STOCK PURCHASE AGREEMENT
by and between
SYSCOMM INTERNATIONAL CORPORATION
Buyer,
and
APPLIED DIGITAL SOLUTIONS, INC.,
Seller
Dated November 13, 2000
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of November 13, 2000, by and between SysComm International Corporation,
a Delaware corporation ("Buyer"), and Applied Digital Solutions, Inc., a
Missouri corporation ("Seller") (Buyer and Seller each a "Party" and together
"Parties").
RECITALS
Buyer desires to purchase from Seller, on the following terms
and conditions, the IPC Shares (as defined below) of Information Products
Center, Inc., a New Jersey corporation (the "Company" or "IPC"); and
Seller desires to sell to Buyer, on the following terms and
conditions, the IPC 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 IPC Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as defined below), the
Seller shall sell and deliver to Buyer, free and clear of all security
interests, claims, and restrictions, and Buyer shall purchase and accept from
Seller, an aggregate of 5,100 shares of IPC common stock now held by Seller (the
"IPC Shares"), constituting fifty-one percent (51.0%) of the outstanding common
stock of IPC.
1.2 Consideration. At the closing of the purchase of the IPC
Shares (the "Closing"), Buyer shall deliver Two Million Thirty-Six Thousand Nine
Hundred Dollars ($2,036,900) to Seller (the "Purchase Price"). The Purchase
Price shall be payable as follows:
(a) Buyer shall deliver to Seller by wire transfer of
immediately available funds (i) Thirty-Six Thousand Dollars ($36,900), plus (ii)
one-half of the Available Cash Balance of Buyer on such date (the "Cash"); and
(b) in the event that such Cash is less than Two Million
Dollars ($2,000,000), Buyer shall also deliver a promissory note (the
"Promissory Note") in the form of Exhibit A attached hereto, in principal amount
equal to the difference between Two Million Dollars ($2,000,000) and the Cash,
and secured by unregistered shares of the Buyer's common stock with an aggregate
value at least equal to the principal amount of the Promissory Note (the per
share value equal to the Purchase Price divided by the number of IPC Shares).
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As used herein, the term "Available Cash Balance" shall mean the aggregate value
of all cash in banking accounts owned by Buyer and any of its subsidiaries, less
checks previously written on such accounts but which have not, theretofore,
cleared such account(s).
1.3 Closing; Cooperation. The Closing shall take place at the
office of Bryan Cave LLP, 245 Park Avenue, New York, New York (or at such other
place as the parties may agree) at 10:00 a.m. local time on November 17, 2000,
or, if the conditions to the Closing are not by then satisfied, upon
satisfaction of such conditions, the 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.
1.4 Deliveries of Seller at Closing. Subject to the conditions
to Seller's obligations in Article V, at the Closing, Seller shall deliver to
Buyer a certificate or certificates evidencing the IPC Shares, duly endorsed or
accompanied by a duly executed stock power, together with the documents
identified in Article IV, duly executed by Seller.
1.5 Deliveries of Buyer at Closing. Subject to the conditions
to Buyer's obligations in Article IV, at the Closing, Buyer shall deliver to
Seller the Purchase Price by wire transfer of immediately available funds, and
the documents identified in Article V, duly executed by Buyer, as appropriate.
1.6 Reconciliation. The parties acknowledge that the amount of
the Available Cash Balance shall be based upon an estimate prepared by
Pricewaterhouse Coopers LLP ("PWC"). If it is determined following the Closing
that the PWC estimate overstated the actual Available Cash Balance, then the
Buyer shall be entitled to reimbursement in cash by Seller for the excess amount
paid by Buyer at Closing, with a corresponding increase in the principal amount
of the Promissory Note nunc pro tunc to the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes 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. The Seller has the power and capacity
to execute and deliver this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby.
2.2 Stock Ownership. The Seller represents that it is the sole
holder of record and beneficial owner of the IPC Shares. Except for the security
interest of IBM Credit Corp. ("IBM"), Seller owns the IPC Shares free and clear
of all security interests, claims, restrictions and voting agreements of any
kind. The Seller will transfer good and marketable title to the IPC Shares at
the Closing, free and clear of all liens, security interests, claims,
restrictions and voting agreements.
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2.3 Enforceability. This Agreement has been duly executed and
delivered by the Seller and constitutes a legal, valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms.
2.4 No Violation; Consents. The execution and delivery of this
Agreement by Seller, the performance by Seller of its obligations hereunder and
the consummation by Seller of the transactions contemplated by this Agreement
will not (i) contravene any provision of the articles of incorporation or bylaws
of the Seller or 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 upon or enforceable against the Seller or the Company, (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 the Seller, other than with respect to
certain lending arrangements with IBM, (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 with the Securities
and Exchange Commission (the "SEC") and other filings required to be made by
Buyer.
2.5 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.
2.6 Capitalization. The authorized capital stock of the
Company consists of 10,000 shares of common stock, par value $ 0.01 per share,
and no shares of preferred stock. As of the date hereof, 10,000 shares are
issued or outstanding, all of which are owned of record and beneficially by the
Seller and all of which have been duly authorized and validly issued and are
fully paid and non-assessable. There are no contracts relating to the issuance,
sale or transfer of any equity security of the Company.
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2.7 Subsidiaries. The Company owns of record and beneficially
all of the outstanding equity securities of Finch and Murray Products, Inc.
(d/b/a "Information Products Center, Inc." and "Information Products Center of
Manhattan, Inc.").
2.8 Property and Permits. Except as set forth on Schedule 2.8
or as reflected in the Financial Information (referenced in Section 2.9), and
subject to Section 2.2 hereof, 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.
2.9 Financial Information. Seller has provided to Buyer
certain financial information relating to the business of the Company, which is
unaudited but which has been derived from the audited annual financial
statements of the Seller and its interim unaudited financial statements (the
"Financial Information"), which is attached hereto as Schedule 2.9. The
Financial Information is accurate, and the financial statements of the Seller
from which the Financial Information has been derived has been prepared in
accordance with generally accepted accounting principles consistently applied
during the periods involved ("GAAP"). The books and records of the Company 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. Notwithstanding the foregoing, the representations
contained in this Section 2.9 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 Seller in 1999.
2.10 Changes Since December 31, 1999. Since December 31, 1999,
the Company has not (i) issued any capital stock or other securities; (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 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.
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2.11 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.
2.12 No Undisclosed Liabilities. The Company does not have any
material liabilities or obligations whatsoever, known or unknown, accrued,
absolute, contingent, or other, except (a) as reflected in the Financial
information , 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 December 31, 1999: (i) Taxes (as defined below) incurred
since December 31, 1999 and (ii) performance and payment obligations (but not
liabilities for breach or violation) lawfully incurred under arm's-length
contracts for goods or services.
2.13 Taxes.
(a) The Company timely has filed or caused to be filed with
the appropriate Government entity (whether as a part of consolidated returns
with the Seller and other affiliates of the Company) 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 2.13, 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 Laws (as defined below)
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 be
withheld 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
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local governmental unit or subdivision thereof, or any branch, agency, or
judicial body thereof ("Government"); and shall include any interest, fines,
penalties, assessments, or additions to tax resulting from, attributable to, or
incurred in connection with any such Taxes or any contest or dispute thereof.
2.14 No Breach of Law or Governing Document. 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.
2.15 Litigation. Except as reflected in the Financial
Information, there is no action, suit, or other legal or administrative
proceeding or governmental investigation pending, or threatened against, by or
affecting the Company or the 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.
2.16 Intellectual Property. Except as set forth on Schedule
2.16:
(a) The Company is the sole and exclusive owner of each
patent, trademark, trade name, service mark, 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
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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 Seller or the Company, the Intellectual Property is not being
infringed upon or violated by any third person.
2.17 Accounts Receivable. All accounts receivable reflected in
the Financial Information arose in the ordinary course of business, are valid
and genuine, and are believed to be collectable in the ordinary course, subject
to write-offs not inconsistent with IPC's historical collections performance.
2.18 Officers and Directors. Set forth on Schedule 2.17 is a
list of: (a) all current directors of the Company, and (b) all current officers
(with office held) of the Company.
2.19 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 IPC Shares, or the performance or consummation of
the respective transactions contemplated hereby or thereby, except any
applicable filings required under HSR, and any filings with the SEC and other
filings required to be made by Buyer.
2.20 Disclosure. Each Schedule and each document attached as
or on a Schedule, as well as the other information provided to the Buyer by or
on behalf of the Seller, is true, correct, and complete. No representation or
warranty by Seller in this Agreement or any Schedule referred to herein or in
any agreement to be delivered hereunder, and no information furnished to Buyer
by or on behalf of Sellers pursuant to or in connection with this Agreement,
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.
2.21 Brokers; Finders. Seller 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.
2.22 Restrictive Documents. Seller is not 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.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and
warranties to Seller, each of which is true and correct on the date hereof and
each of which shall survive the Closing:
3.1 Corporate Status. Each of Buyer and Buyer's wholly-owned
subsidiary, Information Technology Services, Inc. ("InfoTech"), is a
corporation, duly organized, validly existing and in good standing under the
laws of Delaware; each is duly qualified and in good standing in each foreign in
which the conduct of its business or its ownership or leasing of property makes
such qualification or licensing necessary. Each of Buyer and InfoTech 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.
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 Buyer, the performance by Buyer of the obligations hereunder and the
consummation by Buyer 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 HSR, and any filings with the SEC and other filings
required to be made by Buyer.
3.5 Financial Condition. Buyer has sufficient assets to enter
into this Agreement and to consummate the transactions contemplated hereby.
Neither Buyer nor InfoTech is insolvent under GAAP.
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3.6 Investment Representation; Restriction on Transfer. Buyer
is acquiring the IPC Shares for its own account, for investment and without any
view to resale or distribution of the IPC Shares or any portion thereof. Buyer
acknowledges that the sale of the IPC Shares hereunder has not been registered
or qualified under the Securities Act of 1933, as amended, or under any state
securities laws, and that transfer of the IPC Shares by the Buyer will
accordingly be restricted. The certificates representing the IPC Shares will
bear a legend to the effect that the IPC Shares may not be transferred except in
a transaction registered or qualified under applicable securities laws or in a
transaction exempt from such registration or qualification, as evidenced by an
opinion of counsel or other evidence satisfactory to the Company and its
counsel. The Buyer agrees to be bound by such restrictions on transfer, and
acknowledges that the Buyer may be required to hold the IPC Shares for an
indefinite period of time.
3.7 Investment Experience. The Buyer acknowledges that it can
bear the economic risk and complete loss of its investment in the IPC Shares and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
3.8 Disclosure of Information. The Buyer has had access to
such financial and other information concerning the Company and the IPC Shares
as the Buyer deems necessary in order to make a decision to acquire the IPC
Shares, including an opportunity to ask questions of and receive information
from the Company. Neither such inquiries nor any other due diligence
investigation conducted by the Buyer shall modify, amend or affect the Buyer's
right to rely on the Seller's representations and warranties contained in this
Agreement.
3.9 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, if any, to Dominic and Dominic, or their affiliates,
which fees are and shall be the sole responsibility of Buyer.
3.10 Restrictive Documents. Buyer is not 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 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):
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4.1 Accuracy of Representations and Warranties. Seller's
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.
4.2 Performance of Agreement. Seller 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 No Adverse Change. There shall have been no material
adverse change in the Company's business, prospects or financial condition
between the date hereof and Closing.
4.4 Certificate. Seller shall have delivered to Buyer at the
Closing a certificate of Seller, dated the Closing Date, to the effect that the
conditions set forth in Sections 4.1, 4.2 and 4.3 have been satisfied. Such
certificate shall be deemed an additional representation and warranty of Seller
hereunder.
4.5 Approvals. Buyer's lenders and IBM shall have consented to
the consummation of the transactions contemplated hereby to the extent required
under applicable agreements, and the lien of IBM shall have been released with
respect to the IPC Shares.
4.6 Agreement for Sale of Shares of Buyer. John H.
Spielberger, a shareholder of the Buyer ("Spielberger"), and the Seller shall
have executed an agreement with respect to the Seller's purchase of shares of
common stock of the Buyer held by Spielberger, subject to the approval of Buyer,
and the closing under such agreement shall have occurred prior to or
simultaneously with the Closing hereunder.
ARTICLE V
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller at the Closing shall be subject to
the satisfaction at the Closing of the following conditions (unless waived in
writing by Seller):
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.
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5.3 Certificate. Buyer shall have delivered to Seller 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
and 5.2 have been satisfied. Such certificate shall be deemed an additional
representation and warranty of Buyer hereunder.
5.4 Lender Approval. Seller's lenders shall have consented to
the consummation of the transactions contemplated hereby to the extent required
under applicable agreements to which the Seller is a party.
5.5 Agreement with John H. Spielberger. John H. Spielberger, a
shareholder of the Buyer ("Spielberger"), and the Seller shall have executed an
agreement with respect to the Seller's purchase of shares of common stock of the
Buyer held by Spielberger, on terms satisfactory to Seller, and the closing
under such agreement shall have occurred prior to or simultaneously with the
Closing hereunder.
ARTICLE VI
ADDITIONAL COVENANTS OF THE PARTIES
6.1 Conduct of Business Before Closing. Until Closing Seller
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 Seller pursuant to
Article II hereof, without the prior written consent of Buyer.
6.2 Public Disclosure. No Party to this Agreement shall (and
Seller shall cause the Company not to) 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. In the event circumstances shall
change requiring, in the opinion of either Party, a public announcement, the
Party proposing to make the announcement will advise the other in advance and
will give the other Party the opportunity to comment on the form of the proposed
announcement. Buyer shall not disclose to any third person any confidential
information relating to the Company without the prior written consent of the
Seller.
6.3 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.
6.4 Termination of the Agreement. This Agreement may be
terminated by a Party hereto without further liability or obligation 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.
6.5 Effect of Termination. The Parties agree that the sole
remedy available to a party terminating this Agreement pursuant to Section 6.4
hereof shall be limited to such party's right not to effect the transactions
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contemplated hereby; provided, however, that notwithstanding the foregoing (i)
Section 6.2, this Section 6.5, Section 8.6 and Section 8.8 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.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Buyer. Seller 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 Seller's representations, warranties,
covenants, or agreements contained in this Agreement, including provisions of
this Article VII.
7.2 Indemnification of Seller. Buyer shall hold Seller, and
the shareholders, directors, officers, successors, assigns, and agents of Seller
(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 VII.
7.3 Survival. The respective representations and warranties
made by the Parties in Articles II and III and certificates under Sections 4.4
and 5.3 shall survive the Closing Date but the right to bring a claim for
indemnification under this Article VII shall expire on the second anniversary of
the Closing Date unless a claim with respect thereto shall have been made
pursuant to Section 7.1 or 7.2 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.
7.4 Notice of Claim. In the event that Buyer seeks
indemnification on behalf of a Buyer Indemnified Person, or Seller seeks
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
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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.
7.5 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
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.
7.6 Limitation of Indemnification. No Indemnified Party (other
than an outside (independent) director of Buyer) shall be entitled to
indemnification for any Losses unless such Indemnified Party has sustained
Losses which, in the aggregate, exceed $50,000, and then for all Losses as
provided above.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 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:
SysComm International Corporation
Attn: President
20 Precision Drive
Shirley, New York 11967
Telephone: (631) 205-1000
Fax: (631) 205-9002
With a copy to:
D. David Cohen, Esq.
500 North Broadway, Suite 133
Jericho, New York 11753
Telephone: (516) 933-1700
Fax: (516) 933-8454
If to Seller:
Michael Krawitz, Esq.
Applied Digital Solutions, Inc.
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
Telephone: (561) 366-4800
Fax: (561) 366-0002
With a copy to:
Denis P. McCusker, Esq.
Bryan Cave LLP
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
Telephone: (314) 259-2000
Fax: (314) 259-2020
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8.2 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.
8.3 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 Seller, its
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.
8.4 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.
8.5 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.
8.6 Expenses. Seller (and not the Company) and Buyer shall pay
all costs and expenses incurred on behalf of itself 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.
8.7 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.
8.8 Governing Law. This Agreement shall in all respects be
construed in accordance with and governed by the substantive laws of the State
of New York, without reference to its conflict of law rules.
8.9 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be finally settled by
arbitration in New York City, New York by a single arbitrator in accordance with
the Commercial Rules of the American Arbitration Association.
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IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed as of the date first above written.
BUYER:
SYSCOMM INTERNATIONAL COMPANY
By: /s/ John C. Spielberger
------------------------
Name: John C. Spielberger
Title: Secretary
SELLER:
APPLIED DIGITAL SOLUTIONS, INC.
By: /s/ Richard J. Sullivan
---------------------------
Name: Richard J. Sullivan
Title: Chairman and Chief Executive Officer
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TABLE OF EXHIBITS AND SCHEDULES
Exhibit A Promissory Note
Schedule 2.8 Property
Schedule 2.9 Financial Information
Schedule 2.13 Taxes Due
Schedule 2.16 Intellectual Property
Schedule 2.17 Officers and Directors
