Document:

Exhibit 10.7

        ACKNOWLEDGMENT, WAIVER AND AMENDMENT NO. 1 TO THE SECOND AMENDED
                AND RESTATED TERM AND REVOLVING CREDIT AGREEMENT

         This  ACKNOWLEDGMENT,  WAIVER AND AMENDMENT NO. 1 ("Amendment")  TO THE
SECOND  AMENDED AND RESTATED TERM AND REVOLVING  CREDIT  AGREEMENT is made as of
March 30,  2001 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.,
("USA  Customer")  and Ground  Effects  Ltd.  (the  "Canadian  Customers")  (USA
Customer and Canadian  Customer are each referred to herein as a "Customer"  or,
collectively, the "Customers").

                                    RECITALS

         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
"Agreement").

         WHEREAS, based on the Financial Statements provided by USA Customer for
the fiscal year ending December 31, 2000, Customers (a) are in default of one or
more of its financial  covenants contained in the Agreement and (b) have been in
default of other terms and  conditions of the  Agreement  (as more  specifically
explained in Section 2 hereof); and

         WHEREAS,  Lenders  are  willing to waive such  defaults  subject to the
conditions set forth below.

                                    AGREEMENT

         NOW THEREFORE,  in consideration of the premises set forth herein,  and
for other good and valuable consideration, the value and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

Section 1.        Definitions.      All capitalized terms not otherwise  defined
herein shall have the respective meanings set forth in the Agreement.

Section 2.        Acknowledgment.

         (A) Each Customer  acknowledges that the financial  covenants set forth
in  Attachment A to the Agreement  are  applicable  to the financial  results of
Customers  for the fiscal year ending  December 31,  2000,  and  Customers  were
required  to maintain  such  financial  covenants  at all times.  Each  Customer
further  acknowledges that the actual attainment,  for the fiscal year ending on
December  31,  2000,  for the  financial  covenant  listed  below,  based on the
Financial Statements, was as follows:
<TABLE>
<CAPTION>

                                                      Covenant              Covenant
           Covenant                                   Requirement           Actual
           --------------------------------------     ----------------      ----------------
<S>        <C>                                        <C>                   <C>
(i)        Tangible Net Worth                         ($11,750,000.00)      ($56,820,000.00)

(ii)       Current Assets to Current Liabilities      1.0:1.0               1.30:1.0

(iii)      Minimum EBITDA with no Net Loss after      $6,100,000.00         ($15,062,700.00)
           Tax in more than two consecutive
           quarters

</TABLE>

                                       1
<PAGE>

         (B) In addition, each Customer acknowledges that the following defaults
occurred:

<TABLE>
<CAPTION>

        Term                               Requirement                            Default
     -----------------------------      ---------------------------------      -------------------------
<S>                                     <C>                                    <C>
(a)  Unpaid Shortfall  Amount           As defined in Section                  Unpaid    Shortfall    of
                                        2.7 of the Agreement                   $3,988,000.00

(b)  Collateral Management Reports      As required in Section 7.1 (I) of      Month ending 12/31/00
                                        the Agreement                          received late and months
                                                                               ending 01/31/01 and
                                                                               02/28/01 not received

(c)  Financial Reports                  As required in Section 7.1 (A) of      Fiscal year ending
                                        the Agreement                          12/31/00 received late

</TABLE>

Section 3. Waivers to Agreement.  Subject to the conditions set forth in Section
5 hereof,  Lenders hereby waive the default of Customers  under the terms of the
Agreement to the extent such default is set forth in Section 2 hereof.

Section 4. Amendment. The Agreement is hereby amended as follows:

          A.  Attachment A to the  Agreement is hereby  amended by deleting such
Attachment A in its entirety and substituting, in lieu thereof, the Attachment A
attached  hereto.  Such  new  Attachment  A shall  be  effective  as of the date
specified in the new Attachment A. The changes contained in the new Attachment A
include, without limitation, the following:

(a)  USA R/C Finance  Charge is increased from Base Rate plus 2.75% to Base Rate
     plus 3.25%;

(b)  Term Loan A Finance  Charge is increased  from Base Rate plus 3.50% to Base
     Rate plus 4.00%;

(c)  Canadian R/C Finance  Charge is increased from Base Rate plus 1.17% to Base
     Rate plus 1.67%;

(d)  Term Loan C Finance  Charge is increased  from Base Rate plus 1.17% to Base
     Rate plus 1.67%;

(e)  Credit  Line is  decreased  from Sixty  Seven  Million  Two  Hundred  Sixty
     Thousand  Dollars  ($67,260,000) to Fifty Three Million Three Hundred Fifty
     Five Thousand Dollars ($53,355,000);

(f)  USA Credit Line is  decreased  from Sixty Three  Million  Four Hundred Five
     Thousand Dollars  ($63,405,000) to Forty Nine Million Five Hundred Thousand
     Dollars ($49,500,000);

(g)  Shortfall  Transaction Fee is increased from Shortfall Amount multiplied by
     0.30% to Shortfall Amount multiplied by 0.50%;

                                       2
<PAGE>

(h)  Section III of the Attachment A is hereby  amended by deleting  section (i)
     thereof in its entirety and  substituting,  in lieu thereof,  the following
     section (i):

     Covenant                           Covenant Requirement
     ----------------------------       ----------------------------------

(i)  Tangible Net Worth                 As of the following dates not less than:

                                        03/31/01                ($57,000,000.00)
                                        06/30/01                ($47,000,000.00)
                                        09/30/01                ($35,000,000.00)
                                        12/31/01                ($34,500,000.00)
                                        03/31/02                ($20,000,000.00)

(i)  Section III  of  the  Attachment A  is  hereby  amended by deleting section
     (ii) thereof in its entirety  and   substituting,  in  lieu   thereof,  the
     following section (ii):

(ii) Current Assets to Current          As of the following dates greater than:
     Liabilities

                                        03/31/01                1.45:1.00
                                        06/30/01                0.60:1.00
                                        09/31/01                0.80:1.00
                                        12/31/01                0.80:1.00
                                        03/31/02                1.00:1.00

(j)  Section III of the Attachment A is hereby amended by deleting section (iii)
     thereof in its entirety and  substituting,  in lieu thereof,  the following
     section (iii):

(iii) Minimum EBITDA (calculated on     As of the following dates not less than:
      a cumulative annualized basis)

                                        03/31/01               ($  4,700,000.00)
                                        06/30/01                $  5,000,000.00
                                        09/30/01                $  7,000,000.00
                                        12/31/01                $ 11,000,000.00
                                        03/31/02                 $10,000,000.00

         B.       Section 1 of the Agreement is hereby amended by inserting,  in
the  appropriate  alphabetical  order,  the  following  definition  of  "Maximum
Permitted Shortfall Amount":

         "`Maximum  Permitted  Shortfall Amount':  at the time of determination,
any Shortfall  Amount equal to or less than (i) from the effective  date of this
Amendment to and including March 31, 2001,  Nine Million  Dollars  ($9,000,000),
(ii) from April 1, 2001 to and  including  April 30,  2001,  Eight  Million Five
Hundred Thousand Dollars  ($8,500,000),  (iii) from May 1, 2001 to and including
May 31, 2001,  Seven Million Five Hundred Thousand  Dollars  ($7,500,000),  (iv)
from June 1, 2001 to and  including  June 30,  2001,  Six Million  Five  Hundred
Thousand Dollars  ($6,500,000),  (v) from July 1, 2001 to and including July 31,
2001,  Four  Million  Dollars  ($4,000,000),  (vi)  from  August  1, 2001 to and
including   August  31,  2001,  One  Million  Five  Hundred   Thousand   Dollars
($1,500,000),  (vii) from September 1, 2001 to and including September 30, 2001,
Eight Million Six Hundred Thousand Dollars ($8,600,000),  (viii) from October 1,
2001 to and  including  October 31,  2001,  Five  Million  Six Hundred  Thousand
Dollars  ($5,600,000),  (ix) from November 1, 2001 to and including November 30,
2001,  Eight  Million  Five  Hundred  Thousand  Dollars  ($8,500,000),  (x) from
December 1, 2001 to and  including  December 31,  2001,  Seven  Million  Dollars

                                       3

<PAGE>

($7,000,000),  (xi) from January 1, 2002 to and  including  March 31, 2002,  Two
Million Dollars ($2,000,000), and (xii) thereafter, Zero Dollars ($0)."

         C. Section 2.3 (C) of the Agreement is hereby  amended by deleting this
section in its entirety and substituting, in lieu thereof, the following:

         "(C) USA Customer shall,  within three (3) Business Days of the date of
receipt of the Net Cash Proceeds by the USA Customer or any of its  Subsidiaries
from the sale,  lease,  transfer or other  disposition of any assets (other than
the sale by any Customer or any  Subsidiary of inventory in the ordinary  course
of business) of the USA  Customer or any  Subsidiary  pay an amount equal to One
Hundred  Percent  (100%)  of such  Net  Cash  Proceeds  to pay (i) an  aggregate
principal  amount of the Outstanding  Term Loan A, or (ii) in the event there is
no Outstanding Term Loan A, any unpaid Shortfall  Amount,  or (iii) in the event
there is no unpaid Shortfall Amount, the oldest R/C Advance owed by USA Customer
to IBM Credit. Notwithstanding the previous sentence, Net Cash Proceeds received
from the sale,  transfer or other  disposition  of a minority of USA  Customer's
interest in Digital Angel  Corporation and payable to IBM Credit hereunder shall
be limited to Eighteen Million Dollars ($18,000,000)."

         D. Section 7.1 (C) of the Agreement is hereby  amended by deleting this
section in its entirety and substituting, in lieu thereof, the following:

         "(C) as soon as available and in any event within thirty five (35) days
after the end of each fiscal month of USA Customer,  USA  Customer's  internally
generated  consolidated and consolidating  balance sheets and income statements,
prepared in accordance with GAAP (subject to normal  year-end audit  adjustments
and  except  for the  absence of  consolidated  statements  of cash flows and of
shareholders' equity and except for the absence of footnotes) and reflecting any
loans to or from any Customer or Guarantor;"

         E. Section  7.1(I) of the Agreement is hereby  amended by deleting this
section in its entirety and substituting, in lieu thereof, the following:

         "(I) by the thirty  fifth  (35th) day of each  month,  or as  otherwise
agreed in writing,  a Collateral  Management Report as of a date no earlier than
the last day of the immediately preceding month;"

         F.  Section  9.1  of the  Agreement  is  hereby  amended  by  inserting
immediately following subsection 9.1(G), the following new subsection 9.1(H) and
by  realphabetizing  the two  subsections  immediately  following  to 9.1(I) and
9.1(J) respectively:

         "(H) by the tenth (10th) day of each month,  a certificate of the chief
executive  officer or chief  financial  officer of USA Customer  specifying that
neither USA Customer nor any Domestic  Subsidiary  is in default of its lease in
real  property and that all rental and other  payments  have been made to lessor
according to the terms of each lease agreement.

         G.  Section  9.1  of the  Agreement  is  hereby  amended  by  inserting
immediately  following  realphabetized  subsection  9.1 (J), the  following  new
subsection  9.1 (K) and by  realphabetizing  the three  subsections  immediately
following to 9.1 (L), 9.1(M) and 9.1 (N) respectively:

         "(K) The  failure of USA  Customer  to  immediately  pay any  Shortfall
Amount in excess of Maximum Permitted Shortfall Amount;"

         H. The  Agreement is hereby  amended by deleting  Exhibit  2.3.1 in its
entirety and substituting, in lieu thereof, the Exhibit 2.3.1 attached hereto.

         I. The  Agreement  is hereby  amended by  deleting  Exhibit  8.5 in its
entirety and substituting, in lieu thereof, the Exhibit 8.5 attached hereto.

                                       4
<PAGE>

         J. The  Agreement  is hereby  amended by deleting  Exhibit  8.12 in its
entirety and substituting, in lieu thereof, the Exhibit 8.12 attached hereto.

Section 5. Post Closing.  USA Customer agrees it shall provide to IBM Credit the
following  reports and documents and, in the event such action does not occur to
the  satisfaction  of IBM Credit  within the time periods set forth below,  such
noncompliance with this Section 5 shall constitute an immediate Event of Default
under the Agreement :

         (i) on or prior to April 2, 2001, the term sheet for the private equity
placement of Digital Angel Corporation in form and substance satisfactory to IBM
Credit together with the confirmation by the USA Customer that its also has been
circulated in the investment community;
         (ii) on or prior to April 16, 2001, the Collateral  Management  Reports
as of the month ending January 31, 2001 and February 28, 2001; and
         (iii) on or prior to April 16, 2001, the Financial Statements and other
documents required pursuant to Section 7.1 (A).

Customers agree to provide any evidence reasonably  requested by IBM Credit that
any of the items  requested  hereunder have been duly  authorized and are legal,
valid, binding and enforceable.

Section  6.  Conditions  to  Effectiveness  of  Waiver.  The waiver set forth in
Section 3 hereof  shall  become  effective  upon the  receipt by IBM Credit from
Customers of (i) this Amendment  executed by each Customer and each Lender,  and
(ii) a waiver  fee,  in  immediately  available  funds,  equal to Three  Hundred
Seventy Five Thousand Dollars ($375,000).  Such waiver fee payable to IBM Credit
hereunder shall be nonrefundable  and shall be in addition to any other fees IBM
Credit may charge Customers.

Section 7.  Success  Fee.  USA  Customer  shall pay to IBM Credit a fee of Three
Million Dollars  ($3,000,000),  in immediately  available  funds, on January 10,
2002 if any Subsequent  Financing  shall have occurred on or prior to that date.
For the  purposes  of this  Section 7, the  following  terms have the  following
meanings:  "Subsequent  Financing"  shall mean any  issuance  by  Digital  Angel
Corporation (or any successor thereto or transferee or assignee of substantially
all of the assets of Digital Angel  Corporation)  of  Convertible  Securities or
Common  Stock  from  the  date  of  this  Amendment   until  January  10,  2002;
"Convertible  Securities"  shall mean any  evidence of  indebtedness,  shares or
other  securities  directly or indirectly  convertible  into or exchangeable for
Common  Stock;  "Common  Stock"  shall mean the common  shares of Digital  Angel
Corporation (or any successor thereto or transferee or assignee of substantially
all of the assets of Digital  Angel  Corporation).  Failure to comply  with this
Section 7 shall constitute an Event of Default under the Agreement

Section 8. Rights and Remedies. Except to the extent specifically waived herein,
Lenders  reserve any and all rights and  remedies  that  Lenders now have or may
have in the future with respect to  Customers,  including  any and all rights or
remedies  which it may have in the future as a result of  Customers'  failure to
comply  with  their  financial  covenants  to  Lenders.  Except  to  the  extent
specifically  waived herein neither this Amendment,  any of Lenders'  actions or
Lenders'  failure  to act shall be  deemed to be a waiver of any such  rights or
remedies.

Section 9. Stock Options.  USA Customer shall deliver to IBM Credit all proceeds
it receives from any stock options for USA Customer  stock  exercised by Richard
Sullivan,  Jerome Artigliere and/or Mercedes Walton during the term of Agreement
to pay (i) an aggregate principal amount of the Outstanding Term Loan A, or (ii)
in the event there is no Outstanding Term Loan A, any unpaid  Shortfall  Amount,
or (iii) in the event  there is no  unpaid  Shortfall  Amount,  the  oldest  R/C
Advance  owed  by  USA  Customer  to  IBM  Credit.

Section 10.  Ratification of Agreement.  Except as specifically  amended hereby,
all of the provisions of the Agreement shall remain  unamended and in full force
and  effect.  Each  Customer  hereby,  ratifies,  confirms  and agrees  that the
Agreement,  as amended hereby,  represents a valid and enforceable obligation of
such Customer, and is not subject to any claims, offsets or defense.

                                        5
<PAGE>

Section 11.  Governing Law. This Amendment  shall be governed by and interpreted
in accordance with the laws which govern the Agreement.

Section  12.  Counterparts.  This  Amendment  may be  executed  in any number of
counterparts,  each  of  which  shall  be an  original  and all of  which  shall
constitute one agreement.

Section  13.  RELEASE  OF  CLAIMS.  TO  INDUCE  IBM  CREDIT  TO ENTER  INTO THIS
AMENDMENT,  EACH CUSTOMER HEREBY  RELEASES,  ACQUITS AND FOREVER  DISCHARGES IBM
CREDIT AND IBM CREDIT'S OFFICERS,  DIRECTORS, AGENTS, EMPLOYEES,  SUCCESSORS AND
ASSIGNS FROM ALL LIABILITIES,  CLAIMS, DEMANDS,  ACTIONS OR CAUSES OF ACTIONS OF
ANY KIND (IF THERE BE ANY),  WHETHER  ABSOLUTE OR  CONTINGENT,  DUE OR TO BECOME
DUE,  DISPUTED OR UNDISPUTED,  LIQUIDATED OR UNLIQUIDATED,  AT LAW OR IN EQUITY,
THAT ANY ONE OR MORE OF THEM  NOW HAVE OR EVER  HAVE  HAD  AGAINST  IBM  CREDIT,
WHETHER  ARISING UNDER OR IN CONNECTION  WITH THE  AGREEMENT,  THIS AMENDMENT OR
OTHERWISE.

                                       6
<PAGE>

IN  WITNESS  WHEREOF,  this  Amendment  has  been  executed  by duly  authorized
representatives of the undersigned as of the day and year first above written.

IBM CREDIT CORPORATION                   IBM FINANCING, A DIVISION OF IBM CANADA
                                         LIMITED

By: /s/ John M. White                    By: /s/ Randy White

Print Name: John M. White                Print Name: Randy White

Title: Director of Global                Title: Manager, Commercial Financing
       Credit Operations

APPLIED DIGITAL SOLUTIONS, INC.          GROUND EFFECTS LTD.

By: /s/ Jerome C. Artigliere             By: /s/ James Scott

Print Name: Jerome C. Artigliere         Print Name: James Scott

Title: Senior Vice President             Title: President

                                       7

<PAGE>

                                 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 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 principal amount due
on April 1, 2001 (the "April Principal Amount") until July 1, 2001. USA Customer
shall pay the April Principal  Amount  together with the next principal  payment
due on July 1, 2001 .

                                       8
<PAGE>

                                  EXHIBIT 8.5
                              (Permitted Payments)

Provided  that no Event of Default has occurred and is  continuing  and provided
further,  that the  effect  of any  payment  hereunder  is not  likely to have a
Material Adverse Effect:

         (a) the USA Customer may acquire, in exchange for its capital stock, or
in  accordance  with the terms of  agreements  in place at the execution of this
Agreement,  the remaining equity interests in Subsidiaries  which are not wholly
owned by the USA Customer, all as set forth in Exhibit A attached hereto;

         (b) the USA  Customer,  in  exchange  for its capital  stock,  may make
certain  "earnout"  payments at the times and upon  satisfaction of the earnings
targets set forth in Exhibit B attached hereto;

         (c) the USA  Customer,  in  exchange  for its  capital  stock,  may pay
certain  "price  protection"  payments,  all as set forth on  Exhibit C attached
hereto; and

         (d) any  Subsidiary may declare and pay cash  dividends,  to the extent
permitted under the provisions of the Stock Pledge Agreement.

         In  addition,  upon the prior  written  consent by IBM Credit,  the USA
Customer  may make  distributions  of up to $6 million in cash to the holders of
the Series C Preferred Stock (the "Preferred Stockholders") upon the exercise by
the Preferred  Stockholders of their rights upon the occurrence of the following
events:

     (i)      trading of the shares of common stock of the USA Customer has been
              suspended for a period of 5 consecutive trading days or for any 30
              non-consecutive trading days during a 365 day period;
     (ii)     a suspension of the  effectiveness of the Registration  Statement,
              as  defined  in the  Certificate  of  Designation  of the Series C
              Convertible Preferred Stock (the "Certificate of Designation"), or
              the use of the  Registration  Statement for any 30 trading days in
              any 365 day period;
     (iii)    failure of the shares of USA Customer's  common stock to be listed
              on the American Stock Exchange, the New York Stock Exchange or the
              Nasdaq  National  Market  System  for a period  of 10  consecutive
              trading days or any 30  non-consecutive  trading days during a 365
              day period;
     (iv)     failure to deliver  shares of USA  Customer's  common stock upon a
              conversion notice or as otherwise provided in section B.(3)(d)(iv)
              of the Certificate of Designation;
     (v)      the USA Customer shall have failed to obtain Stockholder  Approval
              if such Stockholder  Approval would then be required to permit the
              conversion of the then  outstanding  shares of Preferred Stock and
              the exercise of the outstanding  Warrants, as set forth in section
              B.(3)(d)(v) of the Certificate of Designation; and
     (vi)     failure  to have the  Registration  Statement  declared  effective
              within 180 days after the issuance of the Preferred Stock.

                                       9
<PAGE>

                                 EXHIBIT 8.12
                                (Permitted Loans)

         All loans  existing,  as of March 29,  2001,  to  directors,  officers,
employees, and shareholders, of any Customer or Subsidiary.

                                       10

<PAGE>
                        ATTACHMENT A ("ATTACHMENT A") TO
         SECOND AMENDED AND RESTATED TERM AND REVOLVING CREDIT AGREEMENT
                      ("AGREEMENT") DATED October 17, 2000

Customers' Names:          USA Customer - Applied Digital Solutions, Inc.
                           Canadian Customer- Ground Effects Ltd.

Effective Date of this Attachment A:  March 30, 2001

I.   Fees, Rates and Repayment Terms:

         (A)    Credit Line: Fifty   Three Million  Three  Hundred  Fifty   Five
                Thousand Dollars ($53,355,000);

                (i)  USA Credit Line:        Forty Nine Million Five Hundred
                                             Thousand Dollars ($49,500,000)

                (ii)  Canadian Credit Line:  Five Million Six Hundred Twenty
                                             Eight Thousand Canadian Dollars
                                             (CND$5,628,000 or when converted to
                                             US$3,855,000) of which Two Hundred
                                             Thousand Canadian Dollars
                                             (CND$200,000) is reserved for the
                                             repayment drawn under the Letter of
                                             Credit;
         (B)   Borrowing Base:

               (i) 75%  of the  amount  of the  Customer's  Accounts  net of all
               applicable  reserves as of the date of determination as reflected
               in  the  Customer's  most   recent  monthly  internal   financial
               statement  .

               (ii) 45% of  Unencumbered  Inventory

               (iii) 100% of  Approved Inventory

         (C)   Collateral Insurance Amount: Twenty Five Million ($25,000,000.00)

         (D)   Finance Charges:

               (I)  Cash  Advance Charge:

                           A)       USA R/C Finance Charge Base Rate plus 3.25%
                           B)       Term  Loan A Finance  Charge  Base Rate plus
                                    4.00%
                           C)       Canadian  R/C Finance  Charge Base Rate plus
                                    1.67%
                           D)       Term  Loan C Finance  Charge  Base Rate plus
                                    1.67%
                (II)  Delinquency Fee Rate:
                (i)    USA:       Base Rate plus 6.00%
                (ii)   Canadian:  Base Rate plus 4.00%

                (III)  Shortfall Transaction Fee:  Shortfall Amount multiplied
                       by 0.50%

                (IV)   Other Charges:
                            Annual Facility Fee:    $  85,000.00 payable on each
                                                    anniversary of the   Closing
                                                    Date of  the Second  Amended
                                                    and   Restated   Term    and
                                                    Revolving Credit Agreement

                                       1

<PAGE>

                        ATTACHMENT A, ("ATTACHMENT A") TO
         SECOND AMENDED AND RESTATED TERM AND REVOLVING CREDIT AGREEMENT
                                 ("AGREEMENT")

II.   Bank Account

Customer's  Lockbox(es)  and  Special  Account(s)  will  be  maintained  at  the
following Bank(s):

               Name of Bank:            Key Bank, N.A.
               Address:                 One Canal Plaza
                                        Portland, Maine 04101
               Telecopy:                207-874-7220
               Lockbox Address:         See Contingent Lockbox Account Agreement
                                        dated as of March 9, 2001
               Special Account #:       See Contingent Lockbox Account Agreement
                                        dated as of March 9, 2001

                                       2
<PAGE>

                        ATTACHMENT A ("ATTACHMENT A") TO
         SECOND AMENDED AND RESTATED TERM AND REVOLVING CREDIT AGREEMENT
                                 ("AGREEMENT")

III.   Financial Covenants:

Definitions: The following terms shall have the following respective meanings in
this  Attachment.  All amounts shall be determined in accordance  with generally
accepted accounting principles (GAAP).

         "Consolidated  Earnings  before  Income  Taxes"  shall  be  defined  as
         consolidated  income  before  provision  for  income  taxes,   minority
         interest and extraordinary items as determined in accordance with GAAP.

         "Consolidated  Net Income" shall mean,  for any period,  the net income
         (or loss),  after taxes,  of Customer on a consolidated  basis for such
         period determined in accordance with GAAP.

         "Current" shall mean within the ongoing twelve month period.

         "Current  Assets" shall mean assets that are cash or expected to become
         cash within the ongoing twelve months.

         "Current  Liabilities"  shall mean payment  obligations  resulting from
         past or current transactions that require settlement within the ongoing
         twelve month period.

         "EBITDA" shall mean, for any period (determined on a consolidated basis
         in accordance with GAAP), (a) the  Consolidated  Earnings before Income
         Taxes  of  Customer  for  such  period,  caluclated  on  a  cumulative,
         annualized  basis,  plus  (b)  each  of the  following  to  the  extent
         reflected  as an  expense  in the  determination  of such  Consolidated
         Earnings before Income Taxes:  (i) Interest Income and Interest Expense
         for such period;  (ii)  depreciation  and  amortization of tangible and
         intangible  assets of Customer  for such  period;  and (iii) the Bostek
         litigation, which is to be included in the 6/30/01 EBITDA caluclation.

         "Fixed Charges" shall mean, for any period, an amount equal to the sum,
         without  duplication,  of the  amounts for such as  determined  for the
         Customer  on a  consolidated  basis,  of (i)  scheduled  repayments  of
         principal  of  all  Indebtedness  (as  reduced  by  repayments  thereon
         previously  made), (ii) Interest  Expense,  (iii) capital  expenditures
         (iv) dividends,  (v) leasehold  improvement  expenditures  and (vi) all
         provisions for U.S. and non U.S. Federal, state and local taxes.

         "Fixed Charge  Coverage  Ratio" shall mean the ratio as of the last day
         of any fiscal  period of (i)  EBITDA as of the last day of such  fiscal
         period to (ii) Fixed Charges.

         "Interest   Expense"  shall  mean,   for  any  period,   the  aggregate
         consolidated interest expense of Customer during such period in respect
         of Indebtedness  determined on a consolidated  basis in accordance with
         GAAP,  including,  without  limitation,  amortization of original issue
         discount on any Indebtedness and of all fees payable in connection with
         the incurrence of such Indebtedness (to the extent included in interest
         expense),  the interest portion of any deferred payment  obligation and
         the interest component of any capital lease obligations.

         "Interest   Income"   shall  mean,   for  any  period,   the  aggregate
         consolidated  interest income of Customer during such period determined
         on a consolidated basis in accordance with GAAP.

         "Long Term" shall mean beyond the ongoing twelve month period.

         "Long Term Assets" shall mean assets that take longer than a year to be
         converted  to cash.  They are divided  into four  categories:  tangible
         assets, investments, intangibles and other.

                                       3
<PAGE>

                        ATTACHMENT A ("ATTACHMENT A") TO
         SECOND AMENDED AND RESTATED TERM AND REVOLVING CREDIT AGREEMENT
                                 ("AGREEMENT")

         "Long Term Debt" shall mean payment  obligations of indebtedness  which
         mature  more than  twelve  months  from the date of  determination,  or
         mature  within  twelve  months  from  such  date but are  renewable  or
         extendible  at the  option of the  debtor  to a date  more than  twelve
         months from the date of determination.

         "Net  Profit/Loss  after Tax" shall mean Revenue plus all other income,
         minus all costs, including applicable taxes.

         "Revenue"  shall  mean the  monetary  expression  of the  aggregate  of
         products or services  transferred by an enterprise to its customers for
         which said  customers  have paid or are  obligated  to pay,  plus other
         income as allowed.

         "Subordinated Debt" shall mean Customer's indebtedness to third parties
         as evidenced by an executed  Notes Payable  Subordination  Agreement in
         favor of IBM Credit.

         "Tangible Net Worth" shall mean:

              Total Net Worth minus;

                  (a) goodwill,  intangible  assets,  prepaid expenses and other
                  current and non-current  assets as   identified  in Customer's
                  financial statements; and

                  (b) all    accounts  receivable   from   employees,  officers,
                  directors, stockholders and affiliates;                   and

                  (c) all callable/redeemable preferred stock.

         "Total  Assets"  shall mean the total of  Current  Assets and Long Term
         Assets.

         "Total  Liabilities"  shall mean the Current  Liabilities and Long Term
         Debt  less   Subordinated   Debt,   resulting   from  past  or  current
         transactions, that require settlement in the future.

         "Total Net Worth" (the amount of owner's or stockholder's  ownership in
         an enterprise) is equal to Total Assets minus Total Liabilities.

         "Working Capital" shall mean Current Assets minus Current Liabilities.

                                       4
<PAGE>

                        ATTACHMENT A ("ATTACHMENT A") TO
         SECOND AMENDED AND RESTATED TERM AND REVOLVING CREDIT AGREEMENT
                                 ("AGREEMENT")

USA  Customer  will be required  to maintain  the  following  financial  ratios,
percentages  and amounts as of the last day of the fiscal period under review by
IBM Credit:

Compliance with the covenants set forth below will be based on the  consolidated
financial statements of USA Customer.

                                              Covenant
         Covenant                             Requirement
         --------------------------           ----------------------------------
(i)      Tangible Net Worth                   As of the following dates not less
                                              than:

                                              03/31/01             ($57,000,000)
                                              06/30/01             ($47,000,000)
                                              09/30/01             ($35,000,000)
                                              12/31/01             ($34,500,000)
                                              03/31/02             ($20,000,000)

(ii)     Current Assets to Current            As of the following dates greater
         Liabilities                          than:

                                              03/31/01             1.45:1.00
                                              06/30/01             0.60:1.00
                                              09/31/01             0.80:1.00
                                              12/31/01             0.80:1.00
                                              03/31/02             1.00:1.00

(iii)    Minimum EBITDA (calculated on a      As of the following dates not less
         cumulative, annualized basis)        than:

                                              03/31/01             ($ 4,700,000)
                                              06/30/01              $  5,000,000
                                              09/30/01              $  7,000,000
                                              12/31/01              $ 11,000,000
                                              03/31/02              $ 10,000,000

                                       5
<PAGE>

                        ATTACHMENT A ("ATTACHMENT A") TO
         SECOND AMENDED AND RESTATED TERM AND REVOLVING CREDIT AGREEMENT
                                 ("AGREEMENT")

IV.  Additional Conditions Precedent Pursuant to Section 5.1 of the Agreement:

     o    Executed Contingent Blocked Account Amendment;

     o    A Certificate of Location of Collateral whereby the Customer certifies
          where each Customer and Domestic Subsidiaries presently keeps or sells
          inventory, equipment and other tangible Collateral;

     o    Subordination or Intercreditor  Agreements from all creditors having a
          lien which is  superior  to IBM  Credit in any assets  that IBM Credit
          relies on to satisfy Customer's obligations to IBM Credit;

     o    A copy of an all-risk  insurance  certificate  pursuant to Section 7.8
          (B) of the Agreement.

                                       6Exhibit 10.10

                              EMPLOYMENT AGREEMENT

                  THIS AGREEMENT  ("Agreement") made and entered into as of this
22nd day of November,  2000, by and between APPLIED DIGITAL  SOLUTIONS,  INC., a
Missouri corporation ("Company") and JEROME C. ARTIGLIERE ("Employee").

                                   BACKGROUND

                  Employee  has been  employed  as  president  of ADS  Financial
Corp., a wholly-owned subsidiary of Company,  pursuant to the terms of a certain
employment  agreement  ("Prior  Agreement").  The parties  desire that  Employee
become Company's vice president and chief financial  officer and desire to enter
into a formal  employment  agreement  covering the terms and  conditions of such
employment which shall supersede the Prior Agreement.

                              TERMS AND CONDITIONS

                  1. Employment.  Company hereby employs Employee,  and Employee
hereby accepts such employment by Company, on the terms and conditions set forth
below.

                  2. Capacity.  Employee shall serve as Company's vice president
and chief financial officer and/or in such other executive capacity as Company's
board of  directors  ("Board")  shall  determine.  Employee  shall  perform such
services  for Company and its  subsidiaries  and  affiliates  as the Board shall
direct from time to time.  However,  no such services shall be of a nature which
are not commensurate  with,  and/or are beneath the dignity of, Employee's title
and status as an executive employee.

<PAGE>

                  3. Term. Company's employment of Employee under this Agreement
shall be for an initial term of five years  commencing  on November 22, 2000 and
ending on  November  21,  2005.  The term of  Employee's  employment  under this
Agreement  shall  automatically  be renewed for  successive  additional one year
terms on each  anniversary of the  commencement of Employee's  employment  under
this Agreement,  beginning with the November 22, 2001 anniversary  date, each of
which terms shall be added at the end of the then  existing  term  (taking  into
account any prior extensions),  unless and until either party notifies the other
to the contrary,  in which event the term of this Agreement  shall  terminate at
the end of the then existing term. For example, unless either party notifies the
other to the contrary on or before  November 21, 2001, on November 22, 2001, the
term of this Agreement  shall be extended from November 22, 2005 to November 21,
2006.  For further  example,  and assuming the term of this  Agreement  has been
extended to November 21, 2006,  as described  above,  if one party  notifies the
other  that it does not  desire to extend  the term of this  Agreement  and such
notice is given on or before November 21, 2002, the term of this Agreement shall
end on  November  21,  2006.  Notwithstanding  the  foregoing,  the term of this
Agreement may end prior to the termination  date determined under this paragraph
3 as provided in paragraphs 9, 10, 11 and 12.

                  4. Service While Employed.  Employee agrees to devote his best
efforts, his full diligence and all of his business time to his duties hereunder
and shall not engage,  either  directly or indirectly,  in any business or other
activity which is  competitive  with or adverse to the interests or the business
of Company.

                  5. Items  Furnished  and  Relocation.  Company  shall  furnish
Employee  with such  private  office,  secretarial  assistance,  and such  other

                                       2
<PAGE>

facilities,  equipment  and  services  suitable to his  position and adequate to
perform his duties hereunder. Except for Employee's contemplated and agreed upon
relocation  to Palm  Beach  County,  Florida no later  than  September  1, 2001,
Employee shall not be relocated by Company without his consent.

                  6.  Compensation,  Vacations  and  Reimbursement.  As  partial
compensation  for his  services to Company,  Company  agrees to pay  Employee an
annual salary in regular  monthly or other agreed upon  installments of not less
than  $175,000.  Employee  shall  also be  entitled  to  receive  such  bonuses,
incentive  compensation,  and other compensation,  if any, as Company's board of
directors,  executive  committee,  compensation  committee,  or other designated
committee shall award Employee from time to time whether in cash, Company stock,
stock options,  other stock based compensation,  other form of remuneration,  or
any  combination  of the  foregoing.  In  addition,  Company  shall pay Employee
monthly payments of $2,500 each as a flexible perquisite allowance to be used by
Employee for such purposes as he shall determine. All such compensation shall be
subject to legally  required  income and  employment tax  withholding.  Employee
shall  be  entitled  to paid  vacations  and  reimbursement  for all  reasonable
business expenses in accordance with Company's policies for executive officers.

                  7. Other Benefits.  In addition to his compensation  described
in paragraph 6 above,  Employee  shall be entitled to participate in such bonus,
profit sharing,  deferred compensation and pension plans of Company for which he
is eligible.

                  8.   Welfare   and  Fringe   Benefits.   In  addition  to  his
compensation  described in paragraph 6 and the benefits described in paragraph 7
above,  Employee  shall be entitled to  participate  in such  welfare and fringe
benefits plans and programs of the Company for which he is eligible.

                                       3
<PAGE>

                  9. Death and  Disability.  If Employee dies during the term of
this Agreement, his employment shall be deemed to have been terminated as of the
last  day of the  month in which  his  death  occurs,  and  Company  will pay to
Employee's  personal  representative  all  salary  and  other  compensation  due
Employee through the end of such month. If Employee becomes permanently disabled
so that he cannot  perform his duties  hereunder,  as  determined by a physician
selected by or acceptable  to Company,  his  employment  shall be deemed to have
been terminated as of the last day of the month in which such  determination  is
made, and he will receive his salary and other  compensation  through the end of
such month. For purposes of the foregoing computations, Employee shall be deemed
to have  earned  the  same  percentage  of his  minimum  annual  bonus  for such
employment  year as the number of days in the  employment  year through the date
his employment is deemed to terminate is of 365.

                  10.  Retirement.  From and after the time Employee attains age
65, he may  retire at any time by  notifying  Company at least 120 days prior to
his retirement date or be retired by Company upon at least two years notice.

                  11.  Default.  In the event  that  Company  fails to perform a
material  provision of this  Agreement  and such failure  continues  for 30 days
after  notification from Employee,  the Employee may terminate this Agreement by
notice to the Company.  Company may terminate  this  Agreement  upon  Employee's
material default.  Employee's material default shall mean (a) Employee's willful
and continued failure to perform the requirements of his duties hereunder (other
than as a result  of total or  partial  incapacity  due to  physical  or  mental
illness)  for 30 days after a written  demand is delivered to Employee on behalf
of Company which specifically  identifies the manner in which it is alleged that

                                       4
<PAGE>

Employee has not substantially  performed his duties, (b) Employee's  dishonesty
in the  performance  of his duties  hereunder,  (c) an act or acts on Employee's
part involving  moral  turpitude or  constituting a felony under the laws of the
United  States  or any  state  thereof,  (d) any  other  act or  omission  which
materially injures the financial  condition or business reputation of Company or
any of its subsidiaries or affiliates,  or (e) Employee's material breach of his
non-compete and confidentiality obligations under paragraphs 4 and/or 13 of this
Agreement,  respectively.  Any  termination  shall be without  prejudice  to any
rights or remedies which Employee or Company may have.

                  12. Change in Control.  Notwithstanding any other provision of
this Agreement,  should a Change of Control (as defined below) occur,  Employee,
at his sole option and  discretion,  may  terminate  his  employment  under this
Agreement  at any time within one year after such Change of Control upon 15 days
notice.  In the  event of such  termination,  Company  shall pay to  Employee  a
severance  payment  equal to three  times the base  amount as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended ("Code") minus $1.00
which shall be payable no later than one month after the  effective  date of the
Employee's  termination of employment.  In addition, in the event of a Change of
Control,  all outstanding  stock options held by Employee  (whether issued under
Company's  1996 Stock  Option  Plan,  Company's  1999  Flexible  Stock Plan,  or
otherwise)   shall  become  fully   exercisable   (to  the  extent  not  already
exercisable).  For purposes of this Agreement, a Change in Control is defined on
the attached Exhibit A.

                  13.  Nondisclosure;  Return  of  Records.  Employee  will not,
except as authorized by Company,  publish or disclose to others,  or use for his
own benefit,  or authorize anyone else to publish or disclose or use, or copy or

                                       5
<PAGE>

make notes of any secret,  proprietary, or confidential information or knowledge
of data or trade  secrets of or relating to the business  activities  of Company
which may come to Employee's  knowledge  during his employment with the Company.
Upon termination of Employee's employment for any reason,  Employee will deliver
to Company, without retaining any copies, notes or excerpts, all records, notes,
data,  memoranda,  and all other  documents  or  materials  made or  compiled by
Employee,  or made available to him by Company during his employment,  which are
in Employee's  possession  and/or  control and which are the property of Company
and/or which relate to  Employee's  employment  or the  business  activities  of
Company.

                  14. Binding  Effect.  This Agreement shall be binding upon and
inure to the benefit of Company and any  successors  or assigns of Company,  and
Employee,  his  heirs,  personal   representatives  and  assigns,   except  that
Employee's  obligations  to  perform  services  and  rights to  receive  payment
therefore shall be nonassignable and nontransferable.

                  15. Entire Agreement: Modification. This Agreement constitutes
the entire agreement  between the parties with respect to the subject matter and
supersedes  all  prior  or  contemporaneous  agreements  not set  forth  in this
agreement.  This  Agreement  may not be modified  other than by an  agreement in
writing signed by each of the parties.

                  16.  Waiver.  Any  failure  by  either  party to  enforce  any
provision of this  Agreement  shall not operate as a waiver of such provision or
any other  provision.  Any waiver by either party of any breach of any provision
of this  Agreement  shall not  operate  as a waiver of any other  breach of such
provision or any other provision of this agreement.

                                       6
<PAGE>

                  17.  Severability.  The invalidity or  unenforceability of any
particular  provision of this Agreement shall not effect the other provisions of
this Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.

                  18. Paragraph  Headings.  Paragraph  headings  throughout this
Agreement  are  solely  for the  convenience  of the  parties  and  shall not be
construed as a part of any section or as modifying the contents of any section.

                  19.  Governing  Law.  This  Agreement  shall be  governed  and
construed in accordance with the laws of the State of Missouri.

                  20.  Notices.  All  notices  under  this  Agreement  shall  be
personally  delivered,  sent certified mail, postage prepaid,  to Company at its
corporate  office  and to  Employee  at his  principal  residence,  or  sent  by
telecopy.

                  21. Non-Competition.  For two years from and after termination
of  Employee's  employment  with  Company  for any reason  other than his death,
Employee shall not engage,  directly or indirectly,  either on his own behalf or
on  behalf  of any other  person,  firm,  corporation  or other  entity,  in any
business  competitive  with the business of Company,  in the geographic  area in
which Company is conducting  business at the time of  termination  of Employee's
employment,  or own more than 5% of any such firm,  corporation or other entity.
In addition,  Employee  must furnish  Company with such  information  as Company
shall  from time to time  request  in order to  determine  that  Employee  is in
compliance with the  requirements of the preceding  provisions of this paragraph
21.

                  22. Company.  For purposes of paragraphs 4, 13, and 21 of this
Agreement,  the Company  shall mean  Applied  Digital  Solutions,  Inc.  and all
subsidiaries and affiliates of it.

                                       7
<PAGE>

                  23.  Excise Gross Up. In the event that any payment or benefit
received or to be received by Employee under this Agreement and/or under another
plan of or agreement  with  Company is subject to the excise tax ("Excise  Tax")
under Section 4999 of the Internal  Revenue Code of 1986,  as amended  ("Code"),
Company shall pay Employee an amount ("Excise Gross Up Payment") that covers all
Excise Taxes incurred or to be incurred by Employee  because of any such payment
or benefit and all federal and state income taxes and Excise Taxes on the Excise
Gross Up Payment and which, therefore,  will place Employee in the same position
that he would have been in had no such  payment or benefit  been  subject to the
Excise Tax. The Excise Tax Gross Up Payment (or portion  thereof)  shall be made
upon the  earlier  of the  imposition  of any Excise  Tax upon  Employee  or his
payment of any Excise Tax.

                  24. Effect of Agreement.  This Agreement  shall  supersede all
agreements  relating to Employee's  employment  by Company or any  subsidiary or
affiliate, including, without limitation, the Prior Agreement.

                  IN  WITNESS  WHEREOF,  the  parties  have duly  executed  this
Agreement as of the day and year first above written.

                                                APPLIED DIGITAL SOLUTIONS, INC.

                                                By:
                                                    ----------------------------
                                                Title:
                                                      --------------------------
                                                               "Company"

                                                --------------------------------
                                                Jerome C. Artigliere

                                                               "Employee"
                                       8
<PAGE>

                                   EXHIBIT A
                                   ---------

                  (a) An  acquisition  of any common stock  ("Common  Stock") or
other voting  securities of Company  entitled to vote generally for the election
of directors (the "Voting  Securities") by any "Person" or "Group" (as each such
term is used for  purposes  of  Section  13(d) or  14(d) of the  Exchange  Act),
immediately  after  which  such  Person  or  Group,  as the  case  may  be,  has
"Beneficial  Ownership"  (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 20% of the then outstanding shares of Common Stock or
the combined  voting  power of Company's  then  outstanding  Voting  Securities;
provided, however, that in determining whether a Change of Control has occurred,
shares of Common Stock or Voting  Securities  that are acquired in a Non-Control
Acquisition  (as defined below) shall not constitute an acquisition  which would
cause a Change of Control. A "Non-Control Acquisition" shall mean an acquisition
by  (i)  Company,   (ii)  any  corporation  which  is  considered  a  subsidiary
corporation  of Company  under  Section  424(f) of the Internal  Revenue Code of
1986, as amended  ("Subsidiary") or (ii) any employee benefit plan maintained by
Company or any  Subsidiary,  including a trust forming part of any such plan (an
"Employee Benefit Plan");

                  (b) When,  during any 2-year period,  individuals  who, at the
beginning of the 2-year period,  constitute the Board (the  "Incumbent  Board"),
cease for any  reason to  constitute  at least 50% of the  members of the Board;
provided,  however,  that (i) if the  election  or  nomination  for  election by
Company's  shareholders  of any new  director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes hereof,
be deemed to be a member of the Incumbent Board; and (ii) no individual shall be
deemed  to be a  member  of the  Incumbent  Board if such  individual  initially
assumed office as a result of either an actual or threatened  "Election Contest"
(as described in Rule 14a-11 promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person or
Group  other  than the  Board (a  "Proxy  Contest")  including  by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest;

                  (c) The consummation of:

                      (i) a merger,  consolidation or  reorganization  involving
Company or any Subsidiary, unless the merger, consolidation or reorganization is
a Non-Control  Transaction.  A  "Non-Control  Transaction"  shall mean a merger,
consolidation or reorganization of Company or any Subsidiary where:

                          (A) the shareholders of Company  immediately  prior to
the  merger,  consolidation  or  reorganization  own,  directly  or  indirectly,
immediately following such merger, consolidation or reorganization, at least 50%
of the  combined  voting  power  of the  outstanding  voting  securities  of the
corporation  resulting from such merger,  consolidation or  reorganization  (the
"Surviving Corporation") in substantially the same proportion as their ownership
of the Common Stock or Voting Securities,  as the case may be, immediately prior
to the merger, consolidation or reorganization,

                          (B) the  individuals who were members of the Incumbent
Board  immediately  prior to the  execution of the  agreement  providing for the
merger,  consolidation or  reorganization  constitute at least two-thirds of the

<PAGE>

members of the board of directors of the Surviving Corporation, or a corporation
beneficially owning, directly or indirectly, a majority of the voting securities
of the Surviving Corporation, and

                          (C) no Person or Group,  other than (1)  Company,  (2)
any Subsidiary,  (3) any Employee  Benefit Plan or (4) any other Person or Group
who,  immediately  prior to the merger,  consolidation  or  reorganization,  had
Beneficial  Ownership  of not  less  than  20% of the  then  outstanding  Voting
Securities  or Common  Stock,  has  Beneficial  Ownership  of 20% or more of the
combined voting power of the Surviving  Corporation's  then  outstanding  voting
securities or common stock;

                  (d) A complete liquidation or dissolution of Company; or

                  (e) The sale or other  disposition of all or substantially all
of the assets of Company to any Person (other than a transfer to a Subsidiary).

         Notwithstanding the foregoing,  a Change of Control shall not be deemed
to have  occurred  solely  because  any Person or Group (the  "Subject  Person")
acquired  Beneficial  Ownership  of more than the  permitted  amount of the then
outstanding  Voting  Securities  or Common  Stock of  Company  as a result of an
acquisition of Voting  Securities or Common Stock by Company which,  by reducing
the number of shares of Voting  Securities  or Common  Stock  then  outstanding,
increases the proportional  number of shares  beneficially  owned by the Subject
Person; provided,  however, that if a Change of Control would have occurred (but
for the  operation of this  sentence) as a result of the  acquisition  of Voting
Securities or Common Stock by Company,  and after such  acquisition  by Company,
the Subject  Person becomes the  beneficial  owner of any  additional  shares of
Voting  Securities or Common Stock,  which  increases the percentage of the then
outstanding  shares of Voting Securities or Common Stock  beneficially  owned by
the Subject Person, then a Change of Control shall be deemed to have occurred."

                                       2

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