Document:

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                                                               EXHIBIT 10.23

                     AGREEMENT OF SETTLEMENT AND RELEASE
                     -----------------------------------

           This AGREEMENT OF SETTLEMENT AND RELEASE ("Agreement") is made as
of the 17TH day of July, 2002, by and between John G. Ballenger, Christopher
J. Ballenger and Frederick M. Henschel on behalf of themselves in their
individual capacity and on behalf of all former shareholders of Computer
Equity Corporation as of August 1, 2000 ("Stockholders Representative");
Applied Digital Solutions, Inc., a Missouri corporation ("ADS"); Computer
Equity Corporation, a Delaware corporation ("Compec"); Government
Telecommunications, Inc., a Maryland corporation ("GTI"); and Michael K.
Gammill, Jacqueline M. Twaststijerna, Glenn J. Ballenger, Dorothy C. Brooks
and David M. Schaumburg ("Additional Parties").

                                  RECITALS
                                  --------

           WHEREAS, the Stockholders Representative, ADS and Compec are
parties to that certain Agreement and Plan of Merger, dated as of June 30,
2000, including all exhibits, attachments and ancillary agreements including
but not limited to the Registration Rights Agreement ("Merger Agreement");

           WHEREAS, the Stockholders Representative, together with certain
of the Additional Parties, have filed suit as plaintiffs in the Court of
Chancery of the State of Delaware in and for New Castle County, Civil Action
No. 19399, against ADS and Compec (the "Delaware Litigation");

           WHEREAS, the Stockholders Representative, Thomas M. Cuneo and the
Additional Parties other than Dorothy C. Brooks have filed suit as
plaintiffs in the United States District Court for the District of Delaware,
Civil Action No. 01-0390 GMS (the "Federal Litigation"), against ADS, Compec
and certain individuals, and the District Court has dismissed the suit with
prejudice and reserved jurisdiction for the sole purposes of ruling on ADS'
Motion for Attorneys' Fees and Related Costs;

           WHEREAS, Compec has filed suit as plaintiff in the Circuit Court
of Fairfax County, Virginia, Chancery No. 174937, against the Stockholders
Representative and David M. Schaumburg (the "First Virginia Litigation");

           WHEREAS, the Stockholders Representative and Michael K. Gammill
have asserted claims against Compec in a proceeding at the American
Arbitration Association, A.A.A No. 16 160 00109 2 (the "Arbitration Action")
and Compec has asserted counterclaims against the Stockholders
Representative and Michael K. Gammill and a third party claim against David
M. Schaumburg;

           WHEREAS, Compec is a plaintiff against Dorothy C. Brooks, in a
civil action pending in the United States District Court for the Eastern
District of Virginia, Civil Action No. 02-136-A (the "Second Virginia
Litigation"); and

           WHEREAS, subject to the satisfaction of all terms and conditions
of this Agreement, the parties have agreed to resolve and compromise any and
all existing or potential claims they may have against each other, including
but not limited to any and all claims relating to or connected

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in any way to the Merger Agreement, the Delaware Litigation, the Arbitration
Action, the First Virginia Litigation and the Second Virginia Litigation.

           NOW THEREFORE, in consideration of these recitals named above,
and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto intending to be legally
bound do agree as follows:

                                  Agreement
                                  ---------

           1.      Issuance of ADS Stock. On the fifth (5TH) business day
                   ---------------------
immediately following the date of this Agreement, ADS shall issue and
deliver to the Stockholders Representative a stock certificate dated as of
the date of this Agreement in the amount of eight million (8,000,000) shares
of ADS Common Stock (the "ADS Stock"), which stock certificate shall be
issued in the names of John G. Ballenger, Christopher J. Ballenger and
Frederick M. Henschel, or their designees, as receiving agents for
themselves and in their capacity as Stockholders Representative.

           2.      Registration of ADS Stock.
                   -------------------------

                   (a)      Within thirty (30) days of the date of this
           Agreement, ADS shall cause to be filed at its sole cost and
           expense under the Securities Act of 1933, as amended (the "1933
           Act"), a registration statement (the "Registration Statement")
           covering the resale of ADS Common Stock plus a currently
           indeterminable number of additional shares (the "Additional
           Shares") of ADS Common Stock for issuance to the Stockholders
           Representative for purposes of satisfying ADS' obligation under
           paragraph 4 of this Agreement, with the Registration Statement to
           cover no more than an additional Ten Million Dollars
           ($10,000,000) worth of shares of ADS Common Stock (exclusive of
           the shares equal to the ADS Stock plus the Additional Shares) and
           no other securities of ADS, and with the Stockholders
           Representative and their counsel receiving as soon as possible
           all relevant information relating to any other persons or
           entities whose shares of ADS Common Stock are to be included in
           the Registration Statement, including but not limited to a
           general description of the transaction involving the other
           persons or entities, the number of shares being registered for
           such other persons or entities, and whether or not such shares
           are subject to a lockup agreement or other restrictions. To the
           extent ADS is in possession of any such information prior to the
           date of this Agreement, such information shall be provided prior
           to the execution of this Agreement.

                   (b)      At any time prior to the filing of the
           Registration Statement, the Stockholders Representative may
           redesignate the names in which the foregoing stock certificate
           for the ADS Stock was issued.

                   (c)      Within one hundred twenty (120) days of the date
           of this Agreement, ADS shall cause the Registration Statement to
           be declared effective by the Securities and Exchange Commission
           ("SEC") and thereafter ADS shall maintain the effectiveness of
           the Registration Statement for a period of twelve (12) months
           immediately following the date on which the Registration
           Statement is declared effective by the SEC. ADS shall not

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           file any other registration statements of any type with the SEC
           until only after the Registration Statement is declared effective
           by the SEC.

                   (d)      Before 5:00 p.m. on the second business day
           following the date on which the Registration Statement is
           declared effective by the SEC, ADS shall at its sole cost cause
           one hundred (100), or such other number up to eight hundred (800)
           as requested by the Stockholders' Representative, complete and
           final prospectuses from the Registration Statement to be printed
           and delivered to such locations as shall be designated by the
           Stockholders Representative, with ADS keeping those prospectuses
           current and useable for a period of twelve (12) months
           immediately following the date on which the Registration
           Statement is declared effective by the SEC.

                   (e)      In the event that the Registration Statement is
           not declared effective within 120 days of the date of this
           Agreement, primarily based upon, as evidenced in writing by the
           SEC, a finding that formal criminal charges have been filed, in
           the form of a federal indictment, a state court indictment or a
           state court equivalent of an indictment, against any Stockholders
           Representative or any of the Additional Parties other than David
           M. Schaumburg, then this Agreement shall become null and void, ab
           initio. Upon nullification, all parties shall return to the
           status quo as of the date prior to this Agreement entitling them
           to pursue any and all such actions currently pending and the
           terms of this Agreement shall be inadmissible in any future
           proceedings.

           3.      Cash Differential. In the event the amount resulting from
                   -----------------
eight million (8,000,000) multiplied by the average closing sale price per
share of the Common Stock of ADS as published in the Wall Street Journal,
Eastern Edition, or, if no such price is published in the Wall Street
Journal, Eastern Edition, then the average closing best bid as reflected on
the Electronic Pink sheets or the NASD Over The Counter Bulletin Board, for
the five (5) business days immediately prior to the date on which the
Registration Statement is declared effective by the SEC (the "Stock Value")
is less than Three Million Dollars ($3,000,00.00), then ADS shall pay to the
Stockholders Representative an amount in cash (the "Cash Differential")
equal to the difference between Three Million Dollars ($3,000,00.00) and the
Stock Value, with such Cash Differential being due and payable by ADS to the
Stockholders Representative within three (3) business days after the date
when the Registration Statement is declared effective by the SEC.

           4.      Listing on National Securities Exchange. If five (5)
                   ---------------------------------------
business days prior to the date the Registration Statement is declared
effective by the SEC. ADS is not listed on a National Securities Exchange,
defined only as the New York Stock Exchange, the American Stock Exchange, or
the NASDAQ (not including the NASDAQ Small Cap Market), then the
Stockholders Representative shall be entitled to receive, at its election,
the eight million shares issued under paragraph I of this Agreement or that
number of shares of ADS Common Stock which results in the Stockholders
Representative receiving Four Million Five Hundred Thousand Dollars
($4,500,000) worth of ADS Common Stock based on the average closing sale
price per share (as determined in paragraph 3) for the five (5) business
days immediately prior to the date on which the Registration Statement is
declared effective, whichever value is greater. In the event the
Stockholders Representative chooses to receive Four Million Five Hundred
Thousand Dollars ($4,500,000) worth of ADS Common Stock, then ADS shall
proceed to issue and deliver all such Additional Shares of ADS Common Stock
to the Stockholders Representative at least

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two business days immediately prior to the date that the Registration
Statement is declared effective, and any remaining shares that are owing
under this paragraph within two (2) business days after the date on which
the Registration Statement is declared effective, such that the total value
of ADS Common Stock issued to the Stockholders Representative equals Four
Million Five Hundred Thousand Dollars ($4,500,000). In the event the
Stockholders Representative chooses to receive the eight million shares and
the value of such shares equals more than Four Million Five Hundred Thousand
Dollars ($4,500,000) based on the average closing sale price per share for
the five (5) business days immediately prior to the date the Registration
Statement is declared effective, then the Stockholders Representative shall
convey to ADS a number of shares of ADS Common Stock equal to fifty percent
(50%) of the difference between Four Million Five Hundred Thousand Dollars
($4,500,000) and the value of the eight million (8,000,000) shares issued to
the Stockholders Representative based on the average closing sale price per
share for the five (5) business days prior to the date the Registration
Statement is declared effective.

           5.      Indemnification/Insurance.
                   -------------------------

                   (a)      On the date of this Agreement, ADS shall cause
           to be delivered to the Stockholders Representative a written
           confirmation from National Union Fire Insurance Co. of
           Pittsburgh, Pa. ("National Union"), the liability insurance
           policy carrier of ADS, in which National Union confirms in
           writing that policy number 873-38-93 is in full force and effect
           and that the Stockholders Representative and Michael K. Gammill
           shall each be insured and covered persons under such insurance
           policy, subject to all applicable exclusions of the policy, with
           respect to the various shareholder class action lawsuits which
           have been filed against ADS prior to and as of the date of this
           Agreement or which in any way arise out of facts similar to those
           alleged in the shareholder class actions that have been filed as
           of the date of this Agreement.

                   (b)      In addition to the provisions of paragraph 5(a)
           of this Agreement, ADS, Compec and GTE (the "Indemnifying
           Parties") agree to indemnify and hold harmless each of the
           Stockholders Representative and the Additional Parties other than
           David M. Schaumburg (the "Indemnified Parties") from any and all
           claims, threatened claims, losses, damages, liabilities and
           expenses (including, without limitation, settlement costs and any
           reasonable legal, accounting and other expenses for investigating
           or defending any actions or threatened actions) asserted against
           or incurred by the Indemnified Parties, which relate directly
           and/or indirectly to the various shareholder class action
           lawsuits which have been filed against ADS prior to and as of the
           date of this Agreement or which in any way arise out of facts
           similar to those alleged in the shareholder class actions that
           have been filed as of the date of this Agreement or by reason of
           the fact that the Indemnified Parties were directors, officers,
           employees or agents of ADS, Compec and/or GTI, or were serving at
           the request of ADS, Compec or GTI as directors, officers,
           employees or agents of ADS, Compec, GTI and/or any other
           corporation, partnership, joint venture, trust or other
           enterprise. The right to indemnity in this paragraph 5(b)
           includes the right to advancement of fees and expenses of defense
           as incurred.

                   (c)      Notwithstanding anything to the contrary in this
           Agreement, the indemnity and hold harmless provisions set forth
           in paragraph 5(b) shall not apply to any claims, threatened
           claims, losses, damages, liabilities and expenses (including,
           without limitation,
                                     4

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           settlement costs and any reasonable legal, accounting and other
           expenses for investigating or defending any actions or threatened
           actions) asserted against or incurred by the Indemnified Parties,
           based primarily upon conduct that results in formal criminal
           charges being filed against any of the Indemnified Parties in the
           form of a federal indictment, a state court indictment, or a
           state court equivalent of an indictment; provided, however, that
           the indemnification obligation set forth in paragraph 5(b),
           including but not limited to the advancement of all legal fees
           and costs, shall continue until such time as formal criminal
           charges are brought against any Indemnified Party and shall only
           be limited under this paragraph 5(c) as to the particular
           Indemnified Party who is indicted and to any Indemnified Party
           who is granted immunity in connection with the indictment filed
           against another Indemnified Party. In the event such indictment
           results in a criminal conviction, then the Indemnified Party who
           has been convicted or who has been granted immunity shall return
           to the Indemnifying Parties any amounts provided to or on behalf
           of that Indemnified Party pursuant to paragraph 5(b).

           6.      Compliance with SEC. Within thirty (30) days of the date
                   -------------------
of this Agreement, ADS shall be in full and complete compliance with all
requirements under the Securities and Exchange Act of 1934, as amended (the
"1934 Act"), including but not limited to the filing within that 30-day
period of its complete Quarterly Report on Form l0-Q for the quarter ended
March 31, 2002, and ADS shall remain in full and complete compliance with
all requirements under the 1934 Act for the ensuing period of six (6) months
immediately following the date of this Agreement. In the event ADS is not in
compliance with any requirement under the 1934 Act, ADS shall have two (2)
weeks to cure such noncompliance.

           7.      Breach by ADS or Compec. In the event of a breach of any
                   -----------------------
provision of this Agreement by ADS or Compec or any failure of ADS or Compec
to comply with any obligations under the Agreement, then (i) a stipulation
and order, in the form hereto attached as Exhibit A, may be enforced in the
Delaware Litigation against ADS and in favor of the Stockholders
Representative and the Additional Parties other than Dorothy C. Brooks and
David M. Schaumburg in the amount of Four Million Five Hundred Thousand
Dollars ($4,500,000.00), (ii) the ownership of the ADS Stock by the
Stockholders Representative, or their designees, shall not be affected
unless and until the Stockholders Representative and the Additional Parties
other than Dorothy C. Brooks and David M. Schaumburg collect any amount
under the stipulation and order under this paragraph 7 at which time the
Stockholder Representative shall remit the ADS Stock to ADS, (iii) the
Stockholders Representative and the Additional Parties, other than Dorothy
C. Brooks and David M. Schaumburg, shall have the right to immediately
enforce and execute on the judgment or, at the election of the Stockholders
Representative, may provide ADS with an additional ninety (90) days to cause
the Registration Statement be declared effective and, in the event that the
Registration Statement is not declared effective within ninety (90) days,
the Stockholders Representative and the Additional Parties, other than
Dorothy C. Brooks and David M. Schaumburg shall have the right to enforce
and execute on the judgment and, in addition, continue to pursue the
Delaware Litigation, and pursue all damages, without restriction, that have
been alleged to have been incurred in the Delaware Litigation but only in an
amount in excess of the confessed judgment amount of Four Million Five
Hundred Thousand Dollars ($4,500,000.00) after giving effect to the receipt
by the Stockholders Representative, or their designees, of such confessed
judgment amount. Notwithstanding the foregoing, in the event ADS or Compec
breaches a provision of this agreement unrelated to any

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obligation to make any payment in cash or stock to the Stockholders
Representative and/or the Additional Parties or to any obligation to
register shares of ADS Common Stock issued to the Stockholders
Representative and/or the Additional Parties, then ADS or Compec shall have
two (2) weeks to cure such breach with such two-week period commencing as of
the earlier of (i) the date ADS or Compec knows or reasonably should know of
the breach or the date, or (ii) the date the Stockholders Representative
provides written notice of the breach.

           8.      Best Efforts in Connection With Listing on National
                   ---------------------------------------------------
Exchange. ADS and Compec represent that they will use their best efforts to
--------
cause ADS Common Stock to be listed on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ prior to the Registration Statement
being declared effective by the SEC and thereafter ADS and Compec will
continue to keep the ADS Common Stock listed on one of the aforementioned
exchanges for an additional ninety (90) days thereafter.

           9.      Mutual Releases.
                   ---------------

           (a)     In consideration of the mutual covenants contained
herein, and subject to all the terms and conditions of this Agreement, ADS,
Compec and GTI, their respective current and former officers, directors,
employees, attorneys, agents, successors, assigns, shareholders,
representatives, predecessors, parents, affiliates and subsidiaries, each
and all (the "ADS Releasing Parties") hereby individually and collectively
release the Stockholders Representative and the Additional Parties, their
respective attorneys, agents, heirs, successors, assigns, shareholders,
representatives, predecessors, parents, affiliates and subsidiaries from any
and all claims, causes of actions, suits, contracts, counterclaims, demands
and/or liabilities, known and unknown, both in law and in equity, which any
of the ADS Releasing Parties has or may have in the future against the
Stockholders Representative and any of the Additional Parties with respect
to all matters, transactions, acts or events resulting from or in any way
connected with or related to the subject matter of any of the Merger
Agreement, the Delaware Litigation, the Federal Litigation, the Arbitration
Action, the First Virginia Litigation and/or the Second Virginia Litigation,
including without limitation all sanctions incident to the aforementioned
actions, and arising out of the employment by or services provided to ADS,
Compec, or any of its subsidiaries, of the Stockholders Representative
and/or the Additional Parties from the beginning of time until the end of
time. Notwithstanding the foregoing, in no event shall the release provided
in this paragraph extend to the rights of the parties that are reflected in
or arise from this Agreement.

           (b)     In consideration of the mutual covenants contained in
this Agreement and subject to all the terms and conditions of this
Agreement, the Stockholders Representative and the Additional Parties hereby
individually and collectively release ADS, Compec and GTI, their respective
current and former officers, directors, employees, attorneys, agents, heirs,
successors, assigns, shareholders, representatives, predecessors, parents,
affiliates and subsidiaries from any and all claims, causes of actions,
suits, contracts, counterclaims, demands and/or liabilities, known and
unknown, both in law and in equity, which the Stockholders Representative or
Additional Parties have or may have in the future against ADS or Compec with
respect to all matters, transactions, acts or events resulting from or in
any way connected with or related to the subject matter of any of the Merger
Agreement, the Delaware Litigation, the Federal Litigation, the Arbitration
Action, the First Virginia Litigation and/or the Second Virginia Litigation,

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including without limitation all sanctions incident to the aforementioned
actions, and arising out of the employment by or services provided to ADS,
Compec, or any of its subsidiaries, of the Stockholders Representative
and/or the Additional Parties from the beginning of time to the end of time.
Notwithstanding the foregoing, in no event shall the release provided in
this paragraph extend to the rights of the parties that are reflected in or
arise from this Agreement.

           10.     Publicity. Any public announcement or press release
                   ---------
concerning the transactions contemplated by this Agreement shall require the
prior approval of all parties hereto except David M. Schaumburg, both as to
the making of such announcement or release and as to the form and content
thereof, except to the extent that a party is advised by counsel, in good
faith, that such announcement or release is required as a matter of law,
judicial or administrative order, or rule or regulation of the SEC or
applicable securities exchange, after a full opportunity for prior
consultation is afforded to the other parties. The parties agree that in the
event a public announcement is required to be made, the parties hereby agree
that such public announcement shall contain only the minimum amount of
information as may be necessary to comply with the applicable law, judicial
or administrative order, or rule or regulation that required such public
announcement, all without the use of any statements or information which is
inflammatory, accusatory or disparaging about any party in any
communications of any type.

           11.     Dismissal of Actions.
                   --------------------

                   (a)      The Delaware Litigation shall be stayed for so
           long as no breach of any of the terms and conditions of this
           Agreement has occurred and, in the event of the satisfaction of
           all of the terms, conditions and provisions of this Agreement in
           a timely manner, then the Delaware Litigation shall be dismissed
           with prejudice within seven (7) days, with each party to bear
           its, his or her own legal fees and costs.

                   (b)      Within two (2) business days of the date of this
           Agreement, the plaintiff in the First Virginia Litigation shall
           seek to dismiss the First Virginia Litigation without prejudice.
           In the event of the satisfaction of all of the terms, conditions
           and provisions of this Agreement, then the First Virginia
           Litigation shall be dismissed with prejudice within seven (7)
           days, with each party to bear its, his or her own legal fees and
           costs.

                   (c)      Within two (2) business days of the date of this
           Agreement, the plaintiff in the Second Virginia Litigation shall
           seek to dismiss the Second Virginia Litigation without prejudice,
           with each party to bear its, his or her own legal fees and costs.
           In the event of the satisfaction of all of the terms, conditions
           and provisions of this Agreement, then the Second Virginia
           Litigation shall be dismissed with prejudice within seven (7)
           days, with each party to bear its, his or her own legal fees and
           costs.

                   (d)      Within two (2) business days of the date of this
           Agreement, the parties to the Arbitration Action shall seek to
           dismiss the Arbitration Action, including all claims and
           counterclaims, without prejudice, with each party to bear its,
           his or her own legal fees and costs. In the event of the
           satisfaction of all of the terms, conditions and provisions of
           this Agreement, then the Arbitration Action shall be dismissed
           with prejudice within seven (7) days, with each party to bear
           its, his or her own legal fees and costs.

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           12.     Attorneys' Fees upon Enforcement of Agreement. If the
                   ---------------------------------------------
Stockholders Representative or the Additional Parties seek a court order to
enforce the terms of this Agreement, and prevail in such enforcement action,
they shall be entitled to recover their reasonable attorneys' fees and costs
incurred at trial, on appeal, and in any proceeding in bankruptcy.

           13.     Integration Clause. This Agreement embodies the entire
                   ------------------
terms and conditions of the settlement and releases described herein and it
is the complete agreement between the parties with respect to the compromise
of any claims that the parties may have, or may have in the future, with
respect to all matters, transactions, acts or events resulting from or in
any way connected with or related to the subject matter of the actions
described in the preceding recitals.

           14.     Best Efforts. The parties agree to undertake their best
                   ------------
efforts, including all steps and efforts contemplated by this Agreement, to
effectuate this Agreement.

           15.     Successors and Assigns. This Agreement shall be binding
                   ----------------------
upon each of the parties hereto, their assigns, heirs, predecessors, and
successors.

           16.     Contractual Effect. This Agreement and all provisions
                   ------------------
hereof, including all representations and warranties contained herein, are
contractual and not a mere recital and shall survive the mutual releases as
described in paragraph 9 above and shall continue in full force and effect
thereafter.

           17.     Modification. No change or modification of this Agreement
                   ------------
may be made without the express written consent of all the parties hereto.

           18.     Choice of Law. This Agreement shall be governed and
                   -------------
construed in accordance with the laws of the State of Delaware without
giving effect to the principals of conflicts of laws.

           19.     Choice of Forum. Each party consents to the jurisdiction
                   ---------------
of the Delaware Court of Chancery with respect to any action to approve and
enforce the terms of this Agreement and expressly waives any right to
commence any such action in any other forum or to contest the jurisdiction
of the Delaware Court of Chancery.

           20.     No Admission of Liability. Nothing contained in this
                   -------------------------
Agreement shall be considered an admission of liability on the part of any
of the parties.

           21.     No Transfer. Etc. of Claims. The parties represent and
                   ---------------------------
warrant that they have not assigned to any third party any claims, demands,
defenses, third party claims or causes of actions of any kind whatsoever,
resulting from or in any way connected with or related to the subject matter
of the actions described herein.

           22.     Severability. If any provision of this Agreement or the
                   ------------
application thereof shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement shall be interpreted so as
best to reasonably effect the intent of the parties hereto, as described
herein.

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           23.     Represented by Counsel. In entering into this Agreement,
                   ----------------------
the parties represent and warrant that they have relied upon the advice of
their respective attorneys, who are the attorneys of their own choice; that
the terms of this Agreement have been interpreted, completely read, and
explained to them by their attorneys; and that the terms of this Agreement
are fully understood and voluntarily accepted; and that none of the terms of
this Agreement are ambiguous. Each of the parties shall be deemed to be a
drafter of this Agreement, which shall not be construed in favor of, or
against, any signer of this Agreement.

           24.     Necessary Corporate Action. Each of ADS, Compec and GTI
                   --------------------------
represents to the other parties to this Agreement that all necessary
corporate action has been taken to authorize the execution and delivery of
this Agreement.

           25.     Authority of Stockholders Representative. The
                   -----------------------------------------
Stockholders Representative represent and warrant that they have full power
and authority to represent the former shareholders of Compec pursuant to
Section 4.13 of the Merger Agreement and have the power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated herein. The Stockholders Representative shall
indemnify, defend and hold harmless ADS and/or Compec from any claims,
actions, threatened claims or actions asserted by any of the former Compec
shareholders as of August 1, 2000 arising out of any such shareholder's
assertion that the aforementioned representation and warranty is false or
that the Stockholders Representative breached its obligations pursuant to
Section 4.13 of the Merger Agreement.

           26.     Authority of Signatories. Each person signing this
                   ------------------------
Agreement represents and warrants that he or she has full power and
authority to execute this Agreement on behalf of the party on whose behalf
he or she is signing.

           27.     Headings. The headings utilized herein are solely for the
                   --------
convenience of the parties and are and shall be without substantive meaning
or content or meaning of any kind whatsoever and are not part of this
Agreement.

           28.     Contract Execution. This Agreement may be executed in
                   ------------------
counterparts with the same force and effect as if all signatures were set
forth on a single instrument.

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           IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first written above.

APPLIED DIGITAL SOLUTIONS, INC.                  COMPUTER EQUITY CORPORATION

By:                                              By: /s/ Jerome C. Artigliere
      Name:                                          Name: Jerome C. Artigliere
     Title:                                         Title: Secretary

GOVERNMENT TELECOMMUNICATIONS, INC.
By: /s/ Jerome C. Artigliere

     Name: Jerome C. Artigliere
    Title: Secretary

STOCKHOLDERS REPRESENTATIVE

  John G.                                        Christopher J.
  Ballenger                                      Ballenger

Frederick M. Henschel

ADDITIONAL PARTIES

  Michael K.                                     Jacqueline M.
  Gammill                                        Twaststijerna

  Glenn J.                                       Dorothy C.
  Ballenger                                      Brooks

David M. Schaumburg<PAGE>

                                                               EXHIBIT 10.24

                      [letterhead of FOLEY & LARDNER]

                              August 23, 2002

VIA FACSIMILE
-------------

Michael Krawitz
Applied Digital Solutions, Inc.
400 Royal Palm Way
Suite 410
Palm Beach, Florida 33480

          Re: Ballenger et al. v. Applied Digital Solutions, Inc. et al.

Dear Michael:

          It is my understanding that Applied Digital Solutions, Inc.
("ADS") has requested a second extension, until August 30, 2002, to file the
Registration Statement for the 8 million shares of stock issued to John G.
Ballenger, Christopher M. Ballenger and Frederick M. Henschel, as the
Stockholders' Representative, in order to amend its segment reporting.

          In exchange for the Stockholders' Representative agreeing to this
second extension of time, ADS shall issue to Foley & Lardner, as escrow
agent on behalf of the Stockholders' Representative, an additional one
hundred thousand (100,000) shares of ADS Common Stock. These additional
shares of ADS Common Stock are subject to the registration requirements and
other terms and conditions set forth in the Settlement Agreement dated July
17, 2002. These shares shall be issued and all necessary documentation
regarding the issuance of such shares shall be completed prior to the filing
of the registration statement and no later than August 30, 2002.

          Please be aware that this extension does not extend or otherwise
affect any other deadlines or obligations set forth in the Settlement
Agreement.

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Michael Krawatz
August 23, 2002
Page 2

          Because the Settlement Agreement requires the written consent of
all the parties, please sign where indicated below.

                                   Sincerely,

                                   /s/ Ellen M. Wheeler

                                   Ellen M. Wheeler

Agreed to by:

/s/ Michael Krawitz
----------------------------------------
Michael Krawitz on behalf of Applied
Digital Solutions, Inc. and Computer Equity Corporation

cc:  Robert E. Salad

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