AGREEMENT
THIS AGREEMENT, dated as of October 31, 1996 (the "Agreement"), is by and
among ELTRAX SYSTEMS, INC., a North Carolina corporation ("Eltrax" or the
"Company"), Xxxxxxx X. X'Xxxxxx, Clunet X. Xxxxx and Xxxx X. Xxxxxxx, III
(collectively referred to herein as the "Eltrax Principals") and Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxxxx and B. Xxxxxx Xxxxxx (collectively, the "ANS
Shareholders").
A. WHEREAS, pursuant to that certain Agreement and Plan of Merger dated
as of October 31, 1996 by and among Eltrax, ANS Acquisition Corporation, the ANS
Shareholders and ANS (the "Merger Agreement"), Eltrax has agreed to acquire in a
merger transaction all of the issued and outstanding capital stock of Atlantic
Network Systems, Inc., a North Carolina corporation ("ANS") which is wholly
owned by the ANS Shareholders, and the ANS Shareholders have agreed to sell ANS
to Eltrax (the foregoing transaction is hereinafter referred to as the
"Merger");
B. WHEREAS, Eltrax has also agreed that, if so requested by the ANS
Shareholders, Eltrax will assist the ANS Shareholders to effectuate a private
resale of shares of restricted common stock of Eltrax which the ANS Shareholders
receive as consideration in the Merger (the "Eltrax Common Stock").
C. WHEREAS, the parties hereto desire to make certain representations
and agreements to each other in connection with these agreements.
NOW, THEREFORE, in consideration of the mutual representations and
covenants contained herein, the parties hereto agree as follows:
ARTICLE
1.
ASSISTANCE OF ELTRAX
1.1. ASSISTANCE OF ELTRAX. At any time after ninety (90) days following the
closing of the Merger and continuing until October 31, 1998, the ANS
Shareholders, acting jointly and not singly, have the right to request in
writing the assistance of Eltrax to effect a private sale of a portion of
the ANS Shareholders' shares of Eltrax Common Stock. Such a private sale
may not be consummated before Parent's first public disclosure of the
earnings of Parent and ANS prepared on a combined basis which includes at
least a thirty (30) day period, based on the audited financial statements
of Parent and ANS (the "First Available Date"). This private sale on
behalf of all ANS Shareholders collectively will be in an aggregate amount
equal to the lesser of Three Hundred Thousand (300,000) shares of Eltrax
Common Stock or such number of shares of Eltrax Common Stock the sale of
which will result in net proceeds of One Million Dollars ($1,000,000)
after deduction of all commissions, expenses and all other costs of sale,
including without limitation, the combined individual capital gains tax of
the ANS Shareholders with
respect to such sale (the "Volume Limitation"). Upon such written request
of the ANS Shareholders, Eltrax will use its good faith reasonable efforts
to assist the ANS Shareholders in such private sale, but Eltrax will in no
way guarantee the consummation of such sale or the sale price, nor will
Eltrax be obligated to incur any costs in this effort. The ANS
Shareholders will use their good faith reasonable efforts to cooperate
with Eltrax in preparing any appropriate disclosure and transfer
documents. Subject to the Volume Limitation, the ANS Shareholders may
participate in any sale pursuant to this Agreement in the following
proportions: Xxxxxxx X. Xxxxxxxx 42.5%, Xxxxxx X. Xxxxxx 42.5% and B.
Xxxxxx Xxxxxx 15.0%. If Eltrax presents a purchaser(s) who is (are)
ready, willing and able to purchase Eltrax Common Stock from the ANS
Shareholders in an amount not exceeding 300,000 shares, that will result
in net proceeds to the ANS Shareholders, in the aggregate, of at least One
Million Dollars ($1,000,000) after deduction of all commissions, expenses
and all other costs of sale, including without limitation, the combined
individual capital gains tax of the ANS Shareholders (the "Minimum Dollar
Amount") and which qualifies for an available exemption from registration
under the Securities Act of 1933, as amended, and any applicable state
securities laws, upon commercially reasonable terms, any or all of the ANS
Shareholders may nonetheless elect not to sell their shares of Eltrax
Common Stock at the closing of such sale (the "Closing"), and Eltrax'
obligations under this Section 1.1 will be deemed satisfied upon the
Closing (or cancelled closing if all ANS Shareholders elect not to sell),
and the Standstill Agreement of the Eltrax Principals set forth in Section
2.1 of this Agreement will thereupon automatically cease.
1.2. LEGAL OPINION. Prior to any such transfer or sale of Eltrax Common Stock
by the ANS Shareholders in a private sale transaction as contemplated by
this Agreement, the ANS Shareholders shall cause their legal counsel or
purchaser's legal counsel to deliver an opinion to Eltrax, which opinion
shall be acceptable to Eltrax and its legal counsel, to the effect that
such sale transaction is an exempt transaction under applicable federal
and state securities laws and would not cause Eltrax to be in violation of
any such securities laws.
1.3. CO-SALE RIGHT. If at any time after the closing of the Merger and before
the date on which ANS Shareholders have sold their first Three Hundred
Thousand shares of Eltrax Common Stock, Eltrax undertakes to issue and
sell Eltrax Common Stock in an underwritten registered public offering
(the "Public Offering"), other than in connection with an acquisition of
another business or pursuant to a registration statement on Form S-8,
then, subject to the determination by such underwriter to exclude all
shares of Eltrax Common Stock held by officers, directors and others who
are holders of registration rights, on the basis that including such
restricted Eltrax Common Stock in the proposed offering would jeopardize
the success of the Public Offering, the ANS Shareholders will have the
right to have their shares of Eltrax Common Stock, in an amount not to
exceed the Volume Limitation, included and sold in such Public Offering
(including in any registration statement that may be pending and not yet
declared effective) before, and with priority over, any shares of Eltrax
Common Stock owned by any other Eltrax officers and directors may be
registered and sold in the Public Offering; provided,
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however, that no sales shall be consummated by the ANS Shareholders in
such Public Offering before the First Available Date. As to any shares of
Eltrax Common Stock in excess of the Volume Limitation which the
underwriter determines may be included in the Public Offering, the ANS
Shareholders and other Eltrax officers and directors with registration
rights will have the right to have their shares included in such Public
Offering on a pro rata basis.
ARTICLE
2.
COVENANT OF ELTRAX PRINCIPALS
2.1. During the time of any pending request made by the ANS Shareholders
collectively pursuant to either Article I of this Agreement or Exhibit
4.10 of the Merger Agreement, each of the Eltrax Principals agrees not to
sell any shares of Eltrax Common Stock owned by him until the ANS
Shareholders have completed sales of their Eltrax Common Stock which
result in net aggregate proceeds of at least the Minimum Dollar Amount
(the "Standstill Agreement"). This Standstill Agreement will
automatically be satisfied and will automatically terminate on the date on
which the ANS Shareholders have sold shares of Eltrax Common Stock through
any means which result in net proceeds of at least the Minimum Dollar
Amount on an aggregate basis. Notwithstanding the foregoing, if the ANS
Shareholders make a request for assistance under Section 1.1 of this
Agreement and a private sale (or any other sale which results in net
proceeds of at least the Minimum Dollar Amount) has not occurred by June
30, 1997, and provided that the ANS Shareholders have exercised their
demand registration rights pursuant to Exhibit 4.10 of the Merger
Agreement by April 1, 1997, then the Eltrax Principals will continue to be
bound by the Standstill Agreement for a period of 120 days following the
effectiveness of such demand registration statement, and at the end of
such 120-day period, the Standstill Agreement will terminate.
ARTICLE
3.
MISCELLANEOUS PROVISIONS
3.1. EXPENSES. Each of the parties hereto shall bear its own costs, fees and
expenses in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including without limitation fees,
commissions and expenses payable to brokers, finders, investment bankers,
consultants, exchange or transfer agents, attorneys, accountants and other
professionals, whether or not the transactions contemplated herein is
consummated.
3.2. AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may
be amended or modified by the parties hereto at any time prior to the
Closing with respect to any of the terms contained herein; provided,
however, that all such amendments and modifications must be in writing
duly executed by all of the parties hereto.
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3.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply with any
obligation, covenant, agreement or condition herein may be expressly
waived in writing by the party entitled hereby to such compliance, but
such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. No
single or partial exercise of a right or remedy shall preclude any other
or further exercise thereof or of any other right or remedy hereunder.
Whenever this Agreement requires or permits the consent by or on behalf of
a party, such consent shall be given in writing in the same manner as for
waivers of compliance.
3.4. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall entitle any
person or entity (other than a party hereto and his, her or its respective
successors and assigns permitted hereby) to any claim, cause of action,
remedy or right of any kind.
3.5. NOTICES. All notices, requests, demands and other communications required
or permitted hereunder shall be made in writing and shall be deemed to
have been duly given and effective: (i) on the date of delivery, if
delivered personally; (ii) on the earlier of the fourth (4th) day after
mailing or the date of the return receipt acknowledgment, if mailed,
postage prepaid, by certified or registered mail, return receipt
requested; or (iii) on the date of transmission, if sent by facsimile,
telecopy, telegraph, telex or other similar telegraphic communications
equipment:
If to the ANS Shareholders:
To: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
B. Xxxxxx Xxxxxx
Atlantic Network Systems, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxxx & Xxxxx, P.L.L.C.
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, X.X. 00000
ATTN: J. Xxxxxx Xxxxx, III, Esq.
Fax: (000) 000-0000
or to such other person or address as the ANS Shareholders shall furnish to the
other parties hereto in writing in accordance with this Section.
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If to Eltrax:
To: Eltrax Systems, Inc.
Rush Lake Business Park
0000 Xxx Xxxxxxx 0
Xx. Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx III
Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
or to such other person or address as Eltrax shall furnish to the other
parties hereto in writing in accordance with this Section.
3.6. GOVERNING LAW. This Agreement and the legal relations among the parties
hereto shall be governed by and construed in accordance with the internal
substantive laws of the State of Minnesota (without regard to the laws of
conflict that might otherwise apply) as to all matters, including without
limitation matters of validity, construction, effect, performance and
remedies.
3.7. COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
3.8. HEADINGS. The table of contents and the headings of the sections and
Sections of this Agreement are inserted for convenience only and shall not
constitute a part hereof.
3.9. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the arrangements
concerning the ANS Shareholders' potential sale of Eltrax Common Stock
contemplated by this Agreement. There are no restrictions, promises,
warranties, agreements, covenants or undertakings, other than those
expressly set forth or referred to in this Agreement. This Agreement
supersedes all prior and contemporaneous oral and written agreements and
understandings between the parties with respect to the transaction or
transactions contemplated by this Agreement (including without limitation
the letter dated September 3, 1996, between the Eltrax Principals and
Shareholders and all amendments and extensions thereof). Provisions of
this Agreement shall be interpreted to be valid and enforceable under
applicable Law to
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the extent that such interpretation does not materially alter this
Agreement; provided, however, that if any such provision shall become
invalid or unenforceable under applicable Law such provision shall be
stricken to the extent necessary and the remainder of such provisions and
the remainder of this Agreement shall continue in full force and effect.
3.10. INJUNCTIVE RELIEF. It is expressly agreed among the parties hereto that
monetary damages would be inadequate to compensate a party hereto for any
breach by any other party of its covenants and agreements in this
Agreement. Accordingly, the parties agree and acknowledge that any such
violation or threatened violation shall cause irreparable injury to the
other and that, in addition to any other remedies which may be available,
such party shall be entitled to injunctive relief against the threatened
breach of this Agreement or the continuation of any such breach without
the necessity of proving actual damages and may seek to specifically
enforce the terms thereof.
3.11. ARBITRATION. With the sole exception of the injunctive relief
contemplated by Section 3.11, any controversy or claim arising out of or
relating to this Agreement, or the making, performance or interpretation
hereof, including without limitation alleged fraudulent inducement hereof,
shall be settled by binding arbitration in Minneapolis, Minnesota by a
panel of three arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. Judgment upon any
arbitration award may be entered in any court having jurisdiction thereof
and the parties consent to the jurisdiction of the courts of the State of
Minnesota for this purpose.
3.12. ATTORNEYS' FEES. If any arbitration, litigation or similar proceedings
are brought by any party to enforce any obligation or to pursue any remedy
under this Agreement, the party prevailing in any such arbitration,
litigation or similar proceedings shall be entitled to costs of
collection, if any, and reasonable attorneys fees incurred in connection
with such proceedings and in collecting or enforcing any award granted
therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
COMPANY
Eltrax Systems, Inc.
By: /s/ Xxxx X. Xxxxxxx, III
-------------------------------------
Its: President and CEO
------------------------------------
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ELTRAX PRINCIPALS
/s/ Xxxxxxx X. X'Xxxxxx
----------------------------------------
Xxxxxxx X. X'Xxxxxx
/s/ Clunet X. Xxxxx
----------------------------------------
Clunet X. Xxxxx
/s/ Xxxx X. Xxxxxxx, III
----------------------------------------
Xxxx X. Xxxxxxx, III
ANS SHAREHOLDERS
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ B. Xxxxxx Xxxxxx
----------------------------------------
B. Xxxxxx Xxxxxx
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