EXECUTION COPY

                       ADSX REGISTRATION RIGHTS AGREEMENT
                       ----------------------------------

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

         This  Agreement  is  being  entered  into  pursuant  to a  certain  MCY
Agreement (the "MCY  Agreement")  dated as of the date hereof by and between the
Company and the Stockholder. Pursuant to Section 1(b) of the Purchase Agreement,
the Stockholder is acquiring  [11,816,298] shares of the Company's common stock,
par value $0.001 per share (the "Common Stock") equal to $40,000,000  (the "ADSX
Shares").

         The Company and the Stockholder hereby agree as follows:

         1. Certain Definitions.  As used in this agreement, the following terms
shall have the meanings provided below:

         (a)  "Commission"  means the  United  States  Securities  and  Exchange
Commission or any other federal agency at the time  administering the Securities
Act.

         (b) "Demand  Notice" means a written  request from the  Stockholder  to
register at least 50% of the Registrable Securities; provided, however, that the
such right to a Demand Notice shall be personal to the  Stockholder  and may not
be transferred to another party;

         (c)  "Other  Securities"  means,  at any time,  those  shares of Common
Stock, and of any other class or series of capital stock of the Company or other
securities of the Company  representing the right to acquire Common Stock,  that
the  Company is  required  to, or has  determined  to,  register  pursuant  to a
registration statement filed by the Company with the Commission pursuant to this
or any other agreement.

         (d) "Person"  shall mean any  individual,  partnership,  joint venture,
firm, corporation,  association,  trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.

         (e)  "Registrable  Securities"  means  the ADSX  Shares  and any  other
securities  issuable  in  replacement  thereof  by  way  of a  recapitalization,
exchange, merger, consolidation,  reorganization or other transaction; provided,
however,  that any share shall  cease to be a  Registrable  Security  under this
Agreement when (A) a registration  statement with respect to such share's public
sale shall have  become  effective  under the  Securities  Act,  (B) it has been
disposed of as  permitted  by, and in  compliance  with,  Rule 144 (or under any
successor provision to Rule 144) promulgated under the Securities Act, (C) if it
become  eligible to be disposed of as permitted by and in  compliance  with Rule
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144 (or under any successor  provision to Rule 144), or (D) it shall have ceased
to be outstanding.

         (f)  "Registration   Expenses"  means  all  expenses  incident  to  the
Company's  performance of or compliance  with the provisions of Sections 2 and 3
including, without limitation, all registration, filing and National Association
of Securities  Dealers,  Inc.  fees,  all listing fees, all fees and expenses of
complying  with  securities  or blue sky laws  (including,  without  limitation,
reasonable fees and  disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities hereunder),  all word
processing,  duplicating and printing expenses, messenger and delivery expenses,
the  fees  and  disbursements  of  counsel  for the  Company  and any  fees  and
disbursements  of  underwriters  customarily  paid  by  issuers  or  sellers  of
securities.

         (g)  "Securities  Act"  means  the  Securities  Act of  1933,  and  any
subsequent  similar federal statute,  and the rules and regulations  promulgated
thereunder.

         (h) "Stockholder Expense" means any underwriters' fees and underwriting
discounts  and  commissions  in  respect  of the  Registrable  Securities  being
registered  hereunder  as  well as any  fees  and  expenses  of  counsel  to the
Stockholder of the Registrable Securities hereunder.

         2. Demand Registration.

         2.1  Effective  Registration  Statement.   The  Company  shall  file  a
registration  statement on Form S-3 under the Securities Act with the Commission
as soon as possible  from the date  hereof.  ADSX shall use its best  efforts to
cause such  registration  statement  to be declared  effective  by no later than
seventy-five  (75) days from the date  hereof.  Upon the  effectiveness  of such
registration  statement  including  the ADSX  Shares,  there shall be no further
registration rights available under this Agreement.

         2.2 Rights to Demand  Registration.  If the  Company  receives a Demand
Notice from the Stockholder  requesting that the Company effect the registration
under the  Securities  Act of not less than 100% of the ADSX  Shares held by the
Stockholder,  promptly  after  receipt of such  notice,  the  Company  will give
written  notice of such  requested  registration  to all other holders of Common
Stock.  The  Company  will  then  use  its  reasonable  efforts  to  effect  the
registration  under the  Securities Act of the ADSX Shares which the Company has
been  requested  to  register by MCY,  and all shares of Common  Stock which the
Company  has been  requested  to register  by other  holders of Common  Stock by
notice  delivered  to the Company  within ten (10) days after the giving of such
notice by the Company.

         2.3 Limits on Demand Rights.

         (a) The  Company  shall  not be  obligated  to file and cause to become
effective  more than one (1)  registration  statements  pursuant  to such Demand
Notice.

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         (b) Unless  the  Company  shall  have  delayed  the  commencement  of a
registration  statement  pursuant to Section 2.2(c) below, the Company may delay
the filing or effectiveness of any registration  statement for a period of up to
sixty (60) days after the date of delivery of the Demand Notice pursuant to this
Section  2 if at  the  time  of  such  request  the  Company  is  engaged  in an
underwritten  public  offering of its Common Stock in which the  Stockholder may
include the  Registrable  Securities  pursuant to Section 3; provided,  however,
that, in the event the Company  exercises its rights under this Section  2.2(b),
the  registration  shall not be  counted  as a demand  for  registration  by any
Stockholder  for purposes of Section 2.2(a) hereof;  and provided,  further that
the Company may not exercise its right under this Section  2.2(b) more than once
in any 12-month period.

         (c) If,  while a  registration  request  is  pending  pursuant  to this
Section 2 or if after the Company has received a Demand  Notice,  the Company is
advised by legal counsel (i) that the filing of a registration  statement  would
require  the  disclosure  of a material  transaction  or other  factor  that the
Company reasonably determines in good faith could have a material adverse effect
on the  Company or (ii) the  Company  then is unable to comply  with  Commission
requirements applicable to the requested registration,  the Company shall not be
required to effect a  registration  pursuant to this Section 2 until the earlier
of (A) the date upon which such material  information is otherwise  disclosed to
the public or ceases to be  material  or the  Company is able to so comply  with
applicable Commission requirements, as the case may be, and (B) ninety (90) days
after the  Company  makes such good faith  determination,  provided  that in the
event  the  Company  exercises  its  rights  under  this  Section  2.2(c),   the
registration  shall  not  be  counted  as  a  demand  for  registration  by  the
Stockholder for purposes of Section 2.2(a) hereof.

         (d) If (i)  there is  material  non-public  information  regarding  the
Company  which  the  Company's  Board  of  Directors  (the  "Board")  reasonably
determines  not to be in the  Company's  best interest to disclose and which the
Company is not  otherwise  required to disclose,  or (ii) there is a significant
business  opportunity  (including,  but  not  limited  to,  the  acquisition  or
disposition  of assets  (other than in the  ordinary  course of business) or any
merger,  consolidation,  tender offer or other similar transaction) available to
the Company  which the Board  reasonably  determines  not to be in the Company's
best  interest to disclose  and which the Company  would be required to disclose
under the  requested  registration  statement,  then the Company may postpone or
suspend  effectiveness  of a  registration  statement  and  suspend  the sale of
Registrable Securities under a registration statement for a period not to exceed
twenty (20)  consecutive  days,  provided  that the Company may not  postpone or
suspend its obligation  under this Section 2.2(d) for more than  forty-five (45)
days in the  aggregate  during any twelve (12) month period  (each,  a "Blackout
Period");  provided,  however,  that no such postponement or suspension shall be
permitted for consecutive  twenty (20) day periods,  arising out of the same set
of facts, circumstances or transactions.

         (e) A requested  registration  under this Section 2 may be rescinded by
written notice to the Company by the  Stockholder.  Such rescinded  registration
shall not count as a registration statement initiated pursuant to this Section 2
for  purposes  of

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Section 2.2 above if such  request is rescinded  by such  Stockholder  not later
than five (5) business days prior to the filing of a registration statement with
the Commission.

         2.4 Underwriter "Cutbacks" in Demand Registrations. With respect to any
registration  pursuant to this  Section 2 that is being  effected by one or more
underwriters,  such  underwriters  shall be  designated  by the  Company and the
Company  may  include  in such  registration  any  Other  Securities;  provided,
however,  that, anything to the contrary in Section 2.1 notwithstanding,  if any
managing  underwriter for the public offering  contemplated by such registration
advises the Company in writing  that,  in such  firm's good faith  opinion,  the
inclusion of all  Registrable  Securities  and Other  Securities  proposed to be
included in such  registration  would adversely  affect the offering and sale of
all such  securities,  then the  number  of  Registrable  Securities  and  Other
Securities  proposed to be included  in such  registration  shall be reduced pro
rata based upon the total  number of shares of Common  Stock  owned by each such
Person and its affiliates  including the  Stockholder  (or that each such Person
and its affiliates have the right to acquire) at the time of such registration.

         2.5 The  Stockholder  shall  pay 100% of the  Stockholder  Expenses  in
connection with registration and sale of the Registrable Securities.

         3. Piggyback Registration.

         3.1 Right to Include Registrable Securities.

         (a) Subject to Section  3.1(b),  if the Company at any time proposes to
register  any of its  common  stock  under  the  Securities  Act for sale to the
public,  whether  for its own  account or for the  account  of other  securities
holders or both (except pursuant to a registration statement on Forms S-4 or S-8
(or any substitute  form adopted by the  Commission) or any other form that does
not permit the  inclusion  of shares by its  securities  holders),  it will give
written  notice  to  the  Stockholder  of  its  intention  to do so  and  of the
Stockholder's  rights  ("Piggyback  Registration  Rights") under this Section 3.
Upon  written  request of the  Stockholder  made  within ten (10) days after the
receipt  of any  such  notice  (which  request  shall  specify  the  Registrable
Securities intended to be sold or disposed of by such Stockholder),  the Company
shall,  subject to the provisions  hereof,  use reasonable  efforts to cause all
Registrable Securities that the Stockholder has requested the registration of to
be included in such  notification or the registration  statement  proposed to be
filed by the Company;  provided, that nothing contained herein shall require the
Company to take any action which would  violate the  provisions  of any existing
agreements  relating  to  registration  rights.  The  number of the  Registrable
Securities to be included in such a  registration  statement may be reduced (pro
rata  among  the  requesting  holders  (other  than  ADSX and any  other  person
demanding registration pursuant to currently existing rights who are entitled to
be  protected  again any such  reduction))  based  upon the  number of shares so
requested  to be  registered;  provided  that,  if and to the  extent  that  the
managing  underwriter  shall be of the good faith  opinion  that such  inclusion
would adversely affect the marketing of the securities to be sold by ADSX.

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<PAGE>

         (b) If, at any time after  giving  written  notice of its  intention to
register any  securities  and prior to the  effective  date of the  registration
statement  filed  in  connection  with  such  registration,  the  Company  shall
determine   for  any  reason  not  to  register  or  to  delay  or  suspend  the
effectiveness of the  registration of such  securities,  the Company may, at its
election, give written notice of such determination to such Stockholder and upon
giving  that  notice (i) in the case of a  determination  not to  register,  the
Company  shall  be  relieved  of its  obligation  to  register  any  Registrable
Securities in connection with such  registration (but not from any obligation of
the Company to pay the  Registration  Expenses (as defined  below) in connection
therewith),  without prejudice; and (ii) in the case of a determination to delay
registering, the Company shall be permitted to delay registering any Registrable
Securities  for  the  same  period  as  the  delay  in  registering  such  other
securities.

         (c) The Company shall pay all Registration  Expenses in connection with
registration of Registrable Securities requested pursuant to this Section 3.1.

         3.2  Underwriter  "Cutbacks"  in Piggyback  Registrations.  Anything in
Section 3.1 to the contrary  notwithstanding,  with respect to any  registration
pursuant to which shares are registered pursuant to this Section 3 that is being
effected by one or more  underwriters,  such underwriters shall be designated by
the Company and if any managing underwriter for the public offering contemplated
by such  registration  advises the Company in writing  that, in such firm's good
faith opinion, the inclusion of all Registrable  Securities and Other Securities
proposed to be included in such registration would adversely affect the offering
and sale of all such securities,  then all securities proposed to be sold by the
Company for its own account,  if any, shall be included in such  registration to
the  extent  possible  and  the  number  of  Registrable  Securities  and  Other
Securities  proposed to be included  in such  registration  shall be reduced pro
rata based upon the total  number of shares of Common  Stock  owned by each such
Person (other than the Company) and its affiliates (or that each such Person and
its affiliates have the right to acquire) at the time of such registration.

         4. Registration Procedures.

         (a) In connection with the  registration of any Registrable  Securities
under the  Securities  Act as provided in Sections 2 and 3, the Company shall as
expeditiously as possible:

                  (i)  prepare  and  file  with  the  Commission  the  requisite
         registration  statement to effect such  registration and thereafter use
         its reasonable  efforts to cause such registration  statement to become
         and remain effective (subject to clause (ii) below); provided, however,
         that the Company may  discontinue  any  registration  of its securities
         that are not Registrable  Securities at any time prior to the effective
         date of the registration statement relating thereto;

                  (ii) prepare and file with the Commission  such amendments and
         supplements to such  registration  statement and the prospectus used in
         connection  therewith  as may be  necessary  to keep such  registration
         statement

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         effective and to comply with the  provisions of the Securities Act with
         respect to the  disposition of all  Registrable  Securities  covered by
         such  registration  statement  for such period as shall be required for
         the  disposition  of  all of  such  Registrable  Securities;  provided,
         however, that, the foregoing notwithstanding,  the Company shall not be
         required under this item (ii) to maintain the effectiveness of any such
         registration  statement for longer than 180 days, or such longer period
         beyond  such  180  days  (up to an  aggregate  of 270  days)  as may be
         available   without   requiring  the  Company  to  file  any  financial
         statements as of a later date and for a later period than the financial
         statements that may have been required to maintain the effectiveness of
         the registration statement for the 180-day period;

                  (iii)  furnish to the  Stockholder  such  number of  conformed
         copies of such  registration  statement and of each such  amendment and
         supplement  thereto (in each case including all exhibits),  such number
         of copies of the prospectus  contained in such  registration  statement
         (including each preliminary  prospectus and any summary prospectus) and
         any other  prospectus filed under Rule 424 under the Securities Act, in
         conformity with the  requirements of the Securities Act, and such other
         documents, as the Stockholder may reasonably request from time to time;

                  (iv) use its reasonable efforts (x) to register or qualify all
         Registrable   Securities   and  other   securities   covered   by  such
         registration  statement under such other securities or blue sky laws of
         such states of the United  States of America  where an exemption is not
         available and as the Stockholder shall reasonably request,  (y) to keep
         such  registration  or  qualification  in  effect  for so  long as such
         registration  statement  remains in  effect,  and (z) to take any other
         action that may  reasonably  be  necessary  or  advisable to enable the
         Stockholder to consummate the disposition in such  jurisdictions of the
         securities to be sold by the Stockholder, except that the Company shall
         not for any  such  purpose  be  required  to  qualify  generally  to do
         business as a foreign corporation in any jurisdiction  wherein it would
         not, but for the  requirements  of this paragraph (iv), be obligated to
         be so qualified or to consent to general service of process in any such
         jurisdiction;

                  (v)  use its  reasonable  efforts  to  cause  all  Registrable
         Securities covered by such registration statement to be registered with
         or approved  by such other  federal or state  governmental  agencies or
         authorities  as may be  necessary  in the  opinion  of  counsel  to the
         Company to consummate the disposition of such Registrable Securities in
         accordance with their intended method of disposition;

                  (vi)  immediately  notify the  Stockholder  when a  prospectus
         relating  thereto is required to be delivered under the Securities Act,
         upon discovery  that, or upon the happening of any event as a result of
         which, the prospectus included in such registration  statement, as then
         in effect,  includes an untrue statement of a material fact or omits to
         state any material fact  required to be stated  therein or necessary to
         make  the  statements  therein  not  misleading,  in the  light  of the
         circumstances  under  which they were made,  and at the  request of

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         the  Stockholder  promptly  prepare  and  furnish to them a  reasonable
         number of copies of a supplement to or an amendment of such  prospectus
         as may be necessary so that, as thereafter  delivered to the purchasers
         of such  securities,  such  prospectus  shall  not  include  an  untrue
         statement of a material  fact or omit to state a material fact required
         to be stated  therein or necessary to make the  statements  therein not
         misleading  in the light of the  circumstances  under  which  they were
         made; and

                  (vii) provide and cause to be maintained a transfer  agent and
         registrar (which, in each case, may be the Company) for all Registrable
         Securities covered by such registration statement from and after a date
         not later than the effective date of such registration.

         (b) The Company may require the Stockholder to furnish the Company such
information  regarding the Stockholder and the distribution of the Stockholder's
Registrable  Securities as the Company may from time to time reasonably  request
in writing based on its reasonable  belief that such  information is required to
be disclosed in the  Registration  Statement  pursuant to the Securities Act and
applicable State securities laws.

         (c) The  Stockholder  agrees to furnish to the Company any  information
regarding the Stockholder and the distribution of the Stockholder's  Registrable
Securities as the Company may from time to time reasonably request in writing in
connection with the preparation and filing of a registration  statement pursuant
to the terms of this Agreement.

         (d) Upon receipt of any notice from the Company of the  happening of an
event of the kind  described  in item (vi) of this  Section  4, the  Stockholder
shall forthwith  discontinue its disposition of Registrable  Securities pursuant
to the registration  statement relating to such Registrable Securities until the
Stockholder's  receipt of the copies of the  supplemented or amended  prospectus
contemplated  by item (vi) and, if so directed by the Company,  the  Stockholder
shall deliver to the Company all copies,  other than permanent file copies, then
in the Stockholder's  possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.

         5. Indemnification.

         5.1  Indemnification  by the Company.  In the event of any registration
statement  filed  pursuant  to Section 2 or Section 3, the  Company  shall,  and
hereby  does,  indemnify  and  hold  harmless  the  Stockholder  and each of its
directors, officers, partners, agents, attorneys, representatives and affiliates
and each Person who  participates  as an  underwriter in the offering or sale of
such  securities and each other Person,  if any, who controls the Stockholder or
any such  underwriter  within  the  meaning of the  Securities  Act (each of the
foregoing, a "Stockholder  Indemnitee"),  insofar as losses, claims, damages, or
liabilities  (or actions or  proceedings,  whether  commenced or threatened,  in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement  of any  material  fact  contained  in any  such  registration
statement, any preliminary

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prospectus,  final prospectus,  or summary prospectus  contained therein, or any
amendment or supplement  thereto,  or any omission or alleged  omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein  in light of the  circumstances  in which they were made not
misleading,  and the Company shall reimburse each Stockholder Indemnitee for any
legal or any other  fees,  costs and  expenses  reasonably  incurred  by them in
connection  with  investigating  or defending any such loss,  claim,  liability,
action or proceeding; provided, that the Company shall not be liable in any such
case to the extent that any such loss,  claim,  damage,  liability (or action or
proceeding  in respect  thereof)  or  expense  arises out of or is based upon an
untrue  statement  or omission  made in  reliance  upon and in  conformity  with
information  furnished to the Company by or on behalf of a  Stockholder  or such
underwriter,  as the  case  may be,  for  use in the  preparation  thereof;  and
provided,  further,  that the  Company  shall not be  liable to any  Stockholder
Indemnitee  in any such case to the extent  that any such loss,  claim,  damage,
liability (or action or proceeding in respect  thereof) or expense arises out of
such  Person's  failure to send or give a copy of the final  prospectus,  as the
same may be then  supplemented  or amended,  to the Person  asserting  an untrue
statement  or alleged  untrue  statement  or omission or alleged  omission at or
prior to the written confirmation of the sale of Registrable  Securities to such
Person if such  statement or omission was corrected in such final  prospectus so
long as such final prospectus,  and any amendments or supplements thereto,  have
been furnished to such underwriter or any Stockholder, as applicable.

         5.2 Indemnification by the Stockholder.  If any Registrable  Securities
are included in any registration statement,  the Stockholder of such Registrable
Securities so registered shall, and hereby does, indemnify and hold harmless (in
the same  manner and to the same  extent as set forth in Section  5.1 above) the
Company, and each director and officer of the Company, and each other Person, if
any, who controls the Company  within the meaning of the  Securities  Act,  with
respect to all losses,  claims,  damages,  expenses or liabilities ("Losses") to
which the Company or such control  person  becomes  subject under the Securities
Act,  insofar as such Losses arise out of or are based upon any untrue statement
or alleged untrue  statement of a material fact  contained in such  registration
statement,  any preliminary  prospectus,  final prospectus or summary prospectus
contained  therein,  or any amendment or supplement  thereto,  or an omission or
alleged  omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such statement or
alleged  statement or omission or alleged omission was made in reliance upon and
in  conformity  with written  information  pertaining  to such  Stockholder  and
furnished to the Company by such  Stockholder for use in the preparation of such
registration  statement,   preliminary  prospectus,  final  prospectus,  summary
prospectus,  amendment or  supplement,  provided,  however,  that no Stockholder
shall have any liability  under this Section 5.2 for any amount in excess of the
net  proceeds  actually  received  by  such  Stockholder  from  the  sale of the
Registrable Securities included in such registration statement.

         5.3 Notice of Claims, Etc.

         (a) Promptly  after  receipt by an  indemnified  party of notice of the
commencement  of any  action or  proceeding  involving  a claim  referred  to in
Sections 5.1

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or 5.2, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party,  immediately give written notice to the latter of
the  commencement  of such action;  provided,  however,  that the failure of any
indemnified  party to give  notice as  provided  herein  shall not  relieve  the
indemnifying party of its indemnity  obligations,  except to the extent that the
indemnifying  party is actually  prejudiced  by such failure to give notice.  In
case any such  action is brought  against an  indemnified  party,  unless in the
reasonable  judgment  of counsel  for such  indemnified  party,  a  conflict  of
interest between such indemnified and indemnifying  parties may exist in respect
of such claim (in which case the  indemnified  party shall be entitled to retain
separate counsel as provided below), the indemnifying party shall be entitled to
participate  in and to  assume  the  defense  thereof,  jointly  with any  other
indemnifying  party similarly notified to the extent that it may wish and at any
time, with counsel reasonably  satisfactory to such indemnified party, and after
notice from the indemnifying  party to such indemnified party of its election so
to assume the defense  thereof,  the  indemnifying  party shall not be liable to
such indemnified party for any legal or other expenses  subsequently incurred by
the  indemnified  party  in  connection  with the  defense  thereof  other  than
reasonable  costs  related  to the  indemnified  party's  cooperation  with  the
indemnifying party provided,  however,  that (i) if the indemnifying party fails
to assume the  defense of such claim  after a  reasonable  time the  indemnified
party may  retain  counsel  to defend  such  claim and the  reasonable  fees and
expenses  of such  counsel  shall be paid by the  indemnifying  party,  (ii) the
indemnified  party  may,  at  its  own  expense,   retain  separate  counsel  to
participate in such defense, (iii) the indemnified party shall have the right to
employ separate counsel at the expense of the indemnifying  party and to control
its own  defense  of such  action,  claim or  proceeding  if, in the  reasonable
opinion of counsel to such indemnified  party, a material  conflict or potential
material  conflict  exists between the  indemnified  party and the  indemnifying
party that would make such separate representation advisable,  except that in no
event shall the  indemnifying  party be required to pay fees and expenses  under
this  Section 5 for more than one  separate  firm of  attorneys in any one legal
action or group of related legal actions.

         (b) No  indemnifying  party shall be liable for any  settlement  of any
action or proceeding  effected without its written consent,  which consent shall
not be unreasonably  withheld.  No indemnifying party shall, without the consent
of the  indemnified  party,  consent to entry of any  judgment or enter into any
settlement that does not include as an unconditional  term thereof the giving by
the  claimant  or  plaintiff  to such  indemnified  party of a release  from all
liability in respect to such claim or litigation.

         5.4 Contribution.  If indemnification shall for any reason be held by a
court to be unavailable to an indemnified party under Section 5.1 or Section 5.2
in respect of any loss,  claim,  damage or  liability,  or any action in respect
thereof,  then,  in lieu of the amount  paid or  payable  under  Section  5.1 or
Section 5.2, as applicable,  the indemnified  party and the  indemnifying  party
shall  contribute  to the  aggregate  losses,  claims,  damages and  liabilities
(including  legal or other  expenses  reasonably  incurred  in  connection  with
investigating the same), (i) in such proportion as is appropriate to reflect the
relative  fault of the Company on the one hand and the  Stockholder on the other
hand that  resulted  in such  loss,  claim,  damage or  liability,  or action in

                                       9
<PAGE>

respect  thereof,  with respect to the  statements or omissions that resulted in
such loss, claim, damage or liability,  or action in respect thereof, as well as
any other relevant equitable  considerations or (ii) if the allocation  provided
by item (i) above is not  permitted by  applicable  law, in such  proportion  as
shall be appropriate to reflect the relative benefits received by the Company on
the one  hand and the  Stockholder  on the  other  provided,  however,  that the
Stockholder  shall have no  liability  under this  Section 5.4 for any amount in
excess of the net proceeds  actually  received by such Stockholder from the sale
of the Registrable Securities included in such registration statement. No Person
guilty of  fraudulent  misrepresentation  (within the meaning of the  Securities
Act) shall be  entitled  to  contribution  from any Person who was not guilty of
such fraudulent misrepresentation.  In addition, no Person shall be obligated to
contribute  hereunder any amounts in payment for any settlement of any action or
claim,  effected  without such  Person's  consent,  which  consent  shall not be
unreasonably withheld.

         5.5 Rule 144.  With a view to making  available the benefits of certain
rules and  regulations of the Commission that may at any time permit the sale of
the Registrable Securities to the public without registration, at all times from
and after 90 days following the effective date of the first  registration of the
Company under the Securities Act of an offering of its securities to the public,
the Company shall:

         (a) use its best  efforts  to  facilitate  the sale of the  Registrable
Securities  to the  public,  without  registration  under  the  Securities  Act,
pursuant to Rule 144 promulgated  under the Securities  Act,  provided that this
shall not require the Company to file reports under the  Securities  Act and the
Securities  Exchange Act of 1934, or any similar federal statute,  and the rules
and regulations of the Commission thereunder ("Exchange Act"), at any time prior
to the Company's being otherwise required to file such reports;

         (b) make and keep  public  information  available,  as those  terms are
understood and defined in Rule 144  promulgated  under the Securities Act at all
times after ninety (90) days after the effective date of the first  registration
under the  Securities Act filed by the Company for an offering of its securities
to the general public;

         (c) use its best efforts to then file with the  Commission  in a timely
manner  all  reports  and other  documents  required  of the  Company  under the
Securities Act and the Exchange Act; and

         (d)  deliver to the  Stockholder,  upon the  Stockholder's  request,  a
written  statement as to whether it has complied with the  requirements  of this
Section 5, a copy of the most recent  annual or quarterly  report of the Company
filed with the Commission or any stock exchange or self regulatory  organization
registered under the Securities Exchange Act of 1934, and such other reports and
documents so filed as a Stockholder  may  reasonably  request to avail itself of
any rule or regulation  of the  Commission  allowing it to sell its  Registrable
Securities without registration.

         6. Miscellaneous.

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<PAGE>

         (a) 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.

         (b) 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.

         (c)  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 6(i). 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.

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

         (e)   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

                                       11
<PAGE>

the parties that this Agreement be enforced to the fullest  extent  permitted by
applicable law.

         (f)  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.

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

         (h) 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.

         (i) 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 6(i)), 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 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:

                                       12
<PAGE>

                  If to MCY:

                  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:        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

                  with a copy to:

                  Bryan Cave LLP
                  245 Park Avenue
                  New York, New York 10167
                  Telephone: 212-692-1813
                  Facsimile: 212-692-1900
                  Attention: Dennis McCusker, Esq.
                             Robert A. Ansehl, Esq.

                                       13
<PAGE>

or to such other  address as any party may specify by notice  given to the other
party in accordance with this Section 6(i).

         (j) 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.

         (k)  Publicity.  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 unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement.

         (l) 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.

         (m)  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.]


                                       14
<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


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