TRANSITION SERVICES AGREEMENT
Exhibit
10.1
This
TRANSITION SERVICES AGREEMENT (this “Agreement”),
dated
as of December 27, 2005 (the “Effective
Date”),
is
entered into between Applied Digital Solutions, Inc., a Missouri corporation
(“ADSX”),
and
Verichip Corporation, a Delaware corporation (“Verichip”;
references to Verichip in this Agreement shall include Verichip’s subsidiary
companies Verichip Inc. and Instantel Inc.).
Preliminary
Statements
A.
Verichip desires that ADSX provide certain Transition Services (as defined
below) to Verichip upon the terms and subject to the conditions of this
Agreement.
B.
ADSX
is willing to provide such Transition Services to Verichip upon the terms
and
subject to the conditions of this Agreement.
Agreement
In
consideration of the mutual covenants contained herein, together with other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
Services and Compensation.
1.1
Transition
Services.
During
the Term (as defined below), ADSX shall provide or cause to be provided to
Verichip certain administrative transition services and payment of expenses
that
ADSX has provided to Verichip prior to the Effective Date, as requested from
time to time by Verichip. These transition services and payment of expenses
include those transition services set forth on Schedule 1-A and those transition
expenses set forth on Schedule 1-B (the “transition services” and the
“transition expenses” shall be referred to collectively in this Agreement as the
“Transition
Services”).
ADSX
shall not be obligated to expand the scope of the Transition Services
significantly beyond the scope of those services and expenses being provided
to
Verichip prior to the Offering (as defined below).
1.2
Compensation
for Transition Services.
(a)
As
compensation for the Transition Services to be provided by ADSX to Verichip
hereunder, the following shall be payable by VeriChip Corporation on a monthly
basis:
(i)
the
amounts specified as “Costs Allocated to Verichip” on Schedule 1-C,
(ii)
the
reasonable out-of-pocket direct expenses incurred by ADSX in connection with
providing Transition Services,
(iii)
services and expenses incurred by ADSX on behalf of Verichip in connection
with
the contemplated initial public offering (the “Offering”)
by
Verichip of shares of its common stock, and
(iv)
charges by third party service providers that may or may not be incurred
as part
of the Offering that are attributable to Transition Services provided to
or for
Verichip and are not included in (i) or (ii) above.
(b)
Charges for the Transition Services shall be invoiced by ADSX, on or about
the
tenth day of the calendar month next following the calendar month in which
the
Transition Services have been performed, and such invoice shall be payable
by
Verichip within 30 days following receipt thereof. ADSX shall submit to
Verichip, together with each invoice, reasonable documentation supporting
each
of the invoiced amounts and shall maintain accurate and complete books of
account necessary to support the amounts set forth on all invoices.
1.3
Additional
Services.
The
parties agree to use commercially reasonable efforts to reach agreement on
any
additional services which Verichip may require of ADSX beyond the scope of
the
Transition Services (the “Additional
Services”),
and
the applicable service fees, payment procedures and other rights and obligations
with respect thereto.
1.4
Cooperation.
Verichip and ADSX agree to use their commercially reasonable efforts to
cooperate with and provide the other with any information necessary to
facilitate ADSX’s ability to provide the Transition Services. Each party will
use its commercially reasonable efforts, and will cooperate as reasonably
required, to obtain any consents or approvals from third parties necessary
to
facilitate the ability of ADSX to provide the Transaction Services and the
Additional Services.
2.
Term and Termination.
2.1
Term.
The
term of this Agreement (the “Term”)
shall
commence on the Effective Date and shall continue in effect with respect
to the
Transition Services until such time as Verichip shall request ADSX to cease
performing such services; provided that ADSX shall not be obligated, except
as
provided in Section 2.2, to continue to provide the Transition Services
after the second anniversary of the Effective Date unless the parties otherwise
agree to do so.
2.2
Termination.
Except
as provided in Section 2.1, this Agreement may not be terminated by either
party for any reason other than upon thirty days’ prior written notice to the
other party of a material default in the delivery of Transition Services
or in
payment therefor by such other party as herein provided. Unless otherwise
extended by agreement of the parties in writing, this Agreement shall terminate
on the second anniversary of the Effective Date, except for any Transition
Services not then completed, as to which this Agreement shall expire upon
completion of those Transition Services, but in no event longer than thirty
days
after the second anniversary of the Effective Date.
2.3
Transition.
Upon
the expiration or termination of this Agreement or upon Verichip’s request, ADSX
shall provide conversion and all other services necessary for an orderly
transition of the Transition Services, in whole or in part, to another provider
and/or to Verichip itself, including, without limitation, the transfer of
all
employee records, financial or tax records and other data in the possession,
custody or control of ADSX; provided,
however,
Verichip agrees that ADSX shall retain copies of all records and other data
transferred to Verichip under this provision including without limitation
workpapers and other documents that form the
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basis
of
the ADSX audit or review of its financial statements, and memoranda,
correspondence, communications, other documents, and records (including
electronic records), which are created, sent or received in connection with
the
audit or review, or as otherwise required by federal securities statutes
and
regulations, the ADSX corporate document retention policies and other applicable
law. The provisions of this Section 2.3 shall survive the expiration or
termination of this Agreement.
3.
Cooperation of the Parties.
3.1
Access
to Personnel and Records.
ADSX
and Verichip shall cooperate with each other in providing reasonable access
to
personnel and records needed to perform or document the Transition Services
and
their cost.
3.2
Further
Assurances.
ADSX
and Verichip shall take all other actions reasonably necessary for the
Transition Services to be performed on a timely basis and in a manner consistent
with past care and practice unless otherwise specifically agreed in writing.
4.
Standard of Care; Limitations on Liability.
4.1
Standard
of Care.
In the
performance of the Transition Services, ADSX shall provide the Transition
Services promptly and in a professional manner, and shall exercise the degree
of
care normally exercised by it in connection with its own affairs, but in
no
event less than the standard of care exercised by it in delivering services
to
Verichip prior to the Effective Date. Except in cases of gross negligence
or
willful misconduct, ADSX shall have no liability to Verichip with regard
to the
breach of any duty or obligation to Verichip herein set forth.
4.2
Limitation
on Damages.
In no
event shall ADSX be liable to Verichip for any special, indirect, incidental,
consequential, punitive or similar damages, including but not limited to
lost
profits, loss of data or business interruption losses. This limitation shall
apply even if ADSX has been notified of the possibility or likelihood of
such
damages occurring and regardless of the form of action, whether in contract,
negligence, strict liability, tort, products liability or otherwise.
5.
Miscellaneous.
5.1
Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties hereto and supersedes
all prior and contemporaneous agreements and understandings (including term
sheets), both written and oral, between the parties hereto, or either of
them,
with respect to the subject matter hereof.
5.2
Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Florida. NO ACTION, SUIT OR PROCEEDING MAY BE BROUGHT OR MAINTAINED
CONCERNING MATTERS COVERED BY THIS AGREEMENT EXCEPT IN A COURT OF THE STATE
OF
FLORIDA OR COURTS OF THE UNITED STATES OF AMERICA SITTING IN THE COUNTY OF
PALM
BEACH, STATE OF FLORIDA. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES TO BE SUBJECT TO, AND HEREBY CONSENTS
AND
SUBMITS TO, THE JURISDICTION OF THE COURTS OF
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THE
STATE
OF FLORIDA AND OF THE FEDERAL COURTS SITTING IN THE COUNTY OF PALM BEACH,
STATE
OF FLORIDA.
5.3
Amendment
and Modification.
This
Agreement may be amended, modified or supplemented only by a written agreement
signed by each of ADSX and Verichip.
5.4
Assignment;
Binding Effect.
Neither
this Agreement nor any of the rights, benefits or obligations hereunder may
be
assigned by ADSX or Verichip (whether by operation of law or otherwise) without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by ADSX and Verichip and their respective successors and permitted assigns.
5.5
No
Third Party Beneficiaries.
Nothing
in this Agreement, express or implied, is intended to or shall confer upon
any
person (other than Verichip, ADSX and their respective successors or permitted
assigns) any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement and no person (other than
as so
specified) shall be deemed a third party beneficiary under or by reason of
this
Agreement.
5.6
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one
agreement binding on ADSX and Verichip, notwithstanding that not all parties
are
signatories to the same counterpart.
5.7
Confidentiality.
ADSX
and Verichip shall preserve in strict confidence any confidential information
obtained from the other party and identified as such by such other party,
and
shall refrain from: (i) disclosing any such information without the prior
written consent of the other party, except as otherwise required by law,
including without limitation, the Securities Act of 1933, as amended, and
the
rules and regulations promulgated thereunder, and the Securities Exchange
Act of
1934, as amended, and the rules and regulations promulgated thereunder, or
(ii) using such information other than in the performance of Transition
Services under this Agreement, unless such information (a) is in the public
domain through no fault of such party, (b) is or hereafter becomes known to
the public through no fault of the receiving party or (c) is provided to
the receiving party by a third party having no confidential obligation to
the
other party to this Agreement with regard to such information.
5.8
Independent
Contractor.
The
relationship of the parties to each other under this Agreement shall be that
of
independent contractor.
5.9
Personnel.
Both
parties hereto agree that they shall take appropriate action by instruction
of
or agreement with their respective personnel to ensure that all personnel
performing or otherwise involved with Transition Services under this Agreement
shall be bound by and comply with all of the terms and conditions of this
Agreement, including, but not limited to, the terms and conditions of
Section 5.7 hereof.
5.10
Notices.
All
notices, requests, consents and other communications hereunder must be in
writing and will be deemed to have been duly given: (i) when received if
personally delivered or sent by facsimile, (ii) one business day after
being sent by nationally recognized overnight delivery service, or
(iii) five business days after being sent by nationally registered or
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certified
mail, return receipt requested, postage prepaid, and in each case addressed
as
follows (any party by written notice to the other party in the manner prescribed
by this Section 5.10 may change the address or the persons to whom notices
thereof shall be directed):
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To
ADSX at:
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Applied
Digital Solutions, Inc.
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0000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
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Xxxxxx
Xxxxx, Xxxxxxx 00000
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Attention:
Xxxxxxx X. Xxxxxxx, Esq.
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Fax
Number: 000-000-0000
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with
a copy to:
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Holland
& Knight LLP
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000
Xxxxxxxx Xxxxxx
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Xxxxx
0000
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Xxxxx,
Xxxxxxx 00000
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Attention:
Xxxxxx X. Xxxxxxx, Esq.
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Fax
Number: 000-000-0000
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To
Verichip at:
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Verichip
Corporation
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0000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
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Xxxxxx
Xxxxx, Xxxxxxx 00000
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Attention:
Xxxxx X. XxXxxxxxxx
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Fax
Number: 000-000-0000
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with
a copy to:
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Akin
Gump Xxxxxxx Xxxxx & Xxxx LLP
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000
Xxxxxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000-0000
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Attention:
Xxxx X. Xxxxx, Esq.
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Fax
Number: 000-000-0000
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[Signature
page to follow]
5
IN
WITNESS WHEREOF, the parties hereto have duly caused the execution of this
Agreement by their duly authorized representative or officer, as of the day
and
year first above written.
| APPLIED DIGITAL SOLUTIONS, INC. | ||||
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By:
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/s/
Xxxx
XxXxxxx
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Name:
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Xxxx
XxXxxxx
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Title:
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Chief
Financial Officer
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| VERICHIP CORPORATION | ||||
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By:
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/s/
Xxxxx X.
XxXxxxxxxx
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Name:
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Xxxxx
X. XxXxxxxxxx
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Title:
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Chief
Executive Officer
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