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EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ELTRAX SYSTEMS, INC.,
SOLEMN ACQUISITION CORPORATION
AND
CEREUS TECHNOLOGY PARTNERS, INC.
DATED AS OF JUNE 12, 2000
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TABLE OF CONTENTS
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ARTICLE I THE MERGER 1
SECTION 1.1 THE MERGER............................................................................. 1
SECTION 1.2 EFFECTIVE TIME OF THE MERGER........................................................... 2
SECTION 1.3 CERTIFICATE OF INCORPORATION........................................................... 2
SECTION 1.4 BYLAWS................................................................................. 2
SECTION 1.5 OFFICERS............................................................................... 2
SECTION 1.6 DIRECTORS.............................................................................. 2
ARTICLE II CONVERSION OF SHARES 2
SECTION 2.1 CONVERSION OF CEREUS SHARES AND OPTIONS................................................ 2
SECTION 2.2 CONVERSION OF CEREUS ACQUIRING SUB SHARES.............................................. 4
SECTION 2.3 EXCHANGE OF CEREUS CERTIFICATES........................................................ 4
SECTION 2.4 NO FRACTIONAL SECURITIES............................................................... 5
SECTION 2.5 CLOSING................................................................................ 6
SECTION 2.6 CLOSING OF CEREUS TRANSFER BOOKS....................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CEREUS 6
SECTION 3.1 ORGANIZATION AND QUALIFICATION......................................................... 6
SECTION 3.2 CAPITALIZATION......................................................................... 7
SECTION 3.3 SUBSIDIARIES........................................................................... 7
SECTION 3.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS................................................ 8
SECTION 3.5 REPORTS AND FINANCIAL STATEMENTS....................................................... 9
SECTION 3.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE PAYMENTS........................... 10
SECTION 3.7 CERTAIN TAX MATTERS.................................................................... 13
SECTION 3.8 CONTRACTS; DEBT INSTRUMENTS............................................................ 13
SECTION 3.9 LITIGATION............................................................................. 13
SECTION 3.10 INTELLECTUAL PROPERTY.................................................................. 14
SECTION 3.11 TAXES.................................................................................. 14
SECTION 3.12 INTERESTED PARTY TRANSACTIONS.......................................................... 14
SECTION 3.13 ABSENCE OF CERTAIN CHANGES OR EVENTS................................................... 15
SECTION 3.14 REGISTRATION STATEMENT AND PROXY STATEMENT............................................. 15
SECTION 3.15 REORGANIZATION......................................................................... 15
SECTION 3.16 BROKERS AND FINDERS.................................................................... 15
SECTION 3.17 OPINION OF FINANCIAL ADVISOR........................................................... 16
SECTION 3.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE............................................... 16
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SECTION 3.19 DISCLOSURE............................................................................. 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND CEREUS ACQUIRING SUB 17
SECTION 4.1 ORGANIZATION AND QUALIFICATION......................................................... 17
SECTION 4.2 CAPITALIZATION......................................................................... 18
SECTION 4.3 SUBSIDIARIES........................................................................... 18
SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS................................................ 19
SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS....................................................... 20
SECTION 4.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE PAYMENTS........................... 21
SECTION 4.7 CERTAIN TAX MATTERS.................................................................... 23
SECTION 4.8 CONTRACTS; DEBT INSTRUMENTS............................................................ 23
SECTION 4.9 LITIGATION............................................................................. 24
SECTION 4.10 INTELLECTUAL PROPERTY.................................................................. 24
SECTION 4.11 TAXES.................................................................................. 25
SECTION 4.12 INTERESTED PARTY TRANSACTIONS.......................................................... 25
SECTION 4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS................................................... 25
SECTION 4.14 REGISTRATION STATEMENT AND PROXY STATEMENT............................................. 25
SECTION 4.15 REORGANIZATION......................................................................... 26
SECTION 4.16 BROKERS AND FINDERS.................................................................... 26
SECTION 4.17 OPINION OF FINANCIAL ADVISOR........................................................... 26
SECTION 4.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE............................................... 26
SECTION 4.19 DISCLOSURE............................................................................. 27
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER 27
SECTION 5.1 TRANSITION MATTERS..................................................................... 27
SECTION 5.2 CONDUCT OF BUSINESS BY PARENT AND CEREUS PENDING THE MERGER............................ 28
SECTION 5.3 ACQUISITION TRANSACTIONS............................................................... 30
ARTICLE VI ADDITIONAL AGREEMENTS 31
SECTION 6.1 ACCESS TO INFORMATION.................................................................. 31
SECTION 6.2 REGISTRATION STATEMENT AND PROXY STATEMENT............................................. 32
SECTION 6.3 STOCKHOLDERS' APPROVALS................................................................ 33
SECTION 6.4 COMPLIANCE WITH THE SECURITIES ACT..................................................... 33
SECTION 6.5 EXPENSES AND FEES...................................................................... 33
SECTION 6.6 AGREEMENT TO COOPERATE................................................................. 34
SECTION 6.7 PUBLIC STATEMENTS...................................................................... 35
SECTION 6.8 NOTIFICATION OF CERTAIN MATTERS........................................................ 35
SECTION 6.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION............................................... 35
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SECTION 6.10 CORRECTIONS TO THE JOINT PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT......... 36
SECTION 6.11 LISTING................................................................................ 36
SECTION 6.12 PARENT BOARD OF DIRECTORS.............................................................. 37
SECTION 6.13 BRIDGE FACILITY........................................................................ 37
SECTION 6.14 EMPLOYMENT AGREEMENTS.................................................................. 37
SECTION 6.15 EXECUTIVE OFFICERS OF PARENT........................................................... 37
SECTION 6.16 REVERSE STOCK SPLIT; CORPORATE NAME.................................................... 37
ARTICLE VII CONDITIONS 38
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER............................. 38
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATION OF CEREUS TO EFFECT THE MERGER..................... 39
SECTION 7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER..................... 40
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 41
SECTION 8.1 TERMINATION............................................................................ 41
SECTION 8.2 EFFECT OF TERMINATION.................................................................. 42
SECTION 8.3 AMENDMENT.............................................................................. 43
SECTION 8.4 WAIVER................................................................................. 43
SECTION 8.5 TERMINATION FEESAND EXPENSES........................................................... 43
ARTICLE IX GENERAL PROVISIONS 44
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................................... 44
SECTION 9.2 NOTICES................................................................................ 45
SECTION 9.3 INTERPRETATION......................................................................... 46
SECTION 9.4 GOVERNING LAW.......................................................................... 46
SECTION 9.5 ARBITRATION............................................................................ 46
SECTION 9.6 COUNTERPARTS, TELECOPIED SIGNATURES.................................................... 46
SECTION 9.7 PARTIES IN INTEREST.................................................................... 47
SECTION 9.8 MISCELLANEOUS.......................................................................... 47
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EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 12, 2000 (the
"AGREEMENT"), is by and among ELTRAX SYSTEMS, INC., a Minnesota corporation
("PARENT"), SOLEMN ACQUISITION CORPORATION, a Delaware corporation and a wholly
owned subsidiary of Parent ("CEREUS ACQUIRING SUB"), and CEREUS TECHNOLOGY
PARTNERS, INC., a Delaware corporation ("CEREUS"). Parent and Cereus are
sometimes together referred to collectively as the "COMPANIES" and,
individually, as a "COMPANY".
RECITALS
A. The Boards of Directors of Parent, Cereus Acquiring Sub and
Cereus have approved the merger of Cereus Acquiring Sub with and into Cereus,
upon the terms and subject to the conditions set forth herein (the "MERGER"),
and deem it advisable and in the best interests of their respective shareholders
that the Merger be consummated.
B. For federal income tax purposes, the parties intend to adopt
this Agreement as a tax-free reorganization and to consummate the Merger in
accordance with the provisions of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE"), and the regulations promulgated thereunder.
C. The parties desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated by this Agreement (the "TRANSACTIONS").
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section 1.2)
and in accordance with the General Corporation Law of the State of Delaware, as
amended (the "DGCL"), Cereus Acquiring Sub shall be merged with and into Cereus
and the separate existence of Cereus Acquiring Sub shall thereupon cease. Cereus
shall be the surviving corporation in the Merger and a wholly-owned subsidiary
of Parent and is hereinafter sometimes referred to as the "SURVIVING
CORPORATION."
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SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall
become effective at such time (the "EFFECTIVE TIME") as shall be stated in
certificate of merger, in a form mutually acceptable to Parent and Cereus, to be
filed with the Secretary of State of the State of Delaware in accordance with
the DGCL (the "MERGER FILING"), concurrently with the closing of the
Transactions in accordance with Section 2.5.
SECTION 1.3 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation as in effect immediately prior to the
Effective Time shall, after the Effective Time, be the Certificate of
Incorporation of Cereus Acquiring Sub, and thereafter may be amended in
accordance with their terms and as provided in the DGCL.
SECTION 1.4 BYLAWS. The Bylaws of the Surviving Corporation as
in effect immediately prior to the Effective Time shall, after the Effective
Time, be the Bylaws of Cereus Acquiring Sub and (subject to Section 6.9)
thereafter may be amended in accordance with their terms and as provided by the
Certificate of Incorporation of the Surviving Corporation and the DGCL.
SECTION 1.5 OFFICERS. The officers of the Surviving Corporation
after the Effective Time shall be the officers of Cereus Acquiring Sub in office
immediately prior to the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal.
SECTION 1.6 DIRECTORS. The directors of the Surviving
Corporation after the Effective Time shall be the directors of Cereus Acquiring
Sub in office immediately prior to the Effective Time, until their successors
are elected or appointed and qualified or until their resignation or removal.
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 CONVERSION OF CEREUS SHARES AND OPTIONS. At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of Cereus:
(a) Subject to paragraphs (b) and (e) of this
Section 2.1, each share of the common stock, par value $.01 per share, of Cereus
(the "CEREUS COMMON STOCK") issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive, without interest,
1.667 fully paid and nonassessable shares (the "EXCHANGE RATIO") of the common
stock, par value $.01 share of Parent ("PARENT COMMON STOCK"); provided,
however, that if Parent sells (in one or more transactions) any part of its
Hospitality Services Group (as defined in Parent's Form 10-K for the fiscal year
ended December 31, 1999) for $8.0 million or more in cash in the aggregate at or
prior to the
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Effective Time, in one or more transactions consented to in writing by Cereus,
which consent will not be unreasonably withheld or delayed (and which consent
will be granted if the consideration for the assets of the Hospitality Services
Group (the "HOSPITALITY ASSETS") proposed to be in sold in such transaction or
transactions is not materially less than the estimated value thereof previously
agreed to by the Companies in writing), then the Exchange Ratio shall decrease
(i) by an amount equal to (1) .007 divided by (2) 1,000,000 for each $1.00 in
cash received by Parent at or prior to the Effective Time upon the sale of such
assets; and (ii) an amount equal to (1) .0035 divided by (2) 1,000,000 for each
$1.00 in principal amount payable to Parent on or prior to the one year
anniversary of the Closing Date (as defined in Section 2.5) pursuant to the
terms of any full recourse promissory note received by Parent upon the sale of
such assets, provided that the repayment of such promissory note is not
contingent upon any post-closing event or performance and is not subject to any
contractual right of set off and that such promissory note is adequately
secured, bears interest at a market rate, and has a fixed repayment schedule and
principal amount;
(b) Each share of Cereus Common Stock
held by Cereus or any of its Subsidiaries (as defined in Section 3.3), and any
shares of Cereus Common Stock owned by Parent, Cereus Acquiring Sub or any other
Subsidiary of Parent, other than shares under any existing employee benefit plan
which are held by either Company as trustee, shall be cancelled;
(c) Each option or warrant granted by
Cereus to purchase shares of Cereus Common Stock that is outstanding and
unexercised immediately prior thereto (an "CEREUS STOCK OPTION"), whether vested
or unvested at the Effective Time, shall cease to represent a right to acquire
shares of Cereus Common Stock and shall be converted automatically into an
option to purchase a number of shares of Parent Common Stock (a "PARENT OPTION")
equal to the number of shares of Cereus Common Stock that could be purchased
under such Cereus Stock Option multiplied by the Exchange Ratio, at a price per
share of Parent Common Stock equal to the per share exercise price of such
Cereus Stock Option divided by the Exchange Ratio; provided, however, that any
fractional shares of Parent Common Stock resulting from such determination shall
be rounded down to the nearest share. The adjustments provided herein with
respect to any Cereus Stock Option that is an "incentive stock option" (as
defined in section 422 of the Code) shall be and are intended to be effected in
a manner that is consistent with section 424(a) of the Code; and
(d) Any Cereus plans governing the
issuance and administration of the Cereus Stock Options (the "CEREUS OPTION
PLANS") shall terminate, and within 90 days following the Closing Date, each
holder of a Cereus Stock Option will receive an award agreement with respect to
the Parent Options they acquire pursuant to Section 2.1(c) above, which shall
preserve the remaining exercise period and vesting schedule (if any) of such
converted Cereus Stock Options and, if applicable, shall preserve the status of
any converted Cereus Stock Options as "incentive stock options" (as defined in
Section 422 of the Code). Cereus shall take all actions necessary to ensure that
following the Effective Time, no holder of Cereus Stock Options or any
participant in the Cereus Option Plans or
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any other plans, programs, agreements or arrangements shall have any right
thereunder to acquire any equity securities of Cereus, the Surviving Corporation
or any subsidiary of either of the foregoing.
(e) Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Cereus Common
Stock held by a Cereus stockholder entitled to and validly exercising appraisal
rights pursuant to Section 262 of the DGCL (a "DISSENTING STOCKHOLDER") shall
not be converted as described in Section 2.1(a) but, as of the Effective Time,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist and shall become the right to receive such
consideration as may be determined to be due such Dissenting Stockholder
pursuant to the laws of the State of Delaware; provided, however, that the
shares of Cereus Common Stock outstanding immediately prior to the Effective
Time and held by a Dissenting Stockholder who shall, after the Effective Time,
withdraw his or her demand for appraisal or lose his or her right of appraisal,
in either case pursuant to the DGCL shall be deemed to be converted at the
Effective Time into the right to receive shares of Parent Common Stock in
accordance with Section 2.1(a). Cereus shall give Parent (i) prompt notice of
any written demands for appraisal of shares of Cereus Common Stock received by
Cereus and (ii) the opportunity to participate in all negotiations and
proceedings with respect to any such demands.
SECTION 2.2 CONVERSION OF CEREUS ACQUIRING SUB SHARES. At the
Effective Time, by virtue of the Merger and without any action on the part of
Parent, each issued and outstanding share of common stock, $.01 par value per
share, of Cereus Acquiring Sub shall be converted into one share of common
stock, $.01 par value per share of the Surviving Corporation.
SECTION 2.3 EXCHANGE OF CEREUS CERTIFICATES.
(a) From and after the Effective Time, each
holder of an outstanding certificate which immediately prior to the Effective
Time represented shares of Cereus Common Stock (individually, a "CERTIFICATE"
and, collectively, the "CERTIFICATES"), shall receive in exchange therefor, upon
surrender thereof to an exchange agent reasonably satisfactory to Parent (the
"EXCHANGE AGENT"), a certificate or certificates representing the number of
whole shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.1 based on the Exchange Ratio. Notwithstanding any other provision of
this Agreement, (i) until holders or transferees of Certificates have
surrendered them for exchange as provided herein, no dividends or other
distributions shall be paid with respect to any shares represented by such
Certificates and no payment for fractional shares shall be made and (ii) without
regard to when such Certificates representing shares of Cereus Common Stock are
surrendered for exchange as provided herein, no interest shall be paid on any
dividends or other distributions or any payment for fractional shares. Upon
surrender of a Certificate, there shall be paid to the holder of such
Certificate the amount of any dividends or other distributions which became
payable, but which were not paid by reason of the foregoing, with respect to the
number of whole shares of Parent Common Stock represented by the certificate or
certificates issued upon such surrender.
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(b) On the Closing Date, Parent shall
make available to the Exchange Agent, for the benefit of each holder of Cereus
Common Stock, a sufficient number of certificates representing shares of Parent
Common Stock required to effect the exchanges referred to in paragraph (a) above
and cash for payment of any fractional shares referred to in Section 2.4.
(c) Promptly after the Effective Time,
the Exchange Agent shall mail to each holder of record of a Certificate or
Certificates (as shown on the books of Cereus's Exchange Agent as of the
Effective Time) (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon actual delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of
the Certificates for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal and such other documents as the Exchange Agent
shall reasonably require, the holder of such Certificates shall receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock into which the shares of Cereus Common Stock, heretofore
represented by the Certificates so surrendered, shall have been converted
pursuant to the provisions of Section 2.1 based on the Exchange Ratio, and the
Certificates so surrendered shall be canceled. The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with respect to the shares
of Parent Common Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such Parent Common Stock for the account of the persons entitled
thereto.
(d) Promptly following the date which
is 12 months after the Effective Time, the Exchange Agent shall deliver to
Parent all cash, certificates (including any Parent Common Stock) and other
documents in its possession relating to the Transactions, and the Exchange
Agent's duties shall terminate. Thereafter, any holders of Certificates shall
contact Parent directly in order to exchange such Certificates for shares of
Parent Common Stock.
SECTION 2.4 NO FRACTIONAL SECURITIES. Notwithstanding any other
provision of this Agreement, no certificates or scrip representing less than one
share of Parent Common Stock shall be issued in the Merger, and no Parent Common
Stock dividend, stock split or interest shall relate to any fractional security,
and such fractional interests shall not entitle the owner thereof to vote or to
any other rights of a security holder. In lieu of any such fractional shares,
each holder of shares of Cereus Common Stock who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock upon surrender
of Certificates for exchange pursuant to this Article II shall be entitled to
receive from the Exchange Agent a cash payment equal to such fraction multiplied
by the closing price per share of Parent Common Stock, as reported by The Wall
Street Journal (Eastern Edition), as of the close of business on the business
day immediately preceding the Closing Date.
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SECTION 2.5 CLOSING. The closing (the "CLOSING") of the
Transactions shall take place simultaneously at a location mutually agreeable to
Cereus and Parent as promptly as practicable (but in any event within five
business days) following the date on which the last of the conditions set forth
in Article VII is fulfilled or waived, or at such other time and place as Parent
and Cereus shall agree. The date on which the Closing occurs is referred to in
this Agreement as the "CLOSING DATE."
SECTION 2.6 CLOSING OF CEREUS TRANSFER BOOKS. At and after the
Effective Time, holders of Certificates shall cease to have any rights as
stockholders of Cereus, except for the right to receive shares of Parent Common
Stock pursuant to Section 2.1 and the right to receive cash for payment of
fractional shares pursuant to Section 2.4. At the Effective Time, the stock
transfer books of Cereus shall be closed and no transfer of shares of Cereus
Common Stock which were outstanding immediately prior to the Effective Time
shall thereafter be made. If, after the Effective Time, subject to the terms and
conditions of this Agreement, Certificates are presented to Parent or the
Surviving Corporation, they shall be canceled and exchanged for shares of Parent
Common Stock in accordance with this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CEREUS
Except as disclosed in the Cereus SEC Reports (as defined in Section
3.5) or as set forth in the Cereus Disclosure Schedule delivered by Cereus to
Parent prior to the execution of this Agreement (the "Cereus Disclosure
Schedule"), Cereus represents and warrants to Parent that the following
statements are true and correct as of the date hereof.
SECTION 3.1 ORGANIZATION AND QUALIFICATION. Cereus is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. Cereus is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have, or be reasonably
expected to have, a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Cereus and its Subsidiaries, taken as a whole, other than any change,
circumstance or effect (i) relating to or resulting from the economy or
securities markets in general, (ii) relating to or resulting from the industries
in which Cereus or Parent operate and not uniquely relating to Cereus or Parent,
or (iii) resulting from the announcement or existence of this Agreement and the
Transactions (a "CEREUS MATERIAL ADVERSE EFFECT"), and copies of good standing
certificates evidencing such qualification will be delivered to Parent at or
prior to the Closing, in each case bearing a date within thirty (30) days prior
to the Closing Date. True, accurate and complete copies of Cereus's Certificate
of
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Incorporation and Bylaws, in each case as in effect the date hereof, including
all amendments thereto, have been delivered to Parent. All jurisdictions in
which Cereus owns, uses or operates property, and any qualifications in such
jurisdictions, are listed on Schedule 3.1.
SECTION 3.2 CAPITALIZATION.
(a) As of the date hereof, the authorized
capital stock of Cereus consists of 50,000,000 shares of Cereus Common Stock and
10,000,000 shares of preferred stock, par value $.01 per share ("CEREUS
PREFERRED STOCK"). As of June 9, 2000, (i) 8,961,953 shares of Cereus Common
Stock were issued and outstanding, all of which were validly issued and were
fully paid, nonassessable and free of preemptive rights, (ii) no shares of
Cereus Preferred Stock were issued and outstanding, (iii) 4,931,379 shares of
Cereus Common Stock were reserved for issuance pursuant to the Cereus Option
Plans, (iv) 7,843,693 shares of Cereus Common Stock were reserved for issuance
upon exercise of outstanding warrants and options not issued under the Cereus
Option Plans, and (v) no shares of Cereus Common Stock were reserved for
issuance upon conversion of outstanding convertible debentures and outstanding
convertible notes.
(b) Except as set forth in subsection (a) above
or as otherwise contemplated by this Agreement, there are no outstanding
subscriptions, options, calls, contracts, commitments, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, and also
including any rights plan or other anti-takeover agreement, obligating Cereus or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of Cereus or
obligating Cereus or any of its Subsidiaries to grant, extend or enter into any
such agreement or commitment. Except as otherwise disclosed in the Cereus SEC
Reports, there are no voting trusts, proxies or other agreements or
understandings to which Cereus or any of its Subsidiaries is a party or is bound
with respect to the voting of any shares of capital stock of Cereus.
SECTION 3.3 SUBSIDIARIES. Identified in Section 3.3 of the
Cereus Disclosure Schedule is each direct and indirect Subsidiary (as defined
below) of Cereus. Each such Subsidiary (i) is duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted; and (ii) is qualified to do business, and is in good standing,
in each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
all such qualifications being listed in Section 3.3 of the Cereus Disclosure
Schedule, except in all cases where the failure to be so qualified and in good
standing would not, when taken together with all such other failures, result in
a Cereus Material Adverse Effect. At or prior to Closing, copies of good
standing certificates evidencing such qualification will be delivered to Parent
in each case bearing a date within thirty (30) days prior to the Closing Date.
All of the outstanding shares of capital stock or other equity interests of each
Subsidiary of Cereus are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned directly or indirectly by
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Cereus, free and clear of any liens, claims or encumbrances. There are no
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or other rights with
respect to any shares of capital stock or other equity interests of any
Subsidiary of Cereus, including any right of conversion or exchange under any
outstanding security, instrument or agreement. As used in this Agreement, the
term "SUBSIDIARY" shall mean, when used with reference to any person or entity,
any corporation, partnership, limited liability company, joint venture or other
entity of which such person or entity (either acting alone or together with its
other Subsidiaries) owns, directly or indirectly, 50% or more of the capital
stock or other voting interests, the holders of which are entitled to vote for
the election of a majority of the board of directors or any similar governing
body of such corporation, partnership, limited liability company, joint venture
or other entity.
SECTION 3.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Cereus has full corporate power and
authority to enter into this Agreement and, subject to the Cereus Stockholders'
Approval (as defined in Section 6.3(a)) and the Cereus Required Statutory
Approvals (as defined in Section 3.4(c)), to consummate the Transactions. This
Agreement has been approved by the Board of Directors of Cereus and no other
corporate proceeding on the part of Cereus is necessary to authorize the
execution and delivery of this Agreement and, except for the Cereus
Stockholders' Approval, the consummation by Cereus of the Transactions. This
Agreement has been duly executed and delivered by Cereus and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes a
valid and legally binding agreement of Cereus, enforceable against it in
accordance with its terms.
(b) The execution and delivery of this Agreement
by Cereus do not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Cereus or any of
its Subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or bylaws of Cereus or any of its Subsidiaries, (ii) other
than as provided in Section 3.4(c), any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Cereus or any of its Subsidiaries
or any of their respective properties or assets or (iii) except as set forth in
Section 3.4(b) of the Cereus Disclosure Schedule, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Cereus
or any of its Subsidiaries is now a party or by which Cereus or any of its
Subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by Cereus of the Transactions will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under the immediately preceding sentence, subject: (A) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Cereus Required Statutory
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Approvals and the Cereus Stockholder's Approval and (B) in the case of the
terms, conditions or provisions described in clause (iii) above, to obtaining
(prior to the Effective Time) consents required from commercial lenders, lessors
or other third parties. Excluded from the foregoing sentences of this paragraph
(b), insofar as they apply to the terms, conditions or provisions described in
clauses (ii) and (iii) of the first sentence of this paragraph (b)(and whether
resulting from such execution and delivery or consummation), are such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would not,
in the aggregate, result in a Cereus Material Adverse Effect.
(c) Except for (i) the filing of the
Registration Statement and Joint Proxy Statement/ Prospectus (as such terms are
defined in Section 3.14) with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
the declaration of the effectiveness by the SEC and filings with or approvals
from various state blue sky authorities, (ii) the making of the Merger Filing,
(iii) the filings by Cereus required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), and (iv) any required
filings with or approvals from NASDAQ or NASD (the filings and approvals
referred to in clauses (i) through (iv) are collectively referred to as the
"CEREUS REQUIRED STATUTORY APPROVALS"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any governmental
or regulatory body or authority is necessary for the execution and delivery of
this Agreement by Cereus or the consummation by Cereus of the Transactions,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not, in the aggregate, result in a Cereus Material Adverse Effect.
SECTION 3.5 REPORTS AND FINANCIAL STATEMENTS. Since January 1,
1997, Cereus has filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and supplements thereto)
required to be filed by it under each of the Securities Act, the Exchange Act
and the respective rules and regulations thereunder, all of which, as amended if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder. No
Subsidiary of Cereus is required to file any form, report or other document with
the SEC. Cereus has previously made available to Parent, via its EDGAR filings
where available, copies (including all exhibits, post-effective amendments and
supplements thereto) of its (a) Annual Reports on Form 10-KSB (as amended on
Form 10-KSB/A) for the fiscal years ended December 31, 1999, 1998 and 1997, as
filed with the SEC, (b) proxy and information statements relating to (i) all
meetings of its stockholders (whether annual or special), (ii) actions by
written consent in lieu of a stockholders' meeting, in each case from January 1,
1998 until the date hereof, (c) all other reports, including quarterly reports,
and registration statements filed by Cereus with the SEC since January 1, 1997
(the documents referred to in clauses (a), (b) and (c) are collectively referred
to as the "Cereus SEC Reports"), and (d) all material documents associated with
the Mineral Transaction (as defined in Cereus's Form 10-KSB for the fiscal year
ended December 31, 1999). As of their
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respective dates, the Cereus SEC Reports contained no untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The audited financial statements for
the fiscal year ended December 31, 1999 and the two prior fiscal years, and the
unaudited consolidated financial statements of Cereus included in Cereus's
Quarterly Reports on Form 10-QSB for the period ended March 31, 2000
(collectively, the "CEREUS FINANCIAL STATEMENTS"), have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis ("GAAP") (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of Cereus and its
Subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended.
SECTION 3.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE
PAYMENTS.
(a) Section 3.6(a) of the Cereus Disclosure
Schedule lists all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, whether legally
enforceable or not, to which Cereus or any Subsidiary of Cereus is a party, with
respect to which Cereus or any Subsidiary of Cereus has any obligation or which
are maintained, contributed to or sponsored by Cereus or any Subsidiary of
Cereus for the benefit of any current or former employee, officer or director of
Cereus or any Subsidiary of Cereus (collectively, the "CEREUS BENEFIT PLANS").
With respect to each Cereus Benefit Plan, Cereus has delivered, or prior to
Closing will deliver, or make available to Parent a true, complete and correct
copy of (i) such Cereus Benefit Plan and the most recent summary plan
description related to such Cereus Benefit Plan, if a summary plan description
is required therefor, (ii) each trust agreement or other funding arrangement
relating to such Cereus Benefit Plan, (iii) the most recent annual report (Form
5500) filed with the Internal Revenue Service ("IRS")with respect to such Cereus
Benefit Plan, (iv) the most recent actuarial report or financial statement
relating to such Cereus Benefit Plan and (v) the most recent determination
letter issued by the IRS with respect to such Cereus Benefit Plan, if it is
qualified under Section 401(a) of the Code. Neither Cereus nor any Subsidiary of
Cereus has any express or implied commitment, whether legally enforceable or
not, (i) to create, incur liability with respect to or cause to exist any other
employee benefit plan, program or arrangement, (ii) to enter into any contract
or agreement to provide compensation or benefits to any individual or (iii) to
modify, change or terminate any Cereus Benefit Plan, other than with respect to
a modification, change or termination required by ERISA or the Code.
(b) None of the Cereus Benefit Plans is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a "MULTIEMPLOYER PLAN") or a single employer pension plan (within the meaning
of Section 4001(a)(15) of ERISA) for which Cereus or any Subsidiary of Cereus
could incur liability under Section 4063 or 4064 of ERISA (a "MULTIPLE EMPLOYER
PLAN"). None of the Cereus Benefit
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Plans provides for or promises retiree medical, disability or life insurance
benefits to any current or former employee, officer or director of Cereus or any
Subsidiary of Cereus.
(c) Each Cereus Benefit Plan has been
administered in all material respects in accordance with its terms and all
contributions required to be made under the terms of any of the Cereus Benefit
Plans as of the date of this Agreement have been timely made or have been
reflected on the most recent consolidated balance sheet filed or incorporated by
reference in the Cereus SEC Reports prior to the date of this Agreement. Except
as set forth in Schedule 3.6(c), with respect to the Cereus Benefit Plans, no
event has occurred and, to the knowledge of Cereus, there exists no condition or
set of circumstances in connection with which Cereus or any Subsidiary of Cereus
could be subject to any liability under the terms of such Cereus Benefit Plans,
ERISA, the Code or any other applicable law which would reasonably be expected
to have, individually or in the aggregate, a Cereus Material Adverse Effect. No
legal action, suit or claim is pending or, to the knowledge of Cereus,
threatened with respect to any Cereus Benefit Plan (other than claims for
benefits in the ordinary course).
(d) Except as would not reasonably be
expected to have, individually or in the aggregate, a Cereus Material Adverse
Effect: (i) each Cereus Benefit Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any Cereus Benefit Plan which is intended
to be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter from the IRS
to adversely affect the qualified status of any such Cereus Benefit Plan or the
exempt status of any such trust; (ii) each trust maintained or contributed to by
Cereus or any Subsidiary of Cereus which is intended to be qualified as a
voluntary employees' beneficiary association and which is intended to be exempt
from federal income taxation under Section 501(c)(9) of the Code has received a
favorable determination letter from the IRS that it is so qualified and so
exempt, and no fact or event has occurred since the date of such determination
by the IRS to adversely affect such qualified or exempt status; (iii) there has
been no prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Cereus Benefit Plan; (iv) neither
Cereus nor any Subsidiary of Cereus has incurred any liability for any penalty
or tax arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such liability; (v) no complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
Cereus Benefit Plan; (vi) no Cereus Benefit Plan is subject to Title IV of
ERISA; (vii) none of the assets of Cereus or any Subsidiary of Cereus is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code; neither Cereus nor any Subsidiary of Cereus has been required to post
any security under Section 307 of ERISA or Section 401(a)(29) of the Code; and
no fact or event exists which could give rise to any such lien or requirement to
post any such security; (viii) all contributions, premiums or payments required
to be made with respect to any Cereus Benefit Plan have been made on or before
their due dates; and (ix) all such contributions have been
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fully deducted for income tax purposes and no such deduction has been challenged
or disallowed by any government entity and no fact or event exists which could
give rise to any such challenge or disallowance.
(e) Neither Cereus nor any Subsidiary
of Cereus is a party to any collective bargaining or other labor union contract
applicable to persons employed by Cereus or any Subsidiary of Cereus and no
collective bargaining agreement is being negotiated by Cereus or any Subsidiary
of Cereus. As of the date of this Agreement, there is no labor dispute, strike
or work stoppage against Cereus or any Subsidiary of Cereus pending or, to the
knowledge of Cereus, threatened which may interfere with the respective business
activities of Cereus or any Subsidiary of Cereus, except where such dispute,
strike or work stoppage would not reasonably be expected to have a Cereus
Material Adverse Effect. As of the date of this Agreement, to the knowledge of
Cereus, there is no charge or complaint against Cereus or any Subsidiary of
Cereus pending before the National Labor Relations Board or any comparable
governmental entity pending or threatened in writing, except where such unfair
labor practice, charge or complaint would not reasonably be expected to have a
Cereus Material Adverse Effect.
(f) Cereus has delivered or made
available to Parent true, complete and correct copies of (i) all employment
agreements with officers and all consulting agreements of Cereus and each
Subsidiary of Cereus providing for annual compensation in excess of $200,000,
(ii) all severance plans, agreements, programs and policies of Cereus and each
Subsidiary of Cereus with or relating to their respective employees or
consultants, and (iii) all plans, programs, agreements and other arrangements of
Cereus and each Subsidiary of Cereus with or relating to their respective
employees or consultants which contain "change of control" provisions.
(g) No employee of Cereus or its
Subsidiaries will be entitled to any additional benefits or any acceleration of
the time of payment or vesting of any benefits sunder any Cereus Benefit Plan as
a result of the Transactions. No amount payable, or economic benefit provided,
by Cereus or its Subsidiaries (including any acceleration of the time of payment
or vesting of any benefit) could be considered an "excess parachute payment"
under Section 280G of the Code. No person is entitled to receive any additional
payment from Cereus or its Subsidiaries or any other person in the event that
the excise tax of Section 4999 of the Code is imposed on such person.
SECTION 3.7 CERTAIN TAX MATTERS. Neither Cereus nor, to the
knowledge of Cereus, any of its affiliates has taken or agreed to take any
action that would reasonably be expected to prevent the Merger from constituting
a transaction qualifying under Section 368 of the Code. Cereus is not aware of
any agreement, plan or other circumstances that would reasonably be expected to
prevent the Merger from so qualifying under Section 368 of the Code.
SECTION 3.8 CONTRACTS; DEBT INSTRUMENTS. There is no contract or
agreement that is material to the business, financial condition or results of
operations of
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Cereus and its Subsidiaries taken as a whole. Except as disclosed in Schedule
3.8, neither Cereus nor any Subsidiary of Cereus is in violation of or in
default under (nor does there exist any condition which with the passage of time
or the giving of notice would reasonably be expected to cause such a violation
of or default under) any loan or credit agreement, note, bond, mortgage,
indenture or lease, or any other contract, license, agreement, arrangement or
understanding to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that would not reasonably be
expected to have, individually or in the aggregate, a Cereus Material Adverse
Effect. Set forth in Section 3.8 of the Cereus Disclosure Schedule is a
description of any material changes to the amount and terms of the indebtedness
of Cereus and its subsidiaries as described in the notes to the financial
statements incorporated in Cereus's March 31, 2000 Form 10-QSB.
SECTION 3.9 LITIGATION. There is no suit, claim, action,
proceeding or investigation pending, to the knowledge of Cereus, or threatened
against Cereus or any Subsidiary of Cereus before any governmental entity that
would reasonably be expected to have, individually or in the aggregate, a Cereus
Material Adverse Effect, and, except as disclosed to Parent, to the knowledge of
Cereus, there are no existing facts or circumstances that would reasonably be
expected to result in such a suit, claim, action, proceeding or investigation.
Except as disclosed to Parent, Cereus is not aware of any facts or circumstances
which would reasonably be expected to result in the denial of insurance coverage
under policies issued to Cereus and its Subsidiaries in respect of such suits,
claims, actions, proceedings and investigations for which Cereus has a
reasonable expectation of obtaining insurance coverage, except in any case as
would not reasonably be expected to have, individually or in the aggregate, a
Cereus Material Adverse Effect or as a result of the execution of this Agreement
and consummation of transactions hereunder. Neither Cereus nor any Subsidiary of
Cereus is subject to any outstanding order, writ, injunction or decree which
would reasonably be expected to have, individually or in the aggregate, a Cereus
Material Adverse Effect.
SECTION 3.10 INTELLECTUAL PROPERTY. Except as would not reasonably
be expected to have, individually or in the aggregate, a Cereus Material Adverse
Effect, (i) Cereus and its Subsidiaries own or possess adequate licenses or
other valid rights to use all patents, patent applications, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights and copyright registrations and applications, copyright rights,
service marks, trade secrets, applications for trademarks and for service marks,
know- how and other proprietary rights and information used or held for use in
connection with the respective businesses of Cereus and its Subsidiaries as
currently conducted (collectively, the "CEREUS IP"), free and clear of all
liens, and (ii) Cereus is unaware of any assertion or claim challenging the
ownership, use or validity of any of the foregoing. The licenses associated with
the Cereus IP are valid and binding obligations of Cereus, enforceable in
accordance with their terms, and there are no material breaches or defaults
thereunder. The conduct of the respective businesses of Cereus and its
Subsidiaries as currently conducted does not infringe upon any patent, patent
right, license, trademark, trademark right, trade dress, trade name, trade name
right, service mark, copyright or copyright right of any third party that would
reasonably be expected to have, individually or
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in the aggregate, a Cereus Material Adverse Effect. To the knowledge of Cereus,
there are no infringements of any proprietary rights owned by or licensed by or
to Cereus or any Subsidiary of Cereus that could reasonably be expected to have,
individually or in the aggregate, a Cereus Material Adverse Effect.
SECTION 3.11 TAXES. Except for such matters that would not
reasonably be expected to have, individually or in the aggregate, a Cereus
Material Adverse Effect, (i) Cereus and each of its Subsidiaries has timely
filed or shall timely file all returns and reports required to be filed by it
with any taxing authority, taking into account any extension of time to file
granted to or obtained on behalf of Cereus and its Subsidiaries, (ii) all taxes
shown to be payable on such returns or reports have been or will be paid, (iii)
as of the date hereof, no deficiencies for any amount of tax have been asserted
or assessed by any taxing authority against Cereus or any Subsidiary of Cereus
that are not adequately reserved for and (iv) the most recent financial
statements contained in the Cereus SEC Reports reflect an adequate reserve in
accordance with GAAP for all taxes payable by Cereus and its Subsidiaries for
all taxable periods and portions thereof accrued through the date of such
financial statements.
SECTION 3.12 INTERESTED PARTY TRANSACTIONS. Except for
transactions of the type described in the Cereus SEC Reports which have occurred
since March 31, 2000 in the ordinary course of business, since March 31, 2000,
no executive officer, director or stockholder of Cereus or any of its
Subsidiaries has engaged in any business dealings with Cereus or any of its
Subsidiaries (other than any such business dealings that would not be required
to be disclosed in a proxy statement satisfying the requirements of Regulation
14A promulgated under the Exchange Act filed on the date hereof).
SECTION 3.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
2000, there has not been (i) any change that would result in a Cereus Material
Adverse Effect , (ii) any event or occurrence which, insofar as can be
reasonably foreseen, would in the future result in a Cereus Material Adverse
Effect, or (iii) any entry into a commitment or transaction material to Cereus
and its Subsidiaries taken as a whole (including any merger, acquisition,
borrowing of money or sales of assets), except in the ordinary course of
business consistent with past practice or undertaken with the knowledge of
Parent.
SECTION 3.14 REGISTRATION STATEMENT AND PROXY STATEMENT. None of
the information to be supplied by Cereus or its Subsidiaries for inclusion in
(i) the Registration Statement on Form S-4 to be filed under the Securities Act
with the SEC in connection with the Merger for the purpose of registering the
shares of Parent Common Stock to be issued in the Merger (the "REGISTRATION
STATEMENT") or (ii) the proxy statement to be distributed in connection with
Cereus's and Parent's meetings of their respective stockholders to vote upon
this Agreement and the Transactions, and any amendments thereof or supplements
thereto (the "PROXY STATEMENT" and, together with the prospectus included in the
Registration Statement, the "JOINT PROXY STATEMENT/PROSPECTUS") will, in the
case of the Proxy Statement, at the time of the mailing of the Proxy Statement
and
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at the time of the meetings of stockholders of Parent and Cereus to be held in
connection with the Transactions, or, in the case of the Registration Statement,
as amended or supplemented, at the time it becomes effective and at the time of
such meetings of the stockholders of Parent and Cereus, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading.
SECTION 3.15 REORGANIZATION. None of Cereus or its Subsidiaries
has willfully taken or agreed to or intends to take any action or has any
knowledge of any fact or circumstance that would prevent the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
SECTION 3.16 BROKERS AND FINDERS. Cereus has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Cereus to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the Transactions, except
The Robinson-Humphrey Company, LLC ("ROBINSON-HUMPHREY"), whose fees and
expenses will be paid by Cereus in accordance with Cereus's agreement with
Robinson-Humphrey, based upon arrangements made by or on behalf of Cereus and
previously disclosed to Parent.
SECTION 3.17 OPINION OF FINANCIAL ADVISOR. Robinson-Humphrey has
rendered an opinion to the Board of Directors of Cereus to the effect that, as
of the date hereof, the Exchange Ratio is fair to the holders of Cereus Common
Stock from a financial point of view; it being understood and acknowledged by
Cereus that such opinion has been rendered for the benefit of the Board of
Directors of Cereus and is not intended to, and may not, be relied upon by
Parent, its affiliates or their respective Subsidiaries. Robinson-Humphrey has
authorized the inclusion of its opinion in the Joint Proxy Statement/Prospectus.
SECTION 3.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE.
(a) There is not now, nor has there ever been,
any disposal, release or threatened release of Hazardous Material (as defined
below) on, from or under properties now or ever owned or leased by or to Cereus
or its Subsidiaries (the "CEREUS PROPERTIES") and there has not been generated
by or on behalf of Cereus or its Subsidiaries any Hazardous Material that would
result in a material adverse effect to the business of Cereus or its
Subsidiaries, taken as a whole. No Hazardous Material has been disposed of or
allowed to be disposed of by Cereus or its Subsidiaries, by any other party, on
or off any of the Cereus Properties during the period that Cereus or its
Subsidiaries owned or leased the property which may give rise under applicable
Environmental Law to a clean-up responsibility, personal injury liability or
property damage claim against Cereus or its Subsidiaries or Cereus or its
Subsidiaries being named a potentially responsible party for any such clean-up
costs, personal injuries or property damage or create any cause of action by any
third party against Cereus or its Subsidiaries. For purposes of this subsection,
the terms
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"disposal," "release," and "threatened release" shall have the definitions
assigned thereto by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended. The term "Hazardous Material" means any
material or substance which is (i) defined as a "hazardous waste" or a
"hazardous substance" under applicable Law, (ii) designated as a "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution Control Act,
(iii) defined as a "hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, or (iv) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended. The term "Environmental
Laws" means any law, statute, ordinance, rule or regulation of any governmental
authority for which the primary purpose is to control pollution and protect the
environment, including the statutes referenced above in this paragraph.
(b) None of Cereus or its Subsidiaries'
operations at the Cereus Properties is (or, with respect to past Cereus
Properties and Cereus Properties of former Subsidiaries, was at the time of
disposition) in violation of any Environmental Law (with respect to past Cereus
Properties and Cereus Properties of former Subsidiaries, Environmental Laws in
effect at the time of disposition) relating to industrial hygiene or to the
environmental conditions on, under or about such Cereus Properties, including,
without limitation, soil and ground water condition and there are (or at the
time of disposition were) no underground tanks or related piping, conduits or
related structures used by Cereus or its Subsidiaries in the conduct of its
business at such properties. During the period that Cereus or its Subsidiaries
owned or leased the Cereus Properties, neither Cereus nor its Subsidiaries nor
any third party used, generated, manufactured or stored on, under or about such
Cereus Properties or transported to or from such Cereus Properties any Hazardous
Material.
SECTION 3.19 DISCLOSURE. The representations and warranties of
Cereus in this Agreement do not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained
herein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND CEREUS ACQUIRING SUB
Except as disclosed in the Parent SEC Reports (as defined in Section
4.5) or as set forth in the Parent Disclosure Schedule delivered by Parent to
Cereus prior to the execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULE"), Parent and Cereus Acquiring Sub jointly and severally represent and
warrant to Cereus that the following statements are true and correct as of the
date hereof.
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and
Cereus Acquiring Sub is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business
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as it is now being conducted. Each of Parent and Cereus Acquiring Sub is
qualified to do business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing will not, when taken together with all
other such failures, have, or be reasonably expected to have, a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its Subsidiaries, taken as a
whole, other than any change, circumstance or effect (i) relating to or
resulting from the economy or securities markets in general, (ii) relating to or
resulting from the industries in which Cereus or Parent operate and not uniquely
relating to Cereus or Parent, or (iii) resulting from the announcement or
existence of this Agreement and the Transactions (a "PARENT MATERIAL ADVERSE
EFFECT"), and copies of good standing certificates evidencing such qualification
will be delivered to Cereus at or prior to the Closing, in each case bearing a
date within thirty (30) days prior to the Closing Date.
SECTION 4.2 CAPITALIZATION.
(a) As of the date hereof, the authorized
capital stock of Parent consists of 50,000,000 shares of Parent Common Stock,
$.01 par value per share, and 1,000,000 shares of preferred stock, par value
$.01 per share ("PARENT PREFERRED STOCK"). As of June 9, 2000, (i) 25,467,250
shares of Parent Common Stock were issued and outstanding, all of which were
validly issued and are fully paid, nonassessable and free of preemptive rights,
(ii) no shares of Parent Preferred Stock were issued and outstanding, (iii)
6,700,103 shares of Parent Common Stock were reserved for issuance pursuant to
one or more plans of Parent governing the issuance and administration of Parent
Options (the "PARENT OPTION PLANS"), (iv) 540,000 shares of Parent Common Stock
were reserved for issuance upon exercise of outstanding warrants and options not
issued under the Parent Option Plans, and (v) no shares of Parent Common Stock
were reserved for issuance upon conversion of outstanding convertible debentures
and outstanding convertible notes.
(b) Except as set forth in subsection (a) above
or as otherwise contemplated by this Agreement, there are no outstanding
subscriptions, options, calls, contracts, commitments, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement and also including
any rights plan or other anti-takeover agreement, obligating Parent or any of
its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of Parent or obligating Parent or
any of its Subsidiaries to grant, extend or enter into any such agreement or
commitment. Except as otherwise disclosed in the Parent SEC Reports, there are
no voting trusts, proxies or other agreements or understandings to which Parent
or any of its Subsidiaries is a party or is bound with respect to the voting of
any shares of capital stock of Parent.
SECTION 4.3 SUBSIDIARIES. Identified on Schedule 4.3 is each
direct and indirect Subsidiary of Parent. Each such Subsidiary (i) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite
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corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted; and (ii)
is qualified to do business, and is in good standing, in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, all such
qualifications being listed in Section 4.3 of the Parent Disclosure Schedule,
except in all cases where the failure to be so qualified and in good standing
would not, when taken together with all such other failures, result in a Parent
Material Adverse Effect. At or prior to Closing, copies of good standing
certificates evidencing such qualification will be delivered to Cereus in each
case bearing a date within thirty (30) days prior to the Closing Date. All of
the outstanding shares of capital stock or other equity interests of each
Subsidiary of Parent are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned directly or indirectly by Parent, free and
clear of any liens, claims or encumbrances, except that such shares are pledged
to secure Parent's credit facilities. There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions or arrangements relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any shares of
capital stock or other equity interests of any corporate Subsidiary of Parent,
including any right of conversion or exchange under any outstanding security,
instrument or agreement.
SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Each of Parent and Cereus Acquiring Sub has
full corporate power and authority to enter into this Agreement and, subject to
the Parent Stockholders' Approval (as defined in Section 6.3(b)) and the Parent
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate the
Transactions. This Agreement has been approved by the Board of Directors of each
of Parent and Cereus Acquiring Sub and no other corporate proceeding on the part
of Parent or Cereus Acquiring Sub is necessary to authorize the execution and
delivery of this Agreement and, except for the Parent Stockholders' Approval,
the consummation by Parent and Cereus Acquiring Sub of the Transactions. This
Agreement has been duly executed and delivered by each of Parent and Cereus
Acquiring Sub and, assuming the due authorization, execution and delivery by the
other parties hereto, constitutes a valid and legally binding agreement of each
of Parent and Cereus Acquiring Sub, enforceable against each in accordance with
its terms.
(b) The execution and delivery of this Agreement
by each of Parent and Cereus Acquiring Sub do not violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Parent or any of its Subsidiaries under any of the
terms, conditions or provisions of (i) the respective charters or by-laws of
Parent or any of its Subsidiaries, (ii) other than as provided in Section
4.4(c), any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets or (iii) except
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as set forth in Section 4.4(b) of the Parent Disclosure Schedule, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which Parent or any of its Subsidiaries is now a party or by which
Parent or any of its Subsidiaries or any of their respective properties or
assets may be bound or affected. The consummation by each of Parent and Cereus
Acquiring Sub of the Transactions will not result in any violation, conflict,
breach, termination, acceleration or creation of liens under the immediately
preceding sentence, subject (A) in the case of the terms, conditions or
provisions described in clause (ii) above, to obtaining (prior to the Effective
Time) the Parent Required Statutory Approvals and the Parent Stockholder's
Approval and (B) in the case of the terms, conditions or provisions described in
clause (iii) above, to obtaining (prior to the Effective Time) consents required
from commercial lenders, lessors or other third parties. Excluded from the
foregoing sentences of this paragraph (b), insofar as they apply to the terms,
conditions or provisions described in clauses (ii) and (iii) of the first
sentence of this paragraph (b) (and whether resulting from such execution and
delivery or consummation), are such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances that would not, in the aggregate, result in a Parent Material
Adverse Effect.
(c) Except for (i) the filing of the
Registration Statement and Joint Proxy Statement/ Prospectus with the SEC
pursuant to the Exchange Act and the Securities Act, and the declaration of the
effectiveness thereof by the SEC and filings with various or approvals from
state blue sky authorities, (ii) the making of the Merger Filing, (iii) the
filings by Parent required by the HSR Act and (iv) any required filings with or
approvals from the NASDAQ or NASD (the filings and approvals referred to in
clauses (i) through (iv) are collectively referred to as the "PARENT REQUIRED
STATUTORY APPROVALS"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement
by Parent or the consummation by Parent of the Transactions, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, result in a Parent Material Adverse Effect.
SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS. Since January 1,
1997, Parent has filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and supplements thereto)
required to be filed by it under each of the Securities Act, the Exchange Act
and the respective rules and regulations thereunder, all of which, as amended if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder. No
Subsidiary of Parent is required to file any form, report or other document with
the SEC. Parent has previously made available to Cereus, via its EDGAR filings
where available, copies (including all exhibits, post-effective amendments and
supplements thereto) of its (a) Annual Reports on Form 10-K (as amended on Form
10-K/A) for the fiscal years ended December 31, 1998 and December 31, 1999,
Annual Report on Form 10-KSB (as amended on Form 10-KSB/A) for the fiscal year
ended December 31, 1997, as filed with the SEC, (b) proxy and information
statements relating to (i) all meetings
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of its stockholders (whether annual or special) and (ii) actions by written
consent in lieu of a stockholders' meeting, in each case from January 1, 1998
until the date hereof, and (c) all other reports, including quarterly reports,
and registration statements filed by Parent with the SEC since January 1, 1997
(the documents referred to in clauses (a), (b) and (c) are collectively referred
to as the "PARENT SEC REPORTS"). As of their respective dates, neither the
Parent SEC Reports nor the documents describing the Mineral Transaction
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The audited financial statements for the fiscal year ended December 1999 and the
two prior fiscal years, and the unaudited consolidated financial statements of
Parent included in Parent's Quarterly Report on Form 10-Q for the period ended
March 31, 2000 (collectively, the "PARENT FINANCIAL STATEMENTS"), have been
prepared in accordance with GAAP (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of Parent and its
Subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended.
SECTION 4.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE
PAYMENTS.
(a) Section 4.6(a) of the Parent Disclosure
Schedule lists all employee benefit plans (as defined in Section 3(3) of ERISA)
and all bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, whether
legally enforceable or not, to which Parent or any Subsidiary of Parent is a
party, with respect to which Parent or any Subsidiary of Parent has any
obligation or which are maintained, contributed to or sponsored by Parent or any
Subsidiary of Parent for the benefit of any current or former employee, officer
or director of Parent or any Subsidiary of Parent (collectively, the "PARENT
BENEFIT PLANS"). With respect to each Parent Benefit Plan, Parent has delivered,
or prior to Closing will deliver, or make available to Parent a true, complete
and correct copy of (i) such Parent Benefit Plan and the most recent summary
plan description related to such Parent Benefit Plan, if a summary plan
description is required therefor, (ii) each trust agreement or other funding
arrangement relating to such Parent Benefit Plan, (iii) the most recent annual
report (Form 5500) filed with the IRS) with respect to such Parent Benefit Plan,
(iv) the most recent actuarial report or financial statement relating to such
Parent Benefit Plan and (v) the most recent determination letter issued by the
IRS with respect to such Parent Benefit Plan, if it is qualified under Section
401(a) of the Code. Neither Parent nor any Subsidiary of Parent has any express
or implied commitment, whether legally enforceable or not, (i) to create, incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Parent Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
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(b) None of the Parent Benefit Plans is a
Multiemployer Plan or a Multiple Employer Plan. None of the Parent Benefit Plans
provides for or promises retiree medical, disability or life insurance benefits
to any current or former employee, officer or director of Parent or any
Subsidiary of Parent.
(c) Each Parent Benefit Plan has been
administered in all material respects in accordance with its terms and all
contributions required to be made under the terms of any of the Parent Benefit
Plans as of the date of this Agreement have been timely made or have been
reflected on the most recent consolidated balance sheet filed or incorporated by
reference in Parent Reports prior to the date of this Agreement. Except as set
forth in Schedule 4.6(c), with respect to the Parent Benefit Plans, no event has
occurred and, to the knowledge of Parent, there exists no condition or set of
circumstances in connection with which Parent or any Subsidiary of Parent could
be subject to any liability under the terms of such Parent Benefit Plans, ERISA,
the Code or any other applicable law which would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. No legal
action, suit or claim is pending or, to the knowledge of Parent, threatened with
respect to any Parent Benefit Plan (other than claims for benefits in the
ordinary course).
(d) Except as would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect: (i)
each Parent Benefit Plan which is intended to be qualified under Section 401(a)
of the Code or Section 401(k) of the Code has received a favorable determination
letter from the IRS that it is so qualified and each trust established in
connection with any Parent Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter from the IRS to adversely
affect the qualified status of any such Parent Benefit Plan or the exempt status
of any such trust; (ii) each trust maintained or contributed to by Parent or any
Subsidiary of Parent which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal income
taxation under Section 501(c)(9) of the Code has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and no
fact or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status; (iii) there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Parent Benefit Plan; (iv) neither Parent
nor any Subsidiary of Parent has incurred any liability for any penalty or tax
arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such liability; (v) no complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
Parent Benefit Plan; (vi) no Parent Benefit Plan is subject to Title IV of
ERISA; (vii) none of the assets of Parent or any Subsidiary of Parent is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code; neither Parent nor any Subsidiary of Parent has been required to post
any security under Section 307 of ERISA or Section 401(a)(29) of the Code; and
no fact or event exists which could give rise to any such lien or requirement to
post any such security; (viii) all
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contributions, premiums or payments required to be made with respect to any
Parent Benefit Plan have been made on or before their due dates; and (ix) all
such contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any government entity and no fact
or event exists which could give rise to any such challenge or disallowance.
(e) Neither Parent nor any Subsidiary of Parent is a party to
any collective bargaining or other labor union contract applicable to persons
employed by Parent or any Subsidiary of Parent and no collective bargaining
agreement is being negotiated by Parent or any Subsidiary of Parent. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Parent or any Subsidiary of Parent pending or, to the knowledge of
Parent, threatened which may interfere with the respective business activities
of Parent or any Subsidiary of Parent, except where such dispute, strike or work
stoppage would not reasonably be expected to have a Parent Material Adverse
Effect. As of the date of this Agreement, to the knowledge of Parent, there is
no charge or complaint against Parent or any Subsidiary of Parent pending before
the National Labor Relations Board or any comparable governmental entity pending
or threatened in writing, except where such unfair labor practice, charge or
complaint would not reasonably be expected to have a Parent Material Adverse
Effect.
(f) Parent has delivered or made available to Parent true,
complete and correct copies of (i) all employment agreements with officers and
all consulting agreements of Parent and each Subsidiary of Parent providing for
annual compensation in excess of $200,000, (ii) all severance plans, agreements,
programs and policies of Parent and each Subsidiary of Parent with or relating
to their respective employees or consultants, and (iii) all plans, programs,
agreements and other arrangements of Parent and each Subsidiary of Parent with
or relating to their respective employees or consultants which contain "change
of control" provisions.
(g) No employee of Parent or its Subsidiaries will be entitled
to any additional benefits or an acceleration of the time of payment or vesting
of any benefits under any of Parent Benefit Plan as a result of the
Transactions. No amount payable, or economic benefit provided, by Parent or its
Subsidiaries (including any acceleration of the time of payment or vesting of
any benefit) could be considered an "excess parachute payment" under Section
280G of the Code. No person is entitled to receive any additional payment from
Parent or its Subsidiaries or any other person in the event that the excise tax
of Section 4999 of the Code is imposed on such person.
SECTION 4.7 CERTAIN TAX MATTERS. Neither Parent nor, to the knowledge
of Parent, any of its affiliates has taken or agreed to take any action that
would reasonably be expected to prevent the Merger from constituting a
transaction qualifying under Section 368 of the Code. Parent is not aware of any
agreement, plan or other circumstances that would reasonably be expected to
prevent the Merger from so qualifying under Section 368 of the Code.
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SECTION 4.8 CONTRACTS; DEBT INSTRUMENTS. There is no contract or
agreement that is material to the business, financial condition or results of
operations of Parent and its Subsidiaries taken as a whole. Except as disclosed
in Schedule 4.8, neither Parent nor any Subsidiary of Parent is in violation of
or in default under (nor does there exist any condition which with the passage
of time or the giving of notice would reasonably be expected to cause such a
violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture or lease, or any other contract, license, agreement,
arrangement or understanding to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Set forth in Schedule 4.8 is a description of any
material changes to the amount and terms of the indebtedness of Parent and its
subsidiaries as described in the notes to the financial statements incorporated
in Parent's March 31, 2000 Form 10-Q.
SECTION 4.9 LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against Parent
or any Subsidiary of Parent before any governmental entity that would reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, and, except as disclosed to Parent, to the knowledge of Parent, there
are no existing facts or circumstances that would reasonably be expected to
result in such a suit, claim, action, proceeding or investigation. Except as
disclosed to Parent, Parent is not aware of any facts or circumstances which
would reasonably be expected to result in the denial of insurance coverage under
policies issued to Parent and its Subsidiaries in respect of such suits, claims,
actions, proceedings and investigations for which Parent has a reasonable
expectation of obtaining insurance coverage, except in any case as would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect or as a result of the execution of this Agreement and
consummation of transactions hereunder. Except as disclosed in Schedule 4.9,
neither Parent nor any Subsidiary of Parent is subject to any outstanding order,
writ, injunction or decree which would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 4.10 INTELLECTUAL PROPERTY. Except as would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, (i) Parent and its Subsidiaries own or possess adequate licenses or
other valid rights to use all patents, patent applications, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights and copyright registrations and applications, copyright rights,
service marks, trade secrets, applications for trademarks and for service marks,
know- how and other proprietary rights and information used or held for use in
connection with the respective businesses of Parent and its Subsidiaries as
currently conducted (collectively, the "PARENT IP"), free and clear of all liens
other than those in favor of PNC Bank, National Association ("PNC"), and (ii)
Parent is unaware of any assertion or claim challenging the ownership, use or
validity of any of the foregoing. The licenses associated with the Parent IP are
valid and binding obligations of Parent, enforceable in accordance with their
terms, and there are no material breaches or defaults thereunder. The conduct of
the respective businesses of Parent and its Subsidiaries as currently conducted
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does not infringe upon any patent, patent right, license, trademark, trademark
right, trade dress, trade name, trade name right, service mark, copyright or
copyright right of any third party that would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. To the
knowledge of Parent, there are no infringements of any proprietary rights owned
by or licensed by or to Parent or any Subsidiary of Parent that could reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
SECTION 4.11 TAXES. Except for such matters that would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, (i) Parent and each of its Subsidiaries has timely filed or shall timely
file all returns and reports required to be filed by it with any taxing
authority, taking into account any extension of time to file granted to or
obtained on behalf of Parent and its Subsidiaries, (ii) all taxes shown to be
payable on such returns or reports have been or will be paid, (iii) as of the
date hereof, no deficiencies for any amount of tax have been asserted or
assessed by any taxing authority against Parent or any Subsidiary of Parent that
are not adequately reserved for and (iv) the most recent financial statements
contained in the Parent SEC Reports reflect an adequate reserve in accordance
with GAAP for all taxes payable by Parent and its Subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements.
SECTION 4.12 INTERESTED PARTY TRANSACTIONS. Except for transactions of
the type described in the Parent SEC Reports which have occurred since March 31,
2000 in the ordinary course of business, since March 31, 2000, no executive
officer, director or stockholder of Parent or any of its Subsidiaries has
engaged in any business dealings with Parent or any of its Subsidiaries (other
than any such business dealings that would not required to be disclosed in a
proxy statement satisfying the requirements of Regulation 14A promulgated under
the Exchange Act filed on the date hereof).
SECTION 4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
2000, except with respect to the proposed sale of the Hospitality Services
Group, there has not been (i) any change that would result in a Parent Material
Adverse Effect, (ii) any event or occurrence which, insofar as can be reasonably
foreseen, would in the future result in a Parent Material Adverse Effect, or
(iii) any entry into a commitment or transaction material to Parent and its
Subsidiaries taken as a whole (including any merger, acquisition, borrowing of
money or sales of assets), except in the ordinary course of business consistent
with past practice or undertaken with the knowledge of Cereus.
SECTION 4.14 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Parent or its Subsidiaries for inclusion in (i)
the Registration Statement or (ii) Joint Proxy Statement/Prospectus will, in the
case of the Proxy Statement, at the time of the mailing of the Proxy Statement,
and at the time of the meetings of stockholders of Parent and Cereus to be held
in connection with the Transactions, or, in the case of the Registration
Statement, as amended or supplemented, at the time it becomes effective and at
the time of such meetings of the stockholders of Cereus
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and Parent, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement/ Prospectus will, as of its mailing
date, comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, except that no representation is
made by Parent with respect to information supplied by Cereus or the
stockholders of Cereus for inclusion in the Joint Proxy Statement/Prospectus.
SECTION 4.15 REORGANIZATION. None of Parent or its Subsidiaries has
taken or agreed or intends to take any action or has any knowledge of any fact
or circumstance that would prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
SECTION 4.16 BROKERS AND FINDERS. Parent has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Parent to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the Transactions, except
Morgan Keegan & Company, Inc. ("MORGAN KEEGAN"), whose fees and expenses will be
paid by Parent in accordance with Parent's agreement with Morgan Keegan, based
upon arrangements made by or on behalf of Parent and previously disclosed to
Cereus.
SECTION 4.17 OPINION OF FINANCIAL ADVISOR. Morgan Keegan has rendered
an opinion to the Board of Directors of Parent to the effect that, as of the
date hereof, the Exchange Ratio is fair to the holders of Parent Common Stock
from a financial point of view; it being understood and acknowledged by Parent
that such opinion has been rendered for the benefit of the Board of Directors of
Parent and is not intended to, and may not, be relied upon by Cereus, its
affiliates or their respective Subsidiaries. Morgan Keegan has authorized the
inclusion of its opinion in the Joint Proxy Statement/Prospectus.
SECTION 4.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE.
(a) There is not now, nor has there ever been, any disposal,
release or threatened release of Hazardous Material (as defined below) on, from
or under properties now or ever owned or leased by or to Parent or its
Subsidiaries (the "PARENT PROPERTIES") and there has not been generated by or on
behalf of Parent or its Subsidiaries any Hazardous Material that would result in
a material adverse effect to the business of Parent or its Subsidiaries, taken
as a whole. No Hazardous Material has been disposed of or allowed to be disposed
of by Parent or its Subsidiaries, by any other party, on or off any of the
Parent Properties during the period that Parent or its Subsidiaries owned or
leased the property which may give rise under applicable Environmental Law to a
clean-up responsibility, personal injury liability or property damage claim
against Parent or its Subsidiaries or Parent or its Subsidiaries being named a
potentially responsible party for any such clean-up costs, personal injuries or
property damage or create any cause of action by
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any third party against Parent or its Subsidiaries. For purposes of this
subsection, the terms "disposal," "release," and "threatened release" shall have
the definitions assigned thereto by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended. The term "Hazardous
Material" means any material or substance which is (i) defined as a "hazardous
waste" or a "hazardous substance" under applicable Law, (ii) designated as a
"hazardous substance" pursuant to Section 311 of the Federal Water Pollution
Control Act, (iii) defined as a "hazardous waste" pursuant to Section 1004 of
the Federal Resource Conservation and Recovery Act, or (iv) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended. The term
"Environmental Laws" means any law, statute, ordinance, rule or regulation of
any governmental authority for which the primary purpose is to control pollution
and protect the environment, including the statutes referenced above in this
paragraph.
(b) None of Parent or its Subsidiaries' operations at the
Parent Properties is (or, with respect to past Parent Properties and Parent
Properties of former Subsidiaries, was at the time of disposition) in violation
of any Environmental Law (with respect to past Parent Properties and Parent
Properties of former Subsidiaries, Environmental Laws in effect at the time of
disposition) relating to industrial hygiene or to the environmental conditions
on, under or about such Parent Properties, including without limitation soil and
ground water condition and there are (or at the time of disposition were) no
underground tanks or related piping, conduits or related structures used by
Parent or its Subsidiaries in the conduct of its business at such properties.
During the period that Parent or its Subsidiaries owned or leased the Parent
Properties, neither Parent nor its Subsidiaries nor any third party used,
generated, manufactured or stored on, under or about such Parent Properties or
transported to or from such Parent Properties any Hazardous Material.
SECTION 4.19 DISCLOSURE. To the knowledge of Parent and Cereus
Acquiring Sub, the representations and warranties of Parent and Cereus Acquiring
Sub in this Agreement do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained herein
not misleading.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 TRANSITION MATTERS.
(a) Upon the execution and delivery of this Agreement, Cereus
and Parent shall establish a committee (the "STEERING COMMITTEE") for the
purpose of, to the extent permitted by applicable laws, facilitating the full
exchange of information concerning the business, operations, capital spending,
budgets, and financial results of Parent and Cereus between the date hereof and
the Closing Date (the "INTERIM PERIOD") and otherwise facilitating the efficient
transition and combination of the respective businesses of Parent and Cereus as
promptly as practicable following the Closing. The Steering Committee will
consist of two individuals to be designated from time to time by the
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Chairman of the Board of Directors of Parent and two individuals to be
designated from time to time by the Chairman of the Board of Directors of Cereus
and will be chaired by Cereus. All material decisions of the Steering Committee,
which shall be dissolved as of the Closing, shall be mutually agreed upon by
Parent and Cereus.
(b) If this Agreement shall be terminated pursuant to Section
8.1 and, at the time of such termination, Cereus shall be entitled to receive a
termination fee under Section 8.5, then Parent shall reimburse Cereus for the
costs incurred by Cereus in connection with making its personnel available to
Parent during the Interim Period in fulfillment of the purposes of this Section
5.1 in an amount equal to $12,500 per week or any part thereof. Reimbursement by
Parent to Cereus under this Section 5.1(b) shall be made simultaneous with the
payment of any such termination fee.
(c) Parent shall indemnify and hold harmless Cereus and those
employees of Cereus who render services to Parent during the Interim Period
under this Agreement (including those employees who serve on the Steering
Committee) from and against any claims or liabilities asserted against them
relating to their services to Parent hereunder (and Parent hereby forever
releases Cereus and such persons from any claims by or liabilities to Parent
arising from or relating to such services), provided that (i) such claims or
liabilities did not result from acts or omissions (x) not in good faith or (y)
which involve intentional misconduct or a knowing violation of law and (ii) such
services were rendered in a manner reasonably and in good faith believed to be
in or not opposed to the best interests of Parent.
(d) During the Interim Period, Cereus shall cause all of its
employees made available to Parent pursuant to this Agreement to use their best
efforts to (i) avoid doing anything to the competitive disadvantage of Parent
vis-a-vis Cereus, (ii) not use to the advantage of Cereus any confidential
information of Parent obtained while performing services for or on behalf of
Parent, (iii) not solicit any employees of Parent to terminate their
relationship with Parent, and (iv) if requested by Parent to do so, cause each
such employee of Cereus to execute confidentiality and non-solicitation
agreements in customary form in accordance with the foregoing.
SECTION 5.2 CONDUCT OF BUSINESS BY PARENT AND CEREUS PENDING THE MERGER.
Subject to Section 5.1 above, or except as otherwise contemplated by this
Agreement, after the date hereof and prior to the Closing Date or earlier
termination of this Agreement, each of the Companies shall, and shall cause each
of their Subsidiaries to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with the immediate past practice;
(b) not (i) amend or propose to amend their respective
Articles of Incorporation or Bylaws (or comparable organizational documents),
(ii) split, combine or reclassify their outstanding capital stock, (iii)
declare, set aside or pay any
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dividend or distribution payable in cash, stock, property or otherwise, except
for the payment of dividends or distributions to a Company by a wholly-owned
Subsidiary of such Company, or (iv) repurchase any shares of their outstanding
capital stock;
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any additional shares of, or any options, warrants
or rights of any kind to acquire any shares of, their capital stock of any class
or any debt or equity securities convertible into or exchangeable for such
capital stock, except that each Company may (i) grant options to non-executive
employees and (ii) issue shares upon the exercise of outstanding options and
warrants or pursuant to existing agreements;
(d) not (i) assume, incur or become contingently liable with
respect to any indebtedness for borrowed money other than (A) borrowings in the
ordinary course of business (other than pursuant to credit facilities) or
borrowings under the existing credit facilities of each Company (the "EXISTING
CREDIT FACILITIES") up to the existing borrowing limit on the date hereof or (B)
borrowings to refinance existing indebtedness on terms which are reasonably
acceptable to the other Company, (ii) redeem, purchase, acquire or offer to
purchase or acquire any shares of its capital stock or any options, warrants or
rights to acquire any of its capital stock or any security convertible into or
exchangeable for its capital stock other than pursuant to an employee stock
incentive plan of a Company, (iii) take or fail to take any action which action
or failure to take action would cause either Company or their stockholders
(except to the extent that any stockholders receive cash in lieu of fractional
shares) to recognize gain or loss for federal income tax purposes as a result of
the consummation of the Merger or would otherwise cause the Merger not to
qualify as a reorganization under Section 368(a) of the Code, (iv) make any
acquisition of any assets or businesses other than expenditures for current
assets in the ordinary course of business and expenditures for fixed or capital
assets in the ordinary course of business and (v) sell, pledge, dispose of or
encumber any material assets or businesses, or enter into any binding contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the services of
their respective present officers and key employees, and preserve the goodwill
and business relationships with customers and others having business
relationships with them and not engage in any action, directly or indirectly,
with the intent to adversely impact the Transactions;
(f) not enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees, except
in the ordinary course and consistent with past practice;
(g) not adopt, enter into or amend any pension or retirement
plan, trust or fund, except as required to comply with changes in applicable law
and not adopt, enter into or amend in any material respect any bonus, profit
sharing, compensation,
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stock option, deferred compensation, health care, employment or other employee
benefit plan, agreement, trust, fund or arrangement for the benefit or welfare
of any employees or retirees generally, other than in the ordinary course of
business;
(h) use commercially reasonable efforts to maintain with
financially responsible insurance companies insurance on its tangible assets and
its businesses in such amounts and against such risks and losses as are
consistent with past practice; and
(i) not make, change or revoke any material tax election or
make any material agreement or settlement regarding taxes with any taxing
authority.
SECTION 5.3 ACQUISITION TRANSACTIONS.
(a) Each Company shall not, directly or indirectly, and shall
instruct its officers, directors, employees, Subsidiaries, agents or advisors or
other representatives (including any investment banker, attorney or accountant
retained by it), not to, directly or indirectly, solicit, initiate or knowingly
encourage (including by way of furnishing nonpublic information), or take any
other action knowingly to facilitate, any inquiries or the making of any
proposal or offer (including any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing Transaction
(as defined in Section 5.3(b)), or enter into or maintain or continue
discussions or negotiate with any person in furtherance of such inquiries , or
agree to or endorse any Competing Transaction, or authorize or permit any of the
officers, directors or employees of the Company or any Subsidiary, or any
investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any Subsidiary, to take any such
action; provided, however, that (i) nothing contained in this Section 5.3(a)
shall prohibit the Board of Directors of the Company from complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer not made in violation of this Section 5.3(a), and (ii) if, after receiving
the written opinion of outside legal counsel, the Board of Directors of the
Company determines in good faith that failing to do so would violate its
fiduciary duties, nothing contained in this Section 5.3(a) shall prohibit the
Board of Directors of the Company from considering and negotiating (including
furnishing nonpublic information) an unsolicited bona fide written acquisition
proposal (the "UNSOLICITED BID") and from approving or recommending to the
stockholders of the Company such Unsolicited Bid which (A) was not received in
violation of this Section 5.3(a), (B) if executed or consummated would be a
Competing Transaction, (C) is not subject to financing or financing is, in the
good faith judgment of the Board of Directors of the Company after consultation
with its financial advisors, highly likely of being obtained, and (D) the Board
of Directors of the Company determines in good faith, after receiving the
written opinion of its financial advisor to such effect, that such Unsolicited
Bid is highly likely to result in a transaction more favorable, from a financial
point of view, to the Company's stockholders than the Merger. Each Company shall
use its best efforts to notify the other Company promptly, and in no event later
than one day after receipt, if any proposal or offer, or any inquiry or contact
with any person with respect thereto, regarding a
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Competing Transaction is made. The Company immediately shall cease and cause to
be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to a Competing Transaction. Subject to the
fiduciary duties of the Board of Directors of the Company, the Company shall not
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party. The Company shall use its best
efforts to ensure that its officers, directors, employees, subsidiaries, agents
and advisors or other representatives (including any investment banker, attorney
or accountant retained by it) are aware of the restrictions described in this
Section 5.3.
(b) For purposes of this Section 5.3, the term "COMPETING
TRANSACTION" shall mean any of the following involving either Company or any
Subsidiary of either Company whose business constitutes 25% or more of the net
revenues, net income or assets of such Company and its Subsidiaries, taken as a
whole, as the case may be (other than the Merger contemplated by this Agreement
or the sale of the Hospitality Assets):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 15% or more of the assets of such party and its
Subsidiaries, taken as a whole, in a single transaction or series of related
transactions except for the sale of inventory in the ordinary course of
business; or
(iii) any tender offer or exchange offer for 15% or more of
the outstanding voting securities of such party or the filing of a registration
statement under the Securities Act in connection therewith.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO INFORMATION.
(a) Subject to applicable law, Cereus and its Subsidiaries
shall afford to Parent and its respective accountants, counsel, financial
advisors and other representatives (the "PARENT REPRESENTATIVES") and Parent and
its Subsidiaries shall afford to Cereus and its accountants, counsel, financial
advisors and other representatives (the "CEREUS REPRESENTATIVES") full access
during normal business hours with reasonable notice throughout the period prior
to the Effective Time to all of their respective properties, books, contracts,
commitments and records (including, but not limited to, tax returns) and, during
such period, shall furnish promptly to one another (i) a copy of each report,
schedule and other document filed or received by any of them pursuant to the
requirements of federal or state securities laws or filed by any of them with
the SEC in connection with the Transactions and (ii) such other information
concerning their respective businesses, properties and personnel as either
Company shall reasonably request; provided, however, that no investigation
pursuant to this Section 6.1 shall amend or modify any representations
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or warranties made herein or the conditions to the obligations of the respective
parties to consummate the Merger. Cereus and its Subsidiaries shall hold and
shall use their reasonable best efforts to cause the Cereus Representatives to
hold, and Parent and its Subsidiaries shall hold and shall use their reasonable
best efforts to cause Parent Representatives to hold, in strict confidence all
nonpublic documents and information furnished to each Company, in connection
with the Transactions contemplated by this Agreement, except that (i) Cereus and
Parent may disclose such information as may be necessary in connection with
seeking the Cereus Required Statutory Approvals, Cereus Stockholders' Approval,
Parent Required Statutory Approvals and Parent Stockholders' Approval and (ii)
each of Cereus and Parent may disclose any information that it is required by
law or judicial or administrative order to disclose.
(b) In the event that this Agreement is terminated in
accordance with its terms, each Company shall promptly redeliver to the other
all nonpublic written material provided pursuant to this Section 6.1 and shall
not retain any copies, extracts or other reproductions in whole or in part of
such written material. In such event, all documents, memoranda, notes and other
writings prepared by a Company based on the information in such material shall
be destroyed (and each Company shall use their respective reasonable best
efforts to cause their advisors and representatives to similarly destroy their
documents, memoranda and notes), and such destruction (and reasonable best
efforts) shall be certified in writing by an authorized officer supervising such
destruction.
SECTION 6.2 REGISTRATION STATEMENT AND PROXY STATEMENT. Parent shall file
with the SEC as soon as is reasonably practicable after the date hereof the
Registration Statement and shall use all reasonable efforts to have the
Registration Statement declared effective by the SEC as promptly as practicable.
Parent shall also take any action required to be taken under applicable state
blue sky or securities laws in connection with the issuance of Parent Common
Stock pursuant to this Agreement and shall use all reasonable efforts to obtain
required approvals and clearance with respect thereto. Parent, Cereus Acquiring
Sub and Cereus shall promptly furnish to each other all information, and take
such other actions, as may reasonably be requested in connection with any action
by any of them in connection with the foregoing sentence. The information
provided and to be provided by Parent and Cereus, respectively, for use in the
Joint Proxy Statement/Prospectus shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 6.3 STOCKHOLDERS' APPROVALS.
(a) Subject to the fiduciary duties of the Board of Directors
of Cereus under applicable law, Cereus shall, as promptly as practicable, submit
this Agreement and the Transactions for the approval of its stockholders at a
meeting of stockholders and shall use its best efforts to obtain stockholder
approval and adoption (the "CEREUS STOCKHOLDERS' APPROVAL") of this Agreement
and the Transactions. Subject to the fiduciary duties of the Board of Directors
of Cereus under applicable law, such meeting of
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stockholders shall be held as soon as practicable following the date upon which
the Registration Statement becomes effective. Subject to the fiduciary duties of
the Board of Directors of Cereus under applicable law, Cereus shall, through its
Board of Directors, recommend to its stockholders approval of the Transactions.
(b) Subject to the fiduciary duties of the Board of Directors
of Parent under applicable law, Parent shall, as promptly as practicable, submit
this Agreement and the Transactions for the approval of its shareholders at a
meeting of shareholders and shall use its best efforts to obtain stockholder
approval and adoption (the "PARENT STOCKHOLDERS' APPROVAL") of this Agreement
and the Transactions. Subject to the fiduciary duties of the Board of Directors
of Parent under applicable law, such meeting of stockholders shall be held as
soon as practicable following the date upon which the Registration Statement
becomes effective. Subject to the fiduciary duties of the Board of Directors of
Parent under applicable law, Parent shall, through its Board of Directors,
recommend to its stockholders approval of the Transactions.
SECTION 6.4 COMPLIANCE WITH THE SECURITIES ACT. Cereus shall use its best
efforts to cause each officer, each director and each other person who is an
"affiliate," of Cereus, as that term is used in paragraphs (c) and (d) of Rule
145 under the Securities Act ("RULE 145"), to deliver to Parent, at or prior to
the Effective Time a written agreement (an "AFFILIATE AGREEMENT") to the effect
that such person will not offer to sell, sell or otherwise dispose of any shares
of Parent Common Stock issued in the Merger, except, in each case, pursuant to
an effective registration statement or in compliance with Rule 145, as amended
from time to time, or in a transaction which, in the opinion of legal counsel
satisfactory to Parent, is exempt from the registration requirements of the
Securities Act.
SECTION 6.5 EXPENSES AND FEES. Expenses (as defined in this Section 6.5)
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such Expenses, except that those Expenses incurred in
connection with printing and filing the Registration Statement and the Joint
Proxy Statement/Prospectus shall be shared equally by Parent and Cereus. For
purposes of this Agreement, the term "EXPENSES" shall mean, with respect to any
party hereto, all reasonable out-of-pocket expenses (including all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates, but excluding any allocation of overhead)
incurred by such party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of its
obligations pursuant to this Agreement and the consummation of the Merger, the
preparation, printing, filing and mailing of the Registration Statement, and the
Joint Proxy Statement/Prospectus, the solicitation of stockholder or shareholder
approvals, any filings made under the HSR Act and all other matters related to
the Closing.
SECTION 6.6 AGREEMENT TO COOPERATE.
(a) Subject to the terms and conditions herein provided and
subject to the fiduciary duties of the respective Boards of Directors of each
Company, each of
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the parties hereto shall use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Transactions, including using its reasonable efforts to obtain all
necessary or appropriate waivers, consents or approvals of third parties
required in order to preserve material contractual relationships of each Company
and their respective Subsidiaries, all necessary or appropriate waivers,
consents and approvals and SEC "no-action" letters to effect all necessary
registrations, filings and submissions and to lift any injunction or other legal
bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible).
(b) Without limitation of the foregoing, each of Parent and
Cereus undertakes and agrees to file as soon as practicable, and in any event
prior to 30 days after the date hereof, a Notification and Report Form under the
HSR Act with the FTC and the Antitrust Division. Each of Parent and Cereus shall
(i) respond as promptly as practicable to any inquiries received from the FTC or
the Antitrust Division for additional information or documentation and to all
inquiries and requests received from any State Attorney General or other
governmental authority in connection with antitrust matters and (ii) not extend
any waiting period under the HSR Act or enter into any agreement with the FTC or
the Antitrust Division not to consummate the Transactions, except with the prior
written consent of the other parties hereto. Each party shall promptly notify
the other party of any communication to that party from the FTC, the Antitrust
Division, any State Attorney General or any other governmental entity and permit
the other party to review in advance any proposed communication to any of the
foregoing.
(c) In the event any litigation is commenced by any person or
entity relating to the Transactions, either party shall have the right, at its
own expense, to participate therein, and each Company will not settle any such
litigation without the consent of the other, which consent will not be
unreasonably withheld.
(d) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of Parent, Cereus and the Surviving
Corporation shall take all such necessary action.
(e) Following the Effective Time, Parent shall conduct its
business, and shall cause the Surviving Corporation to conduct its business, in
a manner which would not jeopardize the characterization of the Merger as a
reorganization described in Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
In this regard, Parent shall cause the Surviving Corporation to continue its
historic business or use a significant portion of its historic business assets
in a business within the meaning of Section 368 of the Code. Moreover, Parent
does not have any present plan or intent to (a) sell or otherwise dispose of the
stock of the Surviving Corporation except for transfers of stock to corporations
controlled (within the meaning of Section 368(c) of the Code) by Parent, (b)
reacquire any of its stock issued in connection with the Merger, (c) cause the
Surviving Corporation to issue shares of stock of the Surviving Corporation that
would result in Parent losing "control" (within the meaning of Section 368(c) of
the Code) of the Surviving Corporation, or (d) take or refrain
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from taking, or permit the Surviving Corporation to take or refrain from taking,
any other action that might otherwise cause the Merger not to be treated as a
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code. Parent and Cereus Acquiring Sub will provide Cereus with certain
factual representations of Parent and Cereus Acquiring Sub reasonably requested
by Cereus as necessary to confirm that Parent and Cereus Acquiring Sub will not
take any action on or after the Effective Time that would jeopardize the tax
free nature of the Merger.
SECTION 6.7 PUBLIC STATEMENTS. Each Company shall consult with each other
prior to issuing any press release or any written public statement with respect
to this Agreement or the Transactions and shall not issue any such press release
or written public statement prior to such consultation.
SECTION 6.8 NOTIFICATION OF CERTAIN MATTERS. Each of Parent and Cereus
agrees to give prompt notice to each other of, and to use commercially
reasonable efforts to remedy, (i) the occurrence or failure to occur of any
event which occurrence or failure to occur would be likely to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect on the Closing Date and (ii) any material failure on its
part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it thereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.8 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 6.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) The indemnification provisions of the Certificate of
Incorporation and Bylaws of the Surviving Corporation as in effect at the
Effective Time shall not be amended, repealed or otherwise modified for a period
of three years from the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who at the Effective Time were directors,
officers, employees or agents of Cereus. Parent hereby guaranties
unconditionally the satisfaction of all such rights to indemnification.
(b) In the event the Surviving Corporation or Parent or any of
their successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations of the Surviving Corporation
or the Parent, as the case may be, set forth in this Section 6.9.
(c) For a period of six years after the Effective Time, Parent
shall cause to be maintained in effect for each director and officer of Cereus
and its Subsidiaries as of the Effective Time, liability insurance coverage with
respect to matters arising at or prior to the Effective Time, in such amounts
and containing such terms and
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conditions that are not materially less advantageous to such parties than the
coverage applicable to such individuals immediately prior to the Effective Time.
(d) The rights of each indemnified party hereunder shall be in
addition to, and not in limitation of, any other rights such indemnified party
may have under the charter or Bylaws of Cereus, any indemnification agreement,
under the DGCL, or otherwise. The provisions of this Section 6.9 shall survive
the consummation of the Merger and expressly are intended to benefit each of the
indemnified parties.
SECTION 6.10 CORRECTIONS TO THE JOINT PROXY STATEMENT/ PROSPECTUS AND
REGISTRATION STATEMENT. Prior to the date of approval of the Merger by their
respective stockholders, each of Cereus and Parent shall correct promptly any
information provided by it to be used specifically in the Joint Proxy
Statement/Prospectus and Registration Statement that shall have become false or
misleading in any material respect and shall take all steps necessary to file
with the SEC and have declared effective or cleared by the SEC any amendment or
supplement to the Joint Proxy Statement/Prospectus or the Registration Statement
so as to correct the same and to cause the Joint Proxy Statement/Prospectus as
so corrected to be disseminated to the stockholders of Cereus and Parent, in
each case to the extent required by applicable law.
SECTION 6.11 LISTING. Parent shall use its reasonable best efforts to
effect, at or before the Effective Time, authorization for listing on NASDAQ,
upon official notice of issuance, of the shares of Parent Common Stock to be
issued pursuant to the Merger or to be reserved for issuance upon the exercise
of stock options.
SECTION 6.12 PARENT BOARD OF DIRECTORS. At and after the Effective Time,
the Board of Directors of Parent shall include the same members of the Board of
Directors of Cereus as existed immediately prior to the Effective Time, and will
also include (a) one individual designated by Parent and acceptable to Cereus,
and (b) the current Chairman of the Board of Directors of Parent (who shall
serve as Chairman of the Board of Directors of Parent at and after the Effective
Time). At the Effective Time, Parent shall secure the resignation of each other
member of its Board of Directors.
SECTION 6.13 BRIDGE FACILITY. Contemporaneous with the execution and
delivery of this Agreement, Parent and Cereus shall enter into a commitment
letter substantially in the form attached hereto as Exhibit 6.13 (the "BRIDGE
FACILITY").
SECTION 6.14 EMPLOYMENT AGREEMENTS. At the Closing, Parent shall execute
and deliver to each of Steven A. Odom, James M. Logsdon and Juliet M. Reising
(each an "EXECUTIVE") an executive employment agreement with Parent in
substantially the same form as each Executive has with Cereus on the date
hereof; it being understood that, in the case of Mr. Odom, he shall not serve as
Chairman of the Board of Directors of Parent.
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SECTION 6.15 EXECUTIVE OFFICERS OF PARENT. Effective at or immediately
prior to the Effective Time, the Board of Directors of Parent shall take all
actions necessary to cause (i) Steven A. Odom to be elected as Vice-Chairman of
the Board of Directors and Chief Executive Officer of Parent, (ii) James M.
Logsdon to be elected as President and Chief Operating Officer of Parent, and
(iii) Juliet M. Reising to be elected as Chief Financial Officer and Executive
Vice President of Parent.
SECTION 6.16 REVERSE STOCK SPLIT; CORPORATE NAME. Parent shall take all
action necessary, including amending the Parent's Articles of Incorporation, in
order to (i) effect and implement, as of the Effective Time, a reverse stock
split of the Parent Common Stock so as to reduce the number of issued and
outstanding shares of Parent Common Stock to a number to be mutually agreeable
to Parent and Cereus; and (ii) change the corporate name of Parent to such other
name as Parent and Cereus may agree, provided that such other name shall not be
Eltrax Systems, Inc. or any name similar thereto.
ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) the Cereus's Stockholders' Approval and the Parent
Stockholders' Approval;
(b) an aggregate of at least $20 million in cash shall have
been raised by either Parent or Cereus or by Parent and Cereus together as a
result of the sale of Hospitality Assets, in the case of Parent, or as a result
of the sale of equity or subordinated convertible debt (provided the terms and
conditions of such convertible debt are satisfactory to Parent, whose approval
shall not be unreasonably withheld or delayed), in the case of Cereus, it being
agreed that each Company shall use its reasonable best efforts in this regard;
(c) the Registration Statement shall have been declared
effective by the SEC in accordance with the provisions of the Securities Act,
and no stop order suspending such effectiveness shall have been issued and
remain in effect and no proceeding for that purpose shall have been instituted
by the SEC or any state regulatory authorities;
(d) the shares of Parent Common Stock issuable in the Merger
and those to be reserved for issuance upon exercise of stock options shall have
been authorized for listing on the NASDAQ upon official notice of issuance;
(e) no preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
Merger shall
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have been issued and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted);
(f) no statute, rule or regulation shall have been enacted by
any state or federal government or governmental agency in the United States
which would prevent the consummation of the Merger or make the Merger illegal;
(g) the waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated;
(h) all governmental waivers, consents, orders and approvals
legally required for the consummation of the Merger and the Transactions,
including, but not limited to, the Cereus Required Statutory Approvals and the
Parent Required Statutory Approvals, and all consents from lenders, lessors, or
other third parties required to consummate the Merger, shall have been obtained
and be in effect at the Effective Time, except where the failure to obtain the
same would not be reasonably likely, individually or in the aggregate, to have a
material adverse effect on the business, operations, properties, assets,
liabilities, condition (financial or other) or results of operations of Cereus,
Parent and their Subsidiaries, taken as a whole, following the Effective Time;
and
(i) Cereus shall not have received pursuant to Section 262 of
the DGCL written notice of intent to demand payment in connection with the
Transaction with respect to more than 350,000 shares of Cereus Common Stock.
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATION OF CEREUS TO EFFECT THE
MERGER. Unless waived by Cereus, the obligation of Cereus to effect the Merger
shall be subject to the fulfillment at the Closing Date of the following
additional conditions:
(a) Parent and Cereus Acquiring Sub shall each have performed
their obligations contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of Parent and
Cereus Acquiring Sub contained in this Agreement shall be true and correct on
and as of the date made and (except to the extent that such representations and
warranties speak as of an earlier date) on and as of the Closing Date as if made
at and as of such date, except for such failures to perform or to be true and
correct that would not reasonably be expected to result in a Parent Material
Adverse Effect, and Cereus shall have received a certificate of the Chief
Executive Officer of Parent to that effect;
(b) Cereus and each of the directors of Parent shall have
entered into a proxy agreement substantially in the form attached hereto as
Exhibit 7.2, pursuant to which, among other things, each such director has
granted to Cereus a proxy to vote all of the shares of Parent Common Stock held
by such director in favor of the Merger; and
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(c) Rogers & Hardin LLP, legal counsel to Cereus, shall have
issued its opinion, such opinion dated on or about the date of the Closing,
addressed to Cereus, and reasonably satisfactory to it, based upon certain
representations of Cereus, Parent and Cereus Acquiring Sub and certain
assumptions, to the effect that: (i) the Merger will qualify as a tax-free
"reorganization" under Section 368(a) of the Code, (ii) no gain or loss will be
recognized by Parent or Cereus by reason of the Merger, (iii) no gain or loss
will be recognized by any stockholder of Cereus upon the exchange of Cereus
Common Stock solely for Parent Common Stock in the Merger, (iv) the basis of the
Parent Common Stock received by each Cereus stockholder who exchanges Cereus
Common Stock for Parent Common Stock in the Merger will be the same as the
stockholder's basis in the Cereus Common Stock surrendered in exchange therefor
(subject to any adjustments required as the result of receipt of cash in lieu of
a fractional share of Parent Common Stock), (v) the holding period of the Parent
Common Stock received by each Cereus stockholder in the Merger will include the
holding period of the Cereus Common Stock surrendered in exchange therefor,
provided that such shares of Cereus Common Stock were held as a capital asset by
such stockholder at the Effective Time, and (vi) cash received by each Cereus
stockholder in lieu of a fractional share interest of Parent Common Stock as
part of the Merger will be treated as having been received as a distribution in
full payment in exchange for the fractional share interest of Parent Common
Stock which such stockholder would otherwise be entitled to receive and will
qualify as capital gain or loss (assuming the Cereus Common Stock was a capital
asset in such stockholder's hands at the Effective Time), which opinion shall
not have been withdrawn or modified in any material respect.
SECTION 7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE
MERGER. Unless waived by Parent, the obligation of Parent to effect the Merger
shall be subject to the fulfillment at the Closing Date of the following
additional conditions:
(a) Cereus shall have performed obligations contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of Cereus contained in this Agreement shall be
true and correct on and as of the date made and (except to the extent that such
representations and warranties speak as of an earlier date) on and as of the
Closing Date as if made at and as of such date except for such failures to
perform or to be true and correct that would not reasonably be expected to
result in a Cereus Material Adverse Effect, and Parent shall have received a
certificate of the Chief Executive Officer of Cereus to that effect;
(b) Parent and each of the directors of Cereus shall have
entered into a proxy agreement substantially in the form attached hereto as
Exhibit 7.3, pursuant to which, among other things, each such director has
granted to Parent a proxy to vote all of the shares of Cereus Common Stock held
by such director in favor of the Merger; and
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(c) Cereus shall have available not less than $15 million (the
"CASH AMOUNT") in unencumbered cash or cash equivalents, exclusive of any cash
it raises through the sale of equity (other than in connection with the exercise
of warrants and options to purchase shares of Cereus Common Stock outstanding as
of the date hereof) but inclusive of: (i) the $978,000 principal amount of that
certain promissory note payable to Cereus made by Arena Acquisition Corporation
on April 26, 2000 and (ii) the $1,000,000 aggregate principal amount (as such
amount may be adjusted) of those certain promissory notes payable to Cereus made
by William Boynes, Jr., Michael Griffith and L. Joseph Artime; provided,
however, that the Cash Amount shall be reduced by any amounts advanced under the
Bridge Facility and by $500,000 on the first day of each calendar month
commencing on August 1, 2000 until the earlier of the Effective Time or the
termination of this Agreement; and further provided that Cereus shall use its
reasonable best efforts to raise at least $1.0 million of the Cash Amount by
accelerating the repayment of one or more of the above-described promissory
notes and by causing the exercise of outstanding warrants and options.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the
Boards of Directors of each of Parent and Cereus;
(b) by either Parent or Cereus, if the Effective Time
shall not have occurred on or before December 31, 2000; provided, however, that
in the event that the Effective Time has not occurred by such time solely due to
the failure to satisfy the condition specified in Section 7.1(g) or 7.1(h), then
such date may be extended, at the option of Parent or Cereus, until January 31,
2001; and provided further, however, that the right to terminate this Agreement
under this Section 8.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have caused, or resulted in,
the failure of the Effective Time to occur on or before such date;
(c) by either Parent or Cereus, if any injunction, order
or decree of the type described in Section 7.1(e) hereof shall have been entered
and shall have become final and nonappealable, provided that the party seeking
to terminate this Agreement pursuant to this Section 8.1(c) shall have used its
best efforts to prevent the entry of and to remove such injunction, order or
decree;
(d) by Cereus, if prior to the Parent Stockholders'
Approval, (i) the Board of Directors of Parent withdraws, modifies or changes
its recommendation of the issuance of the Parent Common Stock in the Merger or
shall have
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resolved to do so; or (ii) the Board of Directors of Parent shall have
recommended to the shareholders of Parent a Competing Transaction or shall have
resolved to do so;
(e) by Parent if, prior to the Cereus Stockholders' Approval,
(i) the Board of Directors of Cereus withdraws, modifies or changes its
recommendation of this Agreement or the Merger or shall have resolved to do so,
or (ii) the Board of Directors of Cereus shall have recommended to the
stockholders of Cereus a Competing Transaction or shall have resolved to do so;
(f) by (i) Cereus if this Agreement and the Merger shall fail
to receive the requisite votes for the Parent Stockholders' Approval or (ii)
Parent if this Agreement and the Merger shall fail to receive the requisite
votes for the Cereus Stockholders' Approval;
(g) by Cereus, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent and Cereus Acquiring Sub set forth
in this Agreement, or if any representation or warranty of Parent shall have
become untrue, incomplete or incorrect, in either case such that the conditions
set forth in Section 7.2(a) would not be satisfied (a "TERMINATING PARENT
BREACH"); provided, however, that if such Terminating Parent Breach is curable
by Parent through the exercise of its reasonable efforts within 30 days after
written notice of such default specifying in reasonable detail the nature of
such default is given to Parent by Cereus, and for so long as Parent continues
to exercise such reasonable efforts, Cereus may not terminate this Agreement
under this Section 8.1(g); and provided further, however, that the preceding
proviso shall not in any event be deemed to extend any date set forth in Section
8.1(b); and provided further, however, that Cereus may not terminate this
Agreement under this Section 8.1(g) by reason of any breach of the
representations and warranties in Section 4.13 that is caused by, or that
results from, any action or inaction of any of Cereus's representatives on the
Steering Committee;
(h) by Parent, upon breach of any representation, warranty,
covenant or agreement on the part of Cereus set forth in this Agreement, or if
any representation or warranty of Cereus shall have become untrue, incomplete or
incorrect, in either case such that the conditions set forth in Section 7.3(a)
would not be satisfied (a "TERMINATING CEREUS BREACH"); provided, however, that
if such Terminating Cereus Breach is curable by Cereus through the exercise of
its reasonable efforts within 30 days after written notice of such default
specifying in reasonable detail the nature of such default is given to Cereus by
Parent, and for so long as Cereus continues to exercise such reasonable efforts,
Parent may not terminate this Agreement under this Section 8.1(h); and provided
further, however, that the preceding proviso shall not in any event be deemed to
extend any date set forth in Section 8.1(b);
(i) by either Parent or Cereus, if PNC shall not have
consented to the terms of the Bridge Facility on or before June 23, 2000, or by
Parent at any time if Cereus materially breaches the terms of the Bridge
Facility; or
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(j) by Parent, if Steven A. Odom does not execute the
executive employment agreement referenced in Section 6.14.
SECTION 8.2 EFFECT OF TERMINATION. Except as provided in Section 8.5,
in the event of termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of any party hereto or any of its affiliates or any of its
or their officers or directors, and all rights and obligations of each party
hereto shall cease, subject to the remedies of the parties hereto set forth in
Section 8.5(b); provided, however, that nothing herein shall relieve any party
hereto from liability for the willful or intentional breach of any of its
representations and warranties or the willful or intentional breach of any of
its covenants or agreements set forth in this Agreement.
SECTION 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after the
Cereus Stockholders' Approval and the Parent Stockholders' Approval, no
amendment may be made, except such amendments that have received the requisite
stockholder approval and such amendments as are permitted to be made without
stockholder approval under the Minnesota Business Corporation Act and the DGCL,
as applicable. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.4 WAIVER. At any time prior to the Effective Time, any party
hereto may (a) extend the time for or waive compliance with the performance of
any obligation or other act of any other party hereto or (b) waive any
inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto. Any such extension or waiver shall be valid
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
SECTION 8.5 TERMINATION FEES AND EXPENSES.
(a) In the event that Cereus shall terminate this Agreement
pursuant to (A) Section 8.1(f)(i); (B) Section 8.1(d); or (C) Section 8.1(b) and
at the time of any such termination pursuant to subpart (A), (B) or (C) hereof
there shall exist or be proposed a Competing Transaction with respect to Parent
and, within 12 months thereafter, Parent shall enter into a definitive agreement
with respect to any Competing Transaction or any Competing Transaction shall be
consummated, then Parent shall pay to Cereus an amount equal to $5.0 million
plus all of Cereus's Expenses, as evidenced by reasonable documentation, up to
an aggregate of $1.0 million, promptly after the execution and delivery of such
agreement or the consummation of such Competing Transaction.
(b) In the event that Parent shall terminate this Agreement
pursuant to (A) Section 8.1(f)(ii); (B) Section 8.1(e); or (C) Section 8.1(b)
and at the time of any such termination pursuant to subpart (A), (B) or (C)
hereof there shall exist or be proposed a Competing Transaction with respect to
Cereus and, within 12 months thereafter,
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Cereus shall enter into a definitive agreement with respect to any Competing
Transaction or any Competing Transaction shall be consummated, then Cereus shall
pay to Parent an amount equal to $5.0 million plus all of Parent's Expenses, as
evidenced by reasonable documentation, up to an aggregate of $1.0 million,
promptly after the execution and delivery of such agreement or the consummation
of such Competing Transaction.
(c) In the event that Cereus shall terminate this Agreement
pursuant to Section 8.1(g) or Section 8.1(f)(i) and Parent is not otherwise
entitled to payment pursuant to Section 8.5(a), then Parent shall pay to Cereus
within two business days after such termination an amount equal to $2.5 million
plus all of Cereus's Expenses, as evidenced by reasonable documentation, up to
an aggregate of $1.0 million; provided, however, that, in the event both Parent
and Cereus would otherwise be entitled to payments under this Section 8.5 in
connection with the termination of this Agreement pursuant to both Sections
8.5(f)(i) and (f)(ii), neither party shall be required to make any payment under
this Section 8.5.
(d) In the event that Parent shall terminate this Agreement
pursuant to Section 8.1(h) or Section 8.1(f)(ii) and Cereus is not otherwise
entitled to payment pursuant to Section 8.5(b), then Cereus shall pay to Parent
within two business days after such termination an amount equal to $2.5 million
plus all of Parent's Expenses, as evidenced by reasonable documentation, up to
an aggregate of $1.0 million; provided, however, that, in the event both Cereus
and Parent would otherwise be entitled to payments under this Section 8.5 in
connection with the termination of this Agreement pursuant to both Sections
8.5(f)(i) and (f)(ii), neither party shall be required to make any payment under
this Section 8.5.
(e) Any payment required to be made pursuant to this Section
8.5 shall be made not later than the date of the entry into an agreement
referred to therein and two business days after delivery to the paying party of
notice of demand for payment and shall be made by wire transfer of immediately
available funds to an account designated by the other Company in the notice of
demand for payment delivered pursuant to this Section 8.5(c). In no event shall
either Company be entitled to collect amounts pursuant to this Section 8.5
relating to more than one specified event.
(f) Except to the extent provided in the Bridge Facility, the
fees set forth in this Section 8.5 shall constitute the sole and exclusive
remedy for any loss, liability, damage or claim arising out of or in connection
with any nonperformance of a covenant, breach, failure of a condition precedent
or termination of this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representations, warranties or obligations in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger, and
after the Effective Date of the Merger neither Parent nor Cereus, or their
respective officers or
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directors shall have any further obligation with respect thereto, except for the
representations, warranties and agreements contained in Articles II and IX and
in Sections 1.4, 1.5, 1.6, 5.1(b), 5.1(c), 5.1(d), 6.1, 6.5, 6.6 (including any
factual representations set forth in a certificate delivered to Cereus pursuant
thereto) and 6.9, all of which shall survive the Merger.
SECTION 9.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via confirmed
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to Cereus, to:
Cereus Technology Partners, Inc.
1000 Abernathy Road
400 Northpark, Suite 1000
Atlanta, Georgia 303028
Facsimile No.: (770) 668-0961
Attn: Chief Executive Officer
with a copy to:
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Steven E. Fox, Esq.
Facsimile No.: (404) 525-2224
(b) If to Parent, to:
Eltrax Systems, Inc.
400 Galleria Parkway, Suite 300
Atlanta, Georgia 30339
Attn: Chief Executive Officer
Facsimile No.: (678) 589-3570
with a copy to:
Jaffe, Raitt, Heuer & Weiss, Professional Corporation
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
Attn: William E. Sider, Esq.
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<PAGE> 48
Facsimile No.: (313) 961-8358
(c) If to Cereus Acquiring Sub, to:
Solemn Acquisition Corporation
400 Galleria Parkway, Suite 300
Atlanta, Georgia 30339
Attn: Chief Executive Officer
Facsimile No.: (678) 589-3570
with a copy to:
Jaffe, Raitt, Heuer & Weiss, Professional Corporation
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
Attn: William E. Sider, Esq.
Facsimile No.: (313) 961-8358
SECTION 9.3 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a contrary intention
appears, (i) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (ii) reference to any Article or Section
means such Article or Section hereof, and (iii) the words "including" shall be
deemed to be followed by the words "without limitation". No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
SECTION 9.4 GOVERNING LAW. This agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware applicable to contracts executed and to be performed wholly
within such state.
SECTION 9.5 ARBITRATION. 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, will be
settled by binding arbitration in Georgia, by a panel of three arbitrators, of
which Parent will choose one arbitrator, Cereus will choose one arbitrator, and
those arbitrators will choose the third arbitrator, who will act as chairman of
the panel. The arbitrators will select the rules and procedures under which the
arbitration will be conducted. 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 Georgia for this purpose.
SECTION 9.6 COUNTERPARTS, TELECOPIED SIGNATURES. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement. Any
signature
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<PAGE> 49
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
SECTION 9.7 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.8 MISCELLANEOUS. This Agreement (including the exhibits
attached hereto and the documents and instruments referred to herein): (a)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof; and (b) shall not be assigned by operation
of law or otherwise, except that Cereus Acquiring Sub may assign this Agreement
to any other wholly-owned Subsidiary of Parent.
[Signatures on following page]
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<PAGE> 50
IN WITNESS WHEREOF, Parent, Cereus Acquiring Sub and Cereus have caused
this Agreement to be signed and delivered by their respective officers as of the
date first written above.
CEREUS TECHNOLOGY PARTNERS, INC.
By: /s/Steven A. Odom
-----------------------------
Its: Chief Executive Officer
SOLEMN ACQUISITION CORPORATION
By: /s/ James M. Logsdon
-----------------------------
Its: President
ELTRAX SYSTEMS, INC.
By: /s/ William P. O'Reilly
-----------------------------
Its: Chief Executive Officer
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<PAGE> 51
EXHIBIT 6.13
CEREUS TECHNOLOGY PARTNERS, INC.
1000 ABERNATHY ROAD, SUITE 1000
ATLANTA, GEORGIA 30328
June 12, 2000
Eltrax Systems, Inc.
400 Galleria Parkway, Suite 300
Atlanta, Georgia 30339
Attn: Chief Executive Officer
Re: Cereus $5 Million Bridge Facility
Ladies and Gentlemen:
The purpose of this Commitment Letter is to outline the manner in which
Cereus Technology Partners, Inc. ("Cereus") will proceed with a loan to Eltrax
Systems, Inc. ("Eltrax") of up to $5 million (the "Bridge Facility"). In
connection with the Bridge Facility and the execution of that certain Agreement
and Plan of Merger among Cereus, Eltrax and Solemn Acquisition Corporation dated
of even date herewith, to which this Commitment Letter is attached as Exhibit
6.13 (the "Merger Agreement"), Eltrax and Cereus each hereby agree as set forth
below. Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Merger Agreement.
1. Bridge Facility. Subject to the consent of Eltrax's bank
lender, PNC Bank, National Association ("PNC"), which Eltrax
shall use its reasonable best efforts to obtain, Cereus hereby
commits to loan to Eltrax up to an aggregate of $5 million in
accordance with the terms and conditions set forth in this
Commitment Letter.
2. Process. Cereus and Eltrax shall negotiate the terms of
definitive agreements with respect to the Bridge Facility (the
"Definitive Agreements") and shall be prepared to execute and
deliver the Definitive Agreements and close the Bridge
Facility by June 16, 2000. The Definitive Agreements shall
incorporate the terms and conditions set forth in Exhibit A
attached hereto and incorporated herein by this reference, as
well as customary representations, warranties, indemnities,
covenants and conditions.
3. Termination. This Commitment Letter shall terminate on the
earliest to occur of (i) the date on which either Cereus or
Eltrax terminates the Merger
<PAGE> 52
Eltrax Systems, Inc.
June 12, 2000
Page 2
Agreement as provided therein, and (ii) the date that the
Definitive Agreements are executed and delivered by the
parties hereto. Notwithstanding any termination under this
Section 3, Sections 4 through 9 hereof shall remain in full
force and effect.
4. Concerning Remedies. Each of the parties hereto acknowledges
and agrees that no failure or delay in exercising any right,
power or privilege hereunder will operate as a waiver thereof,
nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any
right, power or privilege hereunder.
5. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
without regard to the principles of conflicts of laws.
6. SUBMISSION TO JURISDICTION SELECTION OF FORUM. CEREUS AND
ELTRAX EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY GEORGIA STATE OR FEDERAL COURT SITTING IN THE CITY OF
ATLANTA, GEORGIA, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS COMMITMENT LETTER, AND CEREUS AND ELTRAX
EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
GEORGIA STATE COURT OR SUCH FEDERAL COURT. CEREUS AND ELTRAX
EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING.
7. Entire Agreement; Amendment. This Commitment Letter embodies
the entire agreement of the parties with respect to the Bridge
Facility and shall not be amended except by a written
instrument executed by the parties hereto.
8. Counterparts. This Commitment Letter may be executed in
multiple counterparts, each of which shall be deemed an
original and all of which together shall constitute one
instrument. Delivery of an executed signature page to this
Commitment Letter by facsimile transmission shall be as
effective as delivery of a manually signed counterpart hereof.
<PAGE> 53
Eltrax Systems, Inc.
June 12, 2000
Page 3
Please confirm that the foregoing accurately sets forth our agreement
by executing this Commitment Letter where indicated and returning it to Cereus.
Very truly yours,
CEREUS TECHNOLOGY PARTNERS, INC.
By:
-----------------------------------
Its:
-------------------------------
ACKNOWLEDGED AND AGREED TO:
ELTRAX SYSTEMS, INC.
By:
-----------------------------------------
Its:
-------------------------------------
<PAGE> 54
EXHIBIT A
SUMMARY OF BRIDGE FACILITY TO BE PROVIDED BY CEREUS
JUNE 12, 2000
AMOUNT: Up to an aggregate of $5 million.
TERM: All amounts outstanding under the Bridge Facility
will be due and payable on the first anniversary of
the closing of the Bridge Facility. The Bridge
Facility may be prepaid at any time without premium
or penalty.
INTEREST RATE: All amounts outstanding under the Bridge Facility
will earn interest through the end of the term at a
rate per annum equal to the Prime Rate, as published
by Bank of America, N.A., Atlanta, Georgia, from time
to time, plus 3%.
ADVANCES: Advances under the Bridge Facility shall be made by
Cereus upon the written request of Eltrax only after
Eltrax has exhausted all of its remaining credit
available under its existing credit facility with
PNC. When any advance under the Bridge Facility is
intended to fund an expenditure that is outside of
Eltrax's normal course of business, the Steering
Committee must approve such expenditure prior to
funding such advance.
SECURITY: The Bridge Facility will be secured by a lien on all
or substantially all of the assets of Eltrax, which
will be subordinated only to Eltrax's existing credit
facility with PNC.
CONVERSION: Prior to the expiration of its term, the
outstanding principal amount of the Bridge Facility
will be convertible by Cereus into that number of
shares of the common stock, par value $.01 per share,
of Eltrax obtained by multiplying (i) 1.15 by (ii) a
fraction, the numerator of which is the outstanding
principal amount of the Bridge Facility on the date
of conversion and the denominator of which is the per
share closing price for the Eltrax common stock on
the day immediately prior to the public announcement
of the Merger.
<PAGE> 55
ISSUANCE OF WARRANTS: If the Merger Agreement is terminated under
circumstances whereby Cereus is entitled to a
termination fee pursuant to Section 8.5 thereof, then
Eltrax will issue to Cereus warrants to purchase
shares of Eltrax common stock exercisable at $.01 per
share (the "Warrants") for that number of shares of
Eltrax common stock equal to the outstanding
principal amount of the Bridge Facility on the date
of the occurrence of the event giving rise to the
payment of any such termination fee (the "Valuation
Date"), divided by the closing price per share of the
Eltrax common stock on the Valuation Date (the
"Warrant Shares"); provided, however, that Eltrax
shall have the right to repay the outstanding
principal amount of the Bridge Facility in full
within thirty (30) days after the Valuation Date, in
which event Eltrax shall issue to Cereus Warrants to
purchase 25% of the Warrant Shares that would have
been issuable but for such repayment.
ANTI-DILUTION Cereus shall receive proportional adjustments for
PROTECTION: splits, dividends, recapitalizations, and the like
and, if the Merger Agreement is terminated pursuant
to Section 8.1 thereof and, at the time of such
termination, Cereus shall be entitled to receive a
termination fee under Section 8.5 thereof, then
Cereus shall also receive "weighted average"
protection for issuances of Eltrax common stock or
securities convertible into Eltrax common stock at a
per share price below the per share closing price for
the Eltrax common stock on the day immediately prior
to the public announcement of the Merger.
Notwithstanding the foregoing, no adjustments shall
be made for shares of Eltrax common stock issued
pursuant to stock purchase, option, warrant and
related agreements outstanding as of the date of the
Merger Agreement.
REGISTRATION RIGHTS: Cereus shall have registration rights in connection
with the resale of the Eltrax common stock issuable
to Cereus upon (i) the conversion of the outstanding
principal amount of the Bridge Facility and (ii) the
exercise of the Warrants (collectively, the "Eltrax
Securities") as follows:
(a) Cereus will have right to make one
demand for an underwritten registration of
the Eltrax Securities at any time within one
year of the conversion of the Bridge
Facility or the exercise of the Warrants, as
the case may be.
(b) Cereus will have unlimited piggyback
registration rights other than with respect
to registrations on Form S-8 or S-4 or with
respect to any shelf registration filed
under Rule 415(a)(1)(viii).
A-2
<PAGE> 56
(c) Registration rights will terminate at
such time as Cereus is eligible to sell all
of its Eltrax Securities under Rule 144(k).
(d) Cereus's registration rights will be
subject to reasonable market standoff
provisions.
(e) Cereus will have two S-3 registration
rights if Eltrax is eligible therefor, but
Cereus may not demand such registration more
than once during any calendar year.
(f) Eltrax will pay all ordinary expenses of
registration.
(g) Both parties will be subject to typical
indemnification and contribution obligations
in connection with the registrations.
(h) Eltrax cannot grant registration rights
on terms more favorable than the
registration rights granted to Cereus
hereunder without Cereus's prior written
consent.
* * * * *
A-3
<PAGE> 57
EXHIBIT 7.2
STOCKHOLDERS PROXY AGREEMENT
STOCKHOLDERS PROXY AGREEMENT (this "Agreement"), dated as of June ____,
2000, among CEREUS TECHNOLOGY PARTNERS, INC., a Delaware corporation ("Cereus"),
and each other person and entity listed on the signature pages hereof (each, a
"Stockholder").
WITNESSETH:
WHEREAS, as of the date hereof each Stockholder owns (either
beneficially or of record) the number of shares of common stock, par value $0.01
per share ("Company Common Stock"), of Eltrax Systems, Inc., a Minnesota
corporation (the "Company"), set forth opposite such Stockholder's name on
Exhibit A hereto (all such shares of Company Capital Stock owned by the
Stockholders and any shares of Company Capital Stock hereafter acquired by the
Stockholders prior to the termination of this Agreement being referred to herein
as the "Shares");
WHEREAS, Cereus and the Company, among others, propose to enter into an
Agreement and Plan of Merger and Reorganization, dated as of the date hereof (as
the same may be amended from time to time, the "Merger Agreement"; capitalized
terms herein not otherwise defined herein shall have the meanings ascribed
thereto in the Merger Agreement), which provides, upon the terms and subject to
the conditions thereof, for the merger of a subsidiary of the Company with and
into Cereus (the "Merger"); and
WHEREAS, as a condition to the willingness of Cereus to enter into the
Merger Agreement, Cereus has requested that each Stockholder agree, and, in
order to induce Cereus to enter into the Merger Agreement, each Stockholder has
agreed, to grant Cereus proxies to vote such Stockholder's Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
TRANSFER AND VOTING OF SHARES
SECTION 1.01 TRANSFER OF SHARES. During the term of this
Agreement, and except as otherwise provided herein, each Stockholder shall not
(a) sell, pledge or otherwise dispose of any of its Shares if such transaction
would result in the Stockholder no longer
<PAGE> 58
dispose of any of its Shares if such transaction would result in the Stockholder
no longer having the power to vote or cause to be voted the Shares, (b) deposit
its Shares into a voting trust or enter into a voting agreement or arrangement
with respect to such Shares or grant any proxy with respect thereto or (c) enter
into any contract, option or other arrangement or undertaking with respect to
the direct or indirect acquisition or sale, assignment, transfer or other
disposition of any of the Company Capital Stock if such transaction would result
in the Stockholder no longer having the power to vote or cause to be voted the
Shares.
SECTION 1.02 VOTING OF SHARES; FURTHER ASSURANCES. (a) Each
Stockholder, by this Agreement, with respect to those Shares that it owns of
record, does hereby constitute and appoint Cereus, or any nominee of Cereus,
with full power of substitution, during and for the term of this Agreement, as
its true and lawful attorney and proxy, for and in its name, place and stead, to
vote each of such Shares as its proxy, at every annual, special or adjourned
meeting of the stockholders of the Company (including the right to sign its name
(as stockholder) to any consent, certificate or other document relating to the
Company that the law of the State of Minnesota may permit or require) (i) in
favor of the adoption of the Merger Agreement and approval of the Merger and the
other transactions contemplated by the Merger Agreement, (ii) against any
proposal for any recapitalization, merger, sale of assets or other business
combination between the Company and any person or entity (other than the Merger)
or any other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or which could result in any of the conditions to the
Company's obligations under the Merger Agreement not being fulfilled, and (iii)
in favor of any other matter relating to consummation of the transactions
contemplated by the Merger Agreement. Each Stockholder further agrees to cause
the Shares owned by it beneficially to be voted in accordance with the
foregoing. Each Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
(b) Each Stockholder shall perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in Cereus the power to carry out the provisions of this
Agreement.
(c) Nothing contained in this Agreement shall be
deemed to restrict a Stockholder who is also a director of the Company from
taking actions in his capacity as a director as may be permitted under the
Merger Agreement.
SECTION 1.03 TERM OF AGREEMENT. This Agreement shall be effective
as of the date hereof and shall expire on the earlier of (a) the Effective Time
and (b) the date of the termination of the Merger Agreement pursuant to its
terms.
2
<PAGE> 59
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants to Cereus as follows:
SECTION 2.01 DUE ORGANIZATION, ETC. Such Stockholder (if it is a
corporation, partnership or other legal entity) is duly organized and validly
existing under the laws of the jurisdiction of its organization. Such
Stockholder has full power and authority (corporate or otherwise) to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of such Stockholder. This Agreement
has been duly executed and delivered by or on behalf of such Stockholder and,
assuming its due authorization, execution and delivery by Cereus, constitutes a
legal, valid and binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 2.02 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by such Stockholder do not, and the
performance of this Agreement by such Stockholder will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws or similar organizational
documents of such Stockholder (in the case of a Stockholder that is a
corporation, partnership or other legal entity), (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to such
Stockholder or by which it or any of its properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the property or assets of
such Stockholder or (if such Stockholder is a corporation) any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such Stockholder is a party or by which such Stockholder or any of its
properties is bound or affected, except for any such breaches, defaults or other
occurrences that would not cause or create a material risk of non-performance or
delayed performance by such Stockholder of its obligations under this Agreement.
3
<PAGE> 60
(b) The execution and delivery of this Agreement
by such Stockholder do not, and the performance of this Agreement by such
Stockholder will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Exchange Act, and the HSR Act and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by such Stockholder of
its obligations under this Agreement.
SECTION 2.03 TITLE TO SHARES. Other than to the extent described
in Exhibit A hereto, such Stockholder is the record or beneficial owner of its
Shares free and clear of any proxy or voting restriction other than pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CEREUS
Cereus hereby represents and warrants to each Stockholder as follows:
SECTION 3.01 DUE ORGANIZATION, ETC. Cereus is a corporation duly
organized and validly existing under the laws of the State of Delaware. Cereus
has all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by Cereus have been duly authorized by all necessary
corporate action on the part of Cereus. This Agreement has been duly executed
and delivered by Cereus and, assuming its due authorization, execution and
delivery by the Stockholders, constitutes a legal, valid and binding obligation
of Cereus, enforceable against Cereus in accordance with its terms.
SECTION 3.02 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Cereus do not, and the performance
of this Agreement by Cereus will not, (i) conflict with or violate the
Certificate of Incorporation or By-laws of Cereus, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Cereus or by
which Cereus or any of its properties is bound or affected, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the property or assets of Cereus
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Cereus is
a party or by which it or any of its properties is bound or affected, except for
any such breaches, defaults or other occurrences that would not cause or create
a material risk of non-performance or delayed performance by Cereus of its
obligations under this Agreement.
4
<PAGE> 61
(b) The execution and delivery of this Agreement
by Cereus do not, and the performance of this Agreement by Cereus will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Exchange Act and the HSR
Act and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by Cereus of its obligations under this
Agreement.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.01 NOTICES. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to Cereus
Cereus Technology Partners, Inc.
1000 Abernathy Road
400 Northpark, Suite 1000
Attention: Chief Executive Officer
Telecopier No.: (770) 668-0961
with a copy to:
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Steven E. Fox, Esq.
Telecopier No.: (404) 525-2224
(b) If to a Stockholder, to such Stockholder's address
set forth on Exhibit A.
SECTION 4.02 HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5
<PAGE> 62
SECTION 4.03 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 4.04 This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof.
SECTION 4.05 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise; provided, however, that Cereus may assign its
rights, interests and obligations hereunder to any successor or Cereus entity of
Cereus whose shares are registered under Section 12 of the Exchange Act (or will
be so registered at the Closing).
SECTION 4.06 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 4.07 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 4.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE. CEREUS AND
EACH OF THE STOCKHOLDERS EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY GEORGIA STATE OR FEDERAL COURT SITTING IN THE CITY OF ATLANTA, GEORGIA, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
CEREUS AND EACH OF THE STOCKHOLDERS HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH GEORGIA
STATE COURT OR SUCH FEDERAL COURT. CEREUS AND EACH OF THE STOCKHOLDERS EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
6
<PAGE> 63
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING.
SECTION 4.09 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[SIGNATURES NEXT PAGE]
7
<PAGE> 64
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above.
CEREUS TECHNOLOGY PARTNERS, INC.
By:
-----------------------------------
Name: Steven A. Odom
Title: Chief Executive Officer
STOCKHOLDERS:
--------------------------------------
WILLIAM P. O'REILLY
--------------------------------------
JAMES C. BARNARD
--------------------------------------
PATRICK J. DIRK
--------------------------------------
STEPHEN E. RAVILLE
--------------------------------------
WILLIAM G. TAYLOR
8
<PAGE> 65
EXHIBIT A
LIST OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AND ADDRESS OF STOCKHOLDER NUMBER OF SHARES OF COMPANY COMMON
STOCK OWNED BENEFICIALLY AND OF RECORD
----------------------------------------------------------------------------------------------------------
<S> <C>
William P. O'Reilly 1,559,858
400 Galleria Parkway Ste. 300
Atlanta, Georgia 30339
James C. Barnard 101,250
14308 Spyglass Ridge
Chesterfield, Missouri 63017
Patrick J. Dirk 373,825
Troy Group, Inc.
2331 South Pullman Street
Santa Ana, California 92705
Stephen E. Raville 146,250
Pointe Communication, Inc.
1951 Airport Road, Suite 120
Atlanta, Georgia 30341
William G. Taylor 354,700
The Springs Company
P.O. Drawer 460
Lancaster, South Carolina 29721
</TABLE>
<PAGE> 66
EXHIBIT 7.3
STOCKHOLDERS PROXY AGREEMENT
STOCKHOLDERS PROXY AGREEMENT (this "Agreement"), dated as of June ___,
2000, among ELTRAX SYSTEMS, INC., a Minnesota corporation (the "Company"), and
each other person and entity listed on the signature pages hereof (each, a
"Stockholder").
W I T N E S S E T H:
WHEREAS, as of the date hereof each Stockholder owns (either
beneficially or of record) the number of shares of common stock, par value
$0.01 per share ("Cereus Common Stock"), of Cereus Technology Partners, Inc., a
Delaware corporation (the "Cereus"), set forth opposite such Stockholder's name
on Exhibit A hereto (all such shares of Cereus Common Stock owned by the
Stockholders and any shares of Cereus Common Stock hereafter acquired by the
Stockholders prior to the termination of this Agreement being referred to
herein as the "Shares");
WHEREAS, Company and the Cereus, among others, propose to enter into
an Agreement and Plan of Merger and Reorganization, dated as of the date hereof
(as the same may be amended from time to time, the "Merger Agreement";
capitalized terms herein not otherwise defined herein shall have the meanings
ascribed thereto in the Merger Agreement), which provides, upon the terms and
subject to the conditions thereof, for the merger of Cereus with and into a
subsidiary of Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Company to enter into
the Merger Agreement, Company has requested that each Stockholder agree, and,
in order to induce Company to enter into the Merger Agreement, each Stockholder
has agreed, to grant Company proxies to vote such Stockholder's Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
TRANSFER AND VOTING OF SHARES
SECTION 1.01 TRANSFER OF SHARES. During the term of this
Agreement, and except as otherwise provided herein, each Stockholder shall not
(a) sell, pledge or otherwise dispose of any of its Shares if such transaction
would result in the Stockholder no longer
<PAGE> 67
having the power to vote or cause to be voted the Shares, (b) deposit its
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares or grant any proxy with respect thereto or (c) enter
into any contract, option or other arrangement or undertaking with respect to
the direct or indirect acquisition or sale, assignment, transfer or other
disposition of any of the Cereus Common Stock if such transaction would result
in the Stockholder no longer having the power to vote or cause to be voted the
Shares.
SECTION 1.02 VOTING OF SHARES; FURTHER ASSURANCES. (a) Each
Stockholder, by this Agreement, with respect to those Shares that it owns of
record, does hereby constitute and appoint Company, or any nominee of Company,
with full power of substitution, during and for the term of this Agreement, as
its true and lawful attorney and proxy, for and in its name, place and stead,
to vote each of such Shares as its proxy, at every annual, special or adjourned
meeting of the stockholders of the Cereus (including the right to sign its name
(as stockholder) to any consent, certificate or other document relating to the
Cereus that the law of the State of Delaware may permit or require) (i) in
favor of the adoption of the Merger Agreement and approval of the Merger and
the other transactions contemplated by the Merger Agreement, (ii) against any
proposal for any recapitalization, merger, sale of assets or other business
combination between the Cereus and any person or entity (other than the Merger)
or any other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Cereus
under the Merger Agreement or which could result in any of the conditions to
the obligations of Cereus under the Merger Agreement not being fulfilled, and
(iii) in favor of any other matter relating to consummation of the transactions
contemplated by the Merger Agreement. Each Stockholder further agrees to cause
the Shares owned by it beneficially to be voted in accordance with the
foregoing. Each Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
(b) Each Stockholder shall perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in Company the power to carry out the provisions of this
Agreement.
(c) Nothing contained in this Agreement shall be
deemed to restrict a Stockholder who is also a director of the Cereus from
taking actions in his or her capacity as a director as may be permitted under
the Merger Agreement.
SECTION 1.03 TERM OF AGREEMENT. This Agreement shall be effective
as of the date hereof and shall expire on the earlier of (a) the Effective Time
and (b) the date of the termination of the Merger Agreement pursuant to its
terms.
2
<PAGE> 68
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants to Company as follows:
SECTION 2.01 DUE ORGANIZATION, ETC. Such Stockholder (if it is a
corporation, partnership or other legal entity) is duly organized and validly
existing under the laws of the jurisdiction of its organization. Such
Stockholder has full power and authority (corporate or otherwise) to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of such Stockholder. This Agreement
has been duly executed and delivered by or on behalf of such Stockholder and,
assuming its due authorization, execution and delivery by Company, constitutes
a legal, valid and binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 2.02 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by such Stockholder do not, and the
performance of this Agreement by such Stockholder will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws or similar
organizational documents of such Stockholder (in the case of a Stockholder that
is a corporation, partnership or other legal entity), (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to such
Stockholder or by which it or any of its properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the property or
assets of such Stockholder or (if such Stockholder is a corporation) any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such Stockholder is a party or by which such Stockholder or any of its
properties is bound or affected, except for any such breaches, defaults or
other occurrences that would not cause or create a material risk of
non-performance or delayed performance by such Stockholder of its obligations
under this Agreement.
3
<PAGE> 69
(b) The execution and delivery of this
Agreement by such Stockholder do not, and the performance of this Agreement by
such Stockholder will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) for applicable requirements, if any,
of the Exchange Act, and the HSR Act and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by such Stockholder
of its obligations under this Agreement.
SECTION 2.03 TITLE TO SHARES. Other than to the extent described
in Exhibit A hereto, such Stockholder is the record or beneficial owner of its
Shares free and clear of any proxy or voting restriction other than pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Stockholder as
follows:
SECTION 3.01 DUE ORGANIZATION, ETC. The Company is a corporation
duly organized and validly existing under the laws of the State of Minnesota.
The Company has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company have been duly authorized by
all necessary corporate action on the part of the Company. This Agreement has
been duly executed and delivered by the Company and, assuming its due
authorization, execution and delivery by the Stockholders, constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
SECTION 3.02 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Articles of Incorporation or By-laws of the Company, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to the Company or by which the Company or any of its properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party
4
<PAGE> 70
or by which it or any of its properties is bound or affected, except for any
such breaches, defaults or other occurrences that would not cause or create a
material risk of non-performance or delayed performance by the Company of its
obligations under this Agreement.
(b) The execution and delivery of this Agreement
by the Company do not, and the performance of this Agreement by the Company
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act
and the HSR Act and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by the Company of its obligations under this
Agreement.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.01 NOTICES. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall
be effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to the
telecopier number specified below:
(a) If to the Company
Eltrax Systems, Inc.
400 Galleria Parkway, Suite 300
Atlanta, Georgia 30339
Attention: Chief Executive Officer
Telecopier No.: (678) 589-3570
with a copy to:
Jaffe, Raitt, Heuer & Weiss, Professional Corporation
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
Attention: William E. Sider, Esq.
Telecopier No.: (313) 961-8358
5
<PAGE> 71
(b) If to a Stockholder, to such Stockholder's address set
forth on Exhibit A.
SECTION 4.02 HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 4.03 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 4.04 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 4.05 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise; provided, however, that the Company may assign
its rights, interests and obligations hereunder to any successor or parent
entity of the Company whose shares are registered under Section 12 of the
Exchange Act (or will be so registered at the Closing).
SECTION 4.06 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
SECTION 4.07 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 4.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS EXECUTED AND TO BE
6
<PAGE> 72
PERFORMED ENTIRELY WITHIN THAT STATE. COMPANY AND EACH OF THE STOCKHOLDERS EACH
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY GEORGIA STATE OR FEDERAL
COURT SITTING IN THE CITY OF ATLANTA, GEORGIA, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND COMPANY AND EACH OF THE
STOCKHOLDERS HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH GEORGIA STATE COURT OR
SUCH FEDERAL COURT. THE COMPANY AND EACH OF THE STOCKHOLDERS EACH HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
SECTION 4.09 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[SIGNATURES NEXT PAGE]
7
<PAGE> 73
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement or caused this Agreement to be executed and delivered by its
duly authorized officer, all as of the date first written above.
ELTRAX SYSTEMS, INC.
By:
------------------------------------------
Name:
Title:
STOCKHOLDERS:
---------------------------------------------
STEVEN A. ODOM
---------------------------------------------
AMY L. NEWMARK
---------------------------------------------
JAMES M. LOGSDON
---------------------------------------------
JOSEPH W. WRIGHT, JR.
---------------------------------------------
GARY H. HECK
---------------------------------------------
JULIET M. REISING
---------------------------------------------
MAX E. BOBBITT
8
<PAGE> 74
EXHIBIT A
LIST OF STOCKHOLDERS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
NAME AND ADDRESS OF STOCKHOLDER NUMBER OF SHARES OF COMPANY COMMON
STOCK OWNED BENEFICIALLY AND OF RECORD
--------------------------------------------------------------------------------------
<S> <C>
Steven A. Odom 675,825
Cereus Technology Partners, Inc.
400 Northpark, Suite 1000
1000 Abernathy Road
Atlanta, Georgia 30328
--------------------------------------------------------------------------------------
Amy L. Newmark 250,000
21 Hedgerow Lane
Greenwich, Connecticut 06831
--------------------------------------------------------------------------------------
James M. Logsdon 205,000
Cereus Technology Partners, Inc.
400 Northpark, Suite 1000
1000 Abernathy Road
Atlanta, Georgia 30328
--------------------------------------------------------------------------------------
Joseph W. Wright, Jr. 158,414
599 Lexington Avenue, 44th Floor
New York, NY 10022
--------------------------------------------------------------------------------------
Gary H. Heck 75,000
19638 Painted Ridge Loop
Bend, Oregon 97702
--------------------------------------------------------------------------------------
Juliet M. Reising 55,000
Cereus Technology Partners, Inc.
400 Northpark, Suite 1000
1000 Abernathy Road
Atlanta, Georgia 30328
--------------------------------------------------------------------------------------
Max E. Bobbitt 50,000
70 Beachside Drive, Apt. 203
Vero Beach, Florida 32963
--------------------------------------------------------------------------------------
</TABLE>
