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EXHIBIT 10.43
BRIDGE LOAN AND SECURITY AGREEMENT
THIS BRIDGE LOAN AND SECURITY AGREEMENT (the "Agreement"), dated as of
June 14, 2000, is entered into between ELTRAX SYSTEMS, INC., a Minnesota
corporation ("Borrower"), and CEREUS TECHNOLOGY PARTNERS, INC., a Delaware
corporation ("Lender").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Agreement and Plan of
Merger, dated as of June 12, 2000, among Borrower, Solemn Acquisition
Corporation ("SAC") and Lender (the "Merger Agreement"), SAC intends to merge
with and into Lender;
WHEREAS, pursuant to the terms of a commitment letter executed in
connection with the Merger Agreement, Borrower desires to borrow up to $2
million in the aggregate from Lender;
WHEREAS, Lender is willing to make such loan to Borrower on the terms
and subject to the conditions set forth below; and
WHEREAS, the consummation of the transactions contemplated herein is a
condition precedent to the consummation of the transactions contemplated by the
Merger Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the meanings indicated for purposes of this Agreement
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined).
"Accounts" means all currently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to Borrower arising
out of the sale or lease of goods or the rendition of services by Borrower,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
"Advance" shall mean an advance of funds under the Loan pursuant to,
and in accordance with, the terms of this Agreement.
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"Agent" shall mean PNC Bank, National Association, in its capacity as
administrative and collateral agent under the PNC Credit Agreement.
"Agreement" shall mean this Bridge Loan and Security Agreement.
"Borrower" shall mean Elan Systems, Inc., a Minnesota corporation.
"Borrower Common Stock" shall mean the common stock, par value $.01 per
share, of Borrower.
"Borrower's Books" shall mean all of Borrower's books and records,
including: ledgers, records indicating, summarizing or evidencing Borrower's
properties and assets (including the Collateral) or liabilities, all information
relating to Borrower's business operations or financial condition, and all
computer files, printouts, runs or other computer prepared summaries of
information concerning Borrower.
"Bridge Loan Interest Rate" shall mean the Prime Rate of interest from
time to time in effect, as published by Bank of America, N.A., Atlanta, Georgia,
plus 3%.
"Bridge Loan Note" shall mean Borrower's Non-Negotiable Subordinated
Convertible Promissory Note, dated as of the date hereof, in the aggregate
principal amount of $2,000,000.00, a form of which is attached hereto as Exhibit
A and incorporated herein by this reference, made by Borrower to the order of
Lender and delivered to Lender pursuant to Section 3.1 hereof.
"Business Day" shall mean a day on which national banks are open for
the transaction of business required for this Agreement in Atlanta, Georgia.
"Closing Date" shall mean the date of this Agreement.
"Collateral" shall mean all of Borrower's right, title, and interest in
each of the following:
(a) the Accounts,
(b) Borrower's Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) Real Property,
(g) the Negotiable Collateral,
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(h) any money, or other assets of Borrower, that now or hereafter
come into the possession, custody, or control of Lender, and
(i) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance
covering any or all of the Collateral, and any and all
Accounts, Borrower's Books, Equipment, General Intangibles,
Inventory, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof
or interest therein, and the proceeds thereof.
"Collections" shall have the meaning set forth in Section 4.3 hereof.
"Equipment" shall mean all present and hereafter acquired machinery,
machine tools, motors, equipment, furniture, furnishings, fixtures, vehicles
(including motor vehicles and trailers), tools, parts and goods (other than
consumer goods, farm products, or Inventory), owned by Borrower wherever
located, including (a) any interest of Borrower in any of the foregoing, and (b)
all attachments, accessories, accessions, replacements, substitutions, additions
and improvements to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, 29 U.S.C.ss.ss.1000 et. seq., as amended, and the rules and regulations
promulgated thereunder.
"Event of Default" shall mean any of the events specified in Section
8.1 hereof, provided that any requirement for notice or passage of time has been
satisfied.
"General Intangibles" means all present and future general intangibles
and other personal property owned by Borrower (including contract rights, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds and tax refund claims),
other than goods, Accounts, Borrower's Books, Equipment, Inventory, Real
Property and Negotiable Collateral.
"Inventory" means all present and future inventory in which Borrower
has any interest, including goods held for sale or lease or to be furnished
under a contract of service.
"Investment Property" means "investment property" as that term is
defined in the UCC.
"Lender" shall mean Solemn Technology Partners, Inc., a Delaware
corporation.
"Loan" shall have the meanings set forth in Section 2.1 hereof.
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"Loan Documents" shall mean the Bridge Loan Note, the Subordination
Agreement, the Warrant Agreement, the Registration Rights Agreement and any
other documents executed by Borrower with or for the benefit of Lender in
connection with this Agreement or the Loan.
"Material Adverse Effect" shall mean any act, omission or undertaking
which would, singly or in the aggregate, have (or reasonably be expected to
have) a material adverse effect upon the business, assets, liabilities,
condition (financial or otherwise) or results of operations of a Person.
"Maturity Date" shall have the meaning set forth in Section 2.1(d)
hereof.
"Merger Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
"Negotiable Collateral" means all of a Person's present and future
letters of credit, notes, drafts, instruments, Investment Property, documents,
personal property leases (wherein such Person is the lessor), chattel paper, and
Borrower's Books relating to any of the foregoing.
"Permitted Dispositions" shall have the meaning set forth in Section
7.3 hereof.
"Permitted Liens" shall have the meaning set forth in Section 7.2
hereof.
"Person" shall mean and include natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts and other similar organizations
or entities, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"PNC Credit Agreement" shall mean that certain Revolving Credit and
Security Agreement, dated March 14, 2000, as amended by the First Amendment to
Revolving Credit and Security Agreement dated May 15, 2000 among Agent, the
various lenders from time to time a party thereto, Borrower and the various
other borrowers thereunder, as the same may hereafter be amended, superseded or
replaced, and all related waivers and consents.
"Real Property" shall mean all estates or interests in real property
now owned or hereafter acquired by Borrower.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement between Borrower and Lender, dated as of the date hereof, a form of
which is attached hereto as Exhibit B and incorporated herein by this reference,
pursuant to which Borrower agrees to register the shares of Borrower Common
Stock underlying the Bridge Loan Note and the Warrant Agreement.
"Subordination Agreement" shall mean the Subordination Agreement among
Borrower, Lender and Agent, dated as of the date hereof, a form of which is
attached hereto as Exhibit C and incorporated herein by this reference, pursuant
to which Lender has agreed to subordinate its security interest in the
Collateral to the security interest Borrower has previously granted to Agent.
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"Subsidiary" shall mean any corporation, partnership, limited
partnership, limited liability company, association or other business entity of
which securities or other ownership interests representing more than fifty
percent (50%) of the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled by Borrower or one or more
Subsidiaries of Borrower.
"Taxes" shall mean, with respect to Borrower, taxes, assessments or
other governmental charges or levies imposed upon Borrower, its income or any of
its properties or assets.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of Georgia.
"Valuation Date" shall have the meaning set forth in Section 9.1
hereof.
"Warrant Agreement" shall mean the Warrant Agreement between Borrower
and Lender, dated as of the date hereof, a form of which is attached hereto as
Exhibit D and incorporated herein by this reference.
"Warrant Shares" shall have the meaning set forth in Section 9.1
hereof.
ARTICLE II
COMMITMENT TO LEND, BORROWING PROCEDURES, ETC.
Section 2.1 Loans
(a) Amount. Lender agrees, from the Closing Date until the Maturity
Date described in Section 2.1(d) below, and upon the terms and conditions herein
set forth, to make from time to time, at the request of Borrower, a loan or
series of loans to Borrower in the aggregate principal amount of up to Two
Million Dollars ($2,000,000.00) (the "Loan," and the aggregate amount of all
such Loan outstanding from time to time, the "Loan Amount"). Borrower shall
repay all outstanding principal under the Loan on the Maturity Date, or such
earlier date if the Loan is prepaid or if the Loan is accelerated in accordance
herewith. Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
prior to the Maturity Date.
(b) Advances. Lender shall make Advances pursuant to this Agreement at
any time prior to the Maturity Date upon written request delivered by Borrower
to Lender signed by the Chief Executive Officer or the Chief Financial Officer
of Borrower stating (i) the amount requested, and (ii) that Borrower is not
entitled to any additional Revolving Advances (as defined in the PNC Credit
Agreement) under the PNC Credit Agreement at the time of such request. Advances
may be used by Borrower for any purpose, at Borrower's discretion; provided,
however, that if Borrower intends to use any such Advance to fund an expenditure
outside of Borrower's normal course of business, then any request therefor must
be accompanied by the written approval of the Steering Committee (as defined in
the Merger Agreement) with respect to such expenditure.
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(c) Bridge Loan Note. The obligation of Borrower to repay the Loan
shall be evidenced by the Bridge Loan Note for the principal sum of
$2,000,000.00, or such Loan Amount as shall be outstanding hereunder from time
to time, with interest as therein provided. Absent manifest error, the Lender's
records with respect to the Loan and the aggregate outstanding Loan Amount shall
be conclusive as to amounts owed Lender under the Bridge Loan Note and this
Agreement.
(d) Payments. Subject to the terms of the Subordination Agreement:
(i) Interest. Interest on the Loan Amount shall be payable
quarterly in arrears. The first such payment, prorated from
the date hereof, shall cover the period from the date hereof
through September 30, 2000, and shall be due on or before the
fifth Business Day after September 30, 2000. Thereafter,
accrued interest for each subsequent calendar quarter shall
be due on or before the fifth Business Day after the end of
such subsequent calendar quarter (each, an "Interest Payment
Date") until such time as all amounts of principal and
interest hereunder shall have been paid in full. If the Loan
is paid or otherwise satisfied in full prior to any Interest
Payment Date, Borrower shall be obligated to pay a pro-rata
amount of interest on the Loan Amount based on the number of
days that have elapsed between the most recent Interest
Payment Date and the date of such payment or satisfaction.
(ii) Principal. Unless payment of the Loan is accelerated upon
occurrence of an Event of Default pursuant to Section 8.2
hereof, no principal payments shall be required until the
Maturity Date, and the aggregate outstanding principal amount
of the Loan, together with all accrued and unpaid interest
thereon, shall be due and payable on June 14, 2001 (the
"Maturity Date"); provided, however, that if any amount,
whether principal, accrued interest or otherwise, remains
outstanding and payable by Borrower under the PNC Credit
Agreement, no payment, unless payment of the Loan is
accelerated upon occurrence of an Event of Default pursuant
to Section 8.2 hereof, shall be due hereunder (other than
interest payments pursuant to Section 2.1(d)(i) hereof) until
such time as all amounts, whether principal, accrued interest
or otherwise, due and owing under the PNC Credit Agreement
have been paid or otherwise satisfied or discharged in full.
(e) Interest. The Loan Amount outstanding hereunder from time to time
shall bear interest through the Maturity Date at a rate per annum equal to the
Bridge Loan Interest Rate, payable in accordance with the terms of the Bridge
Loan Note.
Section 2.2 Prepayment.
The principal amount of the Loan may be repaid or prepaid in full or in
part at any time and from time to time prior to the Maturity Date, without
premium or penalty.
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Section 2.3 Manner of Payment.
(a) Subject to the terms of Section 2.1(d) hereof, payment (including
prepayment) by Borrower of the principal or accrued interest on the Loan shall
be made on the Maturity Date to the Lender in lawful money of the United States
of America in immediately available funds.
(b) If any payment under this Agreement shall be specified to be made
upon a day which is not a Business Day, it shall be made on the next succeeding
day which is a Business Day, and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
(c) If some or less than all amounts due from Borrower are received by
Lender, Lender shall apply such amounts in the following order of priority: (i)
to the payment of all amounts then due and payable under this Agreement other
than interest or principal; (ii) to the payment of accrued interest then due and
payable on the Loan; and (iii) to the repayment or prepayment of the principal
balance of the Loan.
Section 2.4 Basis of Calculation of Interest.
All interest payable hereunder shall be calculated on the basis of the
360/365 method, which computes a daily amount of interest for a hypothetical
year of 360 days, then multiplies such amount by the actual number of days
elapsed in an interest calculation period.
Section 2.5 Maximum Interest Rate.
In no event shall the amount of interest due or payable under the
Bridge Loan Note exceed the maximum rate of interest allowed by applicable law,
and in the event that any such payment is inadvertently paid by Borrower or
inadvertently received by Lender, then such excess sum shall be credited as a
payment of principal, unless Borrower shall notify Lender, in writing, that
Borrower elects to have such excess sum returned to it forthwith. It is the
express intent hereof that Borrower not pay, and that Lender not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which would lawfully be paid by Borrower under applicable law.
ARTICLE III
CLOSING DELIVERIES
The following deliveries shall be made simultaneously with the
execution of this Agreement:
Section 3.1 The Bridge Loan Note.
Borrower shall deliver to Lender the Bridge Loan Note duly executed and
dated as of the Closing Date.
Section 3.2 The Subordination Agreement.
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Borrower, Lender and Agent shall each deliver to the other parties
thereto the Subordination Agreement duly executed and dated as of the Closing
Date.
Section 3.3 The Registration Rights Agreement.
Borrower and Lender shall each deliver to the other party hereto the
Registration Rights Agreement duly executed and dated as of the Closing Date.
Section 3.4 Evidence of Approvals.
Lender shall have received from the Borrower a copy of the written
consent of the various lenders under the PNC Credit Agreement consenting to the
transactions contemplated by this Agreement and the Loan Documents, as well as
copies of all such documents and other evidence that Lender may reasonably
request to confirm the Borrower's authority to enter into the Agreement and the
transactions contemplated hereby, and to fully perform its obligations hereunder
and thereunder.
Section 3.5 Other Conditions to Closing.
Lender's obligation to make Advances hereunder shall be further subject
to the prior satisfaction of the following conditions, except to the extent
waived by Lender in writing:
(a) at the time of each Advance, none of the the Collateral shall be
subject to any Lien unacceptable to Lender other than Permitted Liens;
(b) prior to or contemporaneously with the initial Advance, Borrower
shall have executed and filed Forms UCC 1 with respect to the Collateral in
forms reasonably acceptable to Lender and its counsel and shall have provided
evidence of each of the foregoing requirements to Lender;
(c) at the time of each Advance, as applicable, Borrower shall not be
in default with respect to any of its covenants and agreements set forth herein;
and
(d) at the time of each Advance, as applicable, no Event of Default
shall have occurred and be continuing.
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ARTICLE IV
CREATION OF SECURITY INTEREST
Section 4.1 Grant of Security Interest. Subject to the terms of the
Subordination Agreement, Borrower hereby grants to Lender a continuing security
interest in all currently existing and hereafter acquired or arising Collateral
in order to secure prompt repayment of the Loan and in order to secure prompt
performance by Borrower of each of its covenants and duties under the Loan
Documents. Lender's security interests in the Collateral shall attach to all
Collateral without further act on the part of Lender or Borrower. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrower has no authority,
express or implied, to dispose of any item or portion of the Collateral.
Section 4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Borrower,
immediately upon the request of Lender, shall endorse and deliver physical
possession of such Negotiable Collateral to Lender. Lender will hold such
Negotiable Collateral for the benefit of Borrower and will return such
Negotiable Collateral to Borrower upon satisfaction in full of the Loan or will
retain and foreclose upon such Negotiable Collateral if necessary under Section
8.3 hereof. Anything contained in the foregoing to the contrary notwithstanding,
the terms and conditions of this Section 4.2 will not be effective until such
time as the PNC Credit Agreement and the credit facility contemplated therein
are terminated.
Section 4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify customers or
Account debtors of Borrower that the Accounts, General Intangibles, or
Negotiable Collateral have been assigned to Lender or that Lender has a security
interest therein, and (b) collect the Accounts, General Intangibles, and
Negotiable Collateral directly and charge the reasonable collection costs and
expenses to the Loan Amount. Borrower agrees that, after the occurrence and
during the continuation of an Event of Default, it will hold in trust for
Lender, as Lender's trustee, any collections that it receives with respect to
such Accounts, General Intangibles and Negotiable Collateral ("Collections") and
immediately will deliver said Collections to Lender in their original form as
received by Borrower. Anything contained in the foregoing to the contrary
notwithstanding, the terms and conditions of this Section 4.3 will not be
effective until such time as the PNC Credit Agreement and the credit facility
contemplated therein are terminated.
Section 4.4 Delivery of Additional Documentation Required. Subject to the terms
of the Subordination Agreement, at any time upon the request of Lender, Borrower
shall execute and deliver to Lender all security agreements, mortgages, deeds to
secure debt, financing statements, continuation financing statements, fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of title, applications for title, affidavits, reports, notices, schedules of
accounts, letters of authority, and all other documents that Lender reasonably
may request, in form satisfactory to Lender, to create, perfect and continue
perfected Lender's security interests in the Collateral, and in order to fully
consummate all of the transactions contemplated hereby and under the other the
Loan Documents.
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Section 4.5 Power of Attorney. Borrower hereby irrevocably makes, constitutes,
and appoints Lender (and any of Lender's officers, employees, or agents
designated by Lender) as Borrower's true and lawful attorney, with power to (a)
if Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 4.4 hereof, sign the name of Borrower on any of
the documents described in Section 4.4 hereof, (b) at any time that an Event of
Default has occurred and is continuing or Lender reasonably deems itself
insecure, sign Borrower's name on any invoice or xxxx of lading relating to any
Account, drafts against Account debtors, schedules and assignments of Accounts,
verifications of Accounts, and notices to Account Debtors, (c) send requests for
verification of Accounts, (d) at any time that an Event of Default has occurred
and is continuing or Lender reasonably deems itself insecure, endorse Borrower's
name on any Collection item that may come into Lender's possession, (e) at any
time that an Event of Default has occurred and is continuing or Lender
reasonably deems itself insecure, make, settle, and adjust all claims under
Borrower's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, all in its reasonable discretion, and (f)
at any time that an Event of Default has occurred and is continuing or Lender
reasonably deems itself insecure, settle and adjust disputes and claims
respecting the Accounts directly with Account Debtors, for amounts and upon
terms that Lender determines to be reasonable, and Lender may cause to be
executed and delivered any documents and releases that Lender reasonably
determines to be necessary. The appointment of Lender as Borrower's attorney,
and each and every one of Lender's rights and powers, being coupled with an
interest, is irrevocable until the Loan has been fully and finally repaid and
performed and Lender's obligation to extend credit hereunder is terminated.
Anything contained in the foregoing to the contrary notwithstanding, (i) the
terms and conditions of this Section 4.5 will not be effective until such time
as the PNC Credit Agreement and the credit facility contemplated therein are
terminated, and (ii) Lender's remedies as a secured creditor hereunder shall be
exercised in a commercially reasonable manner to the extent required by the UCC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties.
Borrower hereby represents and warrants to Lender that:
(a) Organization; Power; Qualification. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota, has the power and authority to own or lease and operate its
properties and to carry on its businesses as now being and hereafter proposed to
be conducted, and is duly qualified and is in good standing as a foreign
corporation, and is authorized to do business, in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization, and in which failure to so qualify would have a
Material Adverse Effect on Borrower.
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(b) Execution and Enforceability. This Agreement has been duly
executed and delivered by Borrower, and is, and each of the Loan Documents to
which Borrower is a party is, a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies, and in particular, may not be
available where damages are considered an adequate remedy at law, and (ii)
limitations imposed by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws effecting enforcement of creditors' rights
generally (insofar as any such law relates to the bankruptcy, insolvency or
similar event of the Borrower).
(c) Authorization. Borrower is duly authorized to execute, deliver and
perform its obligations under this Agreement and the Loan Documents. The
execution, delivery and performance by Borrower of this Agreement and the Loan
Documents do not and will not require any consent or approval of any
governmental agency or authority.
(d) No Conflicts. The execution, delivery and performance by Borrower
of this Agreement and the Loan Documents (i) do not and will not conflict with:
(A) any provision of law, (B) Borrower's Articles of Incorporation and Bylaws,
(C) any material agreement binding upon Borrower (other than the PNC Credit
Agreement and documents executed in connection therewith, subject to Section 3.4
above), or (D) any court or administrative order or decree applicable to
Borrower; and (ii) do not and will not require, or result in, the creation or
imposition of any lien on any asset of Borrower (other than those contemplated
herein).
ARTICLE VI
AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until the Merger
Agreement has been terminated in accordance with its terms or until the
transactions contemplated therein have been consummated, whichever occurs first,
and all accrued and unpaid interest thereon has been paid in full, and unless
Lender shall otherwise consent in writing, Borrower covenants and agrees that it
will, and will cause each Subsidiary to, comply in all material respects with
all of its obligations under the Merger Agreement. If the Merger Agreement is
terminated for any reason prior to Borrower's payment of the Loan and all
accrued and unpaid interest thereon, in full, then from and after such
termination of the Merger Agreement and until the Loan, and all accrued and
unpaid interest thereon, has been paid in full, and unless Lender shall
otherwise consent in writing, Borrower covenants and agrees that it will, and
will cause each Subsidiary to:
Section 6.1 Certain Information and SEC Reports. Furnish to Lender in form
and substance reasonably satisfactory to Lender:
(a) Litigation. Within five (5) days after Borrower learns of the
commencement of any material claim or suit, legal or equitable, or of any
administrative, arbitration, or other similar proceeding against Borrower or any
of its Subsidiaries, or any of their respective businesses, assets, or
properties which claim or proceeding, if determined adversely to Borrower or
such Subsidiary, would be likely to have a Material Adverse Effect on Borrower
and its Subsidiaries, taken as a whole, written notice of the nature and extent
of such suit or proceeding;
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(b) Material Adverse Changes. Within five (5) days after Borrower
learns of any circumstance or event (other than conditions having an effect on
the economy in general) which reasonably can be expected to have a Material
Adverse Effect on Borrower and its Subsidiaries taken as a whole, written notice
of the nature and extent of such circumstance or event;
(c) SEC Reports. Simultaneous with the transmission thereof to
Borrower's shareholders, copies of (or notice from an XXXXX watch service of)
all financial statements, proxy statements, reports and any other general
written communications which Borrower sends to its shareholders and copies (or
notice from an XXXXX watch service of) of all registration statements and all
regular, special or periodic reports which it files with the SEC or with any
securities exchange on which any of its securities are then listed, and copies
of all press releases and other statements made available generally by Borrower
to the public concerning material developments in Borrower's businesses; and
(d) Other Information. Within ten (10) days after Lender makes a
reasonable request therefor, such other data relating to the business, affairs
and financial condition of Borrower or any of its Subsidiaries.
Section 6.2 Taxes. Pay and discharge all Taxes and other governmental charges
before the same shall become overdue, unless and to the extent only that such
payment is being contested in good faith.
Section 6.3 Insurance. Maintain insurance coverage on its physical assets and
against other business risks in such amounts and of such types as are not
materially inconsistent with its historical practice, and in the event of
acquisition of additional property, real or personal, or of incurrence of
additional risks of any nature, increase such insurance coverage in such manner
and to such extent as prudent business judgment and present practice would
reasonably dictate.
Section 6.4 Examination of Books. Permit the Lender, through its authorized
attorneys, accountants and representatives, to examine Borrower's books,
accounts, records, ledgers and assets of every kind and description at all
reasonable times upon request of the Lender, at Borrower's reasonable cost and
expense (provided that so long as no Event of Default has occurred and is
continuing, Lender shall be entitled to no more than one (1) such examination
per year).
Section 6.5 Notification of Events of Default, Acceleration or Material
Adverse Effect. Promptly notify the Lender of any condition or event which
constitutes, or with the passage of time and/or the giving of notice would
constitute, an Event of Default under this Agreement or under the PNC Credit
Agreement, or of any acceleration of the maturity of any indebtedness
aggregating $500,000 or more of Borrower.
Section 6.6 Maintenance of Licenses. Maintain in good standing all licenses
required by any governmental authority that may be necessary or required for
Borrower and its Subsidiaries to carry on their respective businesses, where the
failure to maintain such licenses would have a Material Adverse Effect on
Borrower and its Subsidiaries taken as a whole.
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Section 6.7 ERISA Compliance. Comply with all material requirements imposed by
ERISA as presently in effect or hereafter promulgated, including the minimum
funding requirements of any defined contribution employee benefit plan.
Section 6.8 Compliance with Law. Comply in all material respects with all
applicable laws, rules, regulations and orders of any governmental authority,
except to the extent that compliance with any of the foregoing is then being
contested in good faith by appropriate legal proceedings and with respect to
which adequate financial reserves have been established on the books and records
of Borrower and except where the failure to comply would not have a Material
Adverse Effect on Borrower and its Subsidiaries, taken as a whole.
ARTICLE VII
NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Merger
Agreement has been terminated in accordance with its terms or until the
transactions contemplated therein have been consummated, whichever occurs first,
and all accrued and unpaid interest thereon has been paid in full, and unless
Lender shall otherwise consent in writing, Borrower shall not, and shall not
cause any Subsidiary to, materially breach any of the terms or conditions of the
Merger Agreement. If the Merger Agreement is terminated for any reason prior to
Borrower's payment of the Loan and all accrued and unpaid interest thereon, in
full, then from and after such termination of the Merger Agreement and until the
Loan, and all accrued and unpaid interest thereon, has been paid in full, and
unless Lender shall otherwise consent in writing:
Section 7.1 Liquidation, Merger or Sale.
Borrower shall not, and shall not cause any Subsidiary to, without the
prior written consent of Lender, unless expressly permitted by the terms of the
Merger Agreement:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise windup its affairs;
(b) sell, lease, abandon, transfer or otherwise dispose of any real
property or of any personal property having a value of in excess of $250,000,
other than in the ordinary course of business; or
(c) consummate any merger or consolidation other than the transactions
contemplated by the Merger Agreement, except any merger the sole purpose of
which is to change the Borrower's jurisdiction of incorporation.
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Section 7.2 Liens.
Borrower shall not, and shall not cause any Subsidiary to, create,
incur or suffer to exist, any lien (including any pledge, assignment, mortgage,
title retaining contract or other type of security interest) to exist on any of
the assets or property (real, personal or mixed, tangible or intangible) of the
Borrower, other than (collectively, "Permitted Liens"):
(a) Liens evidencing Borrower's indebtedness to the various lenders
under and pursuant to the PNC Credit Agreement and any and all documents
executed in connection therewith;
(b) Liens for Taxes not delinquent or for Taxes being contested in
good faith by appropriate proceedings and as to which adequate financial
reserves have been established on Borrower's books and records;
(c) Liens created in connection with workmen's compensation,
unemployment insurance, and social security, or to secure the performance of
bids, tenders or contracts (other than for the repayment of borrowed money),
leases, statutory obligations, surety and appeal bonds, and other obligations of
like nature made in the ordinary course of business;
(d) Each lien existing on the date hereof; and
(e) Liens created in connection with purchase money mortgages or
security interests granted to secure the purchase price of assets, the purchase
of which does not violate this Agreement or any Loan Document.
Section 7.3 Distributions.
Borrower shall not, and shall not cause any Subsidiary to, make any
distribution, directly or indirectly, whether in cash or in other property,
other than (a) distributions of Borrower's securities, including the issuance of
warrants to the various lenders under the PNC Credit Agreement, and (b)
distributions from Borrower's Subsidiaries to Borrower or from any Subsidiary of
Borrower to any other Subsidiary of Borrower ("Permitted Dispositions").
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1 Events of Default.
An Event of Default shall have occurred under this Agreement:
(a) Non-payment. If Borrower shall default in the payment when due of
any principal of, or interest on, the Loan, such payment shall be permitted
pursuant to the terms of the Subordination Agreement, and such default shall not
be cured within ten (10) days following notice thereof from Lender (which notice
shall not be sent until such time as such payment shall be permitted pursuant to
the terms of the Subordination Agreement).
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(b) Insolvency. If Borrower becomes insolvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in, the appointment of a trustee,
receiver or other custodian for Borrower or for a substantial part of the
property of Borrower, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Borrower or for a
substantial part of the property of the Borrower and is not discharged within
sixty days; or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against Borrower and, if instituted
against Borrower, is consented to or acquiesced in by Borrower or remains for
sixty days undismissed; or any warrant of attachment or similarly legal process
is issued against any substantial part of the property of Borrower which is not
released within sixty days of service.
(c) Representations and Warranties. If any representation or warranty
made under this Agreement or any statement in any certificate given by Borrower
hereunder shall be untrue, incorrect or misleading in any material respect when
made or given.
(d) Covenants. If Borrower shall default in the performance or
observance of any covenant set forth herein and permitted by the terms of the
Subordination Agreement, and such default shall not be cured within thirty (30)
days following notice thereof from Lender to Borrower (which notice shall not be
sent until such time as such performance or observance is permitted by the terms
of the Subordination Agreement).
(e) Other Loan Documents. Subject to the terms of the Subordination
Agreement, if there is an event of default under any of the Loan Documents,
subject to any applicable period of grace.
(f) Other Obligations. Subject to the terms of the Subordination
Agreement, if subject to any applicable grace period, Borrower (i) fails to pay
any indebtedness or other obligations, direct or indirect, for borrowed money
from Agent or any lender under the PNC Credit Agreement in accordance with, or
fails to perform or breaches any of the terms and conditions of, the PNC Credit
Agreement when required to be performed, and, if as the result of such failure,
the maturity date of such indebtedness or other obligations has been
accelerated, (ii) fails to pay any indebtedness or other obligations, direct or
indirect, for borrowed money in an amount in excess of $250,000.00 (other than
as evidenced by this Agreement or the Bridge Loan Note) owing by Borrower when
due, whether at maturity, by acceleration or otherwise, or (iii) fails to
perform any term, covenant or agreement on its part to be performed under any
agreement or instrument (other than this Agreement or under the Loan Documents
or the PNC Credit Agreement or documents executed in connection therewith)
evidencing or securing or relating to the indebtedness or other obligations
described in clauses (i) or (ii) above, when required to be performed, and, if
as the result of such failure, the maturity date of such indebtedness or other
obligations has been accelerated.
(g) Judgments. If Borrower fails to satisfy or stay the execution by
appropriate proceedings of any final judgment rendered against it in excess of
$25,000.
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Section 8.2 Acceleration.
(a) Declaration of Acceleration. If any Event of Default occurs
and is continuing, Lender may (subject to the terms of the Subordination
Agreement), upon notice to Borrower, declare the Loan to be due and payable
immediately; and upon any such declaration all principal and interest on the
Loan shall become immediately due and payable; provided, however, in the case of
an Event of Default arising from certain events of insolvency described in
Section 8.1(b), with respect to Borrower, the Loan shall ipso facto become due
and payable without further action or notice on the part of Lender.
(b) Rescission. At any time after a declaration of acceleration
with respect to the Loan, Lender may, in its sole discretion, rescind and cancel
such declaration and its consequences. No such rescission shall affect any
subsequent Event of Default or impair any right with respect thereto.
Section 8.3 Other Remedies. If an Event of Default occurs and is continuing,
Lender may immediately terminate its obligation to make Advances hereunder and
may, subject to the terms of the Subordination Agreement, pursue any available
remedy to collect the payment of principal and interest on the Loan and to
enforce the performance of any provision of the Bridge Loan Note, this Agreement
and any other Loan Document. A delay or omission by Lender in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 8.4 Waiver Of Past Defaults. Lender may waive any existing Event of
Default and its consequences under this Agreement. Upon any such waiver, such
Event of Default shall cease to exist and thereafter shall be deemed to have
been cured for every purpose of this Agreement; but no such waiver shall extend
to any subsequent or other Event of Default or impair any right consequent
thereon.
Section 8.5 Priorities. Any sums collected by Lender hereunder and under the
Bridge Loan Note shall, subject to the terms of the Subordination Agreement, be
applied first to all reasonable costs and expenses of collection, including
reasonable attorneys' fees, then to accrued and unpaid interest, and lastly to
principal.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Issuance of Warrants.
If the Merger Agreement shall be terminated pursuant to Section 8.1
thereof, and if, as a result, Lender is entitled to receive a termination fee
under Section 8.5 thereof, then Borrower shall issue to Lender warrants to
purchase shares of the Borrower Common Stock at an exercise price equal to $.01
per share (the "Warrants") by completing, executing and delivering to Lender
(within forty (40) days after the Valuation Date) the Warrant Agreement. The
Warrants shall be exercisable for that number of shares of Borrower Common Stock
equal to the outstanding Loan Amount on the date of the occurrence of the event
giving rise to the termination of the Merger Agreement pursuant to Section 8.1
thereof and the payment of the termination fee under Section 8.5 of the Merger
Agreement (the "Valuation Date"), divided by the closing price per share of the
Borrower Common Stock on the Valuation Date (the "Warrant Shares").
Notwithstanding the foregoing, if Borrower repays the outstanding Loan Amount in
full within thirty (30) days after the Valuation Date, Borrower shall execute
and deliver the Warrant Agreement for Warrants to purchase 25% of the number of
Warrant Shares that would otherwise have been issuable to Lender under this
Section 9.1 but for such repayment.
Section 9.2 Waiver and Amendments.
No failure or delay on the part of Lender in the exercise of any power
or right, and no course of dealing between Borrower and Lender, shall operate as
a waiver of such power or right, nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. Remedies provided for herein are cumulative and not
exclusive of any remedies which may be available to the Lender at law or in
equity. No notice to or demand on the Borrower required hereunder or under the
Bridge Loan Note shall in any event entitle Borrower to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
right of Lender to any other or further action and any circumstances without
notice or demand. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the Bridge Loan Note shall in any
event be effective unless the same shall be in writing and signed and delivered
by Lender. Any waiver of any provision of this Agreement or the Bridge Loan
Note, and any consent to any departure by Borrower from the terms of any
provision of this Agreement or the Note, shall be effective only in the specific
instance and for the specific purpose for which given.
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Section 9.3 Notices
All notices, requests and other communications required or permitted
under this Agreement (collectively, "notices") shall be in writing and sent or
delivered in one of the manners expressly contemplated in this Section 9.3. If
mailed, notices must be sent by prepaid first-class mail, certified, return
receipt requested, and shall be deemed to have been received on the earlier of
the date shown on the receipt or three (3) Business Days after the post-xxxx
date thereof. In addition, notices hereunder may be delivered by hand in which
event the notice shall be deemed effective when delivered or by a nationally
recognized overnight courier, in which event the notice shall be deemed
delivered the first Business Day after it is accepted by the courier for next
day delivery. All such notices shall be given to the parties hereto at the
following addresses:
(a) If to Borrower:
Eltrax Systems, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a required copy to:
Jaffe, Raitt, Heuer & Xxxxx, Professional Corporation
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to Lender:
Cereus Technology Partners, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
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with a required copy to:
Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxx, Esq.
Telecopier No.: (000) 000-0000
Any party hereto may change the address to which notices shall be
directed under this Section by giving written notice of such change to the other
parties.
Section 9.4 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 9.5 Governing Law.
This Agreement shall be construed under and governed by the laws of the
State of Georgia, without giving effect to its principles of conflicts of laws.
Section 9.6 Successors and Assigns.
This Agreement shall be binding upon Borrower and Lender and their
respective successors and assigns, and shall inure to the benefit of Borrower
and Lender and their respective successors and assigns. Neither Borrower nor
Lender shall assign its rights or delegate its duties hereunder without the
prior written consent of the other party.
Section 9.7 Headings; Construction.
Headings used in this Agreement are for convenience only and shall not
be used in connection with the interpretation of any provision hereof. As used
herein, the words "include," "including," and "includes" shall be deemed to be
followed by the words "without limitation."
Section 9.8 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which counterparts shall
together constitute one and the same instrument. Copies (whether photostatic,
facsimile or otherwise) of signatures to this Agreement shall be deemed to be
originals and may be relied on to the same extent as the originals.
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Section 9.9 Expenses.
Borrower agrees to pay, and hold Lender harmless from liability for the
payment of, all reasonable costs and expenses of Lender (including reasonable
fees and expenses of counsel and experts) in connection with any Event of
Default or the enforcement of this Agreement.
Section 9.10 Subordination Agreement.
Any other provision of this Agreement to the contrary notwithstanding,
all of Borrower's obligations and all of Lender's rights under this Agreement
are subject to the terms of the Subordination Agreement.
Section 9.11 Integration.
This Agreement, together with the Merger Agreement and the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Bridge Loan and
Security Agreement to be executed by the undersigned thereunto duly authorized
as of June 14, 2000.
ELTRAX SYSTEMS, INC.
By: /S/ Xxxxxxx X. Xxxxxxx, III
------------------------------------------
Chief Financial Officer
CEREUS TECHNOLOGY PARTNERS, INC.
By: /S/ Xxxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT A
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THIS PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"),
NOR REGISTERED OR QUALIFIED UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE.
NEITHER THIS PROMISSORY NOTE, NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF, NOR ANY INTEREST OR PARTICIPATION THEREIN, MAY BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED
OF UNLESS (I) REGISTERED UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT AND IN FULL COMPLIANCE WITH THE APPLICABLE RULES AND REGULATIONS
THEREUNDER AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, (II) PURSUANT TO
RULE 144 UNDER THE 1933 ACT OR (III) UNLESS ELTRAX SYSTEMS, INC. RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES, REASONABLY SATISFACTORY TO
ELTRAX SYSTEMS, INC., STATING THAT SUCH SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION,
ENCUMBRANCE OR OTHER MANNER OF TRANSFER OR DISPOSITION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT AND APPLICABLE
STATE SECURITIES OR BLUE SKY LAW.
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO INDEBTEDNESS OWING
FROM MAKER AND CERTAIN OTHER BORROWERS TO VARIOUS LENDERS AND PNC BANK, NATIONAL
ASSOCIATION, AS AGENT FOR SUCH LENDERS (TOGETHER WITH ITS SUCCESSORS AND ASSIGNS
IN SUCH CAPACITY, "AGENT"), PURSUANT TO A SUBORDINATION AGREEMENT DATED JUNE 14,
2000, AMONG MAKER, HOLDER AND AGENT.
--------------------------------------------------------------------------------
NON-NEGOTIABLE SUBORDINATED CONVERTIBLE PROMISSORY NOTE
$2,000,000.00 June 14, 0000
Xxxxxxx, Xxxxxxx
FOR VALUE RECEIVED, the undersigned, ELTRAX SYSTEMS, INC., a Minnesota
corporation ("Maker"), promises to pay to the order of CEREUS TECHNOLOGY
PARTNERS, INC., a Delaware corporation (together with any permitted assignee,
the "Holder"), at Holder's principal offices located at 0000 Xxxxxxxxx Xxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, or at such other address as Holder may from
time to time designate in writing, the principal sum of TWO MILLION AND NO/100
DOLLARS ($2,000,000.00), or, if less, the unpaid aggregate principal amount of
all loans made from time to time hereunder, together with interest thereon as
provided herein, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts.
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All capitalized terms used herein shall have the meanings ascribed to
such terms in that certain Bridge Loan and Security Agreement by and between
Maker (as Borrower thereunder) and Holder (as Lender thereunder) dated of even
date herewith, as the same may be amended (the "Loan Agreement"), except to the
extent that such capitalized terms are otherwise defined or limited herein.
The aggregate then-current Loan Amount of the Loan loaned and borrowed
pursuant to the Loan Agreement shall be paid as provided in Section 2.1(d) of
the Loan Agreement.
Maker may repay all or any portion of the Loan Amount outstanding
hereunder in full or in part at any time prior to the Maturity Date, without
penalty or premium, in the manner set forth in the Loan Agreement.
All amounts of principal outstanding hereunder shall bear interest at a
rate equal to the Bridge Loan Interest Rate, which shall accrue and be payable
in accordance with the terms of Section 2.1 of the Loan Agreement. Unpaid
interest hereunder shall not bear interest. The entire principal balance hereof,
and all interest accrued and unpaid thereon, shall be due and payable in full on
the Maturity Date, except as otherwise set forth in Section 2.1(d) of the Loan
Agreement. The provisions of Article II of the Loan Agreement are hereby
incorporated herein by this reference.
1. CONVERSION. Holder shall have the right, at Holder's option at any
time prior to or after the Maturity Date, to convert the then outstanding Loan
Amount in whole (but not in part) into that number of fully paid and
non-assessable shares of Borrower Common Stock determined by multiplying (i)
1.15 by (ii) a fraction, the numerator of which shall be the outstanding Loan
Amount on the date of conversion and the denominator of which shall be $7.563(1)
(the "Initial Conversion Price").
1.1 CONVERSION PROCEDURE
1.1.1 Notice of Conversion. To effect the conversion
of this Note into shares of Borrower Common Stock, Holder shall give
written notice by hand or by overnight mail, or by mail, postage
prepaid, to Maker at its address designated in Section 8 below, of the
election to convert this Note pursuant to this Section 1.1. Holder
shall surrender this Note contemporaneous with such notice. Such
notice shall state therein the name or names (which shall be the names
of the Holders) in which the certificate or certificates for shares of
Borrower Common Stock are to be issued. Such conversion shall be
deemed to have been made immediately prior to the close of business on
the date (which shall be the date of conversion) on which Maker
actually receives such notice and this Note, and the Person or Persons
entitled to receive the shares of Borrower Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder
or holders of such shares of Borrower Common Stock as of such date.
------------------------
(1) The Initial Conversion Price shall be the per share closing price for
the Borrower Common Stock on the day immediately prior to the date that Maker
and Holder publicly announce the transactions comtemplated by the Merger
Agreement
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1.1.2 Delivery of Stock Certificate. As promptly as
practicable after the date of conversion of this Note, but in no event
later than five (5) Business Days after receipt thereof, Maker, at its
expense, will issue and deliver to Holder a certificate or
certificates for the number of full shares of Borrower Common Stock
issuable upon such conversion.
1.1.3 Fractional Shares. No fractional shares of
Borrower Common Stock shall be issued upon conversion of this Note. In
lieu of Maker issuing any fractional shares to Holder upon the
conversion of this Note, Maker shall issue a check payable to Holder
for an amount equal to the fractional share times the Initial
Conversion Price.
1.1.4 Transfer Taxes. Maker shall pay all taxes which
may be payable in respect of the issuance of any shares of Borrower
Common Stock deliverable upon conversion of this Note, except that
Maker shall not be required to pay any tax imposed in connection with
any transfer involving the issuance of a certificate for shares of
Borrower Common Stock in any name other than that of the original
Holder of this Note; and in such case, Maker shall not be required to
deliver any certificate representing the shares of Borrower Common
Stock purchased upon conversion until such tax shall have been paid,
or it has been established to Maker's satisfaction that no tax is due.
1.2 ADJUSTMENTS. The number of shares of Borrower Common Stock
which may be received upon the conversion of this Note shall be subject to
change or adjustment from time to time as follows:
1.2.1 Stock Dividends; Stock Splits; Reverse Stock
Splits; Reclassifications. In case Maker shall (i) pay a dividend or
make any other distribution with respect to the Borrower Common Stock
in shares of its capital stock, (ii) subdivide its outstanding
Borrower Common Stock, (iii) combine its outstanding Borrower Common
Stock into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of the Borrower Common Stock
(including any such reclassification in connection with a merger
(other than the transactions contemplated by the Merger Agreement),
consolidation or other business combination in which Maker is the
continuing corporation), then the number of shares of Borrower Common
Stock issuable upon conversion of this Note (assuming it had been
converted immediately prior to the record date for each such dividend
or distribution or the effective date of each such subdivision or
combination) shall be adjusted so that Holder shall thereafter be
entitled after the completion of each such event to receive the kind
and number of shares of Borrower Common Stock or other securities of
Maker that Holder would have owned or have been entitled to receive
after the happening of each such event had this Note been converted
immediately prior to the happening of each such event or any record
date with respect thereto. Each adjustment made pursuant to this
Section 1.2.1 shall become effective immediately after the effective
date of the applicable event retroactive to the record date, if any,
for such event.
1.2.2 Rights; Options; Warrants. If the Merger Agreement
shall be terminated pursuant to Section 8.1 thereof, and, at the time
of such termination, Holder
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shall be entitled to receive a termination fee under Section 8.5
thereof, and if Maker shall at any time thereafter issue rights,
options, warrants or convertible or exchangeable securities (other
than a transaction subject to Section 1.2.1 hereof) to all holders of
the Borrower Common Stock, entitling them to subscribe for or purchase
Borrower Common Stock at a price per share that is lower (at the
record date for such issuance) than the Initial Conversion Price, then
the number of shares of Borrower Common Stock thereafter issuable upon
conversion of this Note shall be determined by adding the number of
shares of Borrower Common Stock theretofore issuable upon conversion
of this Note to the product of (a) the Cheap Stock Issued (as
hereinafter defined), multiplied by (b) the Ownership Ratio (as
hereinafter defined). Such adjustment shall be made whenever such
rights, options, warrants or convertible or exchangeable securities
are issued, and shall become effective retroactively immediately after
the record date for the determination of shareholders entitled to
receive such rights, options, warrants or convertible or exchangeable
securities. For purposes of this Section 1.2.2, the term (x) "Cheap
Stock Issued" shall be the number of additional shares of Borrower
Common Stock offered by Maker for subscription or purchase as
described above, minus the number of shares of Borrower Common Stock
that the aggregate offering price of the total number of shares of
Borrower Common Stock so offered would purchase at the Initial
Conversion Price; and (y) "Ownership Ratio" shall be a fraction, the
numerator of which shall be the number of shares of Borrower Common
Stock theretofore issuable upon conversion of this Warrant, and the
denominator of which shall be the shares of Borrower Common Stock
outstanding immediately prior to the issuance of such rights, options,
warrants or convertible or exchangeable securities, plus the number of
shares of Borrower Common Stock theretofore issuable upon the
conversion of this Note. Upon the expiration or termination of such
rights, options, warrants or convertible or exchangeable securities
the issuance of which triggered the adjustments referred to in this
Section 1.2.2 prior to any exercise thereof, the number of shares of
Borrower Common Stock into which this Note shall be converted shall
forthwith be readjusted to the number of shares of Borrower Common
Stock that would have been issuable had such expired or terminated
rights, options, warrants or convertible or exchangeable securities
not been issued by Maker.
1.2.3 Distributions of Debt, Assets, Subscription
Rights or Convertible Securities. In case Maker shall fix a record date
for the making of a distribution to all holders of shares of the
Borrower Common Stock of evidences of indebtedness of Maker, assets
(other than cash dividends payable out of retained earnings or
securities (excluding those referred to in Sections 1.2.1 and 1.2.2
hereof) (any such evidences of indebtedness, assets, or securities
being referred to in this Section 1.2.3 as the "assets or securities"),
then in each case Holder, upon the conversion of this Note, shall be
entitled to receive in addition to the shares of Borrower Common Stock
issuable upon conversion of this Note, (a) the assets or securities to
which Holder would have been entitled as a holder of Borrower Common
Stock if Holder had converted this Note immediately prior to the record
date for such distribution, and (b) any interest or distributions on
the assets or securities distributed from the distribution date to the
date of exercise. At the time of any such distribution, Maker shall
either (x) deposit the assets or securities payable to Holder pursuant
hereto in trust for Holder with an eligible institution (as hereinafter
defined) with instructions as to the investment of such property and
any proceeds therefrom so as
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to protect the value of such property for Holder, or (y) distribute to
Holder the assets or securities to which it would be entitled upon
exercise and, upon any such distribution pursuant to this clause (y),
the provisions of this Section 1.2.3 shall no longer apply to such
event. Such election shall be made by Maker by giving written notice
thereof to Holder. For purposes of this Section 1.2.3, the term
"eligible institution" shall mean a corporation organized and doing
business under the laws of the United States of America or of any
state thereof, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least
$100,000,000, and subject to supervision or examination by Federal or
state authority.
1.2.4 Reclassification, Reorganization, Consolidation
or Merger. In the event of any reclassification, capital reorganization
or other change of outstanding shares of Borrower Common Stock of Maker
(other than a subdivision or combination of the outstanding Common
Stock, a change in the par value of the Common Stock or a transaction
subject to Sections 1.2.1, 1.2.2 or 1.2.3 hereof) or in the event of
any consolidation or merger of Maker with or into another corporation
(other than the transactions contemplated by the Merger Agreement, a
merger in which Maker is the continuing corporation and that does not
result in any reclassification, capital reorganization or other change
of outstanding shares of Borrower Common Stock of the class issuable
upon conversion of this Note or a transaction subject to Sections
1.2.1, 1.2.2 or 1.2.3 hereof) or in the event of any sale, lease,
transfer or conveyance to another corporation of the property and
assets of Maker as an entirety or substantially as an entirety, in each
case as a result of which the holders of Borrower Common Stock shall be
entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Borrower
Common Stock, then Maker shall, as a condition precedent to such
transaction, cause effective provisions to be made so that such other
corporation shall assume all of the obligations of Maker hereunder, and
Holder shall have the right thereafter, by converting this Note, to
receive the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification,
capital reorganization and other change, consolidation, merger, sale,
lease, transfer or conveyance by a holder of the number of shares of
Borrower Common Stock that might have been received upon conversion of
this Note immediately prior to such reclassification, capital
reorganization, change, consolidation, merger, sale, lease or
conveyance. Any such provision shall include provision for adjustments
in respect of such shares of stock and other securities and property
that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Note. The foregoing provisions of this
Section 1.2.4 shall similarly apply to successive reclassifications,
capital reorganizations and changes of shares of Borrower Common Stock
and to successive changes, consolidations, mergers, sales, leases,
transfers or conveyances of the nature and type described in the first
sentence hereof. In the event that in connection with any such capital
reorganization, reclassification, consolidation, merger, sale, lease,
transfer or conveyance, additional shares of Borrower Common Stock
shall be issued in exchange, conversion, substitution or payment, as a
whole or in part, for, or of, a security of Maker other than Borrower
Common Stock, any such issue shall be treated as an issue of Borrower
Common Stock covered by the provisions of Section 1.2.1 hereof.
1.2.5 De Minimis Adjustments. Except as provided in Section
1.2.6
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hereof with reference to adjustments required by such
Section 1.2.6, no adjustment in the number of shares of Borrower Common
Stock issuable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the
number of shares of Borrower Common Stock issuable upon the conversion
of this Note; provided, however, that any adjustments which by reason
of this Section 1.2.5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest one-thousandth of a share.
1.2.6 Adjustments. In case Maker after the date
hereof shall take any action affecting the shares of Borrower Common
Stock into which this Note may be converted, other than any action
described in Sections 1.2.1, 1.2.2, 1.2.3 or 1.2.4 hereof, which
Maker's Board of Directors, acting in the good faith exercise of its
reasonable judgment, determines would have a material adverse effect on
the rights of Holder, then the conversion price, the number of shares
of Borrower Common Stock into which this Note may be converted and/or
the character of the securities receivable upon conversion of this Note
may be adjusted in such manner, if any, and at such time, by action of
the directors, acting in the good faith exercise of their reasonable
judgment, subject to obtaining all necessary approvals to such
adjustment, including, without limitation, any necessary approvals of
any stock exchange or over-the-counter market on which securities of
Maker are then listed or quoted.
1.2.7 Notice of Adjustment. Whenever the number of
shares of Borrower Common Stock or other stock or property issuable
upon the conversion of this Note is adjusted, as herein provided, Maker
shall promptly notify Holder of such adjustment or adjustments.
1.3 CONVERSION SHARES SUBJECT TO REGISTRATION RIGHTS. Maker
and Holder agree that the shares of Borrower Common Stock and other securities
(as the case may be) receivable upon the conversion of this Note shall be
"Registrable Stock" as defined in that certain Registration Rights Agreement
between the Company and the Holder dated of even date herewith and shall be
subject to the terms and conditions thereof.
2. NOTICES OF RECORD DATE, ETC. In the event of (a) any taking by Maker
of a record of the holders of any class of securities of Maker for the purpose
of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend payable out of earned surplus at the same rate as
that of the last such cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right;
(b) any capital reorganization of Maker, any reclassification or
recapitalization of the capital stock of Maker or any transfer of all or
substantially all of the assets of Maker to any other person or any
consolidation or any merger involving Maker (other than the transactions
contemplated by the Merger Agreement); or (c) any voluntary or involuntary
dissolution, liquidation or winding-up of Maker, Maker will, but only to the
extent that such information is disclosed to Maker's shareholders, and then
contemporaneous therewith, mail to Holder a notice specifying (x) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right; and (y) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution,
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liquidation or winding-up is expected to become effective and the record date
for determining shareholders entitled to vote thereon.
3. SHARES RESERVED FOR ISSUANCE. Maker shall at all times reserve and
keep available out of its authorized but unissued shares of Borrower Common
Stock solely for the purpose of effecting the conversion of this Note such
number of shares of Borrower Common Stock as shall from time to time be
sufficient to effect the conversion of this Note; and if at any time the number
of authorized but unissued shares of Borrower Common Stock shall not be
sufficient to effect the conversion of the entire outstanding principal amount
of this Note, in addition to such other remedies as shall be available to the
Holder of this Note, Maker will use its best efforts to take such corporate
actions as may be necessary to increase its authorized but unissued shares of
Borrower Common Stock to such number of shares as shall be sufficient for such
purposes.
4. EVENTS OF DEFAULT. If an Event of Default occurs and is continuing,
then, at Holder's option, Holder may (subject to the terms of the Subordination
Agreement) declare the entire principal amount outstanding hereunder, together
with all accrued and unpaid interest thereon, immediately due and payable and
pursue such remedies as are provided in the Loan Agreement. The rights,
remedies, powers and privileges provided for herein are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
5. SUBORDINATION. Maker and Holder each acknowledges and agrees that
the payment of the principal and interest (including, without limitation,
post-petition interest, whether or not a claim for such post-petition interest
is allowed in the related bankruptcy proceeding) hereunder and any and all other
obligations and liabilities now or at any time or times hereafter owing by Maker
or any subsidiary of Maker to Holder or any other person under or in respect of,
and all of Holder's rights under or in respect of, this Note and any amendments,
modifications, extensions, renewals, refinancings and replacements hereof
(including, without limitation, obligations and liabilities in respect of
expenses, costs, indemnities, conversions, redemptions and special contingent
payments), together with any and all guaranties, collateral and other security,
if any, for the payment thereof, are subordinated in all respects pursuant to,
and are subject to, the terms of the Subordination Agreement.
6. WAIVER AND AMENDMENT. Any provision of this Note may be
amended, waived or modified, but only upon the written consent of Maker and
Holder.
7. TRANSFERS PROHIBITED WITHOUT CONSENT. Except for Permitted Transfers
(as defined below), this Note shall not be transferable, negotiable or
assignable otherwise than by the operation of law without the prior written
consent of Maker, and any purported transfer, negotiation or assignment of this
Note without the prior written consent of Maker shall be void and of no force or
effect. The term "Permitted Transfers" shall mean transfers between Holder and
its Subsidiaries.
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8. NOTICES. All notices, requests and other communications required
or permitted under this Agreement (collectively, "notices") shall be in writing
and sent or delivered in one of the manners expressly contemplated in this
Section 8. If mailed, notices must be sent by prepaid first-class mail,
certified, return receipt requested, and shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business Days after
the post-xxxx date thereof. In addition, notices hereunder may be delivered by
hand in which event the notice shall be deemed effective when delivered or by a
nationally recognized overnight courier, in which event the notice shall be
deemed delivered the first Business Day after it is accepted by the courier for
next day delivery. All such notices shall be given to the parties hereto at the
following addresses:
(a) If to Maker:
Eltrax Systems, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a required copy to:
Jaffe, Raitt, Heuer & Xxxxx, Professional Corporation
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If To Holder:
Cereus Technology Partners, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a required copy to:
Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxx, Esq.
Telecopier No.: (000) 000-0000
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Any party hereto may change the address to which notices shall be
directed under this Section by giving written notice of such change to the other
parties.
9. NO SHAREHOLDER RIGHTS. Nothing contained in this Note shall be
construed as conferring upon Holder or any other person the right to vote or to
consent or, except as set forth in Section 2 hereof, to receive notice as a
shareholder in respect of meetings of shareholders for the election of directors
of Maker or any other matters or any rights whatsoever as a shareholder of
Maker; and no dividends or interest shall be payable or accrued in respect of
this Note or the interest represented hereby or the shares of Borrower Common
Stock obtainable hereunder until, and only to the extent that, this Note shall
have been converted as provided herein.
10. HEADING; REFERENCES. All headings used herein are used for
convenience only and shall not be used to construe or interpret this Note.
11. WAIVER. No waiver by Holder of any default shall be effective
unless in writing, nor shall it operate as a waiver of any other default or of
the same default on a future occasion. No delay or omission by Holder in
exercising any of its rights, remedies, powers and privileges hereunder or at
law and no course of dealing between Holder and Maker or any other person shall
be deemed a waiver by Holder of any of such rights, remedies, powers and
privileges even if such delay or omission is continuous or repeated, nor shall
any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise thereof by Holder or the exercise of any other
right, remedy, power or privilege by Holder. Maker waives demand, presentment,
protest, notice of protest and notice of dishonor.
12. ATTORNEYS' FEES. If this Note is placed in the hands of any
attorney for collection, or if collected by suit or through any bankruptcy or
other legal proceedings, Maker hereby agrees to pay all expenses incurred
reasonably by the Holder of this Note, including reasonable attorneys' fees, all
of which shall become a part of the principal hereof.
13. SEVERABILITY. Each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note.
14. SUCCESSORS AND ASSIGNS. This Note shall be binding upon Maker
and its successors and assigns and shall inure to the benefit of Holder and
its successors and assigns.
15. GOVERNING LAW. This Note in all respects shall be governed by
and construed and enforced in accordance with the laws of the State of Georgia,
without giving effect to principles of conflicts of laws. This Note may not be
changed orally, but only by an instrument in writing executed by Maker and
Holder.
[SIGNATURES NEXT PAGE]
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IN WITNESS WHEREOF, the undersigned have caused this Non-Negotiable
Subordinated Convertible Promissory Note to be executed and delivered by their
respective duly authorized officers as of June 14, 2000.
ELTRAX SYSTEMS, INC.
By:
-----------------------------------------
Its:
CEREUS TECHNOLOGY PARTNERS, INC.
By:
-----------------------------------------
Its:
-------------------------------------
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of June 14, 2000, by and between ELTRAX SYSTEMS, INC., a Minnesota corporation
(the "Company"), and CEREUS TECHNOLOGY PARTNERS, INC., a Delaware corporation
(the "Investor").
W I T N E S S E T H:
WHEREAS, the Company and the Investor have entered into that certain
Bridge Loan and Security Agreement dated of even date herewith (the "Loan
Agreement;" capitalized terms used but not specifically defined herein shall
have the meanings ascribed to such terms in the Loan Agreement) providing, among
other things, for the loan by the Investor of up to $2,000,000 in cash pursuant
to the terms of the Bridge Loan Note which is attached as Exhibit A to the Loan
Agreement and which, under certain circumstances, may be converted into shares
the Company's common stock, par value $.01 per share (the "Common Stock");
WHEREAS, the Loan Agreement further provides that, if that certain
Agreement and Plan of Merger dated as of June 12, 2000 by and among the Company,
Solemn Acquisition Corporation and the Investor, as the same may be amended (the
"Merger Agreement") is terminated by the Investor under certain circumstances,
the Company will deliver to the Investor warrants to purchase shares of the
Common Stock pursuant to the terms and conditions of that certain Warrant
Agreement which is attached as Exhibit D to the Loan Agreement;
WHEREAS, the Company desires to grant to the Investor registration
rights with respect to the shares of Common Stock into which the Bridge Loan
Note may be converted and for which the Warrant Agreement may be exercised, and
the Investor desires to receive such registration rights, all in accordance with
the terms of this Agreement; and
WHEREAS, this Agreement is the Registration Rights Agreement referred
to in the Loan Agreement, and the execution and delivery of this Agreement by
the Company and the Investor is a condition to the closing of the transactions
contemplated by the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. REGISTRABLE STOCK. For purposes of this Agreement, the term
"Registrable Stock" means all Common Stock into which the Bridge Loan Note has
been converted and for which the Warrant Agreement has been exercised, and any
Common Stock and other securities of the Company that may have been issued to
the Investor pursuant to the provisions of Section 1.2 of the Bridge Loan Note
and Sections 7 and 8 of the Warrant Agreement.
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2. DEMAND AND FORM S-3 REGISTRATIONS.
2A. REQUEST FOR REGISTRATION.
(i) At any time and from time to time for the period (the
"Demand Period") that is one (1) year after the later to occur of (x) the date
that the Bridge Loan Note is converted, and (y) the date that the Warrant is
exercised, the Investor may request an underwritten registration under the
Securities Act of 1933, as amended (the "Securities Act"), of all or part (but
not less than 100,000 shares) of its Registrable Stock (the "Demand
Registration"), subject to the terms and conditions of this Agreement. Any
request (a "Registration Request") for the Demand Registration shall specify the
approximate number of shares of Registrable Stock requested to be registered
(but not less than a majority of the total number of shares of Registrable Stock
then outstanding).
(ii) Subject to subsection (i) above and paragraph 2F, the
Investor will be entitled to request one (1) Demand Registration at any time
during the Demand Period.
(iii) A registration will not count as the Demand
Registration paid for by the Company (as provided in paragraph 5B) unless the
Investor is able to register and sell at least 50% of the Registrable Stock
requested to be included in such registration.
(iv) The Company will not include in any Demand Registration
any securities other than shares of Registrable Stock and securities to be
registered for offering and sale on behalf of the Company without the prior
written consent of the Investor. If the managing underwriter(s) of the offering
to be effected pursuant to the Demand Registration advise the Company in writing
that in their opinion the number of shares of Registrable Stock and, if
permitted hereunder, other securities in such offering, exceeds the number of
shares of Registrable Stock and other securities, if any, which can be sold in
an orderly manner in such offering within a price range acceptable to the
Investor, the Company will include in such registration, prior to the inclusion
of any securities which are not shares of Registrable Stock, the number of
shares of Registrable Stock requested to be included which in the opinion of
such underwriters can be sold in an orderly manner within the price range of
such offering.
2B. REGISTRATIONS ON FORM S-3. The Company shall use commercially
reasonable efforts to qualify for registration of its securities on Form S-3 or
any comparable or successor form or forms ("Form S-3"). After the Company has so
qualified, in addition to the rights set forth in paragraph 2A hereof, at any
time and from time to time (but subject to the proviso in paragraph 2B(i)
hereof) for the period that is one (1) year after the later to occur of (x) the
date that the Bridge Loan Note is converted, and (y) the date that the Warrant
Agreement is exercised, the Investor may make a Registration Request for
registration of not less than 100,000 shares of the Registrable Stock on Form
S-3 (the "S-3 Registration"). Such Registration Request shall be in writing and
shall state the number of shares of Registrable Stock proposed to be disposed of
and the intended method of distribution of such shares by the Investor.
(i) The Investor will be entitled to require the Company to
file two (2) registration statements on Form S-3; provided, however, that the
Investor may not require the Company to file a registration statement on Form
S-3 more than once during any calendar year.
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(ii) A registration will not count as the S-3 Registration
paid for by the Company (as provided in paragraph 5B) unless the Investor is
able to register and sell at least 50% of the Registrable Stock requested to be
included in such registration.
(iii) The Company will not include in the S-3 Registration
any securities other than shares of Registrable Stock and securities to be
registered for offering and sale on behalf of the Company without the prior
written consent of the Investor. If the managing underwriter(s), if any, of the
offering to be effected pursuant to an S-3 Registration advise the Company in
writing that in their opinion the number of shares of Registrable Stock and, if
permitted hereunder, other securities in such offering, exceeds the number of
shares of Registrable Stock and other securities, if any, which can be sold in
an orderly manner in such offering within a price range acceptable to the
Investor, the Company will include in such registration, prior to the inclusion
of any securities which are not shares of Registrable Stock, the number of
shares of Registrable Stock requested to be included which in the opinion of
such underwriters can be sold in an orderly manner within the price range of
such offering.
2C. SELECTION OF UNDERWRITER. The Investor or the holders of a
majority of the then outstanding Registrable Stock proposed to be registered, as
the case may be, will have the right to select the managing underwriter or
underwriters to manage the offering, subject to the Company's approval, which
will not be unreasonably withheld, provided that the managing underwriter or
underwriters shall be the firm or firms that managed the Company's most recently
completed underwritten public offering of Common Stock unless the Investor or
the holders of a majority of the then outstanding Registrable Stock proposed to
be registered, as the case may be, shall object to such firm or firms for
reasons related to the ability of such firm or firms to effectively manage the
offering, and the Company may consent to the selection of such other managing
underwriter or underwriters in such event.
2D. DELAYED REGISTRATIONS. Notwithstanding anything in this
Section 2 to the contrary, the Company may delay any Demand Registration or S-3
Registration for a period of not more than sixty (60) days from the date a
Registration Request is made upon certification by an executive officer of the
Company that such registration might (i) materially interfere with or affect the
negotiation or completion of any transaction that is being contemplated by the
Company (whether or not a final decision has been made to undertake such
transaction) at the time the right to delay is exercised, or (ii) involve
initial or continuing disclosure obligations that would not be in the best
interests of the Company and its shareholders.
2F. TERMINATION OF REGISTRATION RIGHTS. The Investor's right
to request a Demand Registration, S-3 Registration or Piggyback Registration (as
hereinafter defined) shall terminate at such time as the Investor can sell all
of the Registrable Stock in accordance with Rule 144(k) under the Securities
Act.
3. PIGGYBACK REGISTRATIONS.
3A. RIGHT TO PIGGYBACK. If the Company proposes to register
any of its securities under the Securities Act (other than pursuant to the
Demand Registration, an S-3 Registration, a registration on Form S-4, a
registration solely in connection with an employee benefit or stock ownership
plan or a shelf registration filed under Rule 415(a)(1)(viii)
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promulgated under the Securities Act) and the registration form to be used may
be used for the registration of Registrable Stock, then the Company will give
prompt written notice to the Investor of its intention to effect such a
registration (the "Piggyback Registration"). Subject to subparagraphs 3B and 3C
below, the Company will include in such registration all shares of Registrable
Stock which the Investor requests the Company to include in such registration by
written notice given to the Company within fifteen (15) days after the date of
sending of the Company's notice, subject to the terms and provisions of this
Section 3.
3B. PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration relates to an underwritten public offering of equity securities by
the Company and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the Company, the Company will
include in such registration (i) first, the securities proposed to be sold by
the Company, (ii) second, any Registrable Stock requested to be included in such
registration, pro rata among the holders of such Registrable Stock on the basis
of the number of shares owned by each such holder, and (iii) third, other
securities requested to be included in such registration.
3C. PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration relates to an underwritten public offering of equity securities by
holders of the Company's securities and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in an
orderly manner in such offering within a price range acceptable to the holders
initially requesting such registration, the Company will include in such
registration (i) first, the Registrable Stock requested to be included in such
registration pro rata among the holders of such Registrable Stock on the basis
of the number of the Registrable Stock owned by each such holder; and (ii)
second, securities other than Registrable Stock.
4. REGISTRATION PROCEDURES. Whenever the Investor has requested that
any Registrable Stock be registered pursuant to this Agreement, the Company will
use its best efforts to effect the registration and the sale of such Registrable
Stock in accordance with the intended method of distribution thereof and will,
as expeditiously as possible (subject to the terms hereof):
(i) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Stock and
use its best efforts to cause such registration statement to become effective,
provided that before filing a registration statement or prospectus or any
amendments or supplements thereto in connection with a Demand Registration or
S-3 Registration, as the case may be, the Company will furnish to the counsel
selected by the Investor copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel;
(ii) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than the reasonable
time necessary to permit the Investor to complete the distribution described in
such registration statement, and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration
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statement during such period in accordance with the intended methods of
distribution by the sellers thereof set forth in such registration statement;
(iii) furnish to the Investor such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as the Investor may reasonably request in order to
facilitate the disposition of the Registrable Stock owned by the Investor;
(iv) use its best efforts to register or qualify such
Registrable Stock under the securities or blue sky laws of such jurisdictions as
the Investor reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable the Investor to consummate
the disposition in such jurisdictions of the Registrable Stock owned by the
Investor, provided that the Company will not be required (i) to qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) to subject itself to
taxation in any such jurisdiction or (iii) to consent to general service of
process in any such jurisdiction;
(v) notify the Investor, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any the Investor, the Company will prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to the Investor, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(vi) use its best efforts to cause all such Registrable Stock
to be listed on each securities exchange on which similar securities issued by
the Company are then listed and to be qualified for trading on each system on
which similar securities issued by the Company are from time to time qualified;
(vii) provide a transfer agent and registrar for all such
Registrable Stock not later than the effective date of such registration
statement and thereafter maintain such a transfer agent and registrar;
(viii) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Investor reasonably requests in order to expedite or facilitate the
disposition of such Registrable Stock;
(ix) make available for inspection by any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with such registration
statement;
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(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12) months beginning
with the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(xi) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order; and
(xii) furnish to the Investor a copy, or upon request, a
signed counterpart, addressed to the Investor (and the underwriters, if any) of
(a) an opinion of counsel for the Company, dated the effective date of such
registration statement (or, if such registration includes an underwritten public
offering, dated the date of closing under the underwriting agreement), and (b) a
"comfort" letter, dated the effective date of such registration statement (or,
if such registration includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), signed by the independent public
accountants who have audited the Company's financial statements included in such
registration statement, covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of the accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants letters delivered to the underwriters in underwritten
public offerings of securities and such other matters as the underwriter may
reasonably request.
5. REGISTRATION EXPENSES.
5A. DEFINITION. The term "Registration Expenses" means all
expenses incident to the Company's performance of or compliance with this
Agreement, including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities and blue sky laws, printing,
messenger and delivery expenses, and fees and expenses of counsel for the
Company and all independent certified public accountants, underwriters
(excluding underwriting discounts and commissions, which shall be paid by the
selling stockholders out of the proceeds of the offering) and other Persons
retained by the Company.
5B. PAYMENT. The Company shall pay the Registration Expenses
in connection with one (1) Demand Registration, or two (2) S-3 Registrations,
and any and all Piggyback Registrations. In connection with each Demand
Registration, the S-3 Registration and each Piggyback Registration, the Company
will reimburse the holders of Registrable Stock covered by such registration for
the reasonable fees and disbursements of one counsel chosen by the Investor.
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6. INDEMNIFICATION.
6A. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the extent permitted by law, the Investor, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such holder
expressly for use therein or by such holder's or an underwriter's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder or underwriter
with a sufficient number of copies of the same, provided that the obligations of
the Company hereunder shall not apply to amounts paid in settlement of any such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld). In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Investor unless otherwise provided in the underwriting
agreement.
6B. INDEMNIFICATION BY HOLDERS. In connection with any
registration statement in which the Investor is participating, the Investor will
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by the Investor and stated to be specifically for use
therein, provided that (i) the obligation to indemnify will be limited to the
net amount of proceeds received by the Investor from the sale of Registrable
Stock pursuant to such registration statement and (ii) the obligations of the
Investor hereunder shall not apply to amounts paid in settlement of any such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
if such settlement is effected without the consent of the Investor (which
consent shall not be unreasonably withheld).
6C. NOTICE; DEFENSE OF CLAIMS. Any Person entitled to
indemnification hereunder will give prompt written notice to the indemnifying
party of any claim with respect to which it seeks indemnification, and such
indemnifying party will, upon request of the indemnified party, assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be subject to
any liability for any settlement made by the indemnified party without its
consent (but such consent will not be unreasonably withheld). An indemnifying
party who assumes the defense of a claim
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will not be obligated to pay the fees and expenses of separate counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the written opinion of counsel to the indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which case the indemnified
party may retain its own counsel (which counsel will be reasonably satisfactory
to the indemnifying party) and the fees and expenses of such counsel will be
paid by the indemnifying party.
6D. CONTRIBUTION. If the indemnification provided for in this
Section 6 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party, on the one hand, and of the indemnified party, on the
other, in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The obligation to contribute will be limited to the
amount by which the net amount of proceeds received by the Investor from the
sale of Registrable Stock exceeds the amount of losses, liabilities, damages,
and expenses which the Investor has otherwise been required to pay by reason of
such statements or omissions.
6E. SURVIVAL. The indemnification and contribution provided
for under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements, and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements,
provided that the Investor shall not be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding the Investor as are required by the underwriters.
8. MISCELLANEOUS.
8A. NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Stock in this
Agreement.
8B. ADJUSTMENTS AFFECTING REGISTRABLE STOCK. The Company will not
take any action, or permit any change to occur, with respect to its securities
for the purpose of
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materially and adversely affecting the ability of the Investor to include the
Registrable Stock in a registration undertaken pursuant to this Agreement.
8C. NOTICES. All notices, requests and other communications
required or permitted under this Agreement (collectively, "notices") shall be in
writing and, sent or delivered in one of the manners expressly contemplated in
this Section 8C. If mailed, notices must be sent by prepaid first-class mail,
certified, return receipt requested, and shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business Days after
the post-xxxx date thereof. In addition, notices hereunder may be delivered by
hand in which event the notice shall be deemed effective when delivered or by a
nationally recognized overnight courier, in which event the notice shall be
deemed delivered the first Business Day after it is accepted by the courier for
next day delivery. All such notices shall be given to the parties hereto at the
following addresses:
(a) If to the Company:
Eltrax Systems, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a required copy to:
Jaffe, Raitt, Heuer & Xxxxx, Professional Corporation
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to the Investor:
Cereus Technology Partners, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
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with a required copy to:
Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxx, Esq.
Telecopier No.: (000) 000-0000
Any party hereto may change the address to which notices shall be
directed under this Section by giving written notice of such change to the other
parties.
8D. REMEDIES. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
8E. AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
no waiver, amendment, modification, termination or cancellation of this
Agreement, or of any of the terms or conditions hereof, shall be effective
unless made in writing signed by the Company and the Investor.
8F. SUCCESSORS AND ASSIGNS. This Agreement, and the rights and
obligations of the Investor hereunder, may be assigned by the Investor to any
Person to which shares of Registrable Stock are transferred by the Investor, and
such transferee shall be deemed the "Investor" and a holder of the Registrable
Stock for purposes of this Agreement, provided that such transferee provides
written notice of such assignment to the Company.
8G. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
8H. ENTIRE AGREEMENT. This Agreement, the Loan Documents and the
Merger Agreement embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
8I. HEADINGS. The headings of this Agreement are for convenience
only and do not constitute a part of this Agreement.
8J. GOVERNING LAW. The construction, validity and interpretation
of this Agreement will be governed by the internal laws of the State of Georgia,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Georgia or any
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other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Georgia.
8K. FURTHER ASSURANCES. Each party to this Agreement hereby
covenants and agrees, without the necessity of any further consideration, to
execute and deliver any and all such further documents and take any and all such
other actions as may be necessary to appropriate to carry out the intent and
purposes of this Agreement and to consummate the transactions contemplated
hereby.
8L. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document. Copies (whether photostatic, facsimile or
otherwise) of signatures to this Agreement shall be deemed to be originals and
may be relied on to the same extent as the originals.
8M. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. If at any
time or from time to time after the date of this Agreement, the Company shall
enter into any agreement with any holder or prospective holder of any securities
of the Company giving such holder or prospective holder any registration rights
the terms and conditions of which are more favorable than the registration
rights granted to the Investor, then the parties hereto agree that the terms and
conditions of this Agreement shall be immediately amended, without any further
or additional action or notice by the parties hereto, so as to give the Investor
registration rights on terms and conditions no less favorable than the terms and
conditions of the registration rights granted to such holder or prospective
holder. The parties hereto further agree that no single amendment pursuant to
this Section 8M will preclude further or additional amendments upon further or
additional grants of registration rights by the Company.
8N. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Securities and Exchange
Commission that may permit sale of the Registrable Stock to the public without
registration, the Company agrees to use its reasonable efforts to:
(i) Make and keep public information regarding the Company
available as those terms are understood and defined in Rule 144 under the
Securities Act, at all times;
(ii) File with the Securities and Exchange Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), at any time after it has become subject to such reporting
requirements.
(iii) So long as a holder owns any Registrable Stock, furnish
to the holder forthwith upon written request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed as a holder of
Registrable Stock may reasonably request in availing itself of any rule or
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regulation of the Securities and Exchange Commission allowing a holder of
Registrable Stock to sell any such securities without registration.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, this Registration Rights Agreement has been
executed and delivered by the duly authorized officers of the parties hereto as
of June 14, 2000.
COMPANY:
ELTRAX SYSTEMS, INC.
By:
-----------------------------------------------
Its:
------------------------------------
INVESTOR:
CEREUS TECHNOLOGY PARTNERS, INC.
By:
-----------------------------------------------
Its:
------------------------------------------
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EXHIBIT C
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement") is made on June 14,
2000, by and among ELTRAX SYSTEMS, INC., a Minnesota corporation ("Eltrax");
CEREUS TECHNOLOGY PARTNERS, INC., a Delaware corporation ("Junior Creditor");
and PNC BANK, NATIONAL ASSOCIATION, a national banking association, in its
capacity as collateral and administrative agent (together with its successors in
such capacity, "Agent") for each of the lenders (the "Senior Creditors") now or
hereafter parties to the Credit Agreement (as defined below)
RECITALS:
Agent, Senior Creditors, Eltrax and the other borrowers from time to
time party thereto (such other borrowers and Eltrax, jointly and severally the
"Borrowers") are parties to a certain Revolving Credit and Security Agreement
dated March 14, 2000 (as at any time amended, the "Credit Agreement") pursuant
to which Senior Creditors may from time to time make loans to Borrowers secured
by all or substantially all of Borrowers' assets.
Eltrax has entered into that certain Bridge Loan and Security Agreement
dated as of June 14, 2000 with Junior Creditor (as at any time amended, the
"Subordinated Loan Agreement"). Pursuant to the Subordinated Loan Agreement,
Eltrax may borrow up to $2,000,000 from Junior Creditor, as evidenced by that
certain Non-Negotiable Subordinated Convertible Promissory Note in the original
principal amount of $2,000,000 executed by Eltrax in favor of Junior Creditor
(as at any time amended, the "Subordinated Note"). Pursuant to the Subordinated
Loan Agreement, Eltrax has granted to Junior Creditor a security interest and
lien upon all or substantially all of Eltrax's assets as security for the
payment of the Subordinated Note.
A condition precedent to Agent's and Senior Creditors' consent to
Eltrax's execution and delivery of the Subordinated Loan Agreement and the
Subordinated Note and to any continuing obligation of Agent or any Senior
Creditor to make any loans or other extensions of credit to Eltrax or any other
Borrower under the Credit Agreement is the execution and delivery of this
Agreement by Agent, Junior Creditor, Eltrax and the other Borrowers.
The parties hereto desire to enter into this Agreement for the purposes
set forth hereafter.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and conditions herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, the parties hereto, intending to be bound hereby, agree as
follows:
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1. DEFINITIONS; RULES OF CONSTRUCTION.
(a) Capitalized terms used in this Agreement, unless otherwise
defined, shall have the meanings ascribed to them in the Credit Agreement. In
addition to such other terms as are elsewhere defined herein, the following
terms shall have the following meanings for the purposes of this Agreement:
"Account" shall have the meaning given to the term "account"
in the Code.
"Bankruptcy Case" shall mean any case hereafter commenced by
or against Eltrax or any other Borrower under any chapter of the
Bankruptcy Code.
"Bankruptcy Code" shall mean title 11 of the United States
Code.
"Business Day" shall mean any day other than a Saturday,
Sunday or day on which banks are authorized or required to be closed
under the laws of the State of Georgia.
"Chattel Paper" shall have the meaning given to the term
"chattel paper" in the Code.
"Code" shall mean the Uniform Commercial Code, as in effect
from time to time in the State of Georgia.
"Collateral" shall mean any property of any Borrower at any
time subject to a Lien in favor of Agent, including all property
included in the definition of "Collateral" in the Credit Agreement and
in any of the other Senior Creditor Loan Documents, whether any of such
property is acquired prior to, during the pendency of or after any
Insolvency Proceeding.
"Document" shall have the meaning given to the term "document"
in the Code.
"Enforcement Action" shall mean and include any remedy
available to Agent or any Senior Creditor under any of the Senior
Creditor Documents or applicable law to enforce collection of any of
the Senior Creditor Obligations following the occurrence of any Event
of Default, and any remedy available to Junior Creditor under any of
the Junior Creditor Documents or applicable law to enforce collection
of any the Junior Creditor Obligations following the occurrence of any
Event of Default, including, in each case, (a) the commencement of any
action, suit or other proceeding against Eltrax or any other Borrower
to enforce payment of any of the Senior Creditor Obligations or Junior
Creditor Obligations or to repossess or otherwise to realize upon any
of the Collateral; (b) any notification by a party to any account
debtor on any Account to remit payments with respect to such Account to
the notifying party; and (c) any involuntary petition for relief
against Eltrax or any other Borrower under the Bankruptcy Code or other
petition or suit for the appointment of a receiver or other custodian
for Eltrax or any other Borrower or any of Eltrax's or such other
Borrower's assets.
"Equipment" shall have the meaning given to the term
"equipment" in the Code and shall include all accessions and additions
to, substitutions for and replacements of any such equipment; all
parts, tools, accessories and fittings thereto or therefor; and all
proceeds and products of the foregoing items, including proceeds of
insurance policies covering any of the foregoing described property of
Eltrax or any other Borrower.
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"Event of Default" shall mean an event or condition that
constitutes a default or an event of default under the Senior Credit
Documents or the Junior Creditor Documents.
"General Intangibles" shall have the meaning given to the term
"general intangibles" in the Code and shall include all tax refund
claims, patents, patent applications, copyrights, trademarks,
tradenames, trade secrets, service marks and choses in action.
"Instrument" shall have the meaning given to the term
"instrument" in the Code.
"Inventory" shall have the meaning given to the term
"inventory" in the Code.
"Junior Creditor Documents" shall mean and include the
Subordinated Loan Agreement, the Subordinated Note and all other
instruments or agreements now or hereafter evidencing or securing the
payment of the whole or any part of the Junior Creditor Obligations.
"Junior Creditor Obligations" shall mean and include all
liabilities and obligations of Eltrax to Junior Creditor under the
Junior Creditor Documents, whether now or hereafter created, incurred
or arising, and however made or incurred, and whether direct or
indirect, absolute or contingent, due or to become due, joint or
several, or secured or unsecured, including (i) all principal and
interest (whether cash or pay in kind), (ii) all fees, charges,
expenses, attorneys' fees, commitment or other fees, indemnity amounts,
collection costs and other amounts owing by Eltrax to Junior Creditor
under any of the Junior Creditor Documents or otherwise and (iii) any
debt otherwise payable to Junior Creditor as a result of a conversion
of interest to warrants, options, stock or other equity.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person, whether such interest is
based on common law, statute, contract, judgment or court order. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting property.
"Person" shall mean any natural person, sole proprietorship,
corporation, partnership, limited liability company, joint venture,
business trust, other business entity, or any governmental unit,
agency, bureau or political subdivision.
"Plan" shall mean a plan proposed in any Bankruptcy Case for
the reorganization or rehabilitation of Eltrax, a composition or
extension of any of Eltrax's debts or a liquidation in whole or in part
of Eltrax's assets.
"Reorganization Securities" shall mean and include (a) shares
of common stock (or other equity securities) of Eltrax and (b) debt
securities of Eltrax, the payment of which is subordinated to the full
and final payment of all Senior Creditor Obligations at the time
outstanding and to the payment of all debt securities issued in
exchange therefor to Agent or any Senior Creditor, which shares or
other equity or debt securities have been provided for by a Plan that
has been approved by final order of a court and that has been accepted
by Senior Creditors.
"Senior Creditor Documents" shall mean and include the Credit
Agreement and all other instruments or agreements now or hereafter
evidencing or securing the payment of the whole or any part of the
Senior Creditor Obligations.
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"Senior Creditor Obligations" shall mean and include all
liabilities and obligations of Eltrax and the other Borrowers to Agent
and Senior Creditors, whether now or hereafter created, incurred or
arising, and whether direct or indirect, absolute or contingent,
primary or secondary, due or to become due, or joint or several,
including (i) all Advances at any time made and all other Obligations
now or hereafter existing under or with respect to any of the Senior
Creditor Loan Documents, (ii) any and all loans made or other credit
extended by any Senior Creditor to Eltrax and the other Borrowers
during the pendency of any Bankruptcy Case, (iii) all interest at any
time accrued with respect to any of the foregoing (including any
interest that accrues during the pendency of any Bankruptcy Case,
whether or not any Senior Creditor is authorized under the Bankruptcy
Code to collect such interest from Eltrax or any other Borrower), and
(iv) all Enforcement Expenses which Eltrax or any other Borrower is now
or hereafter becomes liable to pay to Agent or any Senior Creditor
under any agreement or by Applicable Law.
(b) All references to any instrument or agreement, including
any of the Junior Creditor Documents or the Senior Creditor Documents, shall
mean and include all amendments and modifications thereto and renewals,
restatements and replacements thereof; all references to any statute shall mean
and include all amendments thereto and all regulations issued pursuant thereto;
and the words "including" and "include" shall mean "including, without
limitation" and "include, without limitation."
2. CONSENTS TO LIENS. Senior Creditor hereby consents to Eltrax's grant of Liens
in the Collateral to Junior Creditor as security for the Junior Creditor
Obligations and agrees that the existence of any such Liens (other than any Lien
that may hereafter arise from any judgment obtained against Eltrax or any other
Borrower) shall not constitute an Event of Default under any of the Senior
Creditor Documents. Junior Creditor hereby acknowledges Eltrax's (and each other
Borrower's) grant of Liens in the Collateral to Agent as security for the Senior
Creditor Obligations and agrees that the existence of any such Liens shall not
constitute an Event of Default under any of the Junior Creditor Documents.
3. PRIORITY OF LIENS.
(a) Junior Creditor and Agent agree at all times, whether
before, after or during the pendency of any Bankruptcy Case or other insolvency
proceeding and notwithstanding the priorities which would ordinarily result from
the order of granting or perfection of any Liens, the order of filing or
recording of any financing statements, or the priorities that would otherwise
apply under applicable law, that (i) Agent's Liens in the Collateral shall
constitute first priority Liens in such property to secure the Senior Creditor
Obligations and shall be superior to any Lien or other interest of Junior
Creditor in the same property arising pursuant to the Junior Creditor Documents,
by operation of law or otherwise; and (ii) any Lien or other interest at any
time acquired by Junior Creditor in any of the Collateral shall be subordinate
to the Liens of Agent therein.
(b) If for any reason any Lien granted or conveyed by Eltrax
or any other Borrower to Agent pursuant to the Senior Creditor Documents or
otherwise is set aside or otherwise declared ineffective, in whole or in part,
by any court of competent jurisdiction, and if as a consequence thereof Junior
Creditor becomes entitled to receive any proceeds from any of the Collateral or
on account of such Junior Creditor's Lien in any of the Collateral, then any
such payments or proceeds received by such Junior Creditor shall be used by it
to purchase a junior participation in the Senior Creditor Obligations pursuant
to a junior participation agreement in form and content satisfactory to Agent
but in all events
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providing that Agent's retained interest in the Senior Creditor Obligations
(including both principal and interest) and all costs and expenses incurred by
Senior Creditor (including attorneys' fees) in attempting to collect the Senior
Creditor Obligations or to realize upon any of the Collateral shall be paid in
full before such Junior Creditor shall be entitled to any payment on account of
its junior participation and such Junior Creditor's junior participation will be
without recourse of any kind to Agent except for Agent's gross negligence or
willful misconduct after the date of such Junior Creditor's purchase of such
junior participation.
(c) In no event shall Junior Creditor institute, or join as a
party in the institution of, or directly or indirectly assist in the prosecution
of, any action, suit or proceeding seeking a determination that the Lien of
Agent in any of the Collateral is invalid, unperfected or avoidable, or is or
should be subordinated to the interests of any other Person. In no event shall
Agent or any Senior Creditor institute, or join as a party in the institution
of, or directly or indirectly assist in the prosecution of, any action, suit or
proceeding seeking a determination that the Lien of Junior Creditor in any of
the Collateral is invalid, unperfected or avoidable, or is or should be
subordinated to the interests of any other Person other than Agent under the
terms hereof.
(d) If, at any time, Agent shall subordinate in whole or in
part its Lien upon any of the Collateral to or in favor of any other Person, the
priority of Agent's Lien in the Collateral vis-a-vis Junior Creditor shall not
be affected thereby, and Agent's Lien shall continue to be superior to Junior
Creditor's Lien in the Collateral as provided in paragraph 3(a) of this
Agreement.
4. DEBT SUBORDINATION/PERMITTED PAYMENTS.
(a) Subject to the provisions of paragraph 4(c) and 4(d)
hereof relating to payments on the Junior Creditor Obligations that are
permitted to be made to the extent and under the circumstances set forth in
paragraphs 4(c) and 4(d), Junior Creditor hereby postpones and subordinates all
of the Junior Creditor Obligations to the full and final payment and discharge
of all of the Senior Creditor Obligations.
(b) In the event of any distribution (other than a
distribution of Reorganization Securities), division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of the assets of Eltrax or any other Borrower or the proceeds thereof
to Junior Creditor or upon any indebtedness of Eltrax or any other Borrower, by
reason of the liquidation, dissolution or other winding up of Eltrax or such
Borrower or Eltrax's or such Borrower's business, or in the event of any sale,
receivership, insolvency or bankruptcy proceeding, or assignment for the benefit
of creditor, or any proceeding by or against Eltrax or any other Borrower for
any relief under the Bankruptcy Code or other insolvency law relating to the
relief of debtors, readjustment of indebtedness, reorganization, compositions or
extensions, then and in any such event any payment or distribution of any kind
or character, whether in cash, securities or other property (excluding
Reorganization Securities), which shall be payable or deliverable upon or with
respect to any of the Junior Creditor Obligations shall be paid or delivered
directly to Agent for application to the Senior Creditor Obligations (whether or
not the same is then due) until all of the Senior Creditor Obligations has been
fully paid and discharged. The Subordinated Note shall at all times bear a
conspicuous legend that the Junior Creditor Obligations evidenced thereby are
subordinated to the Senior Creditor Obligations pursuant to this Agreement.
Eltrax's and Junior Creditor's books shall be marked to evidence the
subordination of all of the Junior Creditor Obligations to the Senior Creditor
Obligations. Agent is authorized to examine such books from time to time and to
make any notations required by this Agreement. The provisions of this paragraph
4 shall remain effective and binding upon Junior Creditor, to the full extent of
the Senior
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Creditor Obligations, even if any of the Senior Creditor Obligations is avoided,
equitably subordinated or nullified in any Bankruptcy Case of Eltrax or any
other Borrower.
(c) Eltrax may pay to Junior Creditor, and Junior Creditor may
accept and retain, the regularly scheduled installment of interest due and owing
to Junior Creditor from Eltrax on September 30, 2000 under the Subordinated Loan
Agreement and Subordinated Note in accordance with their present tenor, but
without prepayment, whether mandatory or optional, or payment upon acceleration.
(d) For so long as (i) no Event of Default exists under any of
the Senior Creditor Documents or would exist as a result of any payment on
account of the Subordinated Note and (ii) Undrawn Availability at the time of
and after giving effect to any payment on account of the Subordinated Note is
not less than the amount required by Section 6.10 of the Credit Agreement, and
except as otherwise provided in paragraph 4(b) hereof, Eltrax may pay to Junior
Creditor, and Junior Creditor may accept and retain, any regularly scheduled
installments of interest due and owing to Junior Creditor from Eltrax under the
Subordinated Loan Agreement and Subordinated Note in accordance with their
present tenor, but without prepayment, whether mandatory or optional, or payment
upon acceleration. If an Event of Default under any of the Senior Creditor
Documents exists or would result from the making of any payment under the
Subordinated Loan Agreement or the Subordinated Note, Eltrax shall not be
permitted to make, and Junior Creditor shall be entitled to accept or retain,
any payments on the Subordinated Note. In no event shall Senior Creditors'
continuing to honor any requests of Eltrax or any other Borrower for Advances
under the Credit Agreement after the occurrence or existence of any Event of
Default under the Senior Creditor Documents be deemed a waiver thereof, unless
such Event of Default is expressly waived in writing by Senior Creditors.
5. WARRANTIES AND REPRESENTATIONS OF ELTRAX AND JUNIOR CREDITOR. Eltrax and
Junior Creditor each hereby represents and warrants (severally and not jointly)
that: (i) it has not relied nor will it rely on any representation or
information of any nature made by or received from Agent or any Senior Creditor
relative to Eltrax or any other Borrower in deciding to execute this Agreement;
(ii) no part of the Junior Creditor Obligations is evidenced by any instrument
or writing except the Subordinated Loan Agreement and Subordinated Note and the
other documents contemplated therein; (iii) Junior Creditor is the lawful owner
of the Junior Creditor Obligations; (iv) Junior Creditor has not heretofore
assigned or transferred any of the Junior Creditor Obligations, any interest
therein or any Collateral or security pertaining thereto; and (v) Junior
Creditor has not heretofore given any subordination in respect of the Junior
Creditor Obligations.
6. NEGATIVE COVENANTS. For so long as this Agreement is in effect: (i) neither
Eltrax nor any other Borrower shall, directly or indirectly, make any payment
(other than a payment permitted by paragraph 4 hereof) on account of the Junior
Creditor Obligations; (ii) Junior Creditor shall not demand, collect or accept
from Eltrax or any other Person, including any other Borrower, any payment
(other than a payment permitted by paragraph 4 hereof) on account of the Junior
Creditor Obligations or any part thereof, or accelerate the maturity of any of
the Junior Creditor Obligations or realize upon or enforce any security
heretofore granted by any Person, including any other Borrower, as collateral
for any of the Junior Creditor Obligations; (iii) Junior Creditor shall not
exchange, set off, release, convert to equity or otherwise discharge any part of
the Junior Creditor Obligations, except as contemplated by the Junior Creditor
Documents as in existence on the date hereof; (iv) Junior Creditor shall not
hereafter give any subordination in respect of the Junior Creditor Obligations
or transfer or assign any of the Junior Creditor Obligations to any Person other
than Agent unless the transferee or
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assignee thereof first agrees in writing with Agent to be bound by the terms of
this Agreement; (v) no Borrower shall hereafter issue any instrument, security
or other writing evidencing any part of the Junior Creditor Obligations, and
Junior Creditor will not receive any such writing, except upon the prior written
approval of Agent or at the request of and in the manner requested by Agent;
(vi) Eltrax and Junior Creditor shall not amend, alter or modify any provision
of the Subordinated Loan Agreement or the Subordinated Note without the prior
written consent of Agent (other than to reduce the rate of interest or extend
the time for payment); (vii) Junior Creditor shall not commence or join with any
other creditor of Eltrax or any other Borrower in commencing any Bankruptcy Case
or reorganization, receivership or insolvency proceeding against Eltrax or any
other Borrower; and (viii) none of Eltrax, any other Borrower or Junior Creditor
otherwise shall take or permit any action prejudicial to or inconsistent with
Agent's priority position over Junior Creditor that is created by this
Agreement.
7. STANDBY AS TO CERTAIN ACTIONS. Junior Creditor agrees that it will not ask
for, demand, xxx for, take, receive, or repossess any of the Collateral from
Eltrax or any other Borrower by setoff or in any other manner, or otherwise take
any Enforcement Action to collect any of the Junior Creditor Obligations or to
realize upon the whole or any part of the Collateral, whether by judicial action
or under power of sale, by self-help repossession or otherwise, unless and until
all of the Senior Creditor Obligations have been paid finally and in full. If
Junior Creditor, in violation hereof, initiates any Enforcement Action against
Eltrax or any other Borrower or any of the Collateral, Eltrax or such other
Borrower may interpose this Agreement as a complete defense, and Agent may
intervene and interpose this Agreement as a defense in Agent's name or in the
name of Eltrax or such other Borrower.
8. SENIOR CREDITOR'S RIGHTS EXCLUSIVE. Agent shall have the exclusive right to
collect, foreclose upon, sell, transfer, liquidate or otherwise dispose of the
Collateral as provided in the Senior Creditor Documents or by applicable law, in
the manner deemed appropriate by Agent, without regard to any Liens of Junior
Creditor therein, and Junior Creditor will not hinder Agent's actions in
enforcing its remedies or taking any Enforcement Action with respect to the
Collateral; provided, however, that after payment in full of all Senior Creditor
Obligations, Agent shall deliver to Junior Creditor (unless otherwise restricted
by law or by any order issued by a court in the proper exercise of its
jurisdiction and subject in all events to Agent's receipt of an indemnification
from Junior Creditor of all liabilities arising from such delivery) for
application to the Junior Creditor Obligations any proceeds remaining from the
sale or other disposition of the Collateral. To the fullest extent permitted by
applicable law, Junior Creditor waives any requirement on the part of Agent to
conduct any sale or other disposition of any of the Collateral in a commercially
reasonable manner, and Agent shall be fully authorized to sell or otherwise
dispose of any or all of the Collateral in the manner deemed appropriate by
Agent, including by the exercise of any right Agent may have to accept any or
all of the Collateral in total or partial satisfaction of any of the Senior
Creditor Obligations in accordance with the Code or otherwise.
9. RECEIPT OF MONIES BY JUNIOR CREDITOR. Junior Creditor agrees that should it
receive at any time prior to payment in full of all Senior Creditor Obligations
any payment, distribution or security (other than Reorganization Securities)
from Eltrax or any other Borrower in violation of this Agreement or any money
from the sale, liquidation, casualty or other disposition of, or as a result of
Junior Creditor's Lien in any of the Collateral, it will (unless otherwise
restricted by law) hold the same in trust for Agent and promptly pay over the
same to Agent for application to the Senior Creditor Obligations (unless
otherwise restricted by law or by any order issued by a court in the proper
exercise of its jurisdiction).
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10. AGREEMENT ON CERTAIN BANKRUPTCY MATTERS.
(a) Without impairing, abrogating or in any way affecting
Agent's rights hereunder, including the relative priorities established by
paragraph 3 hereof, Agent may during any Bankruptcy Case give or withhold its
consent to Eltrax's, any other Borrower's or any bankruptcy trustee's use of any
Collateral (including cash proceeds of any Collateral) or may provide financing
or otherwise extend credit to Eltrax, any other Borrower or any bankruptcy
trustee secured by a Lien upon any or all of the Collateral whether created,
acquired or arising prior to or after the commencement of any such Bankruptcy
Case, and by its execution of this Agreement Junior Creditor shall be deemed to
have consented to Eltrax's, any other Borrower's or any bankruptcy trustee's use
of Collateral if and to the extent consented to by Agent and to any financing
proposed to be provided by Senior Creditors to any Borrower or any bankruptcy
trustee during the pendency of any such Bankruptcy Case. Any Lien at any time
granted to or otherwise acquired by Junior Creditor in any of the Collateral,
whether such Collateral is created, acquired or arises prior to or after the
commencement of any such Bankruptcy Case, shall be subject to all of the terms
of this Agreement and shall be subordinate in priority to all Liens granted to
or otherwise obtained by Agent with respect to any such Collateral, including
Liens granted to or conferred upon Agent or any Senior Creditors to secure
financings in any such Bankruptcy Case.
(b) If Agent consents to the sale of any of the Collateral
during any Bankruptcy Case (whether such sale is to be made pursuant to 11
U.S.C. ss. 363, pursuant to a plan of reorganization or otherwise), then Junior
Creditor shall be deemed to have consented to any such sale and shall, if
requested to do so by Agent in connection with any such sale Junior Creditor
shall promptly execute and deliver to Agent a release of Junior Creditor's Liens
with respect to the Collateral to be sold.
(c) If, in or as a result of any Bankruptcy Case, Agent
returns, refunds or repays to Eltrax, any other Borrower or any trustee or
committee appointed in the Bankruptcy Case any payment or proceeds of any
Collateral in connection with any action, suit or proceeding alleging that
Agent's receipt of such payments or proceeds was a transfer voidable under state
or federal law, then Agent shall not be deemed ever to have received such
proceeds for purposes of this Agreement in determining whether and when all of
the Senior Creditor Obligations have been paid in full.
(d) If Junior Creditor has any claim against Eltrax or any
other Borrower in any Bankruptcy Case, assignment for the benefit of Junior
Creditor, receivership proceedings, dissolution proceedings or similar
proceedings, Junior Creditor hereby makes, constitutes and appoint Agent as
Junior Creditor's attorney-in-fact and authorizes Agent to file, in the name of
Junior Creditor, such claim on behalf of Junior Creditor and any sums received
by Agent in connection with such claim shall be applied to the Senior Creditor
Obligations to the extent thereof. Agent shall remit to Junior Creditor any
funds remaining after those sums have been so applied, to the extent permitted
by applicable laws or the proceedings governing any such bankruptcy.
11. SUBROGATION. Provided that the Senior Creditor Obligations have been
indefeasibly paid and discharged and the Senior Creditor Documents have been
terminated, Junior Creditor shall be subrogated (without any representation by
or recourse to any Senior Creditor) to the rights of Senior Creditors to receive
payments or distributions of cash, property or securities payable or
distributable on account of the Senior Creditor Obligations, to the extent of
all payments and distributions paid over to or for the benefit of Senior
Creditors pursuant to this Agreement on account of the Junior Creditor
Obligations. In no event, however, shall Junior Creditor have any rights or
claims against any Senior Creditor for any alleged impairment of Junior
Creditor's subrogation rights,
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Junior Creditor acknowledging that any actions taken by any Senior Creditor with
respect to the Senior Creditor Obligations or the Collateral are authorized and
consented to by Junior Creditor.
12. AGREEMENT TO RELEASE LIENS. Junior Creditor agrees that it will (if
requested to do so by Agent after and during the continuance of an Event of
Default under the Senior Creditor Documents) release its Liens, if any, in any
Collateral in connection with and in order to facilitate any orderly liquidation
sale of such Collateral by Eltrax or any other Borrower or any bankruptcy
trustee or receiver for any Borrower, and promptly upon the request of Agent, it
will execute and deliver such documents, instruments and agreements as are
necessary to effectuate such release and to evidence such release in the
appropriate public records. Notwithstanding the foregoing, the Lien, if any,
granted to Junior Creditor shall, subject to all of the provisions of this
Agreement, continue in the proceeds of any such Collateral if such proceeds are
not applied to the Senior Creditor Obligations in accordance with the terms of
the Senior Creditor Documents.
13. WAIVER OF MARSHALING; APPLICATION OF PAYMENTS AND PROCEEDS. Junior Creditor
hereby waives any right to require Agent or any Senior Creditor to xxxxxxxx any
security or collateral or otherwise to compel Agent or any Senior Creditor to
seek recourse against or satisfaction of the indebtedness to it from one source
before seeking recourse or satisfaction from another source. Agent shall be
authorized to apply any and all payments, collections and proceeds of Collateral
received by it to such portion of the Senior Creditor Obligations as Agent may
lawfully elect consistent with the provisions of the Senior Creditor Documents.
14. PROVISIONS CONCERNING INSURANCE. Proceeds of the Collateral include
insurance proceeds, and therefore the priorities set forth in paragraph 3 hereof
govern the ultimate disposition of casualty insurance proceeds. Agent shall have
the sole and exclusive right, as against Junior Creditor, to adjust settlement
of insurance claims in the event of any covered loss, theft or destruction of
the Collateral. All proceeds of such insurance shall inure to Agent to the
extent of the Senior Creditor Obligations, and Junior Creditor shall cooperate
(if necessary), at Agent's expense, in a reasonable manner in effecting the
payment of insurance proceeds to Agent. Agent shall have the right (as set forth
in the Senior Creditor Documents) to determine whether such proceeds will be
applied to its claim or used to rebuild, replace or repair the affected
Collateral. If such proceeds are applied to Senior Creditor Obligations, any
proceeds remaining after payment of Senior Creditor Obligations and all expenses
of collection shall be promptly remitted to Junior Creditor for application to
the Junior Creditor Obligations or to Eltrax, as applicable.
15. NOTICES. All notices, requests and demands to or upon a party hereto shall
be in writing and shall be delivered by hand, sent by certified or registered
mail, return receipt requested or by telecopier and shall be deemed to have been
validly served, given or delivered when delivered against receipt or three (3)
Business Days after deposit in the mail, postage prepaid, or, in the case of
telecopy notice, when received at the office of the noticed party, in each case
addressed as follows:
(A) If to Agent: PNC Bank, National Association, as
Agent Xxx Xxxxx Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
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with a copy to: Parker, Hudson, Rainer & Xxxxx LLP
1500 Marquis Two Tower
000 Xxxxxxxxx Xxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
(B) If to Junior Creditor: Cereus Technology Partners, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxx, Esq.
Telecopier No.: (000) 000-0000
(C) If to Eltrax or any
other Borrower: Eltrax Systems, Inc.
000 Xxxxxx 00 Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 Attention:
Chief Financial Officer Telecopier:
(000) 000-0000
with a copy to: Jaffe, Raitt, Heuer & Xxxxx, P.C.
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000 Attention:
Xxxxxxx X. Xxxxx, Esq. Telecopier:
(000) 000-0000
or to such other address as each party may designate for itself by like notice
given in accordance with this paragraph. Any written notice that is not sent in
conformity with the provisions hereof shall nevertheless be effective on the
date that such notice is actually received by the noticed party. Junior Creditor
hereby agrees that any requirement for the giving of notice by Agent under the
Code or otherwise in connection with any exercise by Agent of any of its rights
or remedies with respect to the Collateral shall be satisfied by the giving of
written notice at least five (5) days prior to the date on which such rights or
remedies are to be exercised by Agent, provided that nothing herein shall be
deemed to require the giving of any such notice when such notice is not required
by applicable law.
16. AUTHORITY. Agent hereby represents and warrants to Junior Creditor and
Eltrax that Agent has the right power and authority to execute this Agreement on
behalf of itself and each Senior Creditor and that upon the execution of this
Agreement by Agent, Agent and each Senior Creditor will be bound by the terms
hereof. Junior Creditor hereby represents and warrants to Agent, that Junior
Creditor has the right power and authority to execute this Agreement on behalf
of itself and each Junior
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Creditor and that upon the execution of this Agreement by Junior Creditor,
Junior Creditor will be bound by the terms hereof.
17. NO DUTIES IMPOSED UPON SENIOR CREDITOR. The rights granted to Agent in this
Agreement are solely for its protection and nothing herein contained imposes on
Agent any duties with respect to any of the Collateral. Agent has no duty to
preserve rights against prior parties on any instrument or chattel paper
received from Eltrax or any other Borrower as collateral security for any of the
Senior Creditor Obligations.
18. SPECIFIC ENFORCEMENT. If Junior Creditor fails to comply with any provision
of this Agreement that is applicable to it, Agent may demand specific
performance of this Agreement and may exercise any other remedy available at law
or equity.
19. ADDITIONAL CREDIT EXTENSIONS. Junior Creditor acknowledges, understands and
agrees that Senior Creditors may make Advances to Eltrax and the other Borrowers
from time to time, pursuant to the Senior Creditor Documents or otherwise, and
all such Advances shall constitute part of the Senior Creditor Obligations and
shall be secured by all of the Collateral, and nothing herein shall restrict in
any manner or in any way the right of any Borrower to obtain additional credit
from Senior Creditors or the right of any Senior Creditors to make available
such additional credit to any Borrower as Senior Creditors in their sole
discretion may elect.
20. INDEMNITY. Junior Creditor agrees to indemnify, defend and hold Agent and
each Senior Creditor harmless from and against any loss, damage, cost, claim or
expense, including court costs and attorneys' fees, incurred or sustained by
Agent or any Senior Creditor in connection with any remittances of proceeds of
any Collateral made pursuant to the terms hereof from Agent to Junior Creditor,
to the extent that such remittance of proceeds subsequently is determined by a
court of competent jurisdiction to have been prohibited by applicable law,
avoidable under any insolvency law (including the Bankruptcy Code), or in
violation of the rights of any other creditor of any Borrower when made. The
foregoing indemnity shall survive any termination of this Agreement.
21. INDEPENDENT CREDIT INVESTIGATIONS. None of the parties hereto nor any of
their respective directors, officers, agents, employees, successors or assigns
shall be responsible to the others or to any other Person for any Borrower's
solvency, financial condition or ability to repay any of the Junior Creditor
Obligations or any of the Senior Creditor Obligations, or for statements of any
Borrower, oral or written, or for the validity, sufficiency or enforceability of
any of the Junior Creditor Documents or any of the Senior Creditor Documents, or
the validity or priority of any Liens granted by any Borrower to either party in
connection with any of the Junior Creditor Documents or any of the Senior
Creditor Documents. Each party hereto has entered into its agreements with
Eltrax and the other Borrowers based upon its own independent investigation, and
makes no warranty or representation to the other party nor does it rely upon any
representation of the other party with respect to matters identified or referred
to in this paragraph.
22. NO ADDITIONAL RIGHTS OF BORROWERS HEREUNDER. Nothing herein shall be
construed to confer additional rights upon Eltrax or any other Borrower. Without
limiting the generality of the foregoing, if any party hereto shall enforce its
rights or remedies in violation of this Agreement, no Borrower shall be
authorized to use such violation as a defense to any right or remedy exercised
by such party, nor assert such violation as a counterclaim or basis of setoff or
recoupment against such party,
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unless the other party hereto consents in writing and itself asserts that the
exercise of right or remedy is in violation of this Agreement.
23. TERM OF AGREEMENT. This Agreement shall continue in full force and effect
and shall be irrevocable by any party hereto until the earliest to occur of the
following: (i) the parties hereto in writing mutually agree to terminate this
Agreement; (ii) the Junior Creditor Obligations are fully paid and discharged
and the Junior Creditor Documents are terminated; or (iii) the Senior Creditor
Obligations are fully paid and discharged and the Senior Creditor Documents are
terminated.
24. GOVERNING LAW. This Agreement shall be interpreted, and the rights and
obligations of the parties hereto determined, in accordance with the internal
laws of the State of Georgia.
25. NO THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement shall be
deemed to indicate that this Agreement has been entered into for the benefit of
any Person other than the parties hereto.
26. CONFLICT WITH DOCUMENTS. The provisions of this Agreement are intended by
the parties to control any conflicting provisions in the Senior Creditor
Documents or the Junior Creditor Documents, including any covenants prohibiting
further borrowing or encumbrances of Collateral.
27. COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument. Any signature delivered by a party by facsimile transmission
shall be deemed to be an original signature hereto.
28. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. In no event, however, shall either party hereto transfer or assign any
Lien that it may have in any of the Collateral to any Person unless the
transferee or assignee thereof shall first agree in writing to be bound by the
terms of this Agreement the same as if an original signatory hereto.
Notwithstanding the immediately preceding sentence, any Person(s) whose loans or
advances to any Borrowers hereafter are used to refinance and pay in full the
Senior Creditor Obligations shall be deemed for all purposes hereof to be the
successor to Agent and Senior Creditors, and from and after the date of any such
refinancing in satisfaction in full of the Senior Creditor Obligations such
Person(s) shall be deemed a party hereto in the place and stead of Agent and
Senior Creditors as if such Person(s) had been the original signatories hereto,
and all loans, advances, liabilities, debit balances, covenants and duties at
any time or times owed by Eltrax and any other Borrowers to such successor to
Agent and Senior Creditors, whether direct or indirect, absolute or contingent,
secured or unsecured, due or to become due, then existing or thereafter arising,
including any renewals, extensions, modifications, or replacements of any of the
foregoing, shall be deemed for all purposes hereunder to constitute and be
Senior Creditor Obligations.
29. FURTHER ASSURANCES. Each of the parties hereto agrees to execute such
amendments to financing statements and other documents as may be necessary to
reflect of record the existence of this Agreement and the relative priorities
established pursuant to paragraph 3 hereof.
30. SEVERABILITY. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this
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Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
31. ENTIRE AGREEMENT; AMENDMENTS. This Agreement expresses the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior understandings and agreements of the
parties regarding the same subject matter. This Agreement may not be amended or
modified except by a writing signed by the parties hereto.
32. JURY TRIAL WAIVER. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH
PARTY HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN CONNECTION WITH ANY
ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
PNC BANK, NATIONAL
ASSOCIATION, as Agent ("Agent")
By:
---------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
ELTRAX SYSTEMS, INC.
Attest: ("Eltrax")
By:
------------------------- ---------------------------------------
, Secretary Name:
------------- -----------------------------------
Title:
-----------------------------------
[CORPORATE SEAL]
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CEREUS TECHNOLOGY
PARTNERS, INC.
("Junior Creditor")
By:
---------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
[CORPORATE SEAL]
Acknowledged and agreed to this ____
day of June, 2000
ATTEST: ELTRAX TECHNOLOGY SERVICES
GROUP, INC.
By:
------------------------ ---------------------------------------
, Secretary Name:
------------ -----------------------------------
Title:
-----------------------------------
[CORPORATE SEAL]
ATTEST: ELTRAX ASP GROUP, LLC
By:
------------------------ ---------------------------------------
, Secretary Name:
------------ -----------------------------------
Title:
-----------------------------------
[CORPORATE SEAL]
ATTEST: SQUIRREL SYSTEMS, INC.
By:
------------------------ ---------------------------------------
, Secretary Name:
------------ -----------------------------------
Title:
-----------------------------------
[CORPORATE SEAL]
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EXHIBIT D
WARRANT AGREEMENT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR REGISTERED OR QUALIFIED UNDER
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE. NEITHER THIS WARRANT, NOR THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF, NOR ANY INTEREST OR PARTICIPATION
THEREIN, MAY BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY
OTHER MANNER TRANSFERRED OR DISPOSED OF UNLESS (I) REGISTERED UNDER AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND IN FULL COMPLIANCE
WITH THE APPLICABLE RULES AND REGULATIONS THEREUNDER AND APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS, (II) PURSUANT TO RULE 144 UNDER SUCH ACT OR (III)
UNLESS ELTRAX SYSTEMS, INC. RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
SUCH SECURITIES, REASONABLY SATISFACTORY TO ELTRAX SYSTEMS, INC., STATING THAT
SUCH SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER MANNER OF
TRANSFER OR DISPOSITION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES OR
BLUE SKY LAW.
ELTRAX SYSTEMS, INC.
Warrant for the Purchase
of Shares of Common Stock
________________________, 20___ ____________ Shares
FOR VALUE RECEIVED, ELTRAX SYSTEMS, INC., a Minnesota corporation
(the "Company"), hereby certifies that CEREUS TECHNOLOGY PARTNERS, INC., a
Delaware corporation (the "Holder"), is entitled, subject to the provisions of
this Warrant, to purchase from the Company, at any time or from time to time
during the Exercise Period (as hereinafter defined) the number of fully paid and
nonassessable shares of Borrower Common Stock, as defined in the Loan Agreement
(as hereinafter defined), as determined pursuant to Section 9.1 of the Loan
Agreement and set forth above, at the applicable Exercise Price (as hereinafter
defined).
All capitalized terms used herein shall have the meanings ascribed
to such terms in that certain Bridge Loan and Security Agreement by and between
the Company (as Borrower thereunder) and Holder (as Lender thereunder) dated
June 14, 2000, as the same may be amended (the "Loan Agreement"), except to the
extent that such capitalized terms are otherwise defined or limited herein.
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The number and character of shares of Borrower Common Stock or
other securities to be received upon exercise of this Warrant are subject to
adjustment in accordance with the provisions of Sections 6 and 7 hereof.
For purposes of this Warrant, "Warrant Shares" means the shares of
the Borrower Common Stock deliverable upon exercise of this Warrant, as adjusted
from time to time. Unless the context requires otherwise, all references to the
Borrower Common Stock and Warrant Shares in this Warrant shall, in the event of
an adjustment pursuant to Sections 6 and 7 hereof, be deemed to refer also to
any securities or property then issuable upon exercise of this Warrant as a
result of such adjustment.
Section 1. Exercise of Warrant. This Warrant may be exercised, as
a whole or in part, at any time or from time to time during the Exercise Period
or, if such day is not a Business Day, then on the next succeeding Business Day,
by presentation and surrender hereof to the Company at the address set forth in
Section 15 hereof (or at such other address as the Company may hereafter notify
the Holder in writing), with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of the aggregate applicable Exercise Price in
lawful money of the United States of America in the form of a certified or
cashier's check to the order of Eltrax Systems, Inc. or by wire transfer of same
day funds, for the number of Warrant Shares specified in such form. If this
Warrant should be exercised in part only, the Company shall, upon surrender of
this Warrant, execute and deliver a new Warrant of like form evidencing the
rights of the Holder to purchase the balance of the Warrant Shares purchasable
hereunder. Upon receipt by the Company of this Warrant and such Purchase Form,
together with the aggregate applicable Exercise Price (as hereinafter defined)
for the number of Warrant Shares specified in such Purchase Form, at such
office, the Company shall issue and deliver to the Holder, in the name of the
Holder, a certificate or certificates for the Warrant Shares. Such certificate
or certificates shall be deemed to have been issued and the Holder shall be
deemed to have become the holder of record of such Warrant Shares as of the date
of the surrender of this Warrant, notwithstanding that the stock transfer books
of the Company shall then be closed or that certificates representing such
Warrant Shares shall not then be actually delivered to the Holder. The Company
shall pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the Warrant Shares.
Notwithstanding the foregoing, the Exercise Price may be paid by surrendering a
part of the Warrant having an aggregate Spread equal to the aggregate Exercise
Price of the portion of the Warrant being exercised. With respect to the
Warrant, "Spread" means the Current Market Value (as hereinafter defined) of the
Warrant Shares issuable upon exercise of such portion of the Warrant less the
Exercise Price of such part of the Warrant, in each case as adjusted as provided
herein.
Section 2. Exercise Period and Exercise Price.
(a) This Warrant shall be exercisable during the period (the
"Exercise Period") beginning on the date of execution of this Warrant (the
"Initial Exercise Date") and ending at 5:00 p.m. (Atlanta, Georgia time) on a
date three (3) years after the Initial Exercise Date (the "Termination Date").
(b) "Exercise Price" means $.01 per share of the Borrower
Common Stock, subject to adjustment as herein provided.
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Section 3. Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Warrant all shares of the Borrower Common Stock or other shares of capital
stock of the Company or other property from time to time issuable upon exercise
of this Warrant. All such shares shall be duly authorized and, when issued upon
such exercise in accordance with the terms of this Warrant, shall be validly
issued, fully paid and nonassessable, free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale (other than
any restrictions on sale pursuant to applicable federal and state securities
laws) and free and clear of all preemptive rights.
Section 4. Exchange, Transfer, Assignment or Loss of Warrant.
(a) This Warrant is exchangeable, without expense, at the
option of the Holder, upon presentation and surrender hereof to the Company for
other warrants of different denomination, entitling the Holder thereof to
purchase in the aggregate the same number of Warrant Shares and otherwise
carrying the same rights as this Warrant.
(b) This Warrant may be divided or combined by the Holder
with other warrants that carry the same rights upon presentation hereof at the
office of the Company, together with a written notice specifying the names and
denominations in which new warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any warrants into which this
Warrant may be divided or for which it may be exchanged.
(c) Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
Section 5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or in equity, and the rights of the Holder are limited to those expressed in
this Warrant.
Section 6. Antidilution Provisions and Other Adjustments. The
number of Warrant Shares which may be purchased upon the exercise hereof shall
be subject to change or adjustment from time to time as follows:
(a) Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications. In case the Company shall (i) pay a dividend or make any
other distribution with respect to the Borrower Common Stock in shares of its
capital stock, (ii) subdivide its outstanding Borrower Common Stock, (iii)
combine its outstanding Borrower Common Stock into a smaller number of shares,
or (iv) issue any shares of its capital stock in a reclassification of the
Borrower Common Stock (including any such reclassification in connection with a
merger (other than the transactions contemplated by the Merger Agreement),
consolidation or other business combination in which the Company is the
continuing corporation) the number of shares of Borrower Common Stock issuable
upon exercise of this Warrant immediately prior to the record date for each such
dividend or distribution or the effective date of each such subdivision or
combination shall be adjusted so that the Holder shall thereafter be entitled
after the completion of each such event to receive the kind and number of shares
of Borrower Common Stock or other securities of the Company that the Holder
would have owned or have been
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entitled to receive after the happening of each such event, had this Warrant
been exercised immediately prior to the happening of each such event or any
record date with respect thereto. Each adjustment made pursuant to this Section
6(a) shall become effective immediately after the effective date of the
applicable event retroactive to the record date, if any, for such event.
(b) Distributions of Debt, Assets, Subscription Rights or
Convertible Securities. In case the Company shall fix a record date for the
making of a distribution to all holders of shares of the Borrower Common Stock
of evidences of indebtedness of the Company, assets (other than cash dividends
payable out of retained earnings or securities (excluding those referred to in
Section 6(a)) (any such evidences of indebtedness, assets, or securities being
referred to in this Section 6(b) as the "assets or securities"), then in each
case the Holder, upon the exercise of this Warrant, shall be entitled to receive
in addition to the shares of Borrower Common Stock issuable upon exercise of
this Warrant, (i) the assets or securities to which the Holder would have been
entitled as a holder of Borrower Common Stock if the Holder had exercised this
Warrant immediately prior to the record date for such distribution and (ii) any
interest or distributions on the assets or securities distributed from the
distribution date to the date of exercise. At the time of any such distribution,
the Company shall either (A) deposit the assets or securities payable to the
Holder pursuant hereto in trust for the Holder with an eligible institution (as
hereinafter defined) with instructions as to the investment of such property and
any proceeds therefrom so as to protect the value of such property for the
Holder or (B) distribute to the Holder the assets or securities to which it
would be entitled upon exercise and, upon any such distribution pursuant to this
clause (B), the provisions of this Section 6(b) shall no longer apply to such
event. Such election shall be made by the Company by giving written notice
thereof to the Holder.
For purposes of this Section 6(b), the term "eligible
institution" shall mean a corporation organized and doing business under the
laws of the United States of America or of any state thereof, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $100,000,000, and subject to supervision or examination by
Federal or state authority.
(c) De Minimis Adjustments. Except as provided in Section
6(d) with reference to adjustments required by such Section 6(d), no adjustment
in the number of shares of Borrower Common Stock issuable hereunder shall be
required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the number of shares of Borrower Common Stock issuable
upon the exercise of each Warrant; provided, however, that any adjustments which
by reason of this Section 6(c) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
shall be made to the nearest one-thousandth of a share.
(d) Adjustments. In case the Company after the date hereof
shall take any action affecting the Warrant Shares, other than any action
described in Sections 6(a) or 6(b) or in Section 7 hereof, which the Company's
board of directors, acting in the good faith exercise of their reasonable
judgment, determines would have a material adverse effect on the rights of the
Holder, then the Exercise Price, the number of Warrant Shares and/or the
character of the securities receivable upon exercise of this Warrant may be
adjusted in such manner, if any, and at such time, by action of the directors,
acting in the good faith exercise of their reasonable
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judgment, subject to obtaining all necessary approvals to such adjustment,
including, without limitation, any necessary approvals of any stock exchange or
over-the-counter market on which securities of the Company are then listed or
quoted.
(e) Notice of Adjustment. Whenever the number of shares of
Borrower Common Stock or other stock or property issuable upon the exercise of
this Warrant is adjusted, as herein provided, the Company shall promptly notify
the Holder of such adjustment or adjustments.
(f) Adjustments to Exercise Price. The aggregate exercise
price payable upon exercise of this Warrant shall not increase or decrease upon
any adjustment (pursuant to this Section 6) to the number of Warrant Shares
issuable upon exercise of this Warrant. Accordingly, the per share Exercise
Price of the Warrant Shares will be adjusted to reflect any such adjustment to
the number of Warrant Shares issuable as required not to increase or decrease
the aggregate exercise price payable upon exercise of this Warrant.
Section 7. Reclassification. Reorganization, Consolidation or
Merger. In the event of any reclassification, capital reorganization or other
change of outstanding shares of the Borrower Common Stock (other than a
subdivision or combination of the outstanding Borrower Common Stock, a change in
the par value of the Borrower Common Stock or a transaction subject to Section 6
hereof) or in the event of any consolidation or merger of the Company with or
into another corporation (other than the transactions contemplated by the Merger
Agreement, a merger in which merger the Company is the continuing corporation
and that does not result in any reclassification, capital reorganization or
other change of outstanding shares of Borrower Common Stock of the class
issuable upon exercise of this Warrant or a transaction subject to Section 6
hereof) or in the event of any sale, lease, transfer or conveyance to another
corporation of the property and assets of the Company as an entirety or
substantially as an entirety, in each case as a result of which the holders of
Borrower Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Borrower Common Stock, then the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that such other
corporation shall assume all of the obligations of the Company hereunder and the
Holder shall have the right thereafter, by exercising this Warrant, to purchase
the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, capital reorganization
and other change, consolidation, merger, sale, lease, transfer or conveyance by
a holder of the number of shares of Borrower Common Stock that might have been
received upon exercise of this Warrant immediately prior to such
reclassification, capital reorganization, change, consolidation, merger, sale,
lease or conveyance. Any such provision shall include provision for adjustments
in respect of such shares of stock and other securities and property that shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 7 shall similarly apply
to successive reclassifications, capital reorganizations and changes of shares
of Borrower Common Stock and to successive changes, consolidations, mergers,
sales, leases, transfers or conveyances of the nature and type described in the
first sentence hereof. In the event that in connection with any such capital
reorganization, reclassification, consolidation, merger, sale, lease, transfer
or conveyance, additional shares of Borrower Common Stock shall be issued in
exchange, conversion, substitution or payment, as a whole or in part, for, or
of, a security of the Company other than Borrower Common Stock, any
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such issue shall be treated as an issue of Borrower Common Stock covered by the
provisions of Section 6(a).
Section 8. Transfer to Comply with the Securities Act. Neither
this Warrant, nor any of the Warrant Shares, nor any interest therein, may be
sold, assigned, pledged, hypothecated, encumbered or in any other manner
transferred or disposed of, as a whole or in part, except in compliance with
applicable United States federal and state securities or Blue Sky laws and the
terms and conditions hereof. Each Warrant shall bear a legend in substantially
the same form as the legend set forth on the first page of this initial Warrant.
Each certificate for Warrant Shares issued upon exercise of this Warrant, unless
at the time of exercise such exercise is registered under the Securities Act of
1933, as amended (the "Securities Act"), shall bear a legend substantially in
the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or registered or qualified
under the securities or Blue Sky laws of any state. Neither these
securities nor any interest or participation therein may be sold,
assigned, pledged, hypothecated, encumbered or in any other manner
transferred or disposed of unless (i) registered under an effective
registration statement under the Securities Act of 1933 and in full
compliance with the applicable rules and regulations thereunder and
applicable state securities or Blue Sky laws, (ii) pursuant to Rule 144
of such Act or (iii) unless Eltrax Systems, Inc. receives an opinion of
counsel for the holder of this certificate, reasonably satisfactory to
Eltrax Systems, Inc., stating that such sale, assignment, pledge,
hypothecation, encumbrance or other manner of transfer or disposition
is exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933 and applicable state securities or Blue Sky
law."
Any certificate for any Warrant Shares issued at any time in exchange or
substitution for any certificate for any Warrant Shares bearing such legend
(except a new certificate for any Warrant Shares issued after registration of
such Warrant Shares under the Securities Act) shall also bear such legend
unless, in the opinion of counsel for the Company, the Warrant Shares
represented thereby need no longer be subject to the restriction contained
herein. The provisions of this Section 8 shall be binding upon all subsequent
holders of certificates for Warrant Shares bearing the above legend and all
subsequent Holders of this Warrant, if any. Warrant Shares sold pursuant to a
Registration Statement under the Securities Act pursuant to Section 12 thereof
or sold by the holder thereof in compliance with Rule 144 under the Securities
Act shall thereafter cease to be deemed to be "Warrant Shares" for all purposes
of this Warrant.
Section 9. Listing on Securities Exchanges. On or before the
Initial Exercise Date, the Company shall list on each national securities
exchange on which any Borrower Common Stock may at such time be listed (if
required by such exchange), subject to official notice of issuance upon the
exercise of this Warrant, all shares of Borrower Common Stock from time to time
issuable upon exercise of this Warrant and the Company shall maintain, so long
as any other shares of the Borrower Common Stock shall be so listed, all shares
of Borrower Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange, and
shall maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of
capital stock of the same class shall be listed on such national securities
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exchange by the Company. Any such listing shall be at the Company's expense.
Section 10. Availability of, information. The Company shall comply
with the reporting requirements of Sections 13 and 15(d) of the Exchange Act to
the extent it is required to do so under the Exchange Act, and shall likewise
comply with all other applicable public information reporting requirements of
the Securities and Exchange Commission (including those required to make
available the benefits of Rule 144 under the Securities Act) to which it may
from time to time be subject. The Company shall also cooperate with the holder
of this Warrant and the holder of any Warrant Shares in supplying such
information as may be necessary for such holder to complete and file any
information reporting forms currently or hereafter required by the Commission as
a condition to the availability of Rule 144 or any successor rule under the
Securities Act for the sale of this Warrant or the Warrant Shares. The
provisions of this Section 10 shall survive termination of this Warrant, whether
upon exercise of this Warrant in full or otherwise until such time as the
Warrant Shares have been sold by the Holder or are eligible for sale under Rule
144(k). The Company shall also provide to holders of this Warrant the same
information that it provides to holders of the Borrower Common Stock.
Section 11. Registration Rights. The Company and the Holder agree
that the shares of Borrower Common Stock and other securities (as the case may
be) underlying this Warrant shall be subject to the terms and conditions of that
certain Registration Rights Agreement between the Company and the Holder dated
as of June ____, 2000.
Section 12. Successors and Assigns. All the provisions of this
Warrant by or for the benefit of the Company or the Holder shall bind and inure
to the benefit of their respective successors and assigns.
Section 13. Headings. The headings of sections of this Warrant
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
Section 14. Amendments. This Warrant may not be amended except by
the written consent of the Company and the Holder.
Section 15. Notices. All notices, requests and other
communications required or permitted under this Agreement (collectively,
"notices") shall be in writing and sent or delivered in one of the manners
expressly contemplated in this Section 15. If mailed, notices must be sent by
prepaid first-class mail, certified, return receipt requested, and shall be
deemed to have been received on the earlier of the date shown on the receipt or
three (3) Business Days after the post-xxxx date thereof. In addition, notices
hereunder may be delivered by hand in which event the notice shall be deemed
effective when delivered or by a nationally recognized overnight courier, in
which event the notice shall be deemed delivered the first Business Day after it
is accepted by the courier for next day delivery. All such notices shall be
given to the parties hereto at the following addresses:
(a) If to the Company:
Eltrax Systems, Inc.
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000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a required copy to:
Jaffe, Raitt, Heuer & Xxxxx, Professional Corporation
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to the Holder:
Cereus Technology Partners, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a required copy to:
Xxxxxx & Hardin LLP
000 Xxxxxxxxx Xxxxxx, X.X.
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxx, Esq.
Telecopier No.: (000) 000-0000
Any party hereto may change the address to which notices shall be
directed under this Section by giving written notice of such change to the other
parties.
Section 16. Governing Law. This Warrant shall be governed by the
internal laws of the State of Georgia, without regard to the conflict of law
provisions thereof.
[Signatures Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Agreement to be executed and delivered by its duly authorized officer as
of , 20 .
ELTRAX SYSTEMS, INC.
By:
----------------------------------------
Title:
Acknowledgment and Agreement
By signing below, the Holder of this Warrant does hereby acknowledge
receipt hereof and does hereby agree to be bound by the terms and conditions
hereof.
CEREUS TECHNOLOGY PARTNERS, INC.
By:
----------------------------------------
Title:
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PURCHASE FORM
To: Eltrax Systems, Inc.
The undersigned irrevocably exercises the Warrant for the purchase
of shares (subject to adjustment) of the common stock, par
value $.01 per share, of Eltrax Systems, Inc., for the Warrant and herewith
makes payment of $ (the "Exercise Price") through the
following method:
[ ] such payment of the Exercise Price being in cash or by
certified or official bank check payable to the order of
Eltrax Systems, Inc.;
[ ] such payment of the Exercise Price being made by wire
transfer of same day funds to Eltrax Systems, Inc. to the
account specified in [place account is specified];
or
[ ] such payment of the Exercise Price made by surrendering of
such additional part of the Warrant having an aggregate
Spread (as such term is defined in the Warrant) equal to the
aggregate Exercise Price;
all at the Exercise Price and on the terms and conditions specified in the
within the Warrant therein referred to, surrenders the Warrant and all right,
title and interest therein to Eltrax Systems, Inc. and directs (subject to
Section 9 of the Warrant) that the shares of Borrower Common Stock deliverable
upon the exercise of such Warrant be registered or placed in the name and at the
address specified below and delivered thereto.
The undersigned hereby certifies to Eltrax Systems, Inc. that it
is, at the time of exercise of the Warrant, an "accredited investor" as defined
in Rule 501(a) of the Securities Act of 1933, as amended.
Date: , 20
--------------------------------------------
(Signature of Owner)(2)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
----------------
(2) The signature must correspond with the name as written upon the face of the
within Warrant in every particular, without alteration or enlargement or any
change whatever.
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Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised part of the Warrant evidenced by the
within Warrant to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant hereby sells, assigns, and transfers unto the Assignee(s) named
below (including the undersigned with respect to any part of the
Warrant not being assigned hereby) all of the right of the undersigned
under the within Warrant, with respect to the number of shares of
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Borrower Common Stock set forth below:
--------------------------------------------------------------------------------
Name of Assignee Address of Assignee Social Security or Number of Shares
Other Identifying of Borrower Common
Number of Stock
Assignee Assigned to
Assignee
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
and does hereby irrevocably constitute and appoint
as the undersigned's attorney to make such
transfer on the books of (Eltrax Systems, Inc. or
other such party) maintained for that purpose, with full power of substitution
in the premises.
Date: , 20
--------------------------------------------
(Signature of Owner)(3)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
-------------------
(3) The signature must correspond with the name as written upon the face of the
within Warrant in every particular, without alteration or enlargement or any
change whatever.
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