SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 21, 1999
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ENTEX Information Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-23457 13-3715291
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6 International Drive, Rye Brook, NY 10573-1085
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 935-3600
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 21, 1999, ENTEX Information Services, Inc. (the "Company")
executed an amendment to its working capital line of credit (the "IBM Working
Capital Line of Credit") with IBM Credit Corporation ("IBMCC") to extend to
March 31, 2000 its existing overadvance from its previously scheduled
termination date of December 21, 1999. The overadvance permits the Company to
borrow up to $20 million in excess of what would otherwise have been allowed
under the collateral formula in the IBM Working Capital Line of Credit. IBMCC
also agreed to modifications of the financial covenants in the IBM Working
Capital Line of Credit requested by the Company. Simultaneously with execution
of the amendment of the IBM Working Capital Line of Credit, the Company's
principal stockholder, Mr. Dort A. Cameron III, guaranteed up to $20 million of
the Company's obligations to IBMCC, and purchased from IBMCC an outstanding
option to purchase from Mr. Cameron 1,851,850 shares of the Company's common
stock. Mr. Cameron initially granted this option to IBMCC in 1993. The purchase
price for the option was $3 million in cash, payable not later than March 31,
2000, and an additional amount equal to the excess, if any, of 1,851,850
multiplied by the highest per-share price of the Company's common stock obtained
by Mr. Cameron or any of his affiliates during the period ending one year after
the execution of the option purchase agreement over the initial $3 million
amount. The additional amount, if any, is payable upon the consummation of any
subsequent transaction in which more than 50% of the Company's common stock is
sold. If no such sale occurs within the one-year period, the original option
will be reinstated with the aggregate exercise price increased by $3 million.
These transactions provide the Company with continued access to $20 million
in liquidity under the IBM Working Capital Line of Credit that otherwise would
have been unavailable and will enable the Company to support its ongoing
business and to fund its debt service obligations in the near term. The
continued availability of these working capital resources will also provide
additional time for the Company to complete the repositioning of its business to
one providing services only.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
The following Exhibits are included with this Form 8-K
Exhibit
Number Description of Exhibit
10.1 Amendment No. 19 to the Fourth Amended and Restated Agreement for
Wholesale Financing by and between the Company and IBM Credit
Corporation dated as of December 21, 1999.
10.2 Option Purchase Agreement by and between IBM Credit Corporation and
Mr. Dort A. Cameron, III dated as of December 21, 1999.
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Exhibit
Number Description of Exhibit
10.3 Guaranty by Mr. Dort A. Cameron, III on behalf of the Company in favor
of IBM Credit Corporation dated as of December 21, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENTEX INFORMATION SERVICES, INC.
Dated: January 5, 2000 By: /s/ Shirley S. Mehta
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Name: Shirley S. Mehta
Title: Vice President and Controller
AMENDMENT NO. 19
TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amendment No. 19 to the Fourth Amended and Restated Agreement for Wholesale
Financing (this "Amendment") is made as of December 21, 1999 by and between
ENTEX Information Services, Inc., a Delaware corporation ("Borrower") and IBM
Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS
A. Borrower and IBM Credit have entered into that certain Fourth Amended and
Restated Agreement for Wholesale Financing dated as of September 15, 1995 (as
amended on September 19, 1995 and as further amended, supplemented or otherwise
modified from time to time, the "Agreement").
B. The parties have agreed to modify the Agreement as more specifically set
forth below, upon and subject to the terms and conditions of this Amendment as
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Borrower and IBM Credit hereby agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Modification of Agreement
A. The following provisions are incorporated into and supplement the
Agreement as if fully set forth as additional terms therein. In the event of a
conflict between the terms of this Amendment and the terms of the Agreement, the
terms of this Amendment will control in determining the agreement between IBM
Credit and Borrower.
(a) Borrower agrees to pay IBM Credit a fee in the amount of One Hundred
Fifty Thousand Dollars ($150,000.00) which shall be due and payable on the date
of execution of Amendment No. 19 to this Agreement in consideration for
modifying the terms of the Agreement pursuant to Section 2 B. of Amendment No.
19 to this Agreement (the "Overadvance Fee").
(b) Borrower may not request an Advance which, when aggregated with all
other Outstanding Advances would cause the aggregate Advances that would then be
outstanding to exceed the Maximum Value (as hereinafter defined) plus Fourteen
Million Dollars unless the proceeds of such Advance are promptly applied to pay
interest required to be paid by Borrower on February 1, 2000 to holders of
Borrower's issued and outstanding 12-1/2% Senior Subordinated Notes due 2006.
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(c) Borrower agrees it shall provide to IBM Credit the following reports
and documents:
(i) on each Business Day, the collateral status and loan status reports as
required pursuant to Subsection 2(b)(viii) of the Agreement;
(ii) on each Friday, beginning on December 17, 1999 and on each Friday
thereafter until December 29, 2000, a projected cash flow statement, in detail
reasonably satisfactory to IBM Credit, showing the sources and uses of cash of
Borrower and its consolidated subsidiaries for the immediately following week;
(iii) within twenty (20) Business Days after the end of each calendar
month, a projected cash flow statement, in detail reasonably satisfactory to IBM
Credit, showing the sources and uses of cash of Borrower and its consolidated
subsidiaries beginning with the month ending November 30, 1999 and for each
month thereafter to and including the month ending December 31, 2000;
(iv) within twenty (20) Business Days after the end of each calendar month,
the unaudited financial statement of Borrower as required pursuant to Subsection
2(c)(iii) of the Agreement; and
(v) on each Friday, beginning on December 17, 1999 and on each Friday
thereafter until December 29, 2000, an accounts payable report, in detail
reasonably satisfactory to IBM Credit, showing the amounts and aging of
Borrower's accounts payable as of such date.
Without limiting any other term of this Agreement, the failure of
Borrower to provide any of the foregoing reports or documents shall
constitute an Event of Default.
B. Section 3(a) of the Agreement is hereby amended by changing the definition of
Base Finance Charge contained in the second paragraph of such Section 3(a) from
"the sum of LIBOR (as hereinafter defined) plus 300 basis points" to "(i) during
the period from December 17, 1999, through March 31, 2000, the sum of (x) for
the portion of Outstanding Advances in an aggregate amount at any one time up to
an amount equal to the Minimum Value at such time, LIBOR (as hereinafter
defined) plus 300 basis points, (y) for the portion of Outstanding Advances in
excess thereof, but less than or equal to (when aggregated with all other
Outstanding Advances) the Maximum Value at such time, LIBOR plus 550 basis
points and (z) for the portion of Outstanding Advances in excess thereof, but,
when aggregated with all the other Outstanding Advances, less than or equal to
the Maximum Value at such time plus Twenty Million Dollars ($20,000,000.00),
LIBOR plus 6.50% and (ii) during the period following March 31, 2000, the sum of
LIBOR plus 3.00%".
C. Section 3(a) of the Agreement is hereby further amended by deleting the
second and third sentence of the fourth paragraph thereof in their entirety and
substituting, in lieu thereof, the following two sentences:
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"From October 6, 1999 to and including the date of Amendment No. 19 to this
Agreement, if the full amount of any amounts owed under this Agreement is not
paid by its due date, including but not limited to any amounts due under Section
3(b) or as a result of the acceleration of obligations, then the unpaid amount
thereof at any one time not to exceed Three Million Seven Hundred Eighty
Thousand Dollars ($3,780,000) will bear interest from its due date until IBM
Credit receives payment thereof at a per annum rate equal to LIBOR plus 4.00%
and the unpaid amount thereof in excess of Three Million Seven Hundred Eighty
Thousand Dollars ($3,780,000) will bear interest from its due date until IBM
Credit receives payment thereof at a per annum rate equal to LIBOR plus 6.5%.
Thereafter, if the full amount of any amounts owed under this Agreement is not
paid by its due date, including but not limited to any amounts due under Section
3(b) or as a result of the acceleration of obligations, then the unpaid amount
thereof will bear interest from its due date until IBM Credit receives payment
thereof at a per annum rate equal to LIBOR plus 6.5%."
D. Section 1 of the Agreement is hereby amended by deleting the second sentence
after the title "Line of Credit" of Section 1 in its entirety and substituting,
in lieu thereof, the following:
"The amount of the Line of Credit shall be One Hundred Million Dollars
($100,000,000.00) on any day."
E. Section 3(c) of the Agreement is hereby amended by deleting the first
paragraph and items (A) through (D) thereof in their entirety and substituting,
in lieu thereof, the following:
"(c) "Value" shall mean (i) at any time from December 21, 1999 through January
23, 2000, Maximum Value plus Fourteen Million Dollars ($14,000,000), (ii) from
January 24, 2000 through March 31, 2000, Maximum Value plus (subject to Section
2(A)(b) of Amendment No. 19) Twenty Million Dollars ($20,000,000) and (iii) at
any time following March 31, 2000, Minimum Value. For purposes hereof, "Maximum
Value" shall mean One Million Seven Hundred Twenty Five Thousand Dollars
($1,725,000) until the earlier of receipt by Borrower of the tax refund claimed
on the Amended U.S. Corporation Income Tax Returns filed by Borrower for the tax
years ending June 1994 and June 1995 and February 28, 2000 plus, as of the time
of determination with respect to the items specified below (i) which are owned
by (and in the possession or under the control of) Borrower and located in a
jurisdiction in the United States in which the Uniform Commercial Code has been
adopted and (ii) as to which IBM Credit has a valid, perfected first priority
security interest, an amount, not to exceed Twenty Million Dollars ($20,000,000)
more than the Minimum Value as of such time of determination, equal to the sum
of each percentage specified opposite each such item of (x) in the case of any
item of Financed Products or other inventory, the lower of the cost and fair
market value (in each case, net of applicable reserves) of such Financed
Products or other inventory, and (y) in the case of Eligible Receivables and
Authorized Supplier Claims described below, the outstanding face amount of such
Eligible Receivables and Authorized Supplier Claims.
A. Financed Products and other inventory constituting Collateral located in
the Canton, Massachusetts; Kent, Washington; Atlanta, Georgia; Rio Rancho,
New Mexico; Dupont,
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Oregon; Santa Clara, California; Folsom, California; Sacramento,
California; Chandler, Arizona; Wichita, Kansas; or Redmond, Washington
warehouse:
(i) Financed Products (i) 100%
(ii) Other inventory constituting Collateral
in which IBM Credit has a perfected first
priority security interest (ii) 20%
B. (i) Eligible Receivables (i) 88%
(ii) Receivables that but for the fact that
they remain unpaid more than 90 days from
date of invoice would constitute Eligible
Receivables (ii) 50%
C. (i) Authorized Supplier Claims (i) 88%
(ii) Authorized Supplier Claims for which
Borrower has not been paid more than 90 days
from the date such claim was submitted by
Borrower (ii) 50%
(iii) Verifiable payments owed by IBM Credit
to Borrower arising from lease agreements
more than 90 days from date of invoice (iii) 75%
D. Service parts which are neither obsolete
nor defective 30%
For purposes hereof, "Minimum Value" shall mean as of the time of determination
with respect to the items specified below (i) which are owned by (and in the
possession or under the control of) Borrower and located in a jurisdiction in
the United States in which the Uniform Commercial Code has been adopted and (ii)
as to which IBM Credit has a valid, perfected first priority security interest,
an amount equal to the sum of each percentage specified opposite each such item
of (x) in the case of any item of Financed Products or other inventory, of the
lower of the cost and fair market value (in each case, net of applicable
reserves) of such Financed Products and other inventory, and (y) in the case of
Eligible Receivables and Authorized Supplier Claims described below, the
outstanding face amount of such Eligible Receivables and Authorized Supplier
Claims.
"A. Financed Products and other inventory constituting Collateral located
in the Canton, Massachusetts; Kent, Washington; Atlanta, Georgia; Rio
Rancho, New Mexico;
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Dupont, Oregon; Santa Clara, California; Folsom, California; Sacramento,
California; Chandler, Arizona; Wichita, Kansas; or Redmond, Washington
warehouse:
(i) Financed Products (i) 100%
(ii) Other inventory constituting Collateral
in which IBM Credit has a perfected first
priority security interest (ii) 20%
B. Eligible Receivables 85%
C. Authorized Supplier Claims 85%
D. Service parts which are neither obsolete
nor defective 30%
F. Section 12 of the Agreement is hereby amended by deleting paragraph (a)
thereof in its entirety and substituting, in lieu thereof, the following
paragraph (a):
"(a) From April 1, 1999 to and including December 1999, Borrower shall at
all times maintain a ratio of current assets to current liabilities equal to or
greater than 0.70:1.00, from January 1, 2000 to and including March 31, 2000,
Borrower shall at all times maintain a ratio of current assets to current
liabilities equal to or greater than 0.65:1.00, from April 1, 2000 to and
including September 30, 2000, Borrower shall at all times maintain a ratio of
current assets to current liabilities equal to or greater than 0.74:1.00, and
from October 1, 2000 and thereafter, Borrower shall at all times maintain a
ratio of current assets to current liabilities equal to or greater than
0.85:1.00."
G. Section 12 of the Agreement is hereby amended by deleting paragraph (b)
thereof in its entirety and substituting, in lieu thereof, the following
paragraph (b):
"(b) From October 1, 1999 to and including December 31, 1999, Borrower
shall not permit the ratio of (i) EBITDA for the Fiscal Quarter ending December
31, 1999 to (ii) Interest Expense for the Fiscal Quarter ending December 31,
1999 to be less than (0.13:1.00); from January 1, 2000 to and including March
31, 2000, Borrower shall not permit the ratio of (i) EBITDA for the Fiscal
Quarter ending March 31, 2000 to (ii) Interest Expense for the Fiscal Quarter
ending March 31, 2000 to be less than 0.05:1.00; and from April 1, 2000 to and
including June 30, 2000, Borrower shall not permit the ratio of (i) EBITDA for
the Fiscal Quarter ending June 30, 2000 to (ii) Interest Expense for the Fiscal
Quarter ending June 30, 2000 to be less than 1.40:1.00; and from July 1 and
thereafter, Borrower shall not permit the ratio of (i) EBITDA for any Fiscal
Quarter ending during such period to (ii) Interest Expense for such Fiscal
Quarter ending during such period to be less than 1.80:1.00 ."
H. Section 12 of the Agreement is hereby amended by deleting paragraph (c)
thereof in its entirety and substituting, in lieu thereof, the following
paragraph (c):
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"(c) Borrower shall as of the end of each Fiscal Quarter commencing with
the Fiscal Quarter ending September 30, 1999 maintain Tangible Net Worth equal
to or greater than the Tangible Net Worth Requirement for such Fiscal Quarter.
For purposes of this section "Tangible Net Worth Requirement" (i) for the Fiscal
Quarter ending December 31, 1999, shall mean negative Twenty Million Nine
Hundred Seventy Nine Thousand Dollars (-$20,979,000), (ii) for the Fiscal
Quarter ending March 31, 2000, shall mean negative Thirty Million Ninety
Thousand Dollars (-$30,090,000) and (iii) for each Fiscal Quarter thereafter,
shall mean the sum of the Tangible Net Worth Requirement for the previous Fiscal
Quarter plus eighty percent (80%) of the Consolidated Net Income of Borrower for
such previous Fiscal Quarter plus One Hundred Percent (100%) of the net proceeds
received from the issuance of additional equity. If Consolidated Net Income for
a Fiscal Quarter is less than Zero Dollars ($0) then for purposes of Tangible
Net Worth Requirement, Consolidated Net Income shall be deemed to be Zero
Dollars ($0)."
I. The Agreement is hereby modified by deleting Exhibit K in its entirety and
substituting, in lieu thereof, the Exhibit K attached hereto.
Section 3. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior or simultaneous satisfaction by Borrower of the following
condition:
(a) IBM Credit shall have received a personal guaranty, in form and substance
satisfactory to IBM Credit, executed by Dort A. Cameron III; and
(b) IBM Credit shall have received an option purchase agreement, in form and
substance satisfactory to IBM Credit, executed by Dort A. Cameron III.
Section 4. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Amendment.
Section 4.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true and accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make representations not
misleading.
Section 4.2 Violation of Other Agreements. The execution and delivery of this
Amendment and the performance and observance of the covenants to be performed
and observed hereunder do not violate or cause Borrower not to be in compliance
with the terms of any agreement to which Borrower is a party.
Section 4.3 Litigation. Except as has been disclosed by Borrower to IBM Credit
in writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against
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Borrower, which if adversely determined, could reasonably be expected to
materially adversely affect Borrower's ability to perform Borrower's obligations
under the Agreement and the other documents, instruments and agreements executed
in connection therewith or pursuant hereto.
Section 4.4 Enforceability of Amendment. This Amendment has been duly
authorized, executed and delivered by Borrower and is enforceable against
Borrower in accordance with its terms.
Section 5. Ratification of Agreement. Except as specifically amended hereby, all
of the provisions of the Agreement shall remain unamended and in full force and
effect. Borrower hereby, ratifies, confirms and agrees that the Agreement, as
amended hereby, represents a valid and enforceable obligation of Borrower, and
is not subject to any claims, offsets or defense.
Section 6. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York.
Section 7. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed by the authorized
officers of the undersigned as of the day and year first above written.
ENTEX INFORMATION SERVICES, INC.
By: ____________________________ By: _____________________________
Name: __________________________ Name: ___________________________
Title: _________________________ Title: __________________________
Accepted and Agreed:
IBM CREDIT CORPORATION
By:___________________________
Name: Ronald J. Bachner
Title: Manager, Commercial Financing Solutions Americas
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OPTION PURCHASE AGREEMENT
This OPTION PURCHASE AGREEMENT, dated as of December 21, 1999 (this
"Agreement"), is entered into by and between IBM CREDIT CORPORATION, a Delaware
corporation ("Seller"), and Dort A. Cameron III, an individual ("Purchaser").
R E C I T A L S:
WHEREAS, Seller and Purchaser entered into that certain Option Agreement,
dated as of July 15, 1994 (the "Option Agreement"), pursuant to which Purchaser
granted to Seller an irrevocable option (the "Options") to purchase Thirty-Seven
Thousand and Thirty-Seven (37,037) shares of common stock of ENTEX Holdings,
Inc. for Thirty-Seven Thousand and Thirty-Seven Dollars ($37,037) (the "Total
Exercise Price") from Purchaser;
WHEREAS, as a result of the merger of ENTEX Holdings, Inc. into ENTEX
Information Services, Inc. ("Issuer") and the occurrence of stock splits and
stock dividends, pursuant to Section 7 of the Option Agreement, as of the date
hereof the Options represent the right to purchase One Million Eight Hundred
Fifty-One Thousand Eight Hundred Fifty (1,851,850) validly issued and
outstanding shares of common stock of Issuer (the "Common Stock") from Purchaser
at the Total Exercise Price; and
WHEREAS, Purchaser wishes to purchase the Options from Seller and Seller
wishes to sell the Options to Purchaser on and subject to the terms and
conditions set forth in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, and the representations,
warranties, and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Definitions. (a) Capitalized terms not otherwise defined herein shall
have the meaning set forth in the Option Agreement.
(b) "Price Per Share" shall mean an amount equal to the purchase price, net
of reasonable and customary costs and expenses actually incurred, obtained by
Purchaser or any affiliate of Purchaser, on a per share basis, in any
transaction or series of related transactions, from the sale of the common stock
of Issuer to an unaffiliated person or entity.
2. Purchase and Sale. As of the date hereof, and subject to all of the
terms and conditions hereof, including paragraph 5 regarding adjustments to the
sale of the Options, Seller hereby sells to Purchaser and Purchaser hereby
purchases from Seller the Options to buy One Million Eight Hundred Fifty-One
Thousand Eight Hundred Fifty (1,851,850) shares of common stock of the Issuer
and Seller hereby assigns and transfers to Purchaser, and Purchaser hereby
accepts and assumes from Seller, all of Seller's right, title, interest and
obligations under the Option Agreement. In consideration of the sale of the
Options, Purchaser hereby agrees to pay to Seller the Purchase Price as
specified in paragraph 4 hereof.
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3. Conditions Precedent. This Agreement shall be effective on the first
business day on which each of the following conditions precedent to the
effectiveness of this Agreement shall have been satisfied:
(a) Purchaser shall have received a duly executed counterpart of this
Agreement executed by Seller;
(b) Seller shall have received a duly executed counterpart of this
Agreement executed by Purchaser;
(c) Purchaser and Seller shall have received a duly executed counterpart of
this Agreement executed by Issuer; and
(d) Each of the representations and warranties of Seller and Purchaser
shall be true and correct.
4. Purchase Price. (a) The purchase price for the Options shall be an
amount (the "Purchase Price") equal to the product of the highest Price Per
Share obtained by Purchaser or any affiliate of Purchaser for the sale of any
shares of common stock of Issuer beneficially owned by Purchaser or any
affiliate of Purchaser during the twelve month period beginning on the date
hereof and ending on the first anniversary of the date hereof multiplied by One
Million Eight Hundred Fifty-One Thousand Eight Hundred Fifty (1,851,850);
provided, however, that the purchase price shall in no event be less than Three
Million Dollars ($3,000,000.00) which amount shall be earned in full as of the
date hereof.
(b) The Purchase Price shall be due and payable as follows:
(i) Purchaser shall pay to Seller, in immediately available funds, the
nonrefundable amount of Three Million Dollars ($3,000,000.00) on or
prior to the earlier of (x) March 15, 2000 and (y) the date on which
any person or group of persons owning less then ten percent (10%) of
the stock of Issuer as of the date hereof shall acquire beneficial
ownership of more than fifty percent (50%) of the outstanding common
stock of Issuer; and
(ii) Purchaser shall pay to Seller the balance of the Purchase Price
beginning on the date on which any person or group of persons owning
less then ten percent (10%) of the stock of Issuer shall acquire
beneficial ownership of more than fifty percent (50%) of the
outstanding common stock of Issuer in the same manner and at the same
time as Purchaser receives consideration for the disposition of shares
of common stock of Issuer.
With respect to any of the Purchase Price paid through the delivery of
securities, Purchaser and Seller agree that the terms of Section 12 of the
Option Agreement shall apply mutatis mutandis to such securities.
5. Adjustments to Sale of Options. In the event Purchaser does not sell all
of the Options or Common Stock to be acquired upon exercise of the Options to an
unaffiliated person or entity on or prior to the first anniversary of the date
hereof, Purchaser agrees to return to Seller, and assign and transfer to Seller,
all of Purchaser's rights, title, interest and obligations under the Option
Agreement with respect to, Options for the purchase of One Million Eight
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Hundred Fifty-One Thousand Eight Hundred Fifty (1,851,850) shares of Common
Stock of Issuer; provided, however, that the aggregate exercise price under the
Option Agreement shall be increased by Three Million Dollars ($3,000,000).
6. Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser as follows:
(a) Seller 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 Seller of this Agreement has
been duly authorized by all necessary corporate action on the part of Seller,
and this Agreement has been duly executed and delivered by Seller and
constitutes a valid and legally binding obligation of Seller enforceable in
accordance with its terms except that the enforceability hereof may be subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws of general application, now or hereafter in effect, relating
to or affecting the enforcement of creditors' rights generally and general
principles of equity;
(c) the execution, delivery and performance by Seller of this Agreement and
the consummation of the transactions contemplated hereby will not violate or
conflict with (i) its Certificate of Incorporation or By-laws, (ii) any
agreement to which Seller is a party which is material to the financial
condition or business of Seller, (iii) any license, franchise or permit
applicable to Seller, or (iv) any law, regulation, order, judgment or decree
applicable to Seller;
(d) other than as may be required in connection with or in compliance with
the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (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 Seller of the transactions contemplated hereby; and
(e) Seller makes no representations or warranties with respect to the
business, assets, liabilities, operations, condition (financial or otherwise),
or prospects of Issuer.
7. Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants to Seller as follows:
(a) Purchaser has full legal capacity, power and authority to execute and
deliver this Agreement and to perform his obligations hereunder. This Agreement
is a valid and binding obligation of Purchaser, enforceable in accordance with
its terms, except that the enforceability hereof may be subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws of general application, now or hereafter in effect, relating to or
affecting the enforcement of creditors' rights generally and general principles
of equity;
(b) the execution, delivery and performance by Purchaser of this Agreement
and the consummation of the transactions contemplated hereby will not violate or
conflict with (i) any agreement to which Purchaser is a party, or (ii) any law,
regulation, order, judgment or decree applicable to Purchaser;
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(c) 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 Purchaser of the transactions contemplated hereby;
(d) Purchaser has been advised that the Options and the shares of Common
Stock to be acquired upon exercise of the Options have not been registered under
the Securities Act, or any state securities laws and, therefore, cannot be
resold unless they are registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration requirements is
available. Purchaser is aware that Issuer is under no obligation to effect any
such registration or comply with any exemption from registration, except as
required under the Option Agreement. Purchaser understands that no public market
now exists for any securities issued by Issuer. Purchaser is purchasing the
Options, and the Common Stock to be acquired upon exercise of the Options,
hereunder for its own account for investment, not as a nominee or agent, and not
with a view to, or for resale in connection with, the distribution thereof.
Purchaser has such knowledge and experience in financial and business matters
that Purchaser is capable of evaluating the merits and risks of such investment,
is able to incur a complete loss of such investment and is able to bear the
economic risk of such investment for an indefinite period of time. Purchaser is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
under the Securities Act; and
(e) Purchaser acknowledges that he has received sufficient information
regarding Issuer to make an informed decision with respect to the purchase of
the Options, and the Common Stock to be acquired upon exercise of the Options.
8. Miscellaneous.
(a) Waivers and Amendments. Any provision of this Agreement may be amended,
waived or modified only pursuant to a written agreement executed by duly
authorized representatives of Seller and Purchaser.
(b) Governing Law. This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of law
provisions of the State of New York or of any other state.
(c) Survival. The representations, warranties, covenants and agreements
made herein shall survive the execution and delivery of this Agreement.
(d) Successors and Assigns. The rights and obligations of Seller and
Purchaser shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
(e) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof. All prior writings, communications, understandings and/or agreements are
superseded and merged herein.
(f) Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally
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<PAGE>
delivered or mailed by registered or certified mail, postage prepaid, or by
recognized overnight courier or personal delivery, addressed:
(i) if to Seller, at:
IBM Credit Corporation
North Castle Drive
Armonk, New York 10504
Facsimile: 914-765-6430
Attention: Director, Commercial Financing Americas
(ii) if to Purchaser, at:
Mr. Dort A. Cameron III
c/o Airlie Group L.P.
115 East Putnam Avenue
Greenwich, CT 06830
Facsimile: 203-661-0479
(g) Severability of this Agreement. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized representatives as of
the date and year first written above.
SELLER:
IBM CREDIT CORPORATION,
a Delaware corporation
By:
Name:
Title:
PURCHASER:
----------------------------------------------
Dort A. Cameron III,
an individual
CONSENTED TO:
ENTEX Information Services, Inc.
By: ____________________________
Name: __________________________
Title: _________________________
STATE OF _______________________ )
)SS
COUNTY OF ______________________ )
On this ______ day of ____________, ____, before me, the subscriber, a Notary
Public in and for said county, personally appeared ____________________________
known to me to be the person(s) described in and who executed the above Guaranty
(By Individual), and who acknowledged the execution thereof to be their free act
and deed.
-------------------------------------
Notary Public
My Commission Expires: ______________
Page 6 of 6
IBM Credit Corporation
GUARANTY
(By Individual)
This Guaranty By Individual (this "Guaranty") is hereby executed as of the
21st day of December 1999 by the undersigned, Dort A. Cameron III (referred to
herein as "Guarantor") on behalf of ENTEX Information Services, Inc.
("Customer"), in favor of IBM Credit Corporation ("IBM Credit") with an office
located at North Castle Drive, Armonk, New York 10504.
RECITALS
WHEREAS, Customer has requested IBM Credit to continue to provide financing
for its purchases of inventory and/or its working capital needs and IBM Credit
has agreed to provide such financing subject to, among other things, receipt of
this Guaranty executed by the undersigned.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. In consideration of credit and financing accommodations granted or to be
granted by IBM Credit to Customer, and for other good and valuable consideration
received, Guarantor, jointly and severally, guaranties to IBM Credit, from
property held separately, jointly, or in community, the prompt and unconditional
performance and payment by Customer of any and all obligations, liabilities,
contracts, mortgages, notes, trust receipts, secured transactions, inventory
financing, working capital financing and security agreements, and commercial
paper on which Customer is in any manner obligated, heretofore, now, or
hereafter owned, contracted, or acquired by IBM Credit ("Liabilities"), whether
the Liabilities are individual, joint, several, primary, secondary, direct,
contingent or otherwise, provided, however, that if IBM Credit shall enforce
this Guaranty the total liability of the Guarantor hereunder to IBM Credit at
such time shall not exceed Twenty Million Dollars ($20,000,000.00).
2. If Customer fails to pay or perform any Liabilities to IBM Credit when due,
IBM Credit shall have the right to accelerate all Liabilities which shall then
become immediately due and payable, and Guarantor shall then pay on or prior to
the fifteenth calendar day following demand the full amount of all sums owed to
IBM Credit by Customer, together with all expenses, including reasonable
attorney's fees; provided, however, that IBM Credit (i) shall not demand payment
hereunder prior to March 1, 2000 and (ii) shall not demand payment hereunder in
an amount in excess of Ten Million Dollars ($10,000,000.00) on or prior to May
16, 2000.
3. The liability of Guarantor is direct and unconditional and shall not be
affected by any extension, renewal or other change in the terms of payment or
any security agreement or any other agreement between IBM Credit and Customer,
or any change in the manner, place or terms of payment or performance thereof,
or the release, settlement or compromise of or with any party liable for the
payment or performance thereof, the release or non-perfection of any security
thereunder, any change in Customer's financial condition, or the interruption of
business relations between IBM Credit and Customer. Guarantor acknowledges that
its obligations hereunder are in addition to and independent of any agreement or
transaction between IBM Credit and Customer or any other person creating or
reserving any lien, encumbrance or security interest in any property of Customer
or any other person as security for any obligation of Customer. This Guaranty is
a continuing guaranty of payment and IBM Credit need not exhaust its rights or
recourse against Customer or any other person or any security IBM Credit may
have at any time before being entitled to payment from Guarantor.
4. This Guaranty is assignable by IBM Credit but is not assignable by Guarantor.
This Guaranty shall be construed liberally in IBM Credit's favor, and shall
inure to the benefit of IBM Credit and its
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<PAGE>
successors and assigns, and also benefit any of IBM Credit's existing or future
affiliates that may extend credit to Customer.
5. If Customer hereafter is incorporated, acquired by a corporation, dissolved,
or otherwise undergoes any change in its management, ownership, identity or
organizational structure, this Guaranty shall continue to extend to any
Liabilities of the Customer or such resulting corporation, dissolved
corporation, or new or changed legal entity or identity to IBM Credit.
6. Guarantor waives: notice of the acceptance of this Guaranty, and of
presentment, demand and protest; notices of nonpayment, nonperformance, any
right of contribution from other guarantors, and dishonor; notices of amount of
indebtedness of Customer outstanding at any time; notices of the number and
amount of advances made by IBM Credit to Customer in reliance on this Guaranty;
notices of any legal proceedings against Customer; notice and hearing as to any
prejudgment remedies; and any other demands and notices required by law.
Guarantor further waives all rights of set-off and all counterclaims against IBM
Credit or Customer. Guarantor also waives any and all rights in and notices or
demands relating to any collateral now or hereafter securing any of the
Liabilities, including, but not limited to, all rights, notices or demands
relating, whether directly or indirectly, to the sale or other disposition of
any or all of such collateral or the manner of such sale or other disposition.
7. All waivers by Guarantor herein shall survive any termination or revocation
of this Guaranty. Guarantor authorizes IBM Credit to sell at public or private
sale or otherwise realize upon the collateral now or hereafter securing any of
the Liabilities, in such manner and upon such terms and conditions as IBM Credit
deems best, all without advertisement or notice to Customer, Guarantor or any
third parties. Guarantor further authorizes IBM Credit to deal with the proceeds
of such collateral as provided in IBM Credit's agreement with Customer, without
prejudice to IBM Credit's claim for any deficiency and free from any right of
redemption on the part of Customer, Guarantor or any third parties, which right
of redemption is hereby waived together with every formality prescribed by
custom or by law in relation to any such sale or other realization.
8. Guarantor further agrees that all of its right, title and interest in, to and
under any loans, notes, debts and all other liabilities and obligations
whatsoever owed by Customer to Guarantor, whether heretofore or hereafter
created or incurred and for whatever amount, other than any obligations of
Customer to Guarantor as compensation for services rendered in the ordinary
course of business of Customer, and all security therefor, shall be now and
hereafter at all times fully subordinated to all Liabilities. Guarantor will not
ask, demand or sue for, or take or receive payment of, all or any part of such
loans, notes, debts or any other liabilities or obligations whatsoever or any
security therefor, until and unless all of the Liabilities are paid, performed
and fully satisfied.
9. Guarantor has made an independent investigation of the financial condition of
Customer and gives this Guaranty based on that investigation and not upon any
representations made by IBM Credit. Guarantor acknowledges that it has access to
current and future financial information which will enable Guarantor to
continuously remain informed of Customer's financial condition. Guarantor also
consents to and agrees that the obligations under this Guaranty shall not be
affected by IBM Credit's: subsequent increases or decreases in the credit line
that IBM Credit may grant to Customer; substitutions, exchanges or releases of
all or any part of the collateral now or hereafter securing any of the
Liabilities; sales or other dispositions of any or all of the collateral now or
hereafter securing any of the Liabilities without demands, advertisement or
notice of the time or place of the sales or other dispositions; realizing on the
collateral to the extent IBM Credit, in its sole discretion, deems proper; or
purchases of all or any part of the collateral for IBM Credit's own account.
10. This Guaranty and any and all obligations, liabilities, terms and provisions
herein shall survive any and all bankruptcy or insolvency proceedings, actions
and/or claims brought by or against Customer, whether such proceedings, actions
and/or claims are federal and/or state.
11. This Guaranty is submitted by Guarantor to IBM Credit (for IBM Credit's
acceptance or rejection thereof) as an offer by Guarantor to guaranty the credit
and financial accommodations provided by IBM
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<PAGE>
Credit to Customer. If accepted, this Guaranty shall be deemed to have been made
at IBM Credit's above specified office. This Guaranty and all obligations
pursuant thereto, shall be governed and controlled as to interpretation,
enforcement, validity, construction, effect and, in all other respects by the
laws of the State of New York. Guarantor, to induce IBM Credit to accept this
Guaranty, agrees that all actions or proceedings arising directly or indirectly
in connection with, out of, related to or from this Guaranty may be litigated,
at IBM Credit's sole discretion and election, in courts within the State of New
York. Guarantor consents and submits to the jurisdiction of any local, state or
federal court located within the State of New York. Guarantor waives any right
to transfer or change the venue of any litigation brought against Guarantor by
IBM Credit in accordance with this paragraph.
12. Any delay by IBM Credit, or its successors, affiliates or assigns, in
exercising any or all rights granted IBM Credit under this Guaranty shall not
operate as a waiver of those rights. Furthermore, any failure by IBM Credit, its
successors, affiliates or assigns, to exercise any and all rights granted IBM
Credit under this Guaranty shall not operate as a waiver of IBM Credit's right
to exercise any or all of them later.
13. This document contains the full agreement of the parties concerning the
guaranty of Customer's Liabilities and can be varied only by a document signed
by all the parties hereto. This Guaranty shall remain in full force and effect
until all Liabilities shall have been satisfied in full and the Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
between Customer and IBM Credit has been terminated.
14. IBM CREDIT AND GUARANTOR AGREE THAT ANY ACTION, SUIT OR PROCEEDING RELATING
DIRECTLY OR INDIRECTLY TO THIS GUARANTY OR THE RELATIONSHIP BETWEEN IBM CREDIT
AND GUARANTOR, WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
WITHOUT A JURY. THUS, IBM CREDIT AND GUARANTOR HEREBY WAIVE ANY RIGHT TO A JURY
TRIAL IN ANY SUCH ACTION, SUIT OR PROCEEDING.
15. Notwithstanding any provision of this Guaranty to the contrary, the
liability of Guarantor hereunder shall in no event exceed the maximum amount
that is valid and enforceable in any action or proceeding involving any
applicable state corporate law or any applicable state or Federal bankruptcy,
insolvency, reorganization, fraudulent conveyance or other law involving the
rights of creditors generally.
16. The Guarantor hereby authorizes IBM Credit to investigate the personal
credit history of the Guarantor and to obtain credit bureau reports on the
Guarantor, from time to time, at IBM Credit's sole discretion.
Guarantor _______________________________
(Guarantor's Signature)
WITNESS
_________________________________ Print Name: Dort A. Cameron III
Print Name ______________________ Social Security No. _____________________
Address _________________________ Home Address ____________________________
_________________________________ _________________________________________
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<PAGE>
STATE OF _______________________ )
)SS
COUNTY OF ______________________ )
On this ______ day of ____________, ____, before me, the subscriber, a Notary
Public in and for said county, personally appeared ____________________________
known to me to be the person(s) described in and who executed the above Guaranty
(By Individual), and who acknowledged the execution thereof to be their free act
and deed.
-------------------------------------
Notary Public
My Commission Expires: ______________
Page 4 of 4
