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Exhibit 10.22
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of July 15, 1997 (this "Agreement"),
between IBM Credit Corporation, a Delaware corporation ("IBM Credit"), and ENTEX
Information Services, Inc., a Delaware corporation ("ENTEX").
WHEREAS, pursuant to Section 5(C) of Amendment No. 8 dated as of
July 15, 1997 ("Amendment No. 8") to the Fourth Amended and Restated Agreement
for Wholesale Financing dated as of September 15, 1995, between IBM Credit and
ENTEX, it was agreed that IBM Credit would receive warrants (the "Warrants") to
purchase shares of Common Stock, par value $0.001 per share ("Common Stock"), of
ENTEX, in the amounts, at the times and subject to the terms and conditions
contained in this Agreement, in consideration for, among other things, the
execution and delivery by IBM Credit of Amendment No. 8, as provided in this
Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Issuance of Warrants. ENTEX shall issue to IBM Credit, its
successors and permitted assigns (as used herein, the term "Holder" shall mean
IBM Credit and/or its successors and permitted assigns, as the context shall
require) Warrants (the "Warrants"), substantially in the form of Exhibit A
attached hereto, to purchase shares of Common Stock, subject to adjustment
pursuant to Section 6 (the "Warrant Shares") at an exercise price of Thirty-
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Seven Dollars and Seventy-Five Cents ($37.75) per share (the "Exercise Price"),
covering the number of shares of Common Stock on the dates set forth below.
Percentage
Date of Issuance Number of Shares of Primary Shares
---------------- ------- ----
Date Hereof 33,447 0.50%
October 15, 1997 16,724 0.25%
December 15, 1997 16,724 0.25%
January 15, 1998 33,447 0.50%
February 15, 1998 33,448 0.50%
------------------ ------- -----
133,790 2.00%
provided, however, that ENTEX shall not be required to issue Warrants on or
after the payment by ENTEX in full of the Short Term Loan (as such term is
defined in Amendment No. 7 dated as of December 1, 1996, to the Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995,
between IBM Credit and ENTEX).
2. Exercise of Warrants; Conversion Rights. (a) The Warrants may
be exercised by the Holder in whole or in part at any time, commencing on the
date hereof and ending, unless extended pursuant to the terms of Section 2(b)
hereof, on or before 12:00 Midnight, New York City Time, on July 31, 2004 (the
"Expiration Date").
(b) The Holder may exercise the Warrants by delivering to
Holdings a written notice of exercise substantially in the form attached as
Annex I to Exhibit A (the "Exercise Notice"). The Warrants may be exercised in
whole or in part. The Holder's obligation to purchase Warrant Shares upon any
exercise of Warrants is subject to the conditions that (i) no preliminary or
permanent injunction or other order of any court of competent jurisdiction
prohibiting the purchase, issuance or delivery of the Warrant Shares shall be in
effect and (ii) any applicable waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976,
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as amended (the "HSR Act"), shall have been terminated or shall have expired,
provided, however, that any failure by the Holder to purchase the Warrant Shares
upon exercise of the Warrants at any Warrant Closing (as hereinafter defined) as
a result of the non-satisfaction of any of such conditions shall not affect or
prejudice the Holder's right to purchase such Warrant Shares upon the subsequent
satisfaction of such conditions. If filings are required to be made pursuant to
the HSR Act, then the applicable date of the Warrant Closing shall be extended
to complete such filings and any applicable waiting period under the HSR Act.
The parties hereto hereby agree to cooperate to prepare and make as promptly as
reasonably practicable any filings required to be made under the HSR Act as a
result of any exercise of the Warrant.
(c) At any time or from time to time on or prior to the
Expiration Date when the Common Stock shall be listed on a national securities
exchange, quoted in the NASDAQ National Market or traded in the over-the-counter
market ("Publicly Traded") and the Exercise Price shall be less than the Current
Market Price (as hereinafter defined) of a share of Common Stock, the Holder of
the Warrants shall also have the right to convert the Warrants, or any portion
thereof (the "Conversion Right"), without payment by the Holder of the Warrant
of the Exercise Price or any other consideration, into shares of Common Stock as
provided in this Section 2(c). Upon exercise of the Conversion Right with
respect to a particular number of Warrant Shares (the "Converted Warrant
Shares"), ENTEX shall deliver to the Holder of the Warrant so converted (without
payment by the Holder of the converted Warrant of the Exercise Price or any
other consideration) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the difference between (1) the product of (A) the
Current Market Price of a share of Common Stock multiplied by (B) the number of
the Converted Warrant Shares,
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and (2) the product of (A) the Exercise Price multiplied by (B) the number of
Converted Warrant Shares in each case as of the Conversion Date (as hereinafter
defined), by (y) the Current Market Price of a share of Common Stock on the
Conversion Date. No fractional Warrant Shares shall be issuable upon exercise of
the Conversion Right, and if the number of Warrant Shares to be issued
determined in accordance with the following formula is other than a whole
number, ENTEX shall pay to the Holder of the Warrant so converted an amount in
cash equal to the Current Market Price of the resulting fractional Warrant Share
on the Conversion Date.
(d) The Conversion Right may be exercised by the Holder of a
Warrant by the surrender of the Warrant being converted as provided in Section
2(c), together with a written statement specifying that the Holder of the
Warrant being converted intends to exercise the Conversion Right with respect to
such Warrant and setting forth the number of Converted Warrant Shares which
are covered by the exercise of the Conversion Right. Such conversion shall be
effective upon receipt by ENTEX of the Warrant being converted, together with
the aforesaid written statement, on such later date as is specified therein (the
"Conversion Date"). ENTEX shall issue to the Holder of the Warrant submitted for
conversion as of the Conversion Date a certificate representing the Warrant
Shares issuable upon exercise of the Conversion Right and, if applicable, a new
warrant of like tenor evidencing the balance of the Warrant Shares remaining
subject to the Warrant submitted for conversion.
(e) The "Current Market Price" of the Common Stock as of a
particular date shall mean the average closing sale price over the 20 prior
trading days, as reported on the principal stock exchange or quotation system on
which the Common Stock is listed or quoted.
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(f) ENTEX shall not be required to issue a fractional share of
Common Stock upon the exercise of the Warrants. As to any fraction of a share
that the Holder of one or more Warrants, the rights of which are being exercised
in the same transaction, would otherwise be entitled to purchase upon such
exercise, if such fraction is equal to or greater than one-half (1/2) of a share
of Common Stock, ENTEX shall issue one share of Common Stock in respect of such
fraction, provided, however, that cash shall be paid in lieu of fractional
shares upon the exercise of the Conversion Right as provided in Section 2(c).
3. Warrant Closing. The purchase of Warrant Shares by the Holder
upon the exercise of a Warrant shall take place at a closing (the "Warrant
Closing") to be held not later than five (5) business days after the delivery of
the Exercise Notice at a time and place agreed on by the exercising Holder and
ENTEX. At each Warrant Closing, (a) ENTEX will deliver to the exercising Holder
a certificate or certificates representing the Warrant Shares being purchased
pursuant to the Notice of Exercise, registered in the name of the exercising
Holder, free and clear of all liens, claims, charges and encumbrances, and (b)
the exercising Holder shall pay the purchase price for such Warrant Shares by
delivery to ENTEX of a certified or bank cashier's check payable in New York
Clearing House funds to the order of ENTEX in the amount of the Exercise Price
or by wire transfer of immediately available funds to an account designated in
writing by ENTEX.
4. Representations &ad Warranties of ENTEX. ENTEX represents and
warrants to the Holder that: (a) ENTEX 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 to enter into and perform this Agreement; (b) the
execution, delivery and performance by
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ENTEX of this Agreement has been duly authorized by all necessary corporate
action on the part of ENTEX, and this Agreement has been duly executed and
delivered by ENTEX and constitutes a valid and legally binding obligation of
ENTEX enforceable in accordance with its terms, except that (i) the
enforceability hereof may be subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought; (c) the authorized capital stock of ENTEX
consists of 2,000,000 shares of Preferred Stock, par value $0.001 per share,
none of which are issued or outstanding, and 10,000,000 shares of Common Stock,
of which (i)(A) a total of 6,479,812 shares are validly issued and outstanding,
fully paid and nonassessable (the "Outstanding Shares"), (B) a total of 66,670
shares (the "1994 IBMCC Warrant Shares") are reserved for issuance pursuant to
the Warrant Agreement (the "1994 IBMCC Warrant Agreement") dated as of November
15, 1994, among IBM Credit, ENTEX Holdings, Inc., a Delaware corporation and the
former parent corporation of ENTEX ("Holdings"), and ENTEX, which, upon the
exercise of the Warrant issued under the 1994 IBMCC Warrant Agreement (the "1994
IBMCC Warrant") and the payment of the exercise price provided for under the
1994 IBMCC Warrant Agreement and the 1994 IBMCC Warrant, will be validly issued
and outstanding, fully paid and nonassessable, and (C) a total of 143,046 shares
(the "Microsoft Shares") are reserved for issuance pursuant to the Common Stock
Purchase Warrant dated June 21, 1996, issued by Holdings to Microsoft
Corporation (the "Microsoft Warrant"), consisting of 75,000 shares originally
reserved and 68,046 shares additionally reserved pursuant to Section
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3.4 of the Microsoft Warrant, which shares, upon the exercise of the Microsoft
Warrant and the payment of the exercise price provided for under the Microsoft
Warrant, will be validly issued and outstanding, fully paid and nonassessable
(the Outstanding Shares, the 1994 IBMCC Warrant Shares and the Microsoft Shares
being hereinafter collectively referred to as the "Primary Shares"), and (ii) a
total of 1,821,932 shares are reserved for issuance (A) pursuant to Stock Option
Plans of Holdings and ENTEX adopted in 1996, (B) to independent directors for
services to ENTEX in such capacity, or (iii) pursuant to the ENTEX Performance
Incentive Plan (all of the foregoing shares being referred to collectively as
the "Compensatory Shares"); (d) the Warrant Shares represent the respective
percentages of the Primary Shares set forth in Section 2; (e) Holdings was
merged with and into ENTEX on June 28, 1996, with ENTEX being the surviving
corporation in such merger; (f) the execution, delivery and performance by ENTEX
of this Agreement will not violate or conflict with (i) its Certificate of
Incorporation or its By-Laws, each is amended to date (ii) any agreement to
which ENTEX is a party, a breach or violation of which would have a material
adverse effect upon the condition (financial or otherwise), assets, liabilities,
business, operations or prospects of ENTEX or the ability of ENTEX to perform
its obligations under this Agreement (an "ENTEX Material Adverse Effect"), (iii)
any license, franchise or permit applicable to ENTEX a breach or violation of
which would have an ENTEX Material Adverse Effect or (iv) any law, regulation,
order, judgment or decree applicable to ENTEX a breach or violation of which
would have an ENTEX Material Adverse Effect; (g) other than as may be required
in connection with or in compliance with the provisions of the HSR Act, no
authorization, consent or approval of, or any filing with, any governmental body
or authority or any other person is necessary for consummation by
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ENTEX of the transactions contemplated hereby; (h) there are no actions, suits,
investigations or proceedings pending, or, to the knowledge of ENTEX,
threatened; against ENTEX, at law or in equity or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign or before any arbitrator of any kind, an adverse determination of which
would have an ENTEX Material Adverse Effect or which in any matter draws into
question the validity of this Agreement; (i) (i) except as disclosed in clause
(c) above, (ii) except for the rights set forth in the Option Agreement (the
"1994 IBMCC Option Agreement"), dated as of July 15, 1994, among IBM Credit,
Dort ▇. ▇▇▇▇▇▇▇ III ("Cameron"), Holdings, and ENTEX; and (iii) except for the
1994 IBMCC Warrant Shares, the Microsoft Warrant Shares, and the Compensatory
Shares, and conversion rights under the 1994 IBMCC Warrant Agreement and the
1994 IBMCC Option Agreement issuable thereunder, ENTEX does not have outstanding
any other shares of capital stock or securities convertible into or exchangeable
for, or options or warrants or other rights to acquire from ENTEX or any other
obligation to issue, directly or indirectly, any shares of capital stock; (j)
except for the registration rights set forth in this Agreement, the 1994 IBMCC
Warrant Agreement, the 1994 IBMCC Option Agreement, and the Microsoft Warrant,
ENTEX is not under any obligation to cause the registration under the Securities
Act of 1933 (the "Securities Act") of any of its currently outstanding capital
stock or other securities or any of its capital stock or other securities that
may hereafter be issued and (k) ENTEX has delivered to the Holder the
information set forth on Schedule I hereto (the "ENTEX Corporate Information"),
which ENTEX Corporate Information is true, correct and complete in all material
respects as of the respective dates of the particular items of information
included in such ENTEX Corporate
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Information, and such ENTEX Corporate Information, as of the respective dates of
the particular items of information included in such ENTEX Corporate
Information, does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
5. Representations and Warranties of IBM Credit. IBM Credit
represents and warrants to ENTEX that:
(a) IBM Credit 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 to enter into and perform this Agreement; (b) the
execution, delivery and performance by IBM Credit of this Agreement has been
duly authorized by all necessary corporate action on the part of IBM Credit, and
this Agreement has been duly executed and delivered by IBM Credit and
constitutes a valid and legally binding obligation of IBM Credit enforceable in
accordance with its terms except that (i) the enforceability hereof may be
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought; (c) the execution, delivery and performance by IBM
Credit of this Agreement will not violate or conflict with (i) its Certificate
of Incorporation or By-Laws, (ii) any agreement to which IBM Credit is a party
which is material to the financial condition or business of IBM Credit, a breach
or violation of which would have a material adverse effect upon the condition
(financial or otherwise), assets,
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liabilities, business, operations or prospects of IBM Credit or the ability of
IBM Credit to perform its obligations under this Agreement (an "IBM Credit
Material Adverse Effect"), (iii) any license, franchise or permit applicable to
IBM Credit, a breach or violation of which would have an IBM Credit Material
Adverse Effect, or (iv) any law, regulation, order, judgment or decree
applicable to IBM Credit, a breach or violation of which would have an IBM
Credit Material Adverse Effect; (d) other than as may be required in connection
with or in compliance with the provisions of the HSR Act, no authorization,
consent or approval of, or any filing with, any governmental body or authority
or any other person is necessary for consummation by IBM Credit of the
transactions contemplated hereby; (e) IBM Credit acknowledges that it has made
its own investigation of ENTEX and that, except as expressly set forth herein,
ENTEX makes no representations or warranties under this Agreement with respect
to the business, assets, liabilities, operations, condition (financial or
otherwise), or prospects of ENTEX; and (f) (i) IBM Credit is acquiring the
Warrants hereunder and will acquire Warrant Shares upon the exercise of the
Warrants for its own account, for investment and not with a view to the
distribution thereof; (ii) IBM Credit understands that the issuance of the
Warrants and the Warrant Shares will not be registered under the Securities Act,
because such issuance is exempt from the registration requirements of the
Securities Act and that such securities must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from the registration requirements thereunder, (iii) IBM Credit
understands that the exemption from registration under the Securities Act
afforded by Rule 144 promulgated thereunder ("Rule 144"), the provisions of
which are known to IBM Credit depends upon the satisfaction of various
conditions and that, if applicable, Rule 144 may only afford the basis for
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sales under certain circumstances and only in limited amounts, and (iv) IBM
Credit is an "accredited investor" (as such term is defined in Rule 501 (a)
promulgated under the Securities Act).
6. Certain Adjustments. (a) In the event of any change in the
number of issued and outstanding shares of Common Stock by reason of any stock
dividend, split-up, combination, reclassification, recapitalization, binding
share exchange, merger or consolidation with any other person or other change in
the corporate or capital structure of ENTEX having an effect on all issued and
outstanding shares (a "Recapitalization Event"), the exercising Holder shall
receive upon its exercise of the Warrant the Common Stock or other securities,
cash or property to which such Holder would have been entitled to receive on the
date of the exercise of the Warrant as if such holder had been a holder of
record of issued and outstanding Warrant Shares on the record date fixed for
determination of holders of Common Stock entitled to receive such stock or other
securities, cash or property pursuant to such Recapitalization Event, and the
Exercise Price shall be appropriately adjusted to give effect to such
Recapitalization Event.
(b) If at any time prior to the Expiration Date and prior to the
time that the Common Stock is Publicly Traded ENTEX shall issue for cash shares
of Common Stock having an aggregate purchase price of more than Fifty Million
Dollars ($50,000,000) in any single transaction or a related series of
transactions to a party other than ENTEX for a price per share (the "Third Party
Purchase Price") that is less than the quotient of (A) Two Hundred Fifty Million
Dollars ($250,000,000) divided by (B) the number of shares equal to the number
of shares of Common Stock then issued and outstanding, increased by the number
of (i) authorized but unissued 1994 IBMCC Warrant Shares, (ii) authorized but
unissued Microsoft Shares, and
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(iii) authorized but unissued Warrant Shares, but excluding the shares of
Common Stock to be issued to the Third Party, then the Exercise Price shall be
reduced to an amount equal to the Third Party Purchase Price.
(c) If the representation contained in Section 4(k) of this
Agreement is inaccurate in any material respect and the Holder notifies ENTEX of
the fact of such inaccuracy on or before March 1, 1998, then, without limiting
any other rights of the Holder, the Holder and ENTEX will negotiate in good
faith an equitable adjustment in the Exercise Price to reflect the impact of
such inaccuracy on the valuation of the Common Stock as of the date hereof.
7. Action by Majority Holders. If, at any time, more than one
person or entity is deemed to be a Holder under the terms of this Agreement,
then any waiver or consent, given or required to be given pursuant to this
Agreement shall be deemed to have been validly taken or given only if such
waiver or consent has been approved in writing by Holders that own or have the
right to acquire a majority of the Warrant Shares (the "Majority Holders"), and
such waiver or consent, if given, shall be binding and conclusive upon all
remaining Holders.
8. Certain Covenants. (a) ENTEX hereby agrees that the Holder
shall have the right upon reasonable prior written notice and during normal
business hours to inspect the books and records of ENTEX for a proper purpose,
as if the Holder were a holder of Common Stock of record on the date such notice
is delivered and to deliver to Holder all information that is given by ENTEX to
stockholders of ENTEX generally.
(b) All of the books and records of ENTEX and its subsidiaries
will be maintained in accordance with generally accepted accounting principles,
consistently applied.
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(c) ENTEX will, and will cause each of its subsidiaries to,
preserve and maintain its corporate existence and all of the rights, privileges
and franchises necessary or desirable in the ordinary course of business and
conduct its business in a regular manner; comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental body or
authority, a violation of which would be reasonably likely to have an ENTEX
Material Adverse Effect; pay and discharge all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any property belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims that, if unpaid, might become a lien upon the
property of ENTEX or any such subsidiary, provided that neither ENTEX nor any
such subsidiary shall be required to pay any such tax, assessment, charge, levy
or claim, the payment of which is being contested in good faith and by proper
proceedings if it maintains adequate reserves with respect thereto; and keep all
of its properties necessary to the conduct of its business in good working order
and condition (taking into consideration, however, the condition of such
properties at the time such properties were acquired by ENTEX or such
subsidiary), ordinary wear and tear excepted.
(d) ENTEX agrees to deliver to the Holder such information
concerning the business affairs and financial condition of ENTEX and its
subsidiaries as it is obligated to deliver under the 1994 IBMCC Option Agreement
and the 1994 IBMCC Warrant Agreement.
(e) ENTEX will not enter into any transaction (other than
transactions between ENTEX and members of the management of ENTEX pursuant to
management equity arrangements in effect from time to time and any other
transaction permitted by the Fourth Amended and Restated Agreement for Wholesale
Financing between IBM Credit and ENTEX,
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as the same may he amended or modified from time to time), with or for the
benefit of any Affiliates except on terms no less favorable to ENTEX, than could
be obtained in a comparable arm's-length transaction with an unaffiliated
person.
(f) ENTEX shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of Common
Stock as shall be issuable upon the exercise of the Warrants. ENTEX further
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, if applicable, all Warrant Shares issuable upon
exercise of the Warrants shall be duly and validly issued, fully paid and
nonassessable.
(g) ENTEX will not amend or otherwise modify, or permit to occur
any amendment or modification of, the Certificate of Incorporation of ENTEX as
in effect on the date hereof, if such amendment or modification would alter or
change the powers, preferences or rights of the shares of the Common Stock that
would materially and adversely affect the Holder.
(h) ENTEX will provide to the Holder at least thirty (30) days'
prior written notice of any proposed sale or other transfer by ENTEX of more
than 50% of its assets.
9. Sales to Third Parties. (a) If at any time prior to the
Expiration Date, Cameron or any Affiliate of Cameron proposes to sell shares of
Common Stock beneficially owned by any of them (as used herein, "beneficial
ownership" refers to shares with respect to which Cameron or Affiliates of
Cameron, as the case may be, possesses the power to dispose or direct the
disposition), and the total number of shares of Common Stock proposed to be sold
in such transaction represents at least 20% of the Fully Diluted Shares, then
Cameron shall
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deliver to the Holder written notice of such proposed sale which shall set forth
the proposed date of such sale, the proposed purchaser, the total number of
shares of Common Stock proposed to be sold, the proposed purchase price and type
of consideration (including, if the purchase price consists in whole or in part
of non-cash consideration, such information available to Cameron and his
Affiliates as may be reasonably necessary for the Holder to properly analyze the
economic value and investment risk of such non-cash consideration) and the other
material terms and conditions of the purchase ("Notice of Intent to Sell"), and
the Holder shall have the opportunity, upon exercise of the Warrants, subject to
the terms of this Section 9(a), to sell to such proposed purchaser, at the same
price per share and on the same terms and conditions as Cameron, a pro rata
portion of the Warrant Shares, then owned by or issuable to the Holder that the
Holder proposes to sell, as notified to Cameron pursuant to Section 9(b), based
upon the proportion that the total number of shares of Common Stock proposed to
be sold by Cameron pursuant to the Notice of Intent to Sell bears to the total
number of shares of Common Stock beneficially owned by Cameron (but excluding
the Option Shares, as defined in the 1994 IBMCC Option Agreement), his
Affiliates, the Holder and all other security holders intending to participate
in such proposed sale and the number of shares proposed to be sold by Cameron
and his Affiliates will be correspondingly reduced.
(b) If the Holder wishes to participate in any sale under Section
9(a) hereof, the Holder shall notify Cameron and ENTEX in writing of such
intention and of the number of Warrant Shares proposed to be sold by the Holder
not later than seven (7) business days after receipt of the Notice of Intent to
Sell.
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(c) Notwithstanding any other provision of this Agreement, if
Cameron, Affiliates of Cameron, or both propose to sell or exchange (in a
business combination or otherwise) the Common Stock beneficially owned by them
in a bona fide arm's-length transaction, involving the sale or exchange of at
least 50% of the outstanding Common Stock, then Cameron, at his option, may
require that the Holder (A) sell or exchange in the same transaction a portion
of the Warrant Shares then owned by or issuable to the Holder in the same
proportion as the number of shares of Common Stock proposed to be sold or
exchanged by Cameron bears to the total number of shares of Common Stock
(excluding all Option Shares) beneficially owned by Cameron and his Affiliates
and (B) if stockholder approval of the transaction is required, that the Holder
vote its shares of Common Stock in favor thereof. In any such sale or exchange,
the Holder shall receive for its shares the identical consideration payable per
share of Common Stock to all other holders of shares of Common Stock
participating in such sale or exchange. At least thirty (30) days prior to the
date of such proposed sale or exchange, Cameron shall deliver to the Holder
written notice of such proposed sale or exchange which shall set forth the
proposed date of such sale or exchange, the proposed purchaser, the total number
of shares of Common Stock proposed to be sold or exchanged, the number of shares
of Common Stock (excluding the Option Shares) beneficially owned by Cameron and
his Affiliates, the amount and type of consideration (including, if the
consideration consists in whole or in part of non-cash consideration, such
information available to Cameron and his Affiliates as may be reasonably
necessary for the holder to property analyze the economic value and investment
risk of such non-cash consideration) and the other material terms of such
proposed sale or exchange. Notwithstanding any provision to the contrary
contained in
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this Section 9(c), (i) the Holder shall not be obligated to participate in any
such sale or exchange unless the Holder is entitled to rely upon any opinion of
counsel received by Cameron or ENTEX, (ii) the Holder shall not be required to
make any representation or warranty in connection with any such sale or exchange
other than representations and warranties as to its authority, the
enforceability of its obligations and ownership of the Warrant Shares, to be
sold or exchanged by it, free and clear of all liens, claims, charges and
encumbrances, and (iii) ENTEX and Cameron jointly and severally agree to
indemnify and hold harmless, to the fullest extent permitted by applicable law,
the Holder from and against all losses, claims, damages, liabilities, costs,
expenses (including, but not limited to, reasonable attorney's fees) arising out
of or relating to, claims made by third parties in connection with such sale or
exchange.
(d) For purposes of this Agreement, an "Affiliate" of any
particular person or entity shall mean any person or entity that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such person or entity.
(e) For purposes of this Agreement, the "Fully Diluted Shares"
shall mean the total number of outstanding shares of Common Stock, giving effect
to the exercise of all outstanding options, warrants (other than the Warrants),
including those issued to or allocable to officers, outside directors,
consultants or employees of ENTEX and the conversion or exchange of all
securities convertible into or exchangeable for shares of Common Stock.
(f) The Holder shall not be obligated to pay any of the fees,
costs and expenses incurred in connection with any sale or exchange described in
this Section 9, other than its own legal fees, costs and expenses.
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10. Restrictive Legends. (a) Except as otherwise provided in this
Section 10, each certificate representing Warrant Shares delivered to the
Holder, and each certificate representing Common Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAW. NO TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH
TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW, (B) SUCH
TRANSFER IS TO AN AFFILIATE OF THE HOLDER, (C) THE HOLDER OF THE
SECURITIES PROPOSED TO BE TRANSFERRED SHALL HAVE DELIVERED TO
ENTEX INFORMATION SERVICES, INC. EITHER A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL
EXPERIENCED IN SECURITIES MATTERS TO THE EFFECT THAT SUCH
PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS, WHICH
OPINION IS IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO ENTEX
INFORMATION SERVICES, INC. OR (D) SUCH TRANSFER IS PURSUANT TO
RULE 144 UNDER THE ACT AND SUCH HOLDER(S) SHALL HAVE DELIVERED TO
ENTEX INFORMATION SERVICES, INC. A CERTIFICATE SETTING FORTH THE
BASIS FOR APPLYING SUCH RULE TO THE PROPOSED TRANSFER.
(b) Except as otherwise provided in this Section 10, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE WARRANTS
REPRESENTED BY THIS CERTIFICATE OR OF THE SECURITIES ISSUABLE
UPON EXERCISE THEREOF SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH
TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND IN COMPLIANCE
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WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (B) THE HOLDER OF
THE SECURITIES PROPOSED TO BE TRANSFERRED SHALL HAVE DELIVERED TO
THE ISSUER EITHER A. NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION OR AN OPINION OF COUNSEL EXPERIENCED IN
SECURITIES MATTERS TO THE EFFECT THAT SUCH PROPOSED TRANSFER IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND OF ANY
APPLICABLE STATE SECURITIES LAWS, WHICH OPINION IS IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER OR (C) SUCH
TRANSFER IS PURSUANT TO RULE 144 UNDER THE ACT AND SUCH HOLDER
SHALL HAVE DELIVERED TO THE ISSUER A CERTIFICATE SETTING FORTH
THE BASIS FOR APPLYING SUCH RULE TO THE PROPOSED TRANSFER.
(c) Notwithstanding the foregoing, the legend requirements of
this Section 10 shall terminates as to any particular Warrant or Warrant Share
when ENTEX shall have received from the holder thereof an opinion of counsel in
form and substance reasonably acceptable to the Company that such legend is not
required in order to ensure compliance with the Securities Act. Whenever the
restrictions imposed by this Section 10 shall terminate, the holder hereof or of
Warrant Shares, as the case may be, shall be entitled to receive from ENTEX
without cost to such holder a new Warrant or certificate for Warrant Shares of
like tenor, as the ease may be, without such restrictive legend.
11. Transfers. (a) Neither the Warrants nor the Warrant Shares
shall be transferred to any person other than an Affiliate of the Holder other
than pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws or an exemption from the registration
provisions thereof. Each certificate, if any, evidencing such shares of Common
Stock issued upon any such transfer, other than in a public offering pursuant to
an effective registration statement shall bear the restrictive legend set forth
in Section 10, unless in the opinion of counsel to the transferring Holder, such
legend is not required for the
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purposes of compliance with the Securities Act. The Holder shall not be entitled
to transfer the Warrant or the Warrant Shares or the Conversion Shares except in
accordance with this Section 11 or Section 20 hereof.
(b) Subject to compliance with the restrictions on transfer set
forth in this Section 11, each transfer of the Warrants and all rights
thereunder, in whole or in part, shall be registered on the books of ENTEX to be
maintained for such purpose, upon surrender of a Warrant at the Designated
Office of ENTEX designated for such purpose pursuant to Section 20, together
with a written assignment of the Warrant in the form of Annex II to Exhibit A
hereto duly executed by the Holder or its agent or attorney. Upon such surrender
and delivery, ENTEX shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees for the number of Warrant Shares specified in
such instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, if any. A Warrant, if
properly assigned in compliance with the provisions hereof, may be exercised by
a new holder for the purchase of Warrant Shares without having a new Warrant
issued. All Warrants issued upon any assignment of Warrants shall be the valid
obligations of ENTEX, evidencing the same rights, and entitled to the same
benefits as the Warrants surrendered upon such registration of transfer or
exchange.
12. Demand Registration. (a) In the event that the Common Stock
is Publicly Traded, the Holder may (i) on an unlimited number of occasions
require ENTEX to effect the registration of Warrant Shares issued or issuable
hereunder (the "Registerable Securities") on Form S-3 (or any successor form
thereto, a "Short Form Registration"); and (ii) in the event a Short Form
Registration is unavailable at the time of such request on up to two occasions,
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require ENTEX to effect the registration (but not for when-issued trading) of
Warrant Shares issued and issuable hereunder on Form S-1 (or any successor form
hereto), a "Long Form Registration"), in each case pursuant to the provisions of
this Section 12. If the Holder shall give notice to ENTEX to the effect that
such Holder desires to transfer Warrant Shares issued and issuable hereunder
pursuant to a public distribution (within the meaning of the Securities Act),
then ENTEX shall, as promptly as practicable after receipt of such notice (but
in any event within 120 days after receipt of such notice), file a registration
statement on the appropriate form pursuant to the Securities Act and cause
Warrant Shares to be registered under the Securities Act and qualified under the
securities or blue sky laws of any jurisdiction requested, subject to Section
14(d), to the end that such Warrant Shares may be sold by the Holders under the
Securities Act and pursuant to the securities or blue sky laws of the
jurisdictions requested, as promptly as is practicable thereafter, ENTEX will
use its best efforts to cause any such registration to become effective and to
keep the prospectus included therein current as provided in Section 14(b);
provided that such Holder shall furnish ENTEX with such appropriate information
in connection therewith as ENTEX may reasonably request in writing.
Notwithstanding the foregoing, ENTEX shall not be required to effect any
Long-Form Registration hereunder for a proposed maximum aggregate offering price
of less than $10.0 million or any Short-form Registration hereunder for a
proposed maximum aggregate offering price of less than $2.0 million unless, in
the case of any Short-form Registration hereunder, the registration covers all
of the remaining Warrant Shares purchased or purchasable by the Holder
hereunder. The managing underwriters, if any, for any offering made pursuant to
this ▇▇▇▇▇▇▇
-▇▇-
▇▇
▇▇ ▇▇▇▇▇ ▇▇ selected by the Holder, subject to the consent of ENTEX, which
consent shall not he unreasonably withheld.
(b) If a registration statement filed pursuant to a request made
under this Section 12 relates to an underwritten offering, and the managing
underwriter advises ENTEX and the Holder in writing that in its opinion the
number of Registrable Securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of such Registrable Securities or the price at which
such securities can be sold, ENTEX will include in such registration (i) first,
all of the securities requested to be registered pursuant to the 1994 IBMCC
Option Agreement, (ii) second, all of the Registrable Securities requested to be
registered pursuant to the 1994 IBMCC Warrant Agreement; (iii) third, all of the
Registerable Securities requested to be registered by the Holder; and (iv)
fourth, other securities requested to be included in such registration, pro rata
among the respective holders of such other securities (if, and to the extent
permitted, by such managing underwriter). If ENTEX shall at any time provide to
any person rights with respect to the registration of Common Stock under the
Securities Act which are, in the reasonable judgment of the Holder, on terms or
conditions that are more favorable to such person than the terms or conditions
provided for in this ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ shall provide (by way of amendment to
this Agreement or otherwise) such more favorable terms or conditions to the
Holder.
13. Piggy-Back Registration. (a) If ENTEX, at any time, proposes
to file on its behalf and/or on behalf of any of its security holders, a
registration statement under the Securities Act on any form (other than a
registration statement on Form S-8 or any successor form for securities to be
offered to employees of ENTEX pursuant to any employee benefit plan
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or Form S-4 or any successor form for securities to be offered in a transaction
of the type referred to in Rule 145 under the Securities Act) for the
registration of any class of its equity securities (as defined in Section
3(a)(11) of the Exchange Act), other than a registration statement for a primary
initial public offering by ENTEX in which no other security holders of ENTEX are
participating, it will give written notice to the Holder as promptly as
reasonably possible, but in no event later than thirty (30) days prior to the
initial filing with the Securities and Exchange Commission (the "Commission") of
such registration statement, which notice shall set forth the intended method of
disposition of the securities proposed to be registered by ENTEX. The notice
shall offer to include in such filing such issued Registrable Securities, and
such Registrable Securities issuable to the Holder as the Holder may request, on
the same terms and conditions as are applicable to ENTEX or other selling
security holders.
(b) If the Holder desires to have Registrable Securities
registered under this Section 13, it shall advise ENTEX in writing within
fifteen (15) days after the date of receipt of such offer from ENTEX, setting
forth the number of such Registrable Securities for which registration is
requested. ENTEX shall thereupon include in such filing the number of
Registrable Securities for which registration is so requested, subject to the
next sentence, and shall use its best efforts to effect registration under the
Securities Act of such securities; provided, however, that ENTEX may, at any
time, abandon any offering in which any such Registrable Securities would
otherwise be required to be included hereunder. If the managing underwriter of a
proposed underwritten public offering of Common Stock shall advise ENTEX in
writing that, in its opinion, the distribution of the Registrable Securities
requested to be included in the registration concurrently with the securities
being registered by ENTEX and any
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other shareholders of ENTEX would materially and adversely affect the
distribution of such securities, then the number of Registrable Securities
determined by such underwriter to be the maximum number capable of being
included in such registration shall be allocated as follows: (i) if the offering
was initiated as a primary offering by ENTEX, first, to the shares sought to be
included by ENTEX and second, to the shares sought to be included by the Holder
and by any other shareholders of ENTEX in proportion to the number of shares
sought to be included in such registration; and (ii) if the offering is a
secondary offering initiated by other shareholders of ENTEX, first, to the
shares sought to be included by such shareholders and by the Holder, in
proportion to the numbers of shares sought to be included by them in such
registration, and then to any shares sought to be included by ENTEX or any other
shares in such registration.
14. Registration Procedures. If ENTEX is required by the
provisions of this Agreement to effect the registration of any Registrable
Securities under the Securities Act, ENTEX shall, as soon as practicable:
(a) prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
such prospectus current for up to 270 days from the initial date of
effectiveness and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such
registration statement;
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(c) furnish to the Holder such number of copies of the
registration statement, preliminary prospectuses and prospectuses and each
supplement or amendment thereto together with such other documents as the Holder
may reasonably request in order to facilitate the sale or other disposition of
the securities being sold by the Holder (i) in conformity with the requirements
of the Securities Act and (ii) the Holder's proposed method of distribution,
provided that ENTEX shall not be required to keep the registration statement
effective for a period longer than that specified in Section 14(b);
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States as the Holder shall
reasonably request (provided, however, that ENTEX shall not be obligated to
qualify as a foreign corporation to do business under the laws of any
jurisdiction in which it is not then qualified, to file any general consent to
service of process under the laws of any such jurisdiction or to do any such
act that would subject ENTEX to the payment of taxes in any such jurisdiction),
and do such other reasonable acts and things as may be required of it to enable
the Holder to consummate the disposition in such jurisdiction of the securities
covered by such registration statement;
(e) use its best efforts to otherwise comply with all applicable
rules and regulations of the Commission and make available to the holders of its
securities, as soon as reasonably practicable, but not later than 16 months
after the effective date of the registration statement an earnings statement
covering the period of at least twelve months beginning with the first month of
the first fiscal quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
10(a) of the Securities Act;
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(f) provide and cause to be maintained, a transfer agent and
registrar for the Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement;
(g) if requested by the underwriters for any underwritten
offering on behalf of the Holder pursuant to a registration requested hereunder,
ENTEX will enter into an underwriting agreement with such underwriters for such
offering, such agreement to contain such representations and warranties by ENTEX
and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including
without limitation, indemnities to the effect and the extent provided in Section
16. The Holder shall be a party to any such underwriting agreement and the
representations and warranties by, and the other agreements on the part of,
ENTEX to and for the benefit of such underwriters, shall also be made to and for
the benefit of the Holder; and the Holder shall not be required by ENTEX to
make any representations or warranties to or agreement with ENTEX or the
underwriters other than reasonable and customary representations, warranties or
agreements regarding the Holder, the Registerable Securities and the Holder's
intended method or methods of disposition and any other representation required
by law;
(h) make available for inspection by the Holder, any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by such Holder or underwriter, all
financial or other records, pertinent corporate documents and properties of
ENTEX, and cause the officers, directors, employees and independent accountants
of ENTEX to supply all information reasonably requested by the Holder or any
such underwriter, attorney, accountant or agent in connection with such
registration
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statement; provided that ENTEX shall have no obligation to make such information
available to any person or entity which (A) is a direct competitor of ENTEX or
(B) refuses to execute a confidentiality agreement reasonably satisfactory to
ENTEX with respect to information not required by such person or entity to be
disclosed under the Securities Act or the Exchange Act;
(i) furnish, at the written request of the Holder if the Holder
requests registration of Registrable Securities pursuant to Section 13 or 14, on
the date that such Registrable Securities are delivered to the underwriters for
sale pursuant to such registration or, if Registrable Securities are not being
sold through underwriters, on the date that the registration statement with
respect to such Registrable Securities becomes effective, (1) an opinion in
customary form, dated such date, of the counsel representing ENTEX for the
purposes of such registration, addressed to the underwriters, if any, and to the
Holder covering such matters as such underwriters or the Holder may reasonably
request and (2) letters (the "Comfort Letters") in customary form dated,
respectively, (a) the effective date of the registration statement and (b) the
date on which such securities are delivered to the underwriters, if any, from
the independent certified public accountants of ENTEX, addressed to the
underwriters, if any, and to the Holder covering such financial, statistical and
accounting matters as such underwriters or the Holder may reasonably request
(and, if such accountants refuse to deliver such letter to the Holder, then the
Comfort Letters shall be addressed to ENTEX and accompanied by a letter
addressed to the Holder suiting that they may rely on the comfort letter
addressed to ENTEX);
(j) enter into such customary agreements and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities being registered;
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(k) if requested by the Holder, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to the
Holder and each underwriters, if any, of the Registrable Securities covered by
such registration statement, copies of such registration statement, or
amendment or supplement, as proposed to be filed;
(1) keep the Holder advised in writing as to the initiation and
progress of any registration hereunder, as the case may be, and after the filing
of any registration statement with respect to any Registrable Securities, notify
the Holder of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;
(m) use its best efforts to cause the Registrable Securities to
be registered to be listed on each national securities exchange on which like
securities issued by ENTEX are then listed; and
(n) during the period when the registration statement is required
to be effective, notify the Holder of the happening of any event as a result of
which the prospectus included in the registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such securities, such prospectus will not contain
and untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
It shall be a condition precedent to the obligation of ENTEX to
take any action pursuant to this Agreement in respect of the securities which
are to be registered at the request
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of the Holder that the Holder shall furnish to ENTEX such information regarding
the securities held by the Holder and the intended method of disposition
thereof, as ENTEX shall reasonably request and as shall be required in
connection with the action taken by ENTEX.
The registration rights contained in Sections 12 and 13 shall
terminate at such time as all of the Warrant Shares have been sold pursuant to
an effective registration statement under the Securities Act and shall not be
available with respect to any proposed sale of Warrant Shares if, at the time of
such sale, such shares may be sold without registration pursuant to Rule 144.
15. Registration Expenses. ENTEX shall bear all expenses incurred
in connection with any offering of securities contemplated by this Agreement,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities
Dealers), printing expenses, fees and disbursements of counsel for ENTEX,
expenses of any special "comfort letters" incident to or required by any such
registration and expenses of complying with the securities or blue sky laws of
any jurisdictions pursuant to Section 14(d), except that ENTEX shall not be
liable for any fees, discounts or commissions to any underwriter with respect to
the sale of securities contemplated by this Agreement, any fees or expenses of
any brokers effecting the sale of securities contemplated by Sections 12 or 13,
the fees and expenses of any counsel to the Holder hereunder, or any expenses of
any special audits required in connection with a registration pursuant to
Section 12 hereof, beyond the annual audited financial statements of ENTEX.
16. Indemnification and Contribution. (a) In the event of any
registration of any of the Registrable Securities under the Securities Act
pursuant to Section 12 or 13, ENTEX shall indemnify and hold harmless each
Holder of such Registrable Securities, such Holder's
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directors and officers and each other person (including each underwriter) who
participated in the offering of such Registrable Securities and each other
person, if any, who "controls" (within the meaning of the Securities Act) such
Holder or such participating person against any losses, claims, damages or
liabilities, joint or several, to which such Holder or any such director or
officer or participating person or person "controlling" such person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse such Holder or such director, officer or participating person or
person "controlling" such person for any legal or any other expenses reasonably
incurred by such Holder or such director, officer or participating person or
person "controlling" such person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that ENTEX
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any alleged untrue statement
or alleged omission made in such registration statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to ENTEX by the Holder seeking indemnification or
reimbursement hereunder for use therein or (in the case of any registration
pursuant to Section 12) so furnished for such purposes by the underwriter
seeking indemnification or reimbursement hereunder for use thereon; provided
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further, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any alleged untrue statement or alleged
omission in any preliminary prospectus but eliminated or remedied in the final
prospectus, such indemnity agreement shall not inure to the benefit of any
underwriter from whom the person asserting any such loss, claim, damage,
liability or action purchased the securities which are the subject thereof (or
to the benefit of any person who "controls" such underwriter), if a copy of the
final prospectus was not sent or given to such person with or prior to the
written confirmation of the sale of such securities to such person and the
delivery thereof would have constituted a defense to the claim by such person;
and provided further, however, that ENTEX shall not, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (and appropriate local counsel) at any
time for all indemnified parties under this Section 16 which firm shall be
designated in writing by such indemnified parties. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Holder or such director, officer or participating person or person
"controlling" such person, and shall survive the transfer of such securities by
such Holder.
(b) Each Holder of Registrable Securities that are included in
any registration statement pursuant to Sections 12 or 13, by acceptance thereof,
agrees to indemnify and hold harmless ENTEX, its directors and officers and each
other person who "controls" ENTEX within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several, to which
ENTEX or any such director or officer or any such person may become
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subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon information in writing provided to ENTEX by such
Holder of Registrable Securities contained in any registration statement under
which securities were registered under the Securities Act at the request of such
Holder, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto.
(c) If the indemnification provided for in this Section 16 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
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The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 16(c) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11 (f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(d) Promptly after receipt by an indemnified party of notice of
the commencement of any action or proceeding involving a claim referred to in
the preceding subdivisions of this Section 16, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided,
however, that the failure so to notify the indemnifying party shall not relieve
it from any liability which it may have under this Section 16 except to the
extent it has been prejudiced in any material respect by such failure. In case
any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party may assume the defense of such claim, to the extent that it
may wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement of such
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proceedings which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
complete and unconditional release from all liability in respect of such claim
or litigation.
(e) The indemnification required by this Section 16 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
17. Opinion of Counsel. Simultaneously with the execution and
delivery of this Agreement, IBM Credit shall receive an opinion of counsel to
ENTEX, who may be the General Counsel of ENTEX, substantially in the form
attached hereto as Exhibit B.
18. EXPENSES. Except (i) as otherwise specified in Sections 15
and 16 and (ii) that ENTEX will pay the reasonable expenses of IBM Credit
(including, but not limited to, the fees and expenses of legal counsel to IBM
Credit) incurred in connection with the preparation of this Agreement, each
party hereto shall pay its or his own expenses incurred in connection with this
Agreement.
19. Amendment. The provisions of this Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the Majority Holders (determined as
if all Warrants had been exercised in their entirety) and the provisions of this
Agreement applicable to ENTEX may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by ENTEX. Provisions of this Agreement relating to Cameron or
Affiliates of Cameron may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by
Cameron.
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20. Assignment. No party to this Agreement may assign any of its
rights or interests or obligations under this Agreement without the prior
written consent of the other parties hereto, except IBM Credit may assign its
rights or interests hereunder to any Affiliate of IBM Credit without the consent
of ENTEX or to any other person with the consent of ENTEX. Notwithstanding
anything herein to the contrary, the Holder may not assign any interest herein
(including any interest in the Warrants or the Warrant Shares) to any person or
entity primarily engaged in the sale of personal computer systems or provision
of consulting, integration and support services to users of personal computers
without the prior written consent of ENTEX.
21. Confidentiality. So long as the Common Stock has not become
Publicly Traded, the Holder agrees to keep the terms of this Agreement
confidential, except that the Holder may disclose this Agreement or the terms
hereof if such disclosure is required by law in the opinion of counsel to the
Holder (including, without limitation, any federal or state securities law). The
Holder further agrees to keep confidential any information regarding ENTEX
disclosed to it by ENTEX pursuant to this Agreement unless (i) in the opinion of
counsel to the Holder, disclosure of such information is required by law
(including, without limitation, any federal or state securities law), (ii) such
information is generally available to the public or (iii) such information was
disclosed to the Holder by a party other than ENTEX that is not subject to any
agreement restricting the disclosure of such information. Notwithstanding the
generality of the preceding two sentences, the Holder shall be permitted to
disclose this Agreement, the terms hereof or any such information (i) to its
Affiliates, (ii) to its legal counsel and independent auditors or independent
certified public accountants, (iii) upon the order or
-35-
36
express direction of any court or government agency or authority,
(iv) to the extent reasonably required in connection with any litigation to
which one or more of the Holders, Cameron or ENTEX are a party adverse to one
another, or (v) to the extent reasonably required in connection with the
enforcement of any rights hereunder. ENTEX agrees to consult with the Holder
before disclosing this Agreement or the terms thereof to any third party, it
being understood and agreed that such disclosure may be required to be made by
ENTEX in connection with the obtaining of financing or for other proper business
purposes. If the Holder receives a request to disclose all or any portion of
this Agreement or the material terms hereof under terms of a subpoena, order,
civil investigative demand or similar process or other oral or written request
issued by a court of competent jurisdiction or by a federal, state or local
governmental regulatory body or agency, the Holder agrees, to the extent
reasonably practicable, to notify ENTEX of the existence, terms and
circumstances surrounding such request so that ENTEX may seek an appropriate
protective order or waive compliance with this Section 20, and, to consult with
ENTEX concerning the advisability of taking appropriate legal steps to resist or
narrow such a request. If, failing the entry of a protective order or the
receipt of a waiver hereunder or a mutually agreeable narrowing of such request,
the Holder, in the opinion of its counsel, is compelled to disclose the terms of
this Agreement or such information, then the Holder may disclose such terms or
such information which its counsel advises the Holder that the Holder is
compelled to disclose.
22. Notices. All notices and other communications hereunder shall
be in writing and shall be given and shall be deemed to have been duly given if
delivered in person,
-36-
37
by overnight delivery or facsimile transmission, with transmission confirmed, to
the parties as follows:
If to Cameron:
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
c/o Airlie Enterprises, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
If to ENTEX:
ENTEX Information Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
in each case with a copy to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
If to IBM Credit:
IBM Credit Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Director, Global Credit
Remarketing Financing
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
-37-
38
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
24 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to the conflict of laws principles thereof.
25. Binding Effect. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the heirs, personal representatives,
successors and assigns of the parties hereto. Nothing expressed or referred to
in this Agreement is intended or shall be construed to give any person other
than the parties to this Agreement, or their respective heirs, personal
representatives, successors or assigns, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
26. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
27. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement, is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
28. Further Assurances. ENTEX will, upon the request of the
Holder, execute and deliver such documents and take such action reasonably
deemed by the Holder to be necessary or desirable to more effectively complete
and evidence the sale and transfer of any Option Shares or Conversion Shares
purchased by the Holder pursuant to this Agreement.
-38-
39
29. Miscellaneous. 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 WITNESS WHEREOF, the undersigned have hereunto set their names
as of the day and year first above written.
ENTEX INFORMATION SERVICES, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
Title: President
IBM CREDIT CORPORATION
BY:
-------------------------------
Name:
Title :
AGREED as to
Section 9 hereof.
/s/ DORT ▇. ▇▇▇▇▇▇▇ III
-------------------------------
Dort ▇. ▇▇▇▇▇▇▇ III
-39-
40
29. Miscellaneous. 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 WITNESS WHEREOF, the undersigned have hereunto set their names
as of the day and year first above written.
ENTEX INFORMATION SERVICES, MAC.
By:
-------------------------------
Name:
Title:
IBM CREDIT CORPORATION
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director Global Credit
[ILLEGIBLE] Financing
AGREED as to
Section 9 hereof.
-------------------------------
Dort ▇. ▇▇▇▇▇▇▇ III
-39-
41
EXHIBIT A
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE SECURITIES
ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO
TRANSFER OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE OR OF THE SECURITIES
ISSUABLE UPON EXERCISE THEREOF SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH
TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, (B)
THE HOLDER OF THE SECURITIES PROPOSED TO BE TRANSFERED SHALL HAVE DELIVERED TO
THE ISSUER EITHER A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION
OR AN OPINION OF COUNSEL EXPERIENCED IN SECURITIES MATTERS TO THE EFFECT THAT
SUCH PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REOUIREMENTS OF THE ACT
AND OF ANY APPLICABLE STATE SECURITIES LAWS, WHICH OPINION IS IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER OR (C) SUCH TRANSFER IS PURSUANT
TO RULE 144 UNDER THE ACT AND SUCH HOLDER SHALL HAVE DELIVERED TO THE ISSUER A
CERTIFICATE SETTING FORTH THE BASIS FOR APPLYING SUCH RULE TO THE PROPOSED
TRANSFER.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS CONTAINED IN THE WARRANT AGREEMENT DATED AS OF JULY 15, 1997 BETWEEN
IBM CREDIT CORPORATION AND ENTEX INFORMATION SERVICES, INC., UNDER WHICH SUCH
WARRANTS WERE ISSUED. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE
EXECUTIVE OFFICES OF THE ISSUER.
shares Warrant No. IBMCC 1997-1
FORM OF WARRANT CERTIFICATE
ENTEX INFORMATION SERVICES, INC.
THIS IS TO CERTIFY THAT IBM CREDIT CORPORATION, or registered
assigns, is entitled, at any time prior to the Expiration Date (such term, and
certain other capitalized terms used herein, have the meanings given such terms
in the Warrant Agreement, as defined below), to purchase from ENTEX INFORMATION
SERVICES, INC., a Delaware corporation ("ENTEX"), ___________________________
__________________________________ (_____________) authorized, but
theretofore unissued shares of the Common Stock, par value $0.001 per share at a
price of Thirty-Seven Dollars and Seventy Five Cents ($37.75) per share, all on
the terms and conditions and pursuant to the provisions set forth in the Warrant
Agreement dated as of July 15, 1997 between IBM Credit Corporation and
42
ENTEX (the "Warrant Agreement"), to all of which the Holder of this Warrant by
acceptance hereof consents.
The Warrant represented hereby is one of the Warrants to purchase
shares of Common Stock of Holdings issued pursuant to the Warrant Agreement.
1. EXERCISE OF WARRANT
1.1. Manner of Exercise. From and after the Closing
Date and until 5:00 P.M., New York time, on the Expiration Date (the "Exercise
Period"), the Holder may from time to time exercise this Warrant, on any
Business Day, for all of the Warrant Shares purchasable hereunder. This warrant
may be exercised in whole or in part.
In order to exercise this Warrant, in whole or in part, the
Holder shall deliver to ENTEX a written notice of the Holder's election to
exercise this Warrant (an "Exercise Notice"), which Exercise Notice shall be
irrevocable. The Holder shall, as promptly as practicable, and in any event
within five (5) Business Days thereafter, deliver to ENTEX at the address
indicated in the Warrant Agreement (i) payment of the Exercise Price and (ii)
the Warrant to be exercised. The Exercise Notice shall be in the form of the
subscription form appearing at the end of this Warrant as Annex I, duly executed
by the Holder or its duly authorized agent or attorney. Upon receipt of the
Warrant Price and the Warrant, ENTEX shall, as promptly as practicable, and in
any event within five (5) Business Days thereafter, execute (or cause to be
executed) and deliver (or cause to be delivered) to the Holder a certificate or
certificates representing the aggregate number of shares of the Common Stock of
ENTEX issuable upon such exercise, together with cash in lieu of any fraction of
a share, as set forth below. The stock certificate or certificates so delivered
shall be, to the extent possible, in such denomination or denominations as such
Holder shall reasonably request in the Exercise Notice and shall be registered
in the name of the Holder or such other name as shall be designated in the
Exercise Notice, subject to the restrictions on transfer contained in the
Warrant Agreement. The Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
items specified in clauses (i) and (ii) above are received by ENTEX, subject to
the provisions set forth in Section 2(b) of the Warrant Agreement. Payment of
the Warrant Price shall be made by certified or bank cashier's check or by wire
transfer of immediately available funds to an account designated in writing by
ENTEX.
- 2 -
43
1.2 Fractional Shares. ENTEX shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share that the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, if such fraction is equal to or greater than
one-half (1/2) of a share of Common Stock, ENTEX shall issue one share of Common
Stock in respect of such fraction, provided, however, that cash shall be paid in
lieu of fractional shares upon the exercise of the Conversion Price set forth in
Section 2(c) of the Warrant Agreement.
1.3. Continued Validity and Application. A Holder of shares of
Warrant Stock issued upon the exercise of this Warrant, in whole or in part,
including any transferee of such shares (other than a transferee who acquires
such shares after the same have been publicly sold pursuant to a registration
statement under the Securities Act or sold pursuant to Rule 144 thereunder),
shall continue, with respect to such shares, to be entitled to all rights and to
be subject to all obligations that are applicable to such Holder by the terms of
this Warrant.
1.4. Conversion Rights. This warrant shall be convertible into
shares of Common Stock on the terms and subject to the conditions set forth in
Section 2 of the Warrant Agreement.
2. TRANSFER, DIVISION AND COMBINATION
This Warrant shall be subject to the provisions regarding transfer,
division and combination set forth in Sections 11 and 19 of the Warrant
Agreement.
3. REGISTRATION
The Holder of this Warrant shall have the demand and piggy-back
registration rights set forth in Sections 12 and 13 of the Warrant Agreement.
4. OFFICE OF ENTEX
As long as any of the Warrants remains outstanding, ENTEX shall
maintain an office or agency, which may be the principal executive offices of
ENTEX, where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant. Such Designated
Office shall initially be the office of ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; thereafter, such office shall
- 3 -
44
be the office of ENTEX or of an agency designated by ENTEX in a notice delivered
to the registered Holders of all Warrants.
5. FINANCIAL AND BUSINESS INFORMATION
Until the Expiration Date, ENTEX shall deliver to each Holder of
Warrants or of Warrant Stock the information set forth in Section 8 of the
Warrant Agreement.
6. RIGHTS AS HOLDERS OF WARRANTS
No Holder of this Warrant shall have any rights as a stockholder of
ENTEX until such Holder shall have exercised this Warrant pursuant to and in
accordance with the terms of this Agreement.
IN WITNESS WHEREOF, ENTEX has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
ENTEX INFORMATION SERVICES, INC.
By:
------------------------------------
Name:
Title:
Attest:
By:
----------------------------
Name:
Title:
- 4 -
45
ANNEX I
NOTICE OF EXERCISE
ENTEX Information Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
The undersigned hereby irrevocably elects to exercise the Warrant
granted pursuant to the Warrant Agreement, dated as of July 15, 1997, between
IBM Credit Corporation and ENTEX Information Services, Inc. ("ENTEX"), as
amended, modified or supplemented from time to time, to purchase shares of
Common Stock, par value $.001 per share, of ENTEX,* as provided therein.
Dated:
-------------------------------
Name of Holder or
Assignee (Please Print):
Address:
Taxpayer Identification No.
Signature:
Name and Title (Please Print):
Signature Guaranteed:
----------------------------
* Modify description of securities accordingly if Warrant Shares do not
consist of shares of Common Stock, par value $0.001 per share, of ENTEX.
46
ANNEX II
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this warrant with respect to the number of
shares of Common Stock of ENTEX Information Services, Inc. ("ENTEX") set forth
below. Capitalized terms used but not defined herein have the meanings given
such terms in the Warrant Agreement dated as of July 15, 1997, between IBM
Credit Corporation and ENTEX.
Name and Address Number of Shares
of Assignee of Common Stock
---------------- ----------------
The undersigned does hereby irrevocably constitute and appoint__________
attorney-in-fact to register such transfer onto the books of ENTEX maintained
for the purpose, with full power of substitution in the premises.
Dated: Print Name:
----------------------- ---------------------------
Signature:
---------------------------
Witness:
------------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
47
SCHEDULE 1
TO
WARRANT AGREEMENT
BY AND BETWEEN
ENTEX INFORMATION SERVICES, INC.
AND
IBM CREDIT CORPORATION
DATED AS JULY 15, 1997
================================================================================
================================================================================
Consolidated balance sheet for ENTEX Information Services, Inc. as of March 31,
1997 and the consolidated statements of operations, stockholders' equity and
cash flows for the fiscal quarter ending March 31, 1997 received by IBM Credit
Corporation.
Quarterly balance sheet, income statement and statement of sources and uses of
funds projections, dated July 2, 1997, for each fiscal quarter through the
fiscal quarter ending June 1998.
Collateral Reports provided to IBM Credit from January 1, 1997 through September
14, 1997.