Sales Plan
Exhibit
10.1
Sales
Plan, dated as of the date set forth on the signature page (the “Sales Plan”),
between Xxxxx
Xxxxxxxxx (“Seller”) and Xxxxxxx, Sachs & Co. (“Broker”).
WHEREAS,
Seller desires to establish the Sales Plan to sell shares of common stock,
par
value $0.01 per share (the “Stock”), of
Applied Digital Solutions, Inc. (the “Issuer”) in
accordance with the requirements of Rule 10b5-1 under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”) as
further set forth herein;
NOW,
THEREFORE, Seller and Broker hereby agree as follows:
1. Broker
shall effect
one or more sales (each a “Sale”) of shares
of Stock (the “Shares”),
including Shares that Seller has the right to acquire under stock options issued
by the Issuer (the “Options”), as
further set forth in the attached Annex A to this Sales Plan. All orders will
be
deemed day orders only and not held unless otherwise specified in Annex
A.
2. This
Sales Plan shall
become effective as of the date hereof and shall terminate on the earliest
of
(a) July 15, 2007, (b) the date on which Broker has sold all Shares specified
in
Annex A, (c) the date that this Sales Plan is terminated in accordance with
paragraph 11 below, or (d) the date Broker receives notice of the death of
Seller.
3. Seller
understands
that Broker may effect Sales hereunder jointly with orders for other sellers
of
Stock of the Issuer and that the average price for executions resulting from
bunched orders will be assigned to Seller's account.
4. Seller
represents and
warrants that Seller is not aware of material, nonpublic information with
respect to the Issuer or any securities of the Issuer (including the Stock)
and
is entering into this Sales Plan in good faith and not as part of a plan or
scheme to evade the prohibitions of Rule 10b5-1.
5. It
is the intent of
the parties that this Sales Plan comply with the requirements of Rule
10b5-1(c)(1)(i)(B) under the Exchange Act and this Sales Plan shall be
interpreted to comply with the requirements of Rule 10b5-1(c). Seller has
consulted with Seller’s own advisors
as
to the legal and tax aspects of Seller’s adoption
and
implementation of this Sales Plan.
6. Seller
represents
that the Shares are “restricted
securities” and/or that Seller may be deemed an “affiliate”
of the
Issuer as those terms are defined under Rule 144 of the Securities Act of 1933.
Seller shall not take, and shall not cause any person or entity with which
he or
she would be required to aggregate sales of Stock pursuant to paragraph (a)(2)
or (e) of Rule 144 to take, any action that would cause the Sales not to comply
with Rule 144. Seller has provided Broker with ten (10) executed Forms 144,
which Broker will complete and file on behalf of the Seller. Seller understands
and agrees that unless otherwise agreed or instructed, Broker will generally
make one Form 144 filing as necessary at the beginning of each three-month
period commencing prior to the first Sale to be effected pursuant to this Plan;
provided that Broker may file Forms 144 more or less
frequently
as may be appropriate under the circumstances. Such Form 144 shall
specify that the Sales are being effected in accordance with a Sales Plan
intended to comply with Rule 10b5-1. Seller agrees to provide Broker with such
information as is reasonably necessary for Broker accurately and timely to
complete the Forms 144.
7. (a)
Seller represents and warrants that Seller is currently permitted to sell
Stock in accordance with the Issuer’s xxxxxxx
xxxxxxx
policies and has obtained the approval of the Issuer’s xxxxxxx
xxxxxxx
policies and has obtained the approval of the Issuer’s counsel
to enter
into this Sales Plan and that, other than any Rule 144 requirements set forth
herein, there are no contractual, regulatory, or other restrictions applicable
to the Sales contemplated under this Sales Plan that would interfere with
Broker’s
ability to execute Sales and effect delivery and settlement of such Sales on
behalf of Seller, other than restrictions with respect to which the Seller
has
obtained all required consents, approvals and waivers. Seller shall notify
Broker immediately in the event that any of the above statements become
inaccurate prior to the termination of this Sales Plan.
(b) With
respect to Shares underlying options held by Seller that are to be exercised
and
sold pursuant to this Plan (“Options”), Seller
has delivered to Broker executed option exercise notices in the form attached
hereto as Annex B covering up to the maximum number of Shares that may be sold
pursuant to option exercise hereunder, and hereby authorizes Broker to deliver
such notices to the Issuer’s stock
administrator on Seller’s behalf
as
necessary to effectuate such exercises and settle such Sales. Seller agrees
to make appropriate arrangements with the Issuer and its transfer agent and
stock plan administrator to assure that Stock received upon exercise of Options
shall be delivered to an account at Broker in the name of and for the benefit
of
Seller.
(c) On
each day that sales are to be made pursuant to option exercise under this Sales
Plan, Broker shall exercise a sufficient number of Options to effect such sales
provided, that in the event sales of any Shares to be executed are subject
to a limit order, Seller shall have been deemed to have exercised the Options
with respect to such notice from Broker with respect to such Shares at the
beginning of the trading day on which such sales took place.
8. Seller
will
not directly or indirectly communicate any information relating to Issuer or
Issuer securities to any employee of Broker or its affiliates who is directly
or indirectly involved in executing this Sales Plan at any time while this
Sales Plan is in effect.
9. Seller
shall
make all filings, if any, required under Sections 13(d) and 16 of the Exchange
Act.
10.
Seller understands that Broker may not effect a Sale due to a market disruption
or a legal, regulatory or contractual restriction applicable to the Broker
or
any other event or circumstance (a “Blackout”). Seller
also understands that even in the absence of a Blackout, Broker may be unable
to
effect Sales consistent with ordinary principles of best execution due to
insufficient volume of trading, failure of the Stock to reach and sustain
a
2
limit
order price, or other market factors in effect on the date of a Sale set forth
in Annex A (“Unfilled
Sales”).
Broker agrees that if Issuer enters into a transaction
that
imposes trading restrictions on the Seller, such as a stock offering requiring
an affiliate lock-up (an “Issuer
Restriction”), and if Issuer and Seller shall provide Broker at least three (3)
days’ prior
notice of such trading restrictions, then Broker will cease effecting Sales
under this Sales Plan until notified by Issuer and Seller that such restrictions
have terminated. All required notifications to Broker under this paragraph
10
shall be made in writing (signed by Seller and Issuer) and confirmed by
telephone as follows: (Attn: Structured Equity Solutions, c/o Control Room;
Fax
No. (000) 000-0000; Tel: (000) 000-0000). Broker shall resume effecting Sales
in
accordance with this Sales Plan as soon as practicable after the cessation
or
termination of a Blackout or Issuer Restriction. Any Unfilled Sales, and any
Sales that would have been executed in accordance with the terms of Annex A
but
are not executed due to the existence of a Blackout or Issuer Restriction,
shall
be deemed to be cancelled, and shall not be effected pursuant to this Sales
Plan.
11. This
Sales Plan and
its enforcement, and each transaction entered into hereunder and all matters
arising in connection with this Sales Plan and transactions hereunder shall
be
governed by, and construed in accordance with, the laws of the State of New
York, without reference to its choice of law doctrine. The Sales Plan may be
modified, terminated or amended only by a writing signed by the parties hereto,
which the Issuer has reviewed and not objected to, and provided that any such
modification, termination or amendment shall only be permitted at a time when
the Seller is otherwise permitted to effect sales under the Issuer's trading
policies and at a time when the Seller is not aware of material nonpublic
information concerning the Issuer or its securities. In the event of a
modification or amendment to this Sales Plan, or in the event Seller establishes
a new plan after termination of the Sales Plan, no sales shall be effected
during the thirty days immediately following such modification, amendment or
termination (other than Sales already provided for in the Sales Plan prior
to
modification, amendment or termination).
12. Seller
agrees that
Broker and its affiliates and their directors, officers, employees, and agents
(collectively, “Broker
Persons”)
shall not have any liability whatsoever to Seller for any action taken or
omitted to be taken in connection with the Sales Plan, the making of any Sale,
or any amendment, modification or termination of this Sales Plan, unless such
liability is determined in a non-appealable order of a court of competent
jurisdiction to have resulted solely from the gross negligence, willful
misconduct or bad faith of the Broker Person. Seller further agrees to hold
each
Broker Person free and harmless from any and all losses, damages, liabilities
or
expenses (including reasonable attorneys’ fees and
costs)
incurred or sustained by such Broker Person in connection with or arising out
of
any suit, action or proceeding relating to this Sales Plan, any Sale, or any
amendment, modification or termination of this Sales Plan (each an “Action”) and to
reimburse each Broker Person for its expenses, as they are incurred, in
connection with any Action, unless such loss, damage, liability or expense
is
determined in a non-appealable order of a court of competent jurisdiction to
be
solely the result of such Broker Person’s gross
negligence, willful misconduct or bad faith. This paragraph 12 shall survive
termination of this Sales Plan.
3
IN
WITNESS WHEREOF,
the undersigned have signed this Sales Plan as of the date below.
/s/ Xxxxx Xxxxxxxxx | |
Xxxxx Xxxxxxxxx | Xxxxxxx, Xxxxx & Co. |
By: /s/ Xxxxxxx Xxxxx | |
Date: 7-14-06 | Name: Xxxxxxx Xxxxx |
Title: Managing Director |
Acknowledged:
Applied Digital Solutions, Inc.
By: /s/ Xxxx
XxXxxxx
Name: Xxxx XxXxxxx
Title: CFO
4
Annex
A
Xxxxx
Xxxxxxxxx
Applied
Digital Solutions, Inc.
Broker
will sell up to 1,289,302 Shares by entering orders on the first Trading Day*
of
each of the Sales Periods set forth below provided that no more than 100,000
Shares shall be sold on any Trading Day. Each limit order shall be good until
the end of such Sales Period. Any Shares that remain unsold at the close of
business on the last trading day of the last Sales Period shall be cancelled
and
shall not be sold pursuant to this Plan.
Trade
Window
|
Shares
to be sold**
|
$
Limit
|
During
the period commencing 8/1/06
through
and including 7/15/07 or the
date
of termination of the Sales Plan, if
earlier
|
392,500
|
$5.95
|
During
the period commencing 8/1/06
through
and including 7/15/07 or the
date
of termination of the Sales Plan, if
earlier
|
461,802
|
$7.95
|
During
the period commencing 8/1/06
through
and including 7/15/07 or the
date
of termination of the Sales Plan, if
earlier
|
435,000
|
$9.95
|
Sales
of shares effected at a price for which more than one limit price is applicable
shall be allocated to the highest of such limit prices.
*“Trading
Day” means
each day on
which the Shares trade regular way on NASDAQ.
**Share amounts and limit prices listed shall be increased
or decreased to reflect stock splits should they occur
Options shall be exercised in the following
order:
Date of Xxxxx | Xxxxx Number | Number of Shares |
Exercise
Price
|
8/14/2001 | [ ] | 10,000 |
$1.50
|
9/17/2001 | [ ] | 10,000 |
$1.50
|
9/24/2001 | [ ] | 12,500 |
$1.50
|
4/8/2004 | [ ] | 36,005 |
$2.57
|
A-1
Date of Xxxxx | Xxxxx Number | Number of Shares |
Exercise
Price
|
5/12/2004 | [ ] | 2,000 |
$2.57
|
4/8/2004 | [ ] | 234,012 |
$2.57
|
4/8/2004 | [ ] | 186,285 |
$2.57
|
5/12/2004 | [ ] | 3,500 |
$2.57
|
4/8/2004 | [ ] | 16,816 |
$2.57
|
7/25/2002 | [ ] | 60,000 |
$2.80
|
2/4/2002 | [ ] | 100,000 |
$3.20
|
7/6/2005 | [ ] | 326,135 |
$3.23
|
11/3/2003 | [ ] | 200,000 |
$3.90
|
12/13/2004 | [ ] | 92,049 |
$5.85
|
/s/ Xxxxx Xxxxxxxxx | |
Xxxxx Xxxxxxxxx | Xxxxxxx, Xxxxx & Co. |
By: /s/ Xxxxxxx Xxxxx | |
Date: 7-14-06 | Name: Xxxxxxx Xxxxx |
Title: Managing Director |
Acknowledged:
Applied Digital Solutions, Inc.
By: /s/ Xxxx
XxXxxxx
Name: Xxxx XxXxxxx
Title: CFO
A-2
Annex
B
Applied
Digital Solutions, Inc.
Stock
Options Exercise Form
Instructions:
1.
Complete form and sign.
2.
Direct any questions and send back to Xxxx Xxxxxxxxx 000-000-0000
Name
of
Employee: Xxxxx Xxxxxxxxx
Phone
Number: 000-000-0000
I
elect
to exercise options for 1,289,302 shares of Common Stock of Applied Digital
Solutions, Inc. (the “Shares”)
pursuant to
the:
Incentive Stock Option Plan (ISO), or
X
Nonqualified Stock Option Plan (NQSO)
This
exercise represents a partial/total (circle one) exercise of an option granted
pursuant to an option agreement dated
with an exercise price of $
per share, for an aggregate exercise price of
$
.
The
exercising procedure I wish to use is as follows (check one):
Option
A: Outright Purchase of Shares with Cash
I
elect
to exercise my option and pay for shares in full. Enclosed is my check to
Applied Digital Solutions, Inc. for
$
representing an aggregate exercise option price of
$
plus required withholding taxes (i.e. federal, state and FICA) of
$
(this number will be provided to you by Applied Digital Solutions,
Inc.).
Note:
Withholding taxes are only required if you are exercising an option under the
Stock Option Plan (NQSO).
Please
instruct the transfer agent to issue my stock in street name and transfer it
directly to Xxxxxxx, Sachs & Co. Via DWAC as follows:
Xxxxxxx,
Xxxxx & Co.
DTC
#0005
For
the
benefit of:
A/C
#
B-1
X Option
B: Cashless Option Exercise
Please
instruct the transfer agent to issue my stock in street name and transfer ALL
shares of Applied Digital Solutions, Inc. that are represented by this
notification directly to Xxxxxxx, Sachs & Co. via DWAC as
follows:
Xxxxxxx,
Xxxxx & Co.
DTC
#0005
For
the
benefit of:
A/C
#
I
authorize Xxxxxxx, Sachs & Co. (“GS & Co.”)
to sell the
above exercised shares for my account and to pay the aggregate option exercise
price for all shares indicated above and any required withholding taxes for
the
exercise to Applied Digital Solutions, Inc.. Required withholding taxes (i.e.
federal, state and FICA) are
$
(this number will be provided by Applied Digital Solutions, Inc.). Note:
Withholding taxes are only required if you are exercising an option under the
Stock Option Plan (NQSO).
You
may
contact Xxxx Xxxxxxxxx at GS & Co. at 000-000-0000.
Fax
number is 000-000-0000
General
Authorization
1.
|
GS
& Co. is authorized to pay the aggregate option price and applicable
withholding taxes to Applied Digital Solutions,
Inc..
|
2.
|
Upon
sale of my stock option shares through GS & Co., my authorization and
direction to deliver such shares to my GS & Co. account shall be
irrevocable.
|
3.
|
I
understand I am responsible for providing GS & Co. with properly
completed Individual or Multi-Party Account Agreements, W-9 and Stock
Power forms, so that the above-referenced sale may be
finalized.
|
Employee
Signature:
/s/ Xxxxx
Xxxxxxxxx
Date:
7-14-06
Employee
Name (please print):
Legal
Address:
Approved
by Applied Digital Solutions,
Inc.:
/s/ Xxxx
XxXxxxx
Date:
7-14-06
Name
(please print): Xxxx
XxXxxxx
B-2