Document:

Exhibit 10.4

 

FIRST
AMENDMENT TO

AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION

 

This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(this “Amendment”) is made and entered into as
of January 22, 2007, by and among Consonus Acquisition Corp., a Delaware
corporation (“Consonus”), Strategic Technologies, Inc.,
a North Carolina corporation (“STI”), Consonus
Technologies, Inc., a Delaware corporation (the “Company”),
CAC Merger Sub, Inc., a Delaware corporation and a wholly and directly
owned subsidiary of the Company (“CAC Merger Sub”),
and STI Merger Sub, Inc., a North Carolina corporation and a wholly and
directly owned subsidiary of the Company (“STI Merger Sub”
and, together with CAC Merger Sub, the “Merger Subs”). Knox
Lawrence International, LLC, a Delaware limited liability company (the “Consonus Principal Stockholder”), is executing this
Amendment for the sole purpose of acknowledging and agreeing to the amendments
to Exhibit K as discussed below and attached hereto.

 

RECITALS

 

A.                                   The
parties hereto are parties to that certain Agreement and Plan of Merger and
Reorganization dated as of October 18, 2006 (the “Merger
Agreement”).

 

B.                                     The
parties desire to amend the Merger Agreement as and to the extent set forth
herein.

 

AGREEMENTS

 

NOW, THEREFORE, in consideration of the
recitals, the mutual covenants and agreements set forth herein and in the
Merger Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                                       Section 1.8(b)(i) of
the Merger Agreement is hereby amended by deleting “0.07716852370881630” and
replacing it with “0.077171303934418” as the STI Exchange Ratio.

 

2.                                       Each
of Sections 2.8 and 3.8 are hereby amended by adding at the end of each such Section “or
(iv) Transaction Expenses.”

 

3.                                       Section 4.16
of the Merger Agreement is hereby amended by deleting the final sentence of
such Section and replacing it with the following:

 

“The Parties agree that Michael G. Shook and William M. Shook, in their
roles as executive officers of the Company and STI, will be entitled to the
incentive payments as and to the extent set forth on Exhibit K attached
hereto and made a part hereof.”

 

4.                                       Exhibit K
to the Merger Agreement is hereby deleted in its entirety and replaced with the
Exhibit K attached hereto and made a part hereof.

 

 

5.                                       Except
as specifically amended or modified by this Amendment, the terms and conditions
of the Merger Agreement shall remain unimpaired, unaffected and unchanged in
every particular as set forth therein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Merger Agreement.

 

6.                                       This
Amendment may be executed in several counterparts and delivered by
facsimile transmission, each of which shall be deemed an original, but which
counterparts shall together constitute one and the same Amendment.

 

[THE
NEXT PAGE IS THE SIGNATURE PAGE.]

 

2

 

IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Agreement and Plan of Merger and Reorganization to be executed and delivered by
their respective officers thereunto duly authorized, all as of the date first
written above.

 

	
   

  	
  CONSONUS ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Nana Baffour

  	
   

  
	
   

  	
   

  	
    Nana
  Baffour, Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STRATEGIC TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Michael G. Shook

  	
   

  
	
   

  	
   

  	
  Michael G. Shook, Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CONSONUS TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Michael G. Shook

  	
   

  
	
   

  	
   

  	
  Michael G. Shook, Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CAC MERGER SUB, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Nana Baffour

  	
   

  
	
   

  	
   

  	
  Nana Baffour, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STI MERGER SUB, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Nana Baffour

  	
   

  
	
   

  	
   

  	
  Nana Baffour, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KNOX LAWRENCE INTERNATIONAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Nana Baffour

  	
   

  
	
   

  	
   

  	
  Nana Baffour, Managing Principal

  
						

 

[Signature
Page to First Amendment to Agreement and Plan of Merger and
Reorganization]

 

 

EXHIBIT K

Executive
Incentive Payments

 

President/CEO Bonus:

 

At or immediately prior to the Closing of the Mergers, STI will provide
as a bonus to Michael G. Shook, the forgiveness and cancellation of any and all
amounts owed to STI pursuant to the Loan Agreement by and between STI and
Michael G. Shook, effective April 17, 1998, as amended April 1, 2003
and March 31, 2005.

 

At the Closing of the Mergers, the Consonus Principal Stockholder will
provide a loan to Michael G. Shook in the principal amount of $100,000, with
interest at twelve percent (12%), which loan will be secured by 21,142 shares
of Company Common Stock issued to Michael G. Shook in connection with the
Mergers (the “M. Shook Closing Loan”).

 

Upon the successful completion of an initial public offering by the
Company, if Michael G. Shook is at such time still employed by STI and/or the
Company as the Chief Executive Officer of such entity, the Consonus Principal
Stockholder will fund a cash bonus in the minimum amount of $589,593 and
maximum amount of $624,688 to Michael G. Shook or to such recipients as Michael
G. Shook may direct. A portion of such cash bonus will be paid in the form of
forgiveness of the M. Shook Closing Loan.

 

 Executive Vice President of
Sales & Marketing/Vice President of Sales and Marketing Bonus:

 

At or immediately prior to the Closing of the Mergers, STI will provide
as a bonus to William M. Shook, the forgiveness and cancellation of any and all
amounts owed to STI pursuant to the Loan Agreement by and between STI and
William M. Shook, effective April 17, 1998, as amended April 1, 2003
and March 31, 2005.

 

Upon the successful completion of an initial public offering by the
Company, if William M. Shook is at such time still employed by STI and/or the
Company as the Executive Vice President of Sales & Marketing and/or
Vice President of Sales & Marketing of such entity, the Consonus
Principal Stockholder will fund a cash bonus in the minimum amount of $159,935
and maximum amount of $169,455 to William M. Shook or to such recipients as
William M. Shook may direct.Exhibit
10.5

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES ACT OF
ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH
OFFER, SALE OR TRANSFER IS REGISTERED UNDER THE 1933 ACT OR APPLICABLE STATE
SECURITIES ACT OR IS EXEMPT FROM SUCH REGISTRATION.

 

Void after 5:00
P.M. (Eastern Time), May 20, 2015

except as otherwise provided herein.

	
   

  	
   

  	
  Warrant to Purchase

  
	
  Date: January 22, 2007

  	
   

  	
  347,271 Shares of Common Stock

  

 

WARRANT

TO PURCHASE COMMON STOCK OF

CONSONUS TECHNOLOGIES, INC.

FOR VALUE RECEIVED, this
certifies that Avnet, Inc., and its assigns (the “Warrant Holder”), is entitled
to purchase from Consonus Technologies, Inc., a Delaware corporation (the
“Company”), 347,271 fully paid and nonassessable shares of Common Stock of the
Company (the  “Common Stock”), subject to
adjustment as provided herein, at a purchase price per share, subject to
adjustment from time to time as provided herein, of $0.00026 (the “Warrant
Price”) Except as otherwise provided herein, this Warrant is exercisable at any
time beginning on the date hereof and ending at 5:00 P.M. (Eastern Time) on May
20, 2015 (the “Exercise Period”).

1.             Definitions.

“Capital Stock” shall mean
the Company’s Common Stock and any other stock of any class, whether now or
hereafter authorized, which has the right to participate in the distribution of
earnings and assets of the Company without limit as to amount or percentage.

“Fair Market Value” shall
mean: (a) the average of the closing prices of the Common Stock’s sales on all
domestic securities exchanges on which such Common Stock may at the time be
listed, or if there have been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or if on any day Common Stock is not so listed, the average of
the representative bid and asked prices quoted on the NASDAQ National Market
System as of 4:00 p.m., Mountain Time, on such day, or if Common Stock is not
quoted in the NASDAQ National Market System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each case averaged over a period of five (5) days
consisting of the day as of which the “fair market value” is being determined
and the four (4) consecutive business days prior to such day; and (b) if the
Common Stock is not so listed or admitted to the unlisted trading privileges
and bid and asked prices are not so reported, the fair market value of a share
shall be an amount determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company; provided, however, that if
the Warrant Holder shall disagree with such determination by the Board of
Directors, the Company shall engage a reputable third-party valuation provider
reasonably satisfactory to the Warrant Holder to make such determination. The
Company shall pay such third-party provider’s fees and other costs in
connection with such determination, except that if the third-party provider’s
determination is within ten percent (10%) of the determination of the Board of
Directors, the Warrant Holder shall pay such fees and other costs of the
third-party provider.

 

 

 

                “Person” shall mean an individual, corporation,
limited liability company, partnership, other business entity, trust,
unincorporated organization or a government or any agency or political
subdivision.

 

                “Underlying Shares” shall mean
the Common Stock purchased upon exercise of this Warrant.

 

2.             Method of Exercise of Warrants.  Subject to the provisions of this Warrant,
the Warrant Holder shall have the right, which may be exercised in whole or in
part, to purchase from the Company, and the Company shall issue and sell to
such Warrant Holder, the number of fully paid and non-assessable shares
of Common Stock specified in this Warrant. 
Such right shall be exercised by surrender to the Company at its
principal office at 301 Gregson Drive, Cary, NC 27511, or such other location
which shall at that time be the principal office of the Company (the “Principal
Office”), of this Warrant together with the form of Purchase Agreement (attached
hereto as Rider A) attached thereto duly completed and signed, and upon
payment to the Company of the Warrant Price, as adjusted in accordance with the
provisions of Section 11, for the number of Underlying Shares in respect
of which this Warrant is then exercised. 
Payment of such Warrant Price may be made (i) in cash, (ii) by certified
check or bank draft payable to the order of the Company, (iii) by wire transfer
of immediately available funds or (iv) by surrender of shares of Common
Stock or by foregoing the issuance of a number of Underlying Shares pursuant to
this Warrant, in either case, having an aggregate Fair Market Value equal to
the aggregate Warrant Price for the Underlying Shares for which this Warrant is
being exercised; provided, however, in the event that (a) at the time of such
exercise the Common Stock is not listed or quoted or admitted for trading on
any national securities exchange or automated quotation system in the United
States, as the case may be, and (b) the Warrant Holder disputes the value
determination by the Board of Directors of the Company described in clause (b)
of the definition of Fair Market Value, the Warrant Holder may, within five (5)
business days from being provided notice of such determination, as its sole and
exclusive remedy, withdraw its request to make payment of the Warrant Price in
accordance with this clause (iv) accompanied by such payment in accordance with
clauses (i), (ii) or (iii) above.  In the
event the Warrant Holder withdraws its request to make payment of the Warrant
Price in accordance with clause (iv) above by operation of the preceding
sentence and determines to make the applicable payment in accordance with
clauses (i), (ii) or (iii) above, the exercise date with respect to this
Warrant shall remain the original date of exercise by the Warrant Holder and
shall in no way be deferred, or deemed to be deferred, to a later day as a
result thereof, and no other term related to the exercise of this Warrant shall
change other than the form of payment of the Warrant Price.  Upon such surrender of this Warrant, delivery
of the Purchase Agreement and payment of the Warrant Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to
or upon the written order of the Warrant Holder, in such name or names as the
Warrant Holder may designate, a certificate or certificates for the number of
full Underlying Shares so purchased, together with cash, as provided in
Section 16 of this Warrant, in respect of any fraction of an Underlying
Share otherwise issuable upon such surrender. 
Such certificate or certificates shall be deemed to have been issued and
any Person so designated to be named therein shall be deemed to have become a
holder of record of such Underlying Shares as of the date of the surrender of
this Warrant, with the Purchase Agreement, and payment of the Warrant Price as
aforesaid.  If this Warrant is exercised
in part prior to the end of the Exercise Period, the Company shall issue a new
warrant for the remaining number of the Common Shares specified in this
Warrant.

 

3.             Exchange.  This Warrant is exchangeable, upon the
surrender thereof by the holder thereof at the Principal Office of the Company,
for new warrants of like tenor registered in such holder’s name and
representing in the aggregate the right to purchase the number of shares
purchasable under this Warrant being exchanged, each of such new warrants to
represent the right to subscribe for and purchase such number of shares as
shall be designated by said holder at the time of such surrender.

 

4.             Certain
Covenants of the Company.  The
Company covenants and agrees that all shares which may be issued upon the
exercise of this Warrant, will, upon issuance, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof; and will, upon issuance, be listed on each
national securities exchange, if any, on which the other outstanding shares of
the Company are then listed to the extent such listing is not prohibited by the
applicable rules of such exchange, and without limiting the generality of the
foregoing, the Company covenants and agrees that it will from time to time take
all such actions as may be required to assure that the par value per share of
the 

 

2

 

Common Stock is at all times equal to or less than the then effective
purchase price per share of the Common Stock issuable pursuant to this
Warrant.  The Company further covenants
and agrees that during the Exercise Period, the Company will at all times have
authorized, and reserved for the purpose of issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.  During the Exercise Period,
Company will notify Warrant Holder of all meetings of Company’s Board of
Directors (and all meetings of any executive committee of such Board), with
such notice being given at the same time and in the same manner as Company
notifies the members of such Board (or executive committee, if
applicable).  During the Exercise Period,
Warrant Holder shall have the right to designate one individual to attend (at
Warrant Holder’s sole expense) each such meeting in a non-voting, observer
capacity, and in this connection, Company will provide to such individual
copies of all information packages, slides and other review and/or presentation
materials (if any) made available to members of such Board; provided, however,
that Company shall have the right without prior written notice to exclude the
Warrant Holder representative from any part of the discussion (and/or refrain
from delivering copies of materials) if the Board determines in good faith that
the material to be discussed is privileged or of such a sensitive nature that
such representative should not be present. 
In addition, Company shall provide such representative with copies of
all written materials supplied by Company to potential third party investors
during the Exercise Period.  All
information learned by the representative by attending such meeting and all
written materials delivered to the representative shall be treated as
confidential information.

 

5.             INTENTIONALLY DELETED.

 

6.             INTENTIONALLY
DELETED.

 

7.             Inspection Rights.  During the Exercise Period, Warrant Holder is
entitled to inspect and copy, during regular business hours at the Company’s
Principal Office, any of the books and records of the Corporation if the
Warrant Holder gives the Company written demand at least five (5) business days
before the date on which the Warrant Holder wished to inspect and copy such
records.

 

8.             Registration
Under the Securities Act. The Warrant Holder shall have the following
Registration Rights:

 

(a)           Registration
Rights - Piggyback. Subject to the limitation on registration rights
provided for in this Section 8, if at any time during the Exercise Period, the
Company shall file a registration statement (other than on Form S-4, Form S-8,
or any successor form and other than in connection with the company’s initial
public offering, whether or not oversubscribed) with the Securities and
Exchange Commission (the “Commission”) while this Warrant is outstanding, the
Company shall give the Warrant Holder at least thirty (30) days prior written
notice of the filing of such registration statement. If requested by the
Warrant Holder in writing within thirty (30) days after receipt of any such
notice, the Company shall, at the Company’s sole expense, register or qualify
all or, at the Warrant Holder’s option, any portion of the Underlying Shares of
the Warrant Holder, concurrently with the registration of such other
securities, all to the extent requisite to permit the public offering and sale
of the Underlying Shares through the facilities of all appropriate securities
exchanges and the over-the-counter market, and will use its best efforts
through its officers, directors, auditors and counsel to cause such
registration statement to become effective as promptly as practicable.
Notwithstanding the foregoing, if the managing underwriter of any such offering
shall advise the Company that, in its opinion, the distribution of all or a
portion of the Underlying Shares requested to be included in the registration concurrently
with the securities being registered by the Company would materially adversely
affect the distribution of such securities by the Company for its own account,
then the Company shall not be required to include such Underlying Shares in
such registration, provided that any such reduction shall be on a pro-rata
basis among all selling shareholders; provided, however, (i) that
in the event that the Company does not intend to include all the requested
Underlying Shares in the registration statement due to such advice received
from the managing underwriter, if the Company includes in the registration
statement any securities other than securities being offered by the Company for
its own account, then the Company shall include any of the Underlying Shares
requested to be included in such registration statement by the Warrant Holder
and any such other securities on a pro-rata basis and (ii) if the Company does
not include all of the requested Underlying Shares in the registration
statement, then the Company will within six (6) months after the registration
statement becomes effective file at is sole expense a new registration
statement relating to those Underlying Shares which the Company did not include
in the prior 

 

3

 

registration statement, and the Company will use its best efforts
to cause the registration statement to become effective as promptly as
practical (provided, however, that the Company and/or the underwriters
for the registration called for under this clause (ii) shall have the right to
defer such registration for a period of not more than ninety (90) days upon a
good faith determination that marketing factors necessitate such a delay).

 

                (b)           Registration Right - Demand.
Subject to the limitation on registration rights provided for in this Section
8, if, on any one occasion 180 days after the Company’s initial public offering
and during the Exercise Period the Company shall receive a written request from
the Warrant Holder to register the sale of all or part of the Underlying
Shares, which sale is reasonably expected to generate aggregate proceeds of at
least $1,000,000, the Company shall, within ninety (90) days thereafter,
prepare and file with the Commission an amendment to any then-outstanding
registration statement or, as appropriate, a new registration statement
sufficient to permit the public offering and sale of the Underlying Shares
through the facilities of all appropriate securities exchanges and the
over-the-counter market, and will use its best efforts through its officers,
directors, auditors and counsel to cause such registration statement to become
and remain effective (including taking such steps as are necessary to obtain
removal of any stop order) as promptly as practicable (provided, however,
that the Company and/or the underwriters for the registration called for under
this Section 8(b) shall have the right to defer such registration for a period
of not more than ninety (90) days upon a good faith determination that
marketing factors necessitate such a delay). All expenses (including up to
$15,000 for fees of a single special counsel for the Warrant Holder) incurred
in connection with such registration (provided that such expenses are
reasonable in the case of expenses incurred by the Warrant Holder) shall be
borne by the Company.  The Warrant Holder may, at its option,
distribute the Underlying Shares covered by its demand by means of an
underwriting.  If the Warrant Holder
intends to distribute the Underlying Shares covered by its demand by means of
an underwriting, Warrant Holder shall so advise the Company as part of its
demand made pursuant to this Section 8(b), including the identity of the
managing underwriter.  The Company shall,
together with the Warrant Holder, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by the Warrant
Holder and reasonably satisfactory to the Company.

 

(c)           Blue-Sky.
In the event of a registration pursuant to the provisions of this Section 8,
the Company shall use its best efforts to cause the Underlying Shares so
registered to be registered or qualified for sale under the securities or “blue
sky” laws of such jurisdictions as the Warrant Holder or such holders may
reasonably request; provided, however, that the Company shall not
be required to qualify to do business or to file a general consent to service
of process in any state by reason of this Section 8(c) in which it is not
otherwise required to qualify to do business or to file a general consent to
service of process.

 

(d)           Effective
Period. The Company shall keep effective any registration or qualification
contemplated by this Section 8 for a period of at least six (6) months or, if
earlier, until the Warrant Holder has completed the distribution of related
thereto; provided, however, that, if the Company is required to
keep any such registration or qualification in effect with respect to
securities other than the Underlying Shares beyond such six (6) month period,
the Company shall keep such registration or qualification in effect as it
relates to the Underlying Shares for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.

 

(e)           Copies
of Prospectus. In the event of a registration pursuant to the provisions of
this Section 8, the Company shall furnish to the Warrant Holder such reasonable
number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement
and each supplement or amendment thereto (including each preliminary
prospectus), all of which shall conform to the requirements of the 1933 Act and
the rules and regulations thereunder, and such other documents, as the Warrant
Holder may reasonably request to facilitate the disposition of the Underlying
Shares included in such registration.

 

4

 

(f)            Prior
Exercise. The Warrant Holder demanding registration pursuant to Section
8(b) hereof shall not be required to exercise the purchase rights represented
by this Warrant prior to demanding registration rights hereunder. If, however,
the Warrant Holder demands such registration rights and the Company prepares
and files a registration statement or post-effective amendment as a result of
such demand and the Warrant Holder thereafter elects not to exercise the
purchase rights represented by this Warrant during the period that such registration
statement or post-effective amendment is effective, the demand registration
right provided by this Section 8 shall nonetheless have been satisfied by the
Company, and the Warrant Holder shall have no further demand rights pursuant to
Section 8(b).

 

(g)           Cross-Indemnity.
In the event of a registration pursuant to the provisions of this Section 8,
the Company shall enter into a cross-indemnity agreement and contribution
agreement, each in customary form, with each underwriter, if any, and, if requested,
enter into an underwriting agreement containing conventional representations,
warranties, allocation of expenses and customary closing conditions, including,
without limitation, opinions of counsel and accountants’ cold comfort letters,
with any underwriter who acquires any Underlying Shares.

 

(h)           Current
Filings. The Company agrees that at all times after it has become subject
to the reporting requirements of the Securities Exchange Act of 1934, as
amended, and  until the earlier of (i)
the period when all the Underlying Shares have been sold under a registration
statement or pursuant to Rule 144 under the 1933 Act or (ii) the date five (5)
years after the date on which the Underlying Shares are issued upon exercise of
this Warrant in accordance with the terms hereof, it shall keep current in
filing all reports, statements and other materials required to be filed with
the Commission to permit holders of the Underlying Shares to sell such
securities under Rule 144.

 

(i)            Registration
on Form S-3. In the event the Company receives from the Warrant Holder a
request that the Company effect a registration on Form S-3 with respect to the
Underlying Shares and if Form S-3 is available for such offering by the Warrant
Holder, the Company shall, as soon as practicable, effect such registration as
would permit or facilitate the sale and distribution of the Underlying Shares
as are specified in the request. All expenses incurred in connection with the
registration pursuant to this Section 8(i) shall be borne by the Company.  Registrations pursuant to this Section 8(i)
shall not be counted as a demand for registration pursuant to Section 8(b)
hereof, and holders of other securities of the Company having registration
rights shall have the ability to be included in the registration on Form S-3.

 

                (j)            Restriction.  No registrations rights superior to those set
forth in this Section 8 shall be granted to any other Person.

 

9.             Market
Stand-Off Agreement. Warrant Holder hereby
agrees that during a period, not to exceed 180 days, following the effective
date of the Company’s initial offering of its securities to the public, to the
extent required by the underwriters with respect to such initial public
offering, it shall not, to the extent requested by the Company and any underwriter,
sell, pledge, transfer, make any short sale of, loan, grant any option for the
purchase of, or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any Capital Stock (including, without limitation,
the Underlying Shares) held by it at any time during such period except
Underlying Shares, if any, included in such registration.  In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the
Capital Stock held by Warrant Holder until the end of such period.

 

10.           Indemnification.

 

                (a)
          Whenever pursuant to Section 8 a
registration statement relating to this Warrant or any Underlying Shares is
filed under the 1933 Act, amended or supplemented, the Company will indemnify
and hold harmless each holder of the securities covered by such registration
statement, amendment or supplement (such holder being hereinafter called the “Distributing
Holder”), and each Person, if any, who controls (within the meaning of the 1933
Act) the Distributing Holder, and each underwriter (within the meaning of the
1933 Act) of such securities and each Person, if any, who controls (within the
meaning of the 1933 Act) any such underwriter, against any losses, claims,
damages or liabilities, joint or several, to which the Distributing Holder, any
such controlling Person or any such underwriter may become subject, 

 

5

 

under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse the Distributing
Holder and each such controlling Person and underwriter for any legal or other
expenses reasonably incurred by the Distributing Holder or such controlling
Person or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder for use in the preparation
thereof; and provided, further, that in the event of any claim by
the Company against the Warrant Holder arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with written
information furnished by the Warrant Holder for use in the preparation thereof,
the Warrant Holder’s damages to the Company shall not exceed the sum received
by the Warrant Holder from the issuance of the Underlying Shares in connection
with any such registration statement, preliminary prospectus, final prospectus
or amendment or supplement.

 

                (b)           Promptly after receipt by an
indemnified party under this Section 10 of notice of the commencement of any
action, such indemnified party if a claim in respect thereof is to be made
against any indemnifying party, shall give the indemnifying party notice of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 10.

 

(c)           In
case any such action is brought against any indemnified party, and it notifies
an indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party and
under such circumstances, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.

 

11.           Anti-Dilution Adjustments.

 

                (a)           The Warrant Price and the number of
Underlying Shares purchasable upon exercise of this Warrant shall be subject to
adjustment from time to time pursuant to this Section 11.

 

                (b)           Subject to Section 12 hereof, if and whenever on or
after the date hereof the Company issues or sells, or in accordance with
Section 12 is deemed to have issued or sold, any shares of its Common
Stock without consideration or at a price per share less than the Fair Market
Value in effect immediately prior to such issuance or sale (or deemed issuance
or sale), then in each such case, the Warrant Price, upon each such issuance or
sale, except as hereinafter provided, shall be lowered so as to be equal to an
amount determined by multiplying the Warrant Price in effect immediately prior
to such issuance or sale by the following fraction:

 

	
   

  	
  P
  + N

  	
   

  
	
   

  	
  P + F

  	
   

  
	
   

  	
   

  	
   

  

where:

 

P =                               the number of shares of
Common Stock outstanding immediately prior to such issuance or sale, assuming
the exercise or conversion of all outstanding 

 

6

 

                                                securities
deemed exercisable for or convertible into Common Stock at any time on or after
the date of such calculation

 

N =                             the number of shares of
Common Stock which the net aggregate consideration, if any, received by the
Company for the total number of such additional shares of Common Stock so
issued or sold would purchase at the Fair Market Value in effect immediately
prior to such issuance or sale

 

F =                               the number of additional
shares of Common Stock so issued or sold

 

In such event, the number of shares of Common Stock issuable upon the
exercise of any Warrant shall be increased to the number obtained by dividing
(i) the product of (a) the number of Underlying Shares issuable upon the
exercise of this Warrant before such adjustment, and (b) the Warrant Price in
effect immediately prior to the issuance giving rise to this adjustment by (ii)
the new Warrant Price determined in accordance with the above formula.

 

                (c)           Notwithstanding the foregoing, there shall be no
adjustment in the Warrant Price as a result of (i) any issue or sale (or
deemed issue or sale) of options to acquire shares of Common Stock to employees
or directors of the Company, or shares of Common Stock issuable pursuant to the
exercise of such options, pursuant to stock option plans approved by the Board
of Directors of the Company or (ii) any issue (or deemed issue by operation of
applicable anti-dilution protections afforded thereto) of shares of Common
Stock that are issuable upon exercise of this Warrant (collectively, “Exempt
Issuances”).

 

                (d)           All calculations under this
Section 11 shall be made to the nearest one-tenth (1/10th) of a cent or to
the nearest one-hundredth (1/100th) of a share, as the case may be.  No adjustment in the Warrant Price or the
number of Underlying Shares purchasable upon exercise of this Warrant is
required if the amount of such adjustment would be less than $0.01 or one-tenth
(1/10th) of a share of Common Stock, as the case may be; provided, however,
that any adjustments which by reason of this Section 11(d) are not required to
be made will be carried forward and given effect in any subsequent adjustment.

 

12.           Effect on Warrant Price of Certain Events.  For purposes of determining the adjusted
Warrant Price under Section 11, the following shall be applicable:

 

                (a)           Issuance of Rights or Options.  Except for Exempt Issuances, if the Company
in any manner grants or sells any options and the price per share for which
Common Stock is issuable upon the exercise of such options at the time of the
granting or sale of such options, or upon conversion or exchange of any
convertible securities issuable upon exercise of such options at the time of
the granting or sale of such options, is less than the Fair Market Value in
effect immediately prior to the time of the granting or sale of such options,
then the total maximum number of shares of Common Stock issuable upon the
exercise of such options or upon conversion or exchange of the total maximum
amount of such convertible securities issuable upon the exercise of such
options shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the granting or sale of such options for such price
per share.  For purposes of this
paragraph, the “price per share for which Common Stock is issuable” shall be
determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the granting or sale of such
options, plus the minimum aggregate amount of additional consideration payable
to the Company upon exercise of all such options, plus in the case of such
options which relate to convertible securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such convertible securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock issuable upon the
exercise of such options or upon the conversion or exchange of all such
convertible securities issuable upon the exercise of such options.  No further adjustment of the Warrant Price
shall be made when convertible securities are actually issued upon the exercise
of such options or when Common Stock is actually issued upon the exercise of
such options or the conversion or exchange of such convertible securities.

 

7

 

                (b)           Issuance of Convertible Securities.  Except for Exempt Issuances, if the Company
in any manner issues or sells any convertible securities and the price per
share for which Common Stock is issuable upon conversion or exchange thereof at
the time of the granting or sale of such convertible securities is less than
the Fair Market Value in effect immediately prior to the time of such issue or
sale, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of such convertible securities shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such convertible securities for such price per share.  For the purposes of this paragraph, the “price
per share for which Common Stock is issuable” shall be determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such convertible securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such convertible
securities.  No further adjustment of the
Warrant Price shall be made when Common Stock is actually issued upon the conversion
or exchange of such convertible securities, and if any such issue or sale of
such convertible securities is made upon exercise of any options for which
adjustments of the Warrant Price had been or are to be made pursuant to other
provisions of this Section 12, no further adjustment of the Warrant Price
shall be made by reason of such issue or sale.

 

                (c)           Change in Option Price or
Conversion Rate.  Except for Exempt
Issuances, if the purchase price provided for in any options outstanding after
the date hereof, the additional consideration, if any, payable upon the
conversion or exchange of any convertible securities outstanding after the date
hereof or the rate at which any such convertible securities are convertible
into or exchangeable for Common Stock changes at any time (excluding changes
resulting from anti-dilution provisions thereof), the Warrant Price in effect
at the time of such change shall be immediately adjusted to the Warrant Price
which would have been in effect at such time had such options or convertible
securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold.  For
purposes of Section 12, if the terms of any option or convertible security
which was outstanding as of the date hereof are changed in the manner described
in the immediately preceding sentence, then such option or convertible security
and the Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such change;
provided that no such change shall at any time cause the Warrant Price
hereunder to be increased.

 

                (d)           Treatment of Expired Options and
Unexercised Convertible Securities. 
Upon the expiration of any option or the termination of any right to
convert or exchange any convertible security without the exercise of any such
option or right, the Warrant Price then in effect hereunder shall be adjusted
immediately to the Warrant Price which would have been in effect at the time of
such expiration or termination had such option or convertible security, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.  For purposes of
Section 12, the expiration or termination of any option or convertible
security which was outstanding as of the date of issuance of this Warrant shall
not cause the Warrant Price hereunder to be adjusted unless, and only to the
extent that, a change in the terms of such option or convertible security
caused it to be deemed to have been issued after the date.

 

                (e)           Calculation of Consideration
Received.  If any Common Stock,
option or convertible security is issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor. 
If any Common Stock, option or convertible security is issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of securities traded on a national
security exchange or automated quotation system in the United States, in which
case the amount of consideration received by the Company shall be the Fair Market
Value thereof as of the date of receipt. 
If any Common Stock, option or convertible security is issued to the
owners of the non-surviving entity in connection with any merger in which
the Company is the surviving Company, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common
Stock, option or convertible security, as the case may be.  The fair value of any consideration other
than cash and 

 

8

 

securities traded on a national
security exchange or automated quotation system in the United States shall be
determined in good faith by a majority of the Board of Directors of the Company.

 

                (f)            Integrated Transactions.  In case any option is issued in connection
with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which no specific consideration is allocated to
such option by the parties thereto, in the event the Board of Directors does
not allocate specific consideration in respect thereof in accordance with the
terms hereof following receipt of a detailed written notice (the “Allocation
Notice”) from a Warrant Holder requesting the same (the “Requesting Holder”)
with respect to a specific issuance, the options shall be deemed to have been
issued for a consideration of $.00002. 
The Board of Directors shall use commercially reasonable efforts to make
such allocation within the time requested in writing by the Warrant Holder but,
in any event, the Board of Directors shall make such allocation within sixty
(60) days from the date it receives the written request for the same.  Furthermore, in the event the Board of
Directors has yet to make the aforementioned allocation by the end of the
Exercise Period and the Requesting Holder has not exercised this Warrant, the
Exercise Peroid shall be extended until three business days following the date
(the “Allocation Date”) the Board makes such allocation and provides the
Warrant Holder with written notice thereof. 
In the event the Requesting Holder exercises this Warrant following the
date of the Allocation Notice but prior to the Allocation Date and the Board of
Directors makes an allocation which would have the effect of lowering the
applicable Warrant Price, the Requesting Holder shall continue to be entitled
to the benefit of such allocation and promptly following the Allocation Date
the Company shall issue the Requesting Holder such number of additional shares
of Common Stock having a value, based on the Fair Market Value in effect on the
exercise date of this Warrant, as would be necessary to effectuate the
operation of the provisions set forth in Sections 11 or 12 hereof, as
applicable, as if such provisions had been effectuated immediately prior to the
exercise date of this Warrant.

 

                (g)           Record Date.  If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock, options or in convertible
securities or (b) to subscribe for or purchase Common Stock, options or
convertible securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

 

                (h)           Subdivision or Combination of
Common Stock.  If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Warrant Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock issuable upon the exercise of this Warrant shall be proportionately
increased, and if the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Warrant Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock issuable upon the exercise of this Warrant shall be
proportionately decreased.

 

                (i)            Reorganization, Reclassification,
Consolidation, Merger or Sale.  Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company’s assets or other transaction, in
each case which is effected in such a manner that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, is
referred to herein as an “Organic Change”. 
Prior to the consummation of any Organic Change, the Company shall make
appropriate provisions  to insure that
the Warrant Holder shall thereafter have the right to acquire and receive, in
lieu of or in addition to (as the case may be) the Underlying Shares
immediately theretofore acquirable and receivable upon the exercise of this
Warrant, such shares of stock, securities or assets as the Warrant Holder would
have received in connection with such Organic Change if the Warrant Holder had
exercised its Warrant immediately prior to such Organic Change.  In each such case, the Company shall also
make appropriate provisions to insure that the provisions of Sections 11 and 12
hereof shall thereafter be applicable to this Warrant.  The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor 

 

9

 

entity (if other than the
Company) resulting from consolidation or merger or the entity purchasing such
assets assumes by written instrument the obligation to deliver to the Warrant
Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Warrant Holder may be entitled to acquire.

 

                (j)            Certain Events.  If any event occurs of the type contemplated
by the provisions of Sections 11 and 12 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features, but
excluding Exempt Issuances), then the Board of Directors shall make an
appropriate adjustment in the Warrant Price so as to protect the rights of the
Warrant Holder; provided that no such adjustment shall increase the Warrant
Price as otherwise determined pursuant to Sections 11 and 12 or decrease the
number of Underlying Shares issuable upon exercise of this Warrant.

 

                (k)           Notices.

 

(i)            Not less than one (1) week after any
adjustment of the Warrant Price, the Company shall give written notice thereof
to the Warrant Holder, setting forth in reasonable detail and certifying the
calculation of such adjustment.

 

(ii)           The Company shall give written notice
to the Warrant Holder at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (a) with respect to any dividend or
distribution upon Common Stock; provided, however, in the event the Company’s
Common Stock is listed or traded on a national securities exchange or quotation
system in the United States, as the case may be, the Company need only comply
with this part (ii)(a) in connection with the Company’s first ordinary Common
Stock dividend, and thereafter no notice shall be required pursuant to this
part (ii)(a) with respect to regular payment of such ordinary Common Stock
dividend, (b) with respect to any pro rata subscription offer to holders of
Common Stock or (c) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.

 

(iii)           The Company shall also give written
notice to the Warrant Holder at least twenty (20) days prior to the date on
which any Organic Change shall take place.

 

13.           Certain Events.  If any of the following occurs on or before
the end of the Exercise Period:

                (a)           a consolidation or merger of the
Company with or into another entity (other than any merger as to which the
Company is the surviving corporation and there is no change in the Common Stock
in connection therewith),

                (b)           a liquidating dividend with respect
to the Common Stock, or

                (c)           a tender offer or exchange offer with respect to the
Common Stock (other than a tender offer that has not been recommended by the
Company’s Board of Directors),

 

(each, an “Event”), in the event the Board of
Directors determines in good faith that operation of this provision will not in
any way adversely affects the interests of the Company, the Company’s
shareholders or any party to the Event, then in connection with any such Event,
the Company shall use commercially reasonable efforts to provide that the
Warrant Holder shall have the right, in lieu of exercising the Warrant in
advance of such Event and receiving the consideration which the Warrant Holder
would receive in connection with such consolidation or merger, liquidating dividend
or tender offer (the “Event Consideration”), upon surrender of this Warrant to
the Company or its duly authorized agent or to the depositary or exchange
agent, as the case may be, to receive the Event Consideration with respect to
the Underlying Shares for which this Warrant is exercisable reduced by the
Warrant Price.  If set forth in writing,
the Warrant Holder may condition the surrender of this Warrant upon the
occurrence of the Event.  Such reduction
in the Event Consideration shall first be applied to any cash included in the
Event 

 

10

 

Consideration and, to the extent that such cash is
less than the Warrant Price, the amount of the securities or other property to
be received by the Warrant Holder shall be reduced by an amount that, together
with any such cash, is (as determined in good faith by the Board of Directors)
equal to the Warrant Price.  The
provisions of this Section 13 shall also apply to successive Events.

 

14.           INTENTIONALLY DELETED.

 

15.           Payment of Taxes.  All shares of Common Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and nonassessable,
and the Company shall pay all taxes and other governmental charges that may be
imposed in respect of the issue or delivery thereof.  The Company shall not be required, however,
to pay any tax or other charge imposed in connection with any transfer involved
in the issue of any certificate for shares of Common Stock in any name other
than that of the holder of this Warrant surrendered in connection with the
purchase of such shares, and in such case the Company shall not be required to
issue or deliver any stock certificate until such tax or other charge has been
paid or it has been established to the Company’s satisfaction that no tax or
other charge is due.

 

16.           Fractional Shares.  No fractional shares of the Company’s Common
Stock will be issued in connection with any purchase hereunder but in lieu of
such fractional shares, the Company shall make a cash refund therefor equal in
amount to the product of the applicable fraction multiplied by the difference
between the Fair Market Value per Underlying Share and the Warrant Price per
share paid by the holder for its Underlying Shares upon such exercise.

 

17.           Loss, Theft, Destruction or
Mutilation; Nontransferability of Warrant. 
Upon receipt by the Company of evidence reasonably satisfactory to it
that this Warrant has been mutilated, destroyed, lost or stolen, and in the
case of a mutilated warrant, upon surrender and cancellation thereof, the
Company will execute and deliver in the Warrant Holder’s name, in exchange and
substitution for the warrant so mutilated, destroyed, lost or stolen, a new
warrant of like tenor substantially in the form thereof with appropriate insertions
and variations.  This Warrant may not be
transferred, conveyed or otherwise disposed of by the Warrant Holder without
the prior written consent of the Company.

 

18.           Computations.  The certificate of any firm of independent
public accountants of recognized standing selected by the Company shall be
conclusive evidence of the correctness of any computation under this Warrant.

 

19.           Governing Law.  This Warrant shall be governed by, construed
and enforced in accordance with, the laws of the State of North Carolina
without giving effect to its principles of conflicts of laws. Both parties
agree to and accept the jurisdiction of the courts of North Carolina and
consent to the State of North Carolina as the forum for any claim brought
hereunder.

 

20.           Headings.  The descriptive headings of the several
sections of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.

 

21.           1933 Act Registration.  Neither this Warrant nor the Underlying
Shares have been or will (except as provided below) be registered under the
1933 Act, and are “restricted securities” as defined under the 1933 Act.  The Warrant Holder, by accepting this
Warrant, agrees (a) to make no sale or other transfer of this Warrant or
Underlying Shares issuable upon exercise of rights arising hereunder except in
conformity with the 1933 Act, and (b) that certificates representing Underlying
Shares, so long as the Underlying Shares are restricted securities, will bear a
legend in form satisfactory to the Company’s counsel which reflects the
foregoing restriction.

 

22.           No Impairment. The Company will not, by amendment
of its charter or through reorganization, consolidation, merger, dissolution,
sale of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.

 

11

 

                IN WITNESS WHEREOF, the Company has caused this
Warrant to be signed by its duly authorized officer on the date of this
Warrant.

 

	
   

  	
   

  	
  CONSONUS TECHNOLOGIES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: /s/Michael G. Shook

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  

 

 

ACCEPTED BY

 

AVNET, INC.

 

 

By: /s/Stephen L. Quick

Title: Director

 

12

 

Rider A

 

 

PURCHASE AGREEMENT

 

 

	
   

  	
   

  	
  Date: 

  	
   

  	
   

  

 

TO:         Strategic Technologies, Inc.

 

                                The undersigned, pursuant to the
provisions set forth in the attached Warrant, hereby agrees to purchase                     
shares of Common Stock covered by such Warrant, and makes payment herewith in
full therefor at the price per share provided by this Warrant.

 

 

 

	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

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