EXHIBIT 2.7
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AMENDED AND RESTATED TRUST AGREEMENT
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This Amended and Restated Trust Agreement (the
"Agreement") of the Digital Angel Share Trust, a Delaware statutory trust
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(the "Trust") is made and entered into as of June 30, 2003, between
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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
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under the laws of Missouri ("ADS").
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RECITALS
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A. This Agreement was originally entered into as of March
1, 2002 between the Trustee and ADS for the purpose of securing certain debt
obligations of ADS and its affiliates to IBM Credit LLC.
B. As of the date hereof, ADS has borrowed the sum of
$10,500,000 from certain lenders described herein, for the purpose, in part,
of repaying in full, the obligations of ADS and the Trust to IBM Credit.
C. In consideration of such new loan, and in order to
secure and facilitate the payment of the Obligations according to their
terms, ADS has agreed to continue the deposit with the Trustee the MAS
Stock, to continue to be held in trust hereunder on the terms and conditions
set forth herein.
AGREEMENT
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NOW THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
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"Act" means the Delaware Business Trust Act, 12 Del. C.
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Sections 3801 et seq.
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"ADS" is defined in the introductory paragraph of this
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Agreement.
"Advisory Board" means the Advisory Board prescribed by
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Section 4.01.
"Advisory Board Member" means the member of the Advisory
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Board.
"Affiliate" of any Person means a Person that, directly or
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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
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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
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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
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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.
"Closing Date" is defined in the Securities Purchase
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Agreement.
"Credit Documents" means the Securities Purchase
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Agreement, the Debentures, the Warrants, the Registration Rights Agreement,
the Pledge Agreement (each of the foregoing, as defined in the Securities
Purchase Agreement) and all dated as of June 30, 2003, and any 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
ADS, and delivered to any Purchaser, pursuant to the Securities Purchase
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
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Secretary of State of the State of Delaware.
"Fair Market Value" means, on any date specified, the
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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
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Obligations have been paid and satisfied in full.
"Final Payment Notice" means the written notice from each
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Purchaser to the Trustee stating that the Final Payment Date has occurred.
"IBM Credit" is defined in Recital A.
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"Indemnified Trustee Person(s)" is defined in Section 6.06.
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"Independent Agent" shall initially mean the law firm of
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Xxxxxxx Xxxxxxxxx LLP, New York, New York, and any successor law firm
thereto, or any law firm located in New York, New York and designated as
such in writing by all of the Purchasers who are then Holders of Debentures
or Warrants, acting through any partner (or equivalent title) thereof.
"Market Price" means, on any date specified, an amount per
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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
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corporation, subsequently re-named "Digital Angel Corporation".
"MAS Stock" means the common stock, par value $.005 per
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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
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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 of ADS under the
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Credit Documents to (i) pay interest as set forth in the Debentures, (ii)
pay principal as set forth in the Debentures, (iii) honor conversion or
exchange notices pursuant to the Debentures, (iv) honor Warrant exercises as
set forth therein, and (v) otherwise perform ADS' covenants contained in the
various Credit Documents.
"Person" means an individual, a corporation, an
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association, a partnership, an estate, a trust, a limited liability company
and any other entity or organization, governmental or otherwise.
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"Purchaser" means the Persons who are Holders of the
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Debentures at any time ("Holder" as defined in the Debenture).
"Registration Rights Agreement" means that certain
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Registration Rights Agreement between MAS and ADS, dated as of March 27,
2002 and attached hereto as Exhibit A.
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"Required Amount of Cash" means (a) the Trigger Amount or
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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
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Notice as owed but not timely paid by ADS under the Credit Documents.
"Trigger Event" means any Event of Default by ADS under
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the Debentures (or any of them) or the Pledge Agreement, as defined therein.
"Trigger Notice" means a written notice from any Purchaser
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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
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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
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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.
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ARTICLE II.
GENERAL
Section 2.01 Formation of the Trust.
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(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 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.
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(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
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Trustee as Agent for Service of Process.
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(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,
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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 act as pledgeholder 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. Pursuant to specific
instruction from ADS, or as otherwise provided in Article V hereof, the
Trustee shall timely honor all requests for exchange of any principal amount
of any Debenture into shares of MAS Stock and for the exercise of any
Warrant into shares of MAS Stock. 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
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of the Trust. The Trust shall maintain its separate existence and,
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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
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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 Continuation of Assignment. On the Closing Date, the
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Trust shall (a) retain all of its right, title and interest in 15,000,000
shares of MAS Stock, and (b) transfer the remaining 4,600,000 shares of MAS
Stock which the Trust now owns of record in whatever manner it is directed
in writing by ADS. The Trustee acknowledges its continuing record ownership
and possession of the 15,000,000 shares of MAS Stock, 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
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conditions set forth herein. For clarity, the same 15,000,000 shares of MAS
Stock constituting the Trust Estate shall serve concurrently as the shares
issuable to a Purchaser on exchange of a Debenture, issuable to a Purchaser
as payment of interest on or principal of a Debenture, shares issuable to a
Purchaser on exercise of a Warrant, and as collateral under the Pledge
Agreement in the case of an Event of Default under a Debenture or the Pledge
Agreement.
Section 3.02 Legal Title to Trust Property. Legal title to the
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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
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beneficial owner of the Trust Estate.
ARTICLE IV.
TRUST GOVERNANCE
Section 4.01 Advisory Board.
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(a) General. The Trustee shall act upon and in accordance with
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this Agreement and the written instructions of the Advisory Board, which
shall initially consist of Xxxxx Xxxxxxxxx, Chief Executive Officer of
ADS, who shall be replaced when and if another Person shall become Chief
Executive Officer of ADS, and thereafter such successor Chief Executive
Officer shall become the Advisory Board Member, who shall be similarly
replaced by the next successive Chief Executive Officer of ADS and so
forth until the dissolution of this Trust. The Trustee shall be entitled
to rely on the most recent public filing of ADS with the Securities and
Exchange Commission as to the identity of the Chief Executive Officer,
or may request and rely upon an incumbency certificate from the
Secretary of ADS.
(b) Meetings. The Advisory Board shall meet as needed.
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(c) Action by Written Consent. Any action required or permitted
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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.
(d) Compensation. The Advisory Board shall serve without
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compensation from the Trust.
(e) Advisory Board Member Liability. To the full extent permitted
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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, any Purchaser 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(e) will adversely affect any right or protection of an Advisory
Board Member existing prior to such repeal or modification.
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(f) Indemnification. Each person who is or was or had agreed to
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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(f): (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
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
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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
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(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. Voting Rights with Respect to the MAS Stock. Except
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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. Release of MAS Stock Upon Exchange of Debentures or
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Exercise of Warrants. From time to time, when the Trustee receives a Notice
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of Exchange from a Purchaser with respect to a Debenture or a Notice of
Exercise from a Purchaser with respect to a Warrant, the Trustee shall
promptly take such actions as are requested by the Purchaser in such Notice
as may be necessary to cause MAS and its transfer agent to transfer the
requisite number of shares of MAS Stock from the Trust to the account
designated by the Purchaser for such purpose, in accordance with the
provisions of the Debentures and the Warrants via the Depository Trust
Company DWAC system, if possible. The Trustee shall immediately notify ADS
and the Independent Agent of such Notice of Exchange or Notice of Exercise.
The Trustee shall act upon any such request upon receipt of a confirmatory
instruction from the Independent Agent, and without the need for any such
confirmatory instruction from ADS or the Advisory Board. The Trustee is
further authorized to similarly transfer shares of MAS Stock from the Trust
to the Purchasers upon the direction of ADS as payment of interest on, or
repayment of principal of, the Debentures, at the discretion of ADS, but
with ADS being subject to the various conditions precedent thereto as set
forth in the Debentures. ADS shall immediately notify Purchasers'
Representative of any such ADS notice. The Trustee shall be entitled to rely
on any written notice from any Purchaser or ADS to take any such action
which such notice states that all conditions precedent to such action have
been met, without further inquiry of any Person, other than the Independent
Agent with respect to any written notice from any Purchaser.
Section 5.02. MAS Stock Liquidations. From time to time, when any
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sums are due and payable under the Credit Documents, upon receipt of a
Trigger Notice and a confirmatory instruction from the Independent Agent,
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 is authorized as pledgeholder under
the Pledge Agreement to 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
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liquidations, and (ii) distribute to the Purchasers, pro-rata in accordance
with the original principal amounts of their respective Debentures (except
if one of the Debentures shall not then be outstanding, pro-rata to the
remaining Purchasers) as set forth in the Securities Purchase Agreement (or
in a certificate executed by all Purchasers and delivered to the Trustee for
such purpose, in which case the distribution provisions of the latest dated
such certificate shall control) the amounts due and payable under the Credit
Documents. Any excess proceeds shall remain in the Trust Estate. The Trustee
may rely, without investigation, on each Purchaser's written instructions to
it as to the place and method of delivery to such Purchaser of any such
funds.
Section 5.03. Final Distribution. Upon receipt of the Final
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Payment Notice, the Trust shall be dissolved pursuant to Article VII.
Section 5.04. Trust Expenses. In the event ADS fails to pay the
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compensation or reimbursement due the Advisory Board Members pursuant to
Section 4.01(d), any indemnification amount or expense advance payable
pursuant to Section 4.01(f), the Trustee's fees and expenses as provided in
Section 6.07, or any indemnification amount payable pursuant to Section 6.06
within 5 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. 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.
ARTICLE VI.
CONCERNING THE TRUSTEE AND THE INDEPENDENT AGENT
Section 6.01. General.
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(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
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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 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
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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.
(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.
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(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 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
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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.
(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
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and Purchasers' Representative; 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.
Section 6.08. Concerning the Independent Agent. The Independent
--------------------------------
Agent shall be subject to the same rights and protections, subject to the
same limitations thereon, as the Trustee pursuant to Section 6.01, 6.05(a),
(b) or (c) (including at the end of (c) "any Purchaser") and 6.06, except
that such indemnification shall be the joint and several liability of ADS
and every Purchaser, as if every reference therein to the Trustee were to
the Independent Agent. The Independent Agent shall be entitled to receive
its customary hourly fees for its services hereunder, which shall be paid by
ADS upon delivery of an invoice therefore, and failing such payment, by the
Purchasers, jointly and severally.
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 the several Purchasers
of the Final Payment Notice, as provided in Section 5.03.
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 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.
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NOTICES
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 Purchasers' Representative.
If to the Trustee, as set forth in Section 2.01.
If to ADS:
Applied Digital Solutions, Inc.
000 Xxxxx Xxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Debenture Department
Facsimile: (000) 000-0000
with an e-mail copy to: xxxxxxxxxx@xxxx.xxx
If to the Advisory Board Members:
c/o ADS
(iv) If to a Purchasers' Representative:
Midsummer Capital
000 Xxxxxxx Xxx.
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxxxx
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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. Section 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. Each Purchaser (and their respective 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. Each
present and former (and future) member of the Advisory Board is an intended
third party beneficiary hereof and shall be entitled to enforce Sections
4.01 (e) and (f) of 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 jurisdiction),
the remaining terms, provisions, covenants and conditions of this Agreement,
modified by the deletion of the unenforceable, invalid or illegal portion
(in any relevant 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
17
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.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date above first written.
WILMINGTON TRUST COMPANY
as Trustee
By: /s/ Xxxx St. Xxxxxx
-------------------
Name: Xxxx St. Xxxxxx
Title: Assistant Vice President
APPLIED DIGITAL SOLUTIONS, INC.,
as Beneficial Owner
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxxx
Title: CEO
19