Exhibit 2.1
EXECUTION COPY
MCY AGREEMENT
by and between
XXX.XXX, INC.
and
APPLIED DIGITAL SOLUTIONS, INC.
Dated as of October 19, 2000
EXECUTION COPY
MCY AGREEMENT
MCY AGREEMENT dated as of October 19, 2000 (this "Agreement"),
by and between XXX.xxx, Inc., a Delaware corporation ("MCY"), and Applied
Digital Solutions, Inc., a Missouri corporation ("ADSX").
RECITALS
WHEREAS, MCY Music World, Inc., a Delaware corporation and
wholly-owned subsidiary of MCY ("Music"), owns or has exclusive rights in
certain digital delivery architecture (collectively, the "MCY Technology"); and
WHEREAS, ADSX wishes to obtain from Music an exclusive,
perpetual, fully paid, license for the use of the MCY Technology and Music
wishes to grant such a license to ADSX, on the same basis, for such purposes
only; and
NOW, THEREFORE, for good and valuable consideration, the
receipt and legal adequacy of which is hereby acknowledged, the parties hereby
agree as follows:
1. Grant of MCY License; Consideration; etc,
(a) Grant of MCY License to ADSX. For the consideration set
forth in Section 1(b) hereof, MCY shall cause Music to grant to ADSX an
exclusive, perpetual, fully paid, personal, limited and
non-transferable license (the "MCY License") of the MCY Technology
pursuant to the terms, provisions and conditions of a license agreement
between Music and ADSX in the form of Exhibit A attached hereto.
(b) Consideration. In consideration for the grant by Music of
the MCY License, ADSX and the MCY Technology, ADSX agrees to pay to MCY
an aggregate of [11,816,298] shares of ADSX common stock (the "ADSX
Shares").
(c) Registration Rights Agreement. ADSX and MCY shall enter
into a registration rights agreement by and between ADSX and MCY (the
"ADSX Registration Rights Agreement") in the form attached hereto as
Exhibit B which shall provide that ADSX shall file a registration
statement on Form S-3 with the Securities and Exchange Commission (the
"Commission") as soon as possible and shall provide that ADSX shall use
its best efforts to cause such registration statement to be declared
effective by no later than seventy-five (75) days from the date hereof
(the "Registration Rights Termination Date").
(d) Escrow and Payment Agreement. MCY shall deposit the MCY
License and MCY Technology into an escrow account pursuant to an escrow
and payment agreement of even date herewith (the "Escrow and Payment
Agreement") by and among MCY, ADSX and Xxxxxx Xxxxxx LLP, as the escrow
agent (the "Escrow Agent"), in the form attached hereto as Exhibit C.
ADSX shall deposit the ADSX Shares with the Escrow Agent who shall hold
and release the ADSX Shares in accordance with the Escrow and Payment
Agreement.
2. Representations and Warranties.
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2.1 MCY hereby represents and warrants to ADSX as follows:
(a) Organization, Good Standing and Power. MCY is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate
power to own, lease and operate its properties and assets and to
conduct its business as it is now being conducted. MCY does not have
any subsidiaries except as set forth on Schedule 2.1(a). MCY and each
such subsidiary is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction (alone or in the
aggregate) in which the failure to be so qualified will not have a MCY
Material Adverse Effect. For the purposes of this Agreement, "MCY
Material Adverse Effect" means any adverse effect on the business,
operations, properties, prospects, or financial condition of MCY and
its subsidiaries taken as a whole.
(b) Authorization; Enforceability. MCY has the requisite
corporate power and authority to enter into and perform this Agreement,
the ADSX Registration Rights Agreement and the Escrow and Payment
Agreement and all other agreements, certificates, instruments and
documents executed in connection therewith (collectively, the "MCY
Transaction Documents"). The execution, delivery and performance of the
MCY Transaction Documents by MCY and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of MCY or its Board of Directors or stockholders as
required. The MCY Transaction Documents have been duly executed and
delivered by MCY. Each of the MCY Transaction Documents constitutes a
valid and binding obligation of MCY enforceable against MCY in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to,
or affecting generally the enforcement of, creditor's rights and
remedies or by other equitable principles of general application.
(c) No Conflicts. The execution, delivery and performance of
the MCY Transaction Documents by MCY or Music, as the case may be, and
the consummation by MCY of the transactions contemplated hereby and
thereby do not and will not (i) violate any provision of MCY's
Certificate of Incorporation or Bylaws, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which MCY is a party or by which
it or its properties or assets are bound, (iii) create or impose a
lien, mortgage, security interest, charge or encumbrance of any nature
on any property or asset of MCY under any agreement or any commitment
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to which MCY is a party or by which MCY is bound or by which any of its
respective properties or assets are bound, or (iv) result in a
violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to MCY or any of its
subsidiaries or by which any property or asset of MCY or any of its
subsidiaries are bound or affected, except, in all cases other than
violations pursuant to clause (i) above, for such conflicts, defaults,
terminations, amendments, acceleration, cancellations and violations as
would not, individually or in the aggregate, have a MCY Material
Adverse Effect. The business of MCY and its subsidiaries is not being
conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for possible violations which singularly or
in the aggregate do not and will not have a MCY Material Adverse
Effect. MCY is not required under federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make
any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations
under the MCY Transaction Documents in accordance with the terms hereof
or thereof (other than any filings which may be required to be made by
MCY with the Commission or state securities administrators pursuant to
the terms hereof and any registration statement which may be filed
pursuant hereto).
(d) No Material Adverse Change. Since September 30, 2000,
neither MCY nor its subsidiaries has experienced or suffered any MCY
Material Adverse Effect, other than a general decline in the stock
price of XXX.xxx, Inc. common stock and that MCY continues to incur
losses as a result of its operations.
(e) Actions Pending. There is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or
other proceeding pending or, to the knowledge of MCY, threatened
against MCY or any subsidiary which questions the validity of this
Agreement or any of the other MCY Transaction Documents or any of the
transactions contemplated hereby or thereby or any action taken or to
be taken pursuant hereto or thereto. Except as set forth in the
Commission Filings or on Schedule 2.1(e) hereto, there is no action,
suit, claim, investigation, arbitration, alternate dispute resolution
proceeding or other proceeding pending or, to the knowledge of MCY,
threatened, against or involving MCY, any subsidiary or any of their
respective properties or assets which is likely to have a MCY Material
Adverse Effect. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental
or regulatory body against MCY or any subsidiary or any officers or
directors of MCY or subsidiary in their capacities as such.
(f) Compliance with Law. The business of MCY and the
subsidiaries has been and is presently being conducted in accordance
with all applicable federal, state and local governmental laws, rules,
regulations and ordinances, except as set forth on Schedule 2.1(f)
hereto or such that, individually or in the aggregate, do not cause a
MCY Material Adverse Effect. MCY and each of its subsidiaries have all
franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct of
its business as now being conducted by it unless the failure to possess
such franchises, permits, licenses, consents and other governmental or
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regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a MCY Material
Adverse Effect.
(g) Certain Fees. Except as set forth on Schedule 2.1(g)
hereto, no brokers, finders or financial advisory fees or commissions
will be payable by MCY or any subsidiary with respect to the
transactions contemplated by this Agreement.
(h) Rule 144. MCY understands that the ADSX Shares must be
held indefinitely unless the ADSX Shares are registered under the
Securities Act or an exemption from registration is available. MCY
acknowledges that it is familiar with Rule 144 of the rules and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act ("Rule 144"), and that MCY has been advised that Rule
144 permits resales only under certain circumstances. MCY understands
that to the extent that Rule 144 is not available, MCY will be unable
to sell any Shares without either registration under the Securities Act
or the existence of another exemption from such registration
requirement.
(i) Acquisition for Investment. MCY is purchasing the ADSX
Shares solely for its own account for the purposes of investment and
not with a view to or for sale in connection with distribution. MCY
does not have a present intention to sell the ADSX Shares, nor a
present arrangement (whether or not legally binding) or intention to
effect any distribution of the ADSX Shares to or through any person or
entity; provided, however, that by making the representations herein,
MCY does not agree to hold the ADSX Shares for any minimum or other
specific term and reserves the right to dispose of the ADSX Shares at
any time in accordance with federal and state securities laws
applicable to such disposition. MCY acknowledges that it is able to
bear the financial risks associated with an investment in ADSX Shares
and that it has been given full access to such records of ADSX and the
subsidiaries and to the officers of ADSX and the subsidiaries as it has
deemed necessary or appropriate to conduct its due diligence
investigation.
(j) Accredited Investor. MCY is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act and has
such knowledge and experience in financial and business matters that
MCY is capable of evaluating the merits and risks of MCY's investment
in ADSX.
(k) No Broker-Dealer Affiliation. MCY is not a broker-dealer
registered with the Commission or an affiliate (as such term is defined
in Rule 144(a) promulgated under the Securities Act) of a broker-dealer
registered with the Commission.
(l) General. MCY understands that the ADSX Shares are being
offered and sold in reliance on a transactional exemption from the
registration requirement of federal and state securities laws and ADSX
is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of MCY set
forth herein in order to determine the applicability of such exemptions
and the suitability of MCY to acquire the ADSX Shares. MCY understands
that no United States federal or state agency or any government or
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governmental agency has passed upon or made any recommendation or
endorsement of the ADSX Shares.
(m) Opportunities for Additional Information. MCY acknowledges
that it has had the opportunity to ask questions of and receive answers
from, or obtain additional information from, the executive officers of
ADSX concerning the financial and other affairs of ADSX, and to the
extent deemed necessary in light of MCY's knowledge of ADSX' affairs,
MCY has asked such questions and received answers to the full
satisfaction of MCY, and MCY desires to invest in ADSX.
(n) No General Solicitation. MCY acknowledges that the ADSX
Shares were not offered to it by means of any form of general or public
solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement,
article, notice or other communication published in any newspaper,
magazine, or similar media, or broadcast over television or radio, or
(ii) any seminar or meeting to which it was invited by any of the
foregoing means of communication
2.2 Representations and Warranties of ADSX. ADSX hereby represents
and warrants to MCY as follows:
(a) Organization, Good Standing and Power. ADSX is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Missouri and has the requisite corporate
power to own, lease and operate its properties and assets and to
conduct its business as it is now being conducted. ADSX does not have
any subsidiaries except as set forth on Schedule 2.2(a) hereto. ADSX
and each such subsidiary is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction (alone or in the
aggregate) in which the failure to be so qualified will not have an
ADSX Material Adverse Effect. For the purposes of this Agreement, "ADSX
Material Adverse Effect" means any adverse effect on the business,
operations, properties, prospects, or financial condition of ADSX and
subsidiaries taken as a whole.
(b) Authorization; Enforcement. ADSX has the requisite
corporate power and authority to enter into and perform this Agreement,
the MCY License, the ADSX Registration Rights Agreement and the Escrow
and Payment Agreement and all other agreements, certificates,
instruments and documents executed in connection therewith
(collectively, the "ADSX Transaction Documents") and to issue ADSX
Shares in accordance with the terms hereof. The execution, delivery and
performance of the ADSX Transaction Documents by ADSX and the
consummation by it of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate
action, and no further consent or authorization of ADSX or its Board of
Directors or stockholders is required. The ADSX Transaction Documents
have been duly executed and delivered by ADSX. Each of the ADSX
Transaction Documents constitutes a valid and binding obligation of the
ADSX enforceable against ADSX in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
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insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the
enforcement of, creditor's rights and remedies or by other equitable
principles of general application.
(c) Capitalization. The authorized capital stock of ADSX and
the shares thereof currently issued and outstanding as of September 29,
2000 are set forth on Schedule 2.2(c) hereto. All of the outstanding
shares of ADSX' common stock have been duly and validly authorized.
(d) Issuance of Shares. The ADSX Shares have been duly
authorized by all necessary corporate action and, when paid for or
issued in accordance with the terms hereof shall be validly issued and
outstanding, fully paid and nonassessable.
(e) No Conflicts. The execution, delivery and performance of
the ADSX Transaction Documents by ADSX and the consummation by ADSX of
the transactions contemplated hereby and thereby do not and will not
(i) violate any provision of the ADSX' Certificate of Incorporation or
its Bylaws, (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which ADSX is a party or by which it or its properties or
assets are bound, (iii) create or impose a lien, mortgage, security
interest, charge or encumbrance of any nature on any property or asset
of ADSX under any agreement or any commitment to which ADSX is a party
or by which ADSX is bound or by which any of its respective properties
or assets are bound, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations)
applicable to ADSX or any of its subsidiaries or by which any property
or asset of ADSX or any of its subsidiaries are bound or affected,
except, in all cases other than violations pursuant to clause (i)
above, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually
or in the aggregate, have an ADSX Material Adverse Effect. The business
of ADSX and its subsidiaries is not being conducted in violation of any
laws, ordinances or regulations of any governmental entity, except for
possible violations which singularly or in the aggregate do not and
will not have a ADSX Material Adverse Effect. ADSX is not required
under federal, state or local law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under the ADSX Transaction
Documents in accordance with the terms hereof or thereof (other than
any filings which may be required to be made by ADSX with the
Commission or state securities administrators pursuant to the terms
hereof and any registration statement which may be filed pursuant
hereto).
(f) No Material Adverse Change. Since September 30, 2000,
other than as reported by ADSX in its Quarterly Report on Form 10-Q for
the period ended September 30, 2000, as amended filed with the
Commission, ADSX has not experienced or suffered any ADSX Material
Adverse Effect.
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(g) No Undisclosed Liabilities. Except as disclosed on
Schedule 2.2(g) hereto, neither ADSX nor any of its subsidiaries has
any liabilities, obligations, claims or losses (whether liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent or
otherwise) other than those incurred in the ordinary course of ADSX' or
its subsidiaries respective businesses since December 31, 1999 and
which, individually or in the aggregate, do not or would not have an
ADSX Material Adverse Effect on ADSX or its subsidiaries.
(h) Actions Pending. There is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or
other proceeding pending or, to the knowledge of ADSX, threatened
against ADSX or any subsidiary which questions the validity of this
Agreement or any of the other ADSX Transaction Documents or any of the
transactions contemplated hereby or thereby or any action taken or to
be taken pursuant hereto or thereto. Except as set forth in the
Commission Filings or on Schedule 2.2(h) hereto, there is no action,
suit, claim, investigation, arbitration, alternate dispute resolution
proceeding or other proceeding pending or, to the knowledge of ADSX,
threatened, against or involving ADSX, any subsidiary or any of their
respective properties or assets which is likely to have an ADSX
Material Adverse Effect. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental
or regulatory body against ADSX or any subsidiary or any officers or
directors of ADSX or subsidiary in their capacities as such.
(i) Compliance with Law. The business of ADSX and the
subsidiaries has been and is presently being conducted in accordance
with all applicable federal, state and local governmental laws, rules,
regulations and ordinances, except as set forth on Schedule 2.2(i)
hereto or such that, individually or in the aggregate, do not cause an
ADSX Material Adverse Effect. ADSX and each of its subsidiaries have
all franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct of
its business as now being conducted by it unless the failure to possess
such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have an ADSX Material
Adverse Effect.
(j) Certain Fees. Except as set forth on Schedule 2.2(j)
hereto, no brokers, finders or financial advisory fees or commissions
will be payable by ADSX or any subsidiary with respect to the
transactions contemplated by this Agreement.
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3. Covenants
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3.1 Sapient Corporation. MCY shall introduce ADSX to Sapient
Corporation ("Sapient") and to use its reasonable best efforts to
request Sapient to enter an agreement with ADSX regarding proposed
modifications of certain digital delivery architecture for ADSX;
provided, however, that there can be no assurances that Sapient will
agree to enter into an agreement with ADSX or that Sapient will agree
to make the proposed modifications on terms acceptable to ADSX;
provided, further, that ADSX will be solely responsible for the cost of
such modifications and the delivery of the modified architecture by
Sapient and the maintenance, hosting, bandwidth and all related costs.
3.2 Registration and Listing. ADSX shall cause its common stock to
continue to be registered under Sections 12(b) or 12(g) of the Exchange
Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements
related to any registration statement filed pursuant to this Agreement
and will not take any action or file any document (whether or not
permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act or Securities
Act, except as permitted herein. ADSX will take all action necessary to
continue the trading of its common stock on the applicable exchange or
successor market. ADSX will take all action necessary to cause the
listing of the ADSX Shares on Nasdaq or any successor exchange.
4. Conditions, etc.
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4.1 Conditions Precedent to the Obligations of ADSX. The obligation
hereunder of ADSX hereunder to deliver the ADSX Shares is subject to
the satisfaction or waiver, at or before the Release Date (as such term
is hereinafter defined), of each of the conditions set forth below.
These conditions are for ADSX' sole benefit and may be waived by ADSX
at any time in its sole discretion. For the purposes of this Agreement,
the term "Release Date" shall mean the date on which all of the
conditions set forth in this Section 4.1 and Section 4.2 have been
fully satisfied.
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties of MCY shall have been true and correct
in all material respects as of the date hereof and shall be true and
correct as of the Release Date.
(b) Performance. MCY shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with
by MCY as of the Release Date.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
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(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental authority
shall have been threatened, against MCY or any subsidiary, or any of
the officers, directors or affiliates of MCY or any subsidiary seeking
to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
(e) MCY Agreement. MCY shall have delivered this Agreement
to ADSX.
(f) MCY License. MCY shall have executed and delivered the
MCY License to ADSX and delivered it to the Escrow Agent.
(g) ADSX Registration Rights Agreement. MCY shall have
delivered the ADSX Registration Rights Agreement to ADSX.
(h) HSR Clearance. MCY shall have obtained all consents,
approvals or waivers required to be obtained in respect of or filings
with any Governmental Authority (as such term is hereinafter defined)
that are required to permit the consummation of the transactions
contemplated herein, and all waiting periods applicable to this
Agreement and the transactions contemplated herein under the HSR Act
(as such term is hereinafter defined), if applicable, shall have
expired or been terminated. For the purposes of this Agreement, the
term "Governmental Authority" means any federal, state or local
regulatory authority or instrumentality, domestic or foreign, or any
department or agency thereof including, without limitation, any
authority, department, commission, board, bureau, agency, court or
instrumentality. For the purposes of this Agreement, the term "HSR Act"
means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
(i) Secretary's Certificate. MCY shall have delivered to ADSX
a secretary's certificate, dated as of the Release Date, as to (i)
resolutions adopted by its the Board of Directors approving the MCY
Transaction Documents and the transactions contemplate therewith, (ii)
the Certificate of Incorporation of MCY as in effect as of the Release
Date, (iii) the Bylaws of MCY, as in effect as of the Release Date, and
(iv) the authority and incumbency of the officers of MCY executing the
MCY Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
4.2 Conditions Precedent to the Obligations of MCY. The obligation of
MCY hereunder to deliver the MCY License and the MCY Technology is
subject to the satisfaction or waiver, at or before the Release Date,
of each of the conditions set forth below. These conditions are for
MCY's sole benefit and may be waived by MCY at any time in its sole
discretion.
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties of ADSX shall have been true and correct
in all material respects as of the date hereof and shall be true and
correct as of the Release Date.
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(b) Performance. ADSX shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with
by ADSX as of the Release Date.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental authority
shall have been threatened, against ADSX or any subsidiary, or any of
the officers, directors or affiliates of ADSX or any subsidiary seeking
to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
(e) Effective Registration Statement. MCY shall have received
from ADSX a copy of confirmation from the Commission that a
registration statement on Form S-3 (or such other applicable form
contemplated by the ADSX Registration Rights Agreement) including the
ADSX Shares has been declared effective.
(f) ADSX Registration Rights Agreement. ADSX shall have
delivered the ADSX Registration Rights Agreement to MCY.
(g) MCY Agreement. ADSX shall have delivered this Agreement
to MCY.
(h) HSR Clearance. ADSX shall have obtained all consents,
approvals or waivers required to be obtained in respect of or filings
with any Governmental Authority that are required to permit the
consummation of the transactions contemplated herein, and all waiting
periods applicable to this Agreement and the transactions contemplated
herein under the HSR Act, if applicable, shall have expired or been
terminated.
(i) Secretary's Certificate. ADSX shall have delivered to MCY
a secretary's certificate, dated as of the Release Date, as to (i)
resolutions adopted by its the Board of Directors approving the ADSX
Transaction Documents and the transactions contemplated therewith, (ii)
the Certificate of Incorporation of ADSX as in effect on the Release
Date, (iii) the Bylaws of ADSX, as in effect at the Release Date, and
(iv) the authority and incumbency of the officers of ADSX executing the
ADSX Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
(j) ADSX Shares. The ADSX Shares shall have been delivered to
the Escrow Agent.
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5. Indemnification.
(a) Survival of Representations and Warranties. The
representations and warranties set forth in Section 2 shall survive
until the second anniversary of the Release Date.
(b) Indemnification by MCY. MCY agrees to indemnify and hold
harmless ADSX and its directors, officers, affiliates, agents,
successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorney's fees, charges and
disbursements) incurred by ADSX as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by MCY
herein.
(c) Indemnification by ADSX. ADSX agrees to indemnify and hold
harmless MCY and its directors, officers, affiliates, agents,
successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorney's fees, charges and
disbursements) incurred by MCY as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by ADSX
herein.
(d) Indemnification Procedure. Any party entitled to
indemnification under this Section 5 (an "indemnified party") will give
written notice to the indemnifying party of any matters giving rise to
a claim for indemnification; provided, that the failure of any party
entitled to indemnification hereunder to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this
Section 5 except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified party in respect
of which indemnification is sought hereunder, the indemnifying party
shall be entitled to participate in and, unless in the reasonable
judgment of the indemnified party a conflict of interest between it and
the indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will contest
such a claim for indemnification hereunder, or fails, within thirty
(30) days of receipt of any indemnification notice to notify, in
writing, such person of its election to defend, settle or compromise,
at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense),
then the indemnified party may, at its option, defend, settle or
otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does
so assume the defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the defense,
settlement or compromise of any such action, claim or proceeding shall
be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with
any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates
to such action or claim. The indemnifying party shall keep the
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indemnified party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. If the
indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with
counsel of its choice at its sole cost and expense. The indemnifying
party shall not be liable for any settlement of any action, claim or
proceeding effected without its prior written consent. Notwithstanding
anything in this Section 5 to the contrary, the indemnifying party
shall not, without the indemnified party's prior written consent,
settle or compromise any claim or consent to entry of any judgment in
respect thereof which imposes any future obligation on the indemnified
party or which does not include, as an unconditional term thereof, the
giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim. The
indemnification required by this Section 5 shall be made by periodic
payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred, so long as the indemnified party irrevocably
agrees to refund such moneys if it is ultimately determined by a court
of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the
indemnified party against the indemnifying party or others, and (b) any
liabilities the indemnifying party may be subject to pursuant to the
law.
6. Miscellaneous.
--------------
(a) Expenses. All expenses incurred in connection with this
Agreement shall be paid by the party incurring such expenses.
(b) Assignment; Pledge. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors (by merger, consolidation or sale of all or substantially
all of the assets of such party) and permitted assigns. This Agreement
may not be assigned, transferred or pledged by either party, without
the prior written consent of the other party hereto.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in that state,
without regard to any of its principles of conflicts of laws or other
laws which would result in the application of the laws of another
jurisdiction. This Agreement shall be construed and interpreted without
regard to any presumption against the party causing this Agreement to
be drafted.
(d) Jurisdiction; Waiver of Jury Trial. EACH OF THE PARTIES
HERETO UNCONDITIONALLY AND IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY AND THE FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO CONTEST THE VENUE OF
SAID COURTS OR DISTRICT OR TO CLAIM THAT SAID COURTS CONSTITUTE AN
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INCONVENIENT FORUM. EACH OF THE PARTIES HERETO AGREES THAT SERVICE OF
ANY SUMMONS, COMPLAINT, NOTICE OR OTHER PROCESS RELATING TO SUCH SUIT,
ACTION OR OTHER PROCEEDING MAY BE EFFECTED IN THE MANNER PROVIDED IN
SECTION 6(j). EACH OF THE PARTIES HERETO UNCONDITIONALLY AND
IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(e) Entire Agreement. This Agreement and any exhibits and
attachments hereto, and the other agreements referred to herein,
constitute the complete and exclusive understanding and agreement
between the parties with respect to the subject matter hereof,
superseding and replacing any and all prior agreements, communications,
and understandings (both written and oral) regarding such subject
matter including, without limitation, the ADSX Agreement of even date
herewith between the parties and the agreements contemplated thereby,
all of which are merged herein. There are no representations, promises
or understandings regarding such subject matter, except to the extent
expressly set forth herein.
(f) Remedies Cumulative; Invalidity. All remedies, rights,
undertakings, obligations and agreements contained in this Agreement
shall be cumulative, and none of them shall be in limitation of any
other remedy, right, undertaking, obligation or agreement available to
either of the parties hereto. The invalidity, illegality or
unenforceability of any term or provision contained in this Agreement
(as determined by a court of competent jurisdiction) shall not affect
the validity, legality or enforceability of any other term or provision
hereof. It is the intent of the parties that this Agreement be enforced
to the fullest extent permitted by applicable law.
(g) Waiver. No course of dealing or omission or delay of the
part of any party hereto in asserting or exercising any rights
hereunder shall constitute or operation as a waiver of any such right.
No waiver of any provision hereof shall be effective, unless in writing
and signed by or on behalf of the party to be charged therewith. No
waiver shall be deemed a continuing waiver or waiver in respect of any
other or subsequent breach or default, unless expressly so stated in
writing.
(h) Amendment. This Agreement may not be modified, amended,
altered or supplemented, except by a written agreement executed by each
of the parties hereto.
(i) Relationship of Parties. Nothing contained herein shall be
deemed to constitute a partnership between, or a joint venture by or
employment relationship between or among the parties hereto. This
Agreement is between two independent contracting parties. Nothing
herein is intended nor shall it make either party a fiduciary of the
other party.
(j) Notices. All notices, demands, consents, requests,
instructions and other communications to be given or delivered or
permitted under or by reason of the provisions of this Agreement or in
connection with the transactions contemplated hereby shall be in
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writing and shall be deemed to be delivered and received by the
intended recipient as follows: (i) if personally delivered, on the
Business Day (as such term is hereinafter defined) of such delivery (as
evidenced by the receipt of the personal delivery service), (ii) if
mailed certified or registered mail return receipt requested, four (4)
Business Days after being mailed, (iii) if delivered by overnight
courier (with all charges having been prepaid), on the Business Day of
such delivery (as evidenced by the receipt of the overnight courier
service of recognized standing), or (iv) if delivered by facsimile
transmission, on the Business Day of such delivery if sent by 6:00 p.m.
in the time zone of the recipient, or if sent after that time, on the
next succeeding Business Day (as evidenced by the printed confirmation
of delivery generated by the sending party's telecopier machine). If
any notice, demand, consent, request, instruction or other
communication cannot be delivered because of a changed address of which
no notice was given (in accordance with this Section 6(j)), or the
refusal to accept same, the notice, demand, consent, request,
instruction or other communication shall be deemed received on the
second Business Day the notice is sent (as evidenced by a sworn
affidavit of the sender). For the purposes of this Agreement, the term
"Business Day" means a day other than a Saturday, Sunday or day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close. For the purposes of this
Agreement, if a day referenced herein is not a Business Day or if a
notice is given or delivered on a day which is not a Business Day, such
day shall be deemed to occur or such notice shall be deemed to be given
or delivered on the next Business Day. All such notices, demands,
consents, requests, instructions and other communications will be sent
to the following addresses or facsimile numbers as applicable:
If to MCY or Music:
XXX.xxx, Inc.
1133 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-944-6943
Attention: President
with copies to:
MCY Music World, Inc.
1133 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-944-6943
Attention: Xxxxxxxx Xxxxxxx, General Counsel
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and to:
Xxxxxx Xxxxxx LLP The Chrysler Building, 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Telephone: 000-000-0000 Facsimile:
000-000-0000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
If to ADSX:
Applied Digital Solutions, Inc.
000 Xxxxx Xxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 561-366-0002
Attention: Xxxxx Xxxxxxx, General Counsel
with a copy to:
Xxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-692-1900
Attention: Xxxxxx XxXxxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq.
or to such other address as any party may specify by notice given to the other
party in accordance with this Section 6(j).
(k) Counterparts. This Agreement may be executed in
counterparts, each of which, when taken together, shall constitute one
and the same instrument. Section headings have been inserted herein for
convenience of reference only and shall not have any impact on the
construction or interpretation of this Agreement.
(l) Publicity; Joint Statements. Each of the parties hereto
agrees that it will not disclose, and will not include in any public
announcement, the names of the other party hereto without the consent
of such party, which consent will not be unreasonably withheld or
delayed or unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement;
provided, however, that if ADSX makes a public announcement with
regarding the ADSX License, it will not disclose the name of MCY or
MCY's business in such announcement and it will provide MCY with a copy
of prior to the public announcement; provided, further, that ADSX will
not disclose the name of MCY or the MCY License in any such
announcement until the Release Date without MCY's prior written
consent. Each of the parties hereto agrees to cooperate with the other
party to prepare and issue a joint statement to the public regarding
the transactions contemplated herein which will be issued concurrently.
Each of the parties hereto agree to cause their respective chairmen and
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chief executive officers to meet with securities holders of MCY and
ADSX by no later than forty-five (45) days after the Release Date.
(m) Further Assurances. From and after the date of this
Agreement, upon the request of a party hereto, the other party shall
executed and deliver such instrument, documents and other writings as
may be reasonably necessary or desirable to confirm and carry out and
to effectuate fully the intent and purposes of this Agreement and the
other Transaction Documents.
(n) Headings. The section headings in this Agreement are for
convenience only and shall not constitute a part of this Agreement for
any other purpose and shall not be deemed to limit or affect any of the
provisions hereof.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, each of MCY and ADSX has duly executed
this Agreement as of the day and year first above written.
XXX.xxx, Inc. Applied Digital Solutions, Inc.
By: /s/ Xxxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------- ---------------------------
Name: Xxxxxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Title: President
Officer
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Exhibit A. MCY License Agreement
--------------------------------
(copy to be attached)
Exhibit B. ADSX Registration Rights Agreement
---------------------------------------------
(copy to be attached)
Exhibit C. Escrow and Payment Agreement
---------------------------------------
(copy to be attached)
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