jurisdiction.  This Agreement shall be construed and interpreted
without regard to any presumption against the party causing this Agreement to be
drafted.

         (d)  Jurisdiction;  Waiver of Jury Trial.  EACH OF THE  PARTIES  HERETO
UNCONDITIONALLY  AND IRREVOCABLY  CONSENTS TO THE EXCLUSIVE  JURISDICTION OF THE
COURTS OF THE  STATE OF NEW YORK  LOCATED  IN NEW YORK  COUNTY  AND THE  FEDERAL
DISTRICT  COURT FOR THE SOUTHERN  DISTRICT OF NEW YORK WITH RESPECT TO ANY SUIT,
ACTION  OR  PROCEEDING  ARISING  OUT OF OR  RELATING  TO THIS  AGREEMENT  OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
CONTEST  THE  VENUE OF SAID  COURTS OR  DISTRICT  OR TO CLAIM  THAT SAID  COURTS
CONSTITUTE AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO AGREES THAT SERVICE
OF ANY SUMMONS, COMPLAINT, NOTICE OR OTHER PROCESS RELATING TO SUCH SUIT, ACTION
OR OTHER PROCEEDING MAY BE EFFECTED IN THE MANNER PROVIDED IN SECTION 5(j). EACH
OF THE PARTIES  HERETO  UNCONDITIONALLY  AND  IRREVOCABLY  WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION,  SUIT OR  PROCEEDING  ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

         (e) Entire  Agreement.  This Agreement and any exhibits and attachments
hereto, and the other agreements referred to herein, constitute the complete and
exclusive  understanding  and agreement  between the parties with respect to the
subject matter hereof,  superseding and replacing any and all prior  agreements,
communications,  and  understandings  (both  written  and oral)  regarding  such
subject matter  including,  without  limitation,  the MCY Agreement of even date
herewith by and between MCY and ADSX and the  agreements  contemplated  thereby,
all of

                                      -10-
<PAGE>

which  are  merged   herein.   There  are  no   representations,   promises   or
understandings regarding such subject matter, except to the extent expressly set
forth herein.

         (f)   Remedies   Cumulative;    Invalidity.   All   remedies,   rights,
undertakings,  obligations  and agreements  contained in this Agreement shall be
cumulative,  and none of them shall be in limitation of any other remedy, right,
undertaking,  obligation or agreement available to either of the parties hereto.
The  invalidity,  illegality  or  unenforceability  of  any  term  or  provision
contained in this Agreement (as determined by a court of competent jurisdiction)
shall not affect the validity,  legality or  enforceability of any other term or
provision  hereof.  It is the  intent  of the  parties  that this  Agreement  be
enforced to the fullest extent permitted by applicable law.

         (g)  Waiver.  No course of dealing or  omission or delay of the part of
any  party  hereto  in  asserting  or  exercising  any  rights  hereunder  shall
constitute  or  operation  as a  waiver  of any such  right.  No  waiver  of any
provision  hereof  shall be  effective,  unless in  writing  and signed by or on
behalf  of the  party to be  charged  therewith.  No  waiver  shall be  deemed a
continuing  waiver or waiver in  respect  of any other or  subsequent  breach or
default, unless expressly so stated in writing.

         (h) Amendment. This Agreement may not be modified,  amended, altered or
supplemented,  except by a written  agreement  executed  by each of the  parties
hereto.

         (i) Relationship of Parties.  Nothing  contained herein shall be deemed
to  constitute  a  partnership  between,  or a joint  venture  by or  employment
relationship  between or among the parties hereto. This Agreement is between two
independent  contracting  parties.  Nothing herein is intended nor shall it make
either party a fiduciary of the other party.

         (j) Notices. All notices, demands, consents, requests, instructions and
other communications to be given or delivered or permitted under or by reason of
the  provisions  of  this  Agreement  or in  connection  with  the  transactions
contemplated  hereby shall be in writing and shall be deemed to be delivered and
received by the intended recipient as follows: (i) if personally  delivered,  on
the  Business  Day (as such term is  hereinafter  defined) of such  delivery (as
evidenced  by the  receipt of the  personal  delivery  service),  (ii) if mailed
certified or registered  mail return receipt  requested,  four (4) Business Days
after being  mailed,  (iii) if delivered by overnight  courier (with all charges
having been prepaid),  on the Business Day of such delivery (as evidenced by the
receipt of the overnight  courier  service of recognized  standing),  or (iv) if
delivered by  facsimile  transmission,  on the Business Day of such  delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding Business Day (as evidenced by the printed confirmation of
delivery  generated by the sending party's telecopier  machine).  If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed  address of which no notice was given (in  accordance  with
this Section 5(j)), or the refusal to accept same, the notice, demand,  consent,
request,  instruction  or other  communication  shall be deemed  received on the
second Business Day the notice is sent (as evidenced by a sworn affidavit of the
sender). For the purposes of this Agreement, the term "Business Day" means a day
other than a Saturday,  Sunday or day on which banking institutions in the State
of New York are authorized or obligated by law or executive order to close.  For
the purposes of this Agreement, if a day referenced herein is not a Business Day
or if a notice is given or delivered on a day which is not a Business  Day, such
day  shall be  deemed  to occur or

                                      -11-
<PAGE>

such notice shall be deemed to be given or delivered on the next  Business  Day.
All  such  notices,  demands,   consents,   requests,   instructions  and  other
communications  will be sent to the following  addresses or facsimile numbers as
applicable:

                  If to MCY or Music:

                  MCY.com, Inc.
                  1133 Avenue of the Americas, 28th Floor
                  New York, New York 10036
                  Telephone: 212-944-6444
                  Facsimile: 212-944-6943
                  Attention:        President

                  with copies to:

                  MCY Music World, Inc.
                  1133 Avenue of the Americas, 28th Floor
                  New York, New York 10036
                  Telephone: 212-944-6444
                  Facsimile: 212-944-6943
                  Attention: Mitchell Lampert, General Counsel

                  and to:

                  Parker Chapin LLP
                  The Chrysler Building,
                  405 Lexington Avenue
                  New York, New York 10174
                  Telephone:  212-704-6050
                  Facsimile:  212-704-6288

                  Attention: Martin Eric Weisberg, Esq.

                  If to ADSX:

                  Applied Digital Solutions, Inc.
                  400 Royal Palm Way, Suite 410
                  Palm Beach, Florida 33480
                  Telephone: 561-366-4800
                  Facsimile: 561-366-0002
                  Attention: David Beckett, General Counsel

                  with a copy to:

                  Bryan Cave LLP
                  245 Park Avenue
                  New York, New York  10167

                                      -12-
<PAGE>

                  Telephone: 212-692-1813
                  Facsimile: 212-692-1900
                  Attention:        Dennis McCusker, Esq.
                                    Robert A. Ansehl, Esq.

or to such other  address as any party may specify by notice  given to the other
party in accordance with this Section 5(j).

         (k) Counterparts.  This Agreement may be executed in counterparts, each
of which,  when taken together,  shall  constitute one and the same  instrument.
Section headings have been inserted herein for convenience of reference only and
shall  not  have  any  impact  on the  construction  or  interpretation  of this
Agreement.

         (l) Publicity; Joint Statements. Each of the parties hereto agrees that
it will not disclose, and will not include in any public announcement, the names
of the other party hereto without the consent of such party,  which consent will
not be  unreasonably  withheld or delayed or unless and until such disclosure is
required by law or  applicable  regulation,  and then only to the extent of such
requirement;  provided,  however,  that if ADSX makes a public announcement with
regarding  the  ADSX  License,  it will  not  disclose  the name of MCY or MCY's
business in such  announcement  and it will  provide MCY with a copy of prior to
the public announcement; provided, further, that ADSX will not disclose the name
of MCY or the MCY  License  in any such  announcement  until  the  Release  Date
without  MCY's  prior  written  consent.  Each of the parties  hereto  agrees to
cooperate  with the other  party to prepare and issue a joint  statement  to the
public  regarding  the  transactions  contemplated  herein  which will be issued
concurrently.  Each of the  parties  hereto  agree  to  cause  their  respective
chairmen and chief executive officers to meet with securities holders of MCY and
ADSX by no later than forty-five (45) days after the Release Date.

         (m) Further Assurances. From and after the date of this Agreement, upon
the request of a party hereto,  the other party shall  executed and deliver such
instrument,  documents  and other  writings as may be  reasonably  necessary  or
desirable  to  confirm  and carry out and to  effectuate  fully the  intent  and
purposes of this Agreement and the other Transaction Documents.

         (n)  Headings.   The  section   headings  in  this  Agreement  are  for
convenience only and shall not constitute a part of this Agreement for any other
purpose and shall not be deemed to limit or affect any of the provisions hereof.

             [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]



                                      -13-
<PAGE>




                  IN  WITNESS  WHEREOF,  each of MCY and ADSX has duly  executed
this Agreement as of the day and year first above written.

MCY.com, Inc.                                   Applied Digital Solutions, Inc.


By: /s/ Bernhard Fritsch                        By: /s/ Garrett A. Sullivan
   ------------------------                        ---------------------------
     Name: Bernhard Fritsch                        Name: Garrett A. Sullivan
     Title: Chairman and Chief Executive Officer   Title:  President



                                      -14-
<PAGE>



                        Exhibit A. ADSX License Agreement
                        ---------------------------------

                              (copy to be attached)

                  Exhibit B. MCY Registration Rights Agreement
                  --------------------------------------------

                              (copy to be attached)


                                      -15-