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EXHIBIT 10.30
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is entered into as of May 1,
1998, by and among TEKGRAF, INC., a Delaware corporation (the "Purchaser"),
TEKGRAF SUB II, INC., a Georgia corporation ("Acquisition Sub"), MARTEC, INC., a
California corporation (the "Company"), Xxxx Xxxxx (the "Company Shareholder"),
and First Union National Bank, a national banking association (the "Escrow
Agent").
WHEREAS, the Purchaser and the Company have entered into an Agreement
and Plan of Merger (the "Merger Agreement") by and among the Company, the
Company Shareholder, Acquisition Sub and the Purchaser.
WHEREAS, the Merger Agreement provides that escrow accounts will be
established to secure the Company Shareholder's guaranty with respect to the
Warranted Pre-Tax Profit and the Warranted Tangible Net Asset Value of the
Company (each as defined in the Merger Agreement) on the terms and conditions
set forth herein.
WHEREAS, the parties hereto desire to establish the terms and
conditions pursuant to which such escrow accounts will be established and
maintained.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given them in the Merger Agreement.
2. Consent of Company Shareholder. By virtue of the Company
Shareholder's approval of the Merger Agreement, the Company Shareholder has
consented to: (a) the establishment of this escrow to secure the Company
Shareholder's guaranty with respect to the Warranted Pre-Tax Profit and the
Warranted Tangible Net Asset Value of the Company in the manner set forth herein
and in the Merger Agreement, and (b) all of the other terms, conditions and
limitations in this Agreement and the Merger Agreement.
3. Escrow and Warranty.
(a) Escrow of Cash. On the Closing Date, the Purchaser shall
deposit with the Escrow Agent $150,000 of the Cash Consideration. The Escrowed
Cash shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party hereto. The Escrow Agent agrees to accept delivery of the Escrowed Cash
and to hold the Escrowed Cash in an interest-bearing escrow account (the "Cash
Escrow Account"), subject to the terms and conditions of this Agreement.
(b) Escrow of Shares. On the Closing Date, the Purchaser shall
deposit with the Escrow Agent a certificate for 60,000 Purchaser Shares, issued
in the name of the Escrow Agent or its nominee as escrow agent. The Escrowed
Shares shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party hereto. The Escrow Agent agrees to accept delivery of the Escrowed Shares
and to hold the Escrowed Shares in an escrow account (the "Share Escrow
Account"), subject to the terms and conditions of this Agreement.
(c) Warranty. The Company Shareholder has agreed in Article I of
the Merger Agreement that the Warranted Pre-Tax Profit and the Warranted
Tangible Net Asset Value of the Company shall not be less than the amounts set
forth in Section 1.3(a) of the Merger Agreement. The Escrowed Shares shall be
security for such warranty obligation of the Company Shareholder, subject to the
limitations, and in the manner provided, in this Agreement.
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(d) Dividends, Etc. Any securities distributable to the Company
Shareholder in respect of or in exchange for any of the Escrowed Shares, whether
by way of stock dividends, stock splits or otherwise, shall be delivered to the
Escrow Agent, who shall hold such securities in the Share Escrow Account. Such
securities shall be issued in the name of the Escrow Agent or its nominee, as
escrow agent, and shall be considered Escrowed Shares for purposes hereof. Any
cash dividends distributable to the Company Shareholder in respect of the
Escrowed Shares shall be distributed to the Company Shareholder.
(e) Voting of Shares. The Company Shareholder shall have the
right, in his sole discretion, to direct the Escrow Agent in writing as to the
exercise of any voting rights pertaining to the Escrowed Shares, and the Escrow
Agent shall comply with any such written instructions. In the absence of such
instructions, the Escrow Agent shall not vote any of the Escrowed Shares.
(f) Transferability. The interest of the Company Shareholder in
the Escrowed Shares shall not be assignable or transferable, other than by
operation of law. Notice of any such assignment or transfer by operation of law
shall be given to the Escrow Agent and the Purchaser, and no such assignment or
transfer shall be valid until such notice is given.
(g) Transfer of Shares Upon Waiver of Warranty. In the event the
Purchaser elects, pursuant to the provisions of Section 1.3(h) of the Merger
Agreement, to waive the Profit Shortfall Adjustment and the Profit Surplus
Adjustment, the Escrowed Shares shall be transferred, upon receipt of notice by
Escrow Agent from Purchaser of such waiver, into the escrow account created
pursuant to that certain Pledge, Security and Escrow Agreement dated as of even
date herewith, to be treated in all respects as escrow shares thereunder and the
Escrowed Shares in such case shall be distributed to the Company Shareholder
pursuant to the terms thereof.
4. Administration of Cash Escrow Account. The Escrow Agent shall
administer the Cash Escrow Account as follows:
(a) In the event that there is a Net Asset Value Shortfall
(including any Collection Shortfall or Inventory Shortfall that remains unpaid
ten (10) days after demand for payment thereof by Purchaser or Acquisition Sub
to the Company Shareholder), the Purchase Price shall be reduced by the amount
of such Net Asset Value Shortfall. Purchaser or Acquisition Sub shall provide to
the Escrow Agent and the Company Shareholder written notice of the amount of
such Net Asset Value Shortfall, and such amount, including any interest accrued
thereon (or such lesser amount as is then held in the Cash Escrow Account),
shall be paid to Purchaser by Escrow Agent within three (3) business days after
receipt of such notice.
(b) Any cash remaining in the Cash Escrow Account after payment of
the Net Asset Value Shortfall amount as set forth in subsection (a) above, shall
be distributed to the Company Shareholder pursuant to Section 6(a) hereof.
(c) In the event that the Net Asset Value Shortfall exceeds the
amount of Escrowed Cash available, Purchaser's recovery of cash pursuant to
Section 1.3 of the Merger Agreement shall not be limited to the amount of
Escrowed Cash available.
5. Administration of Share Escrow Account. The Escrow Agent shall
administer the Share Escrow Account as follows:
(a) In the event that the Warranted Pre-Tax Profit exceeds the
Actual Pre-Tax Profit for the Year (or the Alternative Year, if applicable), the
Purchase Price shall be reduced by the number of Purchaser Shares equal to the
Profit Shortfall Adjustment, subject to the Adjustment Floor. In such event,
Purchaser or Acquisition Sub and the Company Shareholder shall provide written
notice to the Escrow Agent of the amount of the Profit Shortfall Adjustment, and
the Escrow Agent shall transfer, deliver and assign to Purchaser such number of
Escrowed Shares held in the Share Escrow Account which have a Fair Market Value
equal to the Profit Shortfall Adjustment (or such lesser number of Purchaser
Shares as is then held in the Share Escrow Account). The Fair Market Value of
the Escrowed Shares to be distributed shall be determined in accordance with
Section 7 hereof.
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(b) On the first anniversary of the Closing Date (or if the
Alternative Year is elected, at the end of the Alternative Year), the Escrow
Agent shall distribute to the Company Shareholder, in accordance with Sections
6(a) and (b) below, one half of the Escrowed Shares remaining in the Share
Escrow Account not required for redistribution pursuant to Section 5(a) hereof.
Any Escrowed Shares remaining in the Share Escrow Account after payment of the
Profit Shortfall Adjustment amount as set forth in subsection (a) above, shall
be distributed to the Company Shareholder pursuant to Sections 6(a) and (b)
hereof.
(c) In the event that the Profit Shortfall Adjustment exceeds the
number of Escrowed Shares available, Purchaser's recovery of Purchaser Shares
pursuant to Section 1.3 of the Merger Agreement shall not be limited to the
amount of Escrowed Share available.
6. Release of Escrowed Cash and Escrowed Shares.
(a) Any distribution of all or a portion of the Escrowed Cash or
the Escrowed Shares to the Company Shareholder shall be made in accordance with
the percentages set forth opposite such holders' respective names on Exhibit B
attached hereto. Distributions of Escrowed Shares to the Company Shareholder
shall be made by mailing stock certificates to the Company Shareholder at his
addresses shown on Exhibit B (or such other address as may be provided in
writing to the Escrow Agent by any such holder).
(b) No fractional Escrowed Shares shall be distributed to
Purchaser or Company Shareholder pursuant to this Agreement. Instead, the number
of shares that Purchaser or Company Shareholder shall receive shall be rounded
down to the nearest whole number; and the Escrow Agent shall sell such number of
Escrowed Shares as is equal to the aggregate of the fractional shares that would
otherwise be distributed to the Purchaser or the Company Shareholder, as the
case may be, and shall distribute the proceeds of such sale to the Purchaser or
the Company Shareholder otherwise entitled to a fractional Escrowed Share based
upon the fraction of an Escrowed Share to which Purchaser or the Company
Shareholder is otherwise entitled, as the case may be.
7. Valuation of Escrowed Shares. For purposes of this Agreement, the
Fair Market Value of the Escrowed Shares to be released from the Share Escrow
Account after a final determination of the Profit Shortfall Adjustment shall be
determined based upon the average closing prices of the Purchaser's Common Stock
on the Nasdaq National Market System for the twenty trading days immediately
preceding the date of such final determination.
8. Investment of Funds. Escrow Agent shall invest and reinvest the
funds held in the Cash Escrow Account as the Company Shareholder and the
Purchaser jointly shall direct (subject to applicable minimum investment
requirements) by the furnishing of a joint written direction; provided, however,
that no investment or reinvestment may be made except in the following:
(a) direct obligations of the United States of America or
obligations the principal of and the interest on which are unconditionally
guaranteed by the United States of America;
(b) certificates of deposit issued by any bank, bank and trust
company, or national banking association (including Escrow Agent and its
affiliates), which certificates of deposit are insured by the Federal Deposit
Insurance Corporation or a similar governmental agency;
(c) repurchase agreements with any bank, trust company, or
national banking association (including Escrow Agent and its affiliates); or
(d) any money market fund substantially all of which is invested
in the foregoing investment categories, including any money market fund managed
by Escrow Agent and any of its affiliates.
If Escrow Agent has not received a joint written direction at any time
that an investment decision must be made, Escrow Agent shall invest the Cash
Escrow Account, or such portion thereof as to which no joint written
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direction has been received, in investments described in clause (d) above. Each
of the foregoing investments shall be made in the name of Escrow Agent. No
investment shall be made in any instrument or security that has a maturity of
greater than six (6) months. Notwithstanding anything to the contrary contained
herein, Escrow Agent may, without notice to the Purchaser or the Company
Shareholder, sell or liquidate any of the foregoing investments at any time if
the proceeds thereof are required for any release of funds permitted or required
hereunder, and Escrow Agent shall not be liable or responsible for any loss,
cost or penalty resulting from any such sale or liquidation. With respect to any
funds received by Escrow Agent for deposit into the Cash Escrow Account or any
joint written direction received by Escrow Agent with respect to investment of
any funds in the Cash Escrow Account after ten o'clock, a.m., Atlanta, Georgia,
time, Escrow Agent shall not be required to invest such funds or to effect such
investment instruction until the next day upon which banks in Atlanta, Georgia
are open for business.
9. Amounts Payable by Company Shareholder. The amounts payable by the
Company Shareholder under this Agreement (i.e., the fees and expenses of
arbitrators payable pursuant to Section 17, the fees of the Escrow Agent payable
pursuant to Section 15 and the indemnification obligations pursuant to Section
14 shall be payable solely as follows. The Company Shareholder shall notify the
Escrow Agent of any such amount payable by the Company Shareholder as soon as
they become aware that any such amount is payable, with a copy of such notice to
the Purchaser or the Company Shareholder, as the case may be. On the sixth
business day after the delivery of such notice, the Escrow Agent shall sell such
number of Escrowed Shares (up to the number of Escrowed Shares then available in
the Escrow Account), subject to compliance with all applicable securities laws,
as is necessary to raise such amount, and shall disburse such proceeds to the
party to whom such amount is owed in accordance with the instructions of the
Company Shareholder; provided that if the Purchaser delivers to the Escrow Agent
(with a copy to the Company Shareholder), within five business days after
delivery of such notice by the Company Shareholder, a written notice contesting
the legitimacy or reasonableness of such amount, then the Escrow Agent shall not
sell Escrowed Shares to raise the disputed portion of such claimed amount, and
such dispute shall be resolved by the Purchaser and the Company Shareholder in
accordance with the procedures set forth in Section 17.
10. Termination. This Agreement shall terminate upon the distribution
by the Escrow Agent of all of the Escrowed Cash and all of the Escrowed Shares
in accordance with this Agreement; provided that the provisions of Sections 13,
14 and 15 shall survive such termination.
11. Notices. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered two business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid, or one business day after it is
sent via a reputable nationwide overnight courier service.
If to the Purchaser and/or the Acquisition Sub:
Tekgraf, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
If to the Company:
Martec, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
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If to the Company Shareholder:
Xxxx Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
If to the Escrow Agent:
First Union National Bank
Attn: Corporate Trust - GA9094
000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xx. Xxxxxx X. Xxxxx
Any party may give any notice, instruction or communication in
connection with this Agreement using any other means (including personal
delivery, telecopy or ordinary mail), but no such notice, instruction or
communication shall be deemed to have been delivered unless and until it is
actually received by the party to whom it was sent. Any party may change the
address to which notices, instructions or communications are to be delivered by
giving the other parties to this Agreement notice thereof in the manner set
forth in this Section 11.
12. Resignation and Removal of Escrow Agent. Escrow Agent may resign
from the performance of its duties hereunder at any time by giving ten (10)
days' prior written notice to the Purchaser and the Company Shareholder or may
be removed, with or without cause, by the Purchaser and the Company Shareholder,
acting jointly by furnishing a joint written direction to Escrow Agent, at any
time by the giving of ten (10) days' prior written notice to Escrow Agent. Such
resignation or removal shall take effect upon the appointment of a successor
Escrow Agent as provided hereinbelow. Upon any such notice of resignation or
removal, the Purchaser and the Company Shareholder jointly shall appoint a
successor Escrow Agent hereunder, which shall be a commercial bank, trust
company or other financial institution with a combined capital and surplus in
excess of $5,000,000. Upon the acceptance in writing of any appointment as
Escrow Agent hereunder by a successor Escrow Agent, such successor Escrow Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Escrow Agent, and the retiring Escrow
Agent shall be discharged from its duties and obligations under this Escrow
Agreement, but shall not be discharged from any liability for actions taken as
Escrow Agent hereunder prior to such succession. After any retiring Escrow
Agent's resignation or removal, the provisions of this Escrow Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrowed Cash and the Escrowed Shares and
shall pay all funds and deliver all shares held by it in the Cash Escrow Account
and the Share Escrow Account to the successor Escrow Agent, after making copies
of such records as the retiring Escrow Agent deems advisable and after deduction
and payment to the retiring Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by the retiring Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.
13. Liability of Escrow Agent.
(a) Escrow Agent shall have no liability or obligation with
respect to the Escrowed Cash or the Escrowed Shares except for Escrow Agent's
willful misconduct or gross negligence. Escrow Agent's sole responsibility shall
be for the safekeeping, investment, and disbursement of the Escrowed Cash or the
Escrowed Shares in accordance with the terms of this Escrow Agreement. Escrow
Agent shall have no implied duties or obligations and shall not be charged with
knowledge or notice of any fact or circumstance not specifically set forth
herein. Escrow Agent may rely upon any instrument, not only as to its due
execution, validity and effectiveness, but also as to the truth and accuracy of
any information contained therein, which Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by the person or parties
purporting to sign the same and to conform to the provisions of this Escrow
Agreement. In no event shall Escrow Agent be liable for incidental, indirect,
special, consequential or punitive damages. Escrow Agent shall not be obligated
to take any legal action or commence any proceeding in connection with the
Escrowed Cash or the Escrowed Shares, any account in which
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Escrowed Cash or the Escrowed Shares are deposited, this Escrow Agreement or the
Merger Agreement, or to appear in, prosecute or defend any such legal action or
proceeding. Escrow Agent may consult legal counsel selected by it in the event
of any dispute or question as to the construction of any of the provisions
hereof or of any other agreement or of its duties hereunder, or relating to any
dispute involving any party hereto, and shall incur no liability and shall be
fully indemnified from any liability whatsoever in acting in accordance with the
opinion or instruction of such counsel. Purchaser and the Company Shareholder,
jointly and severally, shall each promptly pay, upon demand, one-half of the
reasonable fees and expenses of any such counsel.
(b) The Escrow Agent is authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
Escrowed Cash or the Escrowed Shares, without determination by the Escrow Agent
of such court's jurisdiction in the matter. If any portion of the Escrowed Cash
or the Escrowed Shares is at any time attached, garnished or levied upon under
any court order, or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any court order, or
in case any order, judgment or decree shall be made or entered by any court
affecting such property or any part thereof, then and in any such event, the
Escrow Agent is authorized, in its sole discretion, to rely upon and comply with
any such order, writ, judgment or decree which it is advised by legal counsel
selected by it is binding upon it without the need for appeal or other action;
and if the Escrow Agent complies with any such order, writ, judgment or decree,
it shall not be liable to any of the parties hereto or to any other person or
entity by reason of such compliance even though such order, writ, judgment or
decree may be subsequently reversed, modified, annulled, set aside or vacated.
14. Indemnification of Escrow Agent. From and at all times after the
date of this Escrow Agreement, Purchaser and the Company Shareholder, jointly
and severally, shall, to the fullest extent permitted by law and to the extent
provided herein, indemnify and hold harmless Escrow Agent and each director,
officer, employee, attorney, agent and affiliate of Escrow Agent (collectively,
the "Indemnified Parties") against any and all actions, claims (whether or not
valid), losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever (including without limitation reasonable attorneys' fees, costs and
expenses) incurred by or asserted against any of the Indemnified Parties from
and after the date hereof, whether direct, indirect or consequential, as a
result of or arising from or in any way relating to any claim, demand, suit,
action or proceeding (including any inquiry or investigation) by any person,
including, without limitation, Purchaser and the Company Shareholder, whether
threatened or initiated, asserting a claim for any legal or equitable remedy
against any person under any statute or regulation, including, but not limited
to, any federal or state securities laws, or under any common law or equitable
cause or otherwise, arising from or in connection with the negotiation,
preparation, execution, performance or failure of performance of this Escrow
Agreement or any transactions contemplated herein, whether or not any such
Indemnified Party is a party to any such action, proceeding, suit or the target
of any such inquiry or investigation; provided, however, that no Indemnified
Party shall have the right to be indemnified hereunder for any liability finally
determined by a court of competent jurisdiction, subject to no further appeal,
to have resulted solely from the gross negligence or willful misconduct of such
Indemnified Party. If any such action or claim shall be brought or asserted
against any Indemnified Party, such Indemnified Party shall promptly notify
Purchaser and the Company Shareholder in writing, and Purchaser and the Company
Shareholder shall assume the defense thereof, including the employment of
counsel and the payment of all expenses. Such Indemnified Party shall, in its
sole discretion, have the right to employ separate counsel (who may be selected
by such Indemnified Party in its sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Indemnified Party, except that Purchaser and/or the
Company Shareholder shall be required to pay such fees and expenses if (a)
Purchaser and/or the Company Shareholder agree to pay such fees and expenses, or
(b) Purchaser and/or the Company Shareholder shall fail to assume the defense of
such action or proceeding or shall fail, in the sole discretion of such
Indemnified Party, to employ counsel satisfactory to the Indemnified Party in
any such action or proceeding, (c) Purchaser or the Company Shareholder is the
plaintiff in any such action or proceeding or (d) the named or potential parties
to any such action or proceeding (including any potentially impleaded parties)
include both Indemnified Party and the Company Shareholder and/or Purchaser, and
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to the Company Shareholder or Purchaser. Purchaser and the
Company Shareholder shall be jointly and severally liable to pay fees and
expenses of counsel pursuant to the preceding sentence, except that any
obligation to pay under clause (a) shall apply only to the party so agreeing.
All such fees and expenses payable by the Company Shareholder and/or Purchaser
pursuant to the foregoing sentence shall be paid from time to
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time as incurred, both in advance of and after the final disposition of such
action or claim. All of the foregoing losses, damages, costs and expenses of the
Indemnified Parties shall be payable by Purchaser and the Company Shareholder,
jointly and severally, upon demand by such Indemnified Party. The obligations of
Purchaser and the Company Shareholder under this Section 14 shall survive any
termination of this Escrow Agreement, and the resignation or removal of Escrow
Agent shall be independent of any obligation of the Escrow Agent.
The parties agree that neither the payment by Purchaser or the
Company Shareholder of any claim by Escrow Agent for indemnification hereunder
nor the disbursement of any amounts to Escrow Agent from the Cash Escrow Account
or the Share Escrow Account in respect of a claim by Escrow Agent for
indemnification shall impair, limit, modify, or affect, as between Purchaser and
the Company Shareholder, the respective rights and obligations of Purchaser, on
the one hand, and the Company Shareholder, on the other hand, under the Merger
Agreement.
15. Fees and Expenses of Escrow Agent. Purchaser and the Company
Shareholder shall compensate Escrow Agent for its services hereunder and, in
addition, shall reimburse Escrow Agent for all of its reasonable out-of-pocket
expenses, including attorneys' fees, travel expenses, telephone and facsimile
transmission costs, postage (including express mail and overnight delivery
charges), copying charges and the like. All of the compensation and
reimbursement obligations set forth in this Section 15 shall be payable one-half
each by Purchaser and the Company Shareholder, jointly and severally, upon
demand by Escrow Agent. The obligations of Purchaser and the Company Shareholder
under this Section 15 shall survive any termination of this Escrow Agreement and
the resignation or removal of Escrow Agent.
16. General.
(a) Governing Law, Assigns. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Georgia
without regard to conflict-of-law principles and shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns.
(b) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) Entire Agreement. Except for those provisions of the Merger
Agreement referenced herein, this Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or of
any breach of any provision of this Escrow Agreement shall be effective unless
in writing. No waiver by any party of any such condition or breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
(e) Amendment. This Agreement may be amended only with the written
consent of the Purchaser, the Escrow Agent and the Company Shareholder.
17. Arbitration; Attorneys' Fees.
(a) The parties agree to use reasonable efforts to resolve any
dispute arising out of this Agreement, but should a dispute remain unresolved
ten (10) days following notice of the dispute to the other party (but in no
event prior to said ten (10) days, except as specifically provided otherwise
herein), such dispute shall be finally settled by binding arbitration in
Atlanta, Georgia in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association (the "AAA") or such other
mediation or arbitration service as shall be mutually agreeable to the parties,
and judgment upon the award rendered by the arbitrator shall be final and
binding on the parties and may be entered in any court having jurisdiction
thereof; provided,
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however, that any party shall be entitled to appeal a question of law or
determination of law to a court of competent jurisdiction; and provided,
further, however, that the parties may first seek appropriate injunctive relief
prior to, and/or in addition to pursuing negotiation or arbitration. Such
arbitration shall be conducted by an arbitrator chosen by mutual agreement of
the parties, or failing such agreement, an arbitrator appointed by the AAA.
There shall be limited discovery prior to the arbitration hearing as follows:
(a) exchange of witness lists and copies of documentary evidence and documents
related to or arising out of the issues to be arbitrated, (b) depositions of all
party witnesses, and (c) such other depositions as may be allowed by the
arbitrator upon a showing of good cause. Depositions shall be conducted in
accordance with the Georgia Code of Civil Procedure and questions of evidence in
all hearings shall be resolved in accordance with the Federal Rules of Evidence.
The arbitrator shall be required to provide in writing to the parties the basis
for the award or order of such arbitrator, and a court reporter shall record all
hearings (unless otherwise agreed to by the parties), with such record
constituting the official transcript of such proceedings.
(b) In the event of arbitration or litigation filed or instituted
between the parties with respect to this Agreement, the prevailing party will be
entitled to receive from the other party all costs, damages and expenses,
including reasonable attorney's fees, incurred by the prevailing party in
connection with that action or proceeding whether or not the controversy is
reduced to judgment or award. The prevailing party will be that party who may be
fairly said by the arbitrator(s) or the court to have prevailed on the major
disputed issues.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
PURCHASER:
TEKGRAF, INC.
By: /s/ Xxx X. Xxxxxx
-----------------------------------
Xxx X. Xxxxxx, President
ACQUISITION SUB:
TEKGRAF SUB II, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx, Chairman
ESCROW AGENT:
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
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COMPANY:
MARTEC, INC.
By: /s/ Xxxx Xxxxx
---------------------------------
Xxxx Xxxxx, President
COMPANY SHAREHOLDER:
/s/ Xxxx Xxxxx (SEAL)
------------------------------
Xxxx Xxxxx
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EXHIBIT B
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Company Shareholder Percentage
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Xxxx Xxxxx 100%
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
10
