-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CdVpfXWR69ahEr//73NB+Blk9/lfn7+Dfa+FSwxN5gI8m9XxSLN3s2UB9mmUAVFM xnxxbX084wUWbWYADljTSw== 0000950138-01-500188.txt : 20020412 0000950138-01-500188.hdr.sgml : 20020412 ACCESSION NUMBER: 0000950138-01-500188 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20011128 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MEDICAL ADVISORY SYSTEMS INC CENTRAL INDEX KEY: 0000771252 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 521233960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-58785 FILM NUMBER: 1800289 BUSINESS ADDRESS: STREET 1: 8050 SOUTHERN MARYLAND BLVD CITY: OWINGS STATE: MD ZIP: 20736 BUSINESS PHONE: 3018558070 MAIL ADDRESS: STREET 1: 8050 SOUTHERN MARYLAND BLVD CITY: OWINGS STATE: MD ZIP: 20736 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: APPLIED DIGITAL SOLUTIONS INC CENTRAL INDEX KEY: 0000924642 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 431641533 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 400 ROYAL PALM WAY STREET 2: SUITE 410 CITY: PALM BEACH STATE: FL ZIP: 33480 BUSINESS PHONE: 5613664800 MAIL ADDRESS: STREET 1: 400 ROYAL PALM WAY STREET 2: SUITE 410 CITY: PALM BEACH STATE: FL ZIP: 33480 FORMER COMPANY: FORMER CONFORMED NAME: APPLIED CELLULAR TECHNOLOGY INC DATE OF NAME CHANGE: 19940606 SC 13D/A 1 sch13da_112601.htm SCHEDULE 13D/A - MEDICAL ADVISORY SYSTEMS, INC. Applied Digital Solutions, Inc. Schedule 13D/A for Medical Advisory Systems, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 13D/A
(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
13d-2(a)

(Amendment No. 2)

Medical Advisory Systems, Inc.

(Name of Issuer)

Common Stock - $0.005 par value

(Title of Class of Securities)

58449P 10 1

(CUSIP Number)

Garrett A. Sullivan
Applied Digital Solutions, Inc.
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
Tel: (561) 366-4800
Fax: (561) 366-0002

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

November 6, 2001

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: [ ]

(Continued on following pages)
(Page 1 of 14 Pages)

CUSIP No. 58449P 10 1

Schedule 13D/A

Page 2 of 14 Pages

1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Applied Digital Solutions, Inc. 43-1641533 Digital Angel Corporation 84-1079037
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X]
3	SEC USE ONLY
4	SOURCE OF FUNDS* Applied Digital Solutions, Inc. 00 Digital Angel Corporation AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED TO ITEM 2(d) OR 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Applied Digital Solutions, Inc. Missouri Digital Angel Corporation Delaware
NUMBER OF SHARES		7	SOLE VOTING POWER 19,600,000
BENEFICIALLY OWNED BY		8	SHARED VOTING POWER None
EACH REPORTING		9	SOLE DISPOSITIVE POWER 19,600,000
PERSON WITH		10	SHARED DISPOSITIVE POWER None
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 19,600,000 shares of Common Stock
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 82.0%
14	TYPE OF REPORTING PERSON* CO

*SEE INSTRUCTIONS BEFORE FILLING OUT!

CUSIP No. 58449P 10 1

Schedule 13D/A

Page 3 of 14 Pages

Item 1. Security and Issuer.

This Statement on Schedule 13D/A (the "Schedule 13D/A") relates to shares of Common Stock, par value $0.005 per share (the "Shares"), of Medical Advisory Systems, Inc., a Delaware corporation ("DOC" or the "Company"). The principal executive offices of DOC are located at 8050 Southern Maryland Boulevard, Owings, Maryland 20736.

Item 2. Identity and Background.

(a)-(c), (f). Applied Digital Solutions, Inc., a Missouri corporation, has its principal place of business at 400 Royal Palm Way, Suite 410, Palm Beach, Florida 33480. Digital Angel Corporation, a Delaware corporation ("Digital Angel"), is a wholly-owned subsidiary of Applied Digital Solutions, Inc., with its principal place of business at 490 Villaume Avenue, South St. Paul, Minnesota 55075. Applied Digital Solutions, Inc. and Digital Angel are collectively referred to herein as the "Reporting Person."

Information relating to the directors and executive officers of the Reporting Person is contained in Appendix A attached hereto and is incorporated herein by reference.

(d) and (e). Neither the Reporting Person nor, to the best of its knowledge, any of the persons listed in Appendix A has, during the last five years, (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which has resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration.

The Reporting Person acquired its initial interest in the Shares in connection with the execution of two stock purchase agreements (see Item 5 below) pursuant to which the Reporting Person acquired Eight Hundred Fifty Thousand (850,000) Shares from the current holders thereof, Dr. Thomas Hall, Ronald W. Pickett, Parlett Pickett, and Marshall Pickett. Pursuant to each stock purchase agreement, the Reporting Person issued shares of its own common stock upon consummation of the stock purchase agreement in payment of the full purchase price thereunder. No other financing was required to effect the transaction.

The Reporting Person acquired an additional interest in the Shares in connection with the execution of an Agreement and Plan of Merger, a copy of which is attached as an exhibit hereto and hereby is incorporated herein by reference (the "Merger Agreement") (see Item 5 below). Upon the consummation of the merger (the "Merger"), the Reporting Person will acquire an additional Eighteen Million Seven Hundred Fifty Thousand (18,750,000) Shares from the Issuer. Pursuant to the Merger Agreement, the Reporting Person will exchange its ownership interests in Digital Angel for the Shares. No other financing was required to effect the transaction.

Item 4. Purpose of Transaction.

The Reporting Person entered into a Stock Purchase Agreement with Dr. Thomas Hall dated as of February 27, 2001 and a Stock Purchase Agreement with Ronald W. Pickett, Parlett Pickett and Marshall Pickett dated February 27, 2001, copies of which are attached as exhibits hereto and hereby incorporated herein by reference (collectively, the "Purchase Agreements").

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As a result of the transactions, Dr. Thomas Hall received One Million Nine Hundred Fifty-four Thousand (1,954,000) shares of common stock of the Reporting Person and Ronald W. Pickett, Parlett Pickett and Marshall Pickett received One Million Three Hundred Sixty-eight Thousand (1,368,000) shares of common stock of the Reporting Person. The Reporting Person entered into the Purchase Agreements with the intent of acquiring a significant financial stake in the Issuer. Pursuant to the Purchase Agreements, the Issuer designated two representatives of the Reporting Person who were elected to the Issuer's Board of Directors, and also designated two other independent individuals who were also elected to the Issuer's Board of Directors.

The Reporting Person executed the Merger Agreement with Issuer on November 1, 2001, subject to the Issuer's right to terminate based upon its review of schedules to the Merger Agreement. Issuer did not exercise its right to terminate and the Merger Agreement was finalized on November 6, 2001. Under the terms of the Merger Agreement, Digital Angel will become a wholly owned subsidiary of Issuer and Issuer will be renamed Digital Angel Corporation. The Merger is conditioned on approval by Issuer's stockholders and the satisfaction of other conditions set forth in the Merger Agreement, including amendments to the certificate of incorporation to change the Issuer's name to Digital Angel Corporation and to authorize the issuance of additional Shares. In consideration of the Merger, Reporting Person, will receive approximately Eighteen Million Seven Hundred Fifty Thousand (18,750,000) Shares. The Reporting Person entered into the Merger Agreement with the intent of acquiring control of the Issuer. Until the Merger is completed, Issuer's stock will continue to trade as AMEX: "DOC". Upon the successful consummation of the Merger, Issuer intends to apply for a NASDAQ-National Market System listing.

Item 5. Interest in Securities of the Issuer.

(a) and (b). As of February 27, 2001, under the definition of "beneficial ownership" as set forth in Rule 13d-3 under the Exchange Act, the Reporting Person may be deemed to have beneficial ownership of Eight Hundred Fifty Thousand (850,000) Shares pursuant to the Purchase Agreements, constituting approximately 16.6% of the outstanding Shares (based on 5,120,481 Shares outstanding on February 27, 2001). Upon consummation of each Purchase Agreement, the Reporting Person obtained the sole power to vote such Shares and the sole power to dispose or to direct the disposition of such Shares.

Following the consummation of the Merger, under the definition of "beneficial ownership" as set forth in Rule 13d-3 under the Exchange Act, the Reporting Person may be deemed to have beneficial ownership of an additional Eighteen Million Seven Hundred Fifty Thousand (18,750,000) Shares for a total of Nineteen Million Six Hundred Thousand (19,600,000) Shares, constituting approximately 82.0% of the outstanding Shares (based on approximately Twenty Three Million Nine Hundred Thousand (23,900,000) Shares outstanding following the approval of Issuer's stockholders to authorize additional Shares). Upon consummation of the Merger Agreement, the Reporting Person shall obtain the sole power to vote such Shares and the sole power to dispose or to direct the disposition of such Shares.

Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission that the Reporting Person is the beneficial owner of the Shares referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such beneficial ownership is expressly disclaimed.

(c). Except as set forth in this Item 5, to the best knowledge of the Reporting Person, neither the Reporting Person nor any director or executive officer of the Reporting Person and no other person described in Item 2 hereof has beneficial ownership of, or has engaged in any transaction during the past 60 days in, any Shares.

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(d). The Reporting Person or one of its designees has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, all of the Shares.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.

None.

Item 7. Material to be Filed as Exhibits.

Attached hereto or incorporated herein as exhibits are the following documents:

Exhibit 2.1	Stock Purchase Agreement by and between the Reporting Person and Dr. Thomas Hall dated as of February 27, 2001.
Exhibit 2.2	Stock Purchase Agreement by and among the Reporting Person, Ronald W. Pickett, Parlett Pickett and Marshall Pickett dated as of February 27, 2001.
Exhibit 2.3	Agreement and Plan of Merger by and among the Reporting Person, the Issuer and Acquisition Subsidiary, Inc. dated as of November 1, 2001.

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SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: November 27, 2001

	Applied Digital Solutions, Inc.
	By:	/s/ JEROME C. ARTIGLIERE
	Name: Jerome C. Artigliere Title: Senior Vice President and Chief Financial Officer
	Digital Angel Corporation
	By:	/s/ JEROME C. ARTIGLIERE
	Name: Jerome C. Artigliere Title: Vice President and Secretary

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Appendix A

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF APPLIED DIGITAL SOLUTIONS, INC.

Set forth below are the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of Applied Digital Solutions, Inc. The principal address of Applied Digital Solutions, Inc. and, unless otherwise indicated below, the current business address for each individual listed below is 400 Royal Palm Way, Suite 410, Palm Beach, Florida 33480. Unless otherwise indicated, each such person is a citizen of the United States. Unless otherwise indicated, each occupation set forth opposite the individual's name refers to employment with Applied Digital Solutions, Inc.

Name and Current Business Address	Present Principal Occupation or Employment: Material Positions Held During the Past Five Years
Arthur F. Noterman	Mr. Noterman, a Chartered Life Underwriter, has served as a Director since February 1997, and serves on the Audit Committee of the Board of Directors of Applied Digital Solutions, Inc. An operator of his own insurance agency, Mr. Noterman is a registered NASD broker affiliated with a Chicago, Illinois registered broker/dealer. Mr. Noterman attended Northeastern University from 1965 to 1975 and obtained the Chartered Life Underwriters Professional degree in 1979 from The American College, Bryn Mawr, Pennsylvania.
Constance K. Weaver	Ms. Weaver was elected to the Board of Directors in July 1998 and serves on the Compensation and Audit Committees of the Board of Directors of Applied Digital Solutions, Inc. From 1996 to the present, Ms. Weaver has been Vice President, Investor Relations and Financial Communications for AT&T Corporation. From 1995 through 1996 she was Senior Director, Investor Relations and Financial Communications for Microsoft Corporation. From 1993 to 1995 she was Vice President, Investor Relations, and from 1991 to 1993 she was Director of Investor Relations, for MCI Communications, Inc. Ms. Weaver is a director of Primark Corporation and the National Investor Relations Institute (NIRI). She earned a Bachelor of Science degree from the University of Maryland in 1975.

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Name and Current Business Address	Present Principal Occupation or Employment: Material Positions Held During the Past Five Years
Richard S. Friedland	Mr. Friedland was elected to the Board of Directors in October 1999 and is Chairman of the Audit Committee and serves on the Compensation Committee of the Board of Directors of Applied Digital Solutions, Inc. He was previously associated with General Instrument Corporation. During his 19-year tenure, he held various executive positions, including Chief Financial Officer, President and Chief Operating Officer. In 1995, he was appointed Chairman of the Board and Chief Executive Officer. Mr. Friedland currently serves on the boards of Tech-Sym Corporation, Zilog, Inc. and Video Network Communications, Inc., as well as several development stage companies. He earned a Bachelor of Science degree in Accounting from Ohio State University in 1972 and a Master of Business Administration degree from Seton Hall University in 1985.
Richard J. Sullivan	Mr. R. Sullivan was elected to the Board of Directors, and named Chief Executive Officer of Applied Digital Solutions, Inc., in May 1993. He was appointed Secretary in March 1996 and is a member of the Compensation Committee of the Board of Directors of Applied Digital Solutions, Inc. Mr. R. Sullivan is currently Chairman of Great Bay Technology, Inc. From August 1989 to December 1992, Mr. R. Sullivan was Chairman of the Board of Directors of Consolidated Convenience Systems, Inc., in Springfield, Missouri. He has been the Managing General Partner of The Bay Group, a merger and acquisition firm in New Hampshire, since February 1985. Mr. R. Sullivan was formerly Chairman and Chief Executive Officer of Manufacturing Resources, Inc., an MRP II software company in Boston, Massachusetts, and was Chairman and CEO of Encode Technology, a "Computer-Aided Manufacturing" company, in Nashua, New Hampshire from February 1984 to August 1986. Mr. R. Sullivan is married to Angela M. Sullivan.

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Name and Current Business Address	Present Principal Occupation or Employment: Material Positions Held During the Past Five Years
Garrett A. Sullivan	Mr. G. Sullivan has served as Vice Chairman of Applied Digital Solutions, Inc. since January 2001. From March 1995 until his appointment to Vice Chairman, Mr. G. Sullivan served as President of Applied Digital Solutions, Inc. He was elected to the Board of Directors of Applied Digital Solutions, Inc. in August 1995 and was acting Secretary from March 1995 to March 1996 and acting Chief Financial Officer from March 1995 to February 1997. He currently serves on the Board of Directors of SysComm International Corporation. From 1993 to 1994, he was an Executive Vice President of Envirobusiness, Inc. From 1988 to 1993, he served as President and Chief Operating Officer of two companies in the electronics and chemical industries which were owned by Philips North America. He was previously a partner in The Bay Group, a merger and acquisition firm in New Hampshire, from 1988 to 1993. From 1981 to 1988, Mr. G. Sullivan was President of Granada Hospital Group, Burlington, Massachusetts. He earned a Bachelor of Arts degree from Boston University in 1960 and an MBA from Harvard University in 1962. Mr. G. Sullivan is not related to Richard J. Sullivan.
Daniel E. Penni	Mr. Penni has served as a Director since March 1995 and is Chairman of the Compensation Committee, and serves on the Audit Committees of the Board of Directors of Applied Digital Solutions, Inc. Since March 1998, he has been an Area Executive Vice President for Arthur J. Gallagher & Co., an insurance agency. He has worked in many sales and administrative roles in the insurance business since 1969. He was President of the Boston Insurance Center, Inc., an insurance agency, until 1988. Mr. Penni was founder and President of BIC Equities, Inc., a broker/dealer registered with the NASD. Mr. Penni graduated with a Bachelor of Science degree in 1969 from the School of Management at Boston College.
Angela M. Sullivan	Ms. Sullivan has served as a Director since April 1996 and serves on the Compensation Committee of the Board of Directors of Applied Digital Solutions, Inc. From 1988 to the present, Ms. Sullivan has been a partner in The Bay Group, a merger and acquisition firm, President of Great Bay Technology, Inc., and President of Spirit Saver, Inc. Ms. Sullivan earned a Bachelor of Science degree in Business Administration in 1980 from Salem State College. Ms. Sullivan is married to Richard J. Sullivan.

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Name and Current Business Address	Present Principal Occupation or Employment: Material Positions Held During the Past Five Years
Jerome C. Artigliere	Mr. Artigliere joined a subsidiary of Applied Digital Solutions, Inc. as President in January 1998, and was appointed Vice President of Applied Digital Solutions, Inc. in April 1998, and Treasurer in December 1999, and in January 2001 was appointed Senior Vice President and Chief Financial Officer. From 1996 to 1997 he was Regional Vice President at General Electric Capital Corporation in Portsmouth, New Hampshire. Prior to that, from 1994 to 1996 he was State Vice President at First National Bank in Portsmouth, New Hampshire, a commercial bank subsidiary of Peoples Heritage Bank of Portland, Maine. He earned an undergraduate degree in finance from Seton Hall University in 1977, and an MBA from Fairleigh Dickinson University in 1980.
Michael E. Krawitz	Mr. Krawitz joined Applied Digital Solutions, Inc. as Assistant Vice President and General Counsel in April 1999, and was appointed Vice President and Assistant Secretary in December 1999 and Senior Vice President in January 2001. From 1994 to April 1999, Mr. Krawitz was an attorney with Fried, Frank, Harris, Shriver & Jacobson in New York. Mr. Krawitz earned a Bachelor of Arts degree from Cornell University in 1991 and a juris doctorate from Harvard Law School in 1994.

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INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF DIGITAL ANGEL CORPORATION

Set forth below are the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of Digital Angel Corporation. The principal address of Digital Angel Corporation and, unless otherwise indicated below, the current business address for each individual listed below is 490 Villaume Avenue, South St. Paul, Minnesota 55075. Unless otherwise indicated, each such person is a citizen of the United States. Unless otherwise indicated, each occupation set forth opposite the individual's name refers to employment with Digital Angel Corporation.

Name and Current
Business Address

Present Principal Occupation or Employment:
Material Positions Held During the Past Five Years

Richard S. Friedland

Mr. Friedland was elected to the Board of Directors of Digital Angel Corporation in September 2000. Mr. Friedland has served on Applied Digital Solutions, Inc.'s Board of Directors since october 1999 and is Chairman of the Audit Committee and serves on the Compensation Committee of the Board of Directors of Applied Digital Solutions, Inc. He was previously associated with General Instrument Corporation. During his 19-year tenure, he held various executive positions, including Chief Financial Officer, President and Chief Operating Officer. In 1995, he was appointed Chairman of the Board and Chief Executive Officer. Mr. Friedland currently serves on the boards of Tech-Sym Corporation, Zilog, Inc. and Video Network Communications, Inc., as well as several development stage companies. He earned a Bachelor of Science degree in Accounting from Ohio State University in 1972 and a Master of Business Administration degree from Seton Hall University in 1985.

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Richard J. Sullivan

Mr. R. Sullivan was elected to the Board of Directors of Digital Angel Corporation in December 1999. Mr. R. Sullivan was elected to the Board of Directors and named Chief Executive Officer of Applied Digital Solutions, Inc. in May 1993. He was appointed Secretary in March 1996 and is a member of the Compensation Commitee of the Board of Directors of Applied Digital Solutions, Inc. Mr. R. Sullivan is currently Chairman of Great Bay Technology, Inc. From August 1989 to December 1992, Mr. R. Sullivan was Chairman of the Board of Directors of Consolidated Convenience Systems, Inc., in Springfield, Missouri. He has been the Managing General Partner of The Bay Group, a meger and acquisition firm in New Hampshire, since February 1985. Mr. R. Sullivan was formerly Chairman and Chief Executive Officer of Manufacturing Resources, Inc., an MRP II software company in Boston, Massachusetts, and was Chairman and CEO of Encode Technology, a "Computer-Aided Manufacturing" company, in Nashua, New Hampshire from February 1984 to August 1986. Mr. R. Sullivan is married to Angela M. Sullivan.

Garrett A. Sullivan

Mr. G. Sullivan was elected to the Board of Directors of Digital Angel Corporation in December 1999 and has been Vice President since March 2000 and Treasurer since December 1999. Mr. G. Sullivan has served as Vice Chairman of Applied Digital Solutions, Inc. since January 2001. From March 1995 until his appointment to Vice Chairman, Mr. G. Sullivan served as President of Applied Digital Solutions, Inc. He was elected to the Board of Directors of Applied Digital Solutions, Inc. in August 1995 and was acting secretary from March 1995 to March 1996 and acting Chief Financial Officer from March 1995 to February 1997. He currently serves on the Board of Directors of SysComm International Corporation. From 1993 to 1994, he was an Executive Vice President of Envirobusiness, Inc. From 1988 to 1993, he served as President and Chief Operating Officer of two companies in the electronics and chemical industries which were owned by Philips North America. He was previously a partner in The Bay Group, a merger and acquisition firm in New Hampshire, from 1988 to 1993. From 1981 to 1988, Mr. G. Sullivan was President of Granada Hospital Group, Burlington, Massachusetts. He earned a Bachelor of Arts degree form Boston University in 1960 and an MBA from Harvard University in 1962. Mr. G. Sullivan is not related to Richard J. Sullivan.

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James P. Santelli	Mr. Santelli joined Digital Angel Corporation in September 1999 as Vice President, Finance and Chief Financial Officer. Mr. Santelli has also served as Vice President Operations. From October 1998 to September 1999 he was Chief Operating Officer of Doorlite, Inc., and from November 1995 to October 1998 he was Vice President Finance/Chief Financial Officer of Hartzell Manufacturing, Inc. From 1984 to 1995 he held senior financial and operating positions with several start-up and emerging companies. In addition, he has held financial positions with major national firms including Pillsbury Co., Northrup King Co. and The Musicland Group. He served in the U. S. Marine Corps from 1969-73. Mr. Santelli has a Bachelor's degree in economics from Carleton College and an M.B.A. in finance from Cornell University.
Peter Zhou	Dr. Zhou has been President of Digital Angel Corporation since its formation in December of 1999 and has been a Director since September of 2000. Prior to joining Digital Angel, Dr. Zhou was Vice President of Technology at Sentry Technology Corporation. Prior to that, Dr. Jhou held the position of Vice President, Technology at Knogo North America. Dr. Zhou has also been an Adjunct Professor at State University of New York (Old Westbury). Earlier in his career, Dr. Zhou was a Research Investigator at the University of Pennsylvania, and a Research Scientist at Max-Planck Institute in Stuttgart, Germany. He holds a Ph.D. in Materials Science from the University of Pennsylvania and a Master of Science degree in Solid State Physics from Beijing University of Science and Technology.
Randolph Geissler	Mr. Geissler has been Chairman and Chief Executive Officer of Digital Angel Corporation since the merger of Destron Fearing Corporation into Digital Angel Corporation in September 2000. Prior to that, Mr. Geissler served as Chef Executive Officer of Destron, a position he held since November 1993. He also served as Interim Chief Executive Officer during the merger of Destron/ID and Fearing Manufacturing Co., Inc., a company he owned since 1987. Mr. Geissler was also the President and Chief Executive Officer of Fearing. Prior to 1987, he held a variety of positions with Fearing, including product manager and director of corporate research and development-ectoparaciticides. He received his degree in Veterinary Animal Science from the University of Wisconsin River Falls in 1982.

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Jerome C. Artigliere

Mr. Artigliere has served as Vice President of Digital Angel Corporation since December 2000 and Assistant Secretary since September 2000. Mr. Artigliere joined a subsidiary of Applied Digital Solutions, Inc. as President in January 1998, and was appointed Vice President of Applied Digital Solutions, Inc. in April 1998, and Treasurer in December 1999, and in January 2001 was appointed Senior Vice President and Chief Financial Officer. From 1996 to 1997 he was Regional Vice President at General Electric Capital Corporation in Portsmouth, New Hampshire. Prior to that, from 1994 to 1996 he was State Vice President at First National Bank in Portsmouth, New Hampshire, a commerical bank subsidiary of Peoples Heritage Bank of Portland, Maine. He earned an undergraduate degree in finance from Seton Hall University in 1977, and an MBA from Fairleigh Dickinson University in 1980.

EX-2.1 3 hall.htm STOCK PURCHASE AGREEMENT (HALL) Stock Purchase Agreement

Exhibit 2.1

STOCK PURCHASE AGREEMENT

by and among

APPLIED DIGITAL SOLUTIONS, INC.

DIGITAL ANGEL.NET, INC.,

Buyer,

and

DR. THOMAS M. HALL

Seller

Dated as of January 31, 2001

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of January 31, 2001, by and among Digital Angel.net, Inc., a Delaware corporation ("Buyer") a subsidiary of Applied Digital Solutions, Inc., a Missouri corporation ("Applied Digital"), and Dr. Thomas M. Hall ("Hall") ("the "Seller") (Buyer and Seller each a "Party" and together "Parties").

RECITALS

Buyer desires to purchase from Seller, on the following terms and conditions, the DOC Shares (as defined below) of Medical Advisory Systems, Inc., a Delaware corporation (the “Company” or “DOC”); and

Seller desire to sell to Buyer, on the following terms and conditions, the DOC Shares.

NOW, THEREFORE, in consideration of the recitals and the mutual covenants, representations, warranties, conditions, and agreement hereinafter expressed, the Parties agree as follows:

ARTICLE I
PURCHASE AND SALE

1.1. The DOC Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined below), the Seller shall sell and deliver to Buyer, free and clear of all security interests, claims, and restrictions, and Buyer shall purchase and accept from Seller, the shares of DOC common stock reflected on Schedule 1.1 consisting of an aggregate of five hundred thousand (500,000) shares of DOC common stock now held by Seller (the “DOC Shares”).

1.2 Consideration. The consideration that Buyer shall pay Seller for the DOC Shares, the obligations of Seller under Article VI, and the other rights of Buyer hereunder, shall be One Million Nine Hundred Fifty-four Thousand (1,954,000) restricted shares (the “ADS Shares”) of common stock of Applied Digital and the sole shareholder of Buyer. At the closing of the purchase of the DOC Shares (the “Closing”), Buyer will deliver to Seller the ADS shares.

1.3 Closing; Cooperation. The Closing shall take place at the office of Bryan Cave LLP, 211 N. Broadway, Suite 3600, St. Louis, Missouri at 10:00 a.m. local time on February ___, 2001, or, if the conditions to the Closing are not by then satisfied, upon satisfaction of such conditions, the date on which the Closing actually occurs being referred to herein as the “Closing Date.” Each Party shall reasonably cooperate, as to matters under such Party’s control, in the satisfaction of conditions to the obligations of the Parties at the Closing; provided, that the foregoing shall not require either Party to waive any condition herein to its obligations at the Closing or to incur any substantial cost not otherwise required hereunder.

1.4 Deliveries of Seller at Closing. Subject to the conditions to Sellers’ obligations in Article V, at the Closing, Seller shall deliver to Buyer a certificate or certificates evidencing the DOC Shares, duly endorsed or accompanied by a duly executed stock power, together with the documents identified in Article IV, duly executed by Seller.

1.5 Deliveries of Buyer at Closing. Subject to the conditions to Buyer’s obligations in Article IV, at the Closing, Buyer shall deliver to Seller a certificate or certificates evidencing the ADS Shares, newly issued or duly endorsed or accompanied by a duly executed stock power, and the documents identified in Article V, duly executed by Buyer.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS

Seller hereby makes the following representations and warranties to Buyer, each of which is true and correct on the date hereof and each of which shall survive the Closing:

2.1 Power and Authority. Seller has the power and capacity to execute and deliver this Agreement, to perform his obligations hereunder, and to consummate the transactions contemplated hereby.

2.2 Stock Ownership. Seller is the sole holder of record and beneficial owner of the DOC Shares as provided on Schedule 1.1. Seller own the DOC Shares as set forth on Schedule 1.1, free and clear of all security interests, claims, restrictions and voting agreements of any kind, except that the Doc Shares are “restricted securities” as such term is defined under Rule 144 promulgated by the SEC. Seller will transfer good and marketable title to the DOC Shares which he owns, at the Closing, free and clear of all liens, security interests, claims, restrictions and voting agreements.

2.3 Enforceability. This Agreement has been duly executed and delivered by Seller and constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

2.4 No Violation; Consents. The execution and delivery of this Agreement by Seller, the performance by Seller of the obligations hereunder and the consummation by Seller of the transactions contemplated by this Agreement will not (i) contravene any provision of the articles of incorporation or bylaws of the Company or the governing documents of the Partnership, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any governmental authority or of any arbitration award which is either applicable to, binding upon or enforceable against the Company or Seller, (iii) conflict with, result in any breach of, or constitute a default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under, or give rise to a right to terminate, amend, modify, abandon or accelerate, any contract which is applicable to, binding upon or enforceable against the Company or Seller, (iv) result in or require the creation or imposition of any lien upon or with respect to any of the property or assets of the Company, or (v) require the consent, approval, authorization or permit of, or filing with or notification to, any governmental authority, any court or tribunal or any other person, except any applicable filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”), and any filings with the Securities and Exchange Commission (the “SEC”) and other filings required to be made by Buyer.

2.5 Control Shares. Seller and the Company has taken all requisite action so that no provision of Delaware law or the Company's certificate of incorporation shall limit the value or voting power of the DOC Shares post-Closing.

2.6 Corporate Existence and Qualification. The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware; it is duly qualified and in good standing in each foreign jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or licensing necessary. The Company has the corporate power and authority to own and use its properties and to transact the business in which it is engaged.

2.7 Capitalization. The authorized capital stock of the Company consists of 11,000,000 shares, consisting of 10,000,000 shares of common stock, par value $ 0.005 per share, and 1,000,000 shares of preferred stock, par value $1.75 per share. As of the date hereof, 5,161,000 shares are issued, 5,111,000 of which are outstanding, and all of which have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth in the Annual Report on Form 10-KSB for the fiscal year ended October 31, 2000 and filed with the Securities and Exchange Commission (“SEC”) on January 26, 2001 (the “Annual Report”), there are no contracts, options or other obligations, contingent or otherwise, relating to the issuance, sale or transfer by the Company of any equity security of the Company.

2.8 Subsidiaries. The Company owns of record and beneficially, free and clear of all liens, all of the outstanding equity securities and other securities of each entity (the “Subsidiaries”) listed on Exhibit 21 to the Annual Report. Each of the Subsidiaries is a corporation, duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority to carry on its business as now conducted and to own its properties. Each Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or licensing necessary. No legend appears on any certificate representing equity securities of any Subsidiary. All of the outstanding equity securities of each Subsidiary have been duly authorized and validly issued, and are fully paid and nonassessable. There are no contracts relating to the issuance, sale or transfer of any equity security of any Subsidiary. Neither the Company nor any Subsidiary owns or has any contract to acquire any securities or ownership interest in any other business.

2.9 Property and Permits. Except as set forth on in the financial statements (or notes thereto) referenced in Section 2.10, the Company is the sole owner of all right, title, and interest in and to all assets reflected on the current balance sheet included in the Annual Report, free and clear of all mortgages, security interests, claims, restrictions and other encumbrances, and there exists no restriction on the use or transfer of such assets or property. No such assets or property are in the possession of others and the Company holds no property on consignment. All tangible such assets and property are in good condition and repair and fit for their intended purpose, and are not in violation of applicable zoning or other Law (as defined below). The Company holds all permits, licenses and other approvals necessary to conduct the business in which it is engaged.

2.10 Financial Statements. The consolidated balance sheets and the related consolidated statements of income, changes in stockholders’ equity and cash flows contained in the Company’s Annual Report and in all other documents filed by the Company with the SEC since January 26, 2001, presented fairly in all material respects the consolidated financial position of the Company, and the results of the consolidated operations and changes in stockholders’ equity and consolidated financial position of the Company and the Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject to possible ordinary year-end adjustments to any such statements not reflecting a fiscal year or year-end date); each of such statements (including the related notes where applicable) has been prepared in accordance with generally accepted accounting principles consistently applied during the periods involved (“GAAP”). The books and records of the Company and the Subsidiaries have been, and are being, maintained in all material respects in accordance with the GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.

2.11 Changes Since January 26, 2001. Since January 26, 2001, the Company has not (i) issued any capital stock or other securities (including without limitation options or warrants), with the exception of options to purchase common stock issued to employees and/or agents of the Company; (ii) made any distribution of or with respect to its capital stock or other securities or purchased or redeemed any of its securities; (iii) paid any bonus to or increased the rate of compensation of any of its officers or salaried employees or amended any other terms of employment of such persons; (iv) sold, leased or transferred any of its properties or assets other than in the ordinary course of business consistent with past practice; (v) made or obligated itself to make capital expenditures out of the ordinary course of business consistent with past practice; (vi) made any payment in respect of its liabilities other than in the ordinary course of business consistent with past practice; (vii) entered into any other transaction or been subject to any event which has or may have a material adverse effect on the Company; or (viii) agreed to do or authorized any of the foregoing.

2.12 (a) Compliance with Disclosure Requirements. Except as otherwise disclosed in the Company’s Annual Report, the Company has timely filed all material reports, registrations and statements, together with any amendments required to be made with respect thereto, that it was required to file since December 31, 1998 to or with any governmental agency, including without limitation the SEC. No document filed with the SEC since December 31, 1998 contains any untrue statement of material fact, or omits to state a material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

(b) Compliance with Continued Listing Requirements. (i) The Company is in compliance with all applicable American Stock Exchange continued listing requirements, (ii) there are no proceedings pending or to the Company’s knowledge threatened against the Company relating to the continued listing of the Company’s common stock on the American Stock Exchange and (iii) the Company has not received any notice of, nor to the knowledge of the Company is there any basis for, the delisting of such common stock from the American Stock Exchange.

2.13 Insurance. The Company maintains insurance coverage. All policies of insurance to which the Company or any Subsidiary is a party: (a) are validly issued, outstanding and enforceable; (b) are issued by an insurer that is financially sound and reputable; (c) taken together, provide adequate insurance coverage for the assets and the operations of the Company; and (d) will continue in full force and effect following the Closing. The Company has given notice to the insurer of all claims that may be insured thereby.

2.14 No Undisclosed Liabilities. The Company does not have any material liabilities or obligations whatsoever, known or unknown, accrued, absolute, contingent, or other, except (a) as disclosed in the Annual Report or other fillings with the SEC since the Annual Report, or (b) to the extent they arise in the ordinary course of the business of the Company and would not have been required to be set forth therein had they existed on January 26, 2001: (i) Taxes (as defined below) incurred since January 26, 2001 and (ii) performance and payment obligations (but not liabilities for breach or violation) lawfully incurred under arm’s-length contracts for goods or services.

2.15 Taxes.

(a) Since December 31, 1994, the Company timely has filed or caused to be filed with the appropriate Government entity all tax returns and reports required to be filed by or on behalf of the Company, including estimated tax and informational returns (“Tax Returns”) and no Tax Returns have been amended. All Tax Returns are true, correct, and complete.

(b) Except as noted in the Annual Report, all Taxes (whether or not reflected in Tax Returns as filed) payable by the Company with respect to all periods reflected on Tax Returns have been fully paid, and there are no grounds for the assertion or assessment of any additional Taxes against the Company or its assets with respect to such periods. All unpaid Taxes are properly accrued on the books of the Company and will be so accrued on the Company’s balance sheet as of the Closing Date in an amount sufficient to pay them in full when due.

(c) The Company has complied with all Laws relating to the withholding of Taxes and the payment thereof (including, without limitation, withholding of Taxes under Section 1441 and 1442 of the Internal Revenue Code of 1986, as amended (the “Code”), or similar provision under foreign laws), and has timely and properly withheld from employee wages and paid over to the proper Government all amounts required to be withheld and be paid over under applicable Law.

(d) As used in this Agreement, “Taxes” means all taxes, charges, fees, levies, or other like assessments, including without limitation income, gross receipts, ad valorem, value added, premium, excise, real property, personal property, windfall profit, sales, use, transfer, license, withholding, employment, payroll, and franchise taxes imposed by: the United States or any other nation, state, or bilateral or multilateral governmental authority, any local governmental unit or subdivision thereof, or any branch, agency, or judicial body thereof (“Government”); and shall include any interest, fines, penalties, assessments, or additions to tax resulting from, attributable to, or incurred in connection with any such Taxes or any contest or dispute thereof.

2.16 No Breach of Law or Governing Document. The Company is not and has not been in default under or in breach or violation of any applicable statute, law, treaty, convention, ordinance, decree, order, injunction, rule, directive, or regulation of any Government (“Law”) or the provisions of any Government permit, franchise, or license, or any provision of its certificate of incorporation or its bylaws. The Company has not received any notice alleging such default, breach or violation. Neither the execution of this Agreement nor the Closing do or will constitute or result in any such default, breach or violation.

2.17 Litigation. Except as disclosed in the Annual Report, there is no action, suit, or other legal or administrative proceeding or governmental investigation pending, or threatened against, by or affecting the Company or Seller, or any of their properties or assets, which alone or in the aggregate would have a material adverse effect upon the Company, or which questions the validity or enforceability of this Agreement or the transactions contemplated hereby, and there is no basis for any of the foregoing. There are no outstanding orders, injunctions, decrees or stipulations issued by any governmental authority in any proceeding to which the Company or any Seller is or was a party which have not been complied with in full or which continue to impose any material obligations on the Company or Seller.

2.18 Intellectual Property. Except as disclosed in the Annual Report:

(a) The Company is the sole and exclusive owner of each patent, trademark, trade name, service mark, and copyrighted work, and registrations thereof and applications therefor, trade secret, software program, invention, proprietary process, and item of proprietary know-how and other intellectual property, and all licenses, sublicenses, and agreements in respect thereof, used or licensed by or to the Company, to which the Company is a party, or which are otherwise included in the property of the Company (the “Intellectual Property”) and all such items are valid and subsisting;

(b) The Company is the exclusive owner of all internally developed prospect lists, customer lists, projections, analyses, and market studies, free and clear of all restrictions whatsoever, and has the unrestricted right to use any other such materials used by the Company but not internally developed;

(c) The ownership, use, licensing, purchase, or sale by or to the Company of any of the Intellectual Property or of the other technology used in the business of the Company does not conflict with, contravene, infringe upon, interfere with, or violate any patent, trademark, copyright or other intellectual property right of any third person or require the acquiescence, agreement or consent of any third person; and

(d) The Intellectual Property and the other technology used in the business of the Company are not subject to a challenge or claim of infringement, interference or unfair competition or other claim and, to the knowledge of Seller or the Company, the Intellectual Property is not being infringed upon or violated by any third person.

2.19 Officers and Directors. Set forth on Schedule 2.19 is a list of: (a) all current directors of the Company, and (b) all current officers (with office held) of the Company.

2.20 Governmental Approvals and Filings. Neither Seller nor the Company is required to obtain any approval, consent, or authorization of, or to make any declaration or filing with, any Government for the valid execution and delivery of this Agreement or any other agreement to be delivered hereunder, the purchase and sale of the DOC Shares, or the performance or consummation of the respective transactions contemplated hereby or thereby, except any applicable filings required under HSR, and any filings with the SEC and other filings required to be made by Buyer.

2.21 Purchase Entirely for Own Account. The ADS Shares to be received by the Seller hereunder will be acquired for the Seller’s own accounts, not as nominee or agent, for investment purposes and not with a view to, or for offer or sale in connection with directly or indirectly, any distribution in violation of the Securities Act of 1933 (the “1933 Act”) or any other applicable securities law and with no intention of participating in the formulation, determination of direction of the basic business decisions of the Buyer. Seller is not a registered broker dealer or an entity engaged in the business of being a broker dealer. Seller has no intention of participating in the formulation, determination or direction of the basic business decisions of the Buyer.

2.22 Investment Experience. Seller acknowledges that it can bear the economic risk and complete loss of its investment in the ADS Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

2.23 Disclosure of Information. Seller has had access to such financial and other information concerning the Buyer and the ADS Shares as Seller deems necessary in order to make a decision to acquire the ADS Shares, including an opportunity to ask questions of and receive information from the Buyer. Neither such inquiries nor any other due diligence investigation conducted by the Seller shall modify, amend or affect any Seller’s right to rely on the Buyer’s representations and warranties contained in this Agreement.

2.24 Accredited Investor. Seller is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.

2.25 Disclosure. Each Schedule and each document attached as or on a Schedule, as well as the other information provided to the Buyer by or on behalf of the Seller, is true, correct, and complete. No representation or warranty by Seller in this Agreement or any Schedule referred to herein or in any agreement to be delivered hereunder, and no information furnished to Buyer by or on behalf of Seller pursuant to or in connection with this Agreement contains or will contain as of the Closing Date any untrue statement of a material fact or any omission of a material fact necessary to make the respective statements contained herein or therein, in light of the circumstances under which the statements were made, not misleading.

2.26 Brokers; Finders. Seller has not incurred any obligation for any finder's or broker's or agent's fees or commissions or similar compensation in connection with the transactions contemplated hereby.

2.27 Restrictive Documents. Seller is not subject to any charter, by-law, mortgage, lien, lease, agreement, instrument, order, law, rule, regulation, judgment or decree or any other restriction which would prevent consummation of the transactions contemplated by this Agreement.

2.28 Employee Benefit Matters.

(a) Schedule 2.28 lists all employee benefit plans (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) that are maintained or contributed to by the Company or any Subsidiary or with respect to which the Company or any Subsidiary has or may have any liability (the “Company Benefit Plans”). Except as set forth in the Annual Report, each Company Benefit Plan has been established and maintained in accordance with its terms and in compliance with all applicable laws, statutes, orders, rules and regulations, including but not limited to ERISA and the Code. Except as set forth in the Annual Report, each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code is, and since its inception has been, so qualified and a determination letter has been issued by the Internal Revenue Service to the effect that each such Company Benefit Plan is so qualified and that each trust forming a part of any such Company Benefit Plan is exempt from tax pursuant to Section 501(a) of the Code and no circumstances exist which could adversely affect this qualification or exemption.

(b) No Company Benefit Plan is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA that is subject to Title IV of ERISA.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND APPLIED DIGITAL

Buyer, and Applied Digital as applicable, hereby make the following representations and warranties to Seller, each of which is true and correct on the date hereof and each of which shall survive the Closing:

3.1 Corporate Status. Buyer is a corporation, duly organized, validly existing and in good standing under the laws of Delaware; it is duly qualified and in good standing in each foreign jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or licensing necessary. The Buyer has the corporate power and authority to own and use its properties and to transact the business in which it is engaged.

3.2 Corporate Power and Authority. Buyer has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. Buyer has taken all action necessary to authorize its execution and delivery of this Agreement, the performance of its respective obligations hereunder and the consummation of the transactions contemplated hereunder.

3.3 Enforceability. This Agreement has been duly executed and delivered by Buyer and constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.

3.4 No Violation. The execution and delivery of this Agreement by Buyer, the performance by Buyer of the obligations hereunder and the consummation by Buyer of the transactions contemplated by this Agreement will not (i) contravene any provision of the articles of incorporation or bylaws of Buyer, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any governmental authority or of any arbitration award which is either applicable to, binding upon or enforceable against Buyer, (iii) conflict with, result in any breach of, or constitute a default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under, or give rise to a right to terminate, amend, modify, abandon or accelerate, any contract which is applicable to, binding upon or enforceable against Buyer, (iv) result in or require the creation or imposition of any lien upon or with respect to any of the property or assets of Buyer, or (v) require the consent, approval, authorization or permit of, or filing with or notification to, any governmental authority, any court or tribunal or any other person, except any applicable filings required under HSR, and any filings with the SEC and other filings required to be made by Buyer.

3.5 Capitalization. The authorized capital stock of Applied Digital consists of 245,000,000 shares of common stock, par value $ 0.001 per share, and 5,000,000 shares of preferred stock, par value $10.00 per share. As of January 19, 2001 (a) 119,440,777 shares of common stock were issued and outstanding, and all of which have been duly authorized and validly issued and are fully paid and non-assessable, and (b) 26,188.04 shares of Class C Preferred Stock were issued all of which are outstanding, and all of which have been duly authorized and validly issued and are fully paid and non-assessable.

3.6 Issuance of Shares. Upon issuance to Seller, the ADS Shares will be duly authorized, validly issued, fully paid, and non-assessable.

3.7 Financial Statements. The consolidated balance sheets and the related consolidated statements of income, changes in stockholders’ equity and cash flows contained in Applied Digital’s annual report on Form 10-K for the fiscal year ended December 31, 1999 (the “ADS 10-K”) and in all other documents filed by Applied Digital with the SEC since December 31, 1999, presented fairly in all material respects the consolidated financial position of Applied Digital, and the results of the consolidated operations and changes in stockholders’ equity and consolidated financial position of Applied Digital and its subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject to possible ordinary year-end adjustments to any such statements not reflecting a fiscal year or year-end date); each of such statements (including the related notes where applicable) has been prepared in accordance with generally accepted accounting principles consistently applied during the periods involved (“GAAP”). The books and records of Applied Digital and its subsidiaries have been, and are being, maintained in all material respects in accordance with the GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. Notwithstanding the foregoing, the representations contained in this Section 3.7 will not be deemed to refer to any information contained in any applicable document filed with the SEC relating to the business, operations, financial condition or results of operations of Bostek, Inc. which was acquired by Applied Digital in 1999.

3.8 (a) Compliance with Disclosure Requirements. Except as otherwise disclosed in the ADS 10-K, Applied Digital has timely filed all material reports, registrations and statements, together with any amendments required to be made with respect thereto, that it was required to file since December 31, 1998 to or with any governmental agency, including without limitation the SEC. No document filed with the SEC since December 31, 1998 contains any untrue statement of material fact, or omits to state a material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

(b) Compliance with Nasdaq Continued Listing Requirements. (i) Applied Digital is in compliance with all applicable Nasdaq National Market continued listing requirements, (ii) there are no proceedings pending or to the Buyer’s knowledge threatened against Applied Digital relating to the continued listing of Applied Digital’s common stock on the Nasdaq National Market and (iii) Applied Digital has not received any notice of, nor to the knowledge of the Buyer is there any basis for, the delisting of such common stock from the Nasdaq National Market.

3.9 No Undisclosed Liabilities. Applied Digital does not have any material liabilities or obligations whatsoever, known or unknown, accrued, absolute, contingent, or other, except (a) as disclosed in the ADS 10-K or other filings with the SEC since the ADS 10-K, or (b) to the extent they arise in the ordinary course of the business of Applied Digital and would not have been required to be set forth therein had they existed on June 30, 2000: (i) Taxes (as defined below) incurred since June 30, 2000 and (ii) performance and payment obligations (but not liabilities for breach or violation) lawfully incurred under arm’s-length contracts for goods or services.

3.10 Investment Representation. Buyer is acquiring the DOC Shares for its own account, for investment and without any view to resale or distribution of the DOC Shares or any portion thereof.

3.11 Investment Experience. The Buyer acknowledges that it can bear the economic risk and complete loss of its investment in the DOC Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

3.12 Disclosure of Information. The Buyer has had access to such financial and other information concerning the Company and the DOC Shares as the Buyer deems necessary in order to make a decision to acquire the DOC Shares, including an opportunity to ask questions of and receive information from the Company. Neither such inquiries nor any other due diligence investigation conducted by the Buyer shall modify, amend or affect the Buyer’s right to rely on the Seller’s representations and warranties contained in this Agreement.

3.14 Brokers, Finders. Buyer has not incurred any obligation for any finder's or broker's or agent's fees or commissions or similar compensation in connection with the transactions contemplated hereby.

3.15 Restrictive Documents. Buyer is not subject to any charter, by-law, mortgage, lien, lease, agreement, instrument, order, law, rule, regulation, judgment or decree or any other restriction which would prevent consummation of the transactions contemplated by this Agreement.

ARTICLE IV
CONDITIONS TO BUYER'S OBLIGATIONS

The obligations of Buyer at the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (unless waived in writing by Buyer):

4.1 Accuracy of Representations and Warranties. Seller’s representations and warranties set forth in Article II shall have been true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made at and as of such date and time.

4.2 Performance of Agreement. Seller shall have fully performed and complied with all covenants, conditions, and other obligations under this Agreement to be performed or complied with by them at or prior to the Closing.

4.3 No Adverse Change. There shall have been no material adverse change in the Company's business, prospects or financial condition between the date hereof and Closing.

4.4 Consents. Seller shall have obtained the written consent of all lenders and parties to material contracts with the Company, if otherwise required..

4.5 Certificate. Seller shall have delivered to Buyer at the Closing a certificate of Seller, dated the Closing Date, to the effect that the conditions set forth in Sections 4.1, 4.2, 4.3 and 4.4 have been satisfied. Such certificate shall be deemed an additional representation and warranty of Seller hereunder.

4.6 Board Composition. The number of members of the Board of Directors of the Company shall be seven, all of the members of the Board of Directors of the Company, other than Ronald Pickett, Thomas Hall, and Robert Goodwin, shall have resigned, and Mercedes Walton, David Loppert, and two other individual designated by Applied Digital shall have been appointed thereto.

4.7 Satisfactory Investigation. Buyer shall have completed its investigation of the business, assets and financial condition of the Company and its Subsidiaries in connection with the transactions contemplated hereby and shall have been satisfied with such results in its sole and absolute discretion.

4.8 Other Transaction. Buyer shall have executed the Stock Purchase Agreement by and between the Buyer and Ronald W. Pickett, Parlett Pickett and Marshall Pickett of even date herewith prior to or simultaneously with this Agreement.

4.9 Consent. Applied Digital shall have obtained the consent of IBM Credit Corporation.

4.10 Board Approval Applied Digital's board of directors shall have approved this Agreement and the transactions contemplated hereby.

ARTICLE V
CONDITIONS TO SELLER'S OBLIGATIONS

The obligations of Seller at the Closing shall be subject to the satisfaction at the Closing of the following conditions (unless waived in writing by Seller):

5.1 Accuracy of Representations and Warranties. Buyer’s representations and warranties set forth in Article III shall have been true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made at and as of such date and time.

5.2 Performance of Agreement. Buyer shall have fully performed and complied with all covenants, conditions, and other obligations under this Agreement to be performed or complied with by it at or prior to the Closing.

5.3 No Adverse Change. There shall have been no material adverse change in the Buyer's business, prospects or financial condition between the date hereof and Closing.

5.4 Certificate. Buyer shall have delivered to Seller at the Closing a certificate of Buyer executed by an executive officer of Buyer, dated the Closing Date, to the effect that the conditions set forth in Sections 5.1, 5.2 and 5.3 have been satisfied. Such certificate shall be deemed an additional representation and warranty of Buyer hereunder.

ARTICLE VI
COVENANT NOT TO COMPETE

In consideration of the sale of the DOC Shares and the consummation of the transactions contemplated hereby, Seller shall not for two (2) years following the termination of Seller’s employment with the Company, operate or have financial interest in any business that competes, directly or indirectly, with the business of the Company, except for passive investments (less than 2% of outstanding shares) in publicly-held entities.

ARTICLE VII
ADDITIONAL COVENANTS OF THE PARTIES

7.1 Demand Registration. Within ninety (90) days of the Closing, if Applied Digital is eligible to use such form, Applied Digital shall file a registration statement on Form S-3 under the Securities Act of 1933, as amended, in order to register for re-sale the ADS Shares.

7.2 (a) Piggyback Registration. If at any time Applied Digital proposes to file a registration statement under the Securities Act of 1933, as amended, with respect to a public offering of Common Stock for its own account (other than a registration statement (i) on Form S-8 or any successor form thereto, (ii) filed solely in connection with a dividend reinvestment plan or employee benefit plan covering officers or directors of Applied Digital or its Affiliates, or (iii) on Form S-4 or any successor form thereto, in connection with a merger, acquisition or similar corporate transaction or for the account of any holder of Common Stock), and at such time no registration statement described in Section 7.1 has yet been filed, then Applied Digital shall, subject to the provision set forth in subsection 7.2(b) below, include in each such registration the ADS Shares.

(b) Priority on Piggyback Registrations. Applied Digital shall permit the Sellers to include the ADS Shares on the same terms and conditions as Common Stock of Applied Digital included therein. Notwithstanding the foregoing, if the managing underwriter or underwriters participating in such offering advise the Seller in writing that the total amount of securities requested to be included in such registration exceeds the amount which can be sold in (or during the time of) such offering without delaying or jeopardizing the success of the offering (including the price per share of the securities to be sold), then the amount of securities to be offered for the account of the Seller and other holders of securities who have piggyback registration rights with respect thereto shall be reduced (to zero if necessary) pro rata on the basis of the number or amount of Common Stock requested to be registered by the Seller and each other holder participating in such offering.

7.3 Conduct of Business Before Closing. Until Closing Seller shall not, without the prior written consent of Buyer (a) fail to cause the Company to operate in the ordinary course of business, (b) take or permit the Company to take any action which would require a change or addition to or deletion from the disclosures of Seller pursuant to Article II hereof, or (c) permit the Company to file any document with the SEC.

7.4 Public Disclosure. No Party to this Agreement shall (and Seller shall cause the Company not to) make any public disclosure of the terms hereof or the transactions contemplated hereby without the prior written consent of the other Party, except as required by law. In the event circumstances shall change requiring, in the opinion of either Party, a public announcement, the Party proposing to make the announcement will advise the other in advance and will give the other Party the opportunity to comment on the form of the proposed announcement. If the Closing does not occur, Buyer, and if the Closing does occur, Seller shall not disclose to any third person any confidential information relating to the Company without the prior written consent of the other Party.

7.5 Further Assurances. From and after the Closing, the Parties shall do such acts and execute such documents and instruments as may be reasonably required to make effective the transactions contemplated hereby.

7.6 Termination of the Agreement. If the Closing shall not have occurred prior thereto, this Agreement may be terminated by a Party hereto without further liability or obligation after March 1, 2001 if such Party is not in breach or violation hereof.

7.7 Effect of Termination. The Parties agree that the sole remedy available to a party terminating this Agreement pursuant to Section 7.6 hereof shall be limited to such party’s right not to effect the transactions contemplated hereby; provided, however, that notwithstanding the foregoing (i) Section 7.4, this Section 7.7, Section 9.6 and Section 9.8 shall survive any termination of this Agreement and (ii) no Party shall be relieved or released as a result of such termination from any liabilities or damages arising out of its willful breach of any provision of this Agreement.

ARTICLE VIII
INDEMNIFICATION

8.1 Indemnification of Buyer. Seller shall hold Buyer, and the shareholders, directors, officers, successors, assigns, and agents of Buyer (the “Buyer Indemnified Persons”), harmless and indemnify each of them from and against, and waives any claim for contribution or indemnity with respect to, any and all claims, losses, damages, liabilities, expenses or costs (“Losses”), plus reasonable attorneys’ fees and expenses incurred in connection with Losses and/or enforcement of this Agreement, plus interest from the date incurred through the date of payment at two (2) percent above the prime lending rate of Citibank, NA from time to time prevailing (in all, “Indemnified Losses”) incurred or to be incurred by any of them to the extent resulting from or arising out of any breach or violation of Seller’s representations, warranties, covenants, or agreements contained in this Agreement, including provisions of this Article VIII.

8.2 Indemnification of Seller. Buyer shall hold Seller, his permitted assigns and agents (the “Seller Indemnified Persons”) harmless and indemnify each of them from and against, and waives any claim for contribution or indemnity with respect to, any and all Indemnified Losses incurred or to be incurred by any of them, to the extent resulting from or arising out of any breach or violation of Buyer’s representations, warranties, covenants and agreements contained in this Agreement, including the provisions of this Article VIII.

8.3 Survival. The respective representations and warranties made by the Parties in Articles II and III and certificates under Sections 4.4 and 5.4 shall survive the Closing Date but the right to bring a claim for indemnification under this Article VIII shall expire on the second anniversary of the Closing Date unless a claim with respect thereto shall have been made pursuant to Section 8.1 or 8.2 prior to such date against the Party responsible for indemnification hereunder (the “Indemnifying Party”); provided, that the foregoing shall not apply to representations and warranties under Sections 2.1 or 2.2 or a certificate relating thereto, or to any intentional breach or violation of any provision of this Agreement, which shall survive without limitation hereunder.

8.4 Notice of Claim. In the event that Buyer seeks indemnification on behalf of a Buyer Indemnified Person, or Seller seek indemnification on behalf of a Seller Indemnified Person, such Party seeking indemnification (the “Indemnified Party”) shall give written notice to the Indemnifying Party specifying the facts constituting the basis for such claim and the amount, to the extent known, of the claim asserted. The Indemnifying Party shall pay the amount of any valid claim not more than ten days after the Indemnified Party provides notice to the Indemnifying Party of such amount.

8.5 Right to Contest Claims of Third Persons. If an Indemnified Party is entitled to indemnification hereunder because of a claim asserted by any claimant (other than an indemnified person hereunder) (“Third Person”), the Indemnified Party shall give the Indemnifying Party reasonably prompt notice thereof after such assertion is actually known to the Indemnified Party; provided, however, that the right of a person to be indemnified hereunder in respect of claims made by a Third Person shall not be adversely affected by a failure to give such notice unless, and then only to the extent that, an Indemnifying Party is prejudiced thereby. The Indemnifying Party shall have the right, upon written notice to the Indemnified Party, and using counsel reasonably satisfactory to the Indemnified Party, to investigate, secure, contest, or settle the claim alleged by such Third Person (a “Third-Person Claim”), provided that the Indemnifying Party has unconditionally acknowledged to the Indemnified Party in writing his or its obligation to indemnify the persons to be indemnified hereunder with respect to such Third-Person Claim; the Indemnified Party may thereafter participate in (but not control) the defense of any such Third-Person Claim with its own counsel at its own expense, unless separate representation is necessary to avoid a conflict of interest, in which case such representation shall be at the expense of the Indemnifying Party. Unless and until the Indemnifying Party so acknowledges his or its obligation to indemnify, the Indemnified Party shall have the right, at its option, to assume and control defense of the matter and to look to the Indemnifying Party for the full amount of the costs of defense. The failure of the Indemnifying Party to respond in writing to the aforesaid notice of the Indemnified Party with respect to such Third-Person Claim within twenty (20) days after receipt thereof shall be deemed an election not to defend the same. If the Indemnifying Party does not so acknowledge his or its obligation to indemnity and assume the defense of any such Third-Person Claim, (a) the Indemnified Party may defend against such claim, in such manner as it may deem appropriate, including, but not limited to, settling such claim, after giving notice of the same to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying Party may participate in (but not control) the defense of such action, with its own counsel at its own expense. If the Indemnifying Party thereafter seeks to question the manner in which the Indemnified Party defended such Third-Person Claim or the amount or nature of any such settlement, the Indemnifying Party shall have the burden to prove by clear and convincing evidence that conduct of the Indemnified Party in the defense and/or settlement of such Third-Person Claim constituted gross negligence or willful misconduct. The Parties shall make available to each other all relevant information in their possession relating to any such Third-Person Claim and shall cooperate in the defense thereof.

8.6 Limitation of Indemnification. No Indemnified Party shall be entitled to indemnification for any Losses unless such Indemnified Party has sustained Losses which, in the aggregate, exceed $50,000, and then for all Losses as provided above.

ARTICLE IX
MISCELLANEOUS PROVISIONS

9.1 Notice. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made upon being delivered either by courier or fax delivery to the Party for whom it is intended, provided that a copy thereof is deposited, postage prepaid, certified or registered mail, return receipt requested, in the United States mail, bearing the address shown in this Section 9.1 for, or such other address as may be designated in writing hereafter by, such Party:

	If to Buyer or Applied Digital: Applied Digital Solutions, Inc. Attention: David I. Beckett, Esq. 400 Royal Palm Way, Suite 410 Palm Beach, Florida 33480 Telephone: (561) 366-4800 Fax: (561) 366-0002 With copies to: Denis P. McCusker, Esq. Bryan Cave LLP 211 North Broadway, Suite 3600 St. Louis, Missouri 63102-2750 Telephone: (314) 259-2000 Fax: (314) 259-2020 If to Seller: Dr. Thomas M. Hall


	With a copy to:

9.2 Entire Agreement. This Agreement and the Schedules and Exhibits hereto embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings relative to such subject matter.

9.3 Assignment; Binding Agreement. This Agreement and various rights and obligations arising hereunder shall inure to the benefit of and be binding upon Buyer, its successors, and permitted assigns and Seller, their legal representatives, successors, and permitted assigns. Neither this Agreement nor any of the rights, interests, or obligations hereunder shall be transferred, delegated, or assigned (by operation of law or otherwise) by any of the Parties hereto without the prior written consent of the other Parties, except that Buyer shall have the right to transfer and assign its rights hereunder to purchase the DOC Shares and any other rights or benefits afforded to it by this Agreement to any entity which at the time of such transfer and assignment is controlled by Buyer.

9.4 Counterparts. This Agreement may be executed simultaneously in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. The parties agree that a copy of a signature sent by telecopier shall be deemed an original for all purposes.

9.5 Headings; Interpretation. The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement. Each reference in this Agreement to an Article, Section, Schedule or Exhibit, unless otherwise indicated, shall mean an Article or a Section of this Agreement or a Schedule or Exhibit attached to this Agreement, respectively. References herein to “days”, unless otherwise indicated, are to consecutive calendar days. All Parties have participated substantially in the negotiation and drafting of this Agreement and agree that no ambiguity herein should be construed against the draftsman.

9.6 Expenses. Seller (and not the Company) shall pay all costs and expenses incurred on behalf of himself or the Company in connection with the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, fees and expenses of attorneys, investment bankers and accountants.

9.7 Remedies Cumulative. All rights and remedies of the Parties under this Agreement are cumulative and without prejudice to any other rights or remedies under Law.

9.8 Governing Law. This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of Delaware, without reference to its conflict of law rules.

* * * * * * * *

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed as of the date first above written.

BUYER:
DIGITAL ANGEL.NET, INC.
By:	/s/ Richard J. Sullivan
Name:	Richard J. Sullivan
Title:	Chairman
APPLIED DIGITAL SOLUTIONS, INC.
By:	/s/ Richard J. Sullivan
Name:	Richard J. Sullivan
Title:	Chairman
SELLER:
By:	/s/ Dr. Thomas M. Hall
	Dr. Thomas M. Hall

EX-2.2 4 pickett-spa.htm STOCK PURCHASE AGMT (PICKETT) Stock Purchase Agreement

Exhibit 2.2

STOCK PURCHASE AGREEMENT

by and among

APPLIED DIGITAL SOLUTIONS, INC.

DIGITAL ANGEL.NET, INC.,

Buyer,

and

RONALD W. PICKETT,

PARLETT PICKETT,

and

MARSHALL PICKETT

Sellers

Dated as of January 31, 2001

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of January 31, 2001, by and among Digital Angel.net, Inc., a Delaware corporation (“Buyer”) a subsidiary of Applied Digital Solutions, Inc., a Missouri corporation (“Applied Digital”), and Ronald W. Pickett (“Pickett”), Parlett Pickett (“PP”), and Marshall Pickett (“MP”, and collectively with Hall, Pickett, and PP, the “Sellers”) (Buyer and Sellers each a “Party” and together “Parties”).

RECITALS

Buyer desires to purchase from Sellers, on the following terms and conditions, the DOC Shares (as defined below) of Medical Advisory Systems, Inc., a Delaware corporation (the “Company” or “DOC”); and

Sellers desire to sell to Buyer, on the following terms and conditions, the DOC Shares.

NOW, THEREFORE, in consideration of the recitals and the mutual covenants, representations, warranties, conditions, and agreement hereinafter expressed, the Parties agree as follows:

ARTICLE I

PURCHASE AND SALE

1.1. The DOC Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined below), the Sellers shall sell and deliver to Buyer, free and clear of all security interests, claims, and restrictions, and Buyer shall purchase and accept from Sellers, shares of DOC common stock reflected on Schedule 1.1 consisting of an aggregate of three hundred fifty thousand (350,000) shares of DOC common stock now held by Sellers (the “DOC Shares”).

1.2 Consideration. The consideration that Buyer shall pay Sellers for the DOC Shares, the obligations of Sellers under Article VI, and the other rights of Buyer hereunder, shall be an aggregate of One Million Three Hundred Sixty-eight Thousand (1,368,000) restricted shares (the “ADS Shares”) of common stock of Applied Digital and the sole shareholder of Buyer. At the closing of the purchase of the DOC Shares (the “Closing”), Buyer will deliver to Sellers the ADS shares.

1.4 Deliveries of Sellers at Closing. Subject to the conditions to Sellers’ obligations in Article V, at the Closing, Sellers shall deliver to Buyer a certificate or certificates evidencing the DOC Shares, duly endorsed or accompanied by a duly executed stock power, together with the documents identified in Article IV, duly executed by Sellers.

1.5 Deliveries of Buyer at Closing. Subject to the conditions to Buyer’s obligations in Article IV, at the Closing, Buyer shall deliver to Sellers a certificate or certificates evidencing the ADS Shares, newly issued or duly endorsed or accompanied by a duly executed stock power, and the documents identified in Article V, duly executed by Buyer.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers, jointly and severally, hereby make the following representations and warranties to Buyer, each of which is true and correct on the date hereof and each of which shall survive the Closing:

2.1 Power and Authority. Each Seller has the power and capacity to execute and deliver this Agreement, to perform such Seller's obligations hereunder, and to consummate the transactions contemplated hereby.

2.2 Stock Ownership. Each Seller is the sole holder of record and beneficial owner of the DOC Shares as provided on Schedule 1.1. Sellers own the DOC Shares as set forth on Schedule 1.1, free and clear of all security interests, claims, restrictions and voting agreements of any kind, except that the DOC Shares are “restricted securities” as such term is defined under Rule 144 promulgated by the SEC. Each of the Sellers will transfer good and marketable title to the DOC Shares which such Seller owns, at the Closing, free and clear of all liens, security interests, claims, restrictions and voting agreements.

2.3 Enforceability. This Agreement has been duly executed and delivered by each Seller and constitutes a legal, valid and binding obligation of each Seller, enforceable against each Seller in accordance with its terms.

2.4 No Violation; Consents. The execution and delivery of this Agreement by Sellers, the performance by Sellers of the obligations hereunder and the consummation by Sellers of the transactions contemplated by this Agreement will not (i) contravene any provision of the articles of incorporation or bylaws of the Company or the governing documents of the Partnership, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any governmental authority or of any arbitration award which is either applicable to, binding upon or enforceable against the Company or any Seller, (iii) conflict with, result in any breach of, or constitute a default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under, or give rise to a right to terminate, amend, modify, abandon or accelerate, any contract which is applicable to, binding upon or enforceable against the Company or any Seller, (iv) result in or require the creation or imposition of any lien upon or with respect to any of the property or assets of the Company, or (v) require the consent, approval, authorization or permit of, or filing with or notification to, any governmental authority, any court or tribunal or any other person, except any applicable filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”), and any filings with the Securities and Exchange Commission (the “SEC”) and other filings required to be made by Buyer.

2.5 Control Shares. Each of the Sellers and the Company has taken all requisite action so that no provision of Delaware law or the Company's certificate of incorporation shall limit the value or voting power of the DOC Shares post-Closing.

2.15 Taxes.

2.17 Litigation. Except as disclosed in the Annual Report, there is no action, suit, or other legal or administrative proceeding or governmental investigation pending, or threatened against, by or affecting the Company or any Seller, or any of their properties or assets, which alone or in the aggregate would have a material adverse effect upon the Company, or which questions the validity or enforceability of this Agreement or the transactions contemplated hereby, and there is no basis for any of the foregoing. There are no outstanding orders, injunctions, decrees or stipulations issued by any governmental authority in any proceeding to which the Company or any Seller is or was a party which have not been complied with in full or which continue to impose any material obligations on the Company or such Seller.

2.18 Intellectual Property. Except as disclosed in the Annual Report:

(d) The Intellectual Property and the other technology used in the business of the Company are not subject to a challenge or claim of infringement, interference or unfair competition or other claim and, to the knowledge of Sellers or the Company, the Intellectual Property is not being infringed upon or violated by any third person.

2.19 Officers and Directors. Set forth on Schedule 2.19 is a list of: (a) all current directors of the Company, and (b) all current officers (with office held) of the Company.

2.20 Governmental Approvals and Filings. No Seller nor the Company is required to obtain any approval, consent, or authorization of, or to make any declaration or filing with, any Government for the valid execution and delivery of this Agreement or any other agreement to be delivered hereunder, the purchase and sale of the DOC Shares, or the performance or consummation of the respective transactions contemplated hereby or thereby, except any applicable filings required under HSR, and any filings with the SEC and other filings required to be made by Buyer.

2.21 Purchase Entirely for Own Account. The ADS Shares to be received by the Sellers hereunder will be acquired for the Sellers’ own accounts, not as nominee or agent, for investment purposes and not with a view to, or for offer or sale in connection with directly or indirectly, any distribution in violation of the Securities Act of 1933 (the “1933 Act”) or any other applicable securities law and with no intention of participating in the formulation, determination of direction of the basic business decisions of the Buyer. No Seller is a registered broker dealer or an entity engaged in the business of being a broker dealer. No Seller has any intention of participating in the formulation, determination or direction of the basic business decisions of the Buyer.

2.22 Investment Experience. Each Seller acknowledges that it can bear the economic risk and complete loss of its investment in the ADS Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

2.23 Disclosure of Information. Each Seller has had access to such financial and other information concerning the Buyer and the ADS Shares as such Seller deems necessary in order to make a decision to acquire the ADS Shares, including an opportunity to ask questions of and receive information from the Buyer. Neither such inquiries nor any other due diligence investigation conducted by the Sellers shall modify, amend or affect any Seller’s right to rely on the Buyer’s representations and warranties contained in this Agreement.

2.24 Accredited Investor. Each Seller is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.

2.25 Disclosure. Each Schedule and each document attached as or on a Schedule, as well as the other information provided to the Buyer by or on behalf of the Sellers, is true, correct, and complete. No representation or warranty by Sellers in this Agreement or any Schedule referred to herein or in any agreement to be delivered hereunder, and no information furnished to Buyer by or on behalf of Sellers pursuant to or in connection with this Agreement contains or will contain as of the Closing Date any untrue statement of a material fact or any omission of a material fact necessary to make the respective statements contained herein or therein, in light of the circumstances under which the statements were made, not misleading.

2.26 Brokers; Finders. No Seller has incurred any obligation for any finder's or broker's or agent's fees or commissions or similar compensation in connection with the transactions contemplated hereby.

2.27 Restrictive Documents. No Seller is subject to any charter, by-law, mortgage, lien, lease, agreement, instrument, order, law, rule, regulation, judgment or decree or any other restriction which would prevent consummation of the transactions contemplated by this Agreement.

2.28 Employee Benefit Matters.

(b) No Company Benefit Plan is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA that is subject to Title IV of ERISA.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer, and Applied Digital as applicable, hereby make the following representations and warranties to Sellers, each of which is true and correct on the date hereof and each of which shall survive the Closing:

3.6 Issuance of Shares. Upon issuance to Sellers, the ADS Shares will be duly authorized, validly issued, fully paid, and non-assessable.

3.10 Investment Representation. Buyer is acquiring the DOC Shares for its own account, for investment and without any view to resale or distribution of the DOC Shares or any portion thereof.

3.12 Disclosure of Information. The Buyer has had access to such financial and other information concerning the Company and the DOC Shares as the Buyer deems necessary in order to make a decision to acquire the DOC Shares, including an opportunity to ask questions of and receive information from the Company. Neither such inquiries nor any other due diligence investigation conducted by the Buyer shall modify, amend or affect the Buyer’s right to rely on the Sellers’ representations and warranties contained in this Agreement.

ARTICLE IV

CONDITIONS TO BUYER’S OBLIGATIONS

The obligations of Buyer at the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (unless waived in writing by Buyer):

4.1 Accuracy of Representations and Warranties. Sellers’ representations and warranties set forth in Article II shall have been true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made at and as of such date and time.

4.2 Performance of Agreement. Sellers shall have fully performed and complied with all covenants, conditions, and other obligations under this Agreement to be performed or complied with by them at or prior to the Closing.

4.3 No Adverse Change. There shall have been no material adverse change in the Company's business, prospects or financial condition between the date hereof and Closing.

4.4 Consents. Sellers shall have obtained the written consent of all lenders and parties to material contracts with the Company, if otherwise required..

4.5 Certificate. Sellers shall have delivered to Buyer at the Closing a certificate of Sellers, dated the Closing Date, to the effect that the conditions set forth in Sections 4.1, 4.2, 4.3 and 4.4 have been satisfied. Such certificate shall be deemed an additional representation and warranty of Sellers hereunder.

4.8 Other Transaction. Buyer shall have consummated that certain Stock Purchase Agreement by and between the Buyer and Dr. Thomas M. Hall of even date herewith prior to or simultaneously with this Agreement.

4.9 Consent. Applied Digital shall have obtained the consent of IBM Credit Corporation.

4.10 Board Approval. Applied Digital's board of directors shall have approved this Agreement and the transactions contemplated hereby.

ARTICLE V

CONDITIONS TO SELLERS’ OBLIGATIONS

The obligations of Sellers at the Closing shall be subject to the satisfaction at the Closing of the following conditions (unless waived in writing by Sellers):

5.3 No Adverse Change. There shall have been no material adverse change in the Buyer's business, prospects or financial condition between the date hereof and Closing.

5.4 Certificate. Buyer shall have delivered to Sellers at the Closing a certificate of Buyer executed by an executive officer of Buyer, dated the Closing Date, to the effect that the conditions set forth in Sections 5.1, 5.2 and 5.3 have been satisfied. Such certificate shall be deemed an additional representation and warranty of Buyer hereunder.

ARTICLE VI

COVENANT NOT TO COMPETE

In consideration of the sale of the DOC Shares and the consummation of the transactions contemplated hereby, no Seller shall, individually or collectively, for two (2) years following the termination of Pickett’s employment with the Company, operate or have financial interest in any business that competes, directly or indirectly, with the business of the Company, except for passive investments (less than 2% of outstanding shares) in publicly-held entities.

ARTICLE VII

ADDITIONAL COVENANTS OF THE PARTIES

7.1 Registration. Within ninety (90) days of the Closing, if Applied Digital is eligible to use such form, Applied Digital shall file a registration statement on Form S-3 under the Securities Act of 1933, as amended, in order to register for re-sale the ADS Shares.

(b) Priority on Piggyback Registrations. Applied Digital shall permit the Sellers to include the ADS Shares on the same terms and conditions as Common Stock of Applied Digital included therein. Notwithstanding the foregoing, if the managing underwriter or underwriters participating in such offering advise the Sellers in writing that the total amount of securities requested to be included in such registration exceeds the amount which can be sold in (or during the time of) such offering without delaying or jeopardizing the success of the offering (including the price per share of the securities to be sold), then the amount of securities to be offered for the account of the Sellers and other holders of securities who have piggyback registration rights with respect thereto shall be reduced (to zero if necessary) pro rata on the basis of the number or amount of Common Stock requested to be registered by the Sellers and each other holder participating in such offering.

7.3 Conduct of Business Before Closing. Until Closing Sellers shall not, without the prior written consent of Buyer (a) fail to cause the Company to operate in the ordinary course of business, (b) take or permit the Company to take any action which would require a change or addition to or deletion from the disclosures of Sellers pursuant to Article II hereof, or (c) permit the Company to file any document with the SEC.

7.4 Public Disclosure. No Party to this Agreement shall (and Sellers shall cause the Company not to) make any public disclosure of the terms hereof or the transactions contemplated hereby without the prior written consent of the other Party, except as required by law. In the event circumstances shall change requiring, in the opinion of either Party, a public announcement, the Party proposing to make the announcement will advise the other in advance and will give the other Party the opportunity to comment on the form of the proposed announcement. If the Closing does not occur, Buyer, and if the Closing does occur, Sellers shall not disclose to any third person any confidential information relating to the Company without the prior written consent of the other Party.

ARTICLE VIII

INDEMNIFICATION

8.1 Indemnification of Buyer. Sellers, jointly and severally, shall hold Buyer, and the shareholders, directors, officers, successors, assigns, and agents of Buyer (the “Buyer Indemnified Persons”), harmless and indemnify each of them from and against, and waives any claim for contribution or indemnity with respect to, any and all claims, losses, damages, liabilities, expenses or costs (“Losses”), plus reasonable attorneys’ fees and expenses incurred in connection with Losses and/or enforcement of this Agreement, plus interest from the date incurred through the date of payment at two (2) percent above the prime lending rate of Citibank, NA from time to time prevailing (in all, “Indemnified Losses”) incurred or to be incurred by any of them to the extent resulting from or arising out of any breach or violation of Sellers’ representations, warranties, covenants, or agreements contained in this Agreement, including provisions of this Article VIII.

8.2 Indemnification of Sellers. Buyer shall hold Sellers, their permitted assigns and agents (the “Seller Indemnified Persons”) harmless and indemnify each of them from and against, and waives any claim for contribution or indemnity with respect to, any and all Indemnified Losses incurred or to be incurred by any of them, to the extent resulting from or arising out of any breach or violation of Buyer’s representations, warranties, covenants and agreements contained in this Agreement, including the provisions of this Article VIII.

8.4 Notice of Claim. In the event that Buyer seeks indemnification on behalf of a Buyer Indemnified Person, or Sellers seek indemnification on behalf of a Seller Indemnified Person, such Party seeking indemnification (the “Indemnified Party”) shall give written notice to the Indemnifying Party specifying the facts constituting the basis for such claim and the amount, to the extent known, of the claim asserted. The Indemnifying Party shall pay the amount of any valid claim not more than ten days after the Indemnified Party provides notice to the Indemnifying Party of such amount.

ARTICLE IX

MISCELLANEOUS PROVISIONS

If to Buyer or Applied Digital:

Applied Digital Solutions, Inc.
Attention: David I. Beckett, Esq.
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
Telephone: (561) 366-4800
Fax: (561) 366-0002

	With copies to: Denis P. McCusker, Esq. Bryan Cave LLP 211 North Broadway, Suite 3600 St. Louis, Missouri 63102-2750 Telephone: (314) 259-2000 Fax: (314) 259-2020 If to Sellers: Ronald W. Pickett Parlett Pickett Marshall Pickett

	With a copy to:

9.3 Assignment; Binding Agreement. This Agreement and various rights and obligations arising hereunder shall inure to the benefit of and be binding upon Buyer, its successors, and permitted assigns and Sellers, their legal representatives, successors, and permitted assigns. Neither this Agreement nor any of the rights, interests, or obligations hereunder shall be transferred, delegated, or assigned (by operation of law or otherwise) by any of the Parties hereto without the prior written consent of the other Parties, except that Buyer shall have the right to transfer and assign its rights hereunder to purchase the DOC Shares and any other rights or benefits afforded to it by this Agreement to any entity which at the time of such transfer and assignment is controlled by Buyer.

9.6 Expenses. Sellers (and not the Company) shall pay all costs and expenses incurred on behalf of themselves or the Company in connection with the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, fees and expenses of attorneys, investment bankers and accountants.

9.7 Remedies Cumulative. All rights and remedies of the Parties under this Agreement are cumulative and without prejudice to any other rights or remedies under Law.

9.8 Governing Law. This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of Delaware, without reference to its conflict of law rules.

* * * * * * * *

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed as of the date first above written.

BUYER:
DIGITAL ANGEL.NET, INC.
By:	/s/ Richard J. Sullivan
Name:	Richard J. Sullivan
Title:	Chairman
APPLIED DIGITAL SOLUTIONS, INC.
By:	/s/ Richard J. Sullivan
Name:	Richard J. Sullivan
Title:	Chairman and CEO
SELLERS:
By:	/s/ Ronald W. Pickett
	Ronald W. Pickett
By:	/s/ Cynthia Pickett
	Cynthia Pickett, Custodian for Parlett Pickett UTMA
By:	/s/ Cynthia Pickett
	Cynthia Pickett, Custodian for Marshall Pickett UTMA

EX-2.3 5 merger.htm AGREEMENT AND PLAN OF MERGER Applied Digital Solutions, Inc. Schedule 13D/A Exhibit

Exhibit 2.3

AGREEMENT AND PLAN OF MERGER

by and between

APPLIED DIGITAL SOLUTIONS, INC.,

DIGITAL ANGEL CORPORATION,

MEDICAL ADVISORY SYSTEMS, INC. AND

ACQUISITION SUBSIDIARY, INC.

dated as of November 1, 2001

TABLE OF CONTENTS

Page

AGREEMENT AND PLAN OF MERGER
ARTICLE I. THE MERGER; THE CONTRIBUTION; CLOSING		2
1.1.	The Merger and Contribution	2
1.2.	Directors and Officers	3
1.3.	Articles of Incorporation and Bylaws	3
1.4.	Certificate of MAS	3
ARTICLE II. EFFECT OF THE MERGER ON SECURITIES OF MAS AND DA		3
2.1.	MAS Common Stock	3
2.2.	Conversion of DA Stock	3
2.3.	Options	4
2.4.	Conversion of Acquisition Subsidiary Stock	4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF MAS		4
3.1.	Organization and Good Standing	4
3.2.	Capitalization	5
3.3.	Subsidiaries	5
3.4.	Authorization; Binding Agreement	6
3.5.	Governmental Approvals	6
3.6.	No Violations	7
3.7.	Securities Filings and Litigation	7
3.8.	Financial Statements	8
3.9.	Absence of Certain Changes	8
3.10.	Related Party Transactions	9
3.11.	Compliance with Laws	9
3.12.	Permits	9
3.13.	Finders and Investment Bankers	9
3.14	Material Contracts	9
3.15.	Employee Benefit Plans	10
3.16.	Taxes and Returns	11
3.17.	No Aderse Actions	12
3.18.	Fairness Opinion	12
3.19.	HSR Act	12
3.20.	Intellectual Property	13
3.21.	Undisclosed Liabilities	13
3.22.	Environmental Matters	13
3.23.	Corporate Records	14
3.24.	Real Property	14
3.25.	Title to and Condition of Personal Property	14
3.26.	Labor Matters	15
3.27.	Insurance	15
3.28.	Disclosure	15

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ADSX		15
4.1.	Organization and Good Standing	16
4.2.	Capitalization	16
4.3.	Subsidiaries	17
4.4.	Authorization; Binding Agreement	18
4.5.	Governmental Approvals	18
4.6.	No Violations	18
4.7.	Securities Filings and Litigation	19
4.8.	Financial Statements	19
4.9.	Absence of Certain Changes or Events	20
4.10.	Related Party Transactions	20
4.11.	Compliance with Laws	20
4.12.	Permits	20
4.13.	Finders and Investment Bankers	21
4.14.	Material Contracts	21
4.15.	Employee Benefit Plans	21
4.16.	Taxes and Returns	22
4.17.	No Adverse Actions	23
4.18.	Investment Intent	24
4.19.	Intellectual Property	24
4.20.	Undisclosed Liabilities	24
4.21.	Environmental Matters	24
4.22.	Corporate Records	25
4.23.	Real Property	25
4.24.	Title to and Condition of Personal Property	25
4.25.	Labor Matters	26
4.26.	Insurance	26
4.27.	Disclosure	26
ARTICLE V. ADDITIONAL COVENANTS OF MAS		27
5.1.	Conduct of Business of MAS and the MAS Subsidiaries	27
5.2.	Notification of Certain Matters	29
5.3.	Access and Information	29
5.4.	Stockholder Approval	29
5.5.	Reasonable Best Efforts	30
5.6.	Public Announcements	30
5.7.	Compliance	30
5.8.	Tax Treatment	30
5.9.	MAS Benefit Plan	30
5.10.	No Solicitation of Acquisition Proposal	31
5.11.	SEC and Stockholder Filings	32
5.12.	Takeover Statutes	32
5.13.	Comfort Letters	32
5.14.	MAS Charter Amendment	32

ARTICLE VI. ADDITIONAL COVENANTS OF ADSX		33
6.1.	Conduct of Business of DA, the DA Subsidiaries and the Other Subsidiaries	33
6.2.	Notification of Certain Matters	35
6.3.	Access and Information	35
6.4.	Reasonable Best Efforts	36
6.5.	Public Announcements	36
6.6.	Compliance	36
6.7.	Tax Treatment	36
6.8.	DA Benefit Plans	36
6.9.	No Solicitation of Acquisition Proposal	37
6.11.	SEC and Stockholder Filings	38
6.12.	Takeover Statutes	38
6.13.	Comfort Letters	38
6.14.	Indemnification	38
ARTICLE VII. PROXY STATEMENT		39
ARTICLE VIII. CONDITIONS		39
8.1.	Conditions to Each Party's Obligations	40
	8.1.1. MAS Stockholder Approval	40
	8.1.2. No Injunction or Action	40
	8.1.3. Governmental Approvals	40
	8.1.4. Required Consents	40
	8.1.5. Tax Opinion	41
8.2.	Conditions to Obligations of MAS and Acquisition Subsidiary	41
	8.2.1. ADSX Representation and Warranties	41
	8.2.2. Performance by ADSX and DA	41
	8.2.3. Absence of Certain Liens	41
	8.2.4. No Material Adverse Change	41
	8.2.5. Certificates and other Deliveries	41
	8.2.6. Opinion of ADSX Counsel	42
	8.2.7. Financial Opinion	42
8.3.	Conditions to Obligations of ADSX and DA	42
	8.3.1. MAS Representations and Warranties	42
	8.3.2. Performance by MAS and Acquisition Subsidiary	42
	8.3.3. No Material Adverse Change	42
	8.3.4. Certificates and Other Deliveries	42
	8.3.5. Opinion of MAS Counsel	43
	8.3.6. Registration Rights Agreement	43
	8.3.7. AMEX Listing	43
ARTICLE IX. TERMINATION AND ABANDONMENT		43
9.1.	Termination	43
9.2.	Effect of Termination	44

iii

ARTICLE X. MISCELLANEOUS		44
10.1.	Confidentiality	44
10.2.	Amendment and Modification	45
10.3.	Waiver of Compliance; Consents	45
10.4.	Survival of Representations and Warranties	45
10.5.	Notices	46
10.6.	Binding Effect; Assignment	47
10.7.	Expenses	47
10.8.	Governing Law	47
10.9.	Counterparts	47
10.10.	Interpretation	47
10.11.	Entire Agreement	48
10.12.	Specific Performance	48
10.13.	Third Parties	48
Exhibit A Other Subsidiaries
Exhibit B Interested Stockholders
Exhibit C Consent of IBM Credit Corporation
Exhibit D Registration Rights Agreement

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this "Agreement") is made and entered into as of November 1, 2001, by and among Applied Digital Solutions, Inc., a Missouri corporation ("ADSX "), Digital Angel Corporation, a Delaware corporation and wholly owned subsidiary of ADSX ("DA"), Medical Advisory Systems, Inc., a Delaware corporation ("MAS"), and Acquisition Subsidiary, Inc., a Delaware corporation and wholly owned subsidiary of MAS ("Acquisition Subsidiary").

Recitals

A. ADSX currently owns approximately 16.5% of the issued and outstanding capital stock of MAS and is now the single largest stockholder in MAS. ADSX currently controls two of the seven board seats of the Board of Directors of MAS. ADSX and MAS have discussed and considered the benefits to their respective stockholders of the transactions contemplated by this Agreement. The Board of Directors of MAS has appointed a Special Committee of Directors for purposes of considering the transactions contemplated by this Agreement.

B. The Board of Directors of MAS and the Board of Directors of ADSX have analyzed and determined that the value of DA and the Other Subsidiaries (herein defined) is approximately $150,000,000, which equates to a value of each share of the issued and outstanding capital stock of MAS of $8, prior to the effect of outstanding DA Options (herein defined), notwithstanding the current market price of such stock.

C. The Board of Directors of MAS has approved and deems it advisable and in the best interests of MAS and its stockholders to consummate (i) the merger of Acquisition Subsidiary with and into DA provided for herein (the "Merger"), pursuant to which the issued and outstanding shares of DA owned by ADSX will be converted into 18,750,000 shares of MAS common stock, and (ii) the contribution by ADSX of its ownership interest in the common stock of certain subsidiaries of ADSX, as set forth in Exhibit A hereto and incorporated herein by reference (collectively the "Other Subsidiaries"), to MAS (the "Contribution") (the Merger and the Contribution, collectively, the "Transaction"), upon the terms and subject to the conditions set forth herein. The Boards of Directors of Acquisition Subsidiary, ADSX and DA have approved and deem it advisable and in the best interests of their respective companies and their respective stockholders to consummate the Merger and the Contribution upon the terms and subject to the conditions set forth herein. The Special Committee of the Board of Directors of MAS has determined that the Transaction and the Transaction Consideration (as defined below) are fair to the stockholders of MAS excluding the stockholders set forth on Exhibit B (the "Interested Stockholders") (the stockholders of MAS excluding the Interested Stockholders are referred to herein as the "Public Stockholders").

D. For federal income tax purposes, it is intended that the Merger be treated as a reorganization under Section 368 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the "Code") and that the Contribution be treated as a tax free contribution under Section 351 of the Code.

E. ADSX, DA, MAS and Acquisition Subsidiary desire to make certain representations, warranties, covenants and agreements in connection with the Transaction.

NOW, THEREFORE, in consideration of the foregoing, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE I.
THE MERGER; THE CONTRIBUTION; CLOSING

1.1. The Merger and Contribution. Upon the terms and subject to the conditions set forth in this Agreement:

(a) At the Effective Time (defined below) of the Merger, Acquisition Subsidiary shall be merged with and into DA in accordance with the applicable provisions of the Delaware General Corporation Law (the "DGCL"). DA shall be the surviving corporation in the Merger (the "Surviving Corporation") and shall continue its corporate existence under the laws of the State of Delaware. After the Effective Time of the merger, the separate corporate existence of Acquisition Subsidiary shall cease. The Merger shall have the effects as set forth in the DGCL.

(b) Immediately after the Effective Time of the Merger, to effect the Contribution, ADSX shall deliver to MAS certificates, duly endorsed or accompanied by duly executed stock powers, evidencing ADSX's ownership interest in the common stock of the Other Subsidiaries as set forth in Exhibit A attached hereto and incorporated herein by reference (collectively, the "Other Subsidiaries Common Stock"), free and clear of all security interests, claims and restrictions. As a result, the Other Subsidiaries shall become subsidiaries of MAS.

(c) The closing of the Transaction (the "Closing") shall take place (a) at the offices of Bryan Cave LLP, One Metropolitan Square, Suite 3600, St. Louis, Missouri, at 10:00 a.m. local time, on the fifth business day following the day on which the last of the conditions set forth in Article VIII (excluding conditions that, by their terms, cannot be satisfied until the Closing Date, but subject to the fulfillment or waiver of such conditions) shall be fulfilled or waived in accordance herewith, or (b) at such other time, date or place as ADSX and MAS may agree. The date on which the Closing occurs is hereinafter referred to as the "Closing Date."

(d) As soon as practicable following the Closing, the parties shall (i) file with the Secretary of State of Delaware a certificate of merger with respect to the Merger (the "Certificate of Merger") in such form as is required by and executed in accordance with the DGCL and (ii) make all other filings or recordings required under the laws of Delaware in order to effect the purposes of this Agreement. The Merger shall become effective at the date and time of the filing of the Certificate of Merger (or such other date and time as may be agreed to by ADSX and MAS and specified in the Certificate of Merger as may be permitted by the DGCL). The consummation of the Contribution shall be conditioned on the consummation of the Merger. The time at which the Merger becomes effective is referred to in this Agreement as the "Effective Time."

(e) As soon as practicable following the Effective Time of the Merger and the consummation of the Contribution, the parties shall cooperate to change the name of the Surviving Corporation to "Digital Angel Acquisition Corp." and the name of MAS to "Digital Angel Corporation."

1.2. Directors and Officers. The directors of DA immediately prior to the Effective Time shall be the directors of the Surviving Corporation as of the Effective Time and until their successors are duly appointed or elected in accordance with the laws of Delaware or until their earlier death, resignation or removal. The officers of DA immediately prior to the Effective Time shall continue as the officers of the Surviving Corporation and after the Effective Time until such time as their successors shall be duly elected or appointed in accordance with the laws of Delaware or until their earlier death, resignation or removal.

1.3. Articles of Incorporation and Bylaws. The articles of incorporation and bylaws of DA immediately prior to the Effective Time shall be the articles of incorporation and bylaws of the Surviving Corporation as of the Effective Time.

1.4. Certificate of MAS. Immediately prior to or at the Effective Time, and subject to the terms and conditions of this Agreement and the DGCL, MAS shall cause the Amended and Restated Certificate of Incorporation of MAS to be amended and restated to change the name of MAS to "Digital Angel Corporation" and to increase the number of authorized shares of common stock to 95,000,000 shares by filing appropriate documentation (the "MAS Charter Amendment") with the Secretary of State of the State of Delaware.

ARTICLE II.
EFFECT OF THE MERGER ON SECURITIES OF MAS
AND DA

2.1. MAS Common Stock. Each share of the common stock of MAS outstanding immediately prior to the Effective Time shall be unaffected by the Merger.

2.2. Conversion of DA Stock. (a) Subject to the provisions of this Agreement, pursuant to the Merger, at the Effective Time each issued and outstanding share of common stock, par value $.00005 per share, of DA ("DA Common Stock"), shall be immediately converted into 0.9375 fully paid, nonassessable and newly issued shares of MAS common stock, $0.005 par value ("MAS Common Stock"), or an aggregate of 18,750,000 shares of MAS Common Stock (assuming no exercise of DA Options prior to the Closing), free and clear of all security interests, claims and restrictions. The shares of MAS Common Stock to be issued to ADSX in the Merger shall be referred to as the "Transaction Consideration." As a result of the issuance of Transaction Consideration, MAS shall become a majority owned subsidiary of ADSX and the Surviving Corporation and the Other Subsidiaries shall become subsidiaries of MAS and second-tier subsidiaries, of ADSX.

(b) Notwithstanding anything contained in this section to the contrary, each share of DA Common Stock issued and held in DA's treasury or by any of DA's subsidiaries immediately prior to the Effective Time shall, by virtue of the Merger, cease to be outstanding and shall be canceled and retired without payment of any consideration therefor.

2.3. Options. At the Effective Time, each option granted by DA to purchase shares of DA Common Stock (the "DA Options") which is outstanding and unexercised immediately prior to the Effective Time shall either be assumed by MAS or converted into an option ("New MAS Options") to purchase shares of MAS Common Stock having the same terms and conditions as are in effect immediately prior to the Effective Time (including such terms and conditions as may be incorporated by reference into the agreements evidencing DA Options pursuant to the plans or arrangements pursuant to which such DA Options were granted and taking into account the provisions of Section 6.8 hereof) except that the exercise price and number of shares issuable upon exercise shall be divided and multiplied, respectively by 0.9375.

2.4 Conversion of Acquisition Subsidiary Stock. At the Effective Time, by virtue of the Merger and without any action on the part of any of the parties, each share of the common stock of Acquisition Subsidiary outstanding immediately prior to the Effective Time shall become one share of common stock of the Surviving Corporation of the Merger.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF MAS

MAS represents and warrants to ADSX that the statements contained in this Article III are true and correct, except as set forth in the disclosure schedule delivered by MAS to ADSX and attached hereto and incorporated herein by reference (the "MAS Disclosure Schedule") or as otherwise expressly contemplated by this Agreement.

3.1. Organization and Good Standing. MAS is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of the subsidiaries of MAS, including Acquisition Subsidiary (each an "MAS Subsidiary" and collectively, the "MAS Subsidiaries"), is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Each of MAS and the MAS Subsidiaries is qualified to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified would have an MAS Material Adverse Effect. For purposes of this Agreement, "MAS Material Adverse Effect" shall mean a material adverse effect on (i) the business, assets, condition (financial or otherwise), properties, liabilities, or the results of operations of MAS and the MAS Subsidiaries, taken as a whole, provided, however, that no change or effect arising out of or in connection with or resulting from any of the following shall be deemed by it or by themselves, either alone or in combination, to constitute or contribute to an MAS Material Adverse Effect: (A) general economic conditions or changes therein, (B) financial market conditions or fluctuations, or (C) any action, change, effect, circumstances or condition expressly required by this Agreement or directly and demonstrably attributable to the execution, performance or announcement of this Agreement or the transactions contemplated hereby; (ii) the ability of MAS or Acquisition Subsidiary to perform its obligations set forth in this Agreement; or (iii) the ability of MAS or Acquisition Subsidiary to timely consummate the transactions contemplated by this Agreement. MAS and the MAS Subsidiaries have all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on their respective businesses as now being conducted and necessary to own, operate and lease their properties and assets except where the failure to have such power, licenses, authorizations, consents and approvals would not have an MAS Material Adverse Effect.

3.2. Capitalization. As of the date hereof, the authorized capital stock of MAS consists of 10,000,000 shares of MAS Common Stock and 1,000,000 shares of preferred stock, par value $1.75 per share. Of such authorized shares, as of the date hereof, there are issued and outstanding 5,121,230 shares of MAS Common Stock, 50,000 shares of MAS Common Stock are issued and held in the treasury of MAS, no shares of preferred stock have been designated or issued, or are outstanding and no other capital stock of MAS is issued or outstanding. As of the date hereof, the authorized capital stock of Acquisition Subsidiary consists of 100 shares of common stock, 1.00 par value ("Acquisition Subsidiary Common Stock"), and no shares of preferred stock. Of such authorized shares, as of the date hereof, there are issued and outstanding 10 shares of Acquisition Subsidiary Common Stock, no shares of Acquisition Subsidiary Common Stock are issued and held in the treasury of MAS and no other capital stock of Acquisition Subsidiary is issued or outstanding. All issued and outstanding shares of MAS Common Stock and Acquisition Subsidiary Common Stock are duly authorized, validly issued and outstanding, fully paid and nonassessable and were issued free of preemptive rights in compliance with applicable corporate and securities Laws (as hereinafter defined). Except as set forth in the MAS Disclosure Schedule, as of the date hereof there are no outstanding rights, including stock appreciation rights, subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or other agreements of any kind relating to, or the value of which is tied to the value of, any of the outstanding, authorized but not issued, unauthorized or treasury shares of the capital stock or any other security of MAS or Acquisition Subsidiary, and there is no authorized or outstanding security of any kind convertible into or exchangeable for any such capital stock or other security. All of the outstanding rights, including stock appreciation rights, subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or other agreements of any kind relating to, or the value of which is tied to the value of, any of the outstanding, authorized but not issued, unauthorized or treasury shares of the capital stock or any other security of MAS or Acquisition Subsidiary have been duly authorized and issued in accordance with all applicable Law. Except as set forth in the MAS Disclosure Schedule, there are no security interests, claims or restrictions upon the transfer of or otherwise pertaining to the securities (including, but not limited to, the ability to pay dividends thereon) of MAS and the MAS Subsidiaries or the ownership thereof other than those imposed by the Securities Act of 1933, as amended, and the rules and regulations thereunder (the "Securities Act"), the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act"), applicable state securities Laws or applicable corporate Law.

3.3. Subsidiaries. Each MAS Subsidiary is wholly owned by MAS and all of the capital stock and other interests of the MAS Subsidiaries so held by MAS are directly or indirectly owned by it, free and clear of any claim, lien, encumbrance, security interest or agreement with respect thereto. All of the outstanding shares of capital stock in each of the MAS Subsidiaries directly or indirectly held by MAS are duly authorized, validly issued and outstanding, fully paid and nonassessable and were issued free of preemptive rights in compliance with applicable corporate and securities Laws. There are no irrevocable proxies or similar obligations with respect to such capital stock of the MAS Subsidiaries held by MAS and no equity securities or other interests of any of the MAS Subsidiaries are or may become required to be issued or purchased by reason of any options, warrants, rights to subscribe to, puts, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any capital stock of any MAS Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any MAS Subsidiary is bound to issue additional shares of its capital stock, or options, warrants or rights to purchase or acquire any additional shares of its capital stock or securities convertible into or exchangeable for such shares. Acquisition Subsidiary is directly and wholly owned by MAS and was recently organized under Delaware law solely for purposes of the Transaction. Acquisition Subsidiary has no assets or liabilities and has not engaged in any business or activities other than as contemplated by this Agreement.

3.4. Authorization; Binding Agreement. (a) MAS and Acquisition Subsidiary each have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the Merger and the MAS Charter Amendment, have been duly and validly authorized by the Board of Directors of MAS and the Board of Directors of Acquisition Subsidiary and by MAS as the sole stockholder of Acquisition Subsidiary, and no other corporate proceedings on the part of MAS or any MAS Subsidiary are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby (other than the approval and adoption of the MAS Charter Amendment and this Agreement and the transactions contemplated hereby including the Merger by the stockholders of MAS in accordance with the DGCL and the Amended and Restated Certificate of Incorporation and Bylaws of MAS). This Agreement has been duly and validly executed and delivered by MAS and Acquisition Subsidiary and constitutes the legal, valid and binding agreements of MAS and Acquisition Subsidiary, enforceable against each of MAS and Acquisition Subsidiary in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by principles of equity ("Enforceability Exceptions").

(b) The only vote of any class or series of capital stock of MAS necessary to adopt or approve the Charter Amendment is a majority of the outstanding shares of MAS Common Stock. The only vote of any class or series of capital stock of MAS necessary to adopt or approve the Merger, this Agreement and the transactions contemplated by this Agreement is at least 66 2/3% of the outstanding shares of MAS Common Stock which are not owned by the Interested Stockholders.

3.5. Governmental Approvals. No consent, approval, waiver or authorization of, notice to or declaration or filing with ("Consent") any nation or government, any state or other political subdivision thereof, any person, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government including, without limitation, any governmental or regulatory authority, agency, department, board, commission or instrumentality, any court, tribunal or arbitrator and any self-regulatory organization ("Governmental Authority") on the part of MAS or any of the MAS Subsidiaries is required in connection with the execution or delivery by MAS of this Agreement or the consummation of the transactions contemplated hereby other than (i) the filing of the Certificate of Merger and the MAS Charter Amendment with the Secretary of State of the State of Delaware in accordance with the DGCL, (ii) the filing of the definitive Proxy Statement (as defined herein) with the Securities and Exchange Commission ("SEC"), and (iii) such other Consents the failure of which to obtain will not have an MAS Material Adverse Effect.

3.6. No Violations. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by MAS with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Articles and/or Certificate of Incorporation or Bylaws or other governing instruments of MAS or any of the MAS Subsidiaries, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration or augment the performance required) under any of the terms, conditions or provisions of any MAS Material Contract (as hereinafter defined) or other material obligation to which MAS or any MAS Subsidiary is a party or by which any of them or any of their properties or assets may be bound, (iii) result in the creation or imposition of any lien or encumbrance of any kind upon any of the assets of MAS or any MAS Subsidiary, or (iv) subject to obtaining the Consents from Governmental Authorities referred to in Section 3.5, above, contravene any applicable provision of any constitution, treaty, statute, law, code, rule, regulation, ordinance, policy or order of any Governmental Authority or other matters having the force of law including, but not limited to, any orders, decisions, injunctions, judgments, awards and decrees of or agreements with any court or other Governmental Authority ("Law") currently in effect to which MAS or any MAS Subsidiary or its or any of their respective assets or properties are subject, except in the case of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which do not or would not reasonably be expected to have an MAS Material Adverse Effect.

3.7. Securities Filings and Litigation. (a) MAS has made available to ADSX true and complete copies of (i) its Annual Reports on Form 10-K or Form 10-KSB, as amended, for the years ended October 31, 1998, 1999 and 2000, as filed with the SEC, (ii) its proxy statements relating to all of the meetings of stockholders (whether annual or special) of MAS since October 31, 1998, as filed with the SEC, and (iii) all other reports, statements and registration statements and amendments thereto (including, without limitation, Quarterly Reports on Form 10-Q or Form 10-QSB and Current Reports on Form 8-K, as amended) filed by MAS with the SEC since October 31, 1998. The reports and statements set forth in clauses (i) through (iii), above, and those subsequently provided or required to be provided pursuant to this section, are referred to collectively herein as the "MAS Securities Filings." As of their respective dates, or as of the date of the last amendment thereof, if amended after filing, none of the MAS Securities Filings (including all schedules thereto and disclosure documents incorporated by reference therein), contained or, as to MAS Securities Filings subsequent to the date hereof, will contain any untrue statement of a material fact or omitted or, as to MAS Securities Filings subsequent to the date hereof, will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the MAS Securities Filings was filed in a timely manner and at the time of filing or as of the date of the last amendment thereof, if amended after filing, complied or, as to MAS Securities Filings subsequent to the date hereof, will comply in all material respects with the Exchange Act or the Securities Act, as applicable.

(b) There is no action, cause of action, claim, demand, suit, proceeding, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, by or before any court, tribunal, arbitrator or other Governmental Authority ("Litigation") pending or, to the knowledge of MAS, threatened against MAS or any of its subsidiaries, any officer, director, employee or agent thereof, in his or her capacity as such, or as a fiduciary with respect to any Benefit Plan (as defined herein) of MAS or any of its subsidiaries or otherwise relating to MAS or any of its subsidiaries or the securities of any of them, or any properties or rights of MAS or any of its subsidiaries or any Benefit Plan of MAS or any of its subsidiaries which is required to be described in any MAS Securities Filing that is not so described. No event has occurred as a consequence of which MAS would be required to file a Current Report on Form 8-K pursuant to the requirements of the Exchange Act as to which such a report has not been timely filed with the SEC. Any reports, statements and registration statements and amendments thereof (including, without limitation, Annual Reports on Form 10-K or Form 10-KSB, Quarterly Reports on Form 10-Q or Form 10-QSB and Current Reports on Form 8-K, as amended) filed by MAS with the SEC after the date hereof shall be provided to ADSX on or prior to the date of such filing.

3.8. Financial Statements. The audited consolidated financial statements and unaudited interim financial statements of MAS included in the MAS Securities Filings (the "MAS Financial Statements") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes thereto) and present fairly, in all material respects, the financial position of MAS and the MAS Subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments, any other adjustments described therein and the fact that certain information and notes have been condensed or omitted in accordance with the Exchange Act.

3.9. Absence of Certain Changes. Except as set forth in the MAS Securities Filings filed by MAS prior to the date of this Agreement, since October 31, 2000, there has not been: (i) any event, occurrence, fact, condition, change, development or effect ("Event") (except for those caused by the pendency or announcement of this Agreement, or the transactions contemplated hereby) that has had or would reasonably be expected to have an MAS Material Adverse Effect; (ii) any declaration, payment or setting aside for payment of any dividend (except to MAS or any MAS Subsidiary wholly owned by MAS) or other distribution or any redemption, purchase or other acquisition of any shares of capital stock or securities of MAS or any MAS Subsidiary; (iii) any return of any capital or other distribution of assets to stockholders of MAS or any MAS Subsidiary (except to MAS or any MAS Subsidiary wholly owned by MAS); (iv) any acquisition (by merger, consolidation, acquisition of stock or assets or otherwise) of any person or business by MAS or any MAS Subsidiary; or (v) any other action or agreement or undertaking by MAS or any MAS Subsidiary that, if taken or done on or after the date hereof without ADSX's consent, would result in a breach of Section 5.1, below.

3.10. Related Party Transactions. Except as set forth in the MAS Securities Filings filed by MAS prior to the date of this Agreement, since October 31, 2000, MAS has not and none of the MAS Subsidiaries have entered into any relationship or transaction of a sort that would be required to be disclosed pursuant to Item 404 of Regulation S-K by MAS in a proxy statement in connection with an annual meeting of stockholders.

3.11. Compliance with Laws. The business of MAS and each MAS Subsidiary has been operated in compliance with all Laws applicable thereto, except for any instances of non-compliance which do not and would not reasonably be expected to have an MAS Material Adverse Effect. Without limiting the generality of the foregoing, neither MAS nor any MAS Subsidiary has conducted its business in violation of applicable Laws, tariffs, rules and regulations in any jurisdiction, foreign or domestic, which violation has had or would reasonably be expected to have an MAS Material Adverse Effect.

3.12. Permits. MAS and the MAS Subsidiaries have all material permits, certificates, licenses, approvals, tariffs and other authorizations required in connection with the operation of their respective businesses, and neither MAS nor any MAS Subsidiary is in violation of any such permit, certificate, license, approval, tariff or other authorization, and no proceedings are pending or, to the knowledge of MAS, threatened, to revoke or limit any such permit, certificate, license, approval, tariff or other authorization, except any such violation or proceeding which does not and would not reasonably be expected to have an MAS Material Adverse Effect.

3.13. Finders and Investment Bankers. Neither MAS, any MAS Subsidiaries, nor any of the officers or directors of any of them has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated hereby.

3.14. Material Contracts. MAS has made available to ADSX true and accurate copies of the MAS Material Contracts, a true, complete and accurate list of which is set forth in the MAS Disclosure Schedule. For purposes of this Agreement, "MAS Material Contract" means any note, bond, mortgage, indenture, contract, lease, license, agreement, understanding, instrument, bid or proposal, whether written or oral (each a "Contract"), entered into by MAS or any MAS Subsidiary (i) that is required to be described in or filed as an exhibit to any MAS Securities Filing; (ii) that was entered into outside the ordinary course of business; (iii) that is material to the business of MAS; (iv) pursuant to which MAS is or will be liable for an amount in excess of $25,000; or (v) which may not be terminated, without additional liability, within six months. Neither MAS nor any MAS Subsidiary is a party or is subject to any Contract required to be described in or filed as an exhibit to any MAS Securities Filing that is not so described in or filed as required by the Securities Act or the Exchange Act, as the case may be. All such MAS Material Contracts are valid and binding and are in full force and effect and enforceable against MAS or such subsidiary in accordance with their respective terms, subject to the Enforceability Exceptions. Except as referenced in Section 3.6 above, (i) no Consent of any person is needed in order that each such MAS Material Contract shall continue in full force and effect in accordance with its terms without penalty, acceleration or rights of early termination by reason of the consummation of the transactions contemplated by this Agreement, except for Consents the absence of which would not have an MAS Material Adverse Effect, and (ii) neither MAS nor any of its subsidiaries is in violation or breach of or default under any such MAS Material Contract; nor to the knowledge of MAS is any other party to any such MAS Material Contract in violation or breach of or default under any such MAS Material Contract in each case where such violation or breach would have an MAS Material Adverse Effect. Neither MAS nor any MAS Subsidiary is a party to or is subject to any Contract that limits the ability of MAS or any MAS Subsidiary, or would limit the ability of ADSX or any subsidiary of ADSX after the Effective Time, to compete in or conduct any line of business or compete with any person or in any geographic area or during any period. Except as contemplated by this Agreement, Acquisition Subsidiary is not a party to any Contract.

3.15. Employee Benefit Plans. (a) There are no Benefit Plans (as defined below) maintained or contributed to by MAS or an MAS Subsidiary under which MAS or an MAS Subsidiary could incur any material liability. A "Benefit Plan" shall include (i) an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, together with all regulations thereunder ("ERISA"), even if, because of some other provision of ERISA, such plan is not subject to any or all of ERISA's provisions, and (ii) whether or not described in the preceding clause, (a) any pension, profit sharing, stock bonus, deferred or supplemental compensation, retirement, thrift, stock purchase, stock appreciation or stock option plan, or any other compensation, welfare, fringe benefit or retirement plan, program, policy, course of conduct, understanding or arrangement of any kind whatsoever, whether formal or informal, oral or written, providing for benefits for or the welfare of any or all of the current or former employees or agents of a specified person or their beneficiaries or dependents, (b) a multi-employer plan as defined in Section 3(37) of ERISA (a "Multi-Employer Plan"), or (c) a multiple employer plan as defined in Section 413 of the Code.

(b) With respect to each Benefit Plan (where applicable): MAS has made available to ADSX complete and accurate copies of (i) all plan and trust texts and agreements, insurance contracts and other funding arrangements; (ii) the most recent annual report on the Form 5500 series; (iii) the most recent financial statement and/or annual and periodic accounting of plan assets; (iv) the most recent determination letter received from the Internal Revenue Service; and (v) the most recent summary plan description as defined in ERISA.

(c) With respect to each Benefit Plan while maintained or contributed to by MAS or any MAS Subsidiary: (i) if intended to qualify under Code Sections 401(a) or 403(a), such Benefit Plan has received a favorable determination letter from the IRS that it so qualifies, and its trust is exempt from taxation under Code Section 501(a) and, to the knowledge of MAS, nothing has since occurred to cause the loss of the Benefit Plan's qualification; (ii) except for payment of benefits made in the ordinary course of the plan administration, no event has occurred and, to the knowledge of MAS, there exists no circumstance under which MAS or any MAS Subsidiary could reasonably be expected to incur liability under ERISA, the Code or otherwise; (iii) no accumulated funding deficiency as defined in Code Section 412 has occurred or exists, (iv) no non-exempt prohibited transaction as defined under ERISA and the Code has occurred; (v) no reportable event as defined in Section 4043 of ERISA has occurred or will by virtue of the consummation of the transactions contemplated by this Agreement (other than events as to which the 30-day notice period is waived pursuant to Section 4043 of ERISA); (vi) all contributions and premiums due have fully been made and paid on a timely basis; (vii) all contributions made or required to be made under any Benefit Plan meet the requirements for deductibility under the Code, and all contributions accrued prior to the Effective Time which have not been made have been properly recorded on the MAS Financial Statements in a manner satisfying the requirements of Financial Accounting Standards 87 and 88; (viii) the present value of all "benefit liabilities" (as defined in ERISA Section 4001(a)(16) and determined based on the actuarial assumptions and methods used under such Benefit Plan for the most recent Benefit Plan actuarial valuation and assuming for such purposes that all benefits provided under the Benefit Plan are fully vested) under each such Benefit Plan did not exceed as of the most recent Benefit Plan actuarial valuation date, and will not exceed as of the Closing Date, the then current value of the assets of such Benefit Plan as determined pursuant to Code Section 412, and (ix) neither MAS nor any MAS Subsidiary has completely or partially withdrawn from a Plan that is a Multi-employer Plan, and MAS would not become subject to liability under ERISA if MAS were to withdraw completely from all multi-employer plans in which it currently participates, except, in each case, for any deviations from the foregoing which do not and would not reasonably be expected to have an MAS Material Adverse Effect.

(d) Except as provided in Section 5.9 below, the consummation of the Merger will not, either alone or in conjunction with another event under the terms of any Benefit Plan: (i) entitle any individual to severance pay, (ii) accelerate the time of payment or vesting of benefits or increase the amount of compensation due to any individual; or (iii) give rise to the payment of any amount that would not be deductible pursuant to Section 280G of the Code.

3.16. Taxes and Returns. (a) MAS and each of the MAS Subsidiaries have timely filed or caused to be filed all material Tax Returns required to be filed by it, and all material Tax Returns filed by MAS and the MAS Subsidiaries are true, complete and correct in all material respects.

(b) MAS and the MAS Subsidiaries have each timely paid, collected or withheld, or caused to be timely paid, collected or withheld, all material amounts of Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the MAS Financial Statements have been established.

(c) There are no claims or assessments pending against MAS or any of the MAS Subsidiaries for any alleged deficiency in any Tax, and neither MAS nor any of the MAS Subsidiaries has been notified in writing of any proposed Tax claims or assessments against MAS or any of the MAS Subsidiaries (other than in each case, claims or assessments for which adequate reserves in the MAS Financial Statements have been established.

(d) There are no material federal, state, local or foreign audits or administrative proceedings pending with regard to any material amounts of Tax or Tax Return of MAS or the MAS Subsidiaries and none of them has received a written notice of any proposed material audit or proceeding.

(e) Neither MAS nor any of the MAS Subsidiaries has any waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes.

(f) There are no outstanding requests by MAS or any of the MAS Subsidiaries for any extension of time within which to file any material Tax Return or within which to pay any material amounts of Taxes shown to be due on any return.

(g) There are no liens for material amounts of Taxes on the assets of MAS or any of the MAS Subsidiaries except for statutory liens for current Taxes not yet due and payable.

(h) Neither MAS nor any MAS Subsidiary is a party to any agreement, contract, arrangement, or plan that has resulted or would result, individually or in the aggregate, in connection with this Agreement or any change of control of MAS or any of the MAS Subsidiaries in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code.

(i) For purposes of this Agreement, the term "Tax" shall mean any federal, state, local, foreign or provincial income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, alternative or added minimum, ad valorem, withholding, estimated, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty imposed by any Governmental Authority. The term "Tax Return" shall mean a report, return or other information (including any attached schedules or any amendments to such report, return or other information) required to be supplied to or filed with a Governmental Authority with respect to any Tax, including an information return, claim for refund, amended return or declaration of estimated Tax.

3.17. No Adverse Actions. There is no existing, pending or, to the knowledge of MAS, threatened termination, cancellation, limitation, modification or change in the business relationship of MAS or any of the MAS Subsidiaries, with any supplier, customer or other person except such as would not reasonably be expected to have an MAS Material Adverse Effect. None of MAS, any MAS Subsidiary or, to the knowledge of MAS, any director, officer, agent, employee or other person acting on behalf of any of the foregoing has used any corporate funds for unlawful contributions, payments, gifts or entertainment or for the payment of other unlawful expenses relating to political activity, or made any direct or indirect unlawful payments to governmental or regulatory officials or others, which would reasonably be expected to have an MAS Material Adverse Effect.

3.18. Fairness Opinion. The Board of Directors of MAS, the Special Committee of the Board of Directors of MAS and the Board of Directors of Acquisition Subsidiary have received from Jessup & Lamont an opinion to the effect that as of the date of this Agreement the Transaction Consideration is fair to the Public Stockholders of MAS from a financial point of view.

3.19. HSR Act. MAS together with all the entities it controls, has less than $10 million in assets, calculated in accordance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. MAS is not engaged in "manufacturing" within the meaning of that Act.

3.20. Intellectual Property. For purposes of this Agreement, "Intellectual Property" shall mean all patents, trademarks, service marks, trade names, domain names, trade secrets, copyrights, franchises, know-how and similar rights of or used by a person, all applications for any of the foregoing and all permits, grants and licenses or other rights running to or from such person relating to any of the foregoing. MAS or one of the MAS Subsidiaries owns, or is licensed to or otherwise has the right to use, all material Intellectual Property currently used in its or their respective businesses. The rights of MAS and the MAS Subsidiaries in such Intellectual Property are, subject to the rights of any licensor thereof, free and clear of any liens or other encumbrances and restrictions and neither MAS nor any of the MAS Subsidiaries has received, as of the date of this Agreement, notice of any adversely-held Intellectual Property of any other person, or notice of any charge or claim of infringement or breach from any person relating to such Intellectual Property or any material process or confidential information ("IP Claim Notice") of MAS or any MAS Subsidiary and does not know of any basis for any such charge or claim. Neither MAS, the MAS Subsidiaries nor their respective predecessors, if any, has conducted business at any time prior to the date hereof under any corporate, trade or fictitious names other than their current corporate names. MAS shall promptly notify, and shall cause the MAS Subsidiaries to promptly notify, ADSX of any IP Claim Notice received by MAS or a MAS Subsidiary after the date of this Agreement.

3.21. Undisclosed Liabilities. MAS and the MAS Subsidiaries do not have any liabilities or obligations whatsoever, whether accrued, contingent or otherwise, and MAS knows of no basis for any claim against MAS or any MAS Subsidiary for any liability or obligation, except (i) to the extent set forth or reflected in the MAS Financial Statements, (ii) to the extent expressly set forth on the MAS Disclosure Schedule, or (iii) liabilities or obligations incurred in the normal and ordinary course of business since October 31, 2000, and except, in each case, for any deviations from the foregoing which individually or in the aggregate do not and would not reasonably be expected to have an MAS Material Adverse Effect.

3.22. Environmental Matters. Except, in each case, for any deviations which do not and would not reasonably be expected to have an MAS Material Adverse Effect, as of the date of this Agreement, (i) each of MAS and the MAS Subsidiaries is in compliance with all applicable Environmental Laws (as hereinafter defined), (ii) each of MAS and the MAS Subsidiaries has obtained, and is in compliance with, all permits and other authorizations of Governmental Authorities necessary under applicable Environmental Laws for the construction of its facilities and the conduct of its operations, as applicable, (collectively, the "Environmental Permits"), (iii) there is no civil, criminal or administrative judgment, action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice or demand letter pending or, to the knowledge of MAS, threatened against MAS, an MAS Subsidiary or any of their respective properties alleging a violation of, or liability under, any Environmental Laws and (iv) there are no past or present Events which reasonably may be expected to prevent compliance with, or which have given rise to or will give rise to liability on the part of MAS or an MAS Subsidiary under, Environmental Laws. The MAS Disclosure Schedule lists all environmental reports in the possession of MAS or an MAS Subsidiary relating to any of their respective past or present properties. For purposes of this Agreement, the term "Environmental Laws" shall mean Laws regulating asbestos, polychlorinated biphenyls, radioactive materials and wastes, petroleum and petroleum products, contaminants, pollutants, hazardous or toxic wastes or substances, and Laws relating to protection of the environment, pollution, waste control and human health and safety as it relates to the environment.

3.23. Corporate Records. The respective corporate record books of or relating to MAS and each of the MAS Subsidiaries made available to ADSX by MAS contain accurate and complete records of (i) all corporate actions of the stockholders and directors (and committees thereof) of MAS and each MAS Subsidiary, (ii) the Certificate and/or Articles of Incorporation, Bylaws and/or other governing instruments, as amended, of MAS and the MAS Subsidiaries, and (iii) the issuance and transfer of stock of MAS and each of the MAS Subsidiaries. Neither MAS nor any MAS Subsidiary has any of its material records or information recorded, stored, maintained or held off the premises of MAS and the MAS Subsidiaries.

3.24. Real Property. (a) The MAS Disclosure Schedule sets forth a true, correct and complete schedule as of the date of this Agreement of all real property owned by MAS or any of the MAS Subsidiaries. MAS or one of the MAS Subsidiaries, as indicated thereon, is the owner of fee title to the real property described on the MAS Disclosure Schedule and to all of the buildings, structures and other improvements located thereon free and clear of any material mortgage, deed of trust, lien, pledge, security interest, claim, lease, charge, option, right of first refusal, easement, restrictive covenant, encroachment or other survey defect, encumbrance or other restriction or limitation except for the matters listed on the MAS Disclosure Schedule and, except for any exceptions, easements, restrictive covenants, encroachments or other survey defects, encumbrances, restrictions or limitations which, individually or in the aggregate, do not and would not reasonably be expected to have an MAS Material Adverse Effect or to interfere in any material respect with the present use and enjoyment of such real property.

(b) The MAS Disclosure Schedule sets forth a true, correct and complete schedule as of the date of this Agreement of all material leases, subleases, easements, rights-of-way, licenses or other agreements under which MAS or any of the MAS Subsidiaries uses or occupies, or has the right to use or occupy any material real property or improvements thereon. Except for the matters listed on the MAS Disclosure Schedule, MAS or an MAS Subsidiary, as indicated thereon, holds the leasehold estate under or other interest in each such lease, sublease, easement, right-of-way, license or other agreement free and clear of all liens, encumbrances and other rights of occupancy other than statutory landlords' or mechanics' liens which have not been executed upon, and except for liens, encumbrances and rights that do not and would not reasonably be expected to have an MAS Material Adverse Effect or to interfere in any material respect with the present use and enjoyment of such leasehold estate or interest.

3.25. Title to and Condition of Personal Property. MAS and each of the MAS Subsidiaries have good and marketable title to, or a valid leasehold interest in, all material items of any personal property currently used in the operation of their respective businesses, and such property or leasehold interests are free and clear of all liens, claims, charges, security interests, options, or other title defects or encumbrances that have had or would reasonably be expected to have an MAS Material Adverse Effect or to interfere in any material respect with the present use and enjoyment of such property or interests. As of the date of this Agreement, all such personal property is in reasonably good operating condition and repair as required for use in the businesses of MAS and the MAS Subsidiaries (ordinary wear and tear excepted), is reasonably suitable for the use to which the same is customarily put by MAS or any MAS Subsidiary and is free from defects except where there would not be an MAS Material Adverse Effect.

3.26. Labor Matters. Neither MAS nor any of the MAS Subsidiaries has any material obligations, contingent or otherwise, under any employment, severance or consulting agreement, any collective bargaining agreement or any other contract with a labor union or other labor or employee group. To the knowledge of MAS, as of the date of this Agreement, there are no negotiations, demands or proposals which are presently pending or overtly threatened by or on behalf of any labor union with respect to the unionizing of employees of MAS or any MAS Subsidiary. As of the date of this Agreement, there is no unfair labor practice complaint against MAS or any MAS Subsidiary pending or, to the knowledge of MAS, threatened before the National Labor Relations Board or comparable agency, no unresolved grievance against MAS or any MAS Subsidiary, no collective bargaining agreement which is currently being negotiated by MAS or any MAS Subsidiary, and neither MAS nor any MAS Subsidiary is experiencing any work stoppage, strike, slowdown or other labor difficulty which, in each case, would reasonably be expected to have an MAS Material Adverse Effect. As of the date of this Agreement, no employee has informed MAS or any MAS Subsidiary of his or her intention to terminate his or her employment with MAS or any MAS Subsidiary as a result of any announcement or consummation of the transactions contemplated by this Agreement. MAS shall promptly notify, and shall cause the MAS Subsidiaries to promptly notify, ADSX upon knowledge by MAS or an MAS Subsidiary of the occurrence after the date hereof of any matter referenced in this Section 3.26.

3.27. Insurance. The MAS Disclosure Schedule lists each policy of insurance which MAS and each of the MAS Subsidiaries has obtained and maintains. As of the date of this Agreement, neither MAS nor any of the MAS Subsidiaries has received notice of default under, or intended cancellation or nonrenewal of, any of such policies of insurance. Neither MAS nor any MAS Subsidiary has been refused any insurance for any material coverage by an insurance carrier to which it has applied for such insurance coverage.

3.28. Disclosure. No representation or warranty of MAS herein and no information contained or referenced in the MAS Disclosure Schedule or in any other document subsequently delivered by MAS to ADSX pursuant hereto contains or will contain, when such statement was made or when such information or document was delivered, any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make any statement contained herein or therein, when such statement was made or when such information or document was delivered, not misleading.

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ADSX

ADSX represents and warrants to MAS that the statements contained in this Article IV are true and correct, except as set forth in the disclosure schedule delivered by ADSX to MAS and attached hereto and incorporated herein by reference (the "DA Disclosure Schedule") or as otherwise expressly contemplated by this Agreement.

4.1. Organization and Good Standing. ADSX is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri. DA is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of the subsidiaries of DA (the "DA Subsidiaries") and the Other Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Each of DA, the DA Subsidiaries and the Other Subsidiaries is qualified to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified would have a DA Group Material Adverse Effect. For purposes of this Agreement, "DA Group Material Adverse Effect" shall mean a material adverse effect on (i) the business, assets, condition (financial or otherwise), properties, liabilities or the results of operations of DA, the DA Subsidiaries and the Other Subsidiaries, taken as a whole, provided, however, that no change or effect arising out of or in connection with or resulting from any of the following shall be deemed by it or by themselves, either alone or in combination, to constitute or contribute to a DA Group Material Adverse Effect: (A) general economic conditions or changes therein, (B) financial market conditions or fluctuations, or (C) any action, change, effect, circumstances or condition expressly required by this Agreement or directly and demonstrably attributable to the execution, performance or announcement of this Agreement or the transactions contemplated hereby; (ii) the ability of ADSX or DA to perform its obligations set forth in this Agreement, or (iii) the ability of ADSX or DA to timely consummate the transactions contemplated by this Agreement. ADSX, DA, the DA Subsidiaries and the Other Subsidiaries have all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on their respective businesses as now being conducted and necessary to own, operate and lease their properties and assets except where the failure to have such power, licenses, authorizations, consents and approvals would not have an MAS Material Adverse Effect.

4.2. Capitalization.

(a) As of the date hereof, the authorized capital stock of DA consists of 50,000,000 shares of DA Common Stock. Of such authorized shares, as of the date hereof, there are issued and outstanding 20,000,000 shares of DA Common Stock, all of which are owned by ADSX, no shares of DA Common Stock are issued and held in the treasury of DA and no other capital stock of DA is issued or outstanding.

(b) As of the date hereof, the number of authorized shares, the number of issued and outstanding shares and the number of treasury shares of the capital stock of the Other Subsidiaries consists of the number of shares of common stock and preferred stock set forth in Exhibit A attached hereto and incorporated herein by reference, at the par values set forth therein. No other capital stock of any of the Other Subsidiaries is issued or outstanding.

(c) All issued and outstanding shares of DA Common Stock and the Other Subsidiaries Common Stock are duly authorized, validly issued and outstanding, fully paid and nonassessable and were issued free of preemptive rights in compliance with applicable corporate and securities Laws. Except as set forth in the DA Disclosure Schedule, as of the date hereof there are no outstanding rights, subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or other agreements of any kind relating to any of the outstanding, authorized but not issued, unauthorized or treasury shares of the capital stock or any other security of DA or the Other Subsidiaries, and there is no authorized or outstanding security of any kind convertible into or exchangeable for any such capital stock or other security. All of the outstanding rights, subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or other agreements of any kind relating to any of the outstanding, authorized but not issued, unauthorized or treasury shares of the capital stock or any other security of DA or the Other Subsidiaries have been duly authorized and issued in accordance with all applicable Law. Except as disclosed in the DA Disclosure Schedule, there are no security interests, claims or restrictions upon the transfer of or otherwise pertaining to the securities (including, but not limited to, the ability to pay dividends thereon) of DA, the DA Subsidiaries or the Other Subsidiaries or the ownership thereof other than those imposed by the Securities Act, the Securities Exchange Act, applicable state securities Laws or applicable corporate Law.

4.3. Subsidiaries.

(a) Each DA Subsidiary is wholly owned by DA and all of the capital stock and other interests of the DA Subsidiaries so held by DA are directly or indirectly owned by it, free and clear of any claim, lien, encumbrance, security interest or agreement with respect thereto. All of the outstanding shares of capital stock in each of the DA Subsidiaries directly or indirectly held by DA are duly authorized, validly issued and outstanding, fully paid and nonassessable and were issued free of preemptive rights in compliance with applicable corporate and securities Laws. There are no irrevocable proxies or similar obligations with respect to such capital stock of the DA Subsidiaries held by DA and no equity securities or other interests of any of the DA Subsidiaries are or may become required to be issued or purchased by reason of any options, warrants, rights to subscribe to, puts, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any capital stock of any DA Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any DA Subsidiary is bound to issue additional shares of its capital stock, or options, warrants or rights to purchase or acquire any additional shares of its capital stock or securities convertible into or exchangeable for such shares.

(b) Except as set forth in Exhibit A, each of the Other Subsidiaries is wholly owned by ADSX and all of the capital stock and other interests of the Other Subsidiaries so held by ADSX are directly or indirectly owned by it, free and clear of any claim, lien, encumbrance, security interest or agreement with respect thereto. All of the outstanding shares of capital stock in each of the Other Subsidiaries directly or indirectly held by ADSX are duly authorized, validly issued and outstanding, fully paid and nonassessable and were issued free of preemptive rights in compliance with applicable corporate and securities Laws. There are no irrevocable proxies or similar obligations with respect to such capital stock of the Other Subsidiaries held by ADSX and no equity securities or other interests of any of the Other Subsidiaries are or may become required to be issued or purchased by reason of any options, warrants, rights to subscribe to, puts, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any capital stock of any Other Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Other Subsidiary is bound to issue additional shares of its capital stock, or options, warrants or rights to purchase or acquire any additional shares of its capital stock or securities convertible into or exchangeable for such shares.

4.4 Authorization; Binding Agreement. ADSX and DA each have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the Merger, have been duly and validly authorized by DA's Board of Directors and by ADSX's Board of Directors, and no other corporate proceedings on the part of ADSX, DA, any DA Subsidiary or any of the Other Subsidiaries are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by ADSX and DA and constitutes, and upon execution and delivery thereof as contemplated by this Agreement, the legal, valid and binding agreements of ADSX and DA, enforceable against ADSX and DA in accordance with its and their respective terms, subject to the Enforceability Exceptions.

4.5 Governmental Approvals. No Consent from or with any Governmental Authority on the part of ADSX, DA, any of the DA Subsidiaries or any of the Other Subsidiaries is required in connection with the execution or delivery by ADSX and DA of this Agreement or the consummation by ADSX and DA of the transactions contemplated hereby other than (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL and (ii) such other Consents the failure of which to obtain will not have an MAS Material Adverse Effect.

4.6 No Violations. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by ADSX and DA with any of the provisions hereof or thereof will not (i) conflict with or result in any breach of any provision of the Articles and/or Certificate of Incorporation or Bylaws or other governing instruments of ADSX, DA, any of the DA Subsidiaries or any of the Other Subsidiaries, (ii) except for the Consent set forth in Exhibit C attached hereto relating to the Second Amended and Restated Term and Revolving Credit Agreement dated October 17, 2000, by and among IBM Credit Corporation, IBM Financing, ADSX and Ground Effects, Ltd., as amended by Acknowledgment, Waiver and Amendment No. 1 dated March 30, 2001 and except as set forth in the DA Disclosure Schedule, require any Consent under or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration or augment the performance required) under any of the terms, conditions or provisions of any DA Group Material Contract (as hereinafter defined) or other material obligation to which ADSX, DA, any DA Subsidiary or any Other Subsidiary is a party or by which any of them or any of their properties or assets may be bound, (iii) result in the creation or imposition of any lien or encumbrance of any kind upon any of the assets of ADSX, DA, any DA Subsidiary or any Other Subsidiary, or (iv) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.5, above, contravene any Law currently in effect to which ADSX, DA, any DA Subsidiary or any Other Subsidiary or its or any of their respective assets or properties are subject, except in the case of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which do not or would not reasonably be expected to have a DA Group Material Adverse Effect.

4.7 Securities Filings and Litigation. (a) ADSX has made available to MAS true and complete copies of (i) ADSX's Annual Reports on Form 10-K, as amended, for the years ended December 31, 1998, 1999 and 2000, as filed with the SEC, (ii) ADSX's proxy statements relating to all of the meetings of stockholders (whether annual or special) of ADSX since December 31, 1998, as filed with the SEC, and (iii) all other reports, statements and registration statements and amendments thereto (including, without limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by ADSX with the SEC since December 31, 1998. The reports and statements set forth in clauses (i) through (iii), above, and those subsequently provided or required to be provided pursuant to this Section, are referred to collectively herein as the "ADSX Securities Filings." As of their respective dates, or as of the date of the last amendment thereof, if amended after filing, none of the ADSX Securities Filings (including all schedules thereto and disclosure documents incorporated by reference therein), to the extent they relate to or reflect the assets, liabilities or operations of DA or the Other Subsidiaries, contained or, as to ADSX Securities Filings subsequent to the date hereof, will contain any untrue statement of a material fact or omitted or, as to ADSX Securities Filings subsequent to the date hereof, will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the ADSX Securities Filings, to the extent they relate to or reflect the assets, liabilities or operations of DA or the Other Subsidiaries, was filed in a timely manner and at the time of filing or as of the date of the last amendment thereof, if amended after filing, complied or, as to ADSX Securities Filings subsequent to the date hereof, will comply in all material respects with the Securities Exchange Act or the Securities Act, as applicable.

(b) There is no Litigation pending or, to the knowledge of ADSX, threatened against DA, any of its subsidiaries or any of the Other Subsidiaries, any officer, director, employee or agent thereof, in his or her capacity as such, or as a fiduciary with respect to any DA Group Benefit Plan, as hereinafter defined, or otherwise relating to DA, any of its subsidiaries or any of the Other Subsidiaries or the securities of any of them, or any properties or rights of DA, any of its subsidiaries or any of the Other Subsidiaries or any DA Group Benefit Plan which is required to be described in any ADSX Securities Filing that is not so described. No event relating to or affecting the assets, liabilities or operations of DA or the Other Subsidiaries has occurred as a consequence of which ADSX would be required to file a Current Report on Form 8-K pursuant to the requirements of the Securities Exchange Act as to which such a report has not been timely filed with the SEC. Any reports, statements and registration statements and amendments thereof (including, without limitation, Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by ADSX with the SEC after the date hereof shall be provided to MAS on or prior to the date of such filing.

4.8 Financial Statements. The audited consolidated financial statements and unaudited interim financial statements of DA and the Other Subsidiaries (the "DA Group Financial Statements"), as described on Schedule 4.8, have been provided to MAS. The DA Group Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as indicated therein or in the notes thereto) and present fairly, in all material respects, the financial position of DA and the Other Subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments, any other adjustments described therein.

4.9 Absence of Certain Changes or Events. Except as set forth in the ADSX Securities Filings or in the DA Disclosure Schedule, since December 31, 2000, there has not been: (i) any Event (except for those Events caused by the pendency or announcement of this Agreement, or the transactions contemplated hereby) that has had or would reasonably be expected to have a DA Group Material Adverse Effect; (ii) any declaration, payment or setting aside for payment of any dividend (except to DA, a DA Subsidiary wholly owned by DA or the Other Subsidiaries) or other distribution or any redemption, purchase or other acquisition of any shares of capital stock or securities of DA, any DA Subsidiary or any Other Subsidiary; (iii) any return of any capital or other distribution of assets to stockholders of DA, any DA Subsidiary or any Other Subsidiary (except to DA, a DA Subsidiary wholly owned by DA or any Other Subsidiary); (iv) any acquisition (by merger, consolidation, acquisition of stock or assets or otherwise) of any person or business by DA, a DA Subsidiary or any Other Subsidiary; or (v) any other action or agreement or undertaking by DA, any DA Subsidiary or any Other Subsidiary that, if taken or done on or after the date hereof without the consent of MAS, would result in a breach of Section 6.1, below.

4.10 Related Party Transactions. Except as set forth in the ADSX Securities Filings or the DA Disclosure Schedule, since December 31, 2000, DA and the Other Subsidiaries have not entered into any relationship or transaction of a sort that would be required to be disclosed pursuant to Item 404 of Regulation S-K by ADSX, or by DA or any Other Subsidiary if it were subject to such reporting requirements, in a proxy statement in connection with an annual meeting of stockholders.

4.11 Compliance with Laws. The businesses of DA, each DA Subsidiary and the Other Subsidiaries have been operated in compliance with all Laws applicable thereto, except for any instances of non-compliance which do not and would not reasonably be expected to have a DA Group Material Adverse Effect. Without limiting the generality of the foregoing, neither DA, any DA Subsidiary nor any of the Other Subsidiaries has conducted its business in violation of applicable Laws, tariffs, rules and regulations in any jurisdiction, foreign or domestic, which violation has had or would reasonably be expected to have a DA Group Material Adverse Effect.

4.12 Permits. DA, the DA Subsidiaries and the Other Subsidiaries have all material permits, certificates, licenses, approvals, tariffs and other authorizations required in connection with the operation of their respective businesses and none of DA, any DA Subsidiary, or any of the Other Subsidiaries is in violation of any such permit, certificate, license, approval, tariff or other authorization, and no proceedings are pending or, to the knowledge of ADSX, threatened, to revoke or limit any such permit, certificate, license, approval, tariff or other authorization, except any such violation or proceeding which does not and would not reasonably be expected to have a DA Group Material Adverse Effect.

4.13 Finders and Investment Bankers. Neither ADSX, DA nor any of the officers or directors of any of them has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated hereby.

4.14 Material Contracts. ADSX has made available to MAS true and accurate copies of the DA Group Material Contracts, a true, complete and accurate list of which is set forth in the DA Disclosure Schedule. For purposes of this Agreement, "DA Group Material Contract" means any Contract entered into by DA, any DA Subsidiary or any Other Subsidiary (i) that is required to be described in or filed as an exhibit to any ADSX Securities Filing, or if DA, any DA Subsidiary or any Other Subsidiary were subject to similar reporting requirements would be required to be so described; (ii) that was entered into outside the ordinary course of business; (iii) that is material to the business of DA or the Other Subsidiaries, taken as a whole; (iv) pursuant to which DA, any DA Subsidiary or any Other Subsidiary is or will be liable for an amount in excess of $50,000; or (v) which may not be terminated, without additional liability, within six months. None of DA, any DA Subsidiary or any Other Subsidiary is a party or is subject to any Contract required to be described in or filed as an exhibit to any ADSX Securities Filing that is not so described in or filed as required by the Securities Act or the Exchange Act, as the case may be. All such DA Group Material Contracts are valid and binding and are in full force and effect and enforceable against DA, any DA Subsidiary or Other Subsidiary in accordance with their respective terms, subject to the Enforceability Exceptions. Except as referenced in Section 4.6 above, (i) no Consent of any person is needed in order that each such DA Group Material Contract shall continue in full force and effect in accordance with its terms without penalty, acceleration or rights of early termination by reason of the consummation of the transactions contemplated by this Agreement, except for Consents the absence of which would not have a DA Group Material Adverse Effect, and (ii) none of DA, the DA Subsidiaries or the Other Subsidiaries is in violation or breach of or default under any such DA Group Material Contract; nor to the knowledge of ADSX is any other party to any such DA Group Material Contract in violation or breach of or default under any such DA Group Material Contract in each case where such violation or breach would have a DA Group Material Adverse Effect. Except as set forth in the DA Disclosure Schedule, neither DA nor any of the Other Subsidiaries is a party to or is subject to any Contract that limits the ability of DA or any of the Other Subsidiaries, or would limit the ability of MAS or any subsidiary of MAS after the Effective Time, to compete in or conduct any line of business or compete with any person or in any geographic area or during any period.

4.15 Employee Benefit Plans. (a) There are no Benefit Plans maintained or contributed to by DA, a DA Subsidiary or any Other Subsidiary under which DA, a DA Subsidiary, any of the Other Subsidiaries or the Surviving Corporation could incur any material liability.

(b) With respect to each such Benefit Plan (where applicable): ADSX has made available to MAS complete and accurate copies of (i) all plan and trust texts and agreements, insurance contracts and other funding arrangements; (ii) the most recent annual report on the Form 5500 series; (iii) the most recent financial statement and/or annual and periodic accounting of plan assets; (iv) the most recent determination letter received from the Internal Revenue Service; and (v) the most recent summary plan description as defined in ERISA.

(c) With respect to each such Benefit Plan while maintained or contributed to by DA, a DA Subsidiary or any Other Subsidiary: (i) if intended to qualify under Code Sections 401(a) or 403(a), such Benefit Plan has received a favorable determination letter from the IRS that it so qualifies, and its trust is exempt from taxation under Code Section 501(a) and, to the knowledge of ADSX, nothing has since occurred to cause the loss of the Benefit Plan's qualification; (ii) except for payment of benefits made in the ordinary course of the plan administration, no event has occurred and, to the knowledge of ADSX, there exists no circumstance under which DA, a DA Subsidiary or any Other Subsidiary could reasonably be expected to incur liability under ERISA, the Code or otherwise; (iii) no accumulated funding deficiency as defined in Code Section 412 has occurred or exists, whether or not waived; (iv) no non-exempt prohibited transaction as defined under ERISA and the Code has occurred; (v) no reportable event as defined in Section 4043 of ERISA has occurred or will occur by virtue of consummation of the transaction contemplated by this Agreement (other than events as to which the 30-day notice period is waived pursuant to Section 4043 of ERISA); (vi) all contributions and premiums due have fully been made and paid on a timely basis; (vii) all contributions made or required to be made under any Benefit Plan meet the requirements for deductibility under the Code, and all contributions accrued prior to the Effective Time which have not been made have been properly recorded on the DA Group Financial Statements in a manner satisfying the requirements of Financial Accounting Standards 87 and 88; (viii) the present value of all "benefit liabilities" (as defined in ERISA Section 4001(a)(16) and determined based on the actuarial assumptions and methods used under such Benefit Plan for the most recent Benefit Plan actuarial valuation and assuming for such purposes that all benefits provided under the Benefit Plan are fully vested) under each such Benefit Plan did not exceed as of the most recent Benefit Plan actuarial valuation date, and will not exceed as of the Closing Date, the then current value of the assets of such Benefit Plan as determined pursuant to Code Section 412, and (ix) none of DA, any DA Subsidiary or any Other Subsidiary has completely or partially withdrawn from a Plan that is a Multi-employer Plan, and DA would not become subject to liability under ERISA if DA were to withdraw completely from all multi-employer plans in which it currently participates, except, in each case, for any deviations from the foregoing which do not and would not reasonably be expected to have a DA Group Material Adverse Effect.

(d) Except as provided in Section 6.8 below, the consummation of the Merger will not, either alone or in conjunction with another event under the terms of any Benefit Plan: (i) entitle any individual to severance pay, (ii) accelerate the time of payment or vesting of benefits or increase the amount of compensation due to any individual; or (iii) give rise to the payment of any amount that would not be deductible pursuant to Section 280G of the Code.

4.16 Taxes and Returns. (a) DA, each of the DA Subsidiaries and each of the Other Subsidiaries has timely filed or caused to be filed all material Tax Returns required to be filed by it, and all material Tax Returns filed by DA, the DA Subsidiaries and the Other Subsidiaries are true, complete and correct in all material respects.

(b) DA, the DA Subsidiaries and the Other Subsidiaries have each timely paid, collected or withheld, or caused to be timely paid, collected or withheld, all material amounts of Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the DA Group Financial Statements have been established.

(c) There are no claims or assessments pending against DA, any of the DA Subsidiaries or any of the Other Subsidiaries for any alleged deficiency in any Tax, and none of ADSX, DA, the DA Subsidiaries or the Other Subsidiaries have been notified in writing of any proposed Tax claims or assessments against DA, any of the DA Subsidiaries or any of the Other Subsidiaries (other than in each case, claims or assessments for which adequate reserves in the DA Group Financial Statements have been established).

(d) There are no material federal, state, local or foreign audits or administrative proceedings pending with regard to any material amounts of Tax or Tax Returns of DA, the DA Subsidiaries or any of the Other Subsidiaries and none of them has received a written notice of any proposed material audit or proceeding.

(e) None of DA, any of the DA Subsidiaries nor any of the Other Subsidiaries has any waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes.

(f) There are no outstanding requests by DA, any of DA Subsidiaries or the Other Subsidiaries for any extension of time within which to file any material Tax Return or within which to pay any material amounts of Taxes shown to be due on any return.

(g) There are no liens for material amounts of Taxes on the assets of DA, any of DA Subsidiaries or any of the Other Subsidiaries except for statutory liens for current Taxes not yet due and payable.

(h) None of DA, any DA Subsidiary or any of the Other Subsidiaries is a party to any agreement, contract, arrangement, or plan that has resulted or would result, individually or in the aggregate, in connection with this Agreement or any change of control of DA, any of DA Subsidiaries or any of the Other Subsidiaries in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code.

4.17 No Adverse Actions. There is no existing, pending or, to the knowledge of ADSX, overtly threatened termination, cancellation, limitation, modification or change in the business relationship of DA, any of the DA Subsidiaries or any of the Other Subsidiaries, with any supplier, customer or other person except such as would not reasonably be expected to have a DA Group Material Adverse Effect. None of DA, any DA Subsidiary, any Other Subsidiary or, to the knowledge of DA, any director, officer, agent, employee or other person acting on behalf of any of the foregoing has used any corporate funds for unlawful contributions, payments, gifts or entertainment or for the payment of other unlawful expenses relating to political activity, or made any direct or indirect unlawful payments to governmental or regulatory officials or others, which would reasonably be expected to have a DA Group Material Adverse Effect.

4.18 Investment Intent. ADSX is acquiring the shares of MAS Common Stock as set forth in this Agreement for its own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act.

4.19 Intellectual Property. Except as set forth in the DA Disclosure Schedule, (i) DA, the DA Subsidiaries or one of the Other Subsidiaries, or a subsidiary of one of the Other Subsidiaries owns, or is licensed to or otherwise has the right to use, all material Intellectual Property currently used in its or their respective businesses, (ii) the rights of DA, the DA Subsidiaries and the Other Subsidiaries in such Intellectual Property are, subject to the rights of any licensor thereof, free and clear of any liens or other encumbrances and restrictions and none of DA, any of the DA Subsidiaries or any of the Other Subsidiaries has received, as of the date of this Agreement, any IP Claim Notice and does not know of any basis for any such charge or claim, and (iii) none of DA, the DA Subsidiaries or any of the Other Subsidiaries nor their respective predecessors, if any, has conducted business at any time prior to the date hereof under any corporate, trade or fictitious names other than their current corporate names. ADSX shall promptly notify, and shall cause DA, the DA Subsidiaries and the Other Subsidiaries to promptly notify, MAS of any IP Claim Notice received by ADSX, DA, a DA Subsidiary or any of the Other Subsidiaries after the date of this Agreement.

4.20. Undisclosed Liabilities. DA, the DA Subsidiaries and the Other Subsidiaries do not have any liabilities or obligations whatsoever, whether accrued, contingent or otherwise, and ADSX knows of no basis for any claim against DA, and DA Subsidiary or any Other Subsidiary for any liability or obligation, except (i) to the extent set forth or reflected in the DA Group Financial Statements, (ii) to the extent expressly set forth on the DA Disclosure Schedule, or (iii) liabilities or obligations incurred in the normal and ordinary course of business since December 31, 2000, and except, in each case, for any deviations from the foregoing which individually or in the aggregate do not and would not reasonably be expected to have a DA Group Material Adverse Effect.

4.21. Environmental Matters. Except as set forth on DA Disclosure Schedule, and except, in each case, for any deviations which do not and would not reasonably be expected to have a DA Group Material Adverse Effect, as of the date of this Agreement, (i) each of DA, the DA Subsidiaries and the Other Subsidiaries is in compliance with all applicable Environmental Laws, (ii) each of DA, the DA Subsidiaries and the Other Subsidiaries has obtained, and is in compliance with, all Environmental Permits, (iii) there is no civil, criminal or administrative judgment, action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice or demand letter pending or, to the knowledge of ADSX, threatened against DA, a DA Subsidiary or any Other Subsidiary or any of their respective properties alleging a violation of, or liability under, any Environmental Laws and (iv) there are no past or present Events which reasonably may be expected to prevent compliance with, or which have given rise to or will give rise to liability on the part of DA, a DA Subsidiary or an Other Subsidiary under, Environmental Laws. The DA Disclosure Schedule lists all environmental reports in the possession of DA, a DA Subsidiary or an Other Subsidiary relating to any of their respective past or present properties.

4.22. Corporate Records. The respective corporate record books of or relating to DA, the DA Subsidiaries and each of the Other Subsidiaries made available to MAS by ADSX contain accurate and complete records of (i) all corporate actions of the stockholders and directors (and committees thereof) of DA, each DA Subsidiary and each Other Subsidiary, (ii) the Certificate and/or Articles of Incorporation, Bylaws and/or other governing instruments, as amended, of DA, the DA Subsidiaries and the Other Subsidiaries, and (iii) the issuance and transfer of stock of DA, each DA Subsidiary and each of the Other Subsidiaries. Except as set forth on the DA Disclosure Schedule, none of DA, the DA Subsidiaries or any Other Subsidiary has any of its material records or information recorded, stored, maintained or held off the premises of DA, the DA Subsidiaries and the Other Subsidiaries.

4.23. Real Property. (a) The DA Disclosure Schedule sets forth a true, correct and complete schedule as of the date of this Agreement of all real property owned by DA, any DA Subsidiary or any of the DA Subsidiaries. DA, the DA Subsidiaries and the Other Subsidiaries, as indicated thereon, is the owner of fee title to the real property described on the DA Disclosure Schedule and to all of the buildings, structures and other improvements located thereon free and clear of any material mortgage, deed of trust, lien, pledge, security interest, claim, lease, charge, option, right of first refusal, easement, restrictive covenant, encroachment or other survey defect, encumbrance or other restriction or limitation except for the matters listed on the DA Disclosure Schedule and, except for any exceptions, easements, restrictive covenants, encroachments or other survey defects, encumbrances, restrictions or limitations which, individually or in the aggregate, do not and would not reasonably be expected to have a DA Group Material Adverse Effect or to interfere in any material respect with the present use and enjoyment of such real property.

(b) The DA Disclosure Schedule sets forth a true, correct and complete schedule as of the date of this Agreement of all material leases, subleases, easements, rights-of-way, licenses or other agreements under which DA, the DA Subsidiaries or any of the DA Subsidiaries uses or occupies, or has the right to use or occupy any material real property or improvements thereon. Except for the matters listed on the DA Disclosure Schedule, DA, a DA Subsidiary or an Other Subsidiary, as indicated thereon, holds the leasehold estate under or other interest in each such lease, sublease, easement, right-of-way, license or other agreement free and clear of all liens, encumbrances and other rights of occupancy other than statutory landlords' or mechanics' liens which have not been executed upon, and except for liens, encumbrances and rights that do not and would not reasonably be expected to have a DA Group Material Adverse Effect or to interfere in any material respect with the present use and enjoyment of such leasehold estate or interest.

4.24. Title to and Condition of Personal Property. DA, each of the DA Subsidiaries and each of the Other Subsidiaries have good and marketable title to, or a valid leasehold interest in, all material items of any personal property currently used in the operation of their respective businesses, and such property or leasehold interests are free and clear of all liens, claims, charges, security interests, options, or other title defects or encumbrances that have had or would reasonably be expected to have a DA Group Material Adverse Effect or to interfere in any material respect with the present use and enjoyment of such property or interests. As of the date of this Agreement, all such personal property is in reasonably good operating condition and repair as required for use in the businesses of DA, the DA Subsidiaries and the Other Subsidiaries (ordinary wear and tear excepted), is reasonably suitable for the use to which the same is customarily put by DA, any DA Subsidiary or any Other Subsidiary and is free from defects except where there would not be an MAS Material Adverse Effect.

4.25 Labor Matters. Except as set forth on the DA Disclosure Schedule, none of DA, any DA Subsidiary or any of the Other Subsidiaries has any material obligations, contingent or otherwise, under any employment, severance or consulting agreement, any collective bargaining agreement or any other contract with a labor union or other labor or employee group. To the knowledge of ADSX, as of the date of this Agreement, there are no negotiations, demands or proposals which are presently pending or overtly threatened by or on behalf of any labor union with respect to the unionizing of employees of DA, any DA Subsidiary or any Other Subsidiary. As of the date of this Agreement, there is no unfair labor practice complaint against DA, any DA Subsidiary or any Other Subsidiary pending or, to the knowledge of ADSX, threatened before the National Labor Relations Board or comparable agency, no unresolved grievance against DA, any DA Subsidiary or any Other Subsidiary, no collective bargaining agreement which is currently being negotiated by DA, any DA Subsidiary or any Other Subsidiary, and none of DA, any DA Subsidiary or any Other Subsidiary is experiencing any work stoppage, strike, slowdown or other labor difficulty which, in each case, would reasonably be expected to have a DA Group Material Adverse Effect. As of the date of this Agreement, no employee has informed ADSX, DA, any DA Subsidiary or any Other Subsidiary of his or her intention to terminate his or her employment with DA, any DA Subsidiary or any Other Subsidiary as a result of any announcement or consummation of the transactions contemplated by this Agreement. ADSX shall promptly notify, and shall cause DA, the DA Subsidiaries and the Other Subsidiaries to promptly notify, MAS upon knowledge by ADSX, DA, the DA Subsidiaries or the Other Subsidiaries of the occurrence after the date hereof of any matter referenced in this Section 4.25.

4.26. Insurance. The DA Disclosure Schedule lists each policy of insurance which DA, each of the DA Subsidiaries and each of the Other Subsidiaries has obtained and maintains. As of the date of this Agreement, none of DA, any DA Subsidiary or any or the Other Subsidiaries has received notice of default under, or intended cancellation or nonrenewal of, any of such policies of insurance. None of DA, any DA Subsidiary or any Other Subsidiary has been refused any insurance for any material coverage by an insurance carrier to which it has applied for such insurance coverage.

4.27. Disclosure. No representation or warranty of ADSX herein and no information contained or referenced in the DA Disclosure Schedule or in any other document subsequently delivered by ADSX to MAS pursuant hereto, to the extent it relates to reflects the assets, liabilities or operations of DA or the Other Subsidiaries, contains or will contain, when such statement was made or when such information or document was delivered, any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make any statement contained herein or therein, when such statement was made or when such information or document was delivered, not misleading.

ARTICLE V.
ADDITIONAL COVENANTS OF MAS

MAS covenants and agrees as follows:

5.1 Conduct of Business of MAS and the MAS Subsidiaries. Except as expressly contemplated by this Agreement, disclosed in the MAS Securities Filings filed as of the date hereof or set forth in the MAS Disclosure Schedule, during the period from the date of this Agreement to the Effective Time, MAS shall conduct, and it shall cause the MAS Subsidiaries to conduct, its or their respective businesses in the ordinary course and consistent with past practice, subject to the limitations contained in this Agreement, and MAS shall, and it shall cause the MAS Subsidiaries to, use its or their respective reasonable best efforts to preserve intact its or their respective business organizations, to keep available the services of its or their respective officers, agents and employees and to maintain satisfactory relationships with all persons with whom any of them does business. Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement, after the date of this Agreement and prior to the Effective Time, neither MAS nor any MAS Subsidiary will, without the prior written consent of ADSX:

(i) amend or propose to amend its Articles or Certificate of Incorporation or Bylaws (or comparable governing instruments) in any material respect;

(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of MAS or any MAS Subsidiary including, but not limited to, any securities convertible into or exchangeable for shares of capital stock of any class of MAS or any MAS Subsidiary, except for the issuance of shares of MAS Common Stock pursuant to the exercise of MAS Options outstanding on the date of this Agreement in accordance with their present terms and except for the granting of options pursuant to Section 5.9;

(iii) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, or redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities;

(iv) other than in the ordinary course of business consistent with past practice, (a) create, incur or assume any debt or obligations in respect of capital leases, except refinancings of existing obligations on terms and conditions prevailing in the market; (b) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person; (c) make any capital expenditures or make any loans, advances or capital contributions to, or investments in, any other person (other than customary travel, relocation or business advances to employees); (d) acquire the stock or assets of, or merge or consolidate with, any other person; (e) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise); or (f) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real, personal or mixed material to MAS and the MAS Subsidiaries taken as a whole other than to secure debt permitted under (a) of this clause (iv), and except for transfers made for fair and adequate consideration;

(v) increase in any manner the compensation of any of its officers or employees or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, other employee, agent, consultant or affiliate other than (a) as required pursuant to the terms of agreements in effect on the date of this Agreement or (b) with respect to non-officer employees, such as are in the ordinary course of business consistent with past practice.

(vi) enter into any lease or amend any lease of real property other than in the ordinary course of business consistent with past practice;

(vii) make or rescind any express or deemed election relating to Taxes of MAS, unless required to do so by applicable Law;

(viii) settle or compromise any Tax liability of MAS or agree to an extension of a statute of limitations with respect to the assessment or determination of Taxes;

(ix) file or cause to be filed any amended Tax Return with respect to MAS or any MAS Subsidiaries or file or cause to be filed any claim for refund of Taxes paid by or on behalf of MAS or any MAS Subsidiaries;

(x) prepare or file any Tax Return of MAS inconsistent with past practice in preparing or filing similar Tax Returns in prior periods or, on any such Tax Return, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods, in each case except to the extent required by Law; or

(xi) enter into any Contract, arrangement or transaction or take any action other than in the ordinary course of business or as otherwise set forth above in (i) - (x) of this section 5.1, which results in an obligation to pay or in the creation of a liability for an amount in excess of $25,000 or which may not be terminated, without additional liability, within six months.

Furthermore, MAS covenants that from and after the date of this Agreement, unless ADSX shall otherwise expressly consent in writing, MAS shall, and MAS shall cause each of the MAS Subsidiaries to, use its or their reasonable business efforts to comply in all material respects with all Laws applicable to it or any of its properties, assets or business and maintain in full force and effect all material permits, certificates, licenses, approvals, tariffs and other authorizations necessary for, or otherwise material to, such business.

5.2 Notification of Certain Matters. MAS shall give prompt notice to ADSX if any of the following occurs after the date of this Agreement: (i) any notice of, or other communication relating to, a material default or Event which, with notice or lapse of time or both, would become a material default under any MAS Material Contract; (ii) receipt of any notice or other communication in writing from any third party alleging that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, other than a Consent disclosed pursuant to Section 3.5 or 3.6 above or not required to be disclosed pursuant to the terms thereof; (iii) receipt of any material notice or other communication from the AMEX or any Governmental Authority (including, but not limited to, SEC) in connection with the transactions contemplated by this Agreement; (iv) the occurrence of an Event which would reasonably be expected to have an MAS Material Adverse Effect; and (v) the commencement or threat of any Litigation involving or affecting MAS or any MAS Subsidiary, or any of their respective properties or assets, or, to its knowledge, any employee, agent, director or officer of MAS or any MAS Subsidiary, in his or her capacity as such or as a fiduciary under a Benefit Plan of MAS, which, if pending on the date hereof, would have been required to have been disclosed in or pursuant to this Agreement or which relates to the consummation of the Merger, or any material development in connection with any Litigation disclosed by MAS in or pursuant to this Agreement or the MAS Securities Filings.

5.3 Access and Information. Between the date of this Agreement and the Effective Time, MAS will give, and will cause each of the MAS Subsidiaries to give, and shall direct its financial advisors, accountants and legal counsel to give, upon reasonable notice, ADSX, its lenders, financial advisors, accountants and legal counsel and their respective authorized representatives at all reasonable times access to all offices and other facilities and to all contracts, agreements, commitments, books and records of or pertaining to MAS and the MAS Subsidiaries, will permit the foregoing to make such reasonable inspections as they may require and will cause its officers promptly to furnish ADSX with (a) such financial and operating data and other information with respect to the business and properties of MAS and the MAS Subsidiaries as ADSX may from time to time reasonably request, including, but not limited to, data and information required for ADSX securities law filings, and (b) a copy of each material report, schedule and other document filed or received by MAS or any of the MAS Subsidiaries pursuant to the requirements of applicable securities laws or the AMEX.

5.4 Stockholder Approval. As soon as practicable, MAS, as the sole stockholder of Acquisition Subsidiary, will approve the MAS Charter Amendment, this Agreement and the transactions contemplated hereby including the Merger, and duly call, give notice of, convene and hold a meeting of MAS stockholders (the "MAS Stockholders Meeting") for the purpose of voting on the MAS Charter Amendment and this Agreement and the transactions contemplated hereby including the Merger (the "MAS Proposals"). Except as otherwise contemplated by this Agreement and subject to the exercise of its fiduciary duties, the Board of Directors of MAS (i) will recommend to the stockholders of MAS that they approve the MAS Proposals, and (ii) will use its reasonable best efforts to solicit proxies to obtain such approval in accordance with the terms hereof.

5.5 Reasonable Best Efforts. Subject to the terms and conditions herein provided, each of MAS and Acquisition Subsidiary agree to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the Merger, the Contribution and the other transactions contemplated by this Agreement including, but not limited to (i) obtaining any third party Consent required in connection with the execution and delivery by MAS of this Agreement or the consummation by MAS of the transactions contemplated hereby and (ii) obtaining all Consents from Governmental Authorities required for the consummation of the Merger and the transactions contemplated hereby. Upon the terms and subject to the conditions hereof, MAS agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the Closing set forth herein.

5.6 Public Announcements. So long as this Agreement is in effect, MAS shall not, and shall cause the MAS Subsidiaries and affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the MAS Proposals, or the transactions contemplated by this Agreement without the consent of ADSX which shall not be unreasonably withheld, conditioned or delayed, except when such release or announcement is required by applicable Law or any applicable listing agreement with, or rules or regulations of, the AMEX or SEC, in which case MAS, to the extent practicable, prior to making such announcement, shall consult with ADSX regarding the same.

5.7 Compliance. In consummating the Merger, the Contribution and the transactions contemplated hereby, MAS shall comply, and/or cause the MAS Subsidiaries to comply or to be in compliance, in all material respects, with all applicable Laws.

5.8 Tax Treatment. MAS shall use its reasonable best efforts to cause the Merger to qualify as, and will not take any action which to its knowledge could reasonably be expected to prevent the Merger from qualifying as a reorganization under Section 368(a) of the Code and to cause the Contribution to qualify as, and will not take any action which to its knowledge could reasonably be expected to prevent the Contribution from qualifying under Section 351(a) of the Code. Prior to the Effective Time, MAS shall provide tax counsel to MAS and ADSX rendering an opinion under Section 8.1.6 below with such certificates concerning such factual matters as such counsel identifies are relevant to its opinion and will use its reasonable best efforts to obtain such a certificate from any stockholder of MAS identified by such counsel.

5.9 MAS Benefit Plans. Between the date of this Agreement and through the Effective Time, no discretionary award or grant under any Benefit Plan of MAS or an MAS Subsidiary shall be made without the consent of ADSX, except options for shares of MAS Common Stock (with exercise prices at or above the fair market value of the underlying shares of MAS Common Stock on the date of grant and as disclosed in writing to ADSX) granted to employees of MAS hired on or after the date of this Agreement in the ordinary course of business consistent with past practice as heretofore disclosed to ADSX; nor shall MAS or any MAS Subsidiary take any action or permit any action to be taken to accelerate the vesting of any warrants or options previously granted pursuant to any such Benefit Plan except as specifically required pursuant to the terms thereof as in effect on the date of this Agreement. Neither MAS nor any MAS Subsidiary shall make any amendment to any Benefit Plan or any awards thereunder without the consent of ADSX, which consent shall not be unreasonably withheld, conditioned or delayed.

5.10 No Solicitation of Acquisition Proposal. (a) MAS and Acquisition Subsidiary shall not, directly or indirectly, take any action to (1) encourage (including by way of furnishing nonpublic information), solicit, initiate or facilitate any MAS Acquisition Proposal (as defined in subsection (c) hereof), (2) enter into any agreement with respect to any MAS Acquisition Proposal or (3) participate in any way in discussions or negotiations with, or furnish any information to, any person in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or could reasonably be expected to lead to, any MAS Acquisition Proposal; provided, however, that if the Board of Directors of MAS determines in good faith, after consultation with outside counsel, that it is necessary to do so to discharge properly its fiduciary duties to stockholders, MAS may, in response to an MAS Acquisition Proposal that such Board determines in good faith is reasonably likely to result in an MAS Superior Proposal (as defined in subsection (c) hereof), and subject to such party's compliance with subsection (b) hereof, (A) furnish information with respect to MAS to the person making such MAS Acquisition Proposal pursuant to a customary confidentiality agreement the terms of which are no more favorable to the other party to such confidentiality agreement than those in place with ADSX and (B) participate in discussions with respect to such MAS Acquisition Proposal. It is expressly understood and agreed that with respect to the foregoing proviso, the legal and financial advisors of MAS shall be able to make inquiries, and engage in discussions, with any party that has made an MAS Acquisition Proposal (and such party's legal and financial advisors) in order to elicit information to allow the Board of Directors of MAS to determine in good faith if such MAS Acquisition Proposal is reasonably likely to result in an MAS Superior Proposal.

(b) MAS and Acquisition Subsidiary will as promptly as practicable communicate to ADSX any inquiry received by it relating to any potential MAS Acquisition Proposal and the material terms of any proposal or inquiry, including the identity of the person and its affiliates making the same, that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with it.

(c) “MAS Acquisition Proposal” means any offer or proposal concerning any (1) merger, consolidation, business combination, or similar transaction involving MAS, (2) sale, lease or other disposition of assets of MAS representing 20% or more of the consolidated assets of MAS and the MAS Subsidiaries, (3) issuance, sale, or other disposition of (including by way of merger, consolidation, business combination, share exchange, joint venture, or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 20% or more of the voting power of MAS or (4) transaction in which any person shall acquire beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial ownership or any “group” (as such term is defined under the Exchange Act) that shall have been formed which beneficially owns or has the right to acquire beneficial ownership of, 20% or more of the outstanding voting capital stock of MAS. “MAS Superior Proposal” means a bona fide MAS Acquisition Proposal made by a third party which was not solicited by MAS, its subsidiaries, representatives or other affiliates and which, in the good faith judgment of the Board of Directors of MAS, taking into account, to the extent deemed appropriate by the Board of Directors of MAS, the various legal, financial and regulatory aspects of the proposal and the person making such proposal (A) if accepted, is reasonably likely to be consummated, and (B) if consummated, is reasonably likely to result in a transaction that is more favorable to the stockholders of MAS, from a financial point of view, than the transactions contemplated by this Agreement.

(d) If the MAS Board of Directors is prepared to accept an MAS Superior Proposal, then MAS shall give ADSX 48 hours notice that MAS is prepared to accept the MAS Superior Proposal, provided that MAS may not definitively accept an MAS Superior Proposal unless MAS concurrently therewith terminates this Agreement pursuant to Section 9.1(f).

5.11 SEC and Stockholder Filings. MAS shall, within a reasonable time, send to ADSX a copy of all public reports sent to its stockholders, the SEC or any state or foreign securities commission.

5.12 Takeover Statutes. If any "business combination," "fair price," "moratorium," "capital share acquisition" or similar takeover statute or regulation under applicable law (each a "Takeover Statute") is or may become applicable to this Agreement and the transactions contemplated by this Agreement, including the Merger and the Contribution, MAS and its Board of Directors will, to the extent consistent with its fiduciary duties, grant such approvals and will take such other actions as are necessary so that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and will otherwise act to eliminate or minimize the effects of any Takeover Statute on the Merger and any of the transactions contemplated hereby.

5.13 Comfort Letters. Upon the request of ADSX, MAS shall use its reasonable best efforts to provide to ADSX on or prior to the Closing Date "comfort letters" from the independent certified public accountants for MAS dated the Closing Date, addressed to the Board of Directors of each of MAS and ADSX, covering such matters as ADSX shall reasonably request with respect to facts concerning the financial condition of MAS and the MAS Subsidiaries as are customary for certified public accountants to deliver in connection with a transaction similar to the Merger.

5.14 MAS Charter Amendment. Immediately prior to or at the Effective Time, MAS shall file the MAS Charter Amendment with the Secretary of State of the State of Delaware. As of the Effective Time MAS, shall have reserved, free from preemptive rights, out of its authorized but unissued shares of MAS Common Stock, for the purpose of effecting the conversion of the issued and outstanding shares of DA Common Stock into the Transaction Consideration pursuant to this Agreement, sufficient shares of MAS Common Stock to provide for such conversion and for the exercise of all New MAS Options issued pursuant to this Agreement.

ARTICLE VI
ADDITIONAL COVENANTS OF ADSX

ADSX covenants and agrees as follows:

6.1 Conduct of Business of DA, the DA Subsidiaries and the Other Subsidiaries. Except as expressly contemplated by this Agreement, disclosed in the ADSX Securities Filings filed as of the date hereof or set forth in the DA Disclosure Schedule, during the period from the date of this Agreement to the Effective Time, DA shall conduct, and it shall cause the DA Subsidiaries to conduct, the Other Subsidiaries shall conduct, and ADSX shall cause each of them to conduct, its or their respective businesses in the ordinary course and consistent with past practice, subject to the limitations contained in this Agreement, and DA shall, and it shall cause the DA Subsidiaries to, the Other Subsidiaries shall, and ADSX shall cause all of them to, use its or their respective reasonable best efforts to preserve intact its or their respective business organizations, to keep available the services of its or their respective officers, agents and employees and to maintain satisfactory relationships with all persons with whom any of them does business. Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement, after the date of this Agreement and prior to the Effective Time, none of DA, any DA Subsidiary or any Other Subsidiary will, without the prior written consent of MAS:

(i) amend or propose to amend its Articles or Certificate of Incorporation or Bylaws (or comparable governing instruments) in any material respect;

(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of DA, any DA Subsidiary or any Other Subsidiary including, but not limited to, any securities convertible into or exchangeable for shares of capital stock of any class of DA, any DA Subsidiary or any Other Subsidiary, except for the issuance of shares of DA Common Stock or Other Subsidiaries Common Stock pursuant to the exercise of DA Options or options to acquire any of the Other Subsidiaries Common Stock outstanding on the date of this Agreement in accordance with their present terms and except for the grant of options pursuant to Section 6.8;

(iii) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than dividends or distributions to DA, a DA Subsidiary wholly owned by DA, or any of the Other Subsidiaries or redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities;

(iv) other than in the ordinary course of business consistent with past practice, (a) create, incur or assume any debt or obligations in respect of capital leases, except refinancings of existing obligations on terms and conditions prevailing in the market; (b) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person; (c) make any capital expenditures or make any loans, advances or capital contributions to, or investments in, any other person (other than to a DA Subsidiary or any Other Subsidiary and customary travel, relocation or business advances to employees); (d) acquire the stock or assets of, or merge or consolidate with, any other person; (e) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise); or (f) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real, personal or mixed material to DA and the DA Subsidiaries and Other Subsidiaries taken as a whole other than to secure debt permitted under (a) of this clause (iv), and except for transfers made for fair and adequate consideration;

(v) increase in any manner the compensation of any of its officers or employees or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, other employee, agent, consultant or affiliate other than (a) as required pursuant to the terms of agreements in effect on the date of this Agreement, (b) with respect to non-officer employees, such as are in the ordinary course of business consistent with past practice, or (c) in connection with the acquisition by DA or any of the Other Subsidiaries of another company or business.

(vi) enter into any lease or amend any lease of real property other than in the ordinary course of business consistent with past practice;

(vii) make or rescind any express or deemed election relating to Taxes of DA or any of the Other Subsidiaries, unless required to do so by applicable Law;

(viii) settle or compromise any Tax liability of DA or the Other Subsidiaries or agree to an extension of a statute of limitations with respect to the assessment or determination of Taxes;

(ix) file or cause to be filed any amended Tax Return with respect to DA or any of the DA Subsidiaries or any of the Other Subsidiaries or file or cause to be filed any claim for refund of Taxes paid by or on behalf of DA, any of the DA Subsidiaries or any of the Other Subsidiaries;

(x) prepare or file any Tax Return of DA, any DA Subsidiary or any Other Subsidiary inconsistent with past practice in preparing or filing similar Tax Returns in prior periods or, on any such Tax Return, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods, in each case except to the extent required by Law; or

(xi) enter into any Contract, arrangement or transaction or take any action other than in the ordinary course of business or as otherwise set forth above in (i) - (x) of this section 6.1, which results in an obligation to pay or in the creation of a liability for an amount in excess of $50,000 or which may not be terminated, without additional liability, within six months.

Furthermore, ADSX covenants that from and after the date of this Agreement, unless MAS shall otherwise expressly consent in writing, DA shall, and DA shall cause each of the DA Subsidiaries to, the Other Subsidiaries shall, and ADSX shall cause each of the them to, use its or their reasonable business efforts to comply in all material respects with all Laws applicable to it or any of its properties, assets or business and maintain in full force and effect all material permits, certificates, licenses, approvals, tariffs and other authorizations necessary for, or otherwise material to, such business.

6.2 Notification of Certain Matters. ADSX shall give prompt notice to MAS if any of the following occurs after the date of this Agreement: (i) any notice of, or other communication relating to, a material default or Event which, with notice or lapse of time or both, would become a material default under any DA Group Material Contract; (ii) receipt of any notice or other communication in writing from any third party alleging that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, other than a Consent disclosed pursuant to Section 5.5 or 5.6 above or not required to be disclosed pursuant to the terms thereof; (iii) receipt of any material notice or other communication from the National Association of Securities Dealers or any Governmental Authority (including, but not limited to, the SEC) in connection with the transactions contemplated by this Agreement; (iv) the occurrence of an Event which would reasonably be expected to have a DA Group Material Adverse Effect; and (v) the commencement or threat of any Litigation involving or affecting DA, any DA Subsidiary or any Other Subsidiary, or any of their respective properties or assets, or, to the knowledge of ADSX, any employee, agent, director or officer of DA, any DA Subsidiary or any Other Subsidiary, in his or her capacity as such or as a fiduciary under such Benefit Plan, which, if pending on the date hereof, would have been required to have been disclosed in or pursuant to this Agreement or which relates to the consummation of the Merger and the Contribution, or any material development in connection with any Litigation relating to DA, the DA Subsidiaries or any of the Other Subsidiaries disclosed by ADSX or DA in or pursuant to this Agreement or the ADSX Securities Filings.

6.3 Access and Information. Between the date of this Agreement and the Effective Time, ADSX will give, and will cause each of DA, the DA Subsidiaries and the Other Subsidiaries to give, and shall direct its financial advisors, accountants and legal counsel to give, upon reasonable notice, MAS, its lenders, financial advisors, accountants and legal counsel and their respective authorized representatives at all reasonable times access to all offices and other facilities and to all contracts, agreements, commitments, books and records of or pertaining to DA, the DA Subsidiaries and the Other Subsidiaries, will permit the foregoing to make such reasonable inspections as they may require and will cause its officers promptly to furnish DA with (a) such financial and operating data and other information with respect to the business and properties of DA, the DA Subsidiaries and the Other Subsidiaries as MAS may from time to time reasonably request, and (b) a copy of each material report, schedule and other document filed or received by DA, any of the DA Subsidiaries or any Other Subsidiary pursuant to the requirements of applicable securities laws. The foregoing access will be subject to restrictions contained in confidentiality agreements to which DA, DA's Subsidiaries and the Other Subsidiaries are subject; provided that they shall use reasonable best efforts to obtain waivers of such restrictions.

6.4 Reasonable Best Efforts. Subject to the terms and conditions herein provided, each of ADSX and DA agree to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the Merger and the other transactions contemplated by this Agreement including, but not limited to (i) obtaining any third party Consent required in connection with the execution and delivery by DA of this Agreement or the consummation by DA of the transactions contemplated hereby and (ii) obtaining all Consents from Governmental Authorities required for the consummation of the Merger and the transactions contemplated hereby. Upon the terms and subject to the conditions hereof, ADSX and DA agree to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the Closing set forth herein.

6.5 Public Announcements. So long as this Agreement is in effect, ADSX and DA shall not, and shall cause their affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the MAS Proposals or the transactions contemplated by this Agreement without the consent of MAS which shall not be unreasonably withheld, conditioned or delayed, except when such release or announcement is required by applicable Law or any applicable listing agreement with, or rules or regulations of, the NASD or the SEC, in which case ADSX, to the extent practicable, prior to making such announcement, shall consult with MAS regarding the same.

6.6 Compliance. In consummating the Merger and the transactions contemplated hereby, ADSX shall comply and/or cause DA, the DA Subsidiaries and the Other Subsidiaries to comply or to be in compliance, in all material respects, with all applicable Laws.

6.7 Tax Treatment. ADSX shall use its reasonable best efforts to cause the Merger to qualify as, and will not take any action which to its knowledge could reasonably be expected to prevent the Merger from qualifying as a reorganization under Section 368(a) of the Code and to cause the Contribution to qualify as, and will not take any action which to its knowledge could reasonably be expected to prevent the Contribution from qualifying under Section 351(a) of the Code. Prior to the Effective Time, ADSX shall provide tax counsel to MAS and ADSX rendering an opinion under Section 8.1.6 below with such certificates concerning such factual matters as such counsel identifies are relevant to its opinion and will use its reasonable best efforts to obtain such a certificate from any stockholder of ADSX identified by such counsel.

6.8 DA Benefit Plans. Between the date of this Agreement and through the Effective Time, no discretionary award or grant under any Benefit Plan of DA, a DA Subsidiary or any Other Subsidiary shall be made without the consent of MAS, except options for shares of DA Common Stock or the Other Subsidiaries Common Stock (with exercise prices at or above the fair market value of the underlying shares on the date of grant and as disclosed to MAS in writing) granted to employees of DA or the Other Subsidiary hired on or after the date of this Agreement in the ordinary course of business consistent with past practice as heretofore disclosed to MAS; nor shall DA, a DA Subsidiary or any of the Other Subsidiaries take any action or permit any action to be taken to accelerate the vesting of any warrants or options previously granted pursuant to any such Benefit Plan except as specifically required pursuant to the terms thereof as in effect on the date of this Agreement. Neither DA, any DA Subsidiary nor any of the Other Subsidiaries shall make any amendment to any Benefit Plan or any awards thereunder without the consent of MAS, which consent shall not be unreasonably withheld, conditioned or delayed.

6.9 No Solicitation of Acquisition Proposal.

(a) ADSX and DA shall not, directly or indirectly, take any action to (1) encourage (including by way of furnishing nonpublic information), solicit, initiate or facilitate any DA Acquisition Proposal (as defined in subsection (c) of this Section), (2) enter into any agreement with respect to any DA Acquisition Proposal or (3) participate in any way in discussions or negotiations with, or furnish any information to, any person in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or could reasonably be expected to lead to, any DA Acquisition Proposal; provided, however, that if the Board of Directors of ADSX determines in good faith, after consultation with outside counsel, that it is necessary to do so to discharge properly its fiduciary duties to stockholders, ADSX or DA may, in response to a DA Acquisition Proposal that such Board determines in good faith is reasonably likely to result in a DA Superior Proposal (as defined in subsection (c) of this Section), and subject to such party's compliance with subsection (b) of this Section, (A) furnish information with respect to DA or any of the Other Subsidiaries to the person making such DA Acquisition Proposal pursuant to a customary confidentiality agreement the terms of which are no more favorable to the other party to such confidentiality agreement than those in place with MAS and (B) participate in discussions with respect to such DA Acquisition Proposal. It is expressly understood and agreed that with respect to the foregoing proviso, ADSX's and DA's legal and financial advisors shall be able to make inquiries, and engage in discussions, with any party that has made a DA Acquisition Proposal (and such party's legal and financial advisors) in order to elicit information to allow the Board of Directors of ADSX and DA to determine in good faith if such DA Acquisition Proposal is reasonably likely to result in a DA Superior Proposal.

(b) ADSX will as promptly as practicable communicate to MAS any inquiry received by it relating to any potential DA Acquisition Proposal and the material terms of any proposal or inquiry, including the identity of the person and its affiliates making the same, that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with it.

(c) "DA Acquisition Proposal" means any offer or proposal concerning any (1) merger, consolidation, business combination, or similar transaction involving DA or any Other Subsidiary, (2) sale, lease or other disposition of assets of DA or any Other Subsidiary representing 20% or more of the consolidated assets of DA, the DA Subsidiaries and the Other Subsidiaries, taken as a whole, (3) issuance, sale, or other disposition of (including by way of merger, consolidation, business combination, share exchange, joint venture, or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 20% or more of the voting power of DA, any DA Subsidiaries or any Other Subsidiary or (4) transaction in which any person shall acquire beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial ownership or any "group" (as such term is defined under the Exchange Act) that shall have been formed which beneficially owns or has the right to acquire beneficial ownership of, 20% or more of the outstanding voting capital stock of DA, any DA Subsidiary or any Other Subsidiary. "DA Superior Proposal" means a bona fide DA Acquisition Proposal made by a third party which was not solicited by ADSX, its subsidiaries, representatives or other affiliates and which, in the good faith judgment of ADSX's Board of Directors, taking into account, to the extent deemed appropriate by ADSX's Board of Directors, the various legal, financial and regulatory aspects of the proposal and the person making such proposal (A) if accepted, is reasonably likely to be consummated, and (B) if consummated, is reasonably likely to result in a transaction that is more favorable to the applicable stockholders, from a financial point of view, than the transactions contemplated by this Agreement.

(d) If the ADSX Board of Directors is prepared to accept a DA Superior Proposal, then ADSX shall give MAS 48 hours notice that ADSX is prepared to accept the DA Superior Proposal, provided that ADSX may not definitively accept a DA Superior Proposal unless ADSX concurrently therewith terminates this Agreement pursuant to Section 9.1(f).

6.11 SEC and Stockholder Filings. ADSX shall, within a reasonable time, send to MAS a copy of all public reports sent to its stockholders, the SEC or any state or foreign securities commission.

6.12 Takeover Statutes. If any Takeover Statute is or may become applicable to this Agreement and the transactions contemplated by this Agreement, including the Merger and the Contribution, ADSX and its Board of Directors will, to the extent consistent with its fiduciary duties, grant such approvals and will take such other actions as are necessary so that the Merger, the Contribution and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and will otherwise act to eliminate or minimize the effects of any Takeover Statute on the Merger and any of the transactions contemplated hereby.

6.13 Comfort Letters. Upon the request of MAS, ADSX shall use its reasonable best efforts to provide to MAS on or prior to the Closing Date "comfort letters" from the independent certified public accountants for ADSX, dated the Closing Date, addressed to the Board of Directors of each of MAS and ADSX, covering such matters as MAS shall reasonably request with respect to facts concerning the financial condition of DA, the DA Subsidiaries and the Other Subsidiaries as are customary for certified public accountants to deliver in connection with a transaction similar to the Merger.

6.14 Indemnification. To the extent that ADSX controls MAS, ADSX shall cause MAS to insure and guaranty that the provisions with respect to indemnification by MAS now existing in favor of any present or former director, officer, employee or agent (and their respective heirs and assigns) of MAS (the "Indemnified Parties"), as set forth in its charter or bylaws or pursuant to other agreements (including any insurance policies), shall survive the Merger, shall not be amended, repealed or modified in any manner as to adversely affect the rights of such Indemnified Parties and shall continue in full force and effect for a period of at least six years from the Effective Time. This Section 6.14 shall survive the closing of any of the transactions contemplated hereby, is intended to benefit the officers and employees of MAS at the Effective Time and each of the Indemnified Parties (each of which shall be entitled to enforce this Section against ADSX as a third-party beneficiary of this Agreement), and shall be binding on all successors and assigns of ADSX.

ARTICLE VII.
PROXY STATEMENT

ADSX and MAS shall cooperate and promptly prepare and MAS shall file with the SEC as soon as practicable a proxy statement with respect to the MAS Stockholders Meeting (the "Proxy Statement"). The parties will cause the Proxy Statement to comply as to form in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder. MAS shall use all reasonable efforts, and ADSX will cooperate with MAS, to have the Proxy Statement cleared by the SEC as promptly as practicable. MAS shall, as promptly as practicable, provide copies of any written comments received from the SEC with respect to the Proxy Statement to ADSX and advise ADSX of any material oral comments with respect to the Proxy Statement received from the SEC. MAS agrees that the Proxy Statement and each amendment or supplement thereto at the time of mailing thereof and at the time of the MAS Stockholders Meeting will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the foregoing shall not apply to the extent that any such untrue statement of a material fact or omission to state a material fact was made by MAS in reliance upon and in conformity with written information concerning ADSX furnished to MAS by ADSX specifically for use in the Proxy Statement. ADSX agrees that the written information provided by it for inclusion in the Proxy Statement and each amendment or supplement thereto, at the time of mailing thereof and at the time of the MAS Stockholders Meeting, will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Proxy Statement and any amendments or supplements thereto shall be approved by ADSX, which such approval shall not be unreasonably withheld, conditioned or delayed. ADSX shall assist MAS in the preparation of any pro forma financial statements required to be included in the Proxy Statement. MAS will advise ADSX promptly of any request by the SEC for amendment of the Proxy Statement or comments thereon and responses thereto or requests by the SEC for additional information. Whenever any event or condition affecting MAS or ADSX occurs that is required to be set forth in an amendment or supplement to the Proxy Statement, such party will promptly inform the other of such occurrence and cooperate in filing with the SEC or any other Governmental Authority, and in mailing to stockholders of MAS, such amendment or supplement.

ARTICLE VIII.
CONDITIONS

8.1. Conditions to Each Party's Obligations. The respective obligations of each party to effect the Merger and the Contribution shall be subject to the fulfillment or waiver on or prior to the Closing Date of the following conditions:

8.1.1. MAS Stockholder Approval. The MAS Charter Amendment, this Agreement and the transactions contemplated hereby including the Merger shall have been approved at or prior to the Effective Time by the requisite vote of the stockholders of MAS in accordance with the DGCL, the Amended and Restated Certificate of Incorporation of MAS.

8.1.2. No Injunction or Action No order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been enacted, entered, promulgated or enforced by any court or other Governmental Authority, which prohibits or prevents the consummation of the Transaction which has not been vacated, dismissed or withdrawn by the Effective Time. ADSX and MAS shall use their reasonable best efforts to have any of the foregoing vacated, dismissed or withdrawn on or prior to the Effective Time.

8.1.3. Governmental Approvals. All Consents of any Governmental Authority required for the consummation of the Merger and the Contribution and the transactions contemplated by this Agreement shall have been obtained by Final Order (as hereafter defined), except those the failure of which to obtain will have neither an MAS Material Adverse Effect nor a DA Group Material Adverse Effect. The term "Final Order" with respect to any Consent of a Governmental Authority shall mean an action by the appropriate Governmental Authority as to which: (i) no request for stay by such Governmental Authority of the action is pending, no such stay is in effect, and, if any deadline for filing any such request is designated by statute or regulation, it has passed; (ii) no petition for rehearing or reconsideration of the action is pending before such Governmental Authority, and no appeal or comparable administrative remedy with such or any other Governmental Authority is pending before such Governmental Authority, and the time for filing any such petition, appeal or administrative remedy has passed; (iii) such Governmental Authority does not have the action under reconsideration on its own motion and the time for such reconsideration has passed; and (iv) no appeal to a court, or request for stay by a court, of the Governmental Authority action is pending or in effect, and if any deadline for filing any such appeal or request is designated by statute or rule, it has passed.

8.1.4. Required Consents. Any required Consents of any person to the Merger or the Contribution or the transactions contemplated hereby as described in Sections 3.5, 3.6, 3.14, 4.5, 4.6 and 4.14 shall have been obtained and be in full force and effect, including, but not limited to, (i) the filing of the Certificate of Merger and the MAS Charter Amendment with the Secretary of State of the State of Delaware in accordance with the DGCL, (ii) the filing of the definitive Proxy Statement with the SEC, (iii) the filing of all necessary notices and applications as may be required under the rules of the AMEX and the National Association of Securities Dealers, (iv) Consents from or with Governmental Authorities set forth on the MAS Disclosure Schedule, (v) Consents from or with Governmental Authorities set forth on the DA Disclosure Schedule, (vi) the Consent substantially in the form set forth in Exhibit C attached hereto relating to the Second Amended and Restated Term and Revolving Credit Agreement dated October 17, 2000, by and among IBM Credit Corporation, IBM Financing, ADSX and Ground Effects, Ltd., as amended by Acknowledgment, Waiver and Amendment No. 1 dated March 30, 2001, and (vii) the Consents required pursuant to the contracts set forth in Schedule 4.14 to the DA Disclosure Schedule.

8.1.5. Tax Opinion. ADSX shall have received an opinion from its tax counsel, in form and substance reasonably satisfactory to ADSX and on the basis of facts, representations and assumptions set forth in such opinion, substantially to the effect that the Merger and the Contribution will qualify either as or both a reorganization within the meaning of Section 368(a) of the Code or as a contribution under Section 351(a) of the Code, and MAS shall have received an opinion from its tax counsel, in form and substance reasonably satisfactory to MAS and on the basis of facts, representations and assumptions set forth in such opinion, substantially to the effect that the Merger and the Contribution will qualify either as or both a reorganization within the meaning of Section 368(a) of the Code or as a contribution under Section 351(a) of the Code.

8.2. Conditions to Obligations of MAS and Acquisition Subsidiary. The obligations of MAS and Acquisition Subsidiary to effect the Merger and the Contribution shall be subject to the fulfillment on or prior to the Closing Date of the following additional conditions, any one or more of which may be waived by MAS:

8.2.1. ADSX Representation and Warranties. As of the Closing Date, none of the representations or warranties of ADSX contained in this Agreement, disregarding any qualifications herein regarding materiality or DA Group Material Adverse Effect, shall be untrue or incorrect as of the Closing Date, except to the extent such representations and warranties speak as of an earlier date, to the extent that such untrue or incorrect representations or warranties, when taken together as a whole, have had or would reasonably be expected to have a DA Group Material Adverse Effect.

8.2.2. Performance by ADSX and DA. ADSX and DA shall have performed and complied with all of the covenants and agreements in all material respects and satisfied in all material respects all of the conditions required by this Agreement to be performed or complied with or satisfied by ADSX or DA on or prior to the Closing Date.

8.2.3 Absence of Certain Liens. There shall be no liens or other encumbrances on the outstanding shares of the Other Subsidiaries or any of the assets of DA securing indebtedness for money borrowed, including any existing or successor credit facilities of any kind to any party, including the IBM facility referred to in Section 8.1.4 above.

8.2.4. No Material Adverse Change. There shall not have occurred after the date hereof any Event that has had or reasonably would be expected to have a DA Group Material Adverse Effect.

8.2.5. Certificates and other Deliveries. ADSX shall have delivered to MAS (i) a certificate executed on its behalf by its Chief Executive Officer or its president and attested by any secretary or assistant secretary to the effect that the conditions set forth in Subsections 8.2.1, 8.2.2 and 8.2.3, above, have been satisfied (ii) a certificate of good standing from the Secretary of State of the State of Delaware stating that DA is a validly existing corporation in good standing; (iii) duly adopted resolutions of the Board of Directors of ADSX and DA and of ADSX as the sole stockholder of DA approving the execution, delivery and performance of this Agreement and the instruments contemplated herein, certified by the Secretary or an Assistant Secretary of ADSX and (iv) certificates evidencing the Other Subsidiaries Common Stock referred to in Section 1.1(b).

8.2.6. Opinion of ADSX Counsel. MAS shall have received a customary opinion of counsel to ADSX, in form and substance reasonably satisfactory to MAS.

8.2.7. Financial Opinion. Jessup & Lamont shall not have withdrawn, modified or revised its fairness opinion to the Special Committee of the Board of Directors of MAS.

8.3. Conditions to Obligations of ADSX and DA. The obligations of ADSX and DA to effect the Merger and the Contribution shall be subject to the fulfillment on or prior to the Closing Date of the following additional conditions, any one or more of which may be waived by ADSX:

8.3.1. MAS Representations and Warranties. As of the Closing Date, none of the representations or warranties of MAS contained in this Agreement, disregarding any qualifications herein regarding materiality or MAS Material Adverse Effect shall be untrue or incorrect as of the Closing Date, except to the extent such representations and warranties speak as of an earlier date, to the extent that such untrue or incorrect representations or warranties, when taken together as a whole, have had or would reasonably be expected to have an MAS Material Adverse Effect.

8.3.2. Performance by MAS and Acquisition Subsidiary. MAS and Acquisition Subsidiary shall have performed and complied with all the covenants and agreements in all material respects and satisfied in all material respects all the conditions required by this Agreement to be performed or complied with or satisfied by MAS or Acquisition Subsidiary on or prior to the Closing Date.

8.3.3. No Material Adverse Change. There shall have not occurred after the date hereof any Event that has had or reasonably would be expected to have an MAS Material Adverse Effect.

8.3.4. Certificates and Other Deliveries. MAS shall have delivered, or caused to be delivered, to ADSX (i) a certificate executed on its behalf by Chief Executive Officer or its president and attested by any secretary or assistant secretary to the effect that the conditions set forth in Subsections 8.3.1, 8.3.2 and 8.3.3, above and 8.3.5 and 8.3.6 below, have been satisfied; (ii) certificates of good standing from the Secretary of State of the State of Delaware stating that MAS and Acquisition Subsidiary are both validly existing corporations in good standing; (iii) duly adopted resolutions of the Board of Directors of MAS and Acquisition Subsidiary approving the execution, delivery and performance of this Agreement and the instruments contemplated hereby and of the stockholders of MAS approving the MAS Proposals, certified by the Secretary or an Assistant Secretary of MAS; (iv) a true and complete copy of the Amended and Restated Certificate of Incorporation of MAS (before the effect of the MAS Charter Amendment) and Acquisition Subsidiary certified by the Secretary of State of the State of Delaware, and a true and complete copy of the Bylaws of MAS and Acquisition Subsidiary certified by the Secretary or an Assistant Secretary of MAS; (v) one or more certificates evidencing the MAS Common Stock referred to in Section 2.2 pursuant to the Merger, and (vi) such other documents and instruments as ADSX reasonably may request.

8.3.5. Opinion of MAS Counsel. ADSX shall have received a customary opinion of counsel to MAS, in form and substance reasonably satisfactory to ADSX.

8.3.6. Registration Rights Agreement. MAS shall have fully executed and delivered to ADSX the Registration Rights Agreement in the form attached hereto as Exhibit D.

8.3.7. AMEX Listing. ADSX shall have received assurances from the American Stock Exchange ("AMEX") to its reasonable satisfaction that following consummation of the Transaction shares of MAS common stock will remain listed for trading on AMEX.

ARTICLE IX.
TERMINATION AND ABANDONMENT

9.1. Termination This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of this Agreement and the Merger by the stockholders of MAS:

                 (a)        by mutual consent of MAS and ADSX;

                 (b)        (1) by MAS (provided that MAS is not then in material breach of any representation, warranty, covenant or other agreement contained herein), if there has been a breach by ADSX or DA of any of their representations, warranties, covenants or agreements contained in this Agreement, or any such representation and warranty shall have become untrue, in any such case such that the conditions set forth in Section 8.2.1 or Section 8.2.2 will not be satisfied and, in either such case, such breach or condition has not been promptly cured within 30 days following receipt by ADSX of written notice of such breach; (2) by ADSX (provided that ADSX is not then in material breach of any representation, warranty, covenant or other agreement contained herein), if there has been a breach by MAS or Acquisition Subsidiary of any of its representations, warranties, covenants or agreements contained in this Agreement, or any such representation and warranty shall have become untrue, in any such case such that the conditions set forth in Section 8.3.1 or Section 8.3.2 will not be satisfied and such breach or condition has not been promptly cured within 30 days following receipt by MAS of written notice of such breach;

                 (c)        by either ADSX or MAS if any decree, permanent injunction, judgment, order or other action by any court of competent jurisdiction, any arbitrator or any Governmental Authority preventing or prohibiting consummation of the Merger shall have become final and nonappealable (so long as the party seeking termination is not in breach of Section 5.5 or Section 6.4 hereof);

                  (d)        by either ADSX or MAS if the Merger and the Contribution shall not have been consummated before the "End Date", which shall be April 30, 2002. Notwithstanding the foregoing, a party shall not be permitted to terminate this Agreement pursuant to this paragraph (d) if the failure of the Effective Time to occur by the End Date shall be due to the failure of such party to perform or observe in all material respects the covenants and agreements of such party set forth herein.

                 (e)        by either ADSX or MAS if the MAS Charter Amendment, this Agreement and the transactions contemplated by this Agreement including the Merger shall fail to receive the requisite vote for approval and adoption by the stockholders of MAS at the MAS Stockholders Meeting or any adjournment or postponement thereof; provided that the right to terminate this Agreement under this Section 9.1(e) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of such approval to have been obtained;

                 (f)        by either ADSX or MAS concurrently with its acceptance of a DA Superior Proposal or an MAS Superior Proposal, as applicable;

                 (g)        by either ADSX or MAS if the Board of Directors of the other shall have withdrawn, or modified or changed, in a manner adverse to the other, its approval or recommendation of the Merger and the Contribution; or

                 (h)        by MAS at any time following 5:00 PM eastern standard time on November 2, 2001, and prior to 5:00 PM on November 6, 2001, if either (i) ADSX has not delivered the DA Disclosure Schedule by such time, or (ii) upon review of the DA Disclosure Schedule and Exhibits, MAS is not, for any reason, satisfied therewith.

9.2. Effect of Termination. (a) In the event of the termination of this Agreement by either MAS or ADSX pursuant to Section 9.1, this Agreement shall forthwith become void, there shall be no liability under this Agreement on the part of ADSX, DA, Acquisition Subsidiary or MAS, other than the provisions of this Section 9.2, Section 10.1 and Section 10.7, and except to the extent that such termination results from the material breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement.

ARTICLE X.
MISCELLANEOUS

10.1. Confidentiality. Unless (i) otherwise expressly provided in this Agreement, (ii) required by applicable Law, (iii) necessary to secure any required Consents as to which the other party has been advised, or (iv) consented to in writing by ADSX and MAS, this Agreement and any information or documents furnished in connection herewith shall be kept strictly confidential by MAS and the MAS Subsidiaries, ADSX, DA, the DA Subsidiaries, the Other Subsidiaries and any other subsidiaries of ADSX, and their respective officers, directors, employees and agents. Prior to any disclosure pursuant to the preceding sentence, the party intending to make such disclosure shall consult with the other party to the extent practicable regarding the nature and extent of the disclosure. Subject to the preceding sentence, nothing contained herein shall preclude disclosures to the extent necessary to comply with accounting, SEC, National Association of Securities Dealers of AMEX and other disclosure obligations imposed by applicable Law. ADSX and MAS shall cooperate with the other and provide such information and documents as may be required in connection with any such filings. In the event the Merger is not consummated, ADSX and MAS shall return to the other all documents furnished by the other and all copies thereof made by such party and will hold in absolute confidence all information obtained from the other party except to the extent (i) such party is required to disclose such information by Law or such disclosure is necessary in connection with the pursuit or defense of a claim, (ii) such information was known by such party prior to such disclosure or was thereafter developed or obtained by such party independent of such disclosure, (iii) such party received such information on a non-confidential basis from a source, other than the other party, which is not known by such party to be bound by a confidentiality obligation with respect thereto or (iv) such information becomes generally available to the public or is otherwise no longer confidential. Prior to any disclosure of information pursuant to the exception in clause (i) of the preceding sentence, the party intending to disclose the same shall so notify the party which provided the same to the extent practicable in order that such party may seek a protective order or other appropriate remedy should it choose to do so.

10.2. Amendment and Modification. To the extent permitted by applicable Law, this Agreement may be amended, modified or supplemented only by a written agreement among MAS, Acquisition Subsidiary, ADSX and DA, whether before or after approval of this Agreement and the Merger by the stockholders of MAS, except that following approval by the stockholders of MAS, there shall be no amendment or change to the provisions hereof with respect to the Transaction Consideration or that adversely affects the Public Stockholders without further approval by the Public Stockholders of MAS, and no other amendment shall be made which by law requires further approval by such stockholders without such further approval.

10.3. Waiver of Compliance; Consents. Any failure of MAS or Acquisition Subsidiary on the one hand, or ADSX or DA on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by ADSX on the one hand, or MAS on the other hand, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 10.3.

10.4. Survival of Representations and Warranties. The respective representations and warranties of MAS and Acquisition Subsidiary and ADSX and DA contained herein or in any certificates or other documents delivered prior to or at the Closing shall survive the execution and delivery of this Agreement, notwithstanding any investigation made or information obtained by the other party, but shall terminate at the Effective Time.

10.5. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or on the next business day when sent by overnight courier or on the second succeeding business day when sent by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice):

	(i)	if to ADSX or DA,
		Applied Digital Solutions, Inc. 400 Royal Palm Way, Suite 410 Palm Beach, Florida 33480 Attention: General Counsel Telecopy: (561)805-0001 with a copy to: Bryan Cave LLP 211 North Broadway, Suite 3600 St. Louis, Missouri 63102-2750 Attention: Denis P. McCusker, Esq. Telecopy: (314) 259-2020 and
	(ii)	if to MAS or Acquisition Subsidiary,
		Medical Advisory Systems, Inc. 8050 Southern Maryland Blvd. Owings, Maryland 20736 Attention: President Telecopy: (410) 257-2704

with a copy to:

Baker & Hostetler LLP
Washington Square, Suite 1100
1050 Connecticut Avenue, N.W.
Washington, D.C. 20035-5304
Attention: William Conti, Esq.
Telecopy: (202) 861-1783

and to:

Jenkins & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention: Gary J. Simon, Esq.
Telecopy: (212) 704-6288

10.6. Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto prior to the Effective Time without the prior written consent of the other parties hereto.

10.7. Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses.

10.8. Governing Law. This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed and governed by and in accordance with the internal laws of, the State of New York, and the parties hereto consent to the jurisdiction of the courts of or in the State of New York in connection with any dispute or controversy relating to or arising out of this Agreement and the transactions contemplated hereby.

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

10.10. Interpretation. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. No rule of construction shall apply to this Agreement which construes ambiguous language in favor of or against any party by reason of that party's role in drafting this Agreement. As used in this Agreement, (i) the term "person" shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an association, an unincorporated organization, a Governmental Authority and any other entity; (ii) the term "affiliate," with respect to any person, shall mean and include any person controlling, controlled by or under common control with such person; and (iii) the term "subsidiary" of any specified person shall mean any corporation the majority of the outstanding voting power of which, or any partnership, joint venture, limited liability company or other entity the majority of the total equity interest of which, is directly or indirectly owned by such specified person.

10.11. Entire Agreement. This Agreement and the other agreements, documents or instruments referred to herein or executed in connection herewith including, but not limited to, the MAS Disclosure Schedule and DA Disclosure Schedule, which schedules are incorporated herein by reference, embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and the understandings between the parties with respect to such subject matter.

10.12. Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions in this Agreement were not performed in accordance with their specific terms or were otherwise reached. Accordingly, the parties further agree that each party shall be entitled to an injunction or restraining order to prevent breaches hereof or thereof and to enforce specifically the terms and provisions hereof or thereof in any court of the United States or any state having jurisdiction, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.

10.13. Third Parties. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person that is not a party hereto or thereto, or, a successor or permitted assign of such a party.

[remainder of page blank]

IN WITNESS WHEREOF, ADSX, DA, MAS and Acquisition Subsidiary have caused this Agreement to be signed and delivered by their respective duly authorized officers as of the date first above written.

APPLIED DIGITAL SOLUTIONS, INC.		MEDICAL ADVISORY SYSTEMS, INC.
By:	/s/ Richard J. Sullivan	By:	/s/ R. W. Pickett
	Name: Richard J. Sullivan		Name: R. W. Pickett
	Title: Chairman & CEO		Title:
DIGITAL ANGEL CORPORATION		ACQUISITION SUBSIDIARY, INC.
By:	/s/ Peter Zhou	By:	/s/ R. W. Pickett
	Name: Peter Zhou		Name: R. W. Pickett
	Title: President		Title: President

INDEX OF DEFINED TERMS

Term	Page Where Defined
Acquisition Subsidiary	1
Acquistion Subsidiary Common Stock	5
ADSX	1
ADSX Securities Filings	18
affiliate	46
Agreement	1
Benefit Plan	10
Certificate of Merger	2
Closing	2
Closig Date	2
Code	1
Consent	6
Contract	9
Contribution	1
DA	1
DA Acquisition Proposal	37
DA Common Stock	3
DA Disclosure Schedule	15
DA Group Financial Statements	19
DA Group Material Adverse Effect	16
DA Group Material Contract	20
DA Options	4
DA Subsidiaries	15
DA Superior Proposal	37
DGCL	2
Effective Time	2
Enforceability Exceptions	6
Environmental Laws	13
Environmental Permits	13
ERISA	10
Event	8
Exchange Act	5
Final Order	40
Governmental Authority	6
Indemnified Parties	38
Intellectual Property	12
Interested Stockholders	1
IP Claim Notice	13
Law	7
Litigation	7
MAS	1
MAS Acquisition Proposal	31
MAS Charter Amendment	3
MAS Common Stock	3

MAS Disclosure Schedule	4
MAS Financial Statements	8
MAS Material Adverse Effect	4
MAS Material Contract	9
MAS Proposals	29
MAS Securities Filings	7
MAS Stockholders Meeting	29
MAS Subsidiaries	4
MAS Superior Proposal	31
Merger	1
Multi-Employer Plan	10
NASD	6
New MAS Options	4
Other Subsidiaries	1
Other Subsidiaries Common Stock	2
person	46
Proxy Statement	38
Public Stockholders	1
SEC	6
Securities Act	5
subsidiary	47
Surviving Corporation	2
Takeover Statute	32
Tax	12
Tax Return	12
Transaction	1
Transaction Consideration	3

-----END PRIVACY-ENHANCED MESSAGE-----

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a) (Amendment No. 2)

Item 1. Security and Issuer.

Item 2. Identity and Background.

Item 3. Source and Amount of Funds or Other Consideration.

Item 4. Purpose of Transaction.

Item 5. Interest in Securities of the Issuer.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 7. Material to be Filed as Exhibits.

Appendix A

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF APPLIED DIGITAL SOLUTIONS, INC.

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF DIGITAL ANGEL CORPORATION

STOCK PURCHASE AGREEMENT

RECITALS

STOCK PURCHASE AGREEMENT

RECITALS

ARTICLE I

PURCHASE AND SALE

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLERS

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

ARTICLE IV

CONDITIONS TO BUYER’S OBLIGATIONS

ARTICLE V

CONDITIONS TO SELLERS’ OBLIGATIONS

ARTICLE VI

COVENANT NOT TO COMPETE

ARTICLE VII

ADDITIONAL COVENANTS OF THE PARTIES

ARTICLE VIII

INDEMNIFICATION

ARTICLE IX

MISCELLANEOUS PROVISIONS

AGREEMENT AND PLAN OF MERGER

ARTICLE I.THE MERGER; THE CONTRIBUTION; CLOSING

ARTICLE II.EFFECT OF THE MERGER ON SECURITIES OF MAS AND DA

ARTICLE III.REPRESENTATIONS AND WARRANTIES OF MAS

ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF ADSX

ARTICLE V.ADDITIONAL COVENANTS OF MAS

ARTICLE VIADDITIONAL COVENANTS OF ADSX

ARTICLE VII.PROXY STATEMENT

ARTICLE VIII.CONDITIONS

ARTICLE IX.TERMINATION AND ABANDONMENT

ARTICLE X.MISCELLANEOUS

[remainder of page blank]

INDEX OF DEFINED TERMS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
13d-2(a)

(Amendment No. 2)

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF APPLIED DIGITAL SOLUTIONS, INC.

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF DIGITAL ANGEL CORPORATION

ARTICLE I.
THE MERGER; THE CONTRIBUTION; CLOSING

ARTICLE II.
EFFECT OF THE MERGER ON SECURITIES OF MAS
AND DA

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF MAS

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ADSX

ARTICLE V.
ADDITIONAL COVENANTS OF MAS

ARTICLE VI
ADDITIONAL COVENANTS OF ADSX

ARTICLE VII.
PROXY STATEMENT

ARTICLE VIII.
CONDITIONS

ARTICLE IX.
TERMINATION AND ABANDONMENT

ARTICLE X.
MISCELLANEOUS