UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 28, 1999
APPLIED DIGITAL SOLUTIONS, INC.
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(Exact name of registrant as specified in its charter)
Missouri
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(State or other jurisdiction of incorporation)
000-26020
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(Commission File Number)
43-1641533
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(IRS Employer Identification No.)
400 Royal Palm Way, Suite 410, Palm Beach, Florida 33480
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 561-366-4800
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Item 2. Acquisition or Disposition of Assets.
On November 28, 1999 our Canadian subsidiary, TigerTel, Inc., entered into
a letter agreement (the "Agreement") with AT&T Canada Corp., a Canadian
corporation, pursuant to which AT&T Canada has agreed, subject to the
satisfaction of certain conditions, to make an all cash take-over bid for 100
percent of TigerTel's common shares at a price of CDN$9.25 per share. AT&T
Canada also entered into an agreement with us, as controlling shareholder of
TigerTel, to acquire, under an irrevocable lock-up agreement, our 4,942,284
common shares of TigerTel, representing approximately 65 percent of the
outstanding common shares of TigerTel on a fully diluted basis. If the Agreement
is consummated, we will receive CDN$45,716,127 for our shares of TigerTel.
The offer is subject to a number of conditions customary for a transaction
of this type and certain additional conditions that are required to be satisfied
prior to the payment for the common shares tendered to AT&T Canada. These
conditions include, but are not limited to, at least 90 percent of the
outstanding common shares of TigerTel being tendered to the bid, receipt of
Competition Act approval in Canada, approval of a special resolution of the
holders of exchangeable shares of TigerTel's subsidiary, TigerTel Services
Limited, to amend the terms of such shares providing for their early redemption,
and the sale by TigerTel Services Limited to us of its direct and indirect
interest in Consolidated Technologies Holdings Inc. and its subsidiaries.
In the event of the termination of the Agreement, under certain
circumstances, AT&T Canada would be entitled to a termination fee of
approximately CDN$3.5 million. These circumstances include TigerTel's board
withdrawing or modifying its approval of the transaction or TigerTel's board
approving or recommending a transaction which it determines is superior to the
AT&T Canada transaction.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Agreement dated as of November 28, 1999 by and among AT&T Canada Corp.
and TigerTel, Inc. *
99.2 Lock-Up Agreement dated as of November 28, 1999 by and among AT&T
Canada Corp. and Applied Digital Solutions, Inc.
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* To be filed by amendment.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
APPLIED DIGITAL SOLUTIONS, INC.
(Registrant)
Date: December 13, 1999 /S/ David A. Loppert
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David A. Loppert
Vice President
Exhibit 99.2
LOCK-UP AGREEMENT
STRICTLY CONFIDENTIAL
November 28, 1999
Applied Digital Solutions, Inc.
400 Royal Palm Way
Suite 400
Palm Beach, Florida
33480
Attention: Garrett A. Sullivan, President and Chief Operating Officer
Dear Mr. Sullivan:
The letter agreement of even date herewith between AT&T Canada Corp. (the
"Purchaser") and TigerTel Inc. (the "Company"), as such letter agreement may be
amended by the parties thereto from time to time (the "Offer Agreement"), sets
out the terms and conditions upon which the Purchaser will make an offer (the
"Offer"), on substantially the terms and conditions set forth in Schedule "A" to
the Offer Agreement to purchase all of the issued and outstanding common shares
(the "Shares") of the Company.
This Agreement sets out the agreement by Applied Digital Solutions, Inc. (the
"Shareholder"), among other things, (i) irrevocably to deposit, or cause to be
deposited, under the Offer: (A) the 4,942,284 Shares presently owned
beneficially by the Shareholder; and (B) any Shares subsequently obtained by the
Shareholder (the "Shareholder's Shares"); (ii) to complete the Exchangeable
Share Redemption; and (iii) to complete the Consolidated Technologies
Disposition, and sets out the obligations and commitments of the Shareholder in
connection therewith.
All references to dollar amounts in this Agreement are to Canadian dollars,
unless otherwise stated. The definitions for capitalized terms used and not
otherwise defined in the body of this Agreement are set out in Schedule "B" to
the Offer Agreement.
ARTICLE 1
THE OFFER
1.1 Timing of the Offer.
The Purchaser agrees to make the Offer for all of the Shares within the time and
upon the terms as provided for in the Offer Agreement, and subject to the
conditions therein contained.
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1.2 General.
Subject to the terms and conditions of the Offer Agreement, the Purchaser hereby
covenants to use its reasonable best efforts to successfully complete the Offer
and the transactions contemplated by this Agreement. Subject to the terms and
conditions of the Consolidated Disposition Agreements and the agreements entered
into in connection with the Exchangeable Share Redemption, the Shareholder
hereby covenants to use, and to cause its subsidiaries to use, its or their
reasonable best efforts to successfully complete the transactions contemplated
by this Agreement, the Consolidated Technologies Disposition and the
Exchangeable Share Redemption.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Shareholder.
The Shareholder hereby represents and warrants to the Purchaser that:
(a) Authorization. This Agreement has been duly executed and
delivered by the Shareholder and constitutes a legal, valid and
binding agreement enforceable by the Purchaser against the
Shareholder in accordance with its terms subject, however, to
limitations with respect to enforcement imposed by law in
connection with bankruptcy or similar proceedings, the equitable
power of the courts to stay proceedings before them and the
execution of judgments and to the extent that equitable remedies
such as specific performance and injunction are in the discretion
of the court from which they are sought.
(b) Ownership of Shares. The Shareholder is the sole beneficial owner
of 4,942,284 Shares which are currently held by the Shareholder.
Except as stated in this paragraph, the Shareholder does not own
or control, directly or indirectly, any other Shares or options,
rights or other entitlements to acquire Shares or any other
securities of the Company. Except with respect to the
Exchangeable Shares and as is contemplated in connection with the
Consolidated Technologies Disposition, the Shareholder does not
own or control, directly or indirectly, any securities of any
subsidiaries of the Company or options, rights or other
entitlements to acquire any such securities. The Shareholder has
the exclusive right to dispose of the Shareholder's Shares as
provided in this Agreement and the Shareholder is not a party to,
bound or affected by or subject to, any charter or by-law
provision, statute, regulation, judgment, order, decree or law of
which a breach would occur as a result of the execution and
delivery of this Agreement or the consummation of any of the
transactions provided for in this Agreement.
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(c) Good Title. The Shareholder's Shares to be acquired by the
Purchaser directly or indirectly from the Shareholder pursuant to
the Offer will be acquired with good and marketable title, free
and clear of any and all mortgages, liens, charges, restrictions,
security interests, adverse claims, pledges, encumbrances and
demands or rights of others of any nature or kind whatsoever
other than the lien on the Shareholder's Shares granted in favour
of IBM Credit Corporation ("IBM Credit") pursuant to the IBM
Credit Agreement. Upon repayment of the IBM Indebtedness, the
Shareholder will be entitled to demand the discharge and release
of any and all liens granted by the Shareholder in favour of IBM
Credit over the Shareholder's Shares and upon such discharge, the
Shareholder's Shares will be free and clear of any and all
mortgages, liens, charges, restrictions, security interests,
adverse claims, pledges, encumbrances and demands or rights of
others of any nature or kind whatsoever.
(d) No Agreements. No person, firm or corporation has any agreement
or option, or any right or privilege (whether by law, pre-emptive
or contractual) capable of becoming an agreement or option, for
the purchase, acquisition or transfer from the Shareholder, or
any registered holder of Shareholder's Shares, of any of the
Shareholder's Shares, or any interest therein or right thereto,
except pursuant to this Agreement.
(e) Voting. Neither the Shareholder nor any registered holder of the
Shareholder's Shares has previously granted or agreed to grant
any ongoing proxy in respect of the Shareholder's Shares or
entered into any voting trust, vote pooling or other agreement
with respect to the right to vote, call meetings of shareholders
or give consents or approvals of any kind as to the Shareholder's
Shares.
(f) No Proceeding Pending. There is no claim, action, lawsuit,
arbitration, mediation or other proceeding pending or, to the
best of the knowledge, information and belief of the Shareholder,
threatened against the Shareholder, which relates to this
Agreement or otherwise materially impairs the ability of the
Shareholder to consummate the transactions contemplated hereby.
(g) Arm's Length Negotiation. The price payable by the Purchaser for
the Shares pursuant to the Offer (the "Offer Price") was arrived
at through negotiation between the Shareholder and the Purchaser
and, at the time of such negotiations, the Shareholder had full
knowledge of and access to information concerning the Company
such that the underlying value of the Company was a material
factor considered by the Shareholder in arriving at the Offer
Price, and there were no non-financial factors or other factors
peculiar to the Shareholder which were considered relevant by the
Shareholder in assessing the price offered by the Purchaser and
in arriving at the Offer Price.
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(h) Company Public Disclosure Documents. To the best of the knowledge
of the Shareholder: (i) all forms, reports, statements, schedules
and documents required to be filed by the Company with securities
regulatory authority under applicable securities laws since
December 31, 1996 (collectively, the "Reports") did not, at the
time filed, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(ii) the Company has not filed any confidential material change
report with any securities regulatory authority or stock exchange
which at the date of this Agreement remains confidential; and
(iii) the Company has publicly disclosed in the Reports any
information regarding any event, circumstances or action taken or
failed to be taken by the Company or its subsidiaries which could
individually or in the aggregate reasonably be expected to
constitute a Material Adverse Effect.
(i) Company Representations and Warranties. To the best of the
knowledge of the Shareholder, all of the representations and
warranties of the Company set forth in the Offer Agreement are
true and correct in all material respects.
(j) Exchangeable Share Redemption and Consolidated Technologies
Disposition. The Shareholder has all requisite corporate power
and authority to enter into the Consolidated Disposition
Agreements and the agreements entered into in connection with the
Exchangeable Share Redemption to which it will be a party and to
carry out the transactions contemplated thereby. The execution
and delivery of the Consolidated Disposition Agreements and the
agreements entered into in connection with the Exchangeable Share
Redemption to which it will be a party, and the consummation of
the transactions contemplated thereby, will be duly and validly
authorized by all necessary corporate action on the part of the
Shareholder and no other corporate proceedings on the part of the
Shareholder will be necessary to authorize such agreements. Each
of the Consolidated Disposition Agreements and the agreements to
be entered into in connection with the Exchangeable Share
Redemption to which the Shareholder will be a party will be duly
executed and delivered by the Shareholder and will constitute a
legal, valid and binding agreement enforceable against the
Shareholder in accordance with its terms, subject, however, to
the usual limitations with respect to enforcement imposed by law
in connection with bankruptcy or similar proceedings and the
availability of equitable remedies. No approval, authorization,
registration, consent or order or other action of or filing with
any person, including any court, administrative agency or other
Governmental Entity is required for the execution and delivery of
the Consolidated Disposition Agreements and the agreements to be
entered into in connection with the Exchangeable Share Redemption
to which the Shareholder will be a party, and the documents to be
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delivered thereunder or the consummation by the Shareholder of
the transactions contemplated thereby.
(k) No Conflict. Neither the execution and delivery of the
Consolidated Disposition Agreement or the agreements to be
entered into in connection with the Exchangeable Share Redemption
or the consummation of the transactions contemplated thereby or
in compliance with any of the provisions thereof will (i)
conflict with or result in any breach of any provision of the
Shareholder's articles or by-laws, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any material note, bond,
mortgage, indenture, licence, lease, contract, agreement or other
instrument or obligation to which the Shareholder is a party or
by which any of them or any of their properties or assets may be
bound, or (iii) violate any law, order, writ, injunction, decree,
statute, rule or regulation applicable to the Shareholder or any
of its subsidiaries or any of their properties or assets.
2.2 Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Shareholder as follows:
(a) Organization. The Purchaser is a corporation duly organized and
validly existing under the laws of its jurisdiction of
incorporation.
(b) Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement to make the Offer and to
carry out the transactions contemplated hereby and by the Offer.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part
of the Purchaser, and no other corporate proceedings on the part
of the Purchaser are necessary to authorize this Agreement. The
Agreement has been duly executed and delivered by the Purchaser
and constitutes a legal, valid and binding agreement enforceable
by the Shareholder against the Purchaser in accordance with its
terms, subject, however, to the usual limitations with respect to
enforcement imposed by law in connection with bankruptcy or
similar proceedings and the availability of equitable remedies.
(c) Non-Contravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby nor compliance with any of the provisions hereof will
conflict with or result in any breach of any provision of the
constating documents of the Purchaser.
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ARTICLE 3
COVENANTS OF THE SHAREHOLDER
3.1 General.
The Shareholder hereby covenants that until the Purchaser has taken up and paid
for the Shares under the Offer or abandoned the Offer, or the terms of this
Agreement have been terminated by the Shareholder pursuant to section 6.1, the
Shareholder and any registered holder of the Shareholder's Shares will:
(a) except as permitted by this Agreement, not take and shall not
authorize or permit any investment banker, financial advisor,
attorney, accountant or other representative of his or its to
take, any action of any kind which may reduce the likelihood of
success of or delay the take up and payment of Shares deposited
under the Offer or the completion of the Offer, including but not
limited to any action to continue, solicit, initiate, assist or
encourage inquiries, submissions, proposals or offers from any
other person, entity or group, and will cease immediately and not
continue or participate in any discussions or negotiations
regarding, or furnish to any other person, entity or group, any
information with respect to, or otherwise co-operate in any way
with or assist or participate in, or facilitate or encourage any
effort or attempt with respect to:
(i) the direct or indirect acquisition or disposition of all or
any Shares or any other securities of the Company or its
subsidiaries, or
(ii) any amalgamation, merger, sale of any part of the Company's
or any of its subsidiaries' assets, take-over bid, plan of
arrangement, reorganization, recapitalization, liquidation
or winding-up of, reverse take-over or other business
combination or similar transaction involving the Company or
any of its subsidiaries or assets;
(b) notify the Purchaser within 24 hours of becoming aware of a
proposal which, if made in writing, could constitute an
Acquisition Proposal including the identity of any prospective
offeror;
(c) not option, sell, transfer, pledge, encumber, grant a security
interest in, hypothecate or otherwise convey the Shareholder's
Shares, or any right or interest therein (legal or equitable), to
any person, entity or group or agree to do any of the foregoing;
(d) not grant or agree to grant any proxy or other right to vote the
Shareholder's Shares, or enter into any voting trust, vote
pooling or other agreement with respect to the right to vote,
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call meetings of shareholders or give consents or approvals of
any kind as to the Shareholder's Shares;
(e) not do indirectly that which it may not do directly in respect of
the restrictions on its rights with respect to the Shareholder's
Shares pursuant to this section 3.1, including, but not limited
to, the sale of any direct or indirect holding company of the
Shareholder or the granting of a proxy on the Shares of any
direct or indirect holding company of the Shareholder which would
have, indirectly, the effect prohibited by this section 3.1, and
not to take any action which would make any representation or
warranty of the Shareholder contained herein untrue or incorrect
or have the effect of preventing or disabling the Shareholder
from performing its obligations under this Agreement, the
Consolidated Disposition Agreements or the agreements entered
into in connection with the Exchangeable Share Redemption;
(f) exercise the voting rights attaching to the Shareholder's Shares
and otherwise use its reasonable best efforts to oppose any
proposed action by the Company, its shareholders, any of its
subsidiaries or any other person: (i) in respect of any
amalgamation, merger, sale of the Company's or its affiliates' or
associates' assets (other than in connection with the
Consolidated Technologies Disposition), take-over bid, plan of
arrangement, reorganization, recapitalization, shareholder rights
plan, liquidation or winding-up of, reverse take-over or other
business combination or similar transaction involving the Company
or any of its subsidiaries, (ii) which might reasonably be
regarded as being directed towards or likely to prevent or delay
the take up and payment of Shares deposited under the Offer or
the successful completion of the Offer, or (iii) which could
result in a Material Adverse Effect;
(g) use all reasonable best efforts to assist the Purchaser to
successfully complete the transactions contemplated by this
Agreement and the Offer Agreement;
(h) promptly advise the Purchaser orally and in writing of any
Material Adverse Effect or any event, condition, change or
development with respect to the Company which could reasonably be
expected to cause the conditions to the Offer not to be
satisfied, known or that becomes known to the Shareholder;
(i) not purchase or obtain or enter into any agreement or right to
purchase any additional Shares from and including the date hereof
up until the termination or withdrawal of the Offer; and
(j) use all reasonable best efforts to preserve intact the goodwill
of the Company and its subsidiaries, keep available the services
of their respective present officers and key employees, and
preserve their business relationships with customers and others
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having business relationships with them and not engage in any
action, directly or indirectly, with the intent to adversely
impact the transactions contemplated by the Offer Agreement.
(k) use all reasonable best efforts to enter into the Consolidated
Disposition Agreements and to consummate the Consolidated
Technologies Disposition on or before the Expiry Time.
(l) use its reasonable best efforts to obtain a letter from IBM
Credit Corporation and IBM Canada addressed to Applied, the
Company and the Purchaser, in form and substance satisfactory to
the Purchaser, acting reasonably, which provides for the
following: (i) that upon the repayment of the IBM Indebtedness by
the Company, the Company shall be able to effect the IBM
Termination without payment of any penalty or premium, (ii) that
upon the IBM Termination, IBM Credit Corporation will discharge
and release any liens, security interests or other encumbrances
now or hereafter existing on the Common Shares of the Company
owned by Applied such that upon such discharge, the Common Shares
of the Company owned by Applied will be free and clear of any and
all mortgages, liens, charges, restrictions, security interests,
adverse claims, pledges, encumbrances and demands or rights of
others of any nature or kind whatsoever arising under the IBM
Loan Documents, and (iii) that upon the IBM Termination, IBM
Canada will discharge and release any liens, security interests
or other encumbrances now or hereafter existing over the property
of the Company or any of its subsidiaries, including without
limitation, any liens, security interests or other encumbrances
now or hereafter existing over any goods, equipment, property,
monetary obligations, undertaking or assets of the Company or any
of its subsidiaries such that upon such discharge, the property,
undertaking, goods, equipment, monetary obligations and assets of
the Company and each of its subsidiaries will be free and clear
and clear of any and all mortgages, liens, charges, restrictions,
security interests, adverse claims, pledges, encumbrances and
demands or rights of others of any nature or kind whatsoever
arising under the IBM Loan Documents.
ARTICLE 4
COVENANTS OF THE SHAREHOLDER AND THE PURCHASER
4.1 General
The Shareholder and the Purchaser hereby covenant that prior to or concurrently
with the Purchaser taking up and paying for the Shares under the Offer, each of
the Shareholder and the Purchaser will do the following:
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(a) the Purchaser will provide funds to the Company in an amount
equal to the IBM Indebtedness or at the direction of the Company
will pay to IBM Canada on behalf of the Company an amount equal
to the IBM Indebtedness;
(b) in the event that the Company elects not to direct the Purchaser
to pay to IBM Canada on behalf of the Company the amount of the
IBM Indebtedness, upon receipt by the Company of cash in the
amount of the IBM Indebtedness, each of the Shareholder and the
Purchaser will use their reasonable best efforts to cause the
Company to repay to IBM Canada the amount of the IBM
Indebtedness;
(c) upon repayment of the IBM Indebtedness either by way of repayment
by the Company or by way of direct payment to IBM Canada by the
Purchaser on behalf of the Company, each of the Shareholder and
the Purchaser will use their reasonable best efforts to cause the
Company to terminate the IBM Credit Agreement and the other IBM
Loan Documents such that the Company and its subsidiaries will no
longer be parties thereto or be bound by any obligations arising
thereunder (the "IBM Termination");
(d) concurrently with the IBM Termination, the Shareholder will cause
any lien on the Shareholder's Shares granted in favour of IBM
Credit pursuant to the IBM Loan Documents be discharged and
released such that upon such discharge, the Shareholder's Shares
will be free and clear of any and all mortgages, liens, charges,
restrictions, security interests, adverse claims, pledges,
encumbrances and demands or rights of others of any nature or
kind whatsoever; and
(e) concurrently with the IBM Termination, the Shareholder will cause
IBM Canada to discharge and release (and complete, at the
Company's expense, any registrations or filings relating thereto)
any and all liens, security interests or other encumbrances now
or hereafter existing over the property of the Company or any of
its subsidiaries, including without limitation, any liens,
security interests or other encumbrances now or hereafter
existing over any goods, equipment, property, monetary
obligations, undertaking or assets of the Company or any of its
subsidiaries such that upon such discharge, the property,
undertaking, goods, equipment, monetary obligations and assets of
the Company and each of its subsidiaries will be free and clear
and clear of any and all mortgages, liens, charges, restrictions,
security interests, adverse claims, pledges, encumbrances and
demands or rights of others of any nature or kind whatsoever
arising under the IBM Loan Documents.
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ARTICLE 5
DEPOSIT AND PAYMENT
5.1 Deposit.
Subject to section 5.2, the Shareholder hereby irrevocably and unconditionally
agrees to deposit or cause to be deposited all of the Shareholder's Shares
(including for greater certainty all Shares issued or issuable to the
Shareholder upon the exercise of options or any other rights to acquire Shares),
together with a duly completed and executed letter of transmittal, under the
Offer as soon as practicable and in any event within ten business days following
the date on which the Offer is made. In the event that the Shareholder
subsequently obtains any additional Shares as contemplated by section 3.1(i)
hereof or otherwise, such Shares shall be immediately deposited under the Offer.
5.2 No Withdrawal.
The Shareholder hereby irrevocably and unconditionally agrees that neither it
nor any person on its behalf will withdraw or take any action to withdraw any of
the Shareholder's Shares deposited under the Offer notwithstanding any statutory
rights or other rights under the terms of the Offer or otherwise which it might
have, unless this Agreement is terminated in accordance with its terms prior to
the taking up of the Shareholder's Shares under the Offer.
5.3 Appointment of Proxy.
The Shareholder hereby grants to, and appoints, the Purchaser and the Secretary
of the Purchaser and the Chief Financial Officer of the Purchaser, in their
respective capacities as officers of the Purchaser, and any individual who shall
hereafter succeed to any such office of the Purchaser, and any other designee of
the Purchaser, each of them individually, the Shareholder's irrevocable proxy
and attorney-in-fact (with full power of substitution) to vote the Shareholder's
Shares, and to sign such Shareholder's name to any written consent of the
holders of the Shares with respect thereto, in order to give effect to the
covenants of the Shareholder contained in this Agreement and in furtherance of
the obligations of the Company contained in the Offer Agreement. The Shareholder
agrees that this proxy is irrevocable until this Agreement is terminated in
accordance with Article 6 hereof and coupled with an interest and will take such
further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy previously
granted by him with respect to the Shares.
5.4 Stop Transfer Order.
In furtherance of the transactions contemplated by this Agreement and the Offer
Agreement, the Shareholder hereby authorizes the Purchaser to instruct the
Company to direct its transfer agent to place a stop transfer order on the
Shareholder's Shares and not to amend, terminate or waive any of the terms of
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such stop transfer order (other than to permit the transfer of the Shareholder's
Shares to the Purchaser) during the term of this Agreement.
ARTICLE 6
TERMINATION BY THE SHAREHOLDER AND BY THE PURCHASER
6.1 Termination by the Shareholder.
The Shareholder, when not in default in performance of its obligations under
this Agreement, the Consolidated Disposition Agreements and the agreements
entered into in connection with the Exchangeable Share Redemption, may, without
prejudice to any other rights, terminate this Agreement by notice to the
Purchaser if:
(a) the Offer has not been made as provided in section 1.1 hereof,
(b) the Offer does not substantially conform with, or subject to
section 1.2 hereof, is modified in a manner (other than any
modification permitted pursuant to section 1 of Schedule "A" of
the Offer Agreement) so as not to conform with, the description
in Schedule "A" of the Offer Agreement or the provisions of this
Agreement;
(c) The Purchaser does not comply with the requirements of subsection
95.13 of the Securities Act (Ontario); or
(d) Shares deposited under the Offer (including the Shareholder's
Shares) have not, for any reason whatsoever, been taken up and
paid for on or before the date that is the earliest of (i) the
date by which the Purchaser is required to take up and pay for
Shares tendered pursuant to the provisions of the Securities Act
(Ontario), (ii) 10 days after the expiry of the Offer, as
extended from time to time and (iii) the 75th day after the date
of the Offer.
6.2 Termination by the Purchaser.
The Purchaser, when not in default in performance of its obligations under this
Agreement, may, without prejudice to any other rights, terminate this Agreement
by notice to the Shareholder if:
(a) the Shareholder has not complied in all material respects with
its covenants to the Purchaser contained herein or its covenants
under the Consolidated Disposition Agreements and the agreements
entered into in connection with the Exchangeable Share
Redemption;
(b) any of the representations and warranties of the Shareholder
contained herein is untrue or inaccurate;
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(c) the Company has not complied in all material respects with its
covenants to the Purchaser under the Offer Agreement;
(d) the conditions in section 4 of Schedule "A" to the Offer
Agreement are not satisfied or waived by the Purchaser on or
prior to the 75th day after the date of the Offer; or
(e) the Offer Agreement is terminated.
6.3 Effect of Termination.
In the case of any termination of this Agreement pursuant to this Article 6,
this Agreement shall be of no further force and effect. Such termination shall
not relieve any party from liability for any breach of this Agreement prior to
such termination.
ARTICLE 7
GENERAL
7.1 Survival of Representations and Warranties.
The representations and warranties shall not survive the consummation of the
Offer, provided that the representations and warranties of the Shareholder in
section 2.1(a) through (e) of this Agreement shall survive indefinitely and the
other representations and warranties of the Shareholder in section 2.l of this
Agreement shall terminate upon the expiry of the Offer. No investigations made
by or on behalf of the Purchaser or any of their authorized agents at any time
shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty or covenant made by the Shareholder in
or pursuant to this Agreement.
7.2 Disclosure.
Except as may otherwise be required by law or by regulatory authorities having
discretion over such matters, each party hereto agrees that it will not make any
public disclosure with respect to this Agreement or the negotiations related to
this Agreement in each case without the prior approval of the other party, which
approval will not be unreasonably withheld. If any party deems that it is
required by law or such regulatory authority to make any public announcement or
release concerning this Agreement, such party agrees to provide a written copy
thereof to the other party in advance of any such announcement or release and to
reasonably consider any suggested modifications, which will be provided by the
other party in a timely matter. The parties acknowledge that the terms of this
Agreement will be summarized in the Offer, the Directors' Circular and the
Circular.
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7.3 Assignment.
This Agreement shall not be assigned by operation of law or otherwise, except
that the Purchaser may assign all or any of its rights and obligations hereunder
to any direct or indirect wholly-owned subsidiary of the Purchaser, provided
that no such assignment shall relieve the Purchaser of its obligations hereunder
if such assignee does not perform such obligations.
7.4 Time.
Time shall be of the essence of this Agreement.
7.5 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein. The parties
hereto irrevocably submit to the non-exclusive jurisdiction of the courts of the
Province of Ontario in respect of the interpretation and enforcement of this
Agreement.
7.6 Entire Agreement.
This Agreement constitutes and comprises the entire agreement and understanding
between the parties hereto with regard to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
the parties with respect to the subject matter hereof.
7.7 Amendments.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by each of the
parties hereto. Either party hereto may (a) extend the time for the performance
of any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
7.8 Definitions.
For the purposes of this Agreement the term:
(a) "affiliates" and "associates" means the persons, companies and
other entities included in the definitions of such terms under
the Securities Act (Ontario);
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(b) "business day" means any day, other than a Saturday or Sunday, on
which banks in the City of Palm Beach, Florida and the City of
Toronto, Ontario are open for business;
(c) "material fact", "material change" and "misrepresentation" are
used as defined under the Securities Act (Ontario); and
(d) "Shares" shall include any shares into which the Shares may be
reclassified, subdivided, consolidated or converted and any
rights and benefits arising therefrom including any extraordinary
distributions of securities which may be declared in respect of
the Shares.
or the purposes of this Agreement, if the last day of a period of days is not a
business day, the period shall be extended to the next following day which is a
business day.
7.9 Specific Performance and other Equitable Rights.
Each of the parties recognizes and acknowledges that this Agreement is an
integral part of the transactions contemplated in the Offer, that the Purchaser
would not contemplate causing the Offer to be made and the Shareholder would not
agree to its covenants to the Purchaser herein and to irrevocably deposit the
Shareholder's Shares to the Offer unless this Agreement was executed and that a
breach by a party of any covenants or other commitments contained in this
Agreement will cause the other party to sustain injury for which it would not
have an adequate remedy at law for money damages. Therefore, each of the parties
agrees that in the event of any such breach, the aggrieved party shall be
entitled to the remedy of specific performance of such covenants or commitments
and preliminary and permanent injunctive and other equitable relief in addition
to any other remedy to which it may be entitled, at law or in equity, and the
parties further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any injunctive or other equitable
relief.
7.10 Notices.
Any notice required or permitted to be given hereunder shall be written, and
shall be either (i) personally delivered, (ii) sent by a reputable common
carrier guaranteeing next business day delivery, or (iii) sent by facsimile, to
the respective addresses of the parties set forth below, or to such other place
as any party hereto may by notice given as provided herein designate for receipt
of notices hereunder. Any such notice shall be deemed given and effective upon
receipt or refusal of receipt thereof by the primary party to whom it is to be
sent.
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If to the Purchaser, addressed as follows:
AT&T Canada Corp.
150 Laurier Avenue West
Ottawa, Ontario
K1P 5J4
Attention: Stephen Millington
Facsimile: (613) 688-4576
with a required copy to:
AT&T Canada Inc.
205 5th Avenue S.W.
Calgary, Alberta
T2P 2V6
Attention: Steven Chisholm
Facsimile: (403) 263-9044
with a required copy to:
Osler, Hoskin & Harcourt LLP
P.O. Box 50
1 First Canadian Place
Toronto, Ontario
M5X 1B8
Attention: Randall Pratt
Facsimile: (416) 862-6666
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If to the Shareholder, addressed as follows:
Applied Digital Solutions, Inc.
400 Royal Palm Way
Suite 400
Palm Beach, Florida
33480
Attention: Garrett A. Sullivan
Facsimile: (561) 366-0002
with a copy to:
Meighen, Demers
Box 11
Merrill Lynch Canada Tower
1100-200 King Street West
Toronto, Ontario
M5H 3T4
Attention: Richard S. Sutin
Facsimile: (416) 977-5239
7.11 Expenses.
Each of the parties shall pay all of its own legal, financial advisory and
accounting costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed or prepared pursuant hereto and any other costs and expenses whatsoever
and howsoever incurred.
7.12 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
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7.13 Counterparts.
This Agreement may be executed by facsimile signature, or otherwise, in two or
more counterparts, all of which taken together will constitute one binding
agreement.
AT&T CANADA CORP.
By: /S/ Steven B. Chisholm
-------------------------------------
Steven B. Chisholm
Senior Vice President and
General Counsel
Agreed and accepted as of this 28th day of November, 1999.
APPLIED DIGITAL SOLUTIONS, INC.
By: /S/ Garrett A. Sullivan
-----------------------------
Garrett A. Sullivan
President and Chief Operating
Officer
