Date of Issuance: _______________, 1997
Warrant No. ___
THIS WARRANT AND THE WARRANT SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, NOR REGISTERED OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS, AND MAY NOT
BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED
OR AN EXEMPTION THEREFROM IS AVAILABLE
WARRANT TO PURCHASE COMMON STOCK
OF
ELTRAX SYSTEMS, INC.
THIS CERTIFIES THAT, for One and 00/100 Dollars ($1.00) and other good and
valuable consideration received, ____________[NAME]_____________________, the
holder of this Warrant or his assigns (the "Holder"), is entitled to purchase
from Eltrax Systems, Inc., a Minnesota corporation (the "Company"), at the per
share exercise price (subject to adjustment as provided in Section 6 hereof) of
Six and 25/100 Dollars ($6.25) (the "Exercise Price"), ____ shares (subject to
adjustment as provided in Section 6 hereof) of the Company's common stock, $0.01
par value (the "Common Stock").
SECTION 1. TERM OF WARRANT, RESTRICTIONS ON TRANSFER, EXERCISE OF
WARRANT.
SECTION 1.1. TERM OF WARRANT. Subject to the terms of this Warrant,
the Holder shall have the right, at the Holder's option, which may be exercised
in whole or in part, at any time commencing at the time of the issuance of this
Warrant and until 5:00 p.m. Eastern Daylight Savings Time on September 30, 2002
(the "Warrant Expiration Date"), to purchase from the Company the number of
fully paid and nonassessable shares of the Common Stock that the Holder may at
the time be entitled to purchase on exercise of this Warrant ("Warrant Shares").
After such time, this Warrant will be void.
SECTION 1.2. CALL FEATURE. If at any time prior to the Warrant
Expiration Date, the closing price of the Common Stock shall for ten (10)
consecutive trading days equal or exceed an average price per share
(non-weighted) of Eight and 25/100 Dollars ($8.25), then within thirty (30)
days following the end of any such period (the "Call Period"), the Company
shall have the option to repurchase this Warrant at the per Warrant price of
$0.25 (the "Call Option"). To exercise the Call Option under this Section
1.2, the Company must provide written notice of such intent to the Holder on
or prior to expiration of the Call Period (the "Call Notice").
Notwithstanding such Call Notice, the Holder shall still have the right to
exercise this Warrant in accordance with the provisions of Section 1.4;
provided, however, that such exercise occurs within twenty (20) days of the
date of the Call Notice.
1
SECTION 1.3. RESTRICTIONS ON TRANSFER. The Warrants and the Warrant
Shares will be restricted securities as defined under the Securities Act of
1933, as amended (the "Act") and therefore will not be transferable except in
compliance with applicable federal and state securities laws, including Rule
144 adopted under the Act. Unless Warrant Shares shall have been duly
registered under the Act and any applicable state securities laws,
certificates representing such shares shall bear a legend comparable to the
legend on the first page of this Warrant regarding restrictions on transfer.
Unless the transfer restrictions have been terminated pursuant to Section 8
hereof, the Holder agrees to give written notice to the Company before
offering for sale, selling or otherwise disposing of any of the Warrants or
Warrant Shares, except when such offer, sale or other disposition is made
pursuant to a registration statement then in effect under the Act and any
applicable state securities laws. The notice shall describe briefly the
manner of any proposed offer, sale or other disposition and shall be
accompanied by a written opinion of counsel for such Holder, which counsel
and opinion shall be reasonably satisfactory to the Company to the effect
that the proposed offer, sale or other disposition of such Warrants or
Warrant Shares may be effected without registration under the Act or any
applicable state securities laws.
SECTION 1.4. EXERCISE OF WARRANT. This Warrant may be exercised upon
surrender hereof to the Company at its principal office, together with the
Purchase Form attached hereto duly filled in and signed, and upon payment to
the Company of an amount equal to the product of the Exercise Price and the
number of Warrant Shares being purchased and surrendered for payment at such
time (the "Aggregate Exercise Price").
Subject to Section 1.3 and to Section 3 hereof, upon such surrender of
this Warrant and payment of the Aggregate Exercise Price, the Company shall
issue and cause to be delivered with all reasonable dispatch to or upon the
written order of the Holder and in such name or names as the Holder may
designate, a certificate or certificates for the number of full Warrant
Shares so purchased upon the exercise of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of this Warrant and payment of
the Aggregate Exercise Price. If this Warrant shall have been exercised only
in part, the Company shall, at the time of delivery of such certificate or
certificates, deliver to the Holder or the Holder's designated nominee a new
Warrant evidencing the rights to purchase the remaining shares of Warrant
Shares called for by this Warrant, which new Warrant shall in all other
respects be identical to this Warrant.
SECTION 2. EXCHANGE OF WARRANT. Subject to Section 1.3 and Section 3
hereof, this Warrant may be exchanged for another Warrant or Warrants
entitling the Holder, or any designated transferee or transferees of the
Holder, to purchase a like aggregate number of Warrant Shares as this Warrant
then entitles such Holder to purchase. Any Holder desiring to exchange this
Warrant shall make such request in writing delivered to the Company, and
shall surrender this Warrant, properly endorsed. Thereupon, the Company
shall execute and deliver to the person entitled thereto a new Warrant or
Warrants, as the case may be, as so requested.
SECTION 3. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of any Warrant Shares
upon the exercise of this Warrant;
2
PROVIDED, HOWEVER, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue
or delivery of any Warrant or certificate for Warrant Shares in a name other
than that of the Holder of this Warrant as such name is then shown on the
books of the Company.
SECTION 4. MUTILATED OR MISSING WARRANT. Upon receipt of evidence
satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction, upon receipt of reasonably satisfactory indemnification
or, in the case of any such mutilation, upon surrender and cancellation of
such Warrant, the Company will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Warrant
Shares. Any such new Warrant executed and delivered shall constitute an
additional contractual obligation on the part of the Company, whether or not
the Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
SECTION 5. CERTAIN COVENANTS.
SECTION 5.1. RESERVATION OF WARRANT SHARES. There have been reserved,
and the Company shall at all times keep reserved, out of its authorized
Common Stock, a number of shares of Common Stock sufficient to provide for
the exercise of the rights of purchase represented by this Warrant. Any
transfer agent for the Common Stock and any successor transfer agent for the
Common Stock is hereby irrevocably authorized to cause to be issued from time
to time the share certificates required to honor this Warrant upon its
exercise in accordance with the terms hereof. The Company will supply any
such transfer agent with duly executed share certificates for such purpose.
SECTION 5.2. NO IMPAIRMENT. The Company shall not by any action,
including, without limitation, amending its Articles of Incorporation, any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will
at all time in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate to protect
the rights of the Holder against impairment. Without limiting the generality
of the foregoing, the Company will (a) take all such action as may be
necessary or appropriate in order that the Company may validly issue fully
paid and nonassessable Common Stock upon the exercise of this Warrant and (b)
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
SECTION 5.3. LISTING. If the Company shall list any of its Common Stock
on any securities exchange or automated quotation system, it will, at its
expense, list thereon, maintain and, when necessary, increase such listing
of, all of its Common Stock issued or, to the extent permissible under the
applicable securities exchange or quotation system rules, issuable upon the
exercise of this Warrant so long as any of its Common Stock shall be so
listed.
3
SECTION 6. ANTI-DILUTION AND OTHER ADJUSTMENT PROVISIONS.
SECTION 6.1. COMMON STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS. If the
Company shall: (a) pay or make a dividend or other distribution to all
holders of its Common Stock in shares of Common Stock, (b) subdivide, split
or reclassify the outstanding shares of its Common Stock into a larger number
of shares, or (c) combine or reclassify the outstanding shares of its Common
Stock into a smaller number of shares, then in each case the Warrant Shares
shall be adjusted to equal the number of such shares to which the Holder of
this Warrant would have been entitled upon the occurrence of such event had
this Warrant been exercised immediately prior to the happening of such event
or, in the case of a stock dividend or other distribution, prior to the
record date for determination of such shareholder entitled thereto, and the
Exercise Price shall be proportionately adjusted. An adjustment made
pursuant to this Section 6.1 shall become effective immediately after such
record date, in the case of a dividend or distribution, and immediately after
the effective date, in the case of a subdivision, split, combination or
reclassification.
SECTION 6.2. REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the Common Stock of the Company
(whether pursuant to a merger of consolidation or otherwise), this Warrant
shall thereafter be exercisable for the number of shares of stock or other
securities or property receivable upon such capital reorganization or
reclassification of Common Stock, as the case may be, by a Holder of the
number of shares of Common Stock into which this Warrant was exercisable
immediately prior to such capital reorganization or reclassification of
Common Stock; and, in any case, appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the Holder of this Warrant such that the provisions
set forth herein shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other securities or property
thereafter deliverable upon the exercise of this Warrant.
SECTION 6.3. DISTRIBUTIONS OF ASSETS OR SECURITIES OTHER THAN COMMON
STOCK. In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any of its capital stock (other
than Common Stock), rights or warrants to purchase any of its securities,
cash (other than dividends paid out of net surplus or current or retained
earnings), other assets or evidences of its indebtedness, then in each case
the Exercise Price shall be reduced by the fair market value (as determined
in good faith by the Board of Directors of the Company) of the portion of the
securities, cash, assets or evidences of indebtedness so distributed
applicable to one share of Common Stock. An adjustment made pursuant to this
Section 6.3 shall become effective immediately after such distribution date.
SECTION 6.4. NOTICE OF CERTAIN CORPORATION TRANSACTIONS. The Company
shall promptly mail to the Holder a notice of any proposed dividend, merger,
dissolution, liquidation or winding up of the Company, stating the proposed
record date (if any) or effective date for any such transaction and briefly
describing the transaction.
SECTION 6.5. NO ADJUSTMENT OR READJUSTMENT IN CERTAIN CIRCUMSTANCES. The
Company shall not make any adjustment or readjustment of any of the Exercise
Price or the number of Warrant Shares in the case of: (a) the exercise of
this Warrant, or (b) the issuance or sale by the
4
Company of Common Stock or rights or options pursuant to, or the adjustment
of the exercise price, or the exercise or termination, of rights or options
issued pursuant to, any employee stock option or similar plan of the Company,
or (c) except as specifically provided in this Section 6, by reason of the
issuance of shares of Common Stock or any other securities of the Company in
exchange for cash, property or services or other consideration.
SECTION 6.6. CERTIFICATE OF ADJUSTMENT. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 6, the Company, at its
expense, shall as promptly as practicable compute such adjustment or
readjustment in accordance with the provisions of this Section 6, and prepare
and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in reasonable detail the facts upon which such
adjustment or readjustment in based.
SECTION 7. REGISTRATION RIGHTS.
SECTION 7.1. INCIDENTAL REGISTRATION. Until such time as any of the
Warrant Shares may be sold pursuant to the provisions of Rule 144 adopted
under the Act, whenever the Company proposes to file a registration statement
with the Securities and Exchange Commission (the "Commission") for an
offering of the sale of Common Stock for cash consideration only, if such
registration statement would permit the inclusion of Warrant Shares to be
sold on behalf of the Holder pursuant to the rules of the Commission, it
will, prior to such filing, give prompt written notice to the Holder of its
intention to do so and, upon the written request of the Holder given within
twenty (20) days after the Company provides such notice, which request will
state the intended method of disposition of the Warrant Shares (the
"Disposition Method"), the Company will, subject to the other provisions of
this Section 7, cause all Warrant Shares which the Company has been requested
by the Holder to register to be included in such registration statement to
the extent necessary to permit their sale or other disposition in accordance
with the Disposition Method; PROVIDED THAT the Company will have the right to
postpone or withdraw any registration effected pursuant to this Section 7
without obligation to the Holder.
In connection with any offering under this Section 7.1 involving an
underwriting, the Company will not be required to include any Warrant Shares
in such underwriting unless the Holder accepts the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it and
applicable to all other sellers of shares in such offering, and then only in
such quantity as will not, in the reasonable opinion of the underwriters,
jeopardize the success of the offering by the Company. If in the reasonable
opinion of the managing underwriter the registration of all, or part of, the
Common Stock which the Holder and other shareholders have requested to be
included would materially and adversely affect such public offering, then the
Company will be required to include in the underwriting only that number of
shares, if any, which the managing underwriter reasonably believes may be
sold without causing such adverse effect. If the shares of Common Stock to
be included in the underwriting in accordance with the foregoing is fewer
than the total number of shares which the Holder and other shareholders have
requested to be included, then the Holder and other holders of shares of
Common Stock entitled to include shares of Common Stock in such registration
will participate in the underwriting PRO RATA based upon the
5
number of shares the Holder and each such holder of Common Stock has
requested to be included in such registration.
SECTION 7.2. SHELF REGISTRATION. If a Holder exercises Warrants within
the twenty (20) day period following the Company's issuance of a Call Notice,
and PROVIDED FURTHER, that the sum of all Warrant Shares to be exercised in
response to such Call Notice by one or more Holders exceeds one hundred
thousand (100,000) shares, than upon the written demand of such Holder
delivered to the Company within fifteen (15) days of such exercise (the
"Demand Notice"), the Company will prepare and file a registration statement
under the Act covering such Holder's Warrant Shares. The Company shall
provide copies of any registration statement filed under this Section 7.2,
including all amendments thereto, to the Holder, and will use its good faith
reasonable efforts to cause such registration statement to become effective
under the rules of the Commission. Such registration statement will be on
Form S-3; PROVIDED, HOWEVER, that if the Company is not eligible to use such
Form, than the Company shall select such other registration statement as it
deems appropriate. The Company will maintain the continuous effectiveness
of such registration statement pursuant to Commission Rule 415 until any of
the Warrant Shares may be sold pursuant to Rule 144 promulgated under the
Act.
SECTION 7.3. OTHER PROVISIONS RELATING TO REGISTRATION RIGHTS. In
connection with any registration pursuant to this Section 7, the Company will:
(a) use all reasonable efforts to cause such registration statement
to become and remain effective for not less than thirty (30) days (the
Holder hereby agreeing to furnish the Company, within fifteen (15) days
following a request by the Company, with such information concerning the
Holder to be included in such registration statement as may be reasonably
requested by the Company), it being understood and acknowledged that the
Company may be required to suspend effectiveness of such registration
statement or notify the Holder to suspend any effort to effect sales of the
Common Stock if the Company is attempting to consummate an acquisition or
sale that would materially affect the Company's business;
(b) furnish to the Holder and the underwriters, if any, participating
in such registration such reasonable number of copies of the registration
statement, each amendment thereto, preliminary prospectus, final
prospectus, each amendment thereto, and other such documents as the Holder
and underwriters, if any, may reasonably request in order to facilitate the
public offering of such securities;
(c) use its good faith reasonable efforts to register or qualify the
securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as the Holder may
reasonably request in writing within twenty (20) days following the
original filing of such registration, except that the Company will not for
any purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified;
6
(d) notify the Holder, promptly after it will receive notice thereof,
of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement
has been filed;
(e) notify the Holder promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus
or for additional information;
(f) prepare and file with the Commission, promptly upon the
reasonable request of the Holder, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for
the Holder (and concurred in by counsel for the Company), is required under
the Act or the rules and regulations thereunder in connection with the
distribution of the Warrant Shares by the Holder;
(g) prepare and promptly file with the Commission and promptly notify
the Holder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event has
occurred as the result of which any such prospectus or any other prospectus
as then in effect would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein,
in the light of circumstances in which they were made, not misleading;
(h) advise the Holder, promptly after the Company receives notice or
obtains knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its good faith, reasonable efforts to prevent the issuance of
any stop order or to obtain its prompt withdrawal if such stop order should
be issued.
(i) if an underwriter is used by the Holder and approved by the
Company, enter into an underwriting agreement that is satisfactory to the
Company and the Holders.
(j) upon the request of one or more holders of Warrant Shares then
being registered, the Company will cooperate with any underwriters (as
defined in the Act) for the requesting party approved by the Company (which
approval will not be unreasonably withheld), including, without limitation,
providing such information, certificates, comfort letters of accountants
and opinions of counsel as may be customarily and reasonably requested by
such underwriters.
(k) pay all fees, disbursements and expenses in connection with the
registration, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company
and expenses of complying with applicable securities or blue sky laws, but
excluding Xxxxxx's attorney's fees and any underwriter's fees or
commissions.
7
(l) With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted
securities (as that term is used in Rule 144 under the Act) to the public
without registration, the Company agrees to:
(1) use its reasonable efforts to make and keep public
information available, as those terms are understood and
defined in Rule 144;
(2) use its reasonable efforts to file with the Commission in a
timely manner all reports and other documents required by
the Company under the Act and the Exchange Act so as to
permit the Holders to sell the Warrant Shares pursuant to
Rule 144; and
(3) so long as a Holder owns any Warrant Shares, furnish to
Holders upon request a written statement by the Company as
to its compliance with the reporting requirements under the
Exchange Act and the Act as required by Rule 144, a copy of
the most recent annual or quarterly report of Company and
such other reports and documents so filed as such Holder may
reasonably request in availing itself of any rule or
regulation of the Commission allowing such Holder to sell
any Warrant Shares without registration.
SECTION 7.4. INDEMNIFICATION RELATING TO REGISTRATION OF WARRANT SHARES.
In the event of any registration of any Warrant Shares under the Act
pursuant to this Warrant, Company will indemnify and hold harmless the seller
of such Warrant Shares, each underwriter of such Warrant Shares, and each
other person, if any, who controls such seller or underwriter within the
meaning of the Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or
controlling person may become subject under the Act, the Exchange Act, state
securities or blue sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of material fact
contained in any registration statement, any preliminary prospectus or final
prospectus contained in the registration statement, or any amendment or
supplement to such registration statement, or arise out of or are based upon
the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and the Company will reimburse such seller, underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or omission made in such registration
statement, preliminary prospectus or prospectus, or any such amendment or
supplement, in reliance upon and in conformity with information furnished to
the Company, in writing, by or on behalf of any seller, underwriter or
controlling person specifically for use in the preparation thereof.
In the event of any registration of any Warrant Shares under the
Act, each seller of Warrant
8
Shares ("Seller"), severally and not jointly, will indemnify and hold
harmless the Company, each of its directors and officers and each underwriter
(if any) and each person, if any, who controls the Company or any such
underwriter within the meaning of the Act or the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to which the
Company, such directors and officers, underwriter or controlling person may
become subject under the Act, Exchange Act, state securities or blue sky
laws or otherwise insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of material fact contained in any
registration statement under which such shares were registered under the Act,
any preliminary prospectus or final prospectus contained in the registration
statement, or any amendment or supplement to the registration statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such Seller, specifically for use in connection
with the preparation of such registration statement, prospectus, amendment or
supplement.
Each party entitled to indemnification under this Section 7.4
(the "Indemnified Party") will give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and will permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom; PROVIDED, that counsel for the
Indemnifying Party, who will conduct the defense of such claim or litigation,
will be approved by the Indemnified Party (whose approval will not be
unreasonably withheld); and PROVIDED, FURTHER, that the failure of any
Indemnified Party to give notice as provided herein will not relieve the
Indemnifying Party of its obligations under this Section 7.4 to the extent
such Indemnifying Party was not harmed by such failure. The Indemnified
Party may participate in such defense at such party's expense; PROVIDED,
HOWEVER, that the Indemnifying Party will pay such expense if representation
of such Indemnified Party by the counsel retained by the Indemnifying Party
would be inappropriate due to actual or potential differing interests between
the Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation will, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party will consent to entry of any
judgment or settle such claim or litigation without the prior written consent
of the Indemnifying Party.
In order to provide for just and equitable contribution to joint
liability under the Act in circumstances in which the indemnity provisions
provided for in this section are for any reason held to be unavailable to the
indemnified parties although applicable in accordance with its terms; then,
in each such case, the Company and such Seller will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportions as shall be appropriate
to reflect the relative fault of the Company, on the one hand, and the
Seller, on the other hand, with such relative fault determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Seller,
9
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; PROVIDED,
HOWEVER, that, in any such case no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 22(f) of the Act, shall be
entitled to contribution from any person or entity who is not guilty of such
fraudulent misrepresentation.
SECTION 8. TERMINATION OF RESTRICTIONS. The restrictions imposed by
Section 1.3 hereof upon the transferability of any Warrant Shares shall cease
and terminate as to any Warrant Shares (a) when such securities shall have
been effectively registered under the Act and any applicable state securities
laws and disposed of in accordance with the registration statement(s)
covering such securities, or (b) when, in the opinions of both counsel for
the Holder and counsel for the Company, such restrictions are no longer
required in order to insure compliance with the Act and applicable state
securities laws. Whenever such restrictions shall terminate as to any
Warrant Shares, the Holder shall be entitled to receive from the Company,
without expense (other than transfer taxes, if any), new securities of like
tenor not bearing a legend as to restrictions on transfer.
SECTION 9. NO RIGHTS AS A SHAREHOLDER; NOTICES TO THE HOLDER. Nothing
contained in this Warrant shall be construed as conferring upon the Holder or
its transferees the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Company or any other matter, or any rights
whatsoever as a shareholder of the Company. If, however at any time prior to
the expiration of this Warrant and prior to its exercise, any of the
following events shall occur:
(a) the Company shall declare any dividend payable in any securities
upon its Common Stock or make any distribution to the holders of its Common
Stock;
(b) the Company shall offer to the holders of its Common Stock any
additional Common Stock or securities convertible into Common Stock or any
right to subscribe thereto; or
(c) a reclassification, consolidation, merger or sale or all or
substantially all of the Company's property, assets and business as an
entirety or a dissolution, liquidation or winding up of the Company shall
be proposed;
then in any one or more of such events, the Company shall give notice in writing
of such event to the Holder as provided in Section 11 hereof at least twenty
(20) days prior to the date fixed as a record date for the determination of the
shareholders entitled to such dividend, distribution or subscription rights, or
for the determination of shareholders entitled to vote on such proposed
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up. Such notice shall specify such record date. Failure to mail such
notice or any defect in such notice or in the mailing of the notice shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or proposed dissolution, liquidation or
winding up.
SECTION 10. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Holder as follows:
10
(a) The Company is a corporation duly organized with its principal
place of business in Michigan, validly existing and in good standing under
the laws of the State of Minnesota, and has full power and lawful authority
to carry on its business;
(b) The Company has the full corporate power to execute, deliver
and issue this Warrant and to carry out its obligations hereunder; the
execution, delivery and issuance of this Warrant, and delivery and issuance
of Warrant Shares upon exercise of this Warrant, have been duly and validly
authorized by the Board of Directors of the Company; no other corporate
acts or proceedings on the part of the Company are necessary to authorize
this Warrant or the Warrant Shares; and this Warrant constitutes a valid
and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject only to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium,
or other laws and equitable principles of general appreciation relating to
or affecting the enforcement of creditor's rights and remedies.
(c) The Warrant Shares will, when issued pursuant to this Warrant,
be duly authorized and validly issued, fully paid and nonassessable, and not
subject to preemptive rights;
(d) No consent or approval by, or filing with, any governmental
authority is required in connection with the execution, delivery and
issuance by the Company of this Warrant or the delivery and issuance of the
Warrant Shares other than such as have been obtained or made (or as may be
required in the future under applicable securities laws in connection with
the transfer or exercise of this Warrant or the resale of the Warrant
Shares); and
(e) The execution, delivery, issuance of this Warrant and the
delivery and issuance of the Warrant Shares will not result in the
violation of any term or provision of the charter or by-laws of the Company
or any loan agreement, indenture, note or other instrument, or decree,
order, statute, rule or regulation applicable to the Company (subject,
however, to compliance with applicable securities laws in connection with
the transfer or exercise of this Warrant or the resale of the Warrant
Shares).
SECTION 11. NOTICES. Any notice pursuant to this Warrant by the Company
or by the Holder shall be in writing and shall be mailed first class, postage
prepaid, or delivered (a) to the Company, at its principal office at 0000
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, or (b) to the Holder, at
its or his address as indicated in the books and records of the Company.
Either party may from time to time change the address to which notices to it
are to be delivered or mailed under this Warrant by notice in writing to the
other party.
SECTION 12. SUCCESSORS. All the covenants and 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.
11
SECTION 13. APPLICABLE LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of Michigan without giving
effect to principles of conflict of laws.
SECTION 14. CAPTIONS. The captions of the Sections and subsections of
this Warrant have been inserted for convenience only and shall have no
substantive effect.
IN WITNESS WHEREOF, the undersigned has executed this Warrant this ____ day
of _________________________, 1997.
ELTRAX SYSTEMS, INC.
By:
--------------------------------
Xxxxxxx X. X'Xxxxxx
Chairman and CEO
ELTRAX SYSTEMS, INC.
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the within Warrant
to purchase _________ shares of Common Stock of Eltrax Systems, Inc., hereby
makes payment of $___________ in payment of the Aggregate Exercise Price
thereof, and requires that certificates for such shares be issued in the name
of:
--------------------------------------------------------------------------------
(Please Print Name and Social Security No.)
--------------------------------------------------------------------------------
(Street Address)
--------------------------------------------------------------------------------
(City, State and Zip Code)
DATED:
----------------------, -------
Name of Warrantholder or Assignee:
----------------------------------------------
(Please Print)
Address:
---------------------------------------------------------------------
---------------------------------------------------------------------
Signature:
---------------------------------------------------------------------
13
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
--------------------------------------------------------------------------------
(Name of Assignee Must be Printed or Typewritten)
--------------------------------------------------------------------------------
(Street Address)
--------------------------------------------------------------------------------
(City, State and Zip Code)
the within Warrant, irrevocably constituting and appointing ____________________
Attorney to transfer such Warrant on the books of the Company, with full power
of substitution in the premises.
DATED:
------------------, ------
---------------------------------------
Signature of Registered Holder
14
