ASSET PURCHASE AGREEMENT
Exhibit 10.1-1
ASSET PURCHASE AGREEMENT (the "Agreement") made and entered into effective
as of the close of business October 31, 2000 by and among TEKGRAF, INC., a
Georgia corporation ("Seller"), MICRO ENVIRONMENTS, L.L.C., a Georgia limited
liability company ("Buyer"), and XXXXX LTD., a corporation organized under the
laws of the British Virgin Islands ("Xxxxx"). Buyer, Xxxxx and Seller are
sometimes referred to herein collectively as the "Parties" and individually as a
"Party", and Buyer and Xxxxx are sometimes referred to herein as the Buyer
Group.
RECITALS
WHEREAS, Xxxxx is a party to that certain lawsuit captioned Tekgraf, Inc.,
a Georgia corporation, Plaintiff, v. Xxxxx Ltd., Xxx X. Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxxx X. Xxxxxxxx, and Xxxx X. Xxxxxxxx, Defendants, pending in the Superior
Court of Xxxxxx County, Georgia, as Case No. 2000 CV 23746 (the "Lawsuit")
relating to the exercise of dissenters rights by Xxxxx and others; and
WHEREAS, Seller, through its "Tekgraf Systems" division, is engaged in the
business of the manufacture and sale of custom or "made to order" premium
servers and network workstations (the "Business") at its 0000 Xxxxxxx Xxxxx
facility in Norcross, Georgia (the "Facility"); and
WHEREAS, entering into this Agreement is in partial settlement of the
Lawsuit with respect to certain shares of Class A Common Stock (which were
formerly shares of Class B Common Stock), the fair value of which, among other
things, is the subject of the Lawsuit; and
WHEREAS, Xxxxx is the majority shareholder of Buyer, and Seller desires to
sell and Buyer desires to purchase substantially all of the operating assets
used by Seller in the Business, and Buyer is willing to assume certain
liabilities of Seller associated with the conduct of the Business; and
NOW, THEREFORE, in consideration of the recitals, representations,
warranties, conditions and covenants contained herein, the Buyer Group and
Seller agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Purchased Assets. On the terms and subject to the conditions and
exceptions contained herein, Seller agrees to sell, transfer, assign and deliver
to Buyer, and Buyer agrees to purchase at the Closing and on the Closing Date
(as each such term is hereinafter defined), all of Seller's right, title and
interest in and to the following assets and properties employed exclusively in
the conduct of the Business (collectively, the "Purchased Assets"):
1.1.1. Tangible Personal Property. The machinery and equipment,
parts and accessories, data processing and graphics hardware and software,
furniture, fixtures, computers, tools and other tangible personal property used
in the conduct of the Business and located at the Facility (the "Tangible
Personal Property").
1.1.2. Inventory. All of Seller's inventory, finished goods,
work-in-progress, raw materials and shipping supplies located at the Facility
and used or held for use in the conduct of the Business as the same may exist as
of the Closing Date (collectively, the "Inventory").
1.1.3. Accounts Receivable. The trade and other accounts receivable
and all notes, bonds and other evidences of indebtedness of and rights to
receive payments arising out of sales occuring in the conduct of the Business
existing as of the Closing Date (collectively, the "Accounts Receivable").
1.1.4. Certain Proprietary Rights. The copyrights, data processing
software, licenses, technology, trade secrets, know-how, customer lists,
customer files, inventions, formulations and formulation records, and other
proprietary information and rights (including all registrations and applications
therefor), if any, and the goodwill associated therewith, listed on Schedule
1.1.4.
1.1.5. Business Contracts. The oral and written contracts used or
held for use in the conduct of the Business to which Sellers are a party and
which are described on Schedule 1.1.5 (the "Business Contracts");
1.1.6. Leases. The leases and subleases of real property and
tangible personal property described in Schedule 1.1.6. as to which Seller is
the lessee or sublessee, together with any options to purchase the underlying
property and, with respect to real property, the improvements thereon, and in
each case all other rights, subleases, licenses, permits, deposits and profits
appurtenant to or related to such leases and subleases (the "Leases");
1.1.7. Licenses. To the extent their transfer is permitted under the
terms thereof or under applicable laws, the licenses, permits, provider numbers,
orders, franchises, registrations and approvals (including applications
therefor) used in the conduct of the Business including, without limitation,
those listed in Schedule 1.1.7 hereto (the "Business Licenses");
1.1.8. Books and Records. All books and records located at the
Facility and used in the conduct of the Business or otherwise relating to the
Assets (the " Books and Records"); and
1.1.9. Other Assets and Properties. All of the other assets and
properties of the Sellers located at the Facility and used or useful in the
conduct of the Business, excluding the Excluded Assets (the "Other Assets").
1.2. Excluded Assets. Notwithstanding anything in Section 1.1 to the
contrary, Seller shall not sell, transfer, assign or deliver to Buyer, and Buyer
shall not purchase, the following assets (collectively, the "Excluded Assets"):
1.2.1. Cash and Funds. Any of Seller's cash, xxxxx cash, cash on
deposit in banks or cash equivalents (classified as such in a manner consistent
with past practice in connection with compilations on the Seller's financial
statements), as of the Closing Date.
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1.2.2. Prepaid Expenses. Any expenses of the Business which are
unaccrued or not yet due, but which have been paid by Seller prior to the
Closing.
1.2.3. Accounting Software. The accounting software licensed and
used by the Business (the "Accounting Software").
2. CONSIDERATION
2.1. Purchase Price; Delivery. The purchase price for the Purchased Assets
shall equal the Net Book Value (as defined below) of the Business, minus $35,000
(the "Purchase Price"). At Closing, the Buyer Group shall pay for the Purchased
Assets by assumption of the Assumed Liabilities and shall relinquish in favor of
Seller any and all right title and interest to 293,334 Dissenter's Shares (as
defined below), together with a duly executed stock power endorsed in blank. The
number of Dissenter's Shares as to which the Buyer Group shall relinquish its
rights shall be adjusted in accordance with Section 2.2. As used in this
Agreement, the "Dissenter's Shares" shall mean shares of Class A Common Stock of
Seller (which prior to the January 21, 2000 special meeting of Seller's
stockholders were shares of Class B Common Stock), together with any and all
rights accorded to such shares by Article 13 of the Georgia Business Corporation
Code, including but not limited to, any and all rights to receive fair value for
such shares and interest thereon, and which among other things, are the subject
of the Lawsuit.
2.2 Share Adjustment. As soon as practicable after the Closing Date, but
in no event later than the 15th calendar day after the Closing Date, Seller
shall prepare, in a manner and on an accounting basis consistent with past
practice of the Seller as set forth in the financial statement of the Business
attached to Schedule 2.2, and deliver to Buyer a set of financial statements of
the Business dated as of October 31, 2000 (the "Adjustment Date") and a
statement (the "Closing Statement") showing the calculation of the Adjustment
Amount as of the Adjustment Date. The "Adjustment Amount" shall equal (i) the
net book value of the Business as of the Adjustment Date calculated in the
manner set forth in the financial statement of the Business attached to Schedule
2.2 (the "Net Book Value"), minus (ii) $35,000. If Seller does not receive
notice from Buyer disputing the Adjustment Amount within thirty (30) calendar
days after Buyer's receipt of the Closing Statement, then the Closing Statement
shall become final and binding on the Parties. If the Adjustment Amount is less
than $880,000, Seller shall release to the Buyer, subject to the Lawsuit,
Dissenter's Shares equal in value (based on a value of $3.00 per share) to the
difference between $880,000 and the Adjustment Amount. If the Adjustment Amount
is greater than $880,000, the Buyer shall promptly relinquish in favor of Seller
additional Dissenter's Shares equal in value (based on a value of $3.00 per
share) to the difference between the Adjustment Amount and $880,000.
2.3 Disputes Regarding Adjustment Amount. If Buyer disagrees with the
Closing Statement used to calculate the Adjustment Amount, Buyer shall notify
Seller of such disagreement in writing specifying in detail the particulars of
such disagreement within thirty (30) calendar days after Buyer's receipt of the
Closing Statement. Buyer and Seller shall use reasonable efforts for a period of
fifteen (15) calendar days after Buyer's delivery of such notice (or such longer
period as Buyer and Seller may mutually agree upon) to resolve any disagreements
raised by Buyer with respect to the Closing Statement. If, at the end of such
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period, Buyer and Seller do not resolve such disagreements, Buyer and Seller
shall jointly select an independent accounting firm of recognized national
standing to review the Closing Statement and resolve any remaining disagreements
regarding the Adjustment Amount. In the event Buyer and Seller cannot agree upon
an accounting firm, they shall choose the same by lot from those "Big 5"
accounting firms having no material relationship to Buyer or Seller and their
respective Affiliates and having offices in locations suitable to conduct such
review. The determination by such independent accounting firm shall be final,
binding and conclusive on the Parties and judgment may be entered thereon in a
court of competent jurisdiction. Buyer and Seller shall use reasonable efforts
to cause such independent accounting firm to make its determination within
thirty (30) calendar days after accepting its selection. The fees and expenses
of such independent accounting firm shall be borne by the non-prevailing Party.
2.4 Allocation of Purchase Price. Within sixty (60) days after the Closing
Date, Buyer and Seller shall use their reasonable best efforts to reach an
agreement regarding how the Purchase Price and the aggregate dollar amount of
the Assumed Liabilities shall be allocated among the Purchased Assets for tax
purposes. Upon having reached such an agreement, Buyer and Seller shall file all
tax returns and statements, forms and schedules in connection therewith
consistent with such allocation and shall take no position contrary thereto
unless required by law.
3. ASSUMPTION OF LIABILITIES BY BUYER
3.1. Assumed Liabilities. At the Closing, the Buyer shall assume and agree
to perform and discharge, when and as due, all debts, obligations or liabilities
of Seller related to the Business, whether accrued, absolute, contingent,
unliquidated, or otherwise, whether known or unknown to Seller (the "Assumed
Liabilities"). Buyer, jointly and severally, agrees to indemnify, defend and
hold harmless Seller (and its directors, officers, employees, successors and
assigns) from and against all claims, liabilities, damages, deficiencies,
judgments, settlements, costs of investigation or other expenses (including
interest, penalties and reasonable attorney's fees and disbursements) based
upon, arising out of or otherwise in respect of the Assumed Liabilities.
3.2. Excluded Liabilities. Except for the Assumed Liabilities, the Buyer
Group shall not assume or in any way become liable for, any debts, obligations
or liabilities of Seller or any of its affiliates (other than the Business), of
any kind or nature, including without limitation, bank overdrafts, checks in
process, intercompany payables or liabilities and any and all indebtedness
payable to any banks or financial institutions, whether accrued, absolute,
contingent or otherwise, or whether due or to become due, or otherwise, arising
out of events, transactions or facts which have occurred on or prior to the
Closing Date (collectively, the "Excluded Liabilities"). Seller agrees to pay,
perform and discharge when due the Excluded Liabilities and to indemnify, defend
and hold harmless Buyer Group (and its directors, officers, employees,
successors and assigns) from and against all claims, liabilities, damages,
deficiencies, judgments, settlements, costs of investigation or other expenses
(including interest, penalties and reasonable attorney's fees and disbursements)
based upon, arising out of or otherwise in respect of Seller's failure to so
pay, perform and discharge the Excluded Liabilities.
4. CLOSING. The Closing of the transactions contemplated by this Agreement (the
"Closing") shall be consummated at the offices of Xxxxxxx, Carton & Xxxxxxx, 000
Xxxxx Xxxxx
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Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000 at 10:00 a.m. on October 31, 2000, unless
Buyer and Seller shall otherwise mutually agree. The day of the Closing is
sometimes referred to herein as the "Closing Date". The Closing shall be deemed
effective as of the close of business on the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Buyer as follows:
5.1. Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia, and Seller
possesses all requisite corporate power and authority to carry on the Business
as presently conducted, and to own and operate the Business and the Purchased
Assets.
5.2. Qualification to Do Business. Seller is qualified to do business and
is in good standing in every jurisdiction in which the nature of the Business,
or the assets and properties owned or operated by it, makes such qualification
necessary.
5.3. Authorization; No Breach. The execution, delivery and performance of
this Agreement and all of the transactions contemplated herein have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement and the other documents and instruments to be delivered by Seller
pursuant hereto constitute the valid and binding obligations of Seller,
enforceable against it in accordance with their respective terms, subject as to
enforcement to usual equitable principles and except as limited by bankruptcy,
moratorium, insolvency or similar laws of general application affecting the
enforcement of creditors' rights.
5.4. Title to Properties. Except as set forth in Schedule 5.4, Seller has
good and marketable title to all of the Purchased Assets, free and clear of all
liens, claims, charges, set-offs, encumbrances or restrictions of every kind (a
"Lien"). The documents of transfer to be executed and delivered by Seller at
Closing will be sufficient to convey good and marketable title to the Purchased
Assets to Buyer.
5.5. No Violations; Consents and Approvals. Except as set forth on
Schedule 5.5, the execution and delivery by Seller of this Agreement, the
Ancillary Documents to which each is a party and the fulfillment of and
compliance with the respective terms hereof and thereof by Seller do not and
will not, (a) conflict with or result in a breach of the terms, conditions or
provisions of, (b) constitute a default or event of default under (with due
notice, lapse of time or both), (c) result in the creation of any Lien upon the
Assets, (d) give any third party the right to accelerate any obligation under,
(e) result in a violation of, or (f) require any authorization, consent,
approval, exemption or other action by or notice to any Person (including,
without limitation, any creditor, customer or supplier) pursuant to any
applicable laws, statutes, rules, regulations, ordinances, orders, requirements,
announcements and other binding actions (collectively, "Regulations") or
Contract to which Seller is subject. Seller has complied with all applicable
Regulations in connection with the execution, delivery and performance of this
Agreement, and the other agreements, instruments, certificates and documents
executed in connection herewith (collectively, the "Ancillary Documents") to
which each is a party and the transactions contemplated hereby and thereby.
Seller is not required to submit any notice, report, or other filing with any
governmental authority in connection with its execution or delivery of
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this Agreement, the Ancillary Documents to which it is a party or the
consummation of the transactions contemplated hereby and thereby. Except as set
forth on Schedule 5.5 hereof, no authorization, consent, approval, exemption or
notice is required to be obtained by Seller in connection with the execution,
delivery, and performance of this Agreement, the Ancillary Documents to which it
is a party and the transactions contemplated hereby and thereby.
5.6. Taxes. Seller has filed all federal and state reports, returns,
information returns and other documents (collectively, the "Tax Returns")
required to be filed with any federal or state taxing authorities (each a
"Taxing Authority", collectively, the "Taxing Authorities") in respect of all
relevant income taxes (including interest and penalties) applicable to its
business (collectively, the "Taxes") and in accordance with all tax sharing
agreements to which Seller may be a party. All Taxes required or anticipated to
be paid for all periods prior to and including the Closing Date have been paid
or are adequately provided for in Seller's financial statements, including any
Taxes that may be due or claimed to be due as a result of the consummation of
the transactions contemplated by this Agreement. All Taxes which are required to
be withheld or collected by Seller have been duly withheld or collected and, to
the extent required, have been paid to the proper Taxing Authority or properly
segregated or deposited as required by applicable laws. There are no Liens for
Taxes upon any property or assets of Seller except for Liens for Taxes not yet
due and payable.
5.7. Litigation. Except as set forth on Schedule 5.7, there is no Claim
pending or, to the Knowledge of Seller, threatened against, relating to or
affecting Seller, the Business, or any of the Assets nor is there any order
outstanding against Seller, the Business or any of the Assets.
5.8. Undisclosed Liabilities. To the Knowledge of Seller, there is no
liability, whether accrued, absolute or contingent, of a type required to be
reflected on the balance sheet of the Business or described in the notes thereto
consistent with past practice of the Seller that will not be in the Closing
Statement.
5.9. Disclaimer of Warranties. THE PURCHASED ASSETS ARE BEING ACQUIRED BY
BUYER "AS IS," "WHERE IS," AND WITH ALL FAULTS AND (A) SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, WITH
RESPECT TO ALL OR ANY OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY
REPRESENTATION WITH RESPECT TO THE DESIGN, QUALITY, DURABILITY, OR SUITABILITY
OF THE PURCHASED ASSETS FOR A PARTICULAR PURPOSE, AND (B) SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, IN
CONNECTION WITH THE VALUE, CONDITION, FITNESS, OR USE OF THE ASSETS OR THE
PRESENCE, ABSENCE OR CONDITION OF ANY ENVIRONMENTAL CONTAMINANT OR THE PRESENCE
OR EXISTENCE OF ANY ENVIRONMENTAL CONDITION.
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6. REPRESENTATIONS AND WARRANTIES OF THE BUYER GROUP. The Buyer Group represents
and warrants to Seller as follows:
6.1. Organization. Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Georgia.
6.2. Authorization. The execution, delivery and performance of this
Agreement and all of the transactions contemplated herein have been duly
authorized by all necessary corporate action on the part of the Buyer Group.
This Agreement and the other documents and instruments to be delivered by the
Buyer Group pursuant hereto constitute the valid and binding obligations of the
Buyer Group, enforceable against the Buyer Group in accordance with their
respective terms subject as to enforcement to usual equitable principles and
except as limited by bankruptcy, moratorium, insolvency or similar laws of
general application affecting the enforcement of creditors' rights. The Buyer
Group is not subject to any restriction or other provision contained in its
Articles of Organization or operating agreement, or any agreement, instrument,
order, judgment, decree or other restriction that would prevent the consummation
of the transactions contemplated by this Agreement, or that would result in the
creation of any lien, mortgage, security interest, charge or other encumbrance
upon its assets.
No notice to, filing with, or authorization, consent or approval of any
public body or authority or other person or entity is required of Buyer Group in
connection with the execution, delivery and performance by Buyer Group of this
Agreement or the other documents and instruments to be delivered by Buyer Group
pursuant hereto or the consummation by Seller of the transactions contemplated
herein or therein.
6.3. No Consent or Approval Required. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental or
regulatory authority or other person or entity is required of the Buyer Group in
connection with the execution, delivery and performance by the Buyer Group of
this Agreement or the other documents and instruments to be delivered by the
Buyer Group pursuant to this Agreement or the consummation by the Buyer Group of
any other transaction contemplated hereby.
6.4 Dissenter's Shares. The Dissenter's Shares delivered at Closing are
shares as to which dissenters' rights have been asserted and which are the
subject of the Lawsuit.
6.5 Stock. Xxxxx represents and warrants to the Seller that, subject to
the tender of the Dissenter's Shares to perfect dissenter's rights, Xxxxx has
good and marketable title to the Dissenter's Shares; free and clear of all
liens, encumbrances, claims, options, rights of first refusal, warrants,
conversion rights and other agreements (collectively, the "Liens"). Upon the
Closing of this Agreement, the Seller shall acquire good and marketable title to
the Dissenter's Shares delivered by Xxxxx to Seller in connection with this
Agreement (as adjusted pursuant to Section 2.2 hereof), free and clear of all
Liens.
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7. ADDITIONAL AGREEMENTS OF THE PARTIES. Buyer and Seller agree as follows:
7.1. Litigation Moratorium. The Parties agree to suspend and not pursue
any and all pending litigation or legal proceedings with respect to the Lawsuit,
until January 1, 2001. The Parties further agree to use their best efforts as
provided in Section 7.4 to take any action necessary to obtain Court approval of
a pretrial litigation schedule in the Lawsuit that is consistent with this
moratorium and preserves the Parties' rights to pursue the Lawsuit thereafter,
including but not limited to adequate time in which to complete discovery. At
Closing Xxxxx agrees to deliver signed, written agreements of its co-defendants
to the Lawsuit to all of the foregoing moratorium provisions.
7.2. Uncontested Stock. Xxxxx agrees to waive any dissenter's rights that
Xxxxx may have with regard to the Dissenter's Shares delivered by Xxxxx to
Seller in connection with this Agreement (as adjusted pursuant to Section 2.2
hereof) and shall deliver a Release as provided in Section 9.3.4. with respect
to such shares. Xxxxx shall retain all rights including, without limitation, its
dissenters rights under applicable state corporate law, with respect to any and
all of the Dissenters Shares that are not delivered pursuant to this Agreement
or that are delivered and released by Seller pursuant to Section 2.2.
7.3. Value of Dissenter's Shares. The Parties agree that the value
attributed to the Dissenter's Shares for purposes of this Agreement may not be
used in any manner in any pending or future litigation between the parties,
including without limitation, the Lawsuit, as evidence or argument in support of
the value of Seller's Class A Common Stock or Class B Common Stock previously
tendered to the Seller by the defendants in the Lawsuit in the exercise of their
dissenter's rights. At Closing, Xxxxx agrees to deliver signed, written
agreements of its co-defendants to the Lawsuit to the foregoing provision.
7.4. Best Efforts; Further Assurances. Subject to the terms and conditions
herein provided, the Buyer Group and Seller agree to use reasonable commercial
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. The Buyer Group and Seller will each use their respective
reasonable commercial efforts to obtain consents of all third parties and
governmental bodies necessary for the consummation of the transactions
contemplated by this Agreement. In case at any time after Closing any further
actions, documents or instruments are necessary to carry out the purposes of
this Agreement, the Buyer Group and Seller shall take all such actions and
prepare and execute all such documents or instruments without any further
consideration therefor.
7.5. Seller's Access to Records After Closing. For a period of three years
after the filing of Seller's 2000 income tax return and thereafter upon Seller's
written request and Buyer's approval, the Buyer shall give, or cause to be
given, to Seller, its successors and representatives, during normal business
hours and at Seller's or their successor's expense, such reasonable access to
the assets, properties, contracts, books, records, files, documents and affairs
of the Buyer as is reasonably necessary to allow Seller or Seller's successors
to obtain information in the Buyer's possession with respect to the Business up
to and including the Closing Date, and to allow Seller to
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obtain information with respect to any claims, demands, audits, suits or matters
of a similar nature made by or against Seller as the previous owner and operator
of the Business, and (at Seller's or its successor's expense) to make copies of
such information to the extent reasonably necessary.
7.6. Certain Employee Matters.
7.6.1. Offer of Employment. Effective immediately after the Closing,
Buyer shall offer employment to each person employed on the Closing Date
(including without limitation, employees who are on approved leaves of absence,
including, but not limited to, short-term and long-term disability leave, or who
are on a leave related to a workers' compensation claim, all of whom will be
offered employment upon their return from said leave of absence) in connection
with the operations of the Business (an "Employee"). Such offers of employment
shall be at compensation and benefit levels substantially equivalent in the
aggregate to compensation and benefit levels enjoyed by Employees of the
Business immediately prior to the Closing.
7.6.2 Plans. If permitted pursuant to the terms of Buyer's Welfare
Plans (as hereinafter defined), if any, Buyer's welfare and fringe benefit
plans, programs, policies or arrangements ("Buyer's Welfare Plans") made
available to Employees shall treat service by Employees with Seller in the same
manner as service with Buyer for purposes of eligibility to participate in such
plans, programs, policies or arrangements, and Buyer shall use commercially
reasonable efforts to cause any limitations thereunder on coverage of
pre-existing conditions to be waived with respect to Employees and their
eligible dependents and beneficiaries. For purposes of the current plan year, if
permitted under the terms of Buyer's Welfare Plans, the Buyer shall take into
account deductible and co-payment amounts incurred under Business welfare
benefit plans when determining deductibles and co-payments under Buyer's welfare
plans with respect to Employees.
7.7. Insurance. Coverage of the Business under all insurance policies of
the Seller shall cease as of the Closing Date. From and after the Closing Date,
Buyer will be responsible for obtaining and maintaining all insurance coverages
with respect to the Business. Neither Buyer nor the Business will have any
rights with respect to any insurance policies of Seller, except that Buyer and
the Business will have the right to assert claims (and Seller, at Buyer's sole
cost and expense, will use reasonable efforts to assist Buyer and the Business
in asserting claims) for any loss, liability or damage with respect to the
assets of the Business under such insurance policies of Seller which are
"occurrence basis" policies ("Occurance Basis Policies") arising out of insured
incidents occurring from the date of coverage thereunder first commenced until
the Closing Date to the extent such Occurance Basis Policies and agreements
relating thereto so allow.
7.8. Consents. Seller shall cooperate with Buyer and use commercially
reasonable efforts to obtain the consent of the other parties to the contracts
listed on Schedule 5.5.
7.9. License of Name. Buyer shall take such actions and file such
documents as may be necessary to change the name of the business from "Tekgraf
Systems" to a name dissimilar to "Tekgraf Systems" or "Tekgraf." Buyer shall
also change the trademarks and trade names
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associated with any products or services available from the Business or Buyer to
discontinue the use of the name "Tekgraf" and any confusingly similar trademarks
and trade names and otherwise discontinue the use of such trademarks and trade
names in connection with Seller's business operations. Notwithstanding the
foregoing, effective upon the Closing, from the Closing Date to January 31,
2001, Buyer shall have a temporary, nonexclusive, nontransferable license to use
the name "Tekgraf Systems", as the name of the Business.
7.10. Certain Business Matters. As a condition to and an inducement for
the Seller to enter into this Agreement, Buyer and Seller each agree to assume
and fulfill on a timely basis all obligations under the following purchase
orders Seller has submitted to the Business for the purchase of computers
(excluding those computers shipped on the purchase orders through the Closing
Date): P.O. 16724 for 70 computers; P.O. 16578 for 135 computers; P.O. 16461 for
35 computers; and P.O. 16388 originally for 150 computers.
8. CONDUCT OF BUSINESS PENDING THE CLOSING. Unless the prior written consent of
Buyer is obtained, between the date hereof and the Closing Date:
8.1. Ordinary Course. The Business shall be conducted in the ordinary
course of business, consistent with prior practices. Seller shall use reasonable
commercial efforts to preserve the Business intact and to preserve the
relationship and goodwill of its suppliers, customers and others having business
relations with it.
8.2. Certain Transactions. Without limiting the generality of Section 8.1
hereof, Seller shall not: (a) sell, lease, mortgage, pledge or otherwise
encumber or dispose of any of the Purchased Assets, except for sales in the
ordinary course of business; or (b) sell, transfer, license or otherwise dispose
of or encumber any proprietary rights or fail to take all necessary action to
protect the proprietary rights of the Business so as to maintain their validity
and enforceability.
9. CONDITIONS TO CLOSING.
9.1. Mutual Conditions. The respective obligations of each party to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to Closing of each of the following conditions:
9.1.1. No Suit. No suit, action or other proceeding or investigation
shall be pending, or to the knowledge of any party hereto, be threatened before
or by any governmental agency or by any third party questioning the legality of
this Agreement or the consummation of the transactions contemplated hereby.
9.2. The Buyer Group's Conditions. The obligations of the Buyer Group to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to Closing of each of the following conditions:
9.2.1. Representations and Warranties. All representations and
warranties made by Seller in or pursuant to this Agreement shall be true and
correct on the date hereof and as of the Closing Date as though such
representations and warranties were made as of the Closing Date.
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9.2.2. Performance. Seller shall have duly performed and complied
with all of the obligations to be performed or complied with by it under the
terms of this Agreement on or prior to Closing.
9.2.3. Closing Documents. Seller shall have delivered to Buyer a
Xxxx of Sale and Assumption Agreement, a Noncompetition, Nonsolicitation and
Nondisclosure Agreement, and an Indemnification Agreement, each executed by
Seller, and such other closing documents as the Buyer Group may reasonably
request, in form and substance reasonably acceptable to Buyer's counsel.
9.2.4. Waiver. Buyer shall have the right to waive any or all of the
conditions precedent to its obligations hereunder; provided, however, that no
waiver by Buyer of any condition precedent to its obligations hereunder shall
constitute a waiver by Buyer of any other condition precedent to its obligations
hereunder.
9.3. Seller's Conditions. The obligations of Seller to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing of each of the following conditions:
9.3.1. Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and correct on the
date hereof and as of the Closing Date as though such representations and
warranties were made as of the Closing Date.
9.3.2. Performance. The Buyer Group shall have duly performed and
complied with all of the obligations to be performed or complied with by it
under the terms of this Agreement on or prior to Closing.
9.3.3. Approvals. All material authorizations or approvals or other
action required in connection with the execution, delivery and performance of
this Agreement by the Buyer Group, and the consummation by the Buyer Group of
the transactions contemplated hereby, shall have been obtained.
9.3.4. Release. The Buyer Group shall have delivered a release with
respect to the Dissenter's Shares delivered pursuant to Section 2 in the form of
Schedule 9.3.4. hereto.
9.3.5. Closing Documents. The Buyer Group shall have delivered to
Seller a duly executed Xxxx of Sale and Assumption Agreement, and such other
closing documents as Seller may reasonably request, in a form reasonably
acceptable to counsel for Seller.
9.3.6. Waiver. Seller shall have the right to waive any or all of
the conditions precedent to its obligations hereunder; provided, however, that
no waiver by Seller of any condition precedent to its obligations hereunder
shall constitute a waiver by Seller of any other condition precedent to its
obligations hereunder.
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10. TERMINATION.
10.1. Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to Closing, as follows:
10.1.1. Mutual Consent. By the mutual written consent of the Buyer
Group and Seller.
10.1.2. Breach by Seller. In the event that the conditions precedent
to the obligations of the Buyer Group hereunder are not satisfied or waived as
of the Closing Date or if Seller materially breaches its covenants or agreements
contained in this Agreement, the Buyer Group shall then have the right to
terminate this Agreement upon notice given to Seller at any time on or prior to
the Closing. Upon the occurrence of a material breach, the Buyer Group shall
retain the right to pursue any and all legal rights against Seller which it may
then have or thereafter obtain.
10.1.3. Breach by Buyer. In the event that the conditions precedent
to the obligations of the Seller hereunder are not satisfied or waived as of the
Closing Date or if any member of the Buyer Group materially breaches its
covenants or agreements contained in this Agreement, Seller shall have the right
to terminate this Agreement upon notice given to the Buyer Group at any time
prior to the Closing, (except with respect to the Buyer Group's obligations
under the last sentence of Section 10.2 hereof, which shall survive such
termination).
10.1.4. Litigation. By Buyer or Seller if any litigation or
proceeding instituted by any person has resulted in an order, stay, judgment or
decree restraining or prohibiting the consummation of the transactions
contemplated by this Agreement, or the ownership and operation by Buyer after
Closing of all the Purchased Assets or the Business, and such order or stay has
not been vacated, or such judgment or decree has not been vacated or reversed,
within ten days after the entry thereof.
10.1.5. Cut-Off Date. By the Buyer Group or Seller if the Closing
shall not have occurred on or before November 1, 2000.
10.2. Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1 hereof (except by reason of subsection 10.1.2 or 10.1.3 hereof),
all rights and obligations of Seller and the Buyer Group hereunder shall
terminate and neither party shall have any liability to the other, except as
provided in the succeeding sentence. If the transaction contemplated hereunder
shall fail to be consummated for any reason, the Buyer Group agrees, (i) for a
period ending December 31, 2001, that it will not hire, offer to hire, or
otherwise solicit interest in hiring on the part of, any employee of Seller, and
(ii) that it will keep the contents of any documents, books or records of Seller
that are not in the public domain, strictly confidential.
11. SURVIVAL. Except as otherwise expressly set forth herein, all of the terms
and conditions of this Agreement, together with the representations, warranties
and covenants contained herein or in any instrument or document delivered or to
be delivered pursuant to this Agreement, shall survive the execution of this
Agreement and the Closing notwithstanding any investigation heretofore or
hereafter made by or on behalf of any party hereto; provided, however, that: (i)
the agreements and covenants set forth in this Agreement shall survive and
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continue until all obligations set forth therein shall have been performed and
satisfied; and (ii) all representations and warranties shall survive and
continue until one (1) year from the Closing Date, except for representations
and warranties for which any claim for indemnification which shall be pending as
of such date of termination, in which event such representations and warranties
shall survive until the final disposition thereof.
12. MISCELLANEOUS.
12.1. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, when mailed by certified
or registered mail, when received by facsimile transmission, or when deposited
with a nationally-recognized carrier for overnight delivery.
12.2. Expenses. Regardless of whether the transactions provided for in
this Agreement are consummated, each party hereto shall pay its own expenses
incident to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12.3. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without giving
effect to any choice or conflict of law provisions or rules (whether of the
State of Illinois or otherwise) that would cause the application of the laws of
any jurisdiction other than the State of Illinois.
12.4. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their successors and assigns,
however, neither party may assign its rights, interests or obligations hereunder
without the prior written consent of the other party.
12.5. Waiver. The waiver by either party of a breach by the other party of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by the waiving party.
12.6. Execution in Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same
instrument.
12.7. Titles and Headings. The titles and headings to sections contained
herein are for purposes of reference only, and shall not affect the provisions
hereof.
12.8. Entire Agreement. This Agreement and the Schedules attached hereto
constitute the entire agreement among the parties with respect to the matters
covered thereby and supersede all previous written, oral or implied
understanding among them with respect to such matters.
12.9. Amendment and Modification. The terms of this Agreement may be
amended, modified, waived or supplemented only by mutual consent set forth in a
writing duly signed by the parties hereto.
12.10. Severability. In case any of the provisions contained in this
Agreement are found to be invalid, illegal or unenforceable in any respect, any
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if
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such invalid, illegal or unenforceable provision had been limited or modified
(consistent with its general intent) to the extent necessary so that it shall be
valid, legal and enforceable, or if it shall not be possible to so limit or
modify such invalid or illegal or unenforceable provision or part of a
provision, this Agreement shall be construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein.
12.11. Public Announcement. No party shall publicly disclose this
Agreement or any dealings between the parties in connection with the subject
matter hereof without the prior written approval of the other, except as may be
required by law.
12.12. Guarantee. Xxxxx hereby absolutely and unconditionally guarantees
the Buyer's performance of its obligations under this Agreement and the
transactions contemplated hereby, subject to the limitations set forth in
Section 4 of the Indemnity Agreement.
12.13. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any other individual or entity other than the parties
and their respective successors and permitted assigns.
12.14. Knowledge of Seller. References in this Agreement to the "Knowledge
of Seller" or "Seller's Knowledge" shall be deemed to mean the actual knowledge
of Xxxx Xxxxxx or Xxx Xxxxx.
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IN WITNESS WHEREOF the parties have executed this Agreement as of the date
set forth above.
TEKGRAF, INC. MICRO ENVIRONMENTS, L.L.C.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxxx
Its: CFO Its: Manager
XXXXX LTD.
By: /s/ Xxxxxxx Xxxxxxx
Its: Attorney-in-fact
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Schedule 1.1.4.--Proprietary Rights
1. The domain name xxx.xxxxxxxxxxxxxx.xxx, subject to use of the name
"Tekgraf" as set forth in this Agreement.
2. The domain name xxx.xxxxxxx.xxx
3. The trade name "Crescent Computers"
4. The trade name "Crescent Computer Services"
5. The telephone number 000-000-0000
6. The telephone number 000-000-0000
Schedule 1.1.5.--Business Contracts
1. MCI Wordlcom--local, long distance, and internet
2. Georgia Security Systems--Security System Monitoring
Schedule 1.1.6.--Leases
1. Pro Logic--building lease
2. Pitney Xxxxx--copier and postage meter lease
Schedule 1.1.7.--Licenses
1. Gwinnett County Business License
Schedule 2.2.--Financial Statement of the Business
Tekgraf Systems
September 2000 Results
ACCT DESCRIPTION 9/30/00 EXCLUDED 9/30/00
AS REPORTED ASSETS/LIAB ADJUSTED
----------- ----------- --------
ASSETS
1110 CASH CHECKING (121,320.16) 121,320.16(1) --
1150 XXXXX CASH 50.00 50.00
1210 TRADE RECEIVABLES 731,008.39 (3,277.00)(2) 727,731.39
1220 ALLOWANCE (46,255.88) (46,255.88)
1310 STOCK INVENTORY 444,321.70 444,321.70
1350 VENDOR INVENTORY 40,966.95 40,966.95
1360 CLEARANCE INVENTORY 22,304.51 22,304.51
1375 RTV CLEARING 5,566.32 5,566.32
1384 MISC INVENTORY 11,745.55 11,745.55
1420 OTHER RECEIVABLES 3,994.71 3,994.71
1465 PREPAID EXPENSE 8,480.00 8,480.00
1470 DEPOSITS 4,536.00 4,536.00
1620 FIXED ASSETS 81,522.03 81,522.03
1640 FIXED ASSETS 37,944.00 37,944.00
1700 ACCUMULATED DEPR (91,940.00) (91,940.00)
1920/30 RECEIVABLE-TEKGRAF 188,278.09 (142,497.89) 45,780.20(3)
TOTAL ASSETS 1,321,202.21 (24,454.73) 1,296,747.48
LIABILITIES
1925 CORPORATE ALLOC (199,377.00) 199,377.00(4) --
2100 TRADE PAYABLE (459,097.56) (459,097.56)
2105 INVENTORY ACCRUAL (6,732.81) (6,732.81)
2200 ACCRUED EXPENSES (15,224.78) (15,224.78)
2205 COMM ACCRUAL (16,542.30) (16,542.30)
2220 SALES TAX PAYABLE (774.71) (774.71)
TOTAL LIABILITIES (697,749.16) 199,377.00 (498,372.16)
------------ ---------- ------------
TOTAL NET BOOK VALUE 623,453.05 174,922.27 798,375.32
============ ========== ============
EQUITY
3010 COMMON STOCK (100.00)
3100 ADD PAID IN CAPITAL (869,900.00)
3200 CURRENT EARNINGS 137,813.07
3210 RETAINED EARNINGS 108,733.88
TOTAL EQUITY (623,453.05)
NOTES:
1.) Represents outstanding checks and deposits in transit.
2.) Represents intercompany A/R with Tekgraf. See notes #3.
3.) Represents prior two months of invoices to Tekgraf. See attached
schedule.
4.) Represents Corporate management fee accrual.
Schedule 5.4.--Title to Properties
1. There is a Lien on the Purchased Assets in favor of Wachovia Bank,
which will be realesed at Closing.
2. With respect to the proprietary rights, Seller makes no representation
or warranty of any kind, without limitation, no representation regarding title,
or ownership or infringement.
Schedule 5.5.--No Violations; Consents and Approvals
1. The Seller has not obtained the consent of the other parties to the
contracts, leases and licenses set forth on Schedules 1.1.5., 1.1.6. and 1.1.7.
to assign these contracts, leases and licenses to Buyer.
Schedule 5.7.--Litigation
1. The lawsuit captioned Tekgraf, Inc., a Georgia corporation, Plaintiff, v.
Xxxxx Ltd., Xxx X. Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx X. Xxxxxxxx, and Xxxx X.
Xxxxxxxx, Defendants, pending in the Superior Court of Xxxxxx County,
Georgia, as Case No. 2000 CV 23746.
2. The lawsuit captioned Epicor Software Corporation, a Delaware corporation,
Plaintiff, vs. Tekgraf, Inc., a corporation; and Does 1 to 25, Defendants,
pending in the Supreme Court of Orange County, California, as Case Xx. 00
XX 00000.
3. The shareholders derivative claim threatened by Xxxxx, Ltd.
Schedule 9.3.4
RELEASE
The Buyer Group and Xxxxxx Xxxxxxx, on behalf of themselves, and each of
their present and former agents, employees, officers, directors, shareholders,
partners, attorneys, heirs, legal representatives, corporate affiliates,
including parent and subsidiary corporations, successors and assigns, hereby
forever release and discharge Seller, and each of its present and former agents,
employees, officers, directors, shareholders, partners, attorneys, heirs, legal
representatives, corporate affiliates, including parent and subsidiary
corporations, successors and assigns, of and from any and all actions, causes of
action, claims, debts, liabilities, damages, costs, loss of services, expenses,
compensation, demands and/or suits whatsoever, whether known or unknown, in law
or in equity, arising from or connected in any manner to the Dissenter's Shares
that the Buyer Group has agreed to deliver to Seller (regardless of whether such
Dissenter's Shares are to be delivered at Closing or thereafter pursuant to
Section 2.2 of the Agreement (as defined below)), including but not limited to,
all rights and claims provided by Article 13 of the Georgia Business Corporation
Code, all rights and claims that have been or could have been asserted pursuant
to Article 13 of the Georgia Business Corporation Code, and all rights and
claims that were raised or could have been raised in the Lawsuit;
PROVIDED, HOWEVER, that, if Seller releases Dissenter's Shares to the
Buyer Group pursuant to Section 2.2 of the Agreement, this RELEASE shall not
apply to such released Dissenter's Shares; and
PROVIDED FURTHER, HOWEVER, that this RELEASE shall not apply to and shall
not affect Dissenter's Shares that the Buyer Group is not obligated to deliver
to the Seller under the Agreement.
IN ADDITION, Xxxxxx Xxxxxxx represents and warrants that he has no
ownership interest in the Dissenter's Shares and releases the Seller from any
and all claims relating to the transactions contemplated by the Agreement. The
foregoing RELEASE shall not affect the Buyer Group's rights under the Agreement.
Unless otherwise defined herein, all capitalized terms used herein shall
have the meanings ascribed to such terms in the Asset Purchase Agreement (the
"Agreement") dated as of November 1, 2000 by and among Tekgraf, Inc., a Georgia
corporation, Micro Environments, L.L.C., a Georgia limited liability company,
and Xxxxx Ltd., a corporation organized under the laws of the Channel Islands.
This RELEASE shall become effective upon completion of the Closing.
MICRO ENVIRONMENTS, L.L.C. XXXXX LTD.
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
Its: Manager Its: Attorney-in-fact
/s/ Xxxxxxx Xxxxxxx
-------------------------------
XXXXXX XXXXXXX
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Exhibit 10.1-2
XXXX OF SALE AND
ASSUMPTION AGREEMENT
Tekgraf, Inc., a Georgia corporation ("Seller"), for good and valuable
consideration paid to it by Micro Environments, L.L.C., a Georgia limited
liability company and Xxxxx Ltd., a corporation organized under the laws of the
Channel Islands (collectively, the "Buyer Group") pursuant to an Asset Purchase
Agreement made and entered into effective as of close of business October 31,
2000 (the "Agreement"; the capitalized terms not otherwise defined herein shall
have the meaning assigned to such terms in the Agreement) by and between Seller
and the Buyer Group, by these presents does hereby sell, transfer, convey and
assign to the Buyer Group, and its successors and assigns, on the date hereof
all of Seller's right, title and interest in and to the Purchased Assets.
At any time or from time to time after the date hereof, at Buyer's Group's
request and without further consideration, Seller shall execute and deliver to
the other Party such other instruments of sale, transfer, conveyance, assignment
and confirmation, provide such materials and information and take such other
actions as Buyer Group may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Buyer Group and to confirm Buyer
Group's title to, all of the Purchased Assets, and, to the full extent permitted
by Law, to put Buyer Group in actual possession and operating control of the
Purchased Assets and to assist Buyer Group in exercising all rights with respect
thereto.
Seller hereby constitutes and appoints Buyer Group the true and lawful
attorney of Seller, with full power of substitution, in the name of Seller or
Buyer Group, but on behalf of and for the benefit of Buyer Group to make
endorsements on checks in order to collect, assert or enforce any claim, right
or title of any kind in or to the Purchased Assets.
The Buyer Group, for itself, its successors and assigns, shall indemnify
and hold Seller harmless from, against, or in respect of all damage, loss,
claims, deficiency, liability, expenses (including, but not limited to, any
reasonable expert witness fees, reasonable attorneys' fees, court costs and
expenses), action, suit, proceeding, demand, assessment, or judgement to or
against Seller arising out of or in connection with any Assumed Liabilities to
the extent provided in the Agreement.
This Xxxx of Sale is delivered pursuant to, on the terms of and subject to
the conditions set forth in the Agreement. This Xxxx of Sale may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Xxxx of Sale as of
this 31st day of October, 2000.
TEKGRAF, INC. MICRO ENVIRONMENTS, L.L.C.
By:/s/ Xxxxxx X. Xxxxx By:/s/ Xxxxxxx Xxxxxxx
Its: CFO, Tekgraf, Inc. Its: Attorney-in-fact
XXXXX LTD.
By: /s/ Xxxxxxx Xxxxxxx
Its: Attorney-in-fact
Exhibit 10.1-3
NON-COMPETITION, NON-DISCLOSURE AND
NON-SOLICITATION AGREEMENT
THIS NON-COMPETITION, NON-DISCLOSURE AND NON-SOLICITATION AGREEMENT (this
"Agreement") is made and entered into as of the 31st day of October, 2000 (the
"Effective Date"), by and among TEKGRAF, INC., a Georgia corporation ("Seller"),
MICRO ENVIRONMENTS, L.L.C., a Georgia limited liability company ("Buyer"), and
XXXXX LTD., a corporation organized under the laws of the Channel Islands
("Xxxxx"). Buyer and Xxxxx are sometimes referred to herein as the "Buyer
Group".
W I T N E S S E T H:
WHEREAS, Xxxxx is a shareholder of Seller owning shares of the Class A
Common Stock (which were formerly shares of Class B Common Stock) of Seller and
holds a majority of the membership interests of Buyer, and has exercised its
dissenters rights with respect to its holdings of Seller's Class A Common Stock;
WHEREAS, Xxxxx is a party to that certain lawsuit captioned Tekgraf, Inc.,
a Georgia corporation, Plaintiff, v. Xxxxx Ltd., Xxx X. Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxxx X. Xxxxxxxx, and Xxxx X. Xxxxxxxx, Defendants, pending in the Superior
Court of Xxxxxx County, Georgia, as Case No. 2000 CV 23746 (the "Lawsuit")
relating to the exercise of dissenters rights by Xxxxx and others; and
WHEREAS, Seller, through its "Tekgraf Systems" division, is engaged in the
business of the manufacture and sale of custom or "made to order" premium
servers and network workstations at its facility at Norcross, Georgia (the
"Business"); and
WHEREAS, in partial settlement of the Lawsuit, Seller and the Buyer Group
have entered into an Asset Purchase Agreement, dated as of even date herewith,
pursuant to which Buyer is acquiring those assets of Seller and assuming certain
of the liabilities of Seller relating to the Business in exchange for the
delivery of a portion of the shares of Class A Common Stock (which were formerly
shares of Class B Common Stock), the fair value of which, among other things, is
the subject of the Lawsuit (the "Purchase Agreement"); and
WHEREAS, Seller understands and acknowledges that the covenants of Seller
set forth herein are, collectively, a material inducement to the Buyer Group to
enter into the Purchase Agreement, without which the Buyer Group would not have
entered into the Purchase Agreement.
NOW, THEREFORE, for and in consideration of the above premises, the mutual
agreements hereinafter set forth, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
1. Definitions.
(a) "Affiliate" shall mean, with regard to any Person, any Person,
directly or indirectly, controlled by, under common control of, or controlling
such Person.
(b) "Customer" shall mean any Person, whether an individual or an
entity, to whom any products or services of the Restricted Businesses were
provided at any time during the twelve (12) month period immediately prior to
the Effective Date.
(c) "Person" shall mean an individual, a partnership, a limited
partnership, a joint venture, a limited liability partnership or company, a
corporation, a proprietorship, a trust, a union, an unincorporated organization,
other business organization, a governmental entity or any department or agency
thereof or any other entity or organization.
(d) "Restricted Businesses" means the Business.
(e) "Restricted Period" means a period of five (5) years from the
Closing Date.
(g) "Restricted Territory" means Georgia and the southeastern states
contiguous thereto.
(h) "Supplier" shall mean any Person, whether an individual or
entity, from or through which any of the Buyer Group obtains as of the Closing
Date (or has obtained at any time during that twelve (12) month period
immediately prior to the Closing Date), supplies or resources including, without
limitation, investment and other financial resources used in or otherwise
relating to the ordinary course of the Business, for the purpose of rendering or
facilitating the services provided thereby or in connection with the management
of any and all of the functions of such entity's business.
2. Acknowledgments and Agreements by Seller. Seller acknowledges that (i)
this Agreement includes certain consideration in respect of the goodwill
associated with the operation of the Restricted Businesses by Seller, (ii) the
covenants of Seller contained in this Agreement are a material inducement to
Buyer to enter into this Agreement, (iii) the Buyer Group and each of their
respective Affiliates (each a "Buyer Entity" and collectively, the "Buyer
Entities") has expended and will expend considerable time, effort and capital to
develop the Restricted Businesses, and (iv) the Buyer Group and each of the
other Buyer Entities has a legitimate business interest in protecting its
investment in the Restricted Businesses and would be irreparably damaged if
Seller were to breach the covenants set forth in this Agreement. Accordingly,
Seller agrees that the covenants set forth in this Agreement, (i) are separate
and independent covenants for which valuable consideration has been paid, the
receipt, adequacy and sufficiency of which are acknowledged by Seller, (ii) are
cumulative to all other covenants of Seller in favor of Buyer Group and the
other Buyer Entities
-2-
contained in this Agreement and shall survive the termination of this Agreement
for the purposes intended, (iii) are reasonable and necessary to protect and
preserve the conduct and operation of the Restricted Businesses by the Buyer
Group and the other Buyer Entities, and (iv) do not impose an undue hardship
upon Seller, do not unreasonably restrict Seller with respect to or from the
performance of services of, relating to or connected with the Restricted
Businesses, the management thereof or otherwise, and are reasonable with respect
to their duration, geographical area and scope.
3. Noncompetition and Nonsolicitation Covenants. Seller covenants and
agrees that, during the Restricted Period, it shall not, directly or indirectly,
either individually, in partnership, jointly or in conjunction with any other
Person, whether as principal, agent, officer, director, shareholder, owner,
partner, joint venturer, member, manager, employee, independent contractor,
consultant, advisor, sales representative or any other capacity whatsoever:
(a) engage in any Restricted Business within the Restricted
Territory;
(b) interfere with, disturb, or seek to interfere with or disturb
the relationship (contractual or otherwise) between Buyer and any Person
who is an employee of, or engaged as an independent contractor, consultant
or in any similar capacity whatsoever with, Buyer in connection with the
Business for the purpose or with the intent of inducing or enticing such
Person to terminate such relationship with Buyer;
(c) employ or otherwise engage as an employee, independent
contractor, consultant or any capacity whatsoever, any Person who is, at
that time, or who has been within one (1) year prior to that time,
employed by Buyer or in the Business; or
(d) interfere with, disturb, or seek to interfere with or disturb
the relationship (contractual or otherwise) between Buyer and any Person
which is, at that time, or which has been within one (1) year prior to
that time, a Customer or Supplier of Buyer or the Business for the purpose
of soliciting or selling products or services in competition with Buyer or
the Business or inducing such Person to cease doing business with Buyer in
connection with the Business.
Notwithstanding anything to the contrary in this Agreement, (a) the
restrictions contained in this Section 3 shall terminate immediately upon a
material breach by Buyer or Xxxxx of the Purchase Agreement as determined
pursuant to the final nonappealable judgment of a court of competent
jurisdiction, and (b) the restrictions contained herein shall not apply to any
entity subsequently acquired by Seller (an "Acquired Entity") where the revenue
of the Restricted Business activities conducted by the Acquired Entity is and
remains throughout the term of this Agreement less than twenty-five percent
(25%) of the total revenue of the Acquired Entity provided that the revenue of
the Restricted Business activities being conducted by Seller and all of its
Affiliates and subsidiaries, in the aggregate, is no greater that five percent
(5%) of the total revenues of the Seller.
-3-
4. Non-disclosure; Confidentiality.
(a) Confidential Information. "Confidential Information" means all
trade secrets and proprietary or business sensitive information primarily
related to the Business, whether in oral, written, graphic, machine-readable or
tangible form, and whether or not registered, and including all notes, plans,
records, documents and other evidence thereof, including but not limited to all:
customer lists, details of client contracts and any other customer information.
"Confidential Information" shall not include (a) any information which becomes
generally available to the public other than as a result of disclosure by Seller
or any relative, agent or representative thereof; (b) becomes available to
Seller on a non-confidential basis from a source other than Seller or any Buyer
Entity or any of its respective employees, agents or representatives, provided
that such source lawfully obtained such information and is not bound by a
confidentiality agreement with Seller or any Buyer Entity; or (c) is required to
be disclosed (y) by law provided, that if Seller is required by law (including,
without limitation, any judicial or administrative proceeding of any
governmental or regulatory authority) to disclose any of the Confidential
Information, Seller shall provide Buyer with prompt written notice of any such
requirement and shall cooperate in full with Buyer to obtain a protective order
or to pursue an action to obtain a waiver from such requirement or (z) pursuant
to the disclosure requirement of the rules and regulations of the Securities and
Exchange Commission. If, in the absence of a protective order or other remedy,
Seller is nonetheless, in the written opinion of Seller's outside counsel,
legally compelled to disclose Confidential Information, Seller may, without
liability hereunder disclose the Confidential Information, provided that (i)
Seller gives Buyer prior written notice of the information to be disclosed, (ii)
Seller only discloses that portion of the Confidential Information which counsel
advises is legally required to be disclosed, and (iii) Seller uses its or his
best efforts to preserve the confidentiality thereof by obtaining reasonable
assurance that confidential treatment will be accorded the Confidential
Information.
(b) Non-Disclosure. Seller agrees that it will not at any time,
without the prior express written authorization of Buyer, (i) disclose to any
Person any Confidential Information, (ii) use any Confidential Information
whatsoever for any purpose whatsoever, or (iii) permit any Person whomsoever to
examine and/or make copies of any reports or any documents or software (whether
in written form or stored on magnetic, optical or other mass storage media)
which contain or are derived from any Confidential Information. Seller further
agrees that no Confidential Information shall be removed from the premises of
the Business or any Buyer Entity, without the prior express written consent of
such entity.
(c) Buyer Entity Property. As used in this Agreement, the term
"Buyer Entity Property" means all documents, papers, computer printouts and
disks, records, customer or customer lists, files, manuals, supplies, computer
hardware and software, equipment, inventory and other materials, other than
Excluded Assets (collectively, "Materials"), containing Confidential Information
(as defined above) unless such Confidential Information is redacted or deleted
from the Materials and provided, that the Confidential Information contained in
any Excluded Assets shall be subject to the terms of Section 4(a) and (b)
hereof. Seller recognizes and agrees that:
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(i) All Buyer Entity Property shall be and remain the property of
the Buyer Entity to which such property belongs; and
(ii) Seller will immediately deliver and surrender to Buyer all
Buyer Entity Property, including all copies, extracts or any other types
of reproductions, which Seller has in its respective possession or
control.
5. Compensation to Seller. In consideration for the covenants and
agreements of Seller hereunder, there shall be allocated as payment therefor, a
portion of the Purchase Price in accordance with Section 2.4 of the Purchase
Agreement, in the amount set forth in the schedules thereto.
6. Severability/Modification of Restrictions. The covenants and provisions
contained herein are severable and are to be interpreted as such to the extent
permitted by applicable law. Should any parts, terms or provisions of this
Agreement be declared or determined by any court to be illegal, invalid or
unenforceable for any reason, the legality, validity and enforceability of the
remaining parts, terms and provisions of this Agreement shall not be affected
thereby, and will remain operative in full force and effect. If any court rules
that any of the covenants in Sections 3 or 4 or any part thereof are illegal,
invalid, unenforceable, arbitrary, unreasonable or against public policy for any
reason, including, without limitation because of their geographic or business
scope or duration, then it is the intention of the parties hereto that such
covenants or parts thereof be construed and enforced as if they had been
narrowly drawn so as not to be illegal, invalid, unenforceable, arbitrary,
unreasonable or against public policy and shall be enforced to the maximum
extent permitted by law and the Agreement shall be reformed in accordance
therewith.
7. Remedies/Enforcement.
(a) The Buyer provides the livelihood and financial stability for
many employees and investors. All parties agree that compliance with the
covenants and provisions contained herein are necessary to protect the Buyer's
investment in the Restricted Businesses, the Confidential Information, and the
goodwill of the Buyer and that a breach will result in irreparable and
continuing damage to the Buyer. All parties agree that it is impossible to
measure or compensate in money alone the damages that would accrue in the event
that Seller failed to perform his or her respective obligations hereunder.
Therefore, if Seller breaches any covenant or provision hereof, the Buyer shall
have, at its option (without limiting any other right or remedy which may be
available either simultaneously or alternatively): (i) the right and remedy to
have such provisions enforced by specific enforcement, injunctive relief or
other equitable remedy by any court of competent jurisdiction, and (ii) the
right and remedy to require Seller to account for and pay over to the Buyer all
compensation, profits, monies, accruals, increments or other benefits, derived
or received by Seller, (or its, his or her successors and assigns) as a result
of any transactions constituting a breach of any of the provisions hereof, and
(iii) any other remedy provided by law. Seller acknowledges and
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agrees that the provisions of this Agreement may be enforced by the Buyer or any
successors or assigns thereof.
(b) It is specifically agreed that the Restricted Period, during
which the agreements and covenants of Seller made in Sections 3 and 4 shall be
effective, shall be computed for Seller by excluding from such computation any
and all of the time during which Seller is in violation of any provision of this
Agreement.
8. Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power, or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law (a) no
claim or right arising out of this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; (c) no
waiver by a party of any violation of any provision of this Agreement will
operate as or be deemed a waiver of any later violation by the breaching party,
and (d) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.
9. Covenants Ancillary to Sale of Business. The parties hereto expressly
acknowledge, stipulate and agree that this Agreement and the covenants of Seller
contained herein are ancillary to the Purchase Agreement and the transactions
relating thereto.
10. Benefit. This Agreement shall inure to the benefit of the Buyer and
its successors and assigns and be binding upon Seller and its successors and
assigns.
11. Assignment. This Agreement shall not be assignable by any of the
parties hereto without the prior written consent of the other party; provided,
however, that the Buyer shall have the right to assign their respective rights
and obligations under this Agreement in the event of a sale of all or
substantially all of the Buyer's stock or the sale or other transfer of all or
substantially all of its assets to any successor entity or any affiliate
thereof, at any time and in their sole and absolute discretion.
12. Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMMERCIAL MATTERS, INCLUDING NON-COMPETITION AGREEMENTS, ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES (IF ANY) BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.
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THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR MATTERS RELATED HERETO.
13. Costs and Attorneys' Fees.
(a) Award to Prevailing Party in Proceeding. In the event any
attorney is employed by any party to this Agreement with regard to any legal
action or other proceeding brought by any party to this Agreement for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
then the prevailing party, whether at trial or upon appeal, and in addition to
any other relief to which the prevailing party may be granted, shall be entitled
to recover from the losing party all costs, expenses, and a reasonable sum for
attorney fees incurred by the prevailing party in bringing or defending such
action, arbitration, or proceeding, and in enforcing any judgment granted
therein, all of which costs, expenses and attorneys fees shall be deemed to have
accrued upon the commencement of such action and shall be paid whether or not
such action is prosecuted to judgment.
(b) Judgment or Order Shall Award. Any judgment or order entered in
such matter shall contain a specific provision providing for the recovery by the
prevailing party of attorney fees, costs, and expenses incurred in enforcing
such judgment. For purposes of this Section, attorney fees shall include,
without limitation, fees incurred in the following: post-judgment motions;
contempt proceedings; garnishment, levy, and debtor and third party
examinations; discovery; and bankruptcy litigation.
14. Amendment. This Agreement shall not be modified in whole or in part
except by an agreement in writing signed by all the parties hereto.
15. Construction. The parties hereto acknowledge and agree that they and
their respective legal counsel have participated in the negotiation and
preparation of this Agreement and that should any provision of this Agreement
require judicial interpretation, it is agreed by the parties that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be construed more strictly against the
party who itself or through its agent prepared the same.
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16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Entire Agreement/Headings. This Agreement, the Indemnity Agreement and
the Purchase Agreement contain the entire agreement between the parties hereto
regarding the subject matter hereof, and supersedes any agreements or
understandings previously reached, made or alleged to have been made or entered
into between them covering the subjects addressed herein. The headings contained
in this Agreement are for convenience of reference only and shall not be
considered a part hereof.
18. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals on
the date shown below.
XXXXX LTD.
By:/s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Attorney-in-fact
MICRO ENVIRONMENTS, L.L.C.
By:/s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Manager
TEKGRAF, INC.
By:/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title:CFO
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Exhibit 10.1-4
RELEASE
The Buyer Group and Xxxxxx Xxxxxxx, on behalf of themselves, and each of
their present and former agents, employees, officers, directors, shareholders,
partners, attorneys, heirs, legal representatives, corporate affiliates,
including parent and subsidiary corporations, successors and assigns, hereby
forever release and discharge Seller, and each of its present and former agents,
employees, officers, directors, shareholders, partners, attorneys, heirs, legal
representatives, corporate affiliates, including parent and subsidiary
corporations, successors and assigns, of and from any and all actions, causes of
action, claims, debts, liabilities, damages, costs, loss of services, expenses,
compensation, demands and/or suits whatsoever, whether known or unknown, in law
or in equity, arising from or connected in any manner to the Dissenter's Shares
that the Buyer Group has agreed to deliver to Seller (regardless of whether such
Dissenter's Shares are to be delivered at Closing or thereafter pursuant to
Section 2.2 of the Agreement (as defined below)), including but not limited to,
all rights and claims provided by Article 13 of the Georgia Business Corporation
Code, all rights and claims that have been or could have been asserted pursuant
to Article 13 of the Georgia Business Corporation Code, and all rights and
claims that were raised or could have been raised in the Lawsuit;
PROVIDED, HOWEVER, that, if Seller releases Dissenter's Shares to the
Buyer Group pursuant to Section 2.2 of the Agreement, this RELEASE shall not
apply to such released Dissenter's Shares; and
PROVIDED FURTHER, HOWEVER, that this RELEASE shall not apply to and shall
not affect Dissenter's Shares that the Buyer Group is not obligated to deliver
to the Seller under the Agreement.
IN ADDITION, Xxxxxx Xxxxxxx represents and warrants that he has no
ownership interest in the Dissenter's Shares and releases the Seller from any
and all claims relating to the transactions contemplated by the Agreement. The
foregoing RELEASE shall not affect the Buyer Group's rights under the Agreement.
Unless otherwise defined herein, all capitalized terms used herein shall
have the meanings ascribed to such terms in the Asset Purchase Agreement (the
"Agreement") made and entered into effective as of close of business October 31,
2000 by and among Tekgraf, Inc., a Georgia corporation, Micro Environments,
L.L.C., a Georgia limited liability company, and Xxxxx Ltd., a corporation
organized under the laws of the Channel Islands.
This RELEASE shall become effective upon completion of the Closing.
IN WITNESS WHEREOF the parties have executed this RELEASE as of the
Closing Date.
MICRO ENVIRONMENTS, L.L.C. XXXXX LTD.
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
Its: Manager Its: Attorney-in-fact
/s/ Xxxxxxx Xxxxxxx
-----------------------------
XXXXXX XXXXXXX
Exhibit 10.1-5
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement") is made and entered into as of
the 31st day of October, 2000 (the "Effective Date"), by and among TEKGRAF,
INC., a Georgia corporation ("Seller"), MICRO ENVIRONMENTS, L.L.C., a Georgia
limited liability company ("Buyer"), and XXXXX LTD., a corporation organized
under the laws of the Channel Islands ("Xxxxx"). Buyer and Xxxxx are sometimes
referred to herein as the "Buyer Group".
W I T N E S S E T H:
WHEREAS, Xxxxx is a shareholder of Seller owning shares of the Class A
Common Stock (which were formerly shares of Class B Common Stock) of Seller and
holds a majority of the membership interests of Buyer, and has exercised its
dissenters rights with respect to its holdings of Seller's Class A Common Stock;
WHEREAS, Xxxxx is a party to that certain lawsuit captioned Tekgraf, Inc.,
a Georgia corporation, Plaintiff, v. Xxxxx Ltd., Xxx X. Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxxx X. Xxxxxxxx, and Xxxx X. Xxxxxxxx, Defendants, pending in the Superior
Court of Xxxxxx County, Georgia, as Case No. 2000 CV 23746 (the "Lawsuit")
relating to the exercise of dissenters rights by Xxxxx and others; and
WHEREAS, Seller, through its "Tekgraf Systems" division, is engaged in the
business of the manufacture and sale of custom or "made to order" premium
servers and network workstations at its facility at Norcross, Georgia (the
"Business"); and
WHEREAS, in partial settlement of the Lawsuit, the Seller and the Buyer
Group have entered into an Asset Purchase Agreement, dated as of even date
herewith, pursuant to which Buyer is acquiring those assets of Seller and
assuming certain of the liabilities of Seller relating to the Business in
exchange for the delivery of a portion of the shares of Class A Common Stock
(which were formerly shares of Class B Common Stock), the fair value of which,
among other things, is the subject of the Lawsuit (the "Purchase Agreement";
capitalized terms not defined herein shall have the meaning assigned to such
terms in the Purchase Agreement); and
WHEREAS, each party understands and acknowledges that the covenants and
agreements set forth herein are, collectively, a material inducement to the
other party to enter into the Purchase Agreement, without which it would not
have entered into the Purchase Agreement.
NOW, THEREFORE, for and in consideration of the above premises, the mutual
agreements hereinafter set forth, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
1. Indemnification by Seller. Subject to this Agreement, Seller shall
indemnify, defend and hold harmless Buyer and Xxxxx and each of the officers,
directors, employees, stockholders, members, attorneys, accountants, partners,
representatives, agents, successors and assigns thereof (each a "Buyer
Indemnified Party" and collectively, the "Buyer Indemnified Parties"), at all
times after the date of this Agreement, against and in respect of any and all
demands, claims, payments, obligations, deficiencies, fines, penalties,
assessments, actions, liens, causes of action, suits, proceedings, judgments,
losses, damages, liabilities, costs and expenses, including, without limitation,
the reasonable legal fees and expenses (individually, a "Claim" and
collectively, "Claims") resulting from, or in respect of, any of the following:
1.1. Any misrepresentation, breach of warranty, or nonfulfillment of
any covenant or other obligation on the part of Seller under the Purchase
Agreement;
1.2. the Epicor Software Corporation lawsuit against Seller as
described in Schedule 5.7 to the Purchase Agreement; and
1.3. All demands, assessments, judgments, costs and reasonable legal
and other expenses arising from, or in connection with any Claim incident to any
of the foregoing.
2. Indemnification by Buyer and Xxxxx. Subject to this Agreement, Buyer
and Xxxxx, jointly and severally, shall indemnify, defend and hold harmless
Seller and each of the officers, directors, employees, stockholders, members,
attorneys, accountants, partners, representatives, agents, successors and
assigns thereof (each, a "Seller Indemnified Party" and collectively, the
"Seller Indemnified Parties"), at all times after the date of this Agreement,
against and in respect of any and all Claims (including, without limitation, the
fees and expenses of counsel) resulting from, or in respect of:
2.1. Any misrepresentation, breach of warranty, or nonfulfillment of
any covenant or other obligation on the part of Buyer or Xxxxx under the
Purchase Agreement; and
2.2. All demands, assessments, judgments, costs and reasonable legal
and other expenses arising from, or in connection with any Claim incident to any
of the foregoing.
3. Third Party Claims .
3.1. Except as otherwise provided in this Agreement, the following
procedures shall be applicable with respect to indemnification for third party
Claims. Promptly after receipt by the party seeking indemnification hereunder
(hereinafter referred to as the "Indemnitee") of notice of the commencement of
any action or the assertion of any Claim, liability or obligation by a third
party (whether by legal process or otherwise), against which Claim, liability or
obligation the other party to this Agreement (hereinafter the "Indemnitor") is,
or may be, required under this Agreement to indemnify such Indemnitee, the
Indemnitee will, if a Claim thereon is to be, or may be, made against the
Indemnitor, notify the Indemnitor in writing of the commencement or assertion
thereof and give the Indemnitor a copy of such Claim, process and all legal
pleadings. The Indemnitor shall have the right to participate in the defense of
such action with counsel of reputable standing. The Indemnitor shall have the
right to assume the
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defense of such action. The Indemnitor and the Indemnitee shall cooperate in the
defense of such Claims. In the event that the Indemnitor shall assume or
participate in the defense of such proceeding as provided herein, the Indemnitee
shall make available to the Indemnitor all relevant records and sign such
documents as are necessary to defend such audit, assessment or other proceeding
in a timely manner.
3.2. Upon judgment, determination, settlement or compromise of any
third party Claim, the Indemnitor shall pay promptly on behalf of the
Indemnitee, and/or to the Indemnitee in reimbursement of any amount theretofore
required to be paid by it, the amount so determined by judgment, determination,
settlement or compromise, unless in the case of a judgment an appeal is made
from the judgment, plus all other Claims of the Indemnitee with respect thereto
(including, without limitation, legal fees and expenses). If the Indemnitor
desires to appeal from an adverse judgment, then the Indemnitor shall post and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnitor of such amounts, the
Indemnitor shall succeed to the rights of such Indemnitee, to the extent not
waived in settlement, against the third party who made such third party Claim.
3.3. Prior to paying or settling any Claim against which an
Indemnitor is, or may be, obligated under this Agreement to indemnify an
Indemnitee, the Indemnitee must first supply the Indemnitor with a copy of a
final court judgment or decree holding the Indemnitee liable on such Claim or
absent such judgment or decree, a copy of the terms of the settlement of such
Claim, provided, however, that Indemnitee must first receive the written
approval of the terms and conditions of such settlement from the Indemnitor. An
Indemnitor shall have the right to settle any Claim against it or as to which it
has assumed the defense, subject to the prior written approval of the
Indemnitee, which approval shall not be unreasonably withheld, provided that
such settlement involves only the payment of a fixed sum which the Indemnitor is
obligated to pay and does not include any admission of liability or other such
similar admissions by or related to Indemnitee with respect to such Claim.
3.4. An Indemnitee shall have the right to employ its own counsel in
any case, but the fees and expenses of such counsel shall be at the expense of
the Indemnitee unless (i) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
action or Claim, (ii) the Indemnitor shall not have employed, or is prohibited
under this Section 3.4 from employing, counsel in the defense of such action or
Claim, or (iii) such Indemnitee shall have reasonably concluded that there may
be defenses available to it which are contrary to, or inconsistent with, those
available to the Indemnitor, in any of which events such fees and expenses of
not more than one additional counsel for the Indemnitee shall be borne by the
Indemnitor.
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4. Limitation on Indemnification. Any indemnification for a Claim
hereunder must be made within the time period for survival set forth in Section
11 of the Purchase Agreement. No party indemnified under this Agreement shall
assert any claim for indemnification hereunder against the other with respect to
the breach of any representation or warranty under the Purchase Agreement until
such time as, and solely to the extent that, the aggregate of all such Claims
which the indemnified party may have against the other shall exceed $50,000 and
then only to the extent of the Claims in excess of $50,000. Notwithstanding any
other term of this Agreement, neither the Seller, on the one hand, nor Buyer or
Xxxxx, on the other hand, shall be liable to the other with respect to the
breach of any representation or warranty under the Purchase Agreement for an
amount which exceeds $880,000.
5. Effect of Investigation. The right to indemnification, payment of
damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
6. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, when mailed by certified
or registered mail, when received by facsimile transmission, or when deposited
with a nationally-recognized carrier for overnight delivery.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without giving
effect to any choice or conflict of law provisions or rules (whether of the
State of Illinois or otherwise) that would cause the application of the laws of
any jurisdiction other than the State of Illinois.
8. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and their successors and assigns, however,
neither party may assign its rights, interests or obligations hereunder without
the prior written consent of the other party.
9. Waiver. The waiver by either party of a breach by the other party of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by the waiving party.
10. Construction. The parties hereto acknowledge and agree that they and
their respective legal counsel have participated in the negotiation and
preparation of this Agreement and that should any provision of this Agreement
require judicial interpretation, it is agreed by the parties that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be construed more strictly against the
party who itself or through its agent prepared the same.
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11. Execution in Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same
instrument.
12. Titles and Headings. The titles and headings to sections contained
herein are for purposes of reference only, and shall not affect the provisions
hereof.
13. Entire Agreement. The Purchase Agreement, this Agreement and the
Non-competition, Non-solicitation and Nondisclosure Agreement constitutes the
entire agreement among the parties with respect to the matters covered thereby
and supersede all previous written, oral or implied understanding among them
with respect to such matters.
14. Amendment and Modification. The terms of this Agreement may be
amended, modified, waived or supplemented only by mutual consent set forth in a
writing duly signed by the parties hereto.
15. Severability. In case any of the provisions contained in this
Agreement are found to be invalid, illegal or unenforceable in any respect, any
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had been limited or modified (consistent with
its general intent) to the extent necessary so that it shall be valid, legal and
enforceable, or if it shall not be possible to so limit or modify such invalid
or illegal or unenforceable provision or part of a provision, this Agreement
shall be construed as if such invalid or illegal or unenforceable provision or
part of a provision had never been contained herein.
16. Covenants Ancillary to Sale of Business. The parties hereto expressly
acknowledge, stipulate and agree that this Agreement and the covenants contained
herein are ancillary to the Purchase Agreement and the transactions relating
thereto.
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals on
the date shown below.
XXXXX LTD.
By:/s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Attorney-in-fact
MICRO ENVIRONMENTS, L.L.C.
By:/s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Manager
TEKGRAF, INC.
By:/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title:CFO
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Exhibit 10.1-6
AGREEMENT
THIS AGREEMENT (this "Agreement") made and entered into effective as of
close of business October 31, 2000 by and among Tekgraf, Inc., a Georgia
corporation (the "Company"), Xxxxx Ltd., a corporation organized under the laws
of the Channel Islands ("Xxxxx"), Xxx X. Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx X.
Xxxxxxxx, and Xxxx X. Xxxxxxxx (collectively, the "Shareholders"). Unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings ascribed to such terms in the Purchase Agreement (as defined below).
WHEREAS, the Company and Xxxxx are parties to the Purchase Agreement (as
defined below);
WHEREAS, as an inducement to the Company to enter into and consummate the
Purchase Agreement, the Shareholders are being asked to enter into this
Agreement;
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
1) The Shareholders and the Company agree to suspend and not pursue any
and all pending litigation or legal proceedings with respect to the Lawsuit (as
defined below), until January 1, 2001. The Shareholders and the Company further
agree to use their best efforts to take any action necessary to obtain Court
approval of a pretrial litigation schedule in the Lawsuit that is consistent
with this moratorium and preserves the Shareholders' and the Company's rights to
pursue the Lawsuit thereafter, including but not limited to adequate time in
which to complete discovery.
2) The Shareholders and the Company agree that the value attributed to the
shares for purposes of the Purchase Agreement may not be used in any manner in
any pending or future litigation between the Shareholders and the Company,
including without limitation, the Lawsuit, as evidence or argument in support of
the value of Seller's Class A Common Stock or Class B Common Stock previously
tendered to the Seller by the defendants in the Lawsuit in the exercise of their
dissenter's rights.
"Purchase Agreement" refers to the Asset Purchase Agreement made and
entered into effective as of close of business October 31, 2000 by and among
Tekgraf, Inc., a Georgia corporation, Micro Environments, L.L.C., a Georgia
limited liability company, and Xxxxx Ltd., a corporation organized under the
laws of the Channel Islands.
"Lawsuit" refers to the lawsuit captioned Tekgraf, Inc., a Georgia
corporation, Plaintiff, v. Xxxxx Ltd., Xxx X. Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx X.
Xxxxxxxx, and Xxxx X. Xxxxxxxx, Defendants, pending in the Superior Court of
Xxxxxx County, Georgia, as Case No. 2000 CV 23746 relating to the exercise of
dissenters rights by Xxxxx and others.
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
set forth above.
TEKGRAF, INC. XXXXX LTD.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxxx
Its: CFO Its: Attorney-in-fact
/s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
/s/ Xxxxxxxx X. Xxxxxxxx
Xxxxxxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx