EXHIBIT 10.1
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is
entered into as of September 19, 2003, between Applied Digital Solutions,
Inc., a Missouri corporation (the "COMPANY"), and First Investors Holding
Co., Inc., (the "PURCHASER").
WHEREAS, the Company has registered with the Securities
and Exchange Commission (the "COMMISSION") the issuance of certain shares
(the "SHARES") of its common stock, $0.001 par value per share (the "COMMON
STOCK"), under a registration statement on Form S-1 (Registration No.
333-106300) (the "REGISTRATION STATEMENT").
WHEREAS, subject to the terms and conditions set forth in
this Agreement, the Company desires to sell to the Purchaser and the
Purchaser desires to purchase from the Company up to 11,428,571 Shares
currently available under the Registration Statement.
NOW, THEREFORE, in consideration of the foregoing, the
mutual covenants contained in this Agreement and for other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
Company and the Purchaser agree as follows:
1. Settlement Dates.
(a) Settlement Dates. The closing, if any, of the
----------------
purchase and sale of the Shares under this Agreement will take place at the
offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on
the settlement dates set forth below. Subject to the terms and conditions of
this Agreement, the Shares will be issued, delivered and paid for on up to
ten settlement dates (if any) as follows:
(1) The first settlement date (if any) will
occur on the fourth (4th) Trading Day (as defined below) following (and
including) the Press Release Date (the "FIRST SETTLEMENT DATE"). Subject to
the terms and conditions of this Agreement, on the First Settlement Date,
the Company will issue and deliver to the Purchaser, and the Purchaser shall
purchase from the Company, 1,142,857 Shares (subject to adjustment, at the
sole option of the Purchaser, in accordance with and subject to the
provisions of Sections 1(b)(2) and (3)).
(2) The second settlement date (if any) will
occur on the seventh (7th) Trading Day following (and including) the Press
Release Date (the "SECOND SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Second Settlement Date, the Company
will issue and deliver to the Purchaser, and the Purchaser shall purchase
from the Company, 2,285,714 Shares less the number of any Shares purchased
by the Purchaser on the First Settlement Date (subject to adjustment, at the
sole option of the Purchaser, in accordance with and subject to the
provisions of Sections 1(b)(2) and (3)).
(3) The third settlement date (if any) will
occur on the tenth (10th) Trading Day following (and including) the Press
Release Date (the "THIRD SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Third Settlement Date, the Company will
issue and deliver to the Purchaser, and the Purchaser shall purchase from
the Company, 3,428,571 Shares less the aggregate number of Shares purchased
by the Purchaser on all previous Settlement Dates (as defined below)
(subject to adjustment, at the sole option of the Purchaser, in accordance
with and subject to the provisions of Sections 1(b)(2) and (3)).
(4) The fourth settlement date (if any) will
occur on the thirteenth (13th) Trading Day following (and including) the
Press Release Date (the "FOURTH SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Fourth Settlement Date, the Company
will issue and deliver to the Purchaser, and the Purchaser shall purchase
from the Company, 4,571,428 Shares less the aggregate number of Shares
purchased by the Purchaser on all previous Settlement Dates (subject to
adjustment, at the sole option of the Purchaser, in accordance with and
subject to the provisions of Sections 1(b)(2) and (3)).
(5) The fifth settlement date (if any) will
occur on the sixteenth (16th) Trading Day following (and including) the
Press Release Date (the "FIFTH SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Fifth Settlement Date, the Company will
issue and deliver to the Purchaser, and the Purchaser shall purchase from
the Company, 5,714,286 Shares less the aggregate number of Shares purchased
by the Purchaser on all previous Settlement Dates (subject to adjustment, at
the sole option of the Purchaser, in accordance with and subject to the
provisions of Sections 1(b)(2) and (3)).
(6) The sixth settlement date (if any) will
occur on the nineteenth (19th) Trading Day following (and including) the
Press Release Date (the "SIXTH SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Sixth Settlement Date, the Company will
issue and deliver to the Purchaser, and the Purchaser shall purchase from
the Company, 6,857,143 Shares less the aggregate number of Shares purchased
by the Purchaser on all previous Settlement Dates (subject to adjustment, at
the sole option of the Purchaser, in accordance with and subject to the
provisions of Sections 1(b)(2) and (3)).
(7) The seventh settlement date (if any) will
occur on the twenty-second (22nd) Trading Day following (and including) the
Press Release Date (the "SEVENTH SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Seventh Settlement Date, the Company
will issue and deliver to the Purchaser, and the Purchaser shall purchase
from the Company, 8,000,000 Shares less the aggregate number of Shares
purchased by the Purchaser on all previous Settlement Dates (subject to
adjustment, at the sole option of the Purchaser, in accordance with and
subject to the provisions of Sections 1(b)(2) and (3)).
(8) The eighth settlement date (if any) will
occur on the twenty-fifth (25th) Trading Day following (and including) the
Press Release Date (the "EIGHTH SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Eighth Settlement Date, the Company
will issue and deliver to the Purchaser, and the Purchaser shall purchase
from the Company, 9,142,857 Shares less the aggregate number of Shares
purchased by the Purchaser on all previous Settlement Dates (subject to
adjustment, at the sole option of the Purchaser, in accordance with and
subject to the provisions of Sections 1(b)(2) and (3)).
2
(9) The ninth settlement date (if any) will
occur on the twenty-eighth (28th) Trading Day following (and including) the
Press Release Date (the "NINTH SETTLEMENT DATE"). Subject to the terms and
conditions of this Agreement, on the Ninth Settlement Date, the Company will
issue and deliver to the Purchaser, and the Purchaser shall purchase from
the Company, 10,285,714 Shares less the aggregate number of Shares purchased
by the Purchaser on all previous Settlement Dates (subject to adjustment, at
the sole option of the Purchaser, in accordance with and subject to the
provisions of Sections 1(b)(2) and (3)).
(10) The tenth settlement date (if any) will
occur on the thirty-first (31st) Trading Day following (and including) the
Press Release Date (the "TENTH SETTLEMENT DATE", and together with the First
Settlement Date, Second Settlement Date, Third Settlement Date, Fourth
Settlement Date, Fifth Settlement Date, Sixth Settlement Date, Seventh
Settlement Date, Eighth Settlement Date and Ninth Settlement Date,
collectively, the "SETTLEMENT DATES", and each individually, a "SETTLEMENT
DATE"). Subject to the terms and conditions of this Agreement, on the Tenth
Settlement Date, the Company will issue and deliver to the Purchaser, and
the Purchaser shall purchase from the Company, 11,428,571 Shares less the
aggregate number of Shares purchased by the Purchaser on all previous
Settlement Dates (subject to adjustment, at the sole option of the
Purchaser, in accordance with and subject to the provisions of Sections
1(b)(2) and (3)).
(b) Per Share Purchase Price; Additional Share Elections.
(1) The purchase price for each Share issuable
under this Agreement on a Settlement Date (the "PER SHARE PURCHASE PRICE")
shall equal 87.00% of the average of the VWAP for the three Trading Days
immediately preceding such Settlement Date.
(2) The Company is not required to sell, and
the Purchaser is not required to purchase, any Shares at a price that is
less than the Floor Price. If the Per Share Purchase Price with respect to a
particular Settlement Date is less than the Floor Price: (a) the Purchaser
shall be under no further obligation to purchase any Shares that would have
been purchased on the applicable Settlement Date, but may, at its option,
require the Company to issue and sell to it up to the maximum aggregate
amount of Shares to be sold hereunder (it being understood that not more
than an aggregate of 11,428,571 Shares will be issued and sold under this
Agreement), and (b) if Purchaser elects to acquire such Shares under (a)
above, then the per share purchase price for such Shares shall equal the
Floor Price.
(3) At any time prior to 6:00 p.m. (New York
time) on the day preceding a Settlement Date, the Purchaser may elect by
written notice to the Company, to acquire (in addition to the Shares which
it may be obligated to acquire at such time) up to the maximum aggregate
amount of Shares to be sold hereunder (it being understood that not more
than an aggregate of 11,428,571 Shares will be issued and sold under this
Agreement).
(4) Notwithstanding anything herein to the
contrary, if the VWAP on two consecutive Settlement Dates is less than
$0.42, then, at any time thereafter, Purchaser shall be entitled to
terminate any and all of its obligations under this Agreement by delivery of
a written notice to the Company to such effect.
3
(5) The Purchaser is not permitted to acquire
Shares hereunder to the extent that, giving effect to such proposed
acquisition, the beneficial ownership of the Common Stock by the Purchaser
(together with its affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Purchaser's for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), would exceed 9% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock potentially issuable upon such acquisition). Notwithstanding
anything herein to the contrary, the obligations of the parties hereto is
subject to the immediately preceding sentence and will be deemed
automatically modified so as to avoid any contravention thereof.
(6) Notwithstanding anything herein to the
contrary, in no event shall the Purchaser or the Company have the right or
obligation to purchase or sell a number of Shares hereunder having an
aggregate purchase price of more than $3,999,999.99.
(c) Deliveries on each Settlement Date.
----------------------------------
(1) Subject to the terms and conditions of this
Agreement, on each Settlement Date: (x) the Company will deliver to the
Purchaser, (A) via such Purchaser's DTC Account through the Depository Trust
Company DWAC system, a number of Shares equal to the applicable number of
Shares being acquired on such Settlement Date, and (B) a certificate,
executed by the President of the Company, to the effect that the Company has
complied with and is in compliance with all of the conditions set forth in
Section 2, and (y) the Purchaser will, upon receipt of such Shares in the
DWAC system, deliver to the Company, an amount in United States dollars
equal to the product of (i) such number of Shares, and (ii) the Per Share
Purchase Price applicable to such Settlement Date, via wire transfer of
immediately available funds to an account designated in writing by the
Company for such purpose.
(2) In addition to any other rights available to
the Purchaser, if on a Settlement Date, the Company fails to deliver to such
Purchaser's DTC Account the number of Shares being acquired on such
Settlement Date, and if the Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Purchaser of the shares that the Purchaser anticipated
receiving from the Company (a "Buy-In"), then, in the Purchaser's sole
discretion, the Company shall, within three Trading Days after the
Purchaser's request, either (i) pay cash to the Purchaser in an amount equal
to the Purchaser's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the "Buy-In Price"), at
which point the Company's obligation to deliver such Shares shall terminate,
or (ii) promptly honor its obligation to deliver to the Purchaser a
certificate or certificates representing such Common Stock and pay cash to
the Purchaser in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock, times (B) the
Closing Price on the date of the event giving rise to the Company's
obligation to deliver such certificate.
(d) Certain Defined Terms. As used in this Agreement,
---------------------
unless otherwise defined, the following terms shall have the respective
meanings set forth in this Section 1(d):
4
(1) "COMPANY REGISTRATION STATEMENT" means the
Registration Statement, including the Prospectus, amendments and supplements
to the Registration Statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material and
exhibits incorporated by reference or deemed to be incorporated by reference
in such registration statement.
(2) "FLOOR PRICE" means $0.35, subject to
equitable adjustment for stock splits, recombinations and similar events.
(3) "PERSON" means any court or other federal,
state, local or other governmental authority or other individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government
(or an agency or subdivision thereof) or other entity of any kind.
(4) "PRESS RELEASE DATE" means the date on which
as of 9:20 a.m. (New York time) the press release or Form 8-K contemplated
by Section 2(d) has been filed and is available to the public through the
Commission's XXXXX system.
(5) "PROSPECTUS" means the prospectus included
in the Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part
of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Shares covered by the Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material or exhibits incorporated by reference or deemed
to be incorporated by reference in the Prospectus.
(6) "SECURITIES ACT" means the Securities Act of
1933, as amended.
(7) "TRADING DAY" means (a) a day on which the
Common Stock is traded on the Nasdaq SmallCap Market, Nasdaq National
Market, New York Stock Exchange or American Stock Exchange, or (b) if the
Common Stock is not listed on any of the Nasdaq SmallCap Market, Nasdaq
National Market, New York Stock Exchange or American Stock Exchange, a day
on which the Common Stock is traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (c) if the Common Stock is not quoted
on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions
of reporting prices); provided, however, that in the event that the Common
Stock is not listed or quoted as set forth in (a), (b) and (c) above, then
Trading Day shall mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State
of New York are authorized or required by law or other government action to
close.
(8) "VWAP" means on any Trading Day, the volume
weighted average trading price (as reported by Bloomberg Financial L.P.
using the VAP function) of the Common Stock for such Trading Day.
5
2. CONDITIONS. The obligation of the Purchaser to
----------
purchase and acquire Shares under this Agreement is subject to the
fulfillment (or waiver by the Purchaser) of each of the following
conditions:
(a) The Company Registration Statement: (x) shall be
effective as to all Shares, not subject to any threatened or actual stop
order and (y) will not contain any untrue statement of material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) The Company shall have secured the listing of the
Shares on the Nasdaq SmallCap Market (subject to official notice of
issuance).
(c) The representations and warranties of the Company
made in this Agreement shall be true and correct as of and on each of the
date of this Agreement and each Settlement Date, as if first made and
restated on each such date.
(d) The Company shall have issued a press release or
filed a current report on Form 8-K , in each case reasonably acceptable to
the Purchaser, disclosing the existence of this Agreement and the material
terms hereof. The Purchaser may terminate its obligation to acquire Shares
under this Agreement if, by 9:20 a.m. (New York time) on September 22, 2003,
neither (i) the Company has issued such press release, nor (ii) such current
report on Form 8-K is available to the public through the Commission's XXXXX
system.
(e) There shall be no litigation, investigation, inquiry
or proceeding pending or threatened in writing (including without limitation
with the Commission, the Nasdaq Stock Market, or the NASD) that challenges
or calls into the question the transactions contemplated hereby or, if
determined in a manner adverse to the Company, that could reasonably be
expected to result in a material and adverse effect on the Company, its
business or its prospects or impose liability upon the Purchaser.
(f) The Company shall file with the Commission a
prospectus supplement to the Company Registration Statement (a
"Supplement"), in agreed form, within one Trading Day of the date of this
Agreement, in order to evidence and disclose the offer and sale of the
Shares issued hereunder. In addition, the Company shall file a Supplement,
in agreed form, on each Settlement Date to disclose the number Shares sold
on such Settlement Date and the corresponding Per Share Purchase Price.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
---------------------------------------------
Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization and Qualification. The Company is a
------------------------------
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Missouri with the requisite corporate power and
authority to own and use its properties and assets and to carry on its
business as currently conducted, except where the failure to do so would not
reasonably be expected to have a material adverse effect on the Company or
the transactions contemplated hereby. The Company is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
6
property owned by it makes such qualification necessary, except where the
failure to do so would not reasonably be expected to have a material adverse
effect on the Company or the transaction contemplated hereby.
(b) Authorization. The Company has the requisite
-------------
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement by the
Company and the consummation of the transaction contemplated hereby have
been duly authorized by all necessary action on the part of the Company and
no further action is required by the Company or its shareholders for the
Company to execute and consummate this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed by the Company
and, when delivered in accordance with the terms hereof, and assuming the
valid execution hereof by the Purchaser, will constitute the valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except (a) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification
and contribution provisions may be limited under the federal and state
securities laws and public policy, and (c) that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(c) No Conflicts. The execution, delivery and performance
------------
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby does not and will not: (i) conflict with or
violate any provision of the Company's certificate of incorporation or
bylaws (each as amended through the date hereof), or (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 or acceleration (with or without notice, lapse of time or both)
of, any agreement or indebtedness to which the Company is a party or by
which any property or asset of the Company is bound or affected, except
where the failure to do so would not reasonably be expected to have a
Material adverse effect on the Company or the transaction contemplated
hereby or (iii) result in a violation of any law, rule, regulation, order,
judgment, decree or other restriction of any court, governmental authority
or stock market to which the Company or the Common Stock is subject, except
where the failure to do so would not reasonably be expected to have a
Material adverse effect on the Company or the transaction contemplated
hereby. There are no notices to or approvals or consents required to be made
by the Company of the NASD, any stock market, the Commission or any other
Person that have not been made and obtained (and any so obtained are in full
force and effect), except where the failure to do so would not reasonably be
expected to have a Material adverse effect on the Company or the transaction
contemplated hereby.
(d) Filings, Consents and Approvals. The Company is not
-------------------------------
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of
this Agreement, other than (i) the required filing of the Supplements, (ii)
applicable Blue Sky filings, and (iii) in all other cases where the failure
to obtain such consent, waiver, authorization or
7
order, or to give such notice or make such filing or registration could not
have or result in, individually or in the aggregate, a Material adverse
effect.
(e) Issuance of the Shares. The Shares are duly
----------------------
authorized and, when issued and paid for in accordance with the terms
hereof, will be legally issued, fully paid and nonassessable, free and clear
of all liens and encumbrances. The Shares have been approved for issuance on
and by the Nasdaq SmallCap Market (subject to official notice of issuance).
(f) Company Registration Statement. The Company
------------------------------
Registration Statement is effective and the Company has not received notice
that the Commission has issued or intends to issue a stop order with respect
to the Company Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Company Registration
Statement, either temporarily or permanently, or intends or has threatened
in writing to do so. The Company Registration Statement (including the
information or documents incorporated by reference therein and all
supplements, including the Supplements, and prospectus thereunder), at the
time it was first declared effective, on the date of this Agreement, and on
each Settlement Date, did not, do not and will not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Shares are
registered under the Securities Act by the Company Registration Statement.
(g) Listing and Maintenance Requirements. None of the
------------------------------------
offer, sale or issuance to the Purchaser of the maximum number of Shares
issuable under this Agreement require any approval of the shareholders of
the Company and do not violate the rules of the Nasdaq Stock Market.
(h) Certain Fees. Except with respect to certain
------------
arrangements between the Company and X.X. Xxxxx Securities Inc. with respect
to the transactions contemplated by this Agreement, no fees or commissions
will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by this Agreement. The
Purchaser will have no obligation with respect to any fees incurred by the
Company or any other Person or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by this
Agreement. The Company will indemnify and hold harmless the Purchaser, its
employees, officers, directors, agents, partners, and affiliates, from and
against all claims, losses, damages, costs (including the costs of
preparation and reasonable attorney's fees) and expenses suffered in respect
of any such claimed or existing fees incurred by the Company or any other
Person, as such fees and expenses are incurred.
(i) Disclosure. Neither the Company nor any other
----------
Person acting on its behalf has provided the Purchaser or its agents or
counsel with any information that constitutes or may, in the Company's
opinion, constitute material non-public information.
(j) SEC Reports; Financial Statements. Except with
---------------------------------
respect to (i) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 30, 2002, which was not timely filed and (ii) two
statements of changes in beneficial ownership in
8
Digital Angel Corporation filed on Form 4, which were not timely filed, the
Company has filed all reports required to be filed by it under the Exchange
Act, for the twelve months preceding the date hereof (collectively, "SEC
Reports") on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in
all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal year-end audit adjustments.
(k) Acknowledgment Regarding Purchaser's Purchase of
------------------------------------------------
Shares. The Company acknowledges and agrees that the Purchaser is acting
------
solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by
the Purchaser or any of its representatives or agents in connection with
this Agreement and the transactions contemplated hereby is merely incidental
to the Purchaser's purchase of the Shares. The Company further represents to
the Purchaser that the Company's decision to enter into this Agreement has
been based solely on the independent evaluation of the proposed transactions
by the Company and its representatives.
4. Representations and Warranties of the Purchaser.
-----------------------------------------------
The Purchaser hereby represents and warrants to the Company as follows:
(a) Organization; Authorization. The Purchaser is a
---------------------------
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation with the requisite corporate
power and authority to own and use its properties and assets and to carry on
its business as currently conducted, except where the failure to do so would
not reasonably be expected to have a material adverse effect on the
Purchaser or the transactions contemplated hereby. The Purchaser is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to do so would not reasonably be
expected to have a material adverse effect on the Purchaser or the
transaction contemplated hereby. The Purchaser has the requisite power and
authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations thereunder. The
execution and delivery of this Agreement by the Purchaser and the
consummation by it of the transaction contemplated hereby have been
9
duly authorized by all necessary action on the part of the Purchaser. This
Agreement has been duly executed by the Purchaser and, when delivered in
accordance with the terms hereof, and assuming the valid execution hereof by
the Company, will constitute the valid and binding obligation of the
Purchaser enforceable against it in accordance with its terms, except (a) as
such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally, (b) as enforceability
of any indemnification and contribution provisions may be limited under the
federal and state securities laws and public policy, and (c) that the remedy
of specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(b) Other Agreements; Status of Purchaser. The Purchaser
-------------------------------------
is not party to any agreement or arrangement with respect to a disposition
of Shares other than this Agreement. The Purchaser is an accredited investor
as defined in Rule 501 of the Securities Act and is not registered as a
broker-dealer under the Exchange Act.
(c) Financial Capacity. The Purchaser has financial
------------------
capacity to satisfy its obligations under this Agreement.
5. CERTAIN DISCLOSURES. The Company will not and will
-------------------
cause each of its affiliates and other Persons acting on behalf of the
Company not to divulge to the Purchaser any information that it believes to
be material non-public information unless the Purchaser has agreed in
writing to receive such information prior to such divulgence. Neither the
Company nor the Purchaser will issue any press release or make any other
public announcement relating to this Agreement unless the form thereof is
mutually agreed to by the Company and the Purchaser, or if the Company is
advised in writing by its counsel that such press release or public
announcement is required by law. Except with respect to the press release to
be issued pursuant to Section 2(d), and other than with respect to: (i) the
filing of the Supplements, and (ii) the filing of a Current Report on Form
8-K to furnish an opinion of counsel as to the legality of the Shares, the
Company shall not publicly disclose the name of the Purchaser, or include
the name of the Purchaser in any filing with the Commission or any
regulatory agency or trading market, without the prior written consent of
the Purchaser, except to the extent such disclosure is required by law or
trading market regulations, in which case the Company shall provide the
Purchaser with prior notice of such disclosure.
6. RESERVATION AND LISTING OF SHARES. The Company shall
---------------------------------
maintain a reserve from its duly authorized shares of Common Stock for
issuance of the Shares pursuant to this Agreement in such amount as may be
required to fulfill its obligations in full under this Agreement. The
Company shall take such steps as may be required to cause and maintain the
listing of the Shares on the Trading Market and such other exchange, market
or quotation facility on which the Common Stock is traded.
7. INDEMNIFICATION. The Company will indemnify the
---------------
Purchaser and the officers, directors, employees and agents of the
Purchaser, and each person, if any, who controls the Purchaser within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act (a "RELATED PERSON"), as provided in Exhibit "A" attached hereto against
liability with respect to the Company Registration Statement (including,
without limitation, the
10
prospectus supplement) relating to the Shares sold by the Company to the
Purchaser hereunder. For purposes of said Exhibit A, capitalized terms used
therein without definition shall have the same meanings therein as are
ascribed to said terms in this Agreement.
8. MISCELLANEOUS.
-------------
(a) Fees and Expenses. Each party will pay the fees and
-----------------
expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The
Company will pay all stamp and other taxes and duties levied in connection
with the sale of the Shares.
(b) Entire Agreement; Amendments. This Agreement contains
----------------------------
the entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have
been merged into this Agreement. This Agreement may not be modified or
amended except in a writing for such purpose signed by the Company and the
Purchaser. The waiver by either party hereto of any right hereunder or the
failure to perform or of a breach by the other party will not be deemed a
waiver of any other right hereunder or of any other breach or failure by
said other party whether of a similar nature or otherwise.
(c) Notices. Any and all notices or other communications
-------
or deliveries required or permitted to be provided hereunder must be in
writing and will be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section, or via email,
prior to 4:30 p.m. (New York City time) on a Trading Day, (ii) the Trading
Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Agreement
later than 4:30 p.m. (New York City time) on any date and earlier than 11:59
p.m. (New York City time) on such date, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to
be given. The address for such notices and communications will be as follows
(or such other address as may be designated in writing hereafter, in the
same manner, by such Person):
If to the Company: Applied Digital Solutions, Inc.
000 Xxxxx Xxxx Xxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
with a copy to:
Holland & Knight
000 Xxxxxxxx Xxx.
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
11
If to the Purchaser: To the address set forth under the
Purchaser's name on the signature page
hereto.
(d) Governing Law. All questions concerning the
-------------
construction, validity, enforcement and interpretation of this Agreement
will be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders, employees or
agents) will be exclusively commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan. Each party
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder, and irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court or that such courts
are an improper or inconvenient forum. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Agreement and
agrees that such service will constitute good and sufficient service of
process and notice thereof. Nothing contained herein will be deemed to limit
in any way any right to serve process in any manner permitted by law. Each
party irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If
either party shall commence an action or proceeding to enforce any
provisions of this Agreement, then the prevailing party in such action or
proceeding will be reimbursed by the other party for its reasonable
attorneys fees and other reasonable costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
(e) Remedies. In addition to being entitled to exercise
--------
all rights provided herein or granted by law, including recovery of damages,
the Purchaser and the Company will each be entitled to specific performance
of the others obligations under this Agreement. In furtherance thereof, the
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any such breach and hereby agrees to waive in any
action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
(f) Execution. This Agreement may be executed in two or
---------
more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
(g) Assignment. Neither party shall assign this Agreement
----------
without the prior written consent of the other party hereto.
(h) Adjustments in Share Numbers and Prices. In the event
---------------------------------------
of any stock split, subdivision, dividend or distribution payable in shares
of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of
Common Stock), combination or other similar recapitalization or event
occurring after the date hereof, each reference in this Agreement to a
number of shares or a price per share shall be amended to appropriately
account for such event.
* * * * * * *
12
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed as of the date first indicated above.
APPLIED DIGITAL SOLUTIONS, INC.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: CEO
FIRST INVESTORS HOLDING CO., INC.
By: /s/ Avi Vigder
Name: Avi Vigder
Title: Authorized Signatory
Address for Notice:
FIRST INVESTORS HOLDING CO., INC.
[OMITTED FOR CONFIDENTIALITY]
With a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 212.969.2900
Attn: Xxxx Xxxxxxx
DWAC instructions for
delivery of shares:
[Omitted for Confidentiality]
13
EXHIBIT `A'
TERMS OF INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and
------------------------------
hold harmless the Purchaser and any Related Persons, from and against any
losses, claims, damages, liabilities, costs and expenses (including, without
limitation, reasonable costs of defense and investigation and all attorneys'
fees and expenses) to which the Purchaser and the officers, directors,
employees and agents of the Purchaser, and each person, if any, who controls
the Purchaser may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Company Registration Statement or any
amendment or supplement to the Registration Statement, or (ii) the omission
or alleged omission to state in that Registration Statement a material fact
required to be stated therein or necessary to make the statements therein
not misleading (an "INDEMNIFIABLE MATTER"). The Company will reimburse the
Purchaser and the officers, directors, employees and agents of the Purchaser
and each such controlling person promptly upon demand for any legal or other
costs or expenses reasonably incurred by the Purchaser and the officers,
directors, employees and agents of the Purchaser or the controlling person
in investigating, defending against, or preparing to defend against any
claim relating to an Indemnifiable Matter, except that the Company will not
be liable to the extent such claim, suit or proceeding which results in a
loss, claim, damage, liability or expense arises out of, or is based upon,
an untrue statement, alleged untrue statement, omission or alleged omission,
included in the Supplement in reliance upon, and in conformity with, written
information furnished by the Purchaser to the Company for inclusion in the
Supplement.
(b) CONTRIBUTION. If for any reason the indemnification provided
------------
for in this Agreement is not available to, or is not sufficient to hold
harmless, an indemnified party in respect of any loss, claim, damage,
liability, cost or expense referred to in Paragraph (a), each indemnifying
party will, in lieu of indemnifying the indemnified party, contribute to the
amount paid or payable by the indemnified party, contribute to the amount
paid or payable by the indemnified party as a result of the loss, claim,
damage, liability, cost or expense: (i) in the proportion which is
appropriate to reflect the relative benefits received by the indemnifying
party, on the one hand, and by the indemnified party, on the other hand,
from the sale of stock which is the subject of the claim, action, suit or
proceeding which resulted in the loss, claim, liability, cost or expense or
(ii) if that allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits of
the sale of stock, but also the relative fault of the indemnifying party and
the indemnified party with respect to the statements or omissions which are
the subject of the claim, action, suit or proceeding that resulted in the
loss, claim, damage, liability, cost or expense as well as any other
relevant equitable considerations.
A-1
