ESCROW AGREEMENT
XXXXXXX COMPUTER RESOURCES OF SOUTH CAROLINA, INC., a South
Carolina corporation (the "Pomeroy"), and XXXXXX X. XXX,
XXXXXX X. XXXXXXXX, and XXXXXXX X. XXXX (the "CSI
Shareholders") and XXXXXX XXXXX XXXXXX & XXXXXXX, LLP and
XXXXXXXXX & DREIDAME CO., L.P.A. (the "Escrow Agents"),
hereby agree as follows, this _____ day of October, 1997.
SECTION 1 - RECITALS
1.1 Xxxxxxx and CSI Shareholders have entered into an
Agreement and Plan of Reorganization dated the 17th day of
October, 1997, (the "Merger Agreement") providing for the
merger of The Computer Store, Inc., a South Carolina
corporation, ("CSI") with and into Xxxxxxx.
1.2 Section 2.1(a) of the Merger Agreement provides that
the CSI Shareholders shall deposit with the Escrow Agents
the number of shares of stock of Xxxxxxx Computer Resources,
Inc., a Delaware corporation and the parent corporation of
Pomeroy, having an aggregate value of Seventy-Four Thousand
Nine Hundred Eighty-Three Dollars and 22/100 ($74,983.22)
(such stock hereinafter referred to as PCR Stock), and
Section 2.2(b) of the Merger Agreement provides that the CSI
Shareholders shall deposit with the Escrow Agents the sum of
Seventy-Five Thousand Sixteen Dollars and 78/100
($75,016.78) in the aggregate, which PCR Stock and cash
shall be deposited by the CSI Shareholders proportionately.
1.3 The Merger Agreement provides that there may be certain
adjustments made to the consideration incident to the
merger, as such adjustments are set forth and described in
the Merger Agreement. Any net reduction in the
consideration for the merger, as a result of such
adjustment(s), shall be implemented by decreasing
proportionately the amount of cash and PCR Stock paid to the
CSI Shareholders, which amount will be repaid to Xxxxxxx
first from the Escrow Fund, as defined in Paragraph 2.1, in
the manner set forth in this Escrow Agreement. In addition,
the CSI Shareholders have provided Pomeroy and Xxxxxxx
Computer Resources, Inc. ("PCR") with certain
indemnification rights under the Merger Agreement. Incident
thereto, the Merger Agreement provides that the Escrow
Agents shall distribute cash and PCR Stock from the Escrow
Fund to Xxxxxxx or PCR in an amount equal to any costs or
expenses incurred by Xxxxxxx or PCR resulting from any
inaccuracy in or breach of any representation, warranty,
covenant or obligation made or incurred by CSI or the CSI
Shareholders, subject to the terms of the Merger Agreement
relating to the indemnification rights and obligations of
the parties to the Merger Agreement.
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CERTAIN PORTIONS OF THIS AGREEMENT
ARE SUBJECT TO BINDING ARBITRATION
SECTION 2 - ESCROW FUND
2.1 The Escrow Agents shall hold the PCR Stock and the cash
which is delivered to the Escrow Agents by the CSI
Shareholders. The PCR Stock and cash received by the Escrow
Agents are sometimes referred to herein collectively as the
"Escrow Fund." The Escrow Agents shall invest the cash in
an interest-bearing account with Star Bank, National
Association.
SECTION 3 - TERM OF ESCROW, RELEASE OF ESCROW FUNDS,
INTEREST AND PROCEEDS THEREON
3.1 The Escrow Agents will hold the Escrow Funds in their
possession until the later of April 1, 1998 or the EBIT
determination, as such adjustment is set forth and described
in the Merger Agreement, is finalized by the CSI
Shareholders and Xxxxxxx.
If, as a result of any adjustments or indemnification
claims resulting from any inaccuracy in or breach of any
representation, warranty, covenant or obligation made or
incurred by CSI or the CSI Shareholders, subject to the
terms and limitations of the Merger Agreement relating to
the indemnification rights and obligations of the parties to
the Merger Agreement, there is a net reduction in the
consideration for the merger, which has been agreed upon in
writing by the parties or for which there is a report of an
arbitrator or an order of a court, then the Escrow Agents
shall deliver to Xxxxxxx a payment equal to the amount owed
Xxxxxxx as a result of such adjustment or indemnification
payable 50% from the cash and 50% from the PCR Stock held in
the Escrow Fund. For purposes of determining the amount of
PCR Stock to be delivered to Xxxxxxx, the value of the PCR
Stock shall be based on the average of the closing price of
the PCR Stock on the NASDAQ exchange for the twenty (20)
trading days immediately preceding the third day before an
agreement is made by the parties to the Merger Agreement in
the manner set forth and described in such Merger Agreement.
3.2 In the event there is no such net reduction in the
consideration paid for the merger or in the event that there
is cash and PCR Stock remaining after the payment from the
Escrow Fund for any such net reduction or pursuant to any
indemnification rights, then the Escrow Agents shall deliver
the remaining cash (with any interest thereon) and remaining
PCR Stock held in the Escrow Fund to the CSI Shareholders in
proportion to their percentage of ownership in CSI that they
held as set forth in the Merger Agreement, immediately prior
to the effective date of the Merger Agreement.
3.3 Until released from the escrow pursuant to this
Agreement, the PCR Stock held as part of the Escrow
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Fund shall remain registered in the name of the individual
CSI Shareholders, and each CSI Shareholder shall be entitled
to all incidents of ownership in the number of shares of PCR
Stock transferred by each CSI Shareholder, respectively,
including but not limited to the right to vote the PCR Stock
and to receive all dividends and other distributions
thereon, subject however, to the provisions of this
Agreement and the Merger Agreement.
3.4 All disbursements from the Escrow Fund to Xxxxxxx for
any adjustments to the consideration of the merger or for
any claims under any indemnification rights must be payable
to the extent possible approximately 50% from the cash held
in the Escrow Fund and approximately 50% from the PCR Stock
held in the Escrow Fund. Any disbursement made to Xxxxxxx
of the PCR Stock shall be rounded down to the nearest whole
share and any cash distributed shall be rounded up
accordingly.
3.5 Notwithstanding the above provisions, the Escrow Agents
shall not release any cash or PCR Stock from the Escrow Fund
without first giving written notice to Xxxxxxx and the CSI
Shareholders. If no objection is made by Xxxxxxx and the
CSI Shareholders within 10 days from the date that the
written notice is delivered to the CSI Shareholders and to
Xxxxxxx, then the Escrow Agents may release the cash and PCR
Stock pursuant to the terms of this Escrow Agreement. If a
timely objection is made in writing by the CSI Shareholders
or by Xxxxxxx, the Escrow Agents shall not release any cash
or PCR Stock until such time that the Escrow Agents are
informed in writing signed by the CSI Shareholders and
Xxxxxxx that the Escrow Agents are to release the Escrow
Fund or a portion thereof. In the event the parties are
unable to reach an agreement within 10 days after the
objection, the matter shall be arbitrated in the manner set
forth in Section 4.7.
SECTION 4 - ESCROW AGENTS
4.1 The Escrow Agents shall be reimbursed for all expenses,
disbursements and advances incurred or made by them in the
performance of their duties hereunder. The CSI Shareholders
shall be responsible for the expenses, disbursements and
advances incurred by Xxxxxx Xxxxx Xxxxxx & Xxxxxxx, LLP and
Subsidiary shall be responsible for the expenses,
disbursements and advances incurred by Xxxxxxxxx & Dreidame
Co., LPA.
4.2 The Escrow Agents may resign and be discharged from
their duties hereunder at any time by giving 10 days prior
written notice of such resignation to CSI Shareholders and
Xxxxxxx specifying the date which such resignation shall
take effect. Upon such notice, successor Escrow Agents
shall be appointed by the mutual consent of the CSI
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Shareholders and Xxxxxxx. CSI Shareholders and Xxxxxxx,
jointly, shall have the right at any time upon their mutual
consent to substitute new Escrow Agents by giving notice
thereof to the Escrow Agents then acting.
4.3 The Escrow Agents undertake to perform such duties only
as are specifically set forth herein and may conclusively
rely, and shall be protected in acting or refraining from
acting, on any written notice, instrument or signature
believed by them to be genuine and to have been signed or
presented by the proper party or parties duly authorized to
do so. The Escrow Agents shall have no responsibility for
the contents of any writing contemplated herein and may rely
without any liability upon the contents thereof.
4.4 The Escrow Agents shall not be liable for any action
taken or omitted by them in good faith and believed by them
to be authorized hereby or within the rights and powers
conferred upon them hereunder, nor for any action taken or
mistake of fact or error of judgment or for any acts or
omissions of any kind unless caused by their willful
misconduct or gross negligence. The Escrow Agents may
consult with legal counsel selected by them and shall not be
liable for any action taken or omitted by them in good faith
in accordance with the advice of such counsel.
4.5 Each party hereto agrees to indemnify the Escrow Agents
and hold them harmless against any all liabilities incurred
by them hereunder as a consequence of such party's action,
and the parties agree jointly to indemnify the Escrow Agents
and hold them harmless against any and all liabilities
incurred by them hereunder that are not a consequence of any
party's action, except for liabilities incurred by the
Escrow Agents resulting from their own willful misconduct or
gross negligence.
4.6 Escrow Agents shall not be responsible for the
identity, authority or rights of any person executing or
delivering, or purporting to execute or deliver, this Escrow
Agreement, or any document or security deposited hereunder,
or any endorsement thereon or assignment thereof, or for the
sufficiency, genuineness or validity of or title to any
document or security deposited with it hereunder, or any
assignment thereof.
4.7 In the event of any disagreement between Xxxxxxx and
the CSI Shareholders regarding the Escrow Agents'
actions or obligations hereunder or in the event of a
disagreement between the Escrow Agents, the Escrow Agents
shall, subject to the provisions of the Merger Agreement,
submit the question to an arbitrator to be appointed by the
American Arbitration Association for arbitration in
accordance with its rules, whose determination shall be
conclusive and binding to all parties to this Agreement.
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4.8 The parties to this Agreement acknowledge that CSI has
been and that the CSI Shareholders may hereafter be
represented by Xxxxxx Xxxxx Xxxxxx & Xxxxxxx, LLP and
Xxxxxxx has been and continues to be represented by
Xxxxxxxxx & Dreidame Co., L.P.A. and that such legal
entities and their respective individual attorneys may
continue to serve as legal counsel for the respective
parties to this Agreement.
4.9 Any action to be taken by the Escrow Agents hereunder
shall be done jointly.
SECTION 5 - MISCELLANEOUS
5.1 Nothing in this Escrow Agreement shall be deemed to
enlarge or diminish the rights and obligations of CSI
Shareholders and Xxxxxxx as set forth in the Merger
Agreement.
5.2 This Escrow Agreement shall be construed by and
governed in accordance with the laws of the State of South
Carolina.
5.3 Notices. All notices and other communications required
by this Agreement shall be in writing and shall be deemed
given if delivered by hand or mailed by registered mail or
certified mail, return receipt requested to the appropriate
party at the following address (or at such other address for
a party as shall be specified by notice pursuant to hereto):
(a) If to Pomeroy, to: Pomeroy Computer
Resources of South Carolina,
Inc.
c/x Xxxxxxx Computer
Resources, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
(b) If to CSI Shareholders, to: Xxxxxx X. Xxx
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxx
0 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
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(c) If to Escrow Agents, to: Xxxxxxxxx & Dreidame
Co., L.P.A.
000 Xxxxxx Xxxxxx, Xxxxx
0000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx
III
Xxxxxx Xxxxx Xxxxxx &
Xxxxxxx, LLP
0000 Xxxx Xxxxxx, Xxxxx
0000
X.X. Xxxxxx 0000
Xxxxxxxx, XX 00000
Attention: G. Xxxxxx
Xxxxxx
WITNESSES: POMEROY:
XXXXXXX COMPUTER
RESOURCES OF SOUTH
CAROLINA, INC.
_________________________
By:
_________________________________
_________________________
CSI SHAREHOLDERS:
_________________________
________________________________
XXXXXX X. XXX
_________________________
_________________________
________________________________
XXXXXX X. XXXXXXXX
_________________________
_________________________
_________________________________
XXXXXXX X. XXXX
_________________________
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ESCROW AGENTS:
XXXXXX XXXXX XXXXXX &
XXXXXXX, LLP
_________________________
By:
_________________________________
G. XXXXXX XXXXXX,
Partner
_________________________
XXXXXXXXX & DREIDAME CO.,
L.P.A.
_________________________ By:
__________________________________
XXXXX X. XXXXX III,
Treasurer
_________________________
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LD 92320-2
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