Applied Digital Solutions, Inc. - Amend #4 to 2nd RCA - 1/31/02


Exhibit 10.10


AMENDMENT
NO. 4 TO SECOND AMENDED AND RESTATED

TERM AND REVOLVING CREDIT AGREEMENT



          This Amendment No. 4 (this "Amendment") to Second Amended and Restated Term and Revolving
Credit Agreement is dated as of January 31, 2002 by and among IBM Credit Corporation, a Delaware corporation
("IBM Credit"), IBM Financing, a division of IBM Canada Limited ("IBM Canada") (each a "Lender" and jointly the
"Lenders"), Applied Digital Solutions, Inc. (the "USA Customer") and Ground Effects Ltd. (the "Canadian Customer")
(USA Customer and Canadian Customer are each referred to herein as a "Customer" or, collectively, the
"Customers").


WITNESSETH



          WHEREAS, Customers and Lenders have entered into that certain  Second Amended and Restated Term
and Revolving Credit Agreement, dated as of October 17, 2000 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement");



          WHEREAS, Customers and Lenders have entered into the Acknowledgment, Waiver and Amendment No. 1
to Second Amended and Restated Term and Revolving Credit Agreement, dated as of March 30, 2001 (as amended,
supplemented or otherwise modified from time to time, "Amendment No. 1";



          WHEREAS, under Amendment No. 1, Customers and Lenders have agreed that (i) USA Customer would
not be obligated to pay the principal amount due under Term Loan A on July 1, 2001 until October 1, 2001 (the
"July Principal Amount") and (ii) USA Customer would pay the July Principal Amount together with the next
principal amount payment due thereafter under Term Loan A on October 1, 2001 (the "October Cumulative Amount");



          WHEREAS, USA Customer failed to pay to IBM Credit the October Cumulative Amount;



          WHEREAS, Customers and Lenders have entered into Amendment No. 2 to Second Amended and Restated
Term and  Revolving Credit Agreement, dated as of September 15, 2001 (as amended, supplemented or otherwise
modified from time to time, "Amendment No. 2") to provide inter alia that the October Cumulative Amount not be
due and payable until January 4, 2002, along with the principal payment currently due on that date (the "January Cumulative Amount");



          WHEREAS, USA Customer failed to pay to IBM Credit the January Cumulative Amount on January 4,
2002;



          WHEREAS, based on the Financial Statements provided by USA Customer for the months of September
and October 2001, certain Events of Default have occurred and are continuing as a result of Customers'
non-compliance with certain financial covenants set forth in Section 7.16 of the Credit Agreement;



          WHEREAS, Customers and Lenders have entered into Amendment No. 3 to Second Amended and Restated
Term and Revolving Credit Agreement, dated as of December 31, 2001 (as amended, supplemented or otherwise
modified from time to time, "Amendment No. 3") to provide, inter alia that the January Cumulative Amount not be
due and payable until January 31, 2002, along with the principal payment currently due on that date;





          WHEREAS, USA Customer failed to pay to IBM Credit the January Cumulative Amount on January 31,
2002;



          WHEREAS, USA Customer has requested that the Lenders consent to an amendment to the Credit
Agreement so as to postpone the payment date of the January Cumulative Amount to March 1, 2002; and



          WHEREAS, Lenders are willing to agree to the requested amendment, but only upon the terms and
conditions set forth herein and in consideration of current negotiations to restructure the credit facilities
under the Credit Agreement.



          NOW THEREFORE, in consideration of the premises contained herein, any financial accommodation
heretofore, now or hereafter made by Lenders and for other good and valuable consideration, the parties hereto
agree as follows:



I.       Defined Terms.  Capitalized terms used herein without definition shall have the meaning ascribed to such
terms in the Credit Agreement.  Unless otherwise specified, references to an article, a section, a subsection, a
schedule, an attachment or an exhibit are to the Credit Agreement.



II.      Conditions Precedent.  This Amendment shall become effective upon the receipt by IBM Credit from
Customers of this Amendment executed by each Customer and each Lender.



III.     Acknowledgment.


           1.     Each Customer
acknowledges that Events of Default have occurred and are continuing as a result
of, including but not limited to, the actual Shortfall Amount of
U.S.$(35,037,000) as of November 30, 2001. 


           2.     Each Customer further
acknowledges that the January Cumulative Amount together with the next principal
amount shall be due and payable on March 1, 2002. 



IV.      Amendment.



           1.     The Exhibits to the Credit Agreement are hereby amended by deleting Exhibit 2.3.1. in Amendment No. 3 in
its entirety and substituting in lieu thereof Exhibit 2.3.1. attached hereto.



V.      General Provisions.


           1.     
Representations and
Warranties. On and as of the date hereof and after giving effect to this
Amendment, each Customer hereby confirms, reaffirms and restates the
representations and warranties set forth in Section 6 of the Credit Agreement
mutatis mutandis, except to the extent that such representations
and warranties expressly relate to a specific earlier date in which case each
Customer hereby confirms, reaffirms and restates such representations and
warranties as of such earlier date, provided that the references to the
Credit Agreement in such representations and warranties shall be deemed to refer
to the Credit Agreement as amended prior to the date hereof and pursuant to this
Amendment. 


           2.     Continuing Effect; No
Other Amendments. Except as expressly amended hereby, all of the terms and
provisions of the Credit Agreement are and shall remain in full force and
effect. The amendments provided for herein are limited to the specific
subsections of the Credit Agreement specified herein and shall not constitute an
amendment or waiver of, or an indication of the Lenders’ willingness to
amend or waive, any other provisions of the Credit Agreement or the same
subsections for any other date or time period (whether or not such other
provisions or compliance with such subsections for another date or time period
are affected by the circumstances addressed in this Amendment). 






           3.     Expenses.  USA Customer agrees to pay and reimburse IBM Credit for all its reasonable costs and expenses
incurred in connection with the preparation and delivery of this Amendment, including, without limitation, the
reasonable fees and disbursements of counsel to IBM Credit.


           4.     Indemnification.
Each Customer hereby agrees to indemnify and hold harmless each Lender and each
of their respective officers, directors, consultants, advisors, agents and
assigns (collectively, the “Indemnified Persons”) against all
losses, claims, damages, liabilities or other expenses (including reasonable
attorneys’ fees and court costs now or hereinafter arising from the
enforcement of this Amendment, the “Losses”) to which any of
them may become subject insofar as such Losses arise out of or are based upon
any event, circumstance or condition (a) occurring or existing on or before the
date if this Amendment relating to any financing arrangements either or both
Lenders may from time to time have with (i) such Customer, (ii) any Person that
shall be acquired by such Customer or (iii) any Person that such Customer may
acquire all or substantially all of the assets of, or (b) directly or
indirectly, relating to the execution, delivery or performance of this Amendment
or the consummation of the transactions contemplated hereby or thereby or to any
of the Collateral or to any act or omission of the Customer in connection
therewith. Notwithstanding the foregoing, a Customer shall not be obligated to
indemnify a Lender for any Losses incurred by such Lender which are a result of
such Lender’s gross negligence or willful misconduct. The indemnity
provided herein shall survive the termination of this Amendment. 


           5.     Notices. Except
as otherwise expressly provided in the Credit Agreement, any notice required or
desired to be served, given or delivered hereunder or under any other Loan
Documents shall be in writing, and shall be served, given or delivered in
accordance with Section 10.12 of the Credit Agreement to the following addresses
or number as indicated below: 


	 	
(a) If to IBM Credit at:


IBM Credit Corporation

1500 Riveredge Parkway

Atlanta, Georgia 30328

Attention:  Regional Manager

Facsimile:  (770) 644-4826


IBM Global Financing

Special Handling Group

North Castle Drive

Armonk, New York  10504

Attention:  Bruce Gordon

Facsimile:  (914) 765-6268	 	
(b) If to a Customer at:


Applied Digital Solutions, Inc.

400 Royal Palm Way, Suite 410

Palm Beach, Florida 33480

Attention:  Jerome C. Artigliere

Facsimile: (561) 805-8004








	 	
With a copy to:


Jones, Day, Reavis & Pogue

599 Lexington Avenue

New York, New York  10022

Facsimile:  (212) 755-7306

Attention:  Corinne Ball, Esq.



(c) If to IBM Canada at:


IBM Financing, a Division of IBM Canada Limited

3600 Steeles Avenue East, f4/938

Markam, Ontario L3R 9Z7

Attention:  Manager, Commercial Financing

Facsimile:  (905) 316-6009	 	With a copy to:


Reimer & Braunstein

3 Center Plaza, 6th Floor

Boston, MA  02108

Facsimile:  (617) 880-3456

Attention:  Robert Paul, Esq.




           6.     Counterparts.  This Amendment may be executed by one or more of the parties to this Amendment on any
number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.  A set of the copies of this Amendment signed by the parties
hereto shall be delivered to Customers and the Lenders.


           7.     GOVERNING
LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 


           IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective proper and duly authorized officers
as of the day and year first above written. 









	 

	IBM CREDIT CORPORATION


	 	By:	  /s/ Steven A. Flanagan

	 	 	Name:    Steven A. Flanagan

Title:     Manager Special Handling










	 

	IBM FINANCING, A DIVISION OF IBM
CANADA LIMITED


	 	By:	   N/A
	 	 	Name: 

Title: 









	 

	APPLIED DIGITAL SOLUTIONS, INC.


	 	By:	  /s/ Jerome C. Artigliere

	 	 	Name:    Jerome C. Artigliere

Title:      Senior Vice President/CFO










	 

	GROUND EFFECTS LTD.


	 	By:	   N/A
	 	 	Name: 

Title: 






EXHIBIT 2.3.1


Term Loan A


Term Loan A Commitment:  Twenty Five Million United States Dollars (U.S. $25,000,000)


Term Loan A Finance Charge:  as set forth in Attachment A.


Term Loan A Stated Maturity Date:  May 25, 2002.


Term Loan A. Repayment
Schedule: The principal amount of Term Loan A shall be amortized over six (6)
years and shall be payable by USA Customer at the end of each calendar quarter,
provided that all unpaid principal of such Term Loan A shall be paid in
full on the Term Loan A Stated Maturity Date. Notwithstanding the foregoing, USA
Customer shall have no obligation to pay the January Cumulative Amount until
March 1, 2002. USA customer shall pay the January Cumulative Amount together
with the next principal payment due on March 1, 2002.