Exhibit 10.1
[Applied Digital Solutions Logo]
FOR IMMEDIATE RELEASE:
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INVESTOR CONTACT MEDIA CONTACT
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LORI ALEXANDER MATTHEW COSSOLOTTO
PHONE: 561-805-8013 PHONE: 914-245-9721
INVESTOR@ADSX.COM MATTHEW@OVATIONS.COM
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APPLIED DIGITAL SOLUTIONS AGREES TO FORBEARANCE
AGREEMENT WITH IBM CREDIT, LLC, THE COMPANY'S SENIOR
SECURED LENDER
RICHARD J. SULLIVAN ANNOUNCES RETIREMENT FROM COMPANY -
SCOTT R. SILVERMAN ASSUMES TITLES OF CHAIRMAN AND CEO
PALM BEACH, FL - MARCH 27, 2003 - APPLIED DIGITAL SOLUTIONS, INC. (NASDAQ:
ADSX), an advanced technology development company, announced today that it
has agreed to the terms of a forbearance agreement with IBM Credit LLC, the
Company's senior secured lender, granting Applied Digital more favorable
loan repayment terms and more time in which to meet its current obligations
to IBM Credit. The specific terms of the agreement have been attached as an
exhibit to the Company's form 8-K to be filed today.
In summary, the terms of the agreement include, but are not limited to, the
following:
o The forbearance by IBM Credit of the current outstanding
obligation (of approximately $95 million) owed by Applied Digital,
subject to continued compliance with the covenants in the
Forbearance Agreement and Credit Agreement.
o Various purchase rights of Applied Digital to buy back its
existing indebtedness from IBM Credit. These rights include a
one-time payment, on or before June 30, 2003, of $30 million. If
this particular payment is made, Applied Digital would satisfy its
full obligation to IBM Credit.
o A substantial reduction in the effective interest rate.
o The implementation of certain agreed procedures, including
the engagement of an investment banker, to facilitate the
valuation and potential sale of some or all of the shares
of Digital Angel Corporation held beneficially by Applied
Digital through the Digital Angel Share Trust.
o The imposition of additional limitations on permitted expenditures
by Applied Digital and a requirement that the Company take steps
towards valuing and, if necessary, selling some of its assets.
o The dismissal of the complaint filed by Applied Digital on March
6, 2003, against IBM Credit and IBM Corporation.
The Company also announced that Richard J. Sullivan has retired from his
positions as Chairman and CEO, effective March 21, 2003. Applied Digital's
Board of Directors negotiated a severance agreement, reduced from the terms
of Mr. Sullivan's existing employment contract, providing for a one-time
payment of approximately $10.6 million in restricted stock instead of a
potential $17 million obligation contained in Mr. Sullivan's employment
contract.
At the request of the Board of Directors, Scott R. Silverman, who has served
as Applied Digital's President since March 2002 and who led the most recent
discussions with IBM Credit, will assume the titles of Chairman and CEO,
effective immediately.
A graduate of The University of Pennsylvania (1985) and Villanova University
School of Law (1989), Mr. Silverman, 39, began his career as an attorney
specializing in commercial litigation and communications law. He has served
as General Counsel and later as President of ATI Communications, Inc. In
1996, ATI Communications was acquired by Applied Digital Solutions, Inc.
From 1997 to 1999, Mr. Silverman was Vice President, Business Development
of Applied Digital. From 1999 to 2001, Mr. Silverman operated his own
private-investment banking firm and has provided consulting,
merger/acquisition, restructuring and capital market services to
public and private companies. Mr. Silverman returned to Applied Digital as a
consultant in mid-year 2001.
ABOUT APPLIED DIGITAL SOLUTIONS, INC.
Applied Digital Solutions is an advanced technology development company that
focuses on a range of life-enhancing, personal safeguard technologies, early
warning alert systems, miniaturized power sources and security monitoring
systems combined with the comprehensive data management services required to
support them. Through its Advanced Technology Group, the Company specializes
in security-related data collection, value-added data intelligence and
complex data delivery systems for a wide variety of end users including
commercial operations, government agencies and consumers. Applied Digital
Solutions is the beneficial owner of a majority position in Digital Angel
Corporation (AMEX: DOC). For more information, visit the Company's website
at http://www.adsx.com.
Statements about the Company's future expectations, including future
revenues and earnings, and all other statements in this press release other
than historical facts are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934, and as that term is defined in the Private Litigation
Reform Act of 1995. Such forward-looking statements involve risks and
uncertainties and are subject to change at any time, and the Company's
actual results could differ materially from expected results. The Company
undertakes no obligation to update forward-looking statements to reflect
subsequently occurring events or circumstances.
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