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EXHIBIT A
Execution Copy
ESCROW AGREEMENT
THIS AGREEMENT is entered into this 30th day of November, 1995, by and
among (i) PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation ("PSE"), (ii)
the holders (other than PSE) of 50,000 of the outstanding shares of capital
stock of Pioneer/Technologies Group, Inc., a Maryland corporation
("Technologies") (hereinafter collectively referred to as the "Shareholders"),
(iii) Xxxxx X. Xxxxxx (or any subsequent Shareholders Representative appointed
pursuant to the terms of the Merger Agreement, as hereinafter defined) as the
Shareholders Representative ("Shareholders Representative"), and (iv)
NationsBank, N.A., as Escrow Agent, a banking corporation with offices located
in the State of Maryland (the "Escrow Agent").
WITNESSETH:
WHEREAS, the Shareholders and PSE have entered into a Plan and
Agreement of Merger, dated as of the date hereof (the "Merger Agreement"),
providing for the acquisition by PSE from the Shareholders of all of the 50,000
issued and outstanding shares of Common Stock, $.10 per share par value (the
"Shares"), of Technologies which are owned by the Shareholders; and
WHEREAS, the Merger Agreement (a copy of which has been delivered to
the Escrow Agent) provides for the establishment of an escrow into which a
portion of the purchase price will be funded,
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to be released to the Shareholders (via the Shareholders Representative)
contingent upon the accuracy of the representations and warranties of
Technologies in the Merger Agreement and the observance and compliance by
Technologies of its obligations under the Merger Agreement, and from which PSE
is entitled to indemnification for certain matters; and
WHEREAS, the parties desire to establish this escrow to comply with the
terms of the Merger Agreement; and
WHEREAS, the Merger Agreement provides for the appointment by the
Shareholders of the Shareholders Representative to act on behalf of the
Shareholders in connection with this Agreement;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Escrow Fund.
Reference hereby is made to Article 9 of the Merger Agreement
for a statement of PSE's right to seek indemnification from the Escrow Fund (as
hereinafter defined). Pursuant to the terms of the Merger Agreement, a portion
of the purchase price thereunder, in the amount of $2,000,000 (the "Escrow
Fund"), shall be deposited with the Escrow Agent on January 4, 1996. Such Escrow
Fund shall be released to the Shareholders (via the Shareholders Representative)
in accordance with the terms of this Escrow Agreement, contingent upon the
accuracy of the representations and
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warranties of Technologies in the Merger Agreement and the observance and
compliance by Technologies with its obligations under the Merger Agreement, and
subject to indemnification of PSE from the Escrow Fund for certain matters. The
Escrow Fund shall be available to indemnify PSE to the extent provided herein,
subject to the terms of the Merger Agreement, against and with respect to any
proven loss, damage, liability or expense to which PSE is entitled to
indemnification from the Escrow Fund, as set forth in the Merger Agreement. The
Escrow Fund shall be disbursed in accordance with Section 8 hereof.
2. Receipt of Escrow Fund Acknowledged by Escrow Agent.
The Escrow Agent shall acknowledge receipt of the $2,000,000
deposited as the Escrow Fund in writing to PSE and the Shareholders
Representative upon receipt of such funds from PSE on January 4, 1996.
3. Authority of Escrow Agent and Shareholders Representative.
PSE and Shareholders hereby authorize the Escrow Agent, and
the Escrow Agent hereby agrees, to hold, transfer and deliver the funds in the
Escrow Fund in accordance with and subject to the terms and conditions of this
Agreement, and Shareholders hereby further authorize and direct the Escrow Agent
to rely upon the terms and provisions of Section 4.5 of the Merger Agreement,
captioned Shareholders Representative, which are incorporated herein by
reference, pursuant to which Xxxxx X. Xxxxxx is appointed as the Shareholders
Representative with respect to this Agreement.
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4. Investment of Escrow Funds.
The funds deposited in the Escrow Fund shall be invested by
the Escrow Agent at the written direction of the Shareholders Representative in
(a) treasury bills or notes of the United States, (b) tax-exempt obligations of
the state of Maryland or any subdivision hereof carrying the highest quality
credit rating of any nationally-recognized rating agency, or (c) any other
money-market investment if such money-market fund is invested primarily in U.S.
government obligations, PROVIDED, that no such investment shall mature more than
ninety (90) days after the date when made. The Escrow Agent shall be under no
obligation to the Shareholders Representative or to PSE with respect to
investments so designated. Any income earned by investment of the funds in the
Escrow Fund shall be accounted for by the Escrow Agent in a written monthly
statement to the parties hereto and distributed by the Escrow Agent
semi-annually in accordance with its customary banking practices to the
Shareholders Representative.
5. Indemnification of PSE From Escrow Fund.
If PSE shall have any claim for which it seeks indemnification
provided for in Article 9 of the Merger Agreement, PSE shall notify the
Shareholders Representative and the Escrow Agent thereof in writing, and include
in such notice a description in reasonable detail of all the facts upon which
such claim is based and the amount thereof (an "Indemnification Claim"). PSE and
the Shareholders Representative shall act in good faith in dealing
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with any matter which may give rise to a claim for indemnification or
reimbursement from the Escrow Fund.
6. Payment of Indemnification From Escrow Fund Without Objection
From Shareholders Representative.
If the Escrow Agent is notified by PSE that no written
objection was made by the Shareholders Representative within thirty (30) days
from the date of receipt of an Indemnification Claim by the Shareholders
Representative and unless the Escrow Agent otherwise receives a written notice
of objection from the Shareholders Representative as provided in Section 7 of
this Agreement within said thirty (30) day period after receipt of such
Indemnification Claim by the Shareholders Representative, the Escrow Agent shall
disburse to PSE that portion of the Escrow Fund specified in the Indemnification
Claim of PSE pursuant to the terms of the Indemnification Claim. The amount
disbursed shall include the income earned on such funds from the date of the
Indemnification Claim pursuant to Section 5 of this Agreement to the date of
disbursement.
7. Obligation of Escrow Agent Upon Notice of Objection to
Indemnification by Shareholders Representative.
Any objection by the Shareholders Representative to an
Indemnification Claim must be received by the Escrow Agent within the time
period set forth in Section 6 of this Agreement, and such objection shall state
with reasonable specificity the basis for the objection. If the Shareholders
Representative objects to a disbursement to indemnify PSE from the Escrow Fund,
the Escrow Agent shall segregate the amount specified in the notice
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of objection, and hold the same in accordance with the terms of this Agreement
until either (i) the rights of the Shareholders Representative and PSE thereto
have been agreed upon in writing by the Shareholders Representative and PSE and
such writing has been delivered to the Escrow Agent, (ii) the Escrow Agent
receives a written notice executed by PSE and the Shareholders Representative
stating that the claim has been settled by Arbitration (as defined in the Merger
Agreement) and directing disbursement, or (iii) a final certified order has been
received from a court having jurisdiction over the subject matter and
adjudicating such claim in accordance with the terms hereof, which order is no
longer subject to appeal, requiring any payment from the Escrow Fund in respect
of such claim.
8. Termination of Escrow Fund and Disbursement of Funds.
(a) At such time as the adjustments, if any, described in
Section 3.3 of the Merger Agreement have been determined (by mutual agreement or
dispute resolution), and payments, if required, have been made to PSE in
accordance therewith (the "Adjustment Date"), the Escrow Agent shall deliver to
the Shareholders Representative by wire transfer to an account designated in
writing by the Shareholders Representative an amount that is equal to (i)
$1,500,000, plus all amounts earned thereon and not already distributed pursuant
to this Agreement, minus (ii) an amount equal to the payments, if any, made from
the Escrow Fund to PSE (or any independent accountant or other party if dispute
resolution is required) in accordance with Section 3.3 of
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the Merger Agreement, minus (iii) all amounts distributed to PSE on or prior to
May 31, 1996, in satisfaction of Indemnification Claims, minus (iv) an amount
equal to the aggregate amount of all Indemnification Claims pending as of May
31, 1996. With respect to any amount specified in clause (iv), above, that
remains in escrow after the Adjustment Date, pending resolution of an
Indemnification Claim, any portion of such amount not distributed to PSE after
resolution of such Indemnification Claim in accordance with Sections 6 and 7 of
this Agreement shall promptly be distributed to the Shareholders Representative
upon such resolution. After May 31, 1996, except for pending Indemnification
Claims, if any, PSE shall be entitled to seek indemnification from the Escrow
Fund only for Tax Liabilities, and shall have no right to indemnification from
the Escrow Fund for any other matter.
(b) On December 31, 1998, the Escrow Agent shall deliver by
wire transfer to an account designated in writing by the Shareholders
Representative all remaining funds held in the Escrow Fund that are not subject
to the resolution of a pending Indemnification Claim (whether such
Indemnification Claim was pending as of May 31, 1996, and is still unresolved,
or whether such Indemnification Claim was asserted thereafter with respect to
Tax Liabilities). With respect to any amount that remains in escrow after
December 31, 1998, pending resolution of an Indemnification Claim, any portion
of such amount not distributed to PSE upon resolution of such Indemnification
Claim in accordance with Sections 6 and 7 of this Agreement shall promptly be
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distributed to the Shareholders Representative upon such resolution.
(c) With respect to any amount that is required to be
distributed pursuant to this Section 8, at the time such amount is to be
distributed (whether at the Adjustment Date, December 31, 1998, or upon
resolution of a pending Indemnification Claim), PSE and the Shareholders
Representative shall promptly, following the date such amount is to be
distributed or upon the resolution of such pending Indemnification Claim,
execute all instructions to the Escrow Agent necessary to ensure prompt
distribution to PSE and/or the Shareholders Representative, as applicable, of
the respective portions of any amounts of the Escrow Fund to which they are
entitled under this Section 8.
(d) All amounts distributed to the Shareholders
Representative, less any unpaid costs and expenses incurred by the Shareholders
Representative in his capacity as such and not covered by the Reserves (as
defined in the Merger Agreement), and any reasonable reserves for such costs or
expenses deemed necessary by the Shareholders Representative (which the
Shareholders Representative will be entitled to retain), shall be promptly
distributed by the Shareholders Representative to the Shareholders on a pro rata
basis, as set forth in Section 4.2(b)(ii) of the Merger Agreement.
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9. Notice.
All notices or other communications required to be given
hereunder shall be in writing and shall be deemed to be given if delivered by
hand or mailed, certified or registered mail, postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by notice given pursuant hereto):
If to PSE to:
Pioneer-Standard Electronics, Inc.
0000 Xxxx 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, President and CEO
With a copy of such Notice to:
Xxxxxx, Halter & Xxxxxxxx
0000 XxXxxxxx Xxxxxxxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
If to the Shareholders Representative to:
Xxxxx X. Xxxxxx
c/o Pioneer-Standard of Maryland, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
With a copy of such Notice to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
If to Escrow Agent to:
NationsBank, N.A.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx Xxxxx
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Any notice or other communication hereunder shall not be deemed to have been
received until actually received.
10. Cost and Expenses.
The costs and expenses (other than legal fees of the
Shareholders) of establishing and maintaining the Escrow Fund hereunder,
including fees and expenses of the Escrow Agent, shall be borne by PSE. The
annual escrow fee to be charged by the Escrow Agent shall be an amount equal to
twenty basis points of the original Escrow Fund (i.e., based upon the original
Escrow Fund of $2,000,000, such escrow fee shall be $4,000 per year).
11. Rights and Obligations of Escrow Agent.
(a) The duties of the Escrow Agent are only such as are
herein specifically provided, and it shall incur no liability whatever except
for gross negligence, willful misconduct or failure to have acted in good faith.
(b) The Escrow Agent shall not be required to defend any
legal proceedings which may be instituted against it (other than legal
proceedings based upon the alleged gross negligence or willful misconduct of the
Escrow Agent or its failure to have acted in good faith) in respect of the
subject matter of this Agreement unless requested so to do by PSE and the
Shareholders Representative, and with respect thereto the Escrow Agent shall be
indemnified to its satisfaction against the cost and expense of such defense.
The Escrow Agent shall not be required to institute legal proceedings of any
kind. It shall have no responsibility for the genuineness or validity of any
document or
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other item deposited with it or presented to it pursuant to this Agreement, and
it shall be fully protected in acting in accordance with any written
instructions given to it hereunder and believed by it to have been signed by the
proper parties.
(c) The Escrow Agent shall be entitled to indemnification
for, and be held harmless against, any loss, liability or expense incurred
without gross negligence, willful misconduct or bad faith on the part of the
Escrow Agent, and arising out of or in connection with the acceptance or
administration of this Agreement. Any such indemnification amounts shall be paid
one-half by PSE and one-half out of the Escrow Fund.
(d) Either PSE or the Shareholders Representative may
examine the Escrow Fund during normal business hours at the office of said
Escrow Agent.
(e) This Agreement is a personal one, the duty of the Escrow
Agent being only to the parties hereto, their heirs, personal representatives or
assigns, and to no other person whomsoever.
(f) Escrow Agent may rely or act upon order or directions
signed by PSE or the Shareholders Representative, or bearing a signature or
signatures believed by it to be genuine.
(g) In case the Escrow Fund shall be attached, garnished, or
levied upon any court order, or the delivery thereof shall be stayed or enjoined
by an order of court, or any order, judgment or decree shall be made or entered
by any court order affecting the Escrow Fund, or any part thereof, said Escrow
Agent
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hereby is expressly authorized in its sole direction, to obey and comply with
all writs, orders or decrees so entered or issued, which it is advised by legal
counsel of its own choosing is binding upon it, whether with or without
jurisdiction, and in case said Escrow Agent obeys or complies with any such
writ, order or decree it shall not be liable to any of the parties hereto or to
any other person, firm or corporation, by reason of such compliance
notwithstanding such writ, order or decree be subsequently reversed, modified,
annulled, set aside or vacated.
(h) In case said Escrow Agent becomes involved in litigation
on account of the Escrow Fund or of this Agreement, it shall have the right to
retain counsel and the parties hereto jointly and severally agree to pay to said
Escrow Agent on demand, its reasonable charges, counsel and attorneys' fees,
disbursements, and expenses in connection with such litigation.
(i) Escrow Agent reserves the right to resign at any time by
giving written notice of resignation, specifying the effective date thereof.
Within thirty (30) days after receiving the aforesaid notice, PSE and the
Shareholders Representative agree to appoint a successor Escrow Agent to which
the Escrow Agent may distribute the property then held hereunder, and prior to
such distributions, PSE shall pay the Escrow Agent's fees, costs and expenses.
If a successor Escrow Agent has not been appointed and has not accepted such
appointment by the end of the thirty (30) day period, the Escrow Agent may apply
to a court of competent jurisdiction for the appointment of a successor Escrow
Agent, and
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the costs, expense and reasonable attorneys' fees which are incurred in
connection with such a proceeding shall be paid by the party or parties to the
Agreement responsible for the failure to select a successor Escrow Agent within
such thirty (30) day period.
(j) In case conflicting demands are made upon it for any
situation not addressed in this Agreement, Escrow Agent may withhold performance
of this escrow until such time as said conflicting demands shall have been
withdrawn or the rights of the respective parties shall have been settled by
court adjudication, arbitration, joint order or otherwise.
12. Governing Law.
This Agreement is being delivered in Maryland and shall be
governed by and construed in accordance with the laws of that State. It shall be
binding upon and inure to the benefit of all parties hereto, their respective
successors, assigns, heirs, executors and legal representatives.
13. Headings.
The section headings and captions appearing in this Agreement
have been inserted for convenience only, and shall be given no substantive
meaning or significance whatsoever in construing the terms and conditions of
this Agreement.
14. Severability.
If any provision of this Agreement shall be held
unenforceable, invalid or void to any extent for any reason, such provision
shall remain in force and effect to the maximum extent allowable, if any, and
the enforceability or validity of the
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remaining provisions of this Agreement shall not be affected thereby.
15. Amendments.
The terms of this Agreement may be altered, amended, modified
or revoked only by an instrument in writing signed by PSE and the Shareholders
Representative.
16. Construction.
Words used in the singular number may indicate the plural and
the plural may include the singular.
17. Assignment.
This Agreement shall not be assignable by any party without
the express prior written consent of all of the other parties hereto.
18. Entire Agreement.
This Agreement constitutes the entire Agreement between the
Escrow Agent and the other parties hereto in connection with the subject matter
of this escrow, and no other agreement entered into between the parties, or any
of them, shall be considered as adopted or binding, in whole or in part, upon
the Escrow Agent notwithstanding that any such other agreement may be deposited
with Escrow Agent or the Escrow Agent may have knowledge thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President and CEO
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Xxxxx X. Xxxxxx Xxxxxx Xxxxx
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Xxx X. Xxxx Xxx Xxxxx
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Xxxxxxx Xxxx Xxxxx Xxxxxxx
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Xxxxxxx X. Xxxxx Xxxxxx Xxxxxx
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Xxxx X. Xxxxxxx Xxxxx Xxxxx
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Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxx
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Xxxxxxx Xxxxxxxx Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
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Xxxxxxx X. XxXxxxxxx Xxxxxxx Xxxxxxx
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Xxxxxxx X. Xxxxx Xxxxx Xxxxx
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Xxxxx X. Xxxxxxx Xxxx X. Xxxxxx
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Xxxxxx Xxxxxx
"Shareholders"
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
"Shareholders Representative"
NationsBank, N.A., as Escrow Agent
By
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Title
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"Escrow Agent"
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