Document:

Exhibit
10.1.2

 

 

 

 

SECOND AMENDMENT

TO

CREDIT AGREEMENT

 

Dated as of December 3,
2003

among

 

MERITAGE CORPORATION,

as the Borrower

 

GUARANTY BANK,

as Administrative Agent and Swing Line Lender,

 

BANK ONE, NA,

as Syndication Agent

 

FLEET NATIONAL BANK,

as Documentation Agent

 

and

The Other Lenders Party Thereto

 

 

 

GUARANTY BANK,

as Joint Lead Arranger and Joint Book Manager

 

and

 

BANC ONE CAPITAL MARKETS,
INC.,

as Joint Lead Arranger and Joint Bank Manager

 

 

 

SECOND AMENDMENT TO
CREDIT AGREEMENT

 

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Second
Amendment”), dated as of December 3, 2003, is entered into among MERITAGE
CORPORATION, a Maryland corporation (the “Borrower”), the lenders listed
on the signature pages hereof as Lenders (the “Lenders”), GUARANTY BANK,
as Administrative Agent and Swing Line Lender, BANK ONE, NA, as Syndication
Agent, and FLEET NATIONAL BANK, as Documentation Agent.

 

BACKGROUND

 

A.             The
Borrower, certain of the Lenders, the Syndication Agent, the Documentation
Agent, the Administrative Agent and the Swing Line Lender are parties to that
certain Credit Agreement, dated as of December 12, 2002, as amended by that
certain First Amendment to Credit Agreement, dated as of September 8, 2003
(said Credit Agreement, as amended, the “Credit Agreement”). The terms
defined in the Credit Agreement and not otherwise defined herein shall be used
herein as defined in the Credit Agreement.

 

B.              The
Borrower has requested certain amendments to the Credit Agreement to, among
other things, (a) increase the Aggregate Commitments and extend the Scheduled
Maturity Date and (b) add Comerica Bank, PNC Bank, National Association and
SouthTrust Bank (collectively, “New Lenders”) as lenders under the
Credit Agreement..

 

C.            The
Lenders, the Syndication Agent, the Documentation Agent, the Administrative
Agent and the Swing Line Lender hereby agree to amend the Credit Agreement,
subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the covenants,
conditions and agreements hereafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
the Borrower, the Lenders, the Syndication Agent, the Documentation Agent, the
Swing Line Lender and the Administrative Agent covenant and agree as follows:

 

1.             AMENDMENTS.

 

(a)           The definition of “Documentation
Agent” set forth in Section 1.01 of the Credit Agreement is hereby
amended to read as follows:

 

“Documentation Agent”
means Fleet National Bank, in its capacity as documentation agent under any of
the Loan Documents.

 

(b)           The definition of “Letter of
Credit Sublimit” set forth in Section 1.01 of the Credit Agreement
is hereby amended to read as follows:

 

“Letter of Credit
Sublimit” means an amount equal to $60,000,000. The Letter of Credit
Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

 

(c)           The definition of “Revolving Note”
set forth in Section 1.01 of the Credit Agreement is hereby amended to
read as follows:

 

“Revolving Note”
or “Revolving Loan Note” means a promissory note made by the Borrower in
favor of a Lender and evidencing Revolving Loans made by such Lender,
substantially in the form of Exhibit C.

 

(d)           The definition of “Scheduled
Maturity Date” set forth in Section 1.01 of the Credit Agreement is
hereby amended to read as follows:

 

“Scheduled Maturity
Date” means May 3, 2007, as the same may be extended pursuant to Section
2.14.

 

(e)           The definition of “Swing Line
Sublimit” set forth in Section 1.01 of the Credit Agreement is
hereby amended to read as follows:

 

“Swing Line Sublimit”
means an amount equal to the lesser of (a) $35,000,000 and (b) the Aggregate
Commitments. The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.

 

(f)            The definition of “Syndication
Agent” set forth in Section 1.01 of the Credit Agreement is hereby
amended to read as follows:

 

“Syndication Agent”
means Bank One, NA, in its capacity as syndication agent under any of the Loan
Documents.

 

(g)           Section
1.01 of the Credit Agreement is hereby amended by adding the defined terms
“Increase Closing Date” and “Second Amendment Closing Date”
thereto in proper alphabetical order to read as follows:

 

“Increase Closing Date” has the meaning
specified in Section 2.15(b). 

 

“Second Amendment Closing Date” means December
3, 2003.

 

(h)           The reference to “Section 2.02(b)”
in the eighth line of Section 2.02(a) of the Credit Agreement is hereby
deleted and “Section 2.02(a)” is inserted in lieu thereof.

 

(i) The reference to “Cash Collateral” in the sixth
line of Section 2.03(d)(i) of the Credit Agreement and in the last
paragraph of Section 8.03 of the Credit Agreement is hereby deleted and
“cash collateral” is inserted in lieu thereof.

 

(j)            Article II of the Credit
Agreement is hereby amended by adding a new Section 2.15 thereto to read
as follows:

 

2.15        Increase in
Commitments.

 

(a)           Provided there exists no Default,
upon notice to the Administrative Agent (which shall promptly notify the
Lenders), the Borrower may from time to time on a one-

 

1

 

time basis, request an increase in the Aggregate
Commitments by an amount (for all such requests) not exceeding $50,000,000. At
the time of sending such notice, the Borrower (in consultation with the
Administrative Agent) shall specify the time period within which each Lender is
requested to respond (which shall in no event be less than ten Business Days
from the date of delivery of such notice to the Lenders). Each Lender shall
notify the Administrative Agent within such time period whether or not it
agrees to increase its Commitment and, if so, whether by an amount equal to,
greater than, or less than its Pro Rata Share of such requested increase. Any
Lender not responding within such time period shall be deemed to have declined
to increase its Commitment. The Administrative Agent shall notify the Borrower
and each Lender of the Lenders’ responses to each request made hereunder. To
achieve the full amount of a requested increase, the Borrower may also invite
additional Eligible Assignees to become Lenders pursuant to a joinder agreement
in form and substance satisfactory to the Administrative Agent and its counsel.

(b)             If the Aggregate Commitments are
increased in accordance with this Section 2.15, the Administrative Agent
and the Borrower shall determine the Closing Date (the “Increase Closing
Date”) and the final allocation of such increase. The Administrative Agent
shall promptly notify the Borrower and the Lenders of the final allocation of
such increase and the Increase Closing Date. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate
of each Loan Party dated as of the Increase Closing Date (in sufficient copies
for each Lender) signed by a Responsible Officer of such Loan Party (i)
certifying and attaching the resolutions adopted by such Loan Party approving
or consenting to such increase, and (ii) in the case of the Borrower,
certifying that, before and after giving effect to such increase, (A) the representations
and warranties contained in Article V and the other Loan Documents are
true and correct on and as of such Increase Closing Date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they are true and correct as of such earlier date, and except
that for purposes of this Section 2.15, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 shall be
deemed to refer to the most recent statements furnished pursuant to subsections
(a) and (b), respectively, of Section 6.01, and (B) no Default exists.
On the Increase Closing Date, each Lender shall, to the extent necessary, make
a payment to the Administrative Agent in an amount sufficient, upon the
application of such payments by all Lenders to the reduction of outstanding
Revolving Loans held by the Lenders, to cause the principal amount of Revolving
Loans outstanding made by each Lender to be in the amount of its Pro Rate Share
(after giving effect to the increase in the Aggregate Commitments in accordance
with this Section 2.15) of all outstanding Revolving Loans. The Borrower
hereby irrevocably authorizes each Lender to fund to the Administrative Agent
the payment required to be made pursuant to the immediately preceding sentence
for application to the reduction of the outstanding Revolving Loans held by the
other Lenders. If, as a result of the repayment of Revolving Loans provided for
in this Section 2.15, any payment of Eurodollar Rate Loans occurs on a day
which is not the last day of the applicable Interest Period, the Borrower will
pay to the Administrative Agent for the benefit of any Lender holding a
Eurodollar Rate Loan any loss or cost incurred by such Lender resulting
therefrom in accordance with Section 3.05

 

2

 

to the extent a
Eurodollar Rate Loan is paid on other than the last day of an Interest Period
as a result thereof.

(c)           Upon the Increase Closing Date and the
making of the payments described in Section 2.15(b), each new Lender
and/or increasing Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided participation in all outstanding Swing Line Loans and L/C Obligations
in accordance with its Pro Rata Share.

(d)           This Section shall supersede any
provisions in Sections 2.13, or 10.01 to the contrary.

(k)           The reference to “Existing Credit
Agreement” in Section 4.01(a)(xi) of the Credit Agreement is hereby
deleted and “Existing Credit Facilities” is inserted in lieu thereof.

(1)           The reference to “Section 7.03(g)”
in Section 5.13 of the Credit Agreement is hereby deleted and “Section
7.02” is inserted in lieu thereof.

(m)          Article V of the Credit
Agreement is hereby further amended by adding a new Section 5.21 thereto
in proper numerical order to read as follows:

 

Section 5.21 Tax Shelter Regulations.
The Borrower does
not intend to treat the Loans and/or Letters of Credit and related transactions
as being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4). In the event the Borrower determines to take any action
inconsistent with such intention, it will promptly notify the Administrative
Agent thereof. If the Borrower so notifies the Administrative Agent, the
Borrower acknowledges that one or more of the Lenders may treat its Revolving
Loans and/or its interest in Swing Line Loans and/or Letters of Credit as part
of a transaction that is subject to Treasury Regulation Section 301.6112-1, and
such Lender or Lenders, as applicable, will maintain the lists and other
records required by such Treasury Regulation.

(n)           Section 6.02 of the Credit
Agreement is hereby amended by (i) deleting “and” at the end of clause (f)
thereof; (ii) deleting “.” at the end of clause (g) thereof and inserting “;
and” in lieu thereof; and (iii) adding the following new clause (h) thereto to
read as follows:

(h)            promptly after the Borrower has
notified the Administrative Agent of any intention by the Borrower to treat the
Loans and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4), a
duly completed copy of IRS Form 8886 or any successor form.

 

(o)            Section 6.02 of the Credit
Agreement is further amended by deleting the reference to “Section 6.02(c)”
in the last paragraph thereof and inserting “Section 6.02(b)” in lieu
thereof.

 

(p)            Section 7.11 (a) of the
Credit Agreement is hereby amended to read as follows:

 

3

 

(a)           Minimum Net Worth. Permit
Consolidated Tangible Net Worth at any time to be less than the sum of (a)
$225,000,000 plus (b) an amount equal to 50% of Consolidated Net Income earned
in each full fiscal quarter ending after the Second Amendment Closing Date
(with no deduction for a net loss in any such fiscal quarter), plus (c) an
amount equal to 75% of the aggregate increases in Consolidated Tangible Net
Worth of the Borrower and its Restricted Subsidiaries after the Second Amendment
Closing Date by reason of the issuance and sale of Equity Interests or other
equity interests of the Borrower or any Restricted Subsidiary (other than
issuances to the Borrower or a wholly-owned Restricted Subsidiary), including
upon any conversion of debt securities of the Borrower into such Equity
Interests or other equity interests, plus (d) an amount equal to the net worth
of any Person that becomes a Restricted Subsidiary or is merged into or
consolidated with the Borrower or any Restricted Subsidiary or substantially
all of the assets of which are acquired by the Borrower or any Restricted
Subsidiary, in each case after the Second Amendment Closing Date.

 

(q)           The reference to “Revolving” in the
fifth line of Section 8.01(e) of the Credit Agreement is hereby deleted
and “committed” is inserted in lieu thereof.

 

(r)            The reference to “Section 9.12”
in the last paragraph of Section 9.11 of the Credit Agreement is hereby
deleted and “Section 9.11” is inserted in lieu thereof.

 

(s)           Subsection (b) of Section
10.01 is hereby amended to read as follows:

 

(b)           extend or increase the Commitment of
any Lender (or reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender;

(t)            The reference to “Administrative
Questionnaire” in Section 10.02(a)(ii) of the Credit Agreement is
hereby deleted and “Administrative Reply Form” is inserted in lieu
thereof.

(u)            Section 10.08 of the Credit
Agreement is hereby amended by adding the following sentence to the end thereof
to read as follows:

 

Notwithstanding anything
to the contrary, “Information” shall not include, and the Administrative Agent
and each Lender may disclose without limitation of any kind, any information
with respect to the “tax treatment” and “tax structure” (in each case, within
the meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to the Administrative Agent or such Lender
relating to such tax treatment and tax structure; provided that with respect to
any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transaction as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated hereby.

 

(v)           Article X of the Credit
Agreement is hereby amended by adding a new Section 10.20 thereto to
read as follows:

 

4

 

10.20  USA Patriot Act
Notice. Each Lender and the Administrative Agent (for itself and not
on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender
or the Administrative Agent, as applicable, to identify the Borrower in
accordance with the Act.

(w)            Schedule 2.01 is hereby
amended to be in the form of Schedule 2.01 to this Second Amendment, and
the Commitment and Pro Rata Share of each Lender, after giving effect to this
Second Amendment, is set forth on such Schedule 2.01.

(x)             Schedule 10.02 is hereby
amended to be in the form of Schedule 10.02 to this Second Amendment.

(y)            Exhibit D to the Credit
Agreement is hereby amended to be in the form of Exhibit D to this
Second Amendment.

2.               REPRESENTATIONS AND WARRANTIES
TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, the
Borrower represents and warrants that, as of the date hereof:

(a)             the representations and warranties
contained in the Credit Agreement and the other Loan Documents are true and
correct on and as of the date hereof as made on and as of such date;

(b)             no event has occurred and is
continuing which constitutes a Default or an Event of Default;

(c)             (i) the Borrower has full power and
authority to execute and deliver this Second Amendment, the Revolving Loan Note
payable to the order of each New Lender (collectively, the “New Notes”),
the replacement Revolving Loan Note payable to the order of each Lender whose
Commitment has been amended pursuant to this Second Amendment (collectively,
the “Replacement Notes”), the replacement Swing Line Note payable to the
order of Swing Line Lender (the “Swing Line Note”), (ii) this Second Amendment,
the New Notes, the Replacement Notes and the Swing Line Note have been duly
executed and delivered by the Borrower, and (iii) this Second Amendment, the
New Notes, the Replacement Notes, the Swing Line Note and the Credit Agreement,
as amended hereby, constitute the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable debtor relief laws and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws;

(d)           neither the execution, delivery and
performance of this Second Amendment, the New Notes, the Replacement Notes, the
Swing Line Note, the Guaranty or the Credit Agreement, as amended hereby, nor
the consummation of any transactions contemplated herein or therein, will
conflict with any Law or Organization Documents of the Borrower, or any
indenture, agreement or other instrument to which the Borrower or any of its
properties are subject; and

 

5

 

(e)           no
authorization, approval, consent, or other action by, notice to, or filing
with, any governmental authority or other Person not previously obtained is
required for (i) the execution, delivery or performance by the Borrower of this
Second Amendment, the New Notes, the Replacement Notes or the Swing Line Note
or (ii) the acknowledgement by each Guarantor of this Second Amendment.

3.             CONDITIONS TO EFFECTIVENESS.  This Second Amendment shall be effective
upon satisfaction or completion of the following:

(a)           the Administrative Agent shall have
received counterparts of this Second Amendment executed by all of the Lenders;

(b)           the Administrative Agent shall have
received counterparts of this Second Amendment executed by the Borrower and
acknowledged by each Guarantor;

(c)          the Administrative Agent shall have
received a certified resolution of the Board of Directors of the Borrower
authorizing the execution, delivery and performance of this Second Amendment,
the New Notes and the Replacement Notes;

(d)         the Administrative Agent shall have
received an opinion of the Borrower’s counsel, in form and substance
satisfactory to the Administrative Agent, with respect to matters set forth in
Sections 2(c), (d) and (e) of this Second Amendment;

(e)          the Administrative Agent shall have
received a duly executed (i) New Note for each New Lender, (ii) Replacement
Note for each Lender whose Commitment is being amended by this Second Amendment
and (iii) Swing Line Note;

(f)          the Administrative Agent shall have
received from the Borrower in immediately available funds for (i) each New
Lender, an amount equal to the product of (A) 0.375% and (B) the amount of each
such New Lender’s Commitment, (ii) for each existing Lender, an amount equal to
the product of (A) 0.150% and (B) the amount of each such Lender’s Commitment
before giving effect to any increase in such Lender’s Commitment pursuant to
this Second Amendment, and (iii) for each existing Lender whose Commitment is
being increased pursuant to this Second Amendment, an amount equal to the
product of (A) 0.375% and (B) the remainder of (1) the amount of such Lender’s
Commitment as increased pursuant to this Second Amendment minus (2) the amount
of such Lender’s Commitment before giving effect to such increase; and

(g)         the Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent and
its counsel, such other documents, certificates and instruments as the
Administrative Agent shall require.

4.           PAYMENTS BY LENDERS.  Upon the effective date of this Second
Amendment, each Lender shall, to the extent necessary, make a payment to the
Administrative Agent in an amount sufficient, upon the application of such
payments by all Lenders to the reduction of outstanding Revolving Loans held by
the Lenders, to cause the principal amount of Revolving Loans outstanding made
by each Lender to be in the amount of its Pro Rata Share (after giving effect
to this Second Amendment) of all outstanding Revolving Loans. The

 

6

 

Borrower hereby irrevocably authorizes each Lender to fund to the
Administrative Agent the payment required to be made pursuant to the
immediately preceding sentence for application to the reduction of the
outstanding Revolving Loans held by the other Lenders. If, as a result of the
repayment of Revolving Loans provided for in this Section 4, any payment of
Eurodollar Rate Loans occurs on a day which is not the last day of the
applicable Interest Period, the Borrower will pay to the Administrative Agent
for the benefit of any Lender holding a Eurodollar Rate Loan any loss or cost
incurred by such Lender resulting therefrom in accordance with Section 3.05
to the extent a Eurodollar Rate Loan is paid on other than the last day of an
Interest Period as a result thereof. Upon the effective date of this Second
Amendment, each New Lender and each Lender whose Commitment is increased as a
result of this Second Amendment, shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided participation in all outstanding Swing Line Loans and L/C Obligations
in accordance with its Pro Rata Share (after giving effect to this Second
Amendment).

5.             ADDITION OF NEW LENDERS.  The parties hereto agree that the provisions
of Section 10.07 of the Credit Agreement shall not be applicable to the
addition of the New Lenders pursuant to this Second Amendment. Each New Lender
represents and warrants to the Administrative Agent as follows:

(a)           such New Lender has received a copy of
the Credit Agreement and all amendments thereto, together with copies of the
most recent financial statements of the Borrower delivered pursuant thereto,
and it is an Eligible Assignee;

(b)           it has the full power and authority
and the legal right to make, deliver and perform, and has taken all necessary
action, to authorize the execution, delivery and performance of this Second
Amendment, and any and all other documents delivered by it in connection
herewith and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Second Amendment and the other Loan Documents,
and no consent or authorization of, filing with, or other act by or in respect
of any Governmental Authority, is required in connection herewith or therewith;

(c)           under applicable Laws no tax will be
required to be withheld by the Administrative Agent or the Borrower with
respect to any payments to be made to such New Lender under any Loan Document,
and no tax forms described in Section 10.15 of the Credit Agreement are
required to be delivered by such New Lender; and

(d)           such New Lender has received and
reviewed such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Second Amendment
and become a party to the Credit Agreement. Such New Lender has independently
and without reliance upon the Administrative Agent or any other Person, and
based on such information as such New Lender has deemed appropriate, made its
own credit analysis and decision to enter into this Second Amendment and become
a party to the Credit Agreement. Such New Lender will, independently and
without reliance upon the Administrative Agent or any other Lender, and based
upon such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement.

 

7

 

6.             REFERENCE
TO THE CREDIT AGREEMENT.

(a)           Upon the effectiveness of this Second
Amendment, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, or words of like import shall mean and be a reference to the
Credit Agreement, as affected and amended hereby.

(b)           The Credit Agreement, as amended by
the amendments referred to above, shall remain in full force and effect and is
hereby ratified and confirmed.

7.             COSTS, EXPENSES AND TAXES.  The Borrower agrees to pay on demand all
costs and expenses of the Administrative Agent in connection with the
preparation, reproduction, execution and delivery of this Second Amendment and
the other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent with respect thereto).

8.             GUARANTOR’S ACKNOWLEDGMENT.  By signing below, each Guarantor (a)
acknowledges, consents and agrees to the execution, delivery and performance by
the Borrower of this Second Amendment, (b) acknowledges and agrees that its
obligations in respect of its Guaranty (i) are not released, diminished,
waived, modified, impaired or affected in any manner by this Second Amendment
or any of the provisions contemplated herein and (ii) cover the Aggregate
Commitments as increased by this Second Amendment, (c) ratifies and confirms
its obligations under its Guaranty, and (d) acknowledges and agrees that it has
no claims or offsets against, or defenses or counterclaims to, its Guaranty.

9.             EXECUTION IN COUNTERPARTS.  This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which when taken together shall constitute but one
and the same instrument. For purposes of this Second Amendment, a counterpart
hereof (or signature page thereto) signed and transmitted by any Person party
hereto to the Administrative Agent (or its counsel) by facsimile machine,
telecopier or electronic mail is to be treated as an original. The signature of
such Person thereon, for purposes hereof, is to be considered as an original
signature, and the counterpart (or signature page thereto) so transmitted is to
be considered to have the same binding effect as an original signature on an
original document.

10.           GOVERNING LAW; BINDING EFFECT.  This Second Amendment shall be governed by
and construed in accordance with the laws of the State of Texas applicable to
agreements made and to be performed entirely within such state, provided that
each party shall retain all rights arising under federal law, and shall be
binding upon the parties hereto and their respective successors and assigns.

11.           HEADINGS.  Section headings in this Second Amendment
are included herein for convenience of reference only and shall not constitute
a part of this Second Amendment for any other purpose.

12.           ENTIRE AGREEMENT.  THE CREDIT AGREEMENT, AS AMENDED BY THIS
SECOND AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE

 

8

 

CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

 

REMAINDER OF PAGE
LEFT INTENTIONALLY BLANK

 

 

9

 

IN WITNESS WHEREOF, this Second Amendment is executed
as of the date first set forth above.

 

 

	
   

  	
  MERITAGE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Name:

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Title:

  	
  VP

  

 

 

10

 

	
   

  	
  GUARANTY BANK, as
  Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sam A. Meade

  
	
   

  	
   

  	
  Name:

  	
  Sam A. Meade

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sam A. Meade

  
	
   

  	
   

  	
  Name:

  	
  Sam A. Meade

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

11

 

	
   

  	
  FLEET NATIONAL BANK, as a Lender
  and Documentation Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff V. Avcock

  
	
   

  	
   

  	
  Name:

  	
  Jeff V. Avcock, CFA

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

12

 

	
   

  	
  BANK ONE, N.A., as a Lender
  and Syndication Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Engler

  
	
   

  	
   

  	
  Name:

  	
  Paul Engler

  
	
   

  	
   

  	
  Title:

  	
  First Vice President

  

 

 

13

 

	
   

  	
  WELLS FARGO BANK
  ARIZONA NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia A. Richards

  
	
   

  	
   

  	
  Name:

  	
  Patricia A. Richards

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

14

 

	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

15

 

	
   

  	
  CALIFORNIA
  BANK AND TRUST, as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephanie Lantz

  
	
   

  	
   

  	
  Name:

  	
  Stephanie Lantz

  
	
   

  	
   

  	
  Title:

  	
  VP

  

 

 

16

 

	
   

  	
  COMPASS
  BANK, as a
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J. Heslep

  
	
   

  	
   

  	
  Name:

  	
  STEVEN J. HESLEP

  
	
   

  	
   

  	
  Title:

  	
  S. V. P.

  

 

 

17

 

	
   

  	
  COMERICA BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casey L. Ostrander

  
	
   

  	
   

  	
  Name:

  	
  Casey L. Ostrander

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

18

 

	
   

  	
  PNC BANK, NATIONAL
  ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas G. Paul

  
	
   

  	
   

  	
  Name:

  	
  Douglas G. Paul

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

19

 

	
   

  	
  SOUTHTRUST BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel L. Boroughs

  
	
   

  	
   

  	
  Name:

  	
  Samuel L. Boroughs

  
	
   

  	
   

  	
  Title:

  	
  VICE PRESIDENT

  

 

 

20

 

	
   

  	
  ACKNOWLEDGED AND AGREED TO:

  
	
   

  	
   

  
	
   

  	
  MONTEREY HOMES ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MONTEREY HOMES CONSTRUCTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE HOMES OF ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MERITAGE PASEO CROSSING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage Homes of Arizona, Inc., its
  Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  

 

 

21

 

	
   

  	
  MERITAGE HOMES CONSTRUCTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE PASEO CONSTRUCTION, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage Homes Construction, Inc., its
  Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HANCOCK-MTH COMMUNITIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HANCOCK-MTH BUILDERS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  

 

 

22

 

	
   

  	
  MTH-TEXAS GP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MTH-TEXAS LP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LEGACY/MONTEREY HOMES L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MTH-Texas GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE HOLDINGS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Legacy/Monterey Homes, L.P., its Sole
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MTH-Texas GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  

 

 

23

 

 

	
   

  	
  LEGACY OPERATING COMPANY, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage Holdings, L.L.C., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Legacy/Monterey Homes, L.P., its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MTH-Texas GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HULEN PARK VENTURE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Legacy Monterey Homes L.P., its Sole
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MTH-Texas GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS GP II, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  

 

 

24

 

	
   

  	
  MTH-TEXAS LP II, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MTH HOMES-TEXAS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MTH-Texas GP II, Inc., its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE HOMES OF NORTHERN CALIFORNIA,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-HOMES NEVADA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  

 

 

25

 

 

 

 

	
   

  	
  MTH-CAVALIER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Monterey Homes Construction, Inc., its
  Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH GOLF, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Hancock-MTH Builders, Inc., its Sole
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LEGACY-HAMMONDS MATERIALS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage Holdings, L.L.C., its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Legacy/Monterey Homes L.P., its Sole
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MTH-Texas GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Vice President and Secretary

  

 

26Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

BETWEEN

 

APPLIED DIGITAL SOLUTIONS, INC.

 

AND

 

DIGITAL ANGEL CORPORATION

 

 

August 14, 2003

 

 

STOCK
PURCHASE AGREEMENT

 

This
Stock Purchase Agreement is entered into as of August 14, 2003, by Applied
Digital Solutions, Inc., a Missouri corporation (the “Purchaser” or “ADSX”),
and its majority-owned subsidiary, Digital Angel Corporation, a Delaware
corporation (“Seller” or “DOC”).

 

Preliminary
Statements

 

For
strategic investment purposes, ADSX wishes to purchase from DOC and DOC wishes
to sell to ADSX newly-issued shares of the common stock of DOC in consideration
for newly-issued shares of the common stock of ADSX (which will be registered
for resale pursuant to the provisions of the Securities Act of 1933, as amended)
on the terms and subject to the conditions set forth in this Agreement.

 

Agreement

 

In
consideration of the preliminary statements and the respective mutual
covenants, representations and warranties herein contained, the parties hereto
agree as set forth below.

 

ARTICLE I

 

Definitions

 

In
addition to terms defined elsewhere in this Agreement, the following terms when
used in this Agreement shall have the meanings indicated below:

 

“ADSX
Common Stock” shall mean the common stock of ADSX, par value $.001 per
share.

 

“ADSX
VWAP” means, for any date, the daily volume weighted average price of the
ADSX Common Stock for such date as reported by Bloomberg Financial, L.P. (based
on a Trading Day from 9:30 a.m. ET to 4:02 p.m. Eastern Time) using the VAP
(volume average price) function.

 

“ADSX
Warrant Exercise Shares” means the shares of ADSX Common Stock which may be
used as payment of the Warrant exercise price at the election of ADSX in
accordance with Section 3(c) of the Warrant.

 

“Agreement”
shall mean this Stock Purchase Agreement together with all exhibits and
schedules referred to herein.

 

“Agreement
Effective Date” shall mean the date of execution of this Agreement.

 

“Commission”
shall mean the Securities and Exchange Commission.

 

“DOC
Common Stock” shall mean the common stock of DOC, par value $.005 per
share.

 

2

 

“DOC
Registrable Shares” shall mean all of the DOC Shares and the Warrant Shares
collectively.

 

“DOC
VWAP” means, for any date, the daily volume weighted average price of the
DOC Common Stock for such date as reported by Bloomberg Financial, L.P. (based
on a Trading Day from 9:30 a.m. ET to 4:02 p.m. Eastern Time) using the VAP
(volume average price) function.

 

“Effective
Date” means the date the Registration Statement is first declared effective
by the Commission.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Filing
Date” means, with respect to the Registration Statement filed hereunder,
the 60th calendar day following the Agreement Effective Date.

 

“Person”
shall mean any natural person, corporation, unincorporated organization,
partnership, association, joint stock company, joint venture, trust or
government, or any agency or political subdivision of any government or any
other entity.

 

“Registration
Rights Agreement” means that certain registration rights agreement, dated
June 30, 2003, between ADSX and the holders of its 8.5% Convertible
Exchangeable Debentures.

 

“Registration
Statement” means the registration statement to be filed by ADSX hereunder
by Section 8.1, subject to receipt of a certain waiver described herein,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

 

“SEC
Reports” means all reports required to be filed by ADSX and DOC under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the one year preceding the date hereof.

 

“Securities
Act” shall mean the Securities Act of 1933, as amended.

 

“Trading
Day”  means a day on which the DOC
Common Stock is traded on the American Stock Exchange and a day on which
the  ADSX Common Stock is traded on the
Nasdaq SmallCap Market, or if the ADSX Common Stock is not listed on the Nasdaq
SmallCap Market, a day on which the ADSX Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board or is quoted in
the over-the-counter market as reported by the National Quotation Bureau
Incorporated.

 

“Warrant”
means the DOC Common Stock purchase warrant to purchase 1,000,000 shares of DOC
Common Stock, exercisable commencing February 1, 2004, for a period of
five years, in the form of Exhibit A delivered to ADSX on the Closing
Date in accordance with Section 7.1.

 

“Warrant
Shares” means the shares of DOC Common Stock issuable upon exercise of the
Warrant.

 

3

 

ARTICLE II

 

Purchase of Securities; Consideration

 

2.1  Securities to be Purchased.  On and subject to the terms and conditions
set forth herein, on the Closing Date, DOC shall sell to ADSX, and ADSX shall
purchase from DOC, all of DOC’s right, title and interest in and to an
aggregate of 3,000,000 shares of DOC Common Stock at $2.64 per share (“Fixed
Price”) (the “DOC Shares”).

 

2.2  Consideration.  The purchase price for the DOC Shares shall
be $7,920,000 (“Purchase Price”), payable by ADSX on the Closing Date
(as defined hereunder) by delivery, in the aggregate, of the number of shares
of ADSX Common Stock equal to the Purchase Price divided by the ADSX Per Share
Exchange Price (as defined hereunder) (the “ADSX Exchange Shares”).

 

2.3  Place of Closing; Closing Date.   The closing of the purchase and sale of the
DOC Shares under this Agreement will take place at the offices of the Purchaser
or other location as may be mutually agreed by Purchaser and Seller, and shall
occur on the business day following the Effective Date (the “Closing Date”).

 

2.4  Closing Price.   The per share exchange price for the ADSX
Exchange Shares issuable under this Agreement on the Closing Date (the “ADSX
Per Share Exchange Price” or, the “Closing Price”) shall equal the
average of the ADSX VWAP for the ten (10) Trading Days immediately preceding
(and not including) the Closing Date; provided, however, in the event
that the ADSX Per Share Exchange Price is less than $.40 (the “Floor Price”),
then ADSX shall have the option, which may be exercised or waived in its sole
discretion, to (x) postpone the Closing Date for a period not to exceed thirty
calendar (30) days, such alternative closing date within the thirty (30) day
postponement period as may be mutually agreed upon by ADSX and DOC, and with
the express understanding that the Floor Price closing condition shall be
applicable on such alternative closing date, or (y) to terminate this Agreement
pursuant to Sections 2.5 and 9.1.

 

2.5  Termination Based Upon ADSX Per Share
Exchange Price.  Notwithstanding
anything herein to the contrary, if the ADSX Per Share Exchange Price on the
Closing Date is calculated to be less than the Floor Price, then ADSX shall be
entitled to terminate at its option any and all of its obligations under this
Agreement by delivery of a written notice to DOC to such effect.

 

2.6  Deliveries of DOC Shares and ADSX
Exchange Shares on the Closing Date. 
Subject to the terms and conditions of this Agreement and including but
not limited to the closing requirements of Section 7.1, on the Closing
Date:  (i) DOC will deliver to ADSX via
ADSX’s DTC account through the Depository Trust Company DWAC system, that
number of DOC Shares being purchased as calculated in Section 2.1, and
(ii)  ADSX will, upon receipt of the DOC
Shares in the DWAC system, deliver to DOC via DOC’s DTC account through the
Depository Trust Company DWAC system, that number of ADSX Exchange Shares being
exchanged in consideration for the DOC Shares as calculated in
Section 2.2.

 

2.7  Fractional Shares.  DOC and ADSX shall receive a whole number of
shares of DOC Shares and ADSX Exchange Shares, respectively, and no fractional
shares of DOC Shares and ADSX Exchange Shares shall be issued.  In lieu of fractional shares, DOC and ADSX
shall

 

4

 

deliver
to the other respective party, cash or a company check in the amount of the
fractional share(s) otherwise issuable to ADSX or DOC by the other party based
on the Closing Price or Fixed Price respectively.

 

ARTICLE III

 

Representations and Warranties of DOC

 

In
order to induce ADSX to enter into this Agreement and to consummate the
transaction contemplated hereby, DOC makes the representations and warranties
set forth below to ADSX.

 

3.1  Organization; Standing and Power.  DOC is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
with the requisite corporate power and authority to own and use its properties
and assets and to carry on its business as currently conducted.

 

3.2  Authorization; Enforceability.  The execution, delivery and performance of
this Agreement by DOC and the consummation by DOC of the transactions
contemplated hereby have been duly authorized by all requisite corporate action.  This Agreement has been duly executed and
delivered by DOC, and constitutes the legal, valid and binding obligation of
DOC, enforceable in accordance with its terms, except to the extent that its
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors’ rights generally and by
general principles of equity.

 

3.3  No Violation or Conflict.  The execution, delivery and performance of
this Agreement by DOC and the consummation by DOC of the transactions
contemplated hereby: (a) do not and will not violate or conflict with any
provision of law or regulation, or any writ, order, judgment or decree of any
court or governmental or regulatory authority, or any provision of DOC’s Certificate
of Incorporation or Bylaws; and (b) do not and will not, with or without the
passage of time or the giving of notice, result in the breach of, or constitute
a default, cause the acceleration of performance, or require any consent under,
or result in the creation of any lien, charge or encumbrance upon any property
or assets of DOC pursuant to any material instrument or agreement to which DOC
is a party or by which DOC or its properties may be bound or affected, other
than instruments or agreements as to which consent shall have been obtained at
or prior to the Closing Date.

 

3.4  Consent of Governmental Authorities.  Other than in connection with the Securities
Act, the Exchange Act and the rules of the American Stock Exchange, no consent,
approval or authorization of, or registration, qualification or filing with any
federal, state or local governmental or regulatory authority is required to be
made by DOC in connection with the execution, delivery or performance by DOC of
this Agreement or the consummation by DOC of the transactions contemplated
hereby.

 

3.5  Validity of Securities.  When issued in accordance with this
Agreement, the DOC Shares, the Warrant, and the Warrant Shares shall be duly
and validly authorized, legally issued and outstanding, fully paid and
non-assessable, shall not have been issued in violation of the preemptive
rights of any Person, and free and clear of all liens and encumbrances.

 

5

 

3.6  Absence of Material Adverse Changes;  Disclosure of Material Non-Public
Information; SEC Reports.  Since the
filing by DOC of its Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 and its Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003, with the Commission, there have been no material
adverse changes to the assets, liabilities, business or condition (financial or
otherwise) of DOC, and all disclosures of material non-public information
required pursuant to the Securities Act and the Exchange Act have been made
accordingly.  As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 

ARTICLE IV

 

Representations and Warranties of ADSX

 

In
order to induce DOC to enter into this Agreement and to consummate the
transaction contemplated hereby, ADSX makes the representations and warranties
set forth below to DOC.

 

4.1  Organization; Standing and Power.  ADSX is a corporation duly incorporated,
validly existing and in good standing under the laws  of the State of Missouri with the requisite corporate power and
authority to own and use its properties and assets and to carry on it business
as currently conducted.

 

4.2  Authorization; Enforceability.   The execution, delivery and performance of
this Agreement by ADSX and the consummation by ADSX of the transactions
contemplated hereby have been duly authorized by all requisite corporate action.  This Agreement has been duly executed and
delivered by ADSX, and constitutes the legal, valid and binding obligation of
ADSX, enforceable in accordance with its terms, except to the extent that its
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors’ rights generally and by
general principles of equity.

 

4.3  No Violation or Conflict.  The execution, delivery and performance of
this Agreement by ADSX and the consummation by ADSX of the transactions
contemplated hereby: (a) do not and will not violate or conflict with any
provision of law or regulation, or any writ, order, judgment or decree of any
court or governmental or regulatory authority, or any provision of ADSX’s Articles
of Incorporation or Bylaws; and (b) do not and will not, with or without the
passage of time or the giving of notice, result in the breach of, or constitute
a default, cause the acceleration of performance, or require any consent under,
or result in the creation of any lien, charge or encumbrance upon any property
or assets of ADSX pursuant to any material instrument or agreement to which
ADSX is a party or by which ADSX or its properties may be bound or affected,
other than instruments or agreements as to which consent shall have been
obtained at or prior to the Closing Date.

 

4.4  Consent of Governmental Authorities.  Other than in connection with the Securities
Act, the Exchange Act and the rules of the Nasdaq SmallCap Market, no consent,
approval or

 

6

 

authorization
of, or registration, qualification or filing with any federal, state or local
governmental or regulatory authority is required to be made by ADSX in
connection with the execution, delivery or performance by ADSX of this
Agreement or the consummation by ADSX of the transactions contemplated hereby.

 

4.5  Validity of Securities.  When issued in accordance with this
Agreement, the ADSX Exchange Shares shall be duly and validly authorized, legally
issued and outstanding, fully paid and non-assessable, shall not have been
issued in violation of the preemptive rights of any Person, and free and clear
of all liens and encumbrances.

 

4.6  Absence of Material Adverse Changes;  Disclosure of Material Non-Public
Information; SEC Reports.  Since the
filing by ADSX of its Annual Report on Form 10-K for the fiscal year ended
December 31, 2002, its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2003, and its Current Report on Form 8-K dated July 9,
2003, with the Commission, there have been no material adverse changes to the
assets, liabilities, business or condition (financial or otherwise) of ADSX,
and all disclosures of material non-public information required pursuant to the
Securities Act and the Exchange Act have been made accordingly. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.

 

ARTICLE V

 

Covenants

 

5.1  Confidentiality.  Except as otherwise required in the
performance of obligations under this Agreement and except as otherwise
required by law, any nonpublic information received by a party or its advisors
from the other party shall be kept confidential and shall not be used or
disclosed for any purpose other than in furtherance of the transaction
contemplated by this Agreement.  The
obligation of confidentiality shall not extend to information (a) which is or
shall become generally available to the public other than as a result of an
unauthorized disclosure by a party to this Agreement or a person to whom a
party has provided such information, (b) which is or becomes known by or available
to a party to this Agreement on a nonconfidential basis prior to its disclosure
by one party to the other pursuant to this Agreement, or (c) which is or
becomes available to a party on a nonconfidential basis from a source other
than a party to this Agreement.  Upon
termination of this Agreement, each party shall promptly return any
confidential information received from the other party and, upon request, shall
destroy any copies of such information in its possession.  The covenants of the parties contained in
this Section 5.1 shall survive any termination of this Agreement.

 

5.2  Notification.  Each party to this Agreement shall promptly
notify the other parties in writing of the occurrence, or pending or threatened
occurrence, of any event that would constitute a breach or violation of this
Agreement by any party or that would cause any representation or warranty made
by the notifying party in this Agreement to be false or

 

7

 

misleading
in any respect.  Any such notification
shall not limit or alter any of the representations, warranties or covenants of
the parties set forth in this Agreement nor any rights or remedies a party may
have with respect to a breach of any representation, warranty or covenant.

 

5.3  Further Assurances.  The parties hereto shall deliver any and all
other instruments or documents required to 
be delivered pursuant to, or necessary or proper in order to give effect
to, all of the terms and provisions of this Agreement including, without
limitation, all necessary stock powers and such other instruments of transfer
as may be necessary or desirable to transfer ownership of the DOC Shares, the
Warrant, the Warrant Shares and the ADSX Exchange Shares and to consummate the
transactions contemplated by this Agreement.

 

ARTICLE VI

 

Additional Agreements

 

6.1  Survival of the Representations and
Warranties.  The representations and
warranties of ADSX and of DOC set forth in this Agreement shall terminate
immediately following the Closing Date (or any alternative closing date).

 

6.2  Investigation.  The representations, warranties, covenants
and agreements set forth in this Agreement shall not be affected or diminished
in any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made.  All
statements contained herein or in any schedule, certificate, exhibit, list or
other document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties for
purposes of this Agreement.

 

6.3  Arbitration.  Any and all claims, disputes or matters in
controversy arising under this Agreement which the parties are unable to settle
by mutual agreement shall be resolved by binding arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association as in
force at the time (“AAA”).

 

(a)                                            A party which desires to submit a claim,
dispute or controversy to binding arbitration under this Section 6.3 shall
so notify the other parties, and if after 30 days from the date of such notice
the claim, dispute or controversy remains unsettled, any party may petition the
AAA for arbitration of the claim, dispute or controversy.  Matters submitted to arbitration shall be
resolved in accordance with the decision of a panel of three arbitrators
selected by the AAA.  The arbitrators
shall be experienced in the resolution of commercial disputes arising in the
context of negotiated acquisitions of businesses, and the place of arbitration
shall be West Palm Beach, Florida.

 

(b)                                 The three arbitrators shall investigate the
facts and shall hold hearings at which the parties to this Agreement may
present evidence and arguments, be represented by counsel and conduct
cross-examination.  In determining any
question, matter or dispute before them, the arbitrators shall apply the
provisions of this Agreement and shall not have the power to add to, modify or
change any of the provisions of this Agreement.  The three arbitrators shall render a written decision upon the
matter presented to them by a majority vote within 90 days

 

8

 

after
the date on which the hearings and presentation of evidence are concluded,
unless a longer period is provided under the rules of the AAA.  The decision rendered by the arbitrators
shall be final and binding on, and unappealable by, the parties.  Judgment upon the decision rendered in such
arbitration may be entered by any court having jurisdiction thereof.  No party to an arbitration proceeding shall
be considered in default hereunder during the pendency of arbitration
proceedings relating to a disputed default. 
If the three arbitrators fail to render a timely decision, then, to the
extent permitted by law, any party shall have the right to institute an action
or proceeding in such court as shall be appropriate in the circumstances, and,
upon the institution of such action, the arbitration proceeding shall be
terminated and shall be of no further force and effect.  The arbitrators shall determine in what
proportion the parties shall bear the fees and expenses of the arbitrators, and
each party shall otherwise bear its own fees and expenses, including expenses
of legal counsel and other advisors or consultants.  It is the intention of the parties that arbitration as described
above be the sole and exclusive means available to them for the resolution of
claims, disputes or matters in controversy arising under this Agreement, other
than claims, disputes and matters arising under those provisions referred to in
the first sentence of this Section 6.3, and only in the event that the
arbitrators fail to render a decision in accordance with the foregoing provisions
shall a party have the right to institute legal action with respect to such
claim, dispute or matter.  Accordingly,
it shall be a complete defense to any action instituted by a party with respect
to a claim, dispute or matter in controversy under this Agreement that such
claim, dispute or matter has not first been submitted to arbitration in
accordance with the foregoing provisions.

 

ARTICLE VII

 

Closing; Conditions Precedent

 

7.1  Closing.  All proceedings to be taken and all documents to be executed on
the Closing Date shall be deemed to have been taken, delivered and executed
simultaneously, and no proceeding shall be deemed taken nor documents deemed
executed or delivered until all have been taken, delivered and executed.  On the Closing Date, DOC shall deliver to
ADSX (i) the DOC Shares in accordance with the procedure described in
Section 2.5, free and clear of any and all claims, liens, charges,
security interests, pledges or encumbrances of any nature whatsoever and
together with all accrued benefits and rights attaching thereto; (ii) the
Warrant executed by a duly authorized representative of DOC; (iii) certificate
of the Secretary of State of Delaware as of a recent date as to the good
standing of DOC and its Certificate of Incorporation; (iv) such other documents
as may be specified, or required to satisfy the conditions set forth, in
Sections 7.2 and 7.3; and (v) such other documents and instruments as ADSX may
reasonably request.  On the Closing
Date, ADSX shall deliver to DOC (i) the ADSX Exchange Shares in accordance with
the procedure described in Section 2.6, free and clear of any and all
claims, liens, charges, security interests, pledges or encumbrances of any
nature whatsoever and together with all accrued benefits and rights attaching thereto;
(ii) certificate of the Secretary of State of Missouri as of a recent date as
to the good standing of ADSX and its Articles of Incorporation, as amended;
(iii) such other documents as may be specified, or required to satisfy the
conditions set forth, in Sections 7.2 and 7.3; and (iv) such other documents
and instruments as DOC may reasonably request.

 

9

 

7.2  Conditions Precedent to the Obligations
of ADSX.  All of the obligations of
ADSX under this Agreement are subject to the satisfaction at or prior to the
Closing Date (or any alternative closing date) of each and every one of the
following conditions.

 

(a)                                            Representations and Warranties True. 
Each of the representations and warranties of DOC contained herein or in
any certificate or other document delivered pursuant to this Agreement or in
connection with the transaction contemplated hereby shall be true and correct
in all material respects (except for representations and warranties which are
by their terms qualified by materiality, which shall be true and correct in all
respects) as of the Closing Date with the same force and effect as though made
on and as of such date.

 

(b)                                           Performance.  DOC shall have performed and
complied in all material respects with all of the agreements, covenants and
obligations required under this Agreement to be performed or complied with by
them on or prior to the Closing Date.

 

(c)                                            Consents.  DOC shall have obtained all
material authorizations, consents, waivers and approvals as may be required to
consummate the transaction contemplated by this Agreement.

 

(d)                                           DOC Audit Committee and Board Approval.  The
Audit Committee and the Board of Directors of DOC shall have approved the
execution, delivery and performance of this Agreement by DOC.

 

 (e)                                         Seller’s Certificate.  DOC
shall have delivered to ADSX a certificate executed by DOC, dated the Closing
Date, certifying in such detail as ADSX may reasonably request, that the
conditions specified in Sections 7.2(a), (b) and (c)  above have been fulfilled and as to such other matters as ADSX
may reasonably request.

 

7.3  Conditions Precedent to the Obligations
of DOC.  All of the obligations of
DOC under this Agreement are subject to the satisfaction at or prior to the
Closing Date (or any alternative closing date) of each and every one of the
following conditions.

 

(a)                                            Representations and Warranties True. 
Each of  the representations and
warranties of ADSX contained herein or in any certificate or other document
delivered pursuant to this Agreement or in connection with the transaction
contemplated hereby shall be true and correct in all material respects (except
for representations and warranties which are by their terms qualified by
materiality, which shall be true and correct in all respects) as of the Closing
Date with the same force and effect as though made on and as of such date.

 

(b)                                           Performance.  ADSX shall have performed and
complied in all material respects with all of the agreements, covenants and
obligations required under this Agreement to be performed or complied with by
it on or prior to the Closing Date.

 

 (c)                                         Consents.  ADSX shall have obtained all
material authorizations, consents, waivers and approvals as may be required to
consummate the transaction contemplated by this Agreement.

 

10

 

(d)                                           ADSX Audit Committee and Board Approval.  The
Audit Committee and the Board of Directors of ADSX shall have approved the
execution, delivery and performance of this Agreement by ADSX.

 

(e)                                            Purchaser’s Certificate. 
ADSX shall have delivered to DOC a certificate executed by ADSX, dated
the Closing Date, certifying in such detail as DOC may reasonably request, that
the conditions specified in Sections 7.3(a), (b) and (c)  above have been fulfilled and as to such
other matters as DOC may reasonably request.

 

ARTICLE VIII

 

Registration

 

8.1
ADSX Exchange Shares’ Registration Rights.  On or prior to the Filing Date, ADSX shall prepare and file with
the Commission the Registration Statement covering the resale of the ADSX
Exchange Shares for an offering to be made under the Securities Act, or include
the ADSX Exchange Shares by piggyback on such other registration statement as
may be filed by ADSX.  The Registration
Statement shall be on Form S-1 (noting that ADSX is not now eligible to
register for resale the Securities on Form S-3) and shall contain a “Plan of
Distribution” approved by both DOC and ADSX. 
Subject to the terms of this Agreement and the piggyback registration
option described herein, ADSX shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, and shall use its best efforts
to keep such Registration Statement continuously effective under the Securities
Act until the date when all ADSX Exchange Shares covered by the Registration
Statement have been sold or may be sold without volume restrictions pursuant to
Rule 144(k) as determined by counsel to ADSX pursuant to a written opinion
letter to such effect, addressed and acceptable to ADSX’s transfer agent.  ADSX shall notify DOC via facsimile or
e-mail, followed by regular U.S. Mail, of the effectiveness of the Registration
Statement immediately after ADSX receives notification of the effectiveness of
such Registration Statement from the Commission; provided, however, in no
event shall ADSX be required to file the Registration Statement by the Filing
Date unless ADSX shall have received a written waiver acceptable to ADSX by no
later than August 30, 2003, from the holders of the ADSX 8.5% Convertible
Exchangeable Debentures, of Section 6(c) of the Registration Rights
Agreement, and such filing of the Registration Statement shall not be required
to be made hereunder until such date as ADSX determines in its sole discretion
that such filing is allowed by the provisions of the Registration Rights
Agreement.

 

8.2    ADSX Warrant Exercise Shares’ Piggyback
Registration Rights.  In the event
that ADSX exercises its rights pursuant to Section 3(c) of the Warrant,
and for a period of no more than twelve months commencing on the date of
exercise of the Warrant, when ADSX proposes to file a registration statement
ADSX will prior to such filing give written notice to DOC of its intention to
do so and, upon the written request of DOC given within ten (10) days after
ADSX provides such notice, ADSX shall use its good faith efforts to cause all
ADSX Warrant Exercise Shares which ADSX has been requested by DOC to register
to be registered under the Securities Act to the extent necessary to permit
their sale or other disposition in accordance with the intended methods of
distribution specified in the request of DOC.

 

11

 

8.3  DOC Registrable Shares’
Registration Rights;  Piggyback
Registration; Demand Registration.

 

(a) At any time and from time to time after the date of this
Agreement, whenever DOC proposes to file a registration statement DOC will
prior to such filing give written notice to ADSX of its intention to do so and,
upon the written request of ADSX given within ten (10) days after DOC provides
such notice, DOC shall use its good faith efforts to cause all DOC Registrable
Shares which DOC has been requested by ADSX to register to be registered under
the Securities Act to the extent necessary to permit their sale or other
disposition in accordance with the intended methods of distribution specified
in the request of ADSX.

 

(b) At any time
and from time to time after the date of this Agreement, upon receipt of a
written request from ADSX specifying the number of DOC Registrable Shares that
ADSX desires to register for public sale, DOC promptly shall prepare and file
with the Commission under the Securities Act within 120 days of the written
request a registration statement covering a public offering of the DOC
Registrable Shares and shall use all reasonable efforts to cause the
registration statement to become effective as soon as is practicable.  If permitted by the Securities Act, DOC
shall use a Form S-3 registration statement (or any successor form) to register
the DOC Registrable Shares pursuant to this Section 8.2(b).  If it is ineligible to use a Form S-3
registration statement, DOC may use any other form of SEC registration
statement that it considers appropriate, as long as DOC is eligible to use the
form and the form does not impair in any way ADSX’s ability to publicly offer
and sell any DOC Registrable Shares compared to such ability if DOC were
eligible to use Form S-3.

 

ARTICLE IX

 

Termination

 

9.1  Termination.  This Agreement may be terminated as
follows:  (i) by mutual written consent
of the parties at any time prior to the Closing Date;  (ii) ADSX or DOC may terminate this Agreement by giving written
notice to the other party at any time prior to the Closing Date if either ADSX
or DOC has breached any representation, warranty or covenant contained in this
Agreement in any material respect; and (iii) ADSX may terminate this Agreement
pursuant to Section 2.5.

 

9.2 Effect of
Termination.  If ADSX or DOC
terminates this Agreement pursuant to Section 9.1(ii) or if ADSX
terminates this Agreement pursuant to 9.1(iii) above, all rights and
obligations of the parties hereunder shall terminate without any liability of
any party to the other party.

 

ARTICLE X

 

Miscellaneous

 

10.1  Notices.  Any notice, demand, claim or other communication under this
Agreement shall be in writing and shall be delivered personally or sent by
certified mail, return receipt requested, postage prepaid, or sent by facsimile
or prepaid overnight courier to the parties at the addresses set forth below
their names on the signature pages of this Agreement (or at such other

 

12

 

addresses
as shall be specified by the parties by like notice).  Such notices, demands, claims and other communications shall be
deemed given when actually received or, (a) in the case of delivery by
overnight service with guaranteed next day delivery, the next day or the day
designated for delivery, (b) in the case of certified U.S. mail, five days
after deposit in the U.S. mail, or (c) in the case of facsimile, the date upon
which the transmitting party received confirmation of receipt by facsimile,
telephone or otherwise.

 

10.2  Entire Agreement.  This Agreement contains every obligation and
understanding between the parties relating to the subject matter hereof and
merges all prior discussions, negotiations and agreements, if any, between
them, and none of the parties shall be bound by any conditions, definitions,
understandings, warranties or representations other than as expressly provided
or referred to herein.

 

10.3  Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, personal representatives, legal representatives, and permitted assigns.

 

10.4  Assignment.  This Agreement may not be assigned by any party without the
written consent of the other party.

 

10.5  Waiver and Amendment.  Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereof
(including, without limitation, the period during which any condition is to be
satisfied or any obligation performed) may be amended by the parties hereto at
any time.  Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed on behalf of
the appropriate party by its Chairman, President or any Vice President or other
person, who has been authorized by its Board of Directors to execute waivers,
extensions or amendments on its behalf. 
No waiver by any party hereto, whether express or implied, of its rights
under any provision of this Agreement shall constitute a waiver of such party’s
rights under such provisions at any other time or a waiver of such party’s
rights under any other provision of this Agreement.  No failure by any party hereto to take any action against any
breach of this Agreement or default by another party shall constitute a waiver
of the former party’s right to enforce any provision of this Agreement or to
take action against such breach or default or any subsequent breach or default
by such other party.

 

10.6  Severability.  In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain
in full force and effect, and such invalid, void or unenforceable provision
shall be interpreted as closely as possible to the manner in which it was
written.

 

10.7  Expenses.  Each party agrees to pay, without right of reimbursement from the
other party, the costs incurred by it incident to the performance of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, costs incident to the
preparation of this Agreement, and the fees and disbursements of counsel,
accountants and consultants employed by such party in connection herewith.

 

13

 

10.8  Headings.  The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.

 

10.9  Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

10.10  Time of Essence.  Wherever time is specified for the doing or
performance of any act hereunder, time shall be considered of the essence.

 

10.11  Litigation; Prevailing Party.  If, notwithstanding the provisions of Section 6.3
regarding arbitration hereunder, any litigation is instituted with regard to
this Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party and the non-prevailing party shall pay all reasonable fees
and expenses of counsel for the prevailing party.

 

10.12  Injunctive Relief.  It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance
or other equitable remedies in addition to all other remedies provided
hereunder or available to the parties hereto at law or in equity.

 

10.13  Remedies Cumulative.  No remedy made available by any of the
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.

 

10.14  Governing Law.  This Agreement has been entered into and shall
be construed and enforced in accordance with the  laws of the State of Florida without reference to the choice of
law principles thereof.

 

10.15  Jurisdiction and Venue.  If, notwithstanding the provisions of
Section 6.3 regarding arbitration hereunder, any litigation is instituted
with regard to this Agreement, this Agreement shall be subject to the exclusive
jurisdiction of the courts of Palm Beach County, Florida.  The parties to this Agreement agree that any
breach of any term or condition of this Agreement shall be deemed to be a
breach occurring in the State of Florida by virtue of a failure to perform an
act required to be performed in the State of Florida and irrevocably and
expressly agree to submit to the jurisdiction of the courts of the State of
Florida for the purpose of resolving any disputes among the parties relating to
this Agreement or the transactions contemplated hereby.  The parties irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, or any judgment entered by any court in respect
hereof brought in Palm Beach County, Florida, and further irrevocably waive any
claim that any suit, action or proceeding brought in Palm Beach County, Florida
has been brought in an inconvenient forum.

 

10.16  Participation of Parties.  The parties hereto acknowledge that this
Agreement and all matters contemplated herein, have been negotiated among all
parties hereto and their respective legal counsel and that all such parties
have participated in the drafting and preparation of this Agreement from the
commencement of negotiations at all times through the execution hereof.  In

 

14

 

the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.

 

10.17  Preliminary Statements.  The parties hereto acknowledge that the
preliminary statements contained herein shall be deemed part of this Agreement
and shall be binding upon the parties.

 

[signatures
on following page]

 

15

 

IN
WITNESS WHEREOF, the parties hereto have each executed and delivered this
Agreement as of the day and year first above written.

 

	
   

  	
  APPLIED DIGITAL SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Scott Silverman

  	
   

  
	
   

  	
  Name:

  	
  Scott
  Silverman

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  Address
  for Notice:

  
	 
	400 Royal Palm Way

	 
	Suite 410

	 
	Palm Beach, FL 33480

	 
	Attn: Scott R. Silverman, CEO

	 
	Tel: (561) 805-8056

	 
	Fax: (561) 805-8001

	 
	 

	
  With
  a copy to:

  	
  Holland
  & Knight LLP

  
	
   

  	
  701
  Brickell Avenue

  
	
   

  	
  Suite
  3000

  
	
   

  	
  Miami,
  FL 33131

  
	
   

  	
  Attn:
  Harvey Goldman, Esq.

  
	
   

  	
  Tel:
  (305)789-7506

  
	
   

  	
  Fax:
  (305)789-7799

  
	
   

  	
   

  
	
   

  	
  DIGITAL
  ANGEL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Randolph K. Geissler, CEO

  	
   

  
	
   

  	
  Name:
  Randolph K. Geissler

  
	
   

  	
  Title:
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address
  for Notice:

  
	 
	490 Villaume Corporation

	 
	South St. Paul, MN 55075

	 
	Attn: Randolph K. Geissler

	 
	Tel: (651) 455-1621

	 
	Fax: (651) 455-0413

	 
	 

	
  With
  a copy to:

  	
  Winthrop
  & Weinstine

  
	
   

  	
  Suite
  3500

  
	
   

  	
  225
  South Sixth Street

  
	
   

  	
  Minneapolis,
  MN 55402

  
	
   

  	
  Attn:
  Richard Hoel, Esq.

  
	
   

  	
  Tel:
  (612) 604-6400

  
	
   

  	
  Fax:
  (612) 604-6800

  
						

 

16

 

Schedules

 

(as necessary)

 

 

Exhibit A

 

Form of Warrant

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}]]