Exhibit 2.4
TRUST AGREEMENT
This Trust Agreement (the "Agreement") of the Digital Angel
Share Trust, a Delaware statutory business trust (the "Trust") is made and
entered into as of March 1, 2002, between Wilmington Trust Company, a Delaware
banking corporation (acting hereunder not in its individual capacity but solely
as trustee hereunder, the "Trustee"), and Applied Digital Solutions, Inc., a
corporation organized under the laws of Missouri ("ADS").
Recitals
A. Pursuant to the Credit Agreement, the Trust has agreed to
assume from ADS and certain of its Affiliates the obligation to pay IBM Credit
Corporation, a Delaware corporation ("IBM Credit"), certain indebtedness.
B. In consideration of such assumption, and in order to secure
and facilitate the payment of the Obligations according to their terms, ADS has
agreed to deposit with the Trustee the MAS Stock, to be held in trust hereunder
on the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
"Act" means the Delaware Business Trust Act, 12 Del. C.
ss.ss.3801 et seq.
"ADS" is defined in the introductory paragraph of this
Agreement.
"ADS Designated Advisory Board Member" is defined in Section
4.01(b).
"Advisory Board" means the Advisory Board prescribed by
Section 4.01.
"Advisory Board Members" means the members of the Advisory
Board.
"Affiliate" of any Person means a Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with the first mentioned Person. A Person shall be deemed
to control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, by
contract or otherwise.
"Bankruptcy Decision" means, with respect to a specified
entity, any of the following actions: (a) filing any voluntary petition in
bankruptcy on behalf of such entity, (b) consenting to the filing of any
involuntary petition in bankruptcy against such entity, (c) filing
any petition seeking, or consenting to, reorganization or relief under any
applicable federal, state or foreign law relating to bankruptcy or insolvency,
on behalf of such entity, (d) consenting to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of such
entity or a substantial part of the property of such entity, (e) making any
assignment for the benefit of creditors on behalf of such entity, (f) admitting
in writing the inability of such entity to pay its debts generally as they
become due, or (g) taking any action by such entity in furtherance of any of the
foregoing actions.
"Certificate of Trust" means the Certificate of Trust of the
Trust filed under the Act with the Delaware Secretary of State on March 1, 2002,
as such Certificate of Trust may be amended or restated from time to time.
"Credit Agreement" means that certain Third Amended and
Restated Term Credit Agreement of even date herewith, among IBM Credit, the
Trust and ADS.
"Closing Date" is defined in the Credit Agreement.
"Credit Documents" means the Credit Agreement, the Guarantee
(as defined in the Credit Agreement), and any security agreements, leases,
instruments, documents, guarantees, schedules of assignment, contracts and
similar agreements, including schedules, attachments, exhibits and ancillary
documentation or other supporting documents, executed by or on behalf of each
Borrower (as defined in the Credit Agreement), or any other Loan Party (as
defined in the Credit Agreement), and delivered to Lender (as defined in the
Credit Agreement), pursuant to the Credit Agreement or otherwise, and all
amendments, supplements and other modifications to the foregoing from time to
time.
"Delaware Secretary of State" means the office of the
Secretary of State of the State of Delaware.
"Fair Market Value" means, on any date specified, the average
of the daily Market Price of a share of MAS Stock during the 10 consecutive
trading days before such date, except that, if on any such date the shares of
MAS Stock are not listed or admitted for trading on any national securities
exchange or quoted in the over-the-counter market, Fair Market Value shall be
the Market Price on such date.
"Final Payment Date" means the date on which all Obligations
have been paid and satisfied in full.
"Final Payment Notice" means the written notice from IBM
Credit to the Trustee stating that the Final Payment Date has occurred.
"IBM Credit" is defined in Recital A.
"Indemnified Trustee Person(s)" is defined in Section 6.06.
"Independent Advisory Board Member" means (i) a Person who is
not at the time of initial appointment, or at any time while serving as an
Advisory Board Member, and has not been at any time during the preceding five
years: (a) a stockholder, director, officer, employee,
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partner, attorney or counsel of MAS, ADS, IBM Credit or any of their respective
Affiliates; (b) a customer, supplier or other person who derives any of its
purchases or revenues from its activities with MAS, ADS, IBM Credit or any of
their respective Affiliates; (c) a Person or other entity controlling or under
common control with any such stockholder, partner, customer, supplier or other
person; or (d) a member of the immediate family of any such stockholder,
director, officer, employee, partner, customer, supplier or other person and
(ii) a Person who at the time of initial appointment as an Advisory Board
Member: (a) is financially literate; (b) has accounting or financial management
expertise; and (c) has no less than ten years of business experience, at least
some of which is with a public company or involving public company matters.
"Market Price" means, on any date specified, an amount per
share of MAS Stock equal to (i) the last reported sale price of such MAS Stock,
regular way, on such date or, in case no such sale takes place on such date, the
average of the closing bid and asked prices thereof regular way on such date, in
either case as officially reported on the principal national securities exchange
on which such MAS Stock is then listed or admitted for trading, (ii) if such MAS
Stock is not then listed or admitted for trading on any national securities
exchange but is designated as a national market system security by the NASD, the
last reported trading price of the MAS Stock on such date, (iii) if there shall
have been no trading on such date or if the MAS Stock is not so designated, the
average of the closing bid and asked prices of the MAS Stock on such date as
shown by the NASD automated quotation system, or (iv) if such MAS Stock is not
then listed or admitted for trading on any national exchange or quoted in the
over-the-counter market, the fair value thereof (as of a date which is within 10
days of the date as of which the determination is to be made) determined in good
faith by the Board of Directors of the issuer of such MAS Stock.
"MAS" means Medical Advisory Systems, Inc., a Delaware
corporation.
"MAS Stock" means the common stock, par value $.005 per share,
of MAS, and any stock into which such common stock shall have been changed, any
stock resulting from any reclassification of such common stock, any other shares
of stock issued or issuable with respect thereto (whether by way of a stock
dividend or stock split or in exchange for or upon conversion of such shares or
otherwise in connection with a combination of shares, recapitalization, merger,
consolidation or other corporate reorganization), and all other stock of any
class or classes (however designated) of MAS (or its successors) the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends or liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
"Merger Agreement" means that Agreement and Plan of Merger by
and among ADS, Digital Angel Corporation, a Delaware corporation, MAS, and
Acquisition Subsidiary, Inc., a Delaware corporation, dated as of November 1,
2001.
"Obligations" means the Obligations (as defined in the Credit
Agreement) of the Trust under the Credit Documents.
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"Person" means an individual, a corporation, an association, a
partnership, an estate, a trust, a limited liability company and any other
entity or organization, governmental or otherwise.
"Registration Rights Agreement" means that certain
Registration Rights Agreement between MAS and ADS, attached as an exhibit to the
Merger Agreement and attached hereto as Exhibit A.
"Required Amount of Cash" means (a) the Trigger Amount or such
other amount as is then due and payable by the Trust under the Credit Documents,
minus (b) the amount of cash then in the Trust Estate, plus (c) the costs of
liquidating sufficient shares of MAS Stock held in the Trust Estate to generate
net proceeds equal to the amount produced by subtracting clause (b) from clause
(a).
"Trigger Amount" means the amount stated in a Trigger Notice
as owed but not timely paid by the Trust under the Credit Documents.
"Trigger Event" means any payment default by the Trust under
the Credit Documents.
"Trigger Notice" means a written notice from IBM Credit to the
Trustee stating that there has been and is continuing a Trigger Event,
specifying the Trigger Amount.
"Trust" means the Delaware statutory business trust formed
pursuant to this Agreement and known as "Digital Angel Share Trust," which was
formed as of March 1, 2002, under the Act pursuant to the filing of the
Certificate of Trust.
"Trustee" means Wilmington Trust Company, not in its
individual capacity, but solely as a trustee hereunder, and any successor
trustee appointed in accordance with Section 3807 of the Act and Section 6.04.
"Trust Estate" is defined in Article III.
ARTICLE II.
GENERAL
Section 2.01. Formation of the Trust.
(a) The Trust created hereby shall be known as "Digital
Angel Share Trust," in which name the Trustee may conduct the affairs of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and xxx and be sued on behalf of the Trust. ADS hereby appoints Wilmington Trust
Company as trustee of the Trust effective as of the date hereof, to have all the
rights, powers and duties set forth herein and in the Act. Wilmington Trust
Company hereby agrees to hold the Trust Estate as Trustee on behalf of the Trust
upon the terms
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and conditions set forth herein. The Trustee is hereby authorized to file the
Certificate of Trust with the Delaware Secretary of State pursuant to Section
3810 of the Act.
(b) It is the intention of the parties hereto that the
Trust constitute a business trust under the Act and that this Trust Agreement
constitute the governing instrument of the Trust. Effective as of the date
hereof, the Trustee shall have all rights, powers and duties set forth herein
and in the Act with respect to accomplishing the purposes of the Trust.
Section 2.02. Name, Principal Office, and Name and Address
of Trustee as Agent for Service of Process.
(a) The principal place of business and office of the Trust
shall be c/o Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000-0000, Attention: Corporate Trust Administration.
The Trustee is hereby designated to accept service of process on behalf of the
Trust at the address provided in the preceding sentence. The Trustee may change
the address set forth in this Section 2.02 upon written notice to each Advisory
Board Member.
(b) The Trust shall be located and administered in, and all
bank accounts of the Trust maintained in, the State of Delaware. Payments shall
be received by the Trust only in the State of Delaware and payments will be made
by the Trust only from the State of Delaware.
Section 2.03. Purpose. The purpose of the Trust is to own,
vote (subject to Section 4.04) and dispose of the Trust Estate as directed in
writing by the Advisory Board and with the ultimate objective of securing and
facilitating the repayment and satisfaction of the Obligations in accordance
with the terms and conditions of the Credit Documents. In furtherance of such
purpose, the Trust shall enter into and exercise all of its rights and perform
all of its obligations under the Credit Documents, this Agreement and any other
agreement, document or instrument necessary or incidental thereto, and shall
make all filings required under Federal securities laws or otherwise in
connection with its ownership of the MAS Stock held in the Trust Estate. The
Trust will not conduct activities other than those contemplated by this Section
2.03, and, except as required in furtherance of its purpose, the Trust shall
not: (i) have any property, rights or interests, whether real or personal,
tangible or intangible, (ii) incur any legal liability or obligation, whether
fixed or contingent, matured or unmatured, or (iii) subject any of the Trust
Estate to any mortgage, lien, security interest or other claim or encumbrance.
Section 2.04. Certain Covenants Relating to the Separateness
of the Trust. The Trust shall maintain its separate existence and, specifically,
shall conduct its affairs in accordance with, and ADS agrees that it will not
take any actions in its dealings with the Trust or with other Persons (including
creditors of ADS) that are inconsistent with, the following:
(a) The Trust shall maintain its books, records and bank
accounts separate from those of any other Person.
(b) The Trust shall not commingle or pool any of its funds
or other assets with those of any other Person, and it shall, through the
Trustee, hold all of its assets in its own name.
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(c) The Trust, through the Trustee, shall conduct its own
business in its own name and shall not operate, or purport to operate,
collectively as a single or consolidated business entity with respect to any
Person.
(d) The Trust has done, or caused to be done, and shall do,
all things necessary to observe all Delaware statutory business trust
formalities and other organizational formalities, and preserve its existence
(subject to Article VII and the other express provisions hereof), and it shall
not, nor will it permit any Affiliate or constituent party to, amend, modify or
otherwise change this Agreement in a manner which would adversely affect the
existence of the Trust as a special purpose entity.
(e) The Trust shall not have any employees.
(f) Except pursuant to the Credit Documents, the Trust does
not, and shall not, (i) guarantee, become obligated for, or hold itself or its
credit out to be responsible for or available to satisfy, the debts or
obligations of any other Person or (ii) control the decisions or actions
respecting the daily business or affairs of any other Person.
(g) The Trust shall, at all times, hold itself out to the
public as an entity separate and distinct from any other Person and shall
correct any known misunderstanding regarding its separate identity.
(h) The Trust shall not identify itself as a division or
agent of any other Person.
(i) The Trust shall maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person.
(j) The Trust shall not use its separate existence to abuse
creditors or to perpetrate a fraud, injury, or injustice on creditors in
violation of applicable law.
(k) The Trust shall not be consensually merged or legally
consolidated with any other Person.
Section 2.05. Creditors of ADS. Except pursuant to the
Credit Documents, to the fullest extent permitted by applicable law, no creditor
of ADS or any of its Affiliates shall have any right to obtain possession of, or
otherwise exercise legal or equitable remedies with respect to, the Trust
Estate.
ARTICLE III.
CONTRIBUTION
Section 3.01. Assignment. On the Closing Date, ADS shall
execute and deliver to the Trustee on behalf of the Trust an assignment in the
form attached hereto as Exhibit B (the "Assignment"), by which ADS shall (a)
sell, assign, transfer, convey and set over to the Trust all of its right, title
and interest in 19,600,000 shares of MAS Stock, which is all of the MAS Stock
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owned by ADS, and (b) assign to the Trust all of its rights under the
Registration Rights Agreement. The Trustee shall acknowledge receipt of the
Assignment, which shall constitute the initial trust estate (including all
income on and proceeds of such initial trust estate, the "Trust Estate"). The
Trustee hereby declares that it will hold the Trust Estate in trust on the terms
and conditions set forth herein.
Section 3.02. Legal Title to Trust Property. Legal title to
the Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Trust Estate to be vested in a trustee or trustees, in which case
legal title shall be deemed to be vested in the Trustee, a co-trustee and/or a
separate trustee, as the case may be.
Section 3.03. Beneficial Owner. ADS shall be deemed to be
the beneficial owner of the Trust Estate.
ARTICLE IV.
TRUST GOVERNANCE
Section 4.01. Advisory Board.
(a) General. The Trustee shall act upon and in accordance
with this Agreement and the written instructions of the Advisory Board, which
shall consist of three individuals, selected as described in Section 4.01(b).
Each Advisory Board Member shall serve until his or her death, resignation or
removal. An Advisory Board Member other than the ADS Designated Advisory Board
Member may only be removed by the other two Advisory Board Members for "cause."
The ADS Designated Advisory Board Member may be removed either by the other two
Advisory Board Members for "cause" or by ADS as provided in paragraph (c) below.
For purposes of this Section 4.01, "cause" to remove an Advisory Board Member
other than the ADS Designated Advisory Board Member shall only exist upon the
occurrence of any of the following events or conditions:
(i) the Advisory Board Member shall be convicted of (or
shall plead nolo contendere to) a felony crime;
(ii) the Advisory Board Member shall misappropriate or
misuse any funds or property of the Trust or engage in any
material act of dishonesty;
(iii) the Advisory Board Member shall attempt to obtain
personal enrichment at the expense of the Trust or from any
transaction in which the Advisory Board Member has an interest
adverse to the interest of the Trust, unless the Advisory Board
Member shall have obtained the prior written consent of the other
Advisory Board Members;
(iv) the Advisory Board Member shall cease to meet the
definition of an Independent Advisory Board Member; or
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(v) the Advisory Board Member shall disregard or fail (for
reasons other than disability or death) to perform any of his
material functions or duties to the Trust.
"Cause" to remove the ADS Designated Advisory Board Member shall only exist upon
the occurrence of the events or conditions in clauses (i) through (iii). A
removal pursuant to any of clauses (i) through (iv) shall be effective
immediately upon written notice to the Advisory Board Member by the other
Advisory Board Members. Upon the happening of an event or occurrence described
in clause (v) above, before the other Advisory Board Members may remove the
Advisory Board Member in question, that Advisory Board Member shall have first
received written notice from the other Advisory Board Members stating, with
specificity, the nature of such failure and affording him not less than ten
business days to correct the acts or omissions specified. The notice and cure
provisions of this paragraph shall not apply, however, to a failure which cannot
be cured.
(b) Initial Selection. The initial Independent Advisory
Board Members shall be selected from a list of candidates to be provided by the
American Arbitration Association (the "AAA") pursuant to a memorandum from ADS
and IBM Credit dated February 27, 2002. Upon receipt of the list of candidates
from the AAA, the Trust shall provide a slate of ten candidates to each of IBM
Credit and ADS. Such slate of ten candidates shall consist of the first ten
names on the list provided by the AAA. Within five business days after receipt
of the initial slate from the Trust, IBM Credit and ADS shall notify the Trustee
and the other of which three candidates it chooses to strike from the slate. The
Trustee shall then promptly select two of the remaining candidates for
appointment on the basis of which candidate is willing to serve for the least
amount of compensation. If the candidates are not distinguishable on the basis
of lowest required compensation, the Trustee shall select the initial
Independent Advisory Board Members arbitrarily. Prior to final selection of the
initial Independent Advisory Board Members, the Trustee shall obtain a
certificate from each selected candidate that he or she qualifies as an
Independent Advisory Board Member. The third initial Advisory Board Members
shall be designated by ADS (the "ADS Designated Advisory Board Member"). ADS
hereby designates Xxxxxxx X. Xxxxxxxx as the initial ADS Designated Advisory
Board Member.
(c) Replacements. In the event there should be a vacancy on
the Advisory Board, other than that of the ADS Designated Advisory Board Member,
the Trustee shall select each new Advisory Board Member by the following
procedure. The Trustee shall promptly propose a slate of five Advisory Board
candidates, which candidates the Trustee shall request the AAA to provide. The
Trustee shall provide the slate of candidates to each of IBM Credit and ADS, and
IBM Credit and ADS shall, within five business days thereafter, notify the
Trustee and the other which candidate it chooses to strike from the slate. The
Trustee shall then promptly select one of the remaining candidates for
appointment on the basis of which candidate is willing to serve for the least
amount of compensation. If none of the candidates is distinguishable on the
basis of lowest required compensation, the Trustee shall select the new Advisory
Board Member arbitrarily from among the two or more candidates requiring the
least compensation. Prior to final selection of the new Advisory Board Member,
the Trustee must receive a certificate from the candidate that he or she
qualifies as an Independent Advisory Board Member. The foregoing procedure shall
be repeated until all vacant Advisory Board Member positions, other than that of
the ADS Designated Advisory Board Member, are filled. ADS shall replace the ADS
Designated Advisory Board Member upon his or her removal, death or resignation,
and may replace the ADS
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Designated Advisory Board Member with another designee at any time with or
without cause upon written notice to the other Advisory Board Members and the
Trustee.
(d) Meetings. The Advisory Board shall meet no less
frequently than quarterly, on such regular date and at such place as may from
time to time be determined by the Advisory Board. Additional meetings of the
Advisory Board may be held upon no less than two business days' written notice
by one or more Advisory Board Member(s) to the other Advisory Board Member(s).
At all meetings of the Advisory Board, two Advisory Board Members then in office
will constitute a quorum for the transaction of business. Except as otherwise
provided in Section 4.02, the act of a majority of the Advisory Board Members
present at any meeting at which there is a quorum will be the act of the
Advisory Board. If a quorum is not present at any meeting of the Advisory Board,
the Advisory Board Members present thereat may adjourn the meeting from time to
time to another place, time, or date, without notice other than announcement at
the meeting, until a quorum is present.
(e) Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Advisory Board may be taken without
a meeting if the requisite number of Advisory Board Members consents thereto in
writing, and the writing or writings are filed with the minutes or proceedings
of the Advisory Board and provided to the non-consenting Advisory Board Member
(if any) within two business days after such written consent.
(f) Participation in Meetings by Telephone Conference.
Advisory Board Members may participate in a meeting of the Advisory Board by
means of telephone conference or similar means by which all persons
participating in the meeting can hear each other, and such participation in a
meeting will constitute presence in person at the meeting.
(g) Compensation. All Advisory Board compensation and
expense reimbursement shall be paid by ADS promptly upon written request by the
Trustee therefor or, in the absence of such payment, from the Trust Estate.
(h) Advisory Board Member Liability. To the full extent
permitted by applicable law currently or hereafter in effect, no Advisory Board
Member will be personally liable, for breach of fiduciary duty or otherwise, to
the Trust, the Trustee, IBM Credit or ADS for or with respect to any acts or
omissions in the performance of his or her duties as an Advisory Board Member.
No repeal or modification of this Section 4.01(h) will adversely affect any
right or protection of an Advisory Board Member existing prior to such repeal or
modification.
(i) Indemnification. Each person who is or was or had
agreed to become an Advisory Board Member will be indemnified by the Trust to
the full extent permitted by applicable law as currently or hereafter in effect
and will be entitled to advancement of expenses in connection therewith. The
right of indemnification and of advancement of expenses provided in this Section
4.01(i): (i) will not be exclusive of any other rights to which any Person
seeking indemnification or advancement of expenses may otherwise be entitled,
including without limitation pursuant to any contract approved by a majority of
all Advisory Board Members (whether or not the Advisory Board Members approving
such contract are or are to be parties to such contract or similar contracts),
and (ii) will be applicable to matters otherwise within its
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scope whether or not such matters arose or arise before or after the date of
this Agreement. Any amendment or repeal of, or addition of any provision
inconsistent with, this Section 4.01(i) will not adversely affect any right or
protection existing hereunder, or arising out of the facts occurring, prior to
such amendment, repeal, or adoption and no such amendment, repeal, or adoption
will affect the legality, validity, or enforceability of any contract entered
into or right granted prior to the effective date of such amendment, repeal, or
adoption. If so determined by the Advisory Board, the Trust may obtain insurance
to support its indemnification obligations hereunder, the cost of which shall be
paid from the Trust Estate.
Section 4.02. Major Decisions. The following actions shall
require the unanimous vote of the Advisory Board Members:
(a) (i) filing any voluntary petition in bankruptcy on
behalf of the Trust, (ii) consenting to the filing of any involuntary petition
in bankruptcy against the Trust, (iii) filing any petition seeking, or
consenting to, reorganization or relief under any applicable federal, state or
foreign law relating to bankruptcy or insolvency, on behalf of the Trust, (iv)
consenting to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trust or a substantial part of
the property of the Trust, (v) making any assignment for the benefit of
creditors on behalf of the Trust, (vi) admitting in writing the Trust's
inability to pay its debts generally as they become due, or (vii) taking any
action by the Trust in furtherance of any of the foregoing actions;
(b) determining to liquidate or dissolve the Trust;
(c) approving the merger, consolidation, sale or transfer
of all or a substantial amount of assets or other change in control transaction
involving the Trust, provided that in no event may any of the aforementioned
activities occur with any entity that may seek bankruptcy protection or if such
merger, consolidation, sale or transfer would undermine the solvency of the
Trust;
(d) except as permitted or required pursuant to Article V,
approving the payment or making of any distributions from the Trust;
(e) approving amendments to the constituent documents of
the Trust or the Credit Documents; or
(f) voting the MAS Stock in favor of a Bankruptcy Decision
with respect to MAS or any of its direct or indirect subsidiaries if, at the
time such Bankruptcy Decision is implemented or is to be implemented, (i) a
Bankruptcy Decision has been made with respect to ADS or any of its direct or
indirect subsidiaries, or (ii) any borrower under the Credit Documents is in
default under or with respect to any obligation for borrowed money, including
the Credit Documents, regardless of whether such default has been declared.
Section 4.03. Charter Amendment. On the Closing Date, the
Trustee shall execute and deliver to the Secretary of MAS, on behalf of the
Trust as the majority shareholder of MAS, the Action by Written Consent attached
hereto as Exhibit C, together with instructions to the Secretary of MAS
directing him or her to execute and file with the Delaware Secretary of
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State the Amendment to the Certificate of Incorporation of MAS attached to such
Action by Written Consent.
Section 4.04. Voting Rights with Respect to the MAS Stock.
Except as otherwise specified in this Section, prior to such time as the MAS
Stock has been sold or otherwise released by the Trust, the Trustee shall
exercise the right to vote such MAS Stock as instructed in writing by the
Advisory Board in accordance with the terms hereof. After delivery of the Final
Payment Notice, ADS shall have the right to direct the Trustee with respect to
the voting of all MAS Stock then in the Trust Estate.
ARTICLE V.
MAS STOCK LIQUIDATIONS; FINAL DISTRIBUTION
Section 5.01. MAS Stock Liquidations. From time to time,
when any sums are due and payable under the Credit Documents, including upon
receipt of a Trigger Notice, the Trustee shall promptly take action to liquidate
the amount of MAS Stock held in the Trust Estate required in order to generate
the Required Amount of Cash. Such action may include the sale of some or all of
the MAS Stock held in the Trust Estate in private transactions or on a national
stock exchange or quotation system, utilizing the registration rights available
pursuant to the Registration Rights Agreement where necessary. In effecting such
sale(s) of MAS Stock, the Trustee will request that IBM Credit release a
sufficient number of shares of MAS Stock to facilitate such sale and will
endeavor not to sell shares of MAS Stock in a manner which would disrupt an
orderly market or is reasonably likely to have an adverse impact on the market
price of MAS Stock and will use commercially reasonable efforts to maximize the
per share value realized for such MAS Stock. From the proceeds of such MAS Stock
liquidations and all other cash then held in the Trust Estate, the Trustee shall
(i) pay the fees and expenses incurred by it in accomplishing such liquidations,
and (ii) distribute to IBM Credit the amounts due and payable under the Credit
Documents. Any excess proceeds shall remain in the Trust Estate.
Section 5.02. Final Distribution. Upon receipt of the
Final Payment Notice, the Trust shall be dissolved pursuant to Article VII.
Section 5.03. Trust Expenses. In the event ADS fails to pay
the compensation or reimbursement due the Advisory Board Members pursuant to
Section 4.01(g), any indemnification amount or expense advance payable pursuant
to Section 4.01(i), the Trustee's fees and expenses as provided in Section 6.07,
or any indemnification amount payable pursuant to Section 6.06 within five
business days after demand, the Trustee is hereby authorized to liquidate such
amount of MAS Stock held in the Trust Estate as is necessary to pay such
amounts. Alternatively, IBM Credit may advance payment in satisfaction of such
amounts and add such amounts to the Obligations. Payment in satisfaction of the
Trustee's fees and expenses as provided in Section 6.07 shall be made in full
prior to any other payment or distribution permitted or required hereunder.
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ARTICLE VI.
CONCERNING THE TRUSTEE
Section 6.01. General.
(a) In the exercise or administration of the Trust
hereunder, the Trustee, at the expense of ADS (paid as specified in Section
6.07), may (i) act directly or through agents or attorneys pursuant to
agreements entered into with any of them, and the Trustee shall not be liable
for the default or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Trustee with reasonable care; and (ii)
consult with counsel, accountants and other skilled Persons to be selected with
reasonable care and employed by the Trustee, and it shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled Persons if
such advice or opinion pertains to such matters as the Trustee may reasonably
presume to be within the scope of such counsel's, accountant's or other skilled
Person's area of expertise.
(b) Except as expressly provided herein, (i) in accepting
the Trust hereby created, Wilmington Trust Company acts solely as Trustee
hereunder and not in its individual capacity, and (ii) all Persons having any
claim against the Trustee or the Trust by reason of the transactions
contemplated by this Agreement shall look only to the Trust's property for
payment or satisfaction thereof.
(c) The Trustee will administer the business and affairs of
the Trust in accordance with the terms of the Act and this Agreement; provided,
however, that the Trustee undertakes to perform only such duties as are
specifically set forth in this Agreement and as the Trustee may be duly directed
from time to time in writing by the appropriate parties specified herein. The
Trustee shall not have any duty or obligation to manage, control, use, sell,
dispose of or otherwise deal with the Trust or to otherwise take or refrain from
taking any action under this Agreement except as expressly required by the terms
hereof or as expressly provided in written instructions from the appropriate
parties specified herein, and no implied duties or obligations shall be read
into this Agreement against the Trustee. Wilmington Trust Company nevertheless
agrees that it will, at its own cost and expense (and not at the expense of the
Trust), promptly take all action as may be necessary to discharge any liens on
any part of the Trust Estate which are attributable to actions by or claims
against Wilmington Trust Company that are not related to the ownership of any
part of the Trust Estate or the administration of the Trust Estate or the
transactions contemplated by this Agreement.
(d) The Trustee shall not be required to take any action
under this Agreement if the Trustee shall reasonably determine or shall have
been advised by counsel that such action is contrary to the terms of this
Agreement or is otherwise contrary to applicable law.
(e) Whenever the Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement, or is unsure as to the application, intent, interpretation or meaning
of any provision hereof, the Trustee may give notice (in such form as shall be
appropriate under the circumstances) to the Advisory Board Members requesting
written instructions as to the course of action to be adopted, and, to the
extent the
-12-
Trustee acts in good faith in accordance with any such appropriate instruction
received, the Trustee shall not be liable on account of such action or inaction
to any Person. If the Trustee shall not have received appropriate instructions
within ten days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances), it may, but shall be under no duty to, take or refrain from
taking such action which is consistent, in its view, with this Agreement and the
Trust's purpose (as set forth in Section 2.03), and the Trustee shall have no
liability to any Person for any such action or inaction.
(f) In no event whatsoever shall the Trustee be liable for
any representation, warranty, covenant, agreement, indebtedness or other
obligation of the Trust; provided, however, the foregoing shall in no event
whatsoever relieve the Trustee from any liability resulting from the Trustee's
bad faith, willful misconduct or gross negligence.
(g) The Trustee may rely upon and shall incur no liability
to anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and reasonably believed by it to be
signed by the proper party or parties. The Trustee may accept a certified copy
of a resolution of the board of directors or other governing body of any Person
as conclusive evidence that such resolution has been duly adopted by such body
and that the same is in full force and effect. As to any fact or matter the
manner of ascertainment of which is not specifically prescribed herein, the
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or any assistant treasurer
or the secretary or any assistant secretary or any trust officer (or equivalent
position) of the relevant party, as to such fact or matter, and such certificate
shall constitute full protection to the Trustee for any action taken or omitted
to be taken by it in good faith reliance thereon.
(h) The Trustee shall not be required to take any action
that is inconsistent with the purposes of the Trust set forth in Section 2.03.
(i) The Trustee shall not have any responsibility or
liability for or with respect to the genuineness, value, sufficiency or validity
of the Trust Estate. The Trustee shall in no event assume or incur any
liability, duty or obligation to any Person other than as expressly provided for
herein, and in no event shall the Trustee have any implied duties or obligations
hereunder.
(j) The Trustee shall incur no liability if, by reason of
any provision of any future law or regulation thereunder, the Trustee shall be
prevented or forbidden from doing or performing any act or thing which the terms
of this Agreement provide shall or may be done or performed.
(k) No provision of this Agreement shall require the
Trustee to expend or risk its personal funds, or otherwise incur any financial
liability in the performance of its rights or powers hereunder, if the Trustee
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it.
-13-
(l) The Trustee shall not be liable for the default or
misconduct of the Advisory Board and shall not be liable for any act or omission
taken at the direction of the Advisory Board.
(m) Every provision of this Agreement relating to the
Trustee shall be subject to the provisions of this Section 6.01.
Section 6.02. Acceptance of the Trust. The Trustee declares
that it accepts the trust created hereunder and agrees to perform its duties
under this Agreement and the Act but only upon the terms of this Agreement.
Section 6.03. Authority and Duties of the Trustee.
(a) The Trustee is authorized and directed to execute and
deliver this Agreement, and to execute and deliver on behalf of the Trust, the
Credit Documents and any other document or instrument attached as an Exhibit to,
contemplated by, or necessary or incidental hereto, in such form as the Advisory
Board shall approve, as evidenced conclusively by the Trustee's execution
thereof. The execution and delivery of, and performance of the terms of any
other document or instrument necessary or incidental hereto shall be deemed not
to conflict with or constitute a breach or default under this Agreement. The
Trustee shall have only such authority and shall perform such duties as are
expressly set forth in this Agreement.
(b) Upon the written instruction of the appropriate party
specified herein, the Trustee shall execute, acknowledge, deliver, file or
record any document or instrument necessary or appropriate to carry out the
provisions of this Agreement in such form as is provided to it.
(c) The Trustee shall have the power and authority to
execute, deliver, acknowledge and file all necessary documents and to maintain
all necessary records of the Trust as required by the Act.
(d) In the performance of its duties under this Agreement,
the Trustee may rely on any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Trustee need not investigate
any fact or matter stated in any such document, but the Trustee, in its
discretion, may make further inquiry or investigation.
(e) The Trustee shall cause to be prepared and filed such
securities law and tax filings and returns relating to the Trust, and shall make
such tax elections as may from time to time be required or appropriate under any
applicable Federal, state or local tax statute or rule or regulation thereunder,
in accordance with the Advisory Board's written instructions; provided that the
Trustee shall not make any tax elections with respect to the Trust that are
inconsistent with the income tax characterization of the Trust as stated in
Section 9.06.
(f) Subject to the provisions of any applicable
confidentiality agreement to which the Trust is or becomes a party, the Trustee
shall furnish to the Advisory Board, promptly upon receipt thereof, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Trustee hereunder;
provided that the Trustee shall not be required to furnish the Advisory Board
with a copy of any such materials
-14-
if the Trustee determines that such Person has otherwise received such copies,
unless such Person so requests.
Section 6.04. Resignation of the Trustee.
(a) The Trustee may resign by giving 30 days' prior written
notice to the Advisory Board. In the case of the resignation of the Trustee, the
Advisory Board shall appoint a Person to serve as successor Trustee, provided
that such Person shall in all respects satisfy the requirements of Section 3807
of the Act, or any successor provision, and shall be a bank or trust company
incorporated and doing business within the United States of America, whose
business shall consist at least in part of serving as trustee in arrangements
comparable to those contemplated hereby and having a combined capital and
surplus of at least $50,000,000, if there be such an institution willing, able
and legally qualified to perform the duties of the Trustee hereunder upon
reasonable or customary terms. The appointment of the successor Trustee shall
take effect concurrently with (i) the resignation of the former Trustee and (ii)
the ratification of this Agreement, and no resignation of a Trustee shall be
effective absent the concurrent appointment of a successor Trustee.
(b) If a successor Trustee shall not have been appointed
within 30 days after such notice of resignation, the Trustee or the Advisory
Board may apply to any court of competent jurisdiction to appoint a successor
Trustee to act until such time as a successor shall have been appointed as above
provided.
(c) Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation to which substantially all the corporate trust
business of the Trustee may be transferred, shall, subject to such corporation
satisfying in all respects the requirements set forth in Section 6.04(a), be the
Trustee hereunder without further action.
(d) Upon the substitution of the Person serving as Trustee,
the successor Trustee shall file an amendment to the Certificate of Trust with
the Secretary of State in accordance with the provisions of Section 3810 of the
Act, indicating the change in the Trustee.
Section 6.05. Liability.
(a) The Trustee shall not be personally liable under any
circumstances, except (i) for its own bad faith, willful misconduct or gross
negligence, and (ii) for taxes, fees or other charges on, based on or measured
by any fees, commissions or compensation received by the Trustee in connection
with any of the transactions contemplated by this Agreement.
(b) The provisions of this Agreement, to the extent that
they restrict the duties and liabilities of the Trustee otherwise existing at
law or in equity, replace such other duties or liabilities of the Trustee to the
extent permissible under law or in equity.
(c) The Trustee shall not be liable for the default or
misconduct of the Advisory Board or ADS.
-15-
(d) The Trustee shall not be liable for voting (or
refraining from voting) the MAS Stock held in the Trust Estate so long as such
shares are voted (or not voted) in accordance with and as required by Section
4.04.
Section 6.06. Indemnification. ADS shall indemnify, pay,
protect, and hold harmless each of the Trustee, its officers, directors,
employees, shareholders and agents (collectively the "Indemnified Trustee
Persons" or individually an "Indemnified Trustee Person") from and against any
and all liabilities, obligations, losses, damages, claims, actions, judgments,
suits, proceedings, taxes, costs, expenses and disbursements of any kind or
nature whatsoever including, without limitation, all reasonable legal fees,
third party costs and expenses of defense, appeal and settlement of any and all
suits, actions, or proceedings instituted against such Indemnified Trustee
Person and all reasonable third party costs of investigation in connection
therewith that may be imposed on, incurred by, or asserted against an
Indemnified Trustee Person relating to or arising out of any action or inaction
on the part of the Trust or an Indemnified Trustee Person in respect of the
Trust. If any action, suit, or proceeding shall be pending against one or more
Indemnified Trustee Persons relating to or arising out of any action or inaction
of the Indemnified Trustee Person or Indemnified Trustee Persons, ADS shall have
the right to assume the defense of the Indemnified Trustee Person or Indemnified
Trustee Persons in which case such defense shall be conducted by counsel chosen
by ADS and reasonably satisfactory to the Indemnified Trustee Person or
Indemnified Trustee Persons and IBM Credit; provided, however, that if an
Indemnified Trustee Person is advised by its counsel that due to actual or
potential conflicting interests representation by the same counsel would be
inappropriate under applicable standards of professional conduct, such
Indemnified Trustee Person may, at the expense of ADS, employ separate counsel
of its choice with respect to all matters as to which such conflicting interests
arise in any such action. The indemnities contained in this Section shall
survive the resignation of the Trustee, termination of the Trust or the
termination of this Agreement.
Section 6.07. Fees and Expenses. The Trustee's fees (as
detailed on Exhibit D) and all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by the Trustee, in its capacity as Trustee
hereunder, including, without limitation, the costs and expenses of the winding
up, liquidation and termination of the Trust, shall be paid by ADS promptly upon
written request therefor.
ARTICLE VII.
DISSOLUTION AND LIQUIDATION OF THE TRUST
Section 7.01. Dissolution of the Trust. The Trust shall be
dissolved, wound up and terminated upon delivery by IBM Credit of the Final
Payment Notice, as provided in Section 5.02.
Section 7.02. Liquidation of the Trust. In connection with
the dissolution of the Trust, the assets of the Trust shall be liquidated at the
written direction of ADS and applied as follows: (i) first, to pay the costs and
expenses of the winding up, liquidation and termination of the Trust, including
all amounts owed to the Trustee, (ii) second, to establish reserves to the
-16-
extent required by the Act and any applicable law, in each case, in the order of
priority provided by law, and (iii) third, to ADS.
Section 7.03. Termination of the Trust.
(a) The Trust (and this Agreement) shall be deemed
terminated when all of the Trust's assets shall have been disposed of and
distributed as provided herein.
(b) Upon the winding up of the Trust and its termination,
the Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Delaware Secretary of State in accordance
with the provisions of Section 3810 of the Act.
ARTICLE VIII.
NOTICES
Section 8.01. Notices. All notices, demands, consents or
requests required or permitted under this Agreement must be in writing, and
shall be delivered by facsimile, courier or first class mail, postage prepaid,
addressed as follows. Each notice hereunder must be delivered to the Trustee,
ADS, each Advisory Board Member and IBM Credit.
(i) If to the Trustee, as set forth in Section 2.01.
(ii) If to ADS:
Applied Digital Solutions, Inc.
000 Xxxxx Xxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
(iii) If to the Advisory Board Members:
c/o the Trustee
(iv) If to IBM Credit:
IBM Credit Corporation
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Region Manager, East
Facsimile: (000) 000-0000
with a copy to:
IBM Global Financing
Special Handling Group
Xxxxx Xxxxxx Xxxxx
-00-
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01. Entire Agreement. This Agreement (including,
without limitation, the exhibits hereto) supercedes all prior agreements,
written or oral, among the parties hereto relating to the transactions
contemplated hereby, and each of the parties hereto represents and warrants to
the others that this Agreement constitutes the entire agreement among the
parties hereto relating to the transactions contemplated hereby.
Section 9.02. Governing Law.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES).
(b) The parties hereto hereby declare that it is their
intention that this Agreement shall be regarded as made under the laws of the
State of Delaware and that the laws of said State shall be applied in
interpreting its provisions in all cases where legal interpretation shall be
required. Each of the parties hereto agrees (a) that this Agreement involves at
least $100,000.00, and (b) that this Agreement has been entered into by the
parties hereto in express reliance upon 6 Del. C. ss. 2708. Each of the parties
hereto hereby irrevocably and unconditionally agrees (a) to be subject to the
jurisdiction of the courts of the State of Delaware and of the federal courts
sitting in the State of Delaware, and (b)(1) to the extent such party is not
otherwise subject to service of process in the State of Delaware, to appoint and
maintain an agent in the State of Delaware as such party's agent for acceptance
of legal process, and (2) that, to the fullest extent permitted by applicable
law, service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service, and that service made pursuant to (b)(1)
or (2) above shall, to the fullest extent permitted by applicable law, have the
same legal force and effect as if served upon such party personally within the
State of Delaware.
Section 9.03. Effect; Third Party Beneficiaries. Except as
otherwise specified herein, this Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives,
successors and assigns. IBM Credit (and its assignees) is an intended third
party beneficiary hereof and shall be entitled to enforce this Agreement against
the parties hereto as if it were a party hereto.
Section 9.04. Severability of Provisions. If any term,
provision, covenant or condition of this Agreement, or the application thereof
to either party or any circumstance, is held to be unenforceable, invalid or
illegal (in whole or in part) for any reason (in any relevant
-18-
jurisdiction), will continue in full force and effect, and such
unenforceability, invalidity or illegality will not otherwise affect the
enforceability, validity or legality of the remaining terms, provisions,
covenants and conditions of this Agreement so long as this Agreement as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the deletion of such portion
of this Agreement will not substantially impair the respective expectations or
reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited or unenforceable
provision with a valid provision, the economic effect of which comes as close
as possible to that of the prohibited or unenforceable provision.
Section 9.05. Amendments, Waivers, Etc. This Agreement may
not be amended, discharged or terminated nor may any provision hereof be waived
unless such amendment, discharge, termination or waiver is in writing and signed
by the Trustee and ADS, with the prior unanimous written consent of the Advisory
Board.
Section 9.06. Tax Characterization.
(a) Each of the parties hereto recognizes and intends that,
for United States federal, state and local income tax purposes the Trust will
not be treated as an association taxable as a corporation.
(b) To the extent that any of the parties hereto is
required to report any item of income, gain, loss, deduction or credit relating
to the Trust for United States federal, state or local income tax purposes, such
party shall report such item in a manner consistent with the characterization
intended by this Section 9.06 and shall not take any contrary position on any
tax return or report relating to the United States federal, state or local
income taxes or take any other action that is inconsistent with such
characterization.
Section 9.07. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
-19-
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date above first written.
WILMINGTON TRUST COMPANY
as Trustee
By:/s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
APPLIED DIGITAL SOLUTIONS, INC.,
as Beneficial Owner
By:/s/ Xxxxxx X. Xxxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
and CFO
-20-
Exhibit A
[Form of Registration Rights Agreement]
Exhibit B
FORM OF ASSIGNMENT
This Assignment is made and entered into as of _______ __, 2002 (the
"Effective Date"), between Applied Digital Solutions, Inc., a corporation
organized under the laws of Missouri (the "Assignor"), and Digital Angel Share
Trust, a Delaware statutory business trust (the "Assignee"). Reference is made
to the Trust Agreement, dated as of March 1, 2002 (as amended or modified, the
"Trust Agreement"), between Wilmington Trust Company, a Delaware banking
corporation, and the Assignor. Capitalized terms used herein and not otherwise
defined herein have the meanings set forth for such terms in the Trust
Agreement.
1. The Assignor hereby sells, assigns, transfers, conveys and sets over to the
Assignee, as of the Effective Date, all of the Assignor's right, title and
interest in stock certificates numbered _______ representing 19,600,000 shares
of MAS Stock, which is all of the MAS Stock owned by Assignor.
2. The Assignor hereby assigns to the Assignee all of the Assignor's rights
under the Registration Rights Agreement.
3. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF DELAWARE.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be
executed by its duly authorized officer as of the Effective Date.
APPLIED DIGITAL SOLUTIONS, INC.
----------------------
By: ___________________
Its:___________________
Receipt Acknowledged:
DIGITAL ANGEL SHARE TRUST
By: Wilmington Trust Company, not in
its individual capacity but solely as Trustee
By:______________________
Name:____________________
Title:___________________
Exhibit C
MEDICAL ADVISORY SYSTEMS, INC.
ACTION BY WRITTEN CONSENT OF STOCKHOLDER
The undersigned, being the holder of a majority of the issued
and outstanding common stock (the "Stockholder") of Medical Advisory Systems,
Inc., a Delaware corporation (the "Corporation"), and having not less than the
minimum number of votes necessary to take the actions described below at a
meeting at which all shares entitled to vote thereon were present and voted,
does hereby consent to the taking of the following actions in lieu of a meeting
and does hereby adopt the following resolutions by written action pursuant to
Section 228(a) of the General Corporation Law of the State of Delaware (the
"DGCL"):
RESOLVED, that the Certificate of Incorporation of the
Corporation be amended in accordance with the attached Certificate of Amendment
of Certificate of Incorporation of Medical Advisory Systems, Inc. (the
"Certificate of Amendment"); and
FURTHER RESOLVED, that the Certificate of Amendment be, and
it hereby is, approved and adopted; and
FURTHER RESOLVED, that the proper officers of the Corporation
be, and each of them hereby is, authorized and directed to take all actions
necessary or prudent to cause the Certificate of Amendment to be filed with the
Office of the Secretary of State of the State of Delaware on the date hereof,
and to take such other actions as are required under the DGCL and any other
applicable law or regulation in respect of the subject matter of the resolutions
contained herein.
Dated as of March 1, 2002
DIGITAL ANGEL SHARE TRUST
By: Wilmington Trust Company, not in its individual
capacity but solely as Trustee
By: __________________________
Name:
Title:
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MEDICAL ADVISORY SYSTEMS, INC.
Medical Advisory Systems, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of Medical Advisory Systems, Inc.
(the "Corporation") duly adopted resolutions setting forth a proposed amendment
to the Certificate of Incorporation of the Corporation, declaring said amendment
to be advisable and directing that the proposed amendment be submitted to the
stockholders of the Corporation for approval. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Board of Directors of the Corporation hereby
declares that it would be advisable to amend the Certificate of Incorporation of
the Corporation by adding a new Article Ninth, as follows, and hereby directs
that the proposed amendment be submitted to the stockholders of the Corporation
for approval:
"NINTH: The Corporation shall not take any of the following actions
without the approval of the holders of 66.6% of the issued and outstanding
common stock of the Corporation:
(ii) a Bankruptcy Decision with respect to the Corporation
or any of its direct or indirect subsidiaries if, at the time such
Bankruptcy Decision is implemented or is to be implemented, (i) a
Bankruptcy Decision has been made with respect to Applied Digital
Solutions, Inc., a corporation organized under the laws of Missouri
("ADS"), or any of its direct or indirect subsidiaries, or (ii) ADS is in
default under or with respect to any obligation for borrowed money,
including the Credit Documents, regardless of whether such default has been
declared; and
(iii) approving any issuance of Corporation Stock (or
securities of any of its direct or indirect subsidiaries) or securities
convertible into or exercisable for Corporation Stock (or securities of any
of its direct or indirect subsidiaries), including options or warrants for
Corporation Stock (or securities of any of its direct or indirect
subsidiaries), for (A) non-cash consideration or (B) cash consideration of
less than Fair Market Value.
For the purposes of items (i) and (ii) above, the following defined
terms shall have the following meanings:
"Bankruptcy Decision" means, with respect to a specified
entity, any of the following actions: (a) filing any voluntary petition in
bankruptcy on behalf of such entity, (b) consenting to the filing of any
involuntary petition in bankruptcy against such entity, (c) filing any petition
seeking, or consenting to, reorganization or relief under any applicable
federal, state or foreign law relating to bankruptcy or insolvency, on behalf of
such entity, (d) consenting to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of such entity or a
substantial part of the property of such entity, (e) making any assignment for
the benefit of creditors on behalf of such entity, (f) admitting in writing the
inability of such entity to pay its debts generally as they become due, or (g)
taking any action by such entity in furtherance of any of the foregoing actions.
"Corporation Stock" means the common stock, par value $.005
per share, of the Corporation, and any stock into which such common stock shall
have been changed, any stock resulting from any reclassification of such common
stock, any other shares of stock issued or issuable with respect thereto
(whether by way of a stock dividend or stock split or in exchange for or upon
conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization), and all other stock of any class or classes (however
designated) of the Corporation (or its successors) the holders of which have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
"Credit Agreement" means that certain Third Amended and
Restated Term Credit Agreement, dated as of March 1, 2002, among IBM Credit
Corporation, Digital Angel Share Trust and ADS.
"Credit Documents" means the Credit Agreement, the Guarantee
(as defined in the Credit Agreement), and any security agreements, leases,
instruments, documents, guarantees, schedules of assignment, contracts and
similar agreements, including schedules, attachments, exhibits and ancillary
documentation or other supporting documents, executed by or on behalf of each
Borrower (as defined in the Credit Agreement), or any other Loan Party (as
defined in the Credit Agreement), and delivered to Lender (as defined in the
Credit Agreement), pursuant to the Credit Agreement or otherwise, and all
amendments, supplements and other modifications to the foregoing from time to
time.
"Fair Market Value" means, on any date specified, the average
of the daily Market Price of a share of Corporation Stock during the 10
consecutive trading days before such date, except that, if on any such date the
shares of Corporation Stock are not listed or admitted for trading on any
national securities exchange or quoted in the over-the-counter market, Fair
Market Value shall be the Market Price on such date.
"Market Price" means, on any date specified, an amount per
share of Corporation Stock equal to (i) the last reported sale price of such
common stock, regular way, on such date or, in case no such sale takes place on
such date, the average of the closing bid and asked prices
thereof regular way on such date, in either case as officially reported on the
principal national securities exchange on which such Corporation Stock is then
listed or admitted for trading, (ii) if such Corporation Stock is not then
listed or admitted for trading on any national securities exchange but is
designated as a national market system security by the NASD, the last reported
trading price of the Corporation Stock on such date, (iii) if there shall have
been no trading on such date or if the Corporation Stock is not so designated,
the average of the closing bid and asked prices of the Corporation Stock on such
date as shown by the NASD automated quotation system, or (iv) if such
Corporation Stock is not then listed or admitted for trading on any national
exchange or quoted in the over-the-counter market, the fair value thereof (as of
a date which is within 10 days of the date as of which the determination is to
be made) determined in good faith by the Corporation's Board of Directors."
SECOND: That thereafter, pursuant to resolution of its Board
of Directors, the proposed amendment was submitted to the stockholders of the
Corporation and that the necessary number of shares required by statute
consented to the adoption of the amendment by written consent pursuant to the
provisions of Delaware General Corporation Law Section 228.
THIRD: That prompt written notice of the adoption of the
amendment to the Corporation's Certification of Incorporation was sent to all
stockholders of record who had not consented in writing as provided in Delaware
General Corporation Law Section 228(e).
FOURTH: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, said Medical Advisory Systems, Inc. has
caused this certificate to be signed by ________________, its President and
_____________________, its Secretary, this ___th day of ______________, 2002.
By: /s/ [NAME]
--------------------------
President
ATTEST: /s/ [NAME]
--------------------------
Secretary
Exhibit D
[Trustee's Fees]
