STOCK PURCHASE AGREEMENT
by and between
APPLIED DIGITAL SOLUTIONS, INC.,
Buyer,
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Sellers
Dated October 27, 2000
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of October 27, 2000, by and between Applied Digital Solutions, Inc., a
Missouri corporation ("Buyer"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇▇" and collectively with Rametra, "Sellers") (Buyer and
Sellers each a "Party" and together "Parties").
RECITALS
Buyer desires to purchase from Sellers, on the following terms
and conditions, the ATEC Shares (as defined below) of ATEC Group, Inc., a
Delaware corporation (the "Company" or "ATEC"); and
Sellers desire to sell to Buyer, on the following terms and
conditions, the ATEC Shares.
NOW, THEREFORE, in consideration of the recitals and the
mutual covenants, representations, warranties, conditions, and agreement
hereinafter expressed, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1. The ATEC Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as defined below), (i)
each of the Sellers shall sell and deliver to Buyer, free and clear of all
security interests, claims, and restrictions and Buyer shall purchase and accept
from Sellers the shares of ATEC common stock reflected on Schedule 1.1
consisting of an aggregate of 595,000 shares of ATEC common stock now held by
Sellers; and (ii) Rametra shall sell and deliver to Buyer, free and clear of all
security interests, claims, and restrictions and Buyer shall purchase and accept
from Rametra an additional 705,000 shares of ATEC common stock which Rametra
will acquire on or prior to the date of the Closing on exercise of options
Rametra currently holds which entitles Rametra to purchase such shares from
ATEC. Such aggregate 1,300,000 shares of ATEC common stock are referred to
herein as the "ATEC Shares."
1.2 Consideration. The consideration that Buyer shall pay
Sellers for the ATEC Shares, the obligations of Sellers under Article VI, and
the other rights of Buyer hereunder shall be a value of seven dollars ($7.00)
per share of the ATEC Shares, payable in shares of Buyer (the "ADS Shares").
Subject to adjustment as provided in following paragraph, at the closing of the
purchase of the ATEC Shares (the "Closing"), the number of the ADS Shares to be
delivered to Sellers shall be calculated using as the per share value thereof
the average of the closing price for the Buyer's common stock for the twenty
five (25) consecutive trading days ending on the last business day prior to the
date of signing of this Agreement (the "Signing Date Average Price").
1.3 Price Protection - Initial Shares. In respect of 30% of
the ADS Shares (the "Price Protection Shares"), the following price protection
provisions shall apply. If the average closing price for ADS common stock for
each of the trading days commencing with the date of the Closing and ending on
the 90th calendar day thereafter is lower than the Signing Date Average Price,
additional ADS Shares shall be issued to Sellers within ten business days
thereafter, so that, after such issuance, the aggregate value of the Price
Protection Shares, valued at such average closing price, shall be equal to the
aggregate value of the original number of the Price Protection Shares valued at
the Signing Date Average Price. If Buyer is required to deliver additional ADS
Shares as described in this paragraph which Shares exceed the number of ADS
Shares included in the Registration Statement (referred to in Section 5.4),
Buyer shall cause such excess Shares to be included in the Registration
Statement, by post-effective amendment or otherwise as agreed to by the Parties.
1.4 Option to Acquire Additional Shares. Buyer shall have
the option to acquire any or all of the remaining shares of common stock of ATEC
which are subject to options or warrants which Rametra now holds, or an
aggregate of 842,140 (provided such number shall be reduced to 342,140 on the
event shareholder approval is not received with respect to 500,000 options
approved by the ATEC Broad in September 2000) shares of ATEC common stock (the
"Additional ATEC Shares") in addition to the ATEC Shares. To exercise such
option, in whole or in part, Buyer shall give written notice to Rametra to such
effect not later than January 31, 2001, and the acquisition of the Additional
ATEC Shares shall take place on the tenth business day following the date of
delivery of such notice, or on such other date as the Parties may agree. Sellers
shall exercise the options to acquire the Additional ATEC Shares (or the
specified number of such shares) and pay the option exercise price in full on or
prior to the date of acquisition by Buyer. Buyer shall acquire the Additional
ATEC Shares at a value of $7.00 per share, payable in shares of Buyer (the
"Additional ADS Shares"), the number of which shall be calculated as the per
share value thereof using the Signing Date Average Price referred to above,
without regard to any changes in the market price of the Buyer's common stock
subsequent to the Closing.
1.5 Price Protection - Additional Shares. In respect of 40%
of the Additional ADS Shares (the "Additional Price Protection Shares"), the
following price protection provisions will apply. If the average closing price
for ADS common stock for each of the trading days commencing with the date of
the acquisition of the Additional ATEC Shares and ending on the 90th calendar
day thereafter is lower than the Signing Date Average Price, additional ADS
Shares shall be issued to Sellers, so that, after such issuance, the aggregate
value of the Additional Price Protection Shares, valued at such average closing
price for such 90-day period, shall be equal to the aggregate value of the
original number of the Additional Price Protection Shares valued at the Signing
Date Average Price. If Buyer is required to deliver additional ADS Shares as
described in this paragraph which Shares exceed the number of ADS Shares
included in the Registration Statement (referred to in Section 5.4), Buyer shall
cause such excess Shares to be included in the Registration Statement, by
post-effective amendment or otherwise as agreed to by the Parties.
1.6 Closing; Cooperation. The Closing shall take place at
the office of ▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ at 10:00 a.m. local time on November 30, 2000, or, if the conditions to
the Closing are not by then satisfied, upon satisfaction of such conditions, the
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date on which the Closing actually occurs being referred to herein as the
"Closing Date." Each Party shall reasonably cooperate, as to matters under such
Party's control, in the satisfaction of conditions to the obligations of the
Parties at the Closing; provided, that the foregoing shall not require either
Party to waive any condition herein to its obligations at the Closing or to
incur any substantial cost not otherwise required hereunder.
1.7 Deliveries of Sellers at Closing. Subject to the
conditions to Sellers' obligations in Article V, at the Closing, Sellers shall
deliver to Buyer a certificate or certificates evidencing the ATEC Shares, duly
endorsed or accompanied by a duly executed stock power, plus the documents
identified in Article IV, duly executed by Sellers.
1.8 Deliveries of Buyer at Closing. Subject to the
conditions to Buyer's obligations in Article IV, at the Closing, Buyer shall
deliver to Sellers a certificate or certificates evidencing the ADS Shares, duly
endorsed or accompanied by a duly executed stock power, plus the documents
identified in Article V, duly executed by Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, hereby make the following
representations and warranties to Buyer, each of which is true and correct on
the date hereof and each of which shall survive the Closing:
2.1 Power and Authority. Each Seller has the power and
capacity to execute and deliver this Agreement, to perform the obligations
hereunder, and to consummate the transactions contemplated hereby.
2.2 Stock Ownership. Each Seller represents for himself and
for herself that he or she is the sole holder of record and beneficial owner of
the ATEC shares and the option to purchase the ATEC shares (the "ATEC Options")
as provided on Schedule 1.1. ▇. ▇▇▇▇▇▇▇ owns the ATEC shares, and Rametra owns
the ATEC shares and the ATEC Options as set forth on Schedule 1.1, free and
clear of all security interests, claims, restrictions and voting agreements of
any kind. Each of the Sellers will transfer good and marketable title to the
ATEC shares which he or she owns, and Rametra shall cause the ATEC Options he
owns to be exercised and shall transfer good and marketable title to the ATEC
shares issuable upon exercise of such ATEC Options at the Closing, free and
clear of all liens, security interests, claims, restrictions and voting
agreements.
2.3 Enforceability. This Agreement has been duly executed
and delivered by each Seller and constitutes a legal, valid and binding
obligation of each Seller, enforceable against each Seller in accordance with
its terms.
2.4 No Violation. The execution and delivery of this
Agreement by Sellers, the performance by Sellers of the obligations hereunder
and the consummation by Sellers of the transactions contemplated by this
Agreement will not (i) contravene any provision of the articles of incorporation
or bylaws of the Company, (ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order of any
governmental authority or of any arbitration award which is either applicable
to, binding
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upon or enforceable against the Company or either Seller, (iii) conflict with,
result in any breach of, or constitute a default (or an event which would, with
the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any contract which is applicable to, binding upon or enforceable
against the Company or either Seller, (iv) result in or require the creation or
imposition of any lien upon or with respect to any of the property or assets of
the Company, or (v) require the consent, approval, authorization or permit of,
or filing with or notification to, any governmental authority, any court or
tribunal or any other person, except any applicable filings required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and any filings with the Securities and Exchange
Commission (the "SEC") and other filings required to be made by Buyer.
2.5 Irrevocable Proxy. Simultaneous with the execution hereof,
each of the Sellers has granted an irrevocable proxy to Buyer to exercise all
voting rights which he or she may have in respect of any of his or her common
stock or other securities of the Company, including the ATEC Shares, effective
from the date hereof and continuing until the Closing (or until termination of
this Agreement in accordance with its terms).
2.6 Resignation of Directorship and Offices. Rametra has
resigned from all offices, directorships and other positions with respect to
ATEC.
2.7 Corporate Existence and Qualification. The Company is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware; it is duly qualified and in good standing in each
foreign jurisdiction where its failure to so qualify would materially adversely
effect such entity. The Company has the corporate power and authority to own and
use its properties and to transact the business in which it is engaged.
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ hereby makes the following warranties and
representations to Buyer, each of which is true and correct on the date hereof
and each of which shall survive the Closing.
2A.1 Capitalization. The authorized capital stock of the
Company consists of 70,000,000 shares of common stock, par value $ 0.01 per
share, and 10,000,000 shares of preferred stock, par value $ 0.01 per share. As
of the date hereof, 7,347,689 shares are issued or outstanding, all of which
have been duly authorized and validly issued and are fully paid and
non-assessable. Except as set forth on Schedule 2A.1, there are no contracts
relating to the issuance, sale or transfer of any equity security of the
Company.
2A.2 Subsidiaries. With the exception of Logix Solutions, Inc.
(as to which the Company owns 90% of the outstanding equity securities), the
Company owns of record and beneficially, free and clear of all liens, all of the
outstanding equity securities and other securities of each entity (the
"Subsidiaries") listed in Exhibit 21.2 to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2000 filed with the SEC on September 28,
2000 (the "Annual Report"). No legend appears on any certificate representing
equity securities of any Subsidiary. All of the outstanding equity securities of
each Subsidiary have been duly authorized and validly issued, and are fully paid
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and nonassessable. There are no contracts relating to the issuance, sale or
transfer of any equity security of any Subsidiary. Neither the Company nor any
Subsidiary owns or has any contract to acquire any securities or ownership
interest in any other business.
2A.3 Property and Permits. Except as set forth on Schedule
2A.3 or in the financial statements (or notes thereto) referenced in Section
2A.4, the Company is the sole owner of all right, title, and interest in and to
all assets reflected on the current balance sheet, free and clear of all
mortgages, security interests, claims, restrictions and other encumbrances, and
there exists no restriction on the use or transfer of such assets or property.
No such assets or property are in the possession of others and the Company holds
no property on consignment. All tangible such assets and property are in good
condition and repair and fit for their intended purpose, and are not in
violation of applicable zoning or other Law. The Company holds all permits,
licenses and other approvals necessary to conduct the business in which it is
engaged.
2A.4 Financial Statements. The consolidated balance sheets and
the related consolidated statements of income, changes in stockholders' equity
and cash flows contained in the Annual Report and in all other documents filed
with the SEC since June 30, 2000, presented fairly in all material respects the
consolidated financial position of the Company, and the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of the Company and the Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such statements
(including the related notes where applicable) has been prepared in accordance
with generally accepted accounting principles consistently applied during the
periods involved ("GAAP"). The books and records of the Company and the
Subsidiaries have been, and are being, maintained in all material respects in
accordance with the GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
2A.5 Changes Since June 30, 2000. Since June 30, 2000, the
Company has not (i) issued any capital stock or other securities, with the
exception of options to purchase common stock issued to employees and/or agents
of the Company; (ii) made any distribution of or with respect to its capital
stock or other securities or purchased or redeemed any of its securities; (iii)
paid any bonus to or increased the rate of compensation of any of its officers
or salaried employees or, with the exception of amendments set forth on Schedule
2A.5, amended any other terms of employment of such persons; (iv) sold, leased
or transferred any of its properties or assets other than in the ordinary course
of business consistent with past practice; (v) made or obligated itself to make
capital expenditures out of ordinary course of business consistent with past
practice; (vi) made any payment in respect of its liabilities other than in the
ordinary course of business consistent with past practice; (vii) entered into
any other transaction or been subject to any event which has or may have a
material adverse effect on the Company; or (viii) agreed to do or authorized any
of the foregoing.
2A.6 Compliance with Disclosure Requirements. Except as
otherwise disclosed in the Company's Annual Report, the Company has timely filed
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that it was required to file since
June 30, 1998 to or with any governmental agency, including without limitation
the SEC. No document filed with the SEC since June 30, 1998 contains any untrue
5
statement of material fact, or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading.
2A.7 Insurance. The Company maintains insurance coverage. All
policies of insurance to which the Company or any Subsidiary is a party: (a) are
validly issued, outstanding and enforceable; (b) are issued by an insurer that
is financially sound and reputable; (c) taken together, provide adequate
insurance coverage for the assets and the operations of the Company; and (d)
will continue in full force and effect following the Closing. The Company has
given notice to the insurer of all claims that may be insured thereby.
2A.8 No Undisclosed Liabilities. To the best of Rametra's
knowledge, the Company does not have any material liabilities or obligations
whatsoever, known or unknown, accrued, absolute, contingent, or other, except
(a) as disclosed in the Annual Report, or (b) to the extent they arise in the
ordinary course of the business of the Company and would not have been required
to be set forth therein had they existed on June 30, 2000: (i) Taxes incurred
since June 30, 2000 and (ii) performance and payment obligations (but not
liabilities for breach or violation) lawfully incurred under arm's-length
contracts for goods or services.
2A.9 Taxes. To the best of Rametra's knowledge:
(a) The Company timely has filed or caused to be filed with
the appropriate Government entity all tax returns and reports required to be
filed by or on behalf of the Company, including estimated tax and informational
returns ("Tax Returns") and no Tax Returns have been amended. All Tax Returns
are true, correct, and complete.
(b) Except as noted on Schedule 2A.9, all Taxes (whether or
not reflected in Tax Returns as filed) payable by the Company with respect to
all periods reflected on Tax Returns have been fully paid, and there are no
grounds for the assertion or assessment of any additional Taxes against the
Company or its assets with respect to such periods. All unpaid Taxes are
properly accrued on the books of the Company and will be so accrued on the
Company's balance sheet as of the Closing Date in an amount sufficient to pay
them in full when due.
(c) The Company has complied with all Law relating to the
withholding of Taxes and the payment thereof (including, without limitation,
withholding of Taxes under Section 1441 and 1442 of the Code, or similar
provision under foreign laws), and has timely and properly withheld from
employee wages and paid over to the proper Government all amounts required to
withhold and be paid over under applicable Law.
(d) As used in this Agreement, "Taxes" means all taxes,
charges, fees, levies, or other like assessments, including without limitation
income, gross receipts, ad valorem, value added, premium, excise, real property,
personal property, windfall profit, sales, use, transfer, license, withholding,
employment, payroll, and franchise taxes imposed by: the United States or any
other nation, state, or bilateral or multilateral governmental authority, any
local governmental unit or subdivision thereof, or any branch, agency, or
judicial body thereof ("Government"); and shall include any interest, fines,
6
penalties, assessments, or additions to tax resulting from, attributable to, or
incurred in connection with any such Taxes or any contest or dispute thereof.
2A.10 No Breach of Law or Governing Document. To the best of
Rametra's knowledge, the Company is not and has not been in default under or in
breach or violation of any applicable statute, law, treaty, convention,
ordinance, decree, order, injunction, rule, directive, or regulation of any
Government ("Law") or the provisions of any Government permit, franchise, or
license, or any provision of its certificate of incorporation or its bylaws. The
Company has not received any notice alleging such default, breach or violation.
Neither the execution of this Agreement nor the Closing do or will constitute or
result in any such default, breach or violation.
2A.11 Litigation. Except as disclosed in the Annual Report,
there is no action, suit, or other legal or administrative proceeding or
governmental investigation pending, or threatened against, by or affecting the
Company or either Seller, or any of their properties or assets which alone or in
the aggregate would have a material adverse effect upon the Company, or which
questions the validity or enforceability of this Agreement or the transactions
contemplated hereby, and there is no basis for any of the foregoing. There are
no outstanding orders, injunctions, decrees or stipulations issued by any
governmental authority in any proceeding to which the Company are or were
parties which have not been complied with in full or which continue to impose
any material obligations on the Company.
2A.12 Intellectual Property. Except as disclosed in the
Annual Report to the best of Rametra's knowledge:
(a) The Company is the sole and exclusive owner of each
patent, trademark, trade name, service ▇▇▇▇, and copyrighted work, and
registrations thereof and applications therefor, trade secret, software program,
invention, proprietary process, and item of proprietary know-how and other
intellectual property, and all licenses, sublicenses, and agreements in respect
thereof, used or licensed by or to the Company, to which the Company is a party,
or which are otherwise included in the property of the Company (the
"Intellectual Property") and all such items are valid and subsisting;
(b) The Company is the exclusive owner of all internally
developed prospect lists, customer lists, projections, analyses, and market
studies, free and clear of all restrictions whatsoever, and has the unrestricted
right to use any other such materials used by the Company but not internally
developed;
(c) The ownership, use, licensing, purchase, or sale by or to
the Company of any of the Intellectual Property or of the other technology used
in the business of the Company does not conflict with, contravene, infringe
upon, interfere with, or violate any patent, trademark, copyright or other
intellectual property right of any third person or require the acquiescence,
agreement or consent of any third person; and
(d) The Intellectual Property and the other technology used in
the business of the Company are not subject to a challenge or claim of
infringement, interference or unfair competition or other claim and, to the
knowledge of Sellers or the Company, the Intellectual Property is not being
infringed upon or violated by any third person.
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2A.13 Officers and Directors. Set forth on Schedule 2.20 is a
list of: (a) all current directors of the Company, and (b) all current officers
(with office held) of the Company.
2A.14 Governmental Approvals and Filings. Neither Seller nor
the Company is required to obtain any approval, consent, or authorization of, or
to make any declaration or filing with, any Government for the valid execution
and delivery of this Agreement or any other agreement to be delivered hereunder,
the purchase and sale of the ATEC Shares, or the performance or consummation of
the respective transactions contemplated hereby or thereby, except any
applicable filings required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and any filings
with the SEC and other filings required to be made by Buyer
2A.15 Disclosure. Each Schedule and each document attached as
or on a Schedule is true, correct, and complete. No representation or warranty
by Sellers in this Agreement or any Schedule referred to herein or in any
agreement to be delivered hereunder, and no written statement, certificate, or
other writing furnished to Buyer by or on behalf of Sellers pursuant hereto or
thereto contains or will contain as of the Closing Date any untrue statement of
a material fact or any omission of a material fact necessary to make the
respective statements contained herein or therein, in light of the circumstances
under which the statements were made, not misleading.
2A.16 No Commissions. Neither Seller has incurred any
obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
2A.17 Restrictive Documents. Neither Seller is subject to any
charter, by-law, mortgage, lien, lease, agreement, instrument, order, law, rule,
regulation, judgment or decree or any other restriction which would prevent
consummation of the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and
warranties to Sellers, each of which is true and correct on the date hereof and
each of which shall survive the Closing:
3.1 Corporate Status. Buyer is a corporation, duly organized,
validly existing and in good standing under the laws of Missouri; it is duly
qualified and in good standing in each foreign jurisdiction where its failure to
so qualify would materially adversely affect such entity. The Buyer has the
corporate power and authority to own and use its properties and to transact the
business in which it is engaged.
3.2 Corporate Power and Authority. Buyer has all requisite
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.
Buyer has taken all action necessary to authorize its execution and delivery of
this Agreement, the performance of its respective obligations hereunder and the
consummation of the transactions contemplated hereunder.
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3.3 Enforceability. This Agreement has been duly executed and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
3.4 No Violation. The execution and delivery of this Agreement
by Buyers, the performance by Buyers of the obligations hereunder and the
consummation by Buyers of the transactions contemplated by this Agreement will
not (i) contravene any provision of the articles of incorporation or bylaws of
Buyer, (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any governmental
authority or of any arbitration award which is either applicable to, binding
upon or enforceable against Buyer, (iii) conflict with, result in any breach of,
or constitute a default (or an event which would, with the passage of time or
the giving of notice or both, constitute a default) under, or give rise to a
right to terminate, amend, modify, abandon or accelerate, any contract which is
applicable to, binding upon or enforceable against Buyer, (iv) result in or
require the creation or imposition of any lien upon or with respect to any of
the property or assets of Buyer, or (v) require the consent, approval,
authorization or permit of, or filing with or notification to, any governmental
authority, any court or tribunal or any other person, except any applicable
filings required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and any filings with the SEC
and other filings required to be made by Buyer.
3.5 Financial Statements. The consolidated balance sheets and
the related consolidated statements of income, changes in stockholders' equity
and cash flows contained in Buyer's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, as amended, and in all other documents filed with
the SEC since March 30, 2000, presented fairly in all material respects the
consolidated financial position of Buyer, and the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
position of Buyer for the respective fiscal periods or as of the respective
dates therein set forth; each of such statements (including the related notes
where applicable) has been prepared in accordance with GAAP. The books and
records of Buyer have been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions. Notwithstanding the
foregoing, the representations contained in this Section 3.5 will not be deemed
to refer to any information contained in any applicable document filed with the
SEC relating to the business, operations, financial condition or results of
operations of Bostek, Inc. which was acquired by Buyer in 1999.
3.6 Investment Representation. Buyer is acquiring the
Shares for its own account, for investment and without any view to resale or
distribution of the Shares or any portion thereof.
3.7 Brokers, Finders. Buyer has not incurred any obligation
for any finder's or broker's or agent's fees or commissions or similar
compensation in connection with the transactions contemplated hereby with the
exception of fees due and payable to ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Consulting or their
affiliates which fees are and shall be the sole responsibility of Buyer.
3.8 Restrictive Documents. Buyer is not subject to any
charter, by-law, mortgage, lien, lease, agreement, instrument, order, law, rule,
9
regulation, judgment or decree or any other restriction which would prevent
consummation of the transactions contemplated by this Agreement.
ARTICLE IV
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer at the Closing shall be subject to
the satisfaction at or prior to the Closing of each of the following conditions
(unless waived in writing by Buyer):
4.1 Accuracy of Representations and Warranties. Sellers'
representations and warranties set forth in Article II shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects on the Closing Date as though such representations and
warranties were made at and as of such date and time. Seller's representations
and warranties as set forth in Article IIA shall have been true and correct in
all material respects when made.
4.2 Performance of Agreement. Sellers shall have fully
performed and complied with all covenants, conditions, and other obligations
under this Agreement to be performed or complied with by them at or prior to the
Closing.
4.3 Certificate. Sellers shall have delivered to Buyer at the
Closing a certificate of Sellers, dated the Closing Date, to the effect that the
conditions set forth in Sections 4.1 and 4.2 have been satisfied. Such
certificate shall be deemed an additional representation and warranty of Sellers
hereunder.
4.4 Option Exercise. Rametra shall have exercised the ATEC
Options to acquire 705,000 shares of ATEC common stock.
ARTICLE V
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers at the Closing shall be subject to
the satisfaction at the Closing of the following conditions (unless waived in
writing by Sellers):
5.1 Accuracy of Representations and Warranties. Buyer's
representations and warranties set forth in Article III shall have been true and
correct in all material respects when made, and shall be true and correct in all
material respects on the Closing Date as though such representations and
warranties were made at and as of such date and time.
5.2 Performance of Agreement. Buyer shall have fully performed
and complied with all covenants, conditions, and other obligations under this
Agreement to be performed or complied with by it at or prior to the Closing.
5.3 Certificate. Buyer shall have delivered to Sellers at the
Closing a certificate of Buyer executed by an executive officer of Buyer, dated
the Closing Date, to the effect that the conditions set forth in Sections 5.1
10
and 5.2 have been satisfied. Such certificate shall be deemed an additional
representation and warranty of Buyer hereunder.
5.4 Registration Statement. The Buyer shall have caused to be
filed with the SEC a registration statement on Form S-3 (or such other form as
is available for such a registration) covering the resale at least that number
of shares of ADS Common Stock as shall equal the product of (x) 1.25 and (y) the
aggregate number of ADS Shares and Additional ADS Shares (the "Registration
Statement"), which Registration Statement shall have become effective.
ARTICLE VI
COVENANT NOT TO COMPETE
In consideration of the sale of the ATEC Shares and the
consummation of the transactions contemplated hereby, Sellers shall not,
individually or collectively, for two years following the Closing Date, operate
or have significant financial interest in any business that competes, directly
or indirectly, with the business of the Company, except for passive investments
(less than 2% of outstanding shares) in publicly-held entities.
ARTICLE VII
ADDITIONAL COVENANTS OF THE PARTIES
7.1 Mandatory Registration. The Buyer shall use its best
reasonable efforts to prepare, and, as soon as practicable, but in no event
later than November 30, 2000 (the "Filing Deadline"), file with the SEC the
Registration Statement. The Buyer shall use its best reasonable efforts to cause
such Registration Statement to be declared effective by the SEC as soon as
practicable, but in no event later than February 28, 2001.
7.2 Conduct of Business Before Closing. In the event Buyer and
or designee of Buyer shall be appointed directors of the Company, prior to
Closing, then until Closing Buyer shall (a) cause the Company to operate in the
ordinary course of business and (b) not take or permit the Company to take any
action which would require a change or addition to or deletion from the
disclosures of Sellers pursuant to Article II and IIA hereof, without the prior
written consent of Sellers.
7.3 Restriction on Sales of ADS Shares. Each Seller agrees
that until the first anniversary of the Closing Date, the maximum number of ADS
Shares and Additional ADS Shares which Sellers, individually and collectively,
will sell during any calendar month shall not exceed one-sixth of the total
number of the ADS Shares and such Additional ADS Shares (if any are purchased).
7.4 Public Disclosure. Neither Party to this Agreement shall
make any public disclosure of the terms hereof or the transactions contemplated
hereby without the prior written consent of the other Party, except as required
by law. If the Closing does not occur, Buyer, and if the Closing does occur,
Sellers shall not disclose to any third person any confidential information
relating to the Company without the prior written consent of the other Party.
7.5 Further Assurances. From and after the Closing, the
Parties shall do such acts and execute such documents and instruments as may be
reasonably required to make effective the transactions contemplated hereby.
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7.6 Termination of the Agreement. This Agreement may be
terminated by a Party hereto without further liability or obligation (a) after
February 28, 2001 by any Party hereto if (i) such Party is not in breach or
violation hereof and (ii) the conditions to such Party's obligations at the
Closing have not been satisfied, or (b) after February 28, 2001 by Buyer if the
Registration Statement has not been declared effective.
7.7 Effect of Termination.
(a) The Parties agree that, subject to Section 7.7(b) and
7.7(c) hereof, the sole remedy available to a party terminating this Agreement
pursuant to Section 7.6 hereof shall be limited to such party's right not to
effect the transactions contemplated hereby; provided, however, that
notwithstanding the foregoing (i) Section 7.4, this Section 7.7, Section 9.6 and
Section 9.8 shall survive any termination of this Agreement and (ii) no Party
shall be relieved or released as a result of such termination from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
(b) Upon termination of this Agreement for any reason, Buyer
shall cause any designee, elected or appointed to the Company's Board of
Directors, to resign.
(c) Notwithstanding subparagraph (a) above, if this Agreement
is terminated by any Party under Section 7.6 because the Registration Statement
has not been declared effective by February 28, 2001, then Buyer shall promptly,
but in no event later than ten (10) days after the date of such termination, pay
to the Sellers, jointly and severally, as reimbursement for the Sellers' direct
and indirect expenses and costs, including legal, accounting and administration
costs, as well as Seller's change in position, and the opportunity cost to
Sellers of business transactions foregone as a result of its efforts to effect
the transactions contemplated hereby, a fee of $1 million (the "Termination
Fee"), payable in cash or the common stock of Buyer, at Buyer's option. If Buyer
decides to deliver its common stock in payment of the Termination Fee, the
number of shares to be delivered shall be calculated using as the per share
value thereof the average of the closing price for the Buyer's common stock for
the twenty-five (25) consecutive trading days ending on the last business day
prior to the date of termination, without regard to any changes in the market
price of the Buyer's common stock subsequent to the termination.
7.8 Delayed Effectiveness of Registration Statement. If the
Registration Statement is not declared effective by February 28, 2001, then for
each business day thereafter until the Registration Statement is declared
effective, Buyer shall be obligated to deliver to Sellers, jointly, at the
Closing, a total of 1,000 additional shares of Buyer's common stock (the
aggregate number of shares deliverable under this provision, the "Delay Fee");
notwithstanding the foregoing, the Delay Fee shall commence on the 16th calendar
day after the Filing Deadline in the event the Registration Statement has not
yet been filed with the SEC. Delivery of the Delay Fee shall be made at Closing
only if the Closing occurs; upon Termination of this Agreement any Party for any
reason, the Delay Fee shall cease to accrue and the obligation of Buyer to
deliver the Delay Fee shall expire, subject to and conditioned upon payment of
any applicable Termination Fee within ten calendar days of termination.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification of Buyer. Sellers, jointly and severally,
shall hold Buyer, and the shareholders, directors, officers, successors,
assigns, and agents of Buyer (the "Buyer Indemnified Persons"), harmless and
indemnify each of them from and against, and waives any claim for contribution
or indemnity with respect to, any and all claims, losses, damages, liabilities,
expenses or costs ("Losses"), plus reasonable attorneys' fees and expenses
incurred in connection with Losses and/or enforcement of this Agreement, plus
interest from the date incurred through the date of payment at two (2) percent
above the prime lending rate of Citibank, NA from time to time prevailing (in
all, "Indemnified Losses") incurred or to be incurred by any of them to the
extent resulting from or arising out of any breach or violation of Sellers'
representations, warranties, covenants, or agreements contained in this
Agreement, including provisions of this Article VIII. Such indemnification shall
be joint and several with respect to Sellers' joint representations and
warranties and shall be individual to Rametra with regard to his separate
representations and warranties.
8.2 Indemnification of Sellers. Buyer shall hold Sellers,
their permitted assigns and agents (the "Seller Indemnified Persons") harmless
and indemnify each of them from and against, and waives any claim for
contribution or indemnity with respect to, any and all Indemnified Losses
incurred or to be incurred by any of them, to the extent resulting from or
arising out of any breach or violation of Buyer's representations, warranties,
covenants and agreements contained in this Agreement, including the provisions
of this Article VIII.
8.3 Survival. The respective representations and warranties
made by the Parties in Articles II, IIA and III and certificates under Sections
4.3 and 5.3 shall survive the Closing Date but the right to bring a claim for
indemnification under this Article VIII shall expire on the second anniversary
of the Closing Date unless a claim with respect thereto shall have been made
pursuant to Section 8.1 or 8.2 prior to such date against the Party responsible
for indemnification hereunder (the "Indemnifying Party"); provided, that the
foregoing shall not apply to representations and warranties under Sections 2.1
or 2.2 or a certificate relating thereto, or to any intentional breach or
violation of any provision of this Agreement, which shall survive without
limitation hereunder.
8.4 Notice of Claim. In the event that Buyer seeks
indemnification on behalf of a Buyer Indemnified Person, or Sellers seek
indemnification on behalf of a Seller Indemnified Person, such Party seeking
indemnification (the "Indemnified Party") shall give written notice to the
Indemnifying Party specifying the facts constituting the basis for such claim
and the amount, to the extent known, of the claim asserted. The Indemnifying
Party shall pay the amount of any valid claim not more than ten days after the
Indemnified Party provides notice to the Indemnifying Party of such amount.
8.5 Right to Contest Claims of Third Persons. If an
Indemnified Party is entitled to indemnification hereunder because of a claim
asserted by any claimant (other than an indemnified person hereunder) ("Third
Person"), the Indemnified Party shall give the Indemnifying Party reasonably
prompt notice thereof after such assertion is actually known to the Indemnified
13
Party; provided, however, that the right of a person to be indemnified hereunder
in respect of claims made by a Third Person shall not be adversely affected by a
failure to give such notice unless, and then only to the extent that, an
Indemnifying Party is prejudiced thereby. The Indemnifying Party shall have the
right, upon written notice to the Indemnified Party, and using counsel
reasonably satisfactory to the Indemnified Party, to investigate, secure,
contest, or settle the claim alleged by such Third Person (a "Third-Person
Claim"), provided that the Indemnifying Party has unconditionally acknowledged
to the Indemnified Party in writing his or its obligation to indemnify the
persons to be indemnified hereunder with respect to such Third-Person Claim; the
Indemnified Party may thereafter participate in (but not control) the defense of
any such Third-Person Claim with its own counsel at its own expense, unless
separate representation is necessary to avoid a conflict of interest, in which
case such representation shall be at the expense of the Indemnifying Party.
Unless and until the Indemnifying Party so acknowledges his or its obligation to
indemnify, the Indemnified Party shall have the right, at its option, to assume
and control defense of the matter and to look to the Indemnifying Party for the
full amount of the costs of defense. The failure of the Indemnifying Party to
respond in writing to the aforesaid notice of the Indemnified Party with respect
to such Third-Person Claim within twenty (20) days after receipt thereof shall
be deemed an election not to defend the same. If the Indemnifying Party does not
so acknowledge his or its obligation to indemnity and assume the defense of any
such Third-Person Claim, (a) the Indemnified Party may defend against such
claim, in such manner as it may deem appropriate, including, but not limited to,
settling such claim, after giving notice of the same to the Indemnifying Party,
on such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party may participate in (but not control) the defense of such
action, with its own counsel at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such Third-Person Claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by clear and convincing
evidence that conduct of the Indemnified Party in the defense and/or settlement
of such Third-Person Claim constituted gross negligence or willful misconduct.
The Parties shall make available to each other all relevant information in their
possession relating to any such Third-Person Claim and shall cooperate in the
defense thereof.
8.6 Limitation of Indemnification. No Indemnified Party shall
be entitled to indemnification for any Losses unless such Indemnified Party has
sustained Losses which, in the aggregate, exceed $150,000. In addition,
notwithstanding anything in this Agreement to the contrary (a) in no event shall
the Sellers be obligated to pay the Buyer Indemnified Persons an aggregate
amount in excess of an amount equal to the value of the Shares of Common Stock
of the Buyer received by the Sellers hereunder in respect of their
indemnification obligations with respect to breaches of representations and
warranties contained in Article IIA; (b) Sellers may at their option satisfy any
such indemnification obligations by delivery of ADS Shares to the Buyer
Indemnification Persons, valued at the Signing Date Average Price; and (c) in no
event shall the Buyer be obligated to pay the Seller Indemnified Persons an
aggregate amount in excess of an amount equal to the value of the Shares of
Common Stock of the Company received by the Buyer hereunder in respect of its
indemnification obligations with respect to breaches of representations and
warranties contained in Article III.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Notice. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given and made upon being delivered either
by courier or fax delivery to the Party for whom it is intended, provided that a
copy thereof is deposited, postage prepaid, certified or registered mail, return
receipt requested, in the United States mail, bearing the address shown in this
Section 9.1 for, or such other address as may be designated in writing hereafter
by, such Party:
If to Buyer:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
Applied Digital Solutions, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Sellers:
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ PC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15
9.2 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto embody the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings relative to such subject matter.
9.3 Assignment; Binding Agreement. This Agreement and various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon Buyer, its successors, and permitted assigns and Sellers, their
legal representatives, successors, and permitted assigns. Neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be transferred,
delegated, or assigned (by operation of law or otherwise) by either of the
Parties hereto without the prior written consent of the other Party, except that
Buyer shall have the right to transfer and assign its rights hereunder to
purchase the Shares and any other rights or benefits afforded to it by this
Agreement to any entity which at the time of such transfer and assignment is
controlled by Buyer.
9.4 Counterparts. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
9.5 Headings; Interpretation. The article and section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of the Agreement. Each reference
in this Agreement to an Article, Section, Schedule or Exhibit, unless otherwise
indicated, shall mean an Article or a Section of this Agreement or a Schedule or
Exhibit attached to this Agreement, respectively. References herein to "days",
unless otherwise indicated, are to consecutive calendar days. All Parties have
participated substantially in the negotiation and drafting of this Agreement and
agree that no ambiguity herein should be construed against the draftsman.
9.6 Expenses. Sellers (and not the Company) shall pay all
costs and expenses incurred on behalf of themselves or the Company in connection
with the negotiation, preparation and execution of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, fees and expenses of attorneys, investment bankers and accountants.
9.7 Remedies Cumulative. All rights and remedies of the
Parties under this Agreement are cumulative and without prejudice to any other
rights or remedies under Law.
9.8 Governing Law. This Agreement shall in all respects
be construed in accordance with and governed by the substantive laws of the
State of Missouri, without reference to its conflict of law rules.
16
WITNESS WHEREOF, each of the Parties hereto has caused this Agreement
to be executed as of the date first above written.
BUYER:
Applied Digital Solutions, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SELLERS:
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
17
TABLE OF SCHEDULES
Schedule 1.1 ATEC Common Stock and Options
Schedule 2A.1 Contracts Relating to Issuance, Sale or Transfer of
Equity Securities
Schedule 2A.3 Property
Schedule 2A.5 Changes in Terms of Employment
Schedule 2A.9 Taxes Due
Schedule 2A.13 Officers and Directors
Schedule 3.6 Changes in Terms of Employment