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EXHIBIT 10.21
WARRANT AGREEMENT
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WARRANT AGREEMENT, dated as of November 15, 1994, among IBM Credit
Corporation, a Delaware corporation ("IBM Credit"), ENTEX Holdings, Inc., a
Delaware corporation ("Holdings"), and ENTEX Information Services, Inc., a
Delaware corporation ("ENTEX").
WHEREAS, by letter agreement dated August 6, 1993, among JWP
Information Services, Inc. ("JWPIS"), Holdings, and International Business
Machines Corporation, a New York corporation, acting through its PC Company
division ("IBM"), in consideration of the payment to IBM of $500,000 by ENTEX,
as the successor in interest of JWPIS, and the agreements of IBM contained
therein, it was agreed that IBM Credit, on behalf of IBM, would receive a
warrant to purchase one per cent (1%) of the shares of Common Stock, par value
$0.001 per share ("Common Stock"), of Holdings, issued and outstanding on a
fully diluted basis on the date hereof, as provided in this Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Issuance of Warrant. Simultaneously with the execution
hereof, Holdings 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) a Warrant (the "Warrant"),
substantially in the form of Exhibit A attached hereto, to purchase a total of
Six Thousand Six Hundred Sixty-Seven (6,667) shares of Common Stock,
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subject to adjustment pursuant to Section 6 (the "Warrant Shares") for a total
exercise price of Ten Dollars ($10.00) (the "Exercise Price").
2. Exercise of Warrant. (a) The Warrant may be exercised by
the Holder in whole only, at any time, commencing on the date hereof and ending,
unless extended pursuant to the terms of Section 2(b) or 8(b) hereof, on or
before 12:00 Midnight, New York City Time, on July 15, 2001 (the "Expiration
Date").
(b) The Holder may exercise the Warrant by delivering to
Holdings a written notice of exercise substantially in the form attached as
Annex I to Exhibit A (the "Exercise Notice"). The Warrant may be exercised in
whole only and not in part. The Holder's obligation to purchase Warrant Shares
upon any exercise of the Warrant 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
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, 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
Warrant 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.
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3. Warrant Closing. The purchase of Warrant Shares by the
Holder upon the exercise of the 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 Holdings. At each Warrant Closing, (a) Holdings 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 Holdings of a certified or bank cashier's
check payable in New York Clearing House funds to the order of Holdings in the
amount of the Exercise Price.
4. Representations and Warranties of Holdings and ENTEX.
Holdings and ENTEX represent and warrant to the Holder that: (a) each of
Holdings and 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 each of Holdings and ENTEX of this Agreement has been duly
authorized by all necessary corporate action on the part of each of Holdings and
ENTEX, respectively, and this Agreement has been duly executed and delivered by
each of Holdings and ENTEX and constitutes a valid and legally binding
obligation of each of Holdings and 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
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may be brought; (c) the authorized capital stock of Holdings consists of
2,000,000 shares of Common Stock of which (i) a total of 633,333 shares are or
will be validly issued and outstanding, fully paid and nonassessable, including
(A) shares issued and outstanding on the date hereof, all of which are validly
issued and outstanding, fully paid and nonassessable, (B) shares reserved for
issuance to members of management of ENTEX, which, upon payment of the purchase
price therefor, will be validly issued and outstanding, fully paid and
nonassessable, and (C) the Warrant Shares, which have been duly reserved for
issuance pursuant to this Agreement and the Warrant, which, upon the exercise of
the Warrant and payment of the exercise price provided for in this Agreement,
will be validly issued and outstanding, fully paid and nonassessable, and (ii)
33,334 shares are reserved for issuance pursuant to the ENTEX Share Plan for the
benefit of employees of ENTEX which shares when issued and paid for in
accordance with such Share Plan will be validly issued and outstanding, fully
paid and nonassessable; (d) the Warrant Shares represent not less than one per
cent (1%) of the shares of Common Stock issued and outstanding on a fully
diluted basis on the date hereof; (e) all of the issued and outstanding capital
stock of ENTEX is owned by Holdings; (f) the execution, delivery and performance
by each of Holdings and ENTEX of this Agreement will not violate or conflict
with (i) their respective Certificates of Incorporation, as amended, or their
respective By-Laws, (ii) any agreement to which Holdings or 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 Holdings or ENTEX or the ability of Holdings or ENTEX to perform
its obligations under this Agreement (an "ENTEX Material Adverse Effect"), (iii)
any license, franchise or permit applicable to Holdings or ENTEX a breach or
violation of which would have an ENTEX Material Adverse Effect or (iv) any law,
regulation,
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order, judgment or decree applicable to Holdings or ENTEX a breach or violation
of which would have an ENTEX Material Adverse Effect; (g) other than (i) as may
be required in connection with or in compliance with the provisions of the HSR
Act, and (ii) by reason of restrictions upon the repurchase of shares of Common
Stock contained in loan agreements to which Holdings, ENTEX or both may be a
party or applicable law, which may limit the ability of Holdings or ENTEX to
perform obligations under Section 7 thereof, no authorization, consent or
approval of, or any filing with, any governmental body or authority or any other
person is necessary for consummation by either Holdings or ENTEX of the
transactions contemplated hereby; (h) except for any claims or proceedings
relating to the restructuring or reorganization of JWP INC. or JWPIS, there are
no actions, suits, investigations or proceedings pending, or, to the knowledge
of Holdings or ENTEX, threatened, against Holdings or 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 a Material Adverse Effect or which in
any matter draws into question the validity of this Agreement; (i) (i) except as
disclosed in clauses (c) and (d) above (ii) except for the rights set forth in
the Option Agreement (the "IBMCC Option Agreement"), dated as of July 15, 1994,
among IBM Credit, Dort X. Xxxxxxx III ("Cameron"), Holdings and ENTEX and (iii)
except for any Conversion Rights (as hereinafter defined) issuable hereunder,
neither Holdings nor ENTEX has outstanding any other shares of capital stock or
securities convertible into or exchangeable for, or options or warrants or other
rights to acquire from Holdings or 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 and the IBMCC Option Agreement,
neither Holdings nor ENTEX is under any obligation to cause the registration of
any
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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) the sole
business activity of Holdings is its ownership of all of the capital stock of
ENTEX. Except as expressly set forth herein, neither Holdings nor ENTEX makes
any representations or warranties under this Agreement with respect to the
business, assets, liabilities, operations, condition (financial or otherwise),
or prospects of Holdings or ENTEX.
5. Representations and Warranties of IBM Credit. IBM Credit
represents and warrants to Holdings and 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) in
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; and (e) IBM Credit acknowledges that it has
made its own investigation of Holdings and ENTEX and that, except as expressly
set forth herein, neither Holdings nor ENTEX makes any representations or
warranties under this Agreement with respect to the business, assets,
liabilities, operation, condition (financial or otherwise), or prospects of
Holdings or ENTEX.
6. Certain Adjustments. 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 Holdings (a "Recapitalization Event"), the
exercising Holder shall receive upon its exercise of the Warrant or, if
applicable, the Conversion Rights, 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 or Conversion Rights as a holder of record of Common
Stock on the record date fixed for determination of holders of Common Stock
entitled to receive such stock or other securities, cash or property, it being
understood that the Exercise Price shall remain unchanged.
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7. Holder's Right to Require Purchase. (a) During the
period commencing on the fifth anniversary of the date hereof and ending on the
Expiration Date, if at the time the Put (as hereinafter defined) is exercised
neither Holdings nor ENTEX has ever been subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended (a "Reporting
Company"), the Holder shall have the irrevocable option (the "Put") to require
Holdings, or at the sole discretion of Holdings, ENTEX, to purchase all, or any
portion of, the Warrant or the Warrant Shares for a total purchase price equal
to the Put Value (as hereinafter defined). If the Holder exercises the Put in
part, then the purchase price to be paid for the Warrant Shares and for the
portion of the Option subject to the exercise of the Put, shall bear the same
proportion to the Put Value as the sum of (x) the number of Warrant Shares owned
by the Holder and subject to the exercise of the Put and (y) the number of
Warrant Shares issuable upon exercise of the portion of the Warrant which is
subject to the exercise of the Put bears to the total number of Warrant Shares
issued or issuable to the Holder upon the exercise of the Warrant.
(b) The Holder may exercise a Put by delivering to ENTEX a
written notice of exercise substantially in the form attached hereto as Exhibit
B (the "Put Exercise Notice"), specifying the portion of the Warrant or Warrant
Shares, as the case may be, to be purchased. Not later than ten (10) days after
receipt of the Put Exercise Notice, Holdings shall notify the exercising Holder
in writing as to whether Holdings or ENTEX will be the purchaser of the Warrant
or Warrant Shares that are the subject of the Put Exercise Notice.
8. Put Closings. (a) The purchase, upon exercise of the
Put, of the Warrant Shares and the portion of the Warrant specified in the Put
Exercise Notice shall take place not later than fifteen (15) business days after
the delivery of the Put Exercise Notice at a time and
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place agreed on by the Exercising Holder and Holdings or ENTEX, as the case may
be ("Put Closing"); provided, however, that Holdings or ENTEX, as the case may
be, may, by written notice to the Holder, adjourn the time of the Put Closing to
a date not later than forty-five (45) business days after the delivery of the
Put Exercise Notice if such adjournment is required in order for ENTEX or
Holdings, as the case may be, to (i) obtain any consents required under
agreements pursuant to which either Holdings or ENTEX has incurred indebtedness
or (ii) obtain any financing required to consummate the purchase contemplated by
the Put Exercise Notice. At each Put Closing, (i) the exercising Holder will
deliver to Holdings or ENTEX, as the case may be, a certificate or certificates
representing the Warrant Shares being purchased pursuant to the Put Exercise
Notice duly registered in the name of the purchaser or accompanied by stock
powers duly endorsed in blank, free and clear of all liens, claims, charges and
encumbrances, together with an instrument of assignment with respect to the
portion of the Warrant which is the subject of the Put Exercise Notice in form
satisfactory to the purchaser, assigning all of the exercising Holder's right,
title and interest in and to the portion of the Warrant which is the subject of
the Put Exercise Notice free and clear of all liens, claims, changes and
encumbrances and (ii) the purchaser shall deliver the purchase price as provided
in Section 8(f).
(b) If neither Holdings nor ENTEX is able to purchase the
Warrant or the Warrant Shares pursuant to a Put Exercise Notice, because (i) (x)
such purchase is precluded by restrictions in agreements pursuant to which
either Holdings or ENTEX has incurred indebtedness, and (y) consents to the
waiver of such restrictions cannot be obtained, or (ii) such purchase would
result in a violation of any law applicable to Holdings or ENTEX, as the case
may be, then the Holder shall withdraw the Put Exercise Notice, and the
Expiration Date shall
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be extended until such time as either Holdings or ENTEX is able to purchase the
Warrant or the Warrant Shares subject to the Put, and at such time the Holder
shall exercise the Put.
(c) For purposes of this Agreement, the "Put Value" shall
mean an amount equal to the product of (i) the Fair Market Value (as hereinafter
defined) of Holdings multiplied by (ii) a fraction, (x) the numerator of which
is the total number of Warrant Shares issued or issuable to the Holder upon
exercise of the Warrant and (y) the denominator of which is the total number of
Fully Diluted Shares (as defined below) outstanding, in each case as of the date
of the Put Closing.
(d) For purposes of this Agreement, the "Fully Diluted
Shares" shall mean the total number of outstanding shares of Common Stock on a
fully diluted basis, giving effect to the exercise of all outstanding options,
warrants (other than the Warrant) and shares and equity participations issued to
or allocable to members of management or employees of ENTEX and the conversion
or exchange of all securities convertible into or exchangeable for shares of
Common Stock.
(e) For purposes of this Agreement, the "Fair Market Value"
shall mean the fair market value of the Fully Diluted Shares of Holdings
substantially as an entirety on a consolidated basis as a going concern, as
determined by an independent investment banker of national reputation selected
jointly by Holdings and the Holder.
(f) The purchase price payable on the exercise of any Put
shall be payable by (i) the payment of 25% thereof at the Put Closing in cash by
wire transfer of immediately available funds to an account or accounts
designated by the exercising Holder and (ii) the delivery by the purchaser
(Holdings or ENTEX, as the case may be), of its unsecured subordinated note (the
"Subordinated Note") substantially in the form of Exhibit C attached
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hereto, having a principal amount equal to the remainder of the purchase price,
bearing interest at a rate equal to the Prime Rate (as such term is defined in
the Third Amended and Restated Agreement for Wholesale Financing between IBM
Credit Corporation and ENTEX, as amended, supplemented or otherwise modified
from time to time (the "Wholesale Financing Agreement")), payable quarterly in
arrears, and providing for payment of principal in three consecutive annual
installments equal to 25% of the Put Value, commencing on the first anniversary
of the Put Closing.
(g) If, at any time while a Subordinated Note is
outstanding, either (i) Holdings or ENTEX becomes a Reporting Company, (ii)
there is a sale of Common Stock to a third party in which the Holder has a right
to participate pursuant to Section 10(a) hereof, or in which the Holder is
required to participate pursuant to Section 10(c) hereof, or (iii) the Holder
receives (x) notice of (A) the entering by Holdings, one or more stockholders of
Holdings, or ENTEX into an agreement in principle with respect to a transaction
in which the Holder would have a right to participate pursuant to Section 10(a)
hereof or would be required to participate pursuant to Section 10(c) hereof, or
(B) the announcement by Holdings or ENTEX of an intention to engage in an
initial public offering of shares of Common Stock or Common Stock of ENTEX (it
being agreed that notice of any such agreement in principle or announcement of
intention shall be given to the Holder not later than two business days after
such agreement or announcement), and (y) notice of prepayment of the
Subordinated Note, then the Holder shall have the right to convert ("Conversion
Rights") the Subordinated Note into a number of shares of Common Stock
("Conversion Shares") equal to the product of (A) the total number of Warrant
Shares that would be issuable if the entire Warrant remained outstanding and
unexercised at such time, multiplied by (B) a fraction, the numerator of which
is the outstanding
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principal amount of the Subordinated Note and the denominator of which is the
Put Value; provided, however, that if the Common Stock have theretofore been
changed, exchange or converted into other securities as a consequence of a
Recapitalization Event, then the number and amount of securities issuable to the
Holder upon the exercise by the Holder of Conversion Right shall be
correspondingly adjusted; and provided, further, that in the case of any
Conversion Right arising by reason of the circumstances described in clause
(iii), such Conversion Rights may be exercised only during the period ending
sixty (60) days after the later to occur of the Holder's receipt of notice under
sub-clause (iii)(x) and the Holder's receipt of notice under sub-clause
(iii)(y). The Conversion Rights may be exercised in whole and not in part. The
Holder may exercise its Conversion Rights by delivering to Holdings a written
notice of exercise substantially in the form attached hereto as Exhibit D (the
"Conversion Notice") not later than 90 days after the occurrence of the event
which gives rise to the Conversion Rights. The closing of the conversion of the
Subordinated Note pursuant to exercise of the Conversion Rights shall take place
not later than five (5) business days after delivery of the Conversion Notice at
a time and place agreed on by the Holder and Holdings (the "Conversion
Closing"). At the Conversion Closing, (i) the exercising Holder shall surrender
the Subordinated Note to Holdings or its designee, together with such other
documents as Holdings may reasonably request to evidence such surrender free and
clear of all liens, claims, charges and encumbrances, and (ii) Holdings shall
deliver to the exercising Holder a certificate or certificates representing the
Conversion Shares registered in the name of the exercising Holder, free and
clear of all liens, claims, charges and encumbrances.
(h) 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
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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 and, if
applicable, Conversion Shares (the "Majority Holders"), and such waiver or
consent, if given, shall be binding and conclusive upon all remaining Holders.
9. Certain Covenants. (a) Holdings 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 Holdings 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 Holdings to stockholders of Holdings generally.
(b) All of the books and records of Holdings and its
subsidiaries will be maintained in accordance with generally accepted accounting
principles, consistently applied.
(c) Each of Holdings and 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 a 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 Holdings, ENTEX or any such subsidiary,
provided that neither Holdings nor 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
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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 Holdings, ENTEX
or such subsidiary), ordinary wear and tear excepted.
(d) Each of Holdings and ENTEX agrees to deliver to the
Holder such information concerning the business affairs and financial condition
of Holdings and its subsidiaries as it is obligated to deliver to the holder of
the option granted under the IBMCC Option Agreement.
(e) Neither Holdings nor ENTEX will enter into any
transaction (other than transactions between Holdings 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 Third Amendment and
Restated Agreement for Wholesale Financing dated as of August 6, 1993 (the
"Wholesale Financing Agreement"), between IBMCC and ENTEX, as the same may be
amended or modified from time to time, with or for the benefit of any Affiliates
except on terms no less favorable to Holdings or ENTEX, as the case may be, than
could be obtained in a comparable arm's-length transaction with an unaffiliated
person.
(f) Holdings will not amend or otherwise modify, or permit
to occur any amendment of modification of, the Certificate of Incorporation of
Holdings 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.
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(g) Holdings will at all times following the issuance of the
Conversion Rights reserve such number of shares of its Common Stock as will be
sufficient to permit the exercise in full of all Conversion Rights issued to the
Holder.
(h) Each of Holdings and ENTEX will provide to the Holder at
least thirty (30) days' prior written notice of (x) any proposed sale or other
transfer by ENTEX of more than 50% of its assets to a person other than Holdings
or a subsidiary of Holdings or (y) any proposed transaction which, if
consummated, would result in Holdings ceasing to own, directly or indirectly,
more than 50% of the outstanding capital stock of ENTEX entitled to vote
generally in the election of directors.
10. 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 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 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, subject to the terms of this Section
10(a), to sell to such proposed purchaser, at the
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same price per share and on the same terms and conditions as Cameron, a pro rata
portion of the Warrant Shares, Conversion Shares, or both Warrant Shares and
Conversion Shares, then owned by or issuable to the Holder that the Holder
proposes to sell, as notified to the Grantor pursuant to Section 10(b), based
upon the proportion that the total number of shares of Common Stock proposed to
be sold pursuant to the Notice of Intent to Sell bears to the total number of
shares of Common Stock (including the Warrant Shares, Conversion Shares or both
Warrant Shares and Conversion Shares that the Holder wishes to sell)
beneficially owned by Cameron (excluding all Warrant Shares then issuable to the
Holder, to the extent the Warrant remains unexercised), his Affiliates, the
Holder and all other security holders intending to participate in such proposed
sale.
(b) If the Holder wishes to participate in any sale under
Section 10(a) hereof, the Holder shall notify Cameron and Holdings in writing of
such intention and of the number of Warrant Shares, Conversion Shares or both
Warrant Shares and Conversion Shares proposed to be sold by the Holder not later
than seven (7) business days after receipt of the Notice of Intent to Sell.
(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, Conversion Shares or both Warrant Shares and Conversion
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
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total number of shares of Common Stock (excluding all Warrant Shares issuable to
the Holder, to the extent that the Warrant remains unexercised) 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, as defined in the IBMCC Option Agreement) 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 properly 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 this Section 10(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, Holdings 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, Conversion Shares or both Warrant Shares and
Conversion Shares, to be sold or exchanged by it, free and clear of all liens,
claims, charges and encumbrances, and (iii) Holdings, ENTEX and Cameron jointly
and severally agree to
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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) 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 10, other than its own legal fees, costs and expenses.
11. Restrictive Legend. Except as otherwise provided in this
Section 11, each certificate representing Warrant Shares or Conversion 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 HOLDINGS, INC.
EITHER A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION OR AN OPINION OF COUNSEL EXPERIENCED IN SECURITIES
MATTERS TO THE EFFECT
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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 HOLDINGS, INC. OR (D) SUCH TRANSFER IS PURSUANT TO RULE 144
UNDER THE ACT AND SUCH HOLDER(S) SHALL HAVE DELIVERED TO ENTEX
HOLDINGS, INC. A CERTIFICATE SETTING FORTH THE BASIS FOR APPLYING
SUCH RULE TO THE PROPOSED TRANSFER."
12. Transfers. Neither the Warrant nor the Warrant Shares
nor the Conversion 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 of 1933, as amended (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 11, unless in the opinion of counsel to the transferring Holder, such
legend is not required for the 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 12.
13. Demand Registration. (a) At any time after the date on
which Holdings, on its behalf and or on behalf of any of its security holders,
has (i) a registration statement under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), declared effective by the Securities and Exchange
Commission (the "Commission") and has a class of equity securities listed or
admitted to trading on any securities exchange or NASDAQ or (ii) has 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 Holdings pursuant to any employee benefit plan) declared
effective by the Commission (in the case of either clause (i) or
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(ii), the "Effectiveness Date"), upon the written request of the Holder (whether
or not the Warrant has been exercised) or, if such rights are being exercised
with respect to the Conversion Shares, the holder of a majority of the
Conversion Shares (determined as if the Conversion Rights, if any, had been
exercised in their entirety) (the Warrant Shares and the Conversion Shares being
referred to collectively herein as the "Registrable Securities"), so long as IBM
Credit (or its assignee) has exercised its rights under Section 15 of the IBMCC
Option Agreement, Holdings shall be obligated to prepare and file and to use its
best efforts to effect the registration under the Securities Act of such
Registrable Securities (to the extent then owned by or issuable to the Holder)
as may be requested by the Holder, all in accordance with the following
provisions of this Agreement; provided, however, that Holdings shall not be
required to effect a registration of Registrable Securities: (A) more than one
(1) time; (B) within 120 days after the Effectiveness Date of a registration
statement with respect to which such Holder has had an opportunity to
participate without restriction as to amount in a "Piggy-Back Registration," as
set forth in Section 14 hereof; and (C) within the shorter of (aa) 270 days
following the Effectiveness Date of the initial registration statement of Common
Stock of Holdings and (bb) the period following the Effectiveness Date of the
initial registration statement of Common Stock during which Holdings, its
officers and directors and selling security holders are prohibited from selling
any shares of Common Stock pursuant to an agreement with any underwriters
engaged in the offering of Holdings securities; and, provided, further, that
Holdings may delay the filing or delay the effectiveness of a registration
statement required by this Section 13, for a period not to exceed 60 days in the
aggregate if Holdings shall have determined, upon the advice of counsel, that
Holdings would be required to disclose any actions taken or proposed to be taken
by Holdings in good faith and for valid business reasons, including without
limitation, the
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incurring by Holdings of indebtedness, which disclosure would have a material
adverse effect on Holdings or such actions and Holdings provides notice to the
Holder of any such delay. It is understood and agreed that a registration
initiated pursuant to this Section 13 shall not be deemed to have been effected
until such registration has been declared effective under the Securities Act and
the Registrable Securities included in such registration have actually been
sold, unless such sale fails to occur by reason of a breach by the Holder of any
obligation of the Holder in connection therewith.
(b) Whenever Holdings shall be required pursuant to this
Section 13 to effect the registration of any of the Registrable Securities under
the Securities Act, Holdings shall promptly give written notice of such proposed
registration to the Holder and thereupon shall file a registration statement
within 60 days after the giving of such written request and use its best efforts
to effect, as expeditiously as possible, the registration under the Securities
Act of the Registrable Securities which Holdings has been requested to register
pursuant to this Section; all to the extent requisite to permit the disposition
by the Holder of such Registrable Securities.
(c) If a registration statement filed pursuant to a request
made under this Section 13 relates to an underwritten offering, and the managing
underwriter advises Holdings 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, Holdings will include in such registration (i)
first, all of the securities requested to be registered pursuant to the IBMCC
Option Agreement, (ii) second, all of the Registrable Securities requested to be
registered by the Holder, and (iii) third, other securities requested to be
included in such registration, pro rata among the respective holders of such
other
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securities (if, and to the extent permitted, by such managing underwriter). If
any of Holdings or 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 and conditions provided for in this
Section 13, Holdings and ENTEX shall provide (by way of amendment to this
Agreement or otherwise) such more favorable terms or conditions to the Holder.
14. Piggy-Back Registration. (a) If Holdings, 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 Holdings pursuant to any employee benefit plan 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 Holdings in which no other security holders of Holdings 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 Commission of such registration statement, which notice
shall set forth the intended method of disposition of the securities proposed to
be registered by Holdings. 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 Holdings or other selling security holders.
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(b) If the Holder desires to have Registrable Securities
registered under this Section 14, it shall advise Holdings in writing within
fifteen (15) days after the date of receipt of such offer from Holdings, setting
forth the number of such Registrable Securities for which registration is
requested. Holdings 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 Holdings 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 Holdings 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 Holdings and any other shareholders of Holdings 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 Holdings,
first to the shares sought to be included by Holdings and second, to the shares
sought be included by the Holder and by any other shareholders of Holdings in
proportion to the number of shares sought be included by them in such
registration: and (ii) if the offering is a secondary offering initiated by
other shareholders of Holdings, 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, then to any shares sought to
be included by Holdings or any other shares in such registration. Except as
otherwise provided in Section 16, all expenses of any such registration shall be
borne by Holdings.
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15. Registration Procedures. If Holdings is required by the
provisions of this Agreement to effect the registration of any Registrable
Securities under the Securities Act, Holdings 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 and remain effective for a period of time
required for the disposition of such securities by the holders thereof;
(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
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 until
the earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of nine months from the effective date of the
registration statement;
(c) furnish to the Holder such number of copies of a summary
prospectus or other prospectus (including, without limitation, a preliminary
prospectus) in conformity with the requirements of the Securities Act (in each
case including all exhibits), together with such other documents as the Holder
may reasonably request;
(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 and Puerto Rico as
the Holder shall reasonably request (provided, however, that Holdings 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
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of process under the laws of any such jurisdiction or to do any such act that
would subject Holdings 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 its
securities holders, as soon as reasonably practicable, 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 11
(a) of the Securities Act;
(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,
Holdings will enter into an underwriting agreement with such underwriters for
such offering, such agreement to contain such representations and warranties by
Holdings 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
17. 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,
Holdings to and for the benefit of such underwriters, shall also be made to and
for the benefit of the Holder. The Holder shall not be required by Holdings to
make any representations or warranties to or agreement with Holdings or the
underwriters other than reasonable and customary representations, warranties or
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agreements regarding the Holder, the Registrable 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 Holdings, and cause Holdings' officers, directors, employees and
independent accountants to supply all information reasonably requested by the
Holder or any such underwriter, attorney, accountant or agent in connection with
such registration statement; provided that Holdings shall have no obligation to
make such information available to any person or entity which (A) is a direct
competitor of Holdings or (B) refuses to execute a confidentiality agreement
reasonably satisfactory to Holdings 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 Holdings 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) a letter (the "Comfort
Letter") in customary form dated such date, from the independent certified
public accountants of Holdings, addressed to the underwriters, if any, and to
the Holder covering such matters as such underwriters or the Holder may
reasonably request (and, if such accountants refuse to deliver
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such letter to the Holder, then the Comfort Letter shall be addressed to
Holdings and accompanied by a letter addressed to the Holder stating that they
may rely on the comfort letter addressed to Holdings);
(j) enter into such other 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;
(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 underwriter, 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) 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; and (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 Holdings are then listed. It shall be a
condition precedent to the obligation of Holdings to take any action pursuant to
this Agreement in respect of the securities which are to be registered at the
request of the Holder that the Holder shall furnish to Holdings such information
regarding the securities held by the Holder and the intended method of
disposition thereof, as Holdings shall reasonably request and as shall be
required in connection with the action taken by Holdings.
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The managing underwriter or underwriters, for any offering of
Registrable Securities to be registered pursuant to Section 13, shall be
selected by the Holder and shall be reasonably acceptable to Holdings.
16. Expenses. Holdings 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 Holdings,
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 15(d), except that Holdings 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 13 or 14,
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 13 hereof, beyond the annual audited financial statements of Holdings or
ENTEX.
17. Indemnification and Contribution. (a) In the event of
any registration of any of the Registrable Securities under the Securities Act
pursuant to Section 13 or 14, Holdings shall indemnify and hold harmless each
Holder of such Registrable Securities, such Holder's 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
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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 Holdings 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 Holdings by the Holder seeking indemnification or reimbursement hereunder for
use therein or (in the case of any registration pursuant to Section 13) so
furnished for such purposes by the underwriter seeking indemnification or
reimbursement hereunder for use thereon; provided 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
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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
Holdings 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 17 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 13 or 14, by acceptance
thereof, agrees to indemnify and hold harmless Holdings, its directors and
officers and each other person who "controls" Holdings within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which Holdings or any such director or officer or any 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 information in writing provided
to Holdings 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.
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(c) If the indemnification provided for in this Section 17
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.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 17(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.
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(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 17, 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 17 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 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 17 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.
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18. Opinion of Counsel. Simultaneously with the execution
and delivery of this Agreement, the Holder shall receive an opinion of Xxxx &
Priest, counsel to the Grantor and Holdings, substantially in the form attached
hereto as Exhibit E.
19. Expenses. Except as otherwise specified in Sections 16
and 17, each party hereto shall pay its or his own expenses incurred in
connection with this Agreement.
20. Amendment. The provisions of this Agreement may not be
modified, amended, altered or supplemented receipt upon the execution and
delivery of a written agreement executed by the Holder of a majority of the
Warrant Shares and Conversion Shares (determined as if the Warrant and
Conversion Rights, if any, had been exercised in their entirety) and the
provisions of this Agreement applicable to Holdings or ENTEX may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by Holdings or ENTEX, as the case may
be. 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.
21. Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other parties hereto, except IBM may assign its rights hereunder to any
Affiliate of IBM without the consent of Holdings or to any other person with the
consent of Holdings.
22. Confidentiality. So long as neither Holdings nor ENTEX
has become a Reporting Company, 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
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Holdings or ENTEX disclosed to it by Holdings or 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 Holdings or ENTEX that is not subject to any agreement restricting the
disclosure of such information. Nothwithstanding 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 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, ENTEX or Holdings are a
party adverse to one another, or (v) to the extent reasonably required in
connection with the enforcement of any rights hereunder. Holdings and ENTEX
agree 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 Holdings or 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
Holdings and ENTEX of the existence, terms and circumstances surrounding such
request so that Holdings or ENTEX may seek an appropriate protective order or
waive compliance with this Section 22, and, to consult with Holdings and ENTEX
concerning the advisability of taking appropriate legal steps to resist
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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.
23. 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, by overnight delivery or facsimile transmission,
with transmission confirmed, to the parties as follows:
If to Cameron:
Xx. Xxxx X. Xxxxxxx III
c/o Airlie Group L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000
If to Holdings:
ENTEX Holdings, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: President
Facsimile No: (000) 000-0000
If to ENTEX:
ENTEX Information Services, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: President
Facsimile No: (000) 000-0000
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in each case with a copy to:
Xxxx & Priest
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 100 19
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No: (000) 000-0000
If to IBM Credit:
IBM Credit Corporation;
000 Xxxxxx Xxxxx
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Director, Working Capital
Financing Support
Facsimile No: (000) 000-0000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
24. 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.
25. 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.
26. 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,
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37
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.
27. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
28. 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.
29. Further Assurances. The Grantor 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.
30. 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.
* * * * *
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IN WITNESS WHEREOF, the undersigned have hereunto set their names as
of the day and year first above written.
ENTEX HOLDINGS, INC.
BY: /s Xxxx X. XxXxxxx
Name: Xxxx X. XxXxxxx, Xx.
Title: President
ENTEX INFORMATION SERVICES, INC.
By: /s/ Xxxx X. XxXxxxx
Name Xxxx X. XxXxxxx, Xx.
Title: President
IBM CREDIT CORPORATION
By:
---------------------------------
Name:
Title:
AGREED as to Section 10 hereof.
/s/ Dort A. Xxxxxxx
Xxxx X. Xxxxxxx III
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IN WITNESS WHEREOF, the undersigned have hereunto set their names as
of the day and year first above written.
ENTEX HOLDINGS, INC.
By:
---------------------------------
Name:
Title:
ENTEX INFORMATION SERVICES, INC.
By:
---------------------------------
Name:
Title:
IBM CREDIT CORPORATION
By:/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Director, Remarketer Finance
Portfolio Controls
AGREED as to Section 10 hereof.
-------------------------------
Dort X. Xxxxxxx III
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