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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 1, 1999
TEKGRAF, INC.
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(Exact Name of Registrant
as Specified in its Charter)
Georgia 000-23221 58-2033795
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
6000 Lake Forrest Drive, Suite 110, Atlanta, Georgia 30328
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (404) 252-0201
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 1, 1999, pursuant to the terms of a Purchase and Sale
Agreement (the "Agreement") dated April 1, 1999 by and among Tekgraf, Inc. (the
"Company"), CalGraph Technology Services, Inc., which is a wholly-owned
subsidiary of the Company ("CalGraph"), and CalComp Technology, Inc.,
("CalComp"), CalGraph acquired certain assets of CalComp and agreed to assume
certain liabilities of CalComp. The purchase price of $400,000, which was
determined through negotiations between the parties, was paid in cash at the
closing, with the Company's funds.
The assets acquired from CalComp consist of certain assets used in
CalComp's worldwide distribution of printers and peripherals (the "Parts
Business") and certain assets used in CalComp's service and maintenance of
printers and peripherals in the United States and Canada (the "Service
Business").
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
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(C) EXHIBITS.
2.1 Purchase and Sale Agreement dated April 1, 1999 by and between Tekgraf,
Inc., CalGraph Technology Services, Inc. and CalComp Technology, Inc. *
*Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEKGRAF, INC.
By: /s/ W. Jeffrey Camp
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W. Jeffrey Camp
Chief Financial Officer
Dated: April 16, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Title
- ------- -----
<S> <C>
2.1 Purchase and Sale Agreement dated April 1, 1999 by and between Tekgraf,
Inc. CalGraph Technology Services, Inc. and CalComp Technology, Inc. *
</TABLE>
*Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request.
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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
by and among
Tekgraf, Inc., a Georgia corporation
and
CalGraph Technology Services, Inc.,
a Georgia corporation and
subsidiary of Tekgraf, Inc.
and
CalComp Technology, Inc.,
a Delaware corporation
Dated as of April 1, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I ACQUISITION.............................................................................................1
Section 1.1 Purchase and Sale...............................................................................1
Section 1.2 Purchase Price..................................................................................3
Section 1.3 Deliveries......................................................................................4
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................................4
Section 2.1 Representations, Warranties and Covenants of the Seller.........................................4
Section 2.2 Representations and Warranties of Purchaser and Tekgraf........................................12
Section 2.3 Survival of Representations and Warranties.....................................................12
Section 2.4 Disclosure.....................................................................................13
ARTICLE III COVENANTS............................................................................................13
Section 3.1 Covenants Against Disclosure...................................................................13
Section 3.2 Non-Competition................................................................................13
Section 3.3 Interim Period Services........................................................................14
Section 3.4 Parts Availability.............................................................................14
Section 3.5 Employees and Employee Benefit Matters.........................................................15
Section 3.6 Further Assurances.............................................................................16
Section 3.7 Warn Act Compliance............................................................................16
ARTICLE IV INDEMNIFICATION.......................................................................................16
Section 4.1 Indemnification of Purchaser. .................................................................16
Section 4.2 Indemnification of the Seller..................................................................16
Section 4.3 Procedure for Indemnification with Respect to Third-Party Claims...............................17
Section 4.4 Procedure For Indemnification with Respect to Non-Third Party Claims...........................18
ARTICLE V MISCELLANEOUS PROVISIONS...............................................................................18
Section 5.1 Notice.........................................................................................18
Section 5.2 Entire Agreement...............................................................................19
Section 5.3 Binding Effect: Assignment.....................................................................19
Section 5.4 Expenses of Transaction........................................................................19
Section 5.5 Waiver; Consent................................................................................19
Section 5.6 Counterparts...................................................................................19
Section 5.7 Severability...................................................................................19
Section 5.8 Remedies of the Parties........................................................................19
Section 5.9 Governing Law..................................................................................20
Section 5.10 Arbitration; Attorneys' Fees...................................................................20
</TABLE>
SCHEDULES
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), effective as of the
1st day of April, 1999 (the "Closing Date"), is made and entered into by and
among TEKGRAF, INC., a Georgia corporation ("Tekgraf"), CALGRAPH TECHNOLOGY
SERVICES, INC., a Georgia corporation ("Purchaser"), and CALCOMP TECHNOLOGY,
INC., a Delaware corporation ("Seller").
WHEREAS, Seller is engaged in, among other things, the business of
worldwide parts distribution for printers and peripherals and maintenance and
service of printers and peripherals in the United States and Canada (such
business, excluding Seller's business related to the CrystalJet, EcoPro,
digitizer and cutter product lines, is referred to herein collectively as the
"Business"); and
WHEREAS, Purchaser desires to acquire certain assets related to the
Business and Seller desires to transfer such assets to Purchaser in exchange for
cash and the assumption of certain liabilities of the Seller; and
WHEREAS, Purchaser and Seller desire to enter into this Agreement with
the understanding that this Agreement will supersede all prior oral and written
agreements between the parties.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
ACQUISITION
Section 1.1 Purchase and Sale. Subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase from Seller, and
Seller agrees to sell, transfer, convey and deliver to Purchaser, all of the
Acquired Assets (as hereinafter defined) for the consideration specified below
in Section 1.2. As used herein, "Acquired Assets" shall mean all of Seller's
right, title and interest in and to the following to the extent such assets
relate to or arise from the Business:
(a) All spare parts inventories and accessories (including, without
limitation, all manuals, documentation, machinery, equipment, tooling, supplies,
tools, repair and maintenance parts and chemicals required for the operation of
the Business whether located on the premises of the Seller, in transit to or
from such premises, in other storage facilities or otherwise) (collectively, the
"Inventory") in Seller's possession (including, without limitation, in the
possession of Seller's employees or otherwise) and located in North America as
of the date hereof related to the Business but specifically excluding all spare
parts inventories relating
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to the following product lines of Seller's business: (i) CrystalJet, (ii)
EcoPro; (iii) digitizer; and (iv) cutter (the "Excluded Products"); an inventory
list is attached hereto as Schedule 1.1(a), which list is true and accurate in
all material respects as of the Closing Date;
(b) All Accounts Receivable related to the Business as of the Closing
Date, including, without limitation, those accounts receivable as set forth on
Schedule 1.1(b), which Schedule is true and correct in all material respects as
of the date set forth thereon;
(c) All trucks and automobiles and related leases with PHH which
vehicles are used by field personnel of Seller in the United States and Canada
as set forth on Schedule 1.1(c), which Schedule is true and accurate as of the
Closing Date;
(d) All supplier contracts related to the Business as listed on
Schedule 1.1(d), which Schedule is true and accurate as of the Closing Date;
(e) All of Seller's United States and Canada maintenance and service
contracts related to the Business as listed on Schedule 1.1(e), which Schedule
is true and accurate in all material respects as of the Closing Date;
(f) All furniture, fixtures owned by Seller, and equipment used in
connection with the Business; including, without limitation, computers, and to
the extent transferable, related software, all as located in Anaheim,
California, including, without limitation, those items set forth on Schedule
1.1(f), which Schedule is true and accurate in all material respects as of the
Closing Date;
(g) To the extent assignable, all leasehold interests in any furniture,
fixtures or equipment used in connection with the Business, including, without
limitation, those leases set forth on Schedule 1.1(g), which Schedule is true
and accurate as of the Closing Date and which Schedule notes all leases that are
not assignable;
(h) All data stored or contained in Scopus, Cosmic and/or Paradox
systems used in connection with the Business except data related to financial
information and systems of Seller;
(i) The non-exclusive right to use in connection with the Business the
trademark and trade name "CalComp" pursuant to the terms of that certain License
Agreement, attached hereto as Exhibit A (the "License Agreement");
(j) Pursuant to the terms of the License Agreement, exclusive rights to
use certain Intellectual Property (as hereinafter defined) owned by Seller as
listed on Schedule 1.1(j)(i) in connection with the parts portion of the
Business and non-exclusive rights to use certain Intellectual Property owned by
Seller as listed on Schedule 1.1(j)(ii) in connection with the service portion
of the Business;
(k) All of Seller's right, title and interest in and to any web pages
utilized by Seller, (copies of which are attached hereto as Schedule 1.1(k)),
including any rights related thereto;
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provided, however, Seller shall maintain a neutral website at the URL address of
www.calcomp.com with neutral pointers for the Business;
(l) All of Seller's right, title and interest in and to that certain
telephone number: 1-800-CalComp (225-2667) which Seller hereby represents and
warrants to Purchaser that Seller owns or has obtained appropriate unrestricted
assignments in favor of Purchaser to Purchaser's satisfaction on or before the
date hereof;
(m) All of Seller's right, title and interest, to the extent
assignable, in and to each item of Intellectual Property listed in Schedule
2.1(j)(iv) attached hereto;
(n) All customer lists of Seller related to the Business; and
(o) All prepaid expenses related to the Business.
The parties hereto agree and acknowledge that except as otherwise provided
herein, the Acquired Assets shall be delivered to Purchaser by Seller in a
"where is/as is/when as" condition.
Section 1.2 Purchase Price. In consideration for the Acquired
Assets, Purchaser shall pay to Seller the sum of Four Hundred Thousand Dollars
($400,000.00), less the Twenty-Five Thousand Dollars ($25,000) deposit paid by
Purchaser to Seller prior to the date hereof (the "Cash Consideration"), and
Purchaser and Tekgraf, jointly and severally, hereby assume and become
responsible for the Assumed Liabilities (as hereinafter defined) of Seller (the
Assumed Liabilities and the Cash Consideration shall be hereinafter referred to
collectively as the "Purchase Price").
Neither Tekgraf nor Purchaser shall assume or have any responsibility, however,
with respect to any other obligation or liability of Seller not included within
the definition of Assumed Liabilities specified below. As used herein, "Assumed
Liabilities" shall mean the following liabilities of Seller to the extent such
liabilities relate exclusively to or arise exclusively out of the Business:
(a) Accounts payable of Seller arising exclusively from the operation by
Seller of the Business as of the Closing Date;
(b) Performance of maintenance services on products sold by Seller to end
users in 1998 in accordance with the service agreements acquired
hereunder, excluding service agreements related to cutter, digitizer,
EcoPro or CrystalJet product lines;
(c) Performance of maintenance services on products sold by Seller to end
users in 1998 pursuant to warranty obligations of Seller for equipment
sold under warranty, excluding warranties for cutter, digitizer,
EcoPro, or CrystalJet product lines;
(d) Truck and automobile leases for field personnel of Seller; and
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(e) All liabilities arising from the operation by Purchaser of the Business
after the date hereof in respect of an Acquired Asset, subject to the
limitations set forth hereinafter; provided, however, that Purchaser
and Tekgraf hereby assume liability for accrued vacation and sick pay
obligations of Seller to the extent set forth in Section 3.5.
Notwithstanding anything contained herein to the contrary, neither Purchaser nor
Tekgraf shall have any liability for any sales tax or other tax liability of
Seller, or any interest or penalties relating thereto, relating to any period or
date prior to the date hereof.
A true and correct list of the Assumed Liabilities is set forth in Schedule 1.2.
The Parties agree to allocate the Purchase Price (and all other capitalizable
costs) among the Acquired Assets for all purposes (including financial
accounting and tax purposes) in accordance with the allocation schedule attached
hereto as Exhibit B. The Agreement shall be deemed to have become effective as
of 12:01 a.m. Anaheim, California Time on April 1, 1999.
Section 1.3 Deliveries. Seller shall have delivered to Purchaser
executed (i) bills of sale for the Acquired Assets, (ii) assignments of all
contracts, agreements or instruments constituting Acquired Assets, to the extent
assignable after Seller uses commercially reasonable efforts to obtain
assignments from third parties related thereto (which efforts shall not require
the payment by Purchaser or Seller of any money to any third party); and (iii)
all other documents reasonably requested by Purchaser or its counsel to evidence
the transactions contemplated by this Agreement, all in form and substance
reasonably satisfactory to Purchaser. Purchaser shall have executed,
acknowledged (if appropriate), and delivered to Seller (A) an assumption in the
form attached hereto as Exhibit C, (B) such other instruments of assumption as
Seller and its counsel reasonably may request; and (C) the Cash Consideration
specified in Section 1.2 above.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1 Representations, Warranties and Covenants of the
Seller. All representations and warranties of the Seller are accurate and
material and are being made in order to induce Purchaser to enter into this
Agreement. The Seller hereby represents, warrants and covenants to Purchaser the
following:
(a) Organization. The Seller is a corporation duly organized and
validly existing under the laws of the State of Delaware (the "State"), and has
all requisite power and authority to lease, own, and operate its properties and
carry on the Business and operations and to directly own, lease, and operate its
assets. The Seller is duly qualified or licensed to do business as a
corporation, and is in good standing in the State and in any other state in
which qualification to do business is required.
(b) Authorization. The Seller has full power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The Seller has taken all
necessary and appropriate corporate action with
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respect to the execution and delivery of this Agreement and any other agreements
contemplated hereby. This Agreement constitutes the valid and binding obligation
of the Seller, enforceable in accordance with its terms; except as limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other laws
affecting contracts, creditors' rights and other laws and remedies generally.
(c) Sales Information. The Seller has delivered to Purchaser
documentation setting forth the quarterly and annual sales figures for fiscal
years ended 1997 and 1998, including volume, revenues and cost of goods sold for
the Business, which information is true and correct in all material respects, a
copy of which list is attached hereto as Schedule 2.1(c). All of the Seller's
general ledgers, books, and records are located at the Seller's principal place
of business or at the offices of its accountant.
(d) Product and Service Warranties. Schedule 2.1(d) provides a
summary of the warranty obligations with respect to the Seller's products (other
than the Excluded Products) which were sold on or prior to February 21, 1999.
(e) Inventory. Schedule 1.1(a) sets forth a list of Inventory that
is true and accurate in all material respects. All Inventory is owned by Seller.
(f) Taxes.
(i) For purposes of this Agreement, the term "Taxes"
means (A) all federal, state, local, foreign and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any interest
and any penalties, additions to tax or additional amounts with respect
thereto, (B) any liability for payment of amounts described in clause
(A) whether as a result of transferee liability, of being a member of
an affiliated, consolidated, combined or unitary group for any period,
or otherwise through operation of law, and (C) any liability for the
payment of amounts described in clauses (A) or (B) as a result of any
tax sharing, tax indemnity or tax allocation agreement or any other
express or implied agreement to indemnify any other person; and the
term "Tax" means any one of the foregoing Taxes.
(ii) There are no liens for Taxes (other than for current
Taxes not yet due and payable) upon the Business or the Acquired
Assets.
(iii) Except as set forth on Schedule 2.1(f)(iii), with
respect to all amounts in respect of Taxes imposed upon Seller related
to the Business or the Acquired Assets, or for which the Seller is
liable, whether to taxing authorities (as, for example, under law) or
to other persons or entities (as, for example, under tax allocation
agreements), with respect to all taxable periods ending on or before
the Closing Date and portions of periods commencing before the Closing
Date and ending after the Closing Date, all applicable tax laws and
agreements have been fully complied with, and all such
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amounts required to be paid by the Seller to taxing authorities or
others on or before the Closing Date related to the Business or the
Acquired Assets have been paid, and all such amounts required to be
paid by the Seller to taxing authorities or others after the Closing
which have not been paid are reflected in the books and records of the
Seller. Seller shall, on or before the earlier of (i) the filing of
liquidation, dissolution or other similar proceedings or actions of
Seller with the Secretary of State of Delaware or (ii) 90 days after
the date hereof, fully and finally settle any and all existing or
potential claims of the State of California and any local subdivisions
thereof with respect to unpaid or partially paid sales tax owed by
Seller related to periods prior to the date hereof.
(g) Employee Payments.
(i) The hours worked by and payments made to the
Employees (as defined in Section 3.5(b) below) have not been in
violation in any respect of the Fair Labor Standards Act or any other
applicable federal, foreign, state or local laws dealing with such
matters.
(ii) All payments due from the Seller on account of
employee health and welfare insurance have been paid or accrued.
(iii) All severance, sick, or vacation payments by the
Seller, which are or were due under the terms of any agreement or
otherwise have been paid or are described in Schedule 2.1(g)(iii).
(h) Compliance With Law. The Seller has complied and is in
compliance with all applicable federal, state, and local laws, statutes,
licensing requirements, rules, and regulations, and judicial or administrative
decisions relating to the Business and/or the Acquired Assets. Seller has been
granted all licenses, permits (temporary and otherwise), authorizations, and
approvals from federal, state, and local government regulatory bodies necessary
to carry on the Business and maintain the Acquired Assets, all of which are
currently valid and in full force and effect. All such licenses, permits,
authorizations and approvals shall be valid and in full force and effect upon
the consummation of the transactions contemplated by this Agreement to the same
extent as if the Seller prior to the Closing Date were continuing the Business
and operations of the Seller. There is no order issued, or proceeding pending or
threatened, or notice served with respect to any violation of any law,
ordinance, order, writ, decree, rule, or regulation issued by any federal state,
local, or foreign court or governmental agency or instrumentality applicable to
the Business.
(i) Consents. Seller has received or made, as appropriate, on or
prior to the date hereof all consents, approvals, orders, or authorizations of,
or registrations, qualifications, designations, declarations, or filings with,
all persons, (including, without limitation, the Seller's shareholders),
agencies or third parties and any and all federal, state, local, or provincial
governmental authorities required in connection with the consummation by Seller
of the transactions contemplated hereunder.
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(j) Intellectual Property.
(i) The Seller owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
(as hereinafter defined) used by Seller in connection with the Business
of the Seller as presently conducted and as presently proposed to be
conducted. As used herein, "Intellectual Property" shall mean to the
extent related to the Business and the Acquired Assets: (1) all
inventions (whether patentable or unpatentable and whether or not
reduced to practice), and all improvements thereto, (2) all patents,
patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (3) all trademarks, service
marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, (4) all
copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (5) all mask works
and all applications, registrations, and renewals in connection
therewith, (6) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing the production process and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and
marketing plans and proposals), (7) all computer software (including
data and related documentation), (8) all other proprietary rights, and
(9) all copies and tangible embodiments thereof (in whatever form or
medium). Attached hereto as Schedules 1.1(j)(i) and 1.1(j)(ii) are in
all material respects true and correct lists of all Intellectual
Property owned and used by Seller in connection with the Business,
except for Intellectual Property as set forth in subsections
2.1(j)(i)(1), (4), (6), (8) and (9). Except as set forth on Schedule
2.1(j)(i)(1), each item of Intellectual Property owned or used by the
Seller immediately prior to the Closing Date hereunder in connection
with the Business or the Acquired Assets will be owned or to the extent
assignable, available for use by the Purchaser on identical terms and
conditions immediately subsequent to the Closing Date hereunder. Except
as shown on Schedule 2.1(j)(i)(2), Seller has taken all reasonable
action to maintain and protect each item of Intellectual Property that
it owns or uses related to the Business and the Acquired Assets.
(ii) The use of the Intellectual Property by Seller has
not interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any intellectual property rights of third parties,
and neither the Seller nor, to the knowledge of Seller, any of the
Seller's shareholders, directors and officers (and employees with
responsibility for Intellectual Property matters) of the Seller has
ever received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or violation
(including any claim that the Seller must license or refrain from using
any intellectual property rights of any third party). To the knowledge
of Seller, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any of the
Intellectual Property.
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(iii) Schedules 1.1(j)(i) and 1.1(j)(ii) identify each
patent or registration which has been issued to the Seller with respect
to any of its Intellectual Property related to the Business or the
Acquired Assets and identify each pending patent application or
application for registration which the Seller has made with respect to
any of its Intellectual Property related to the Business or the
Acquired Assets, and Schedule 2.1(j)(iii) identifies each written
license, agreement, or other written permission which the Seller has
granted to any third party with respect to any of its Intellectual
Property (together with any exceptions) related to the Business or the
Acquired Assets. To the best of Seller's knowledge, there are no oral
licenses, agreements or other oral permissions which the Seller has
granted to any third party with respect to any of its Intellectual
Property related to the Business or the Acquired Assets. The Seller has
delivered to the Purchaser correct and complete copies of all such
patents, registrations, applications, licenses, agreements, and
permission (as amended to date) and has made available to the Purchaser
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such item.
With respect to each item of Intellectual Property required to be
identified in Schedule 2.1(j)(iii) and in Schedules 1.1(j)(i) and (ii):
(1) Except as provided in Schedule 2.1(j)(iii),
Seller possesses all right, title, and interest in and to the
item, free and clear of any security interest, license, or
other restriction;
(2) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge; and
(3) Seller has not ever agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Schedule 2.1(j)(iv) identifies each item of
Intellectual Property that any third party owns and that Seller uses
related to the Business or the Acquired Assets pursuant to a written
license, sublicense, agreement, or permission. The Seller has delivered
to the Purchaser correct and complete copies of all such licenses,
sublicenses, agreements, and permission (as amended to date). With
respect to each item of Intellectual Property required to be identified
in Schedule 2.1(j)(iv) that is assignable:
(1) the license, sublicense, agreement, or
permission covering the item is legal valid, binding,
enforceable, and in full force and effect;
(2) except as set forth in Schedule 2.1(j)(iv),
the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation
of the transactions contemplated hereby, including the
assignments and assumptions of same by Purchaser;
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(3) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event
has occurred which with notice or lapse of time would
constitute a breach of default or permit termination,
modification, or acceleration thereunder;
(4) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(5) with respect to each sublicense, the
representations and warranties set forth in subsections
(iv)(1) through (iv)(4) above are true and correct with
respect to the underlying license;
(6) the underlying item of Intellectual Property
is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(7) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the knowledge of Seller is threatened which challenges
the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(8) Seller has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement, or permission.
(k) Restrictive Documents or Orders. The Seller is not a party to
nor bound under any order, judgment, or decree, or any similar restriction which
adversely affects, or reasonably could be expected to adversely affect (i) the
continued operation by Purchaser (through its ownership of the Acquired Assets)
of the Business on and after the Closing Date on substantially the same basis as
said business was theretofore operated or (ii) the consummation of the
transactions contemplated by this Agreement.
(l) Contracts and Commitments.
(i) Schedule 2.1(l)(i) hereto sets forth a list of all
material written agreements and contracts, contract rights, licenses,
and other written executory commitments other than purchase and sale
orders and quotations related to the Business or the Acquired Assets
(collectively, the "Contracts") including, without limitation, those
contracts with governmental agencies, rental agencies, and all others
under which the Seller is supplied with materials, supplies, or
equipment ("Materials") (such suppliers shall be referred to herein as
"Suppliers") to which the Seller is a party or to which any of the
assets of the Seller are subject. To Seller's knowledge, there are no
oral agreements or commitments relating to the Business that would have
a material adverse effect on the Seller.
(ii) Seller has performed all of its obligations under the
terms of each Contract that is assignable, and is not in default
thereunder, except as described in
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Schedule 2.1(l)(ii). To Seller's knowledge, no event or omission has
occurred which but for the giving of notice or lapse of time or both
would constitute a default by Seller or any other party thereto under
any such Contract. To the extent such Contract is assignable, each such
Contract is valid and binding on Seller and each other party thereto,
and in full force and effect, and each Contract will continue to be
valid and binding on substantially identical terms following the
consummation of the transaction contemplated hereby (including the
assignments and assumptions referred to in Sections 1.1 and 1.2 above).
The Seller has received no written notice of default, cancellation, or
termination in connection with any such Contract. The Seller is not now
and has never been a party to any governmental contracts subject to
price redetermination or renegotiation.
(iii) There has not been any written notice nor to the
knowledge of Seller's officers and key employees any oral notice from
any Supplier that any such Supplier will not continue to supply the
current level and type of Materials currently being provided by such
Supplier upon the same terms and conditions.
(m) Debt. Seller is not a party to any agreements for the
incurring of indebtedness for borrowed money solely related to the Business or
the Acquired Assets.
(n) Assets. The Acquired Assets include all the assets used by
Seller to operate the Business immediately prior to the Closing Date, and none
of the Seller's Shareholders, nor any family member or entity affiliated with
the Seller's Shareholders or any such family member, owns, or has any interest
in, any asset used in the operation of the Seller.
(o) Title to the Property. The Seller has good title to the
Acquired Assets and a valid and subsisting leasehold interest in all leased
property. Except as described in Schedule 2.1(o), the Seller owns all of its
assets and property free and clear of any lien.
(p) Litigation. Except as described in Schedule 2.1(p), none of
the Seller nor any of the Seller's officers or directors nor, to the knowledge
of Seller, any of the Seller's Shareholders is engaged in, or has received any
threat of, any litigation, arbitration, investigation, or other proceeding
relating to the Business, the Acquired Assets, or against or affecting this
Agreement, the other agreements contemplated hereby or the actions taken or
contemplated in connection herewith and therewith, nor to Seller's knowledge is
there any reasonable basis therefor. None of the Seller nor any of the Seller's
officers or directors nor, to the knowledge of Seller, any of the Seller's
Shareholders is bound by any judgment, decree, injunction, ruling or order of
any court, governmental, regulatory or administrative department, commission,
agency or instrumentality, arbitrator or any other person which would or could
have a material adverse effect on the Business or the Acquired Assets.
(q) No Conflict or Default. Neither the execution and delivery of
this Agreement, nor compliance with the terms and provisions hereof and thereof
including, without limitation, the consummation of the transactions contemplated
hereby will violate any statute, regulation, or ordinance of any governmental or
administrative authority, or conflict with or result in the breach of any term,
condition, or provision of the Seller's Certificate of Incorporation or
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Bylaws, as presently in effect, or of any writ, order or decree to which the
Seller is a party or by which it or any of the Acquired Assets of the Seller are
or may be bound, or constitute a default (or an event which, with the lapse of
time or the giving of notice, or both, would constitute a default) thereunder.
(r) Labor Relations.
(i) There are no labor controversies pending or, to the
knowledge of the Seller, threatened between the Seller and any of the
Employees or any labor union or other collective bargaining unit
representing any of the Employees.
(ii) The Seller has never entered into a collective
bargaining agreement or other labor union contract relating to the
Business and applicable to the Employees.
(iii) Except as set forth in Schedule 2.1(r)(iii), there
are no written employment or separation agreements, or oral employment
or separation agreements other than (1) those establishing an "at will"
employment relationship between the Seller and any of the Employees and
which do not provide for any advance notice requirements to terminate
an Employee's employment or any severance or salary or benefits
continuation obligations on the part of the Seller and (2) any unknown
future claims for wrongful termination based upon a theory of implied
agreements arising out of course of conduct.
(iv) Seller has not knowingly employed aliens without
proper work authorization issued by the U.S. government and has
maintained its employment records as required to evidence such
authorization. Presently, there are no aliens employed by Seller whose
continued employment is an Assumed Liability.
(s) Brokers' and Finders' Fees/Contractual Limitations. The Seller
is not obligated to pay any fees or expenses of any broker or finder in
connection with the origin, negotiation, or execution of this Agreement, or in
connection with any transactions contemplated hereby.
(t) Customers. To the knowledge of the Seller, Schedule 2.1(t)
hereto lists all of the customers currently under a service contract with Seller
and currently included in the Seller's database for the year 1998 and from the
end of such year to the date hereof.
(u) Books and Records. The books and records of the Seller to
which Purchaser and its accountants and attorneys have been given access are the
true books and records of the Seller and truly and fairly reflect the underlying
facts and transactions in all material respects.
(v) Complete Disclosure. No representation or warranty by the
Seller in this Agreement, and no exhibit, schedule, statement, certificate, or
other writing furnished to Purchaser pursuant to this Agreement, contains any
untrue statement or omits or will omit to state any fact necessary to make the
statements contained herein and therein not materially misleading.
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(w) Leased Properties. Schedule 2.1(w) hereto lists all personal
property (including equipment leases) and real property leased by the Seller in
connection with the Business or the Acquired Assets (the "Leased Properties")
and the aggregate annual rent or other fees payable under all such leases. The
Seller has a valid leasehold or ownership interest in all of the Leased
Properties, free and clear of any liens.
(x) Compensation. The Seller has delivered to Purchaser an
accurate schedule, attached to this Agreement as Schedule 2.1(x), showing all
Employees of the Seller related to the Business and the Acquired Assets and the
rate of compensation (and the portions thereof attributable to salary, bonus,
and other compensation, respectively) of the Employees.
(y) Accounts Receivable. Schedule 1.1(b) shows the aging of
Accounts Receivable in amounts due in thirty-day aging categories. All Accounts
Receivable represent sales or rentals actually made or services actually
performed in the ordinary course of business.
Section 2.2 Representations and Warranties of Purchaser and
Tekgraf. Purchaser and Tekgraf hereby jointly and severally represent and
warrant to Seller the following:
(a) Organization and Standing. Each of Tekgraf and Purchaser is a
corporation duly organized and validly existing under the laws of the State of
Georgia, and has all requisite power and authority to lease, own, and operate
its properties and carry on the Business and operations and to directly own,
lease, and operate its assets.
(b) Authorization. Each of Tekgraf and Purchaser has full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby,
including, without limitation, the execution and delivery of this Agreement.
Each of Tekgraf and Purchaser has taken all necessary and appropriate corporate
action with respect to the execution and delivery of this Agreement. This
Agreement constitutes the valid and binding obligation of each of Tekgraf and
Purchaser, enforceable in accordance with its respective terms; except as
limited by applicable bankruptcy, insolvency, moratorium, reorganization, or
other laws affecting creditors' rights and remedies generally, and general
principles of equity.
(c) Brokers' and Finders' Fees/Contractual Limitations. Except as
set forth on Schedule 2.2(c), neither Tekgraf nor Purchaser is obligated to pay
any fees or expenses of any broker or finder in connection with the origin,
negotiation, or execution of this Agreement or in connection with any
transactions contemplated hereby.
Section 2.3 Survival of Representations and Warranties.
Tekgraf's, Purchaser's, and the Seller's representations and warranties
contained in this Article II shall survive the closing of the transactions
contemplated hereby until the earlier to occur of (i) 90 days following the
Closing Date, or (ii) the date of the official dissolution, liquidation, or any
such similar proceeding or action of Seller as confirmed by the appropriate
offices or agencies of the State of Delaware.
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Section 2.4 Disclosure. Disclosure of any item on any schedule
hereto shall be deemed adequate disclosure of such item on all other schedules,
provided a specific cross-reference is set forth in each such other schedule.
ARTICLE III
COVENANTS
Section 3.1 Covenants Against Disclosure.
(a) The terms and provisions of this Agreement, and any
information heretofore disclosed or to be disclosed in the future in connection
herewith by any party hereto to any other party, other than information which is
in the public domain or which the disclosing party authorizes the receiving
party in writing to disclose (such terms, provisions and information herein
called the "Confidential Material") shall be treated confidentially by the
parties; provided that any party may disclose Confidential Material of another
party to the receiving party's employees, accountants, attorneys and advisors
who need to know the same (it being understood that they shall be informed by
the receiving party of the confidential nature of the Confidential Material, and
that the receiving party shall cause them to treat the same confidentially), and
otherwise to the extent required by law. The parties acknowledge that remedies
at law would be inadequate to enforce the covenants contained in this Section
3.1 and therefore agree that a party aggrieved hereunder may enforce such
covenants through the remedy of specific performance or other equitable relief.
Should an aggrieved party have cause to seek such relief, no bond shall be
required, and the breaching party shall pay all attorney's fees and court costs
which the aggrieved party may incur in enforcing the provisions of this Section.
(b) The parties shall, by mutual agreement, draft a press release
for public dissemination. No party shall disseminate (except to the parties to
this Agreement) any press release or announcement concerning the transactions
contemplated by this Agreement or the parties hereto without the prior written
consent of the other party hereto, except as required by law.
Section 3.2 Non-Competition.
(a) Commencing as of the Closing Date and continuing until the
later to occur of (i) ninety (90) days following the Closing Date, or (ii) the
date of the official dissolution, liquidation or other similar proceeding or
action of Seller as confirmed by the appropriate offices or agencies of the
State of Delaware, the Seller agrees that it shall not engage directly or
indirectly, whether on its own account or as a shareholder (other than as a less
than 1 % shareholder of a publicly-held Seller), partner, joint venturer,
employee, consultant, advisor, and/or agent, of any person, firm, corporation,
or other entity, in any or all of the following activities within a fifty (50)
mile radius of the zero milepost of the city in which the Seller's principal
place of business is located (the "Territory"):
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(i) Enter into or engage in the businesses of parts
distribution, service and/or maintenance of products the same as,
similar to, or comparable to those related to the Business (such
businesses are collectively referred to herein as the "Protected
Business").
(ii) Solicit existing Customers or existing Suppliers
wherever located, or business patronage which results in competition
with the Purchaser or any of its affiliates in the Protected Business;
(iii) Encourage or solicit any Employees of or service
providers to the Business, Purchaser, or any of its affiliates to leave
the employment of or terminate their service relationship with
Purchaser or any of its affiliates for any reason; or
(iv) Promote or assist, financially or otherwise, any
person, firm, association, corporation or other entity engaged in any
aspect of the Protected Business.
(b) If, in any judicial proceeding, a court shall refuse to
enforce in such action any of the covenants included herein, then at the option
of Purchaser or its affiliates, wholly unenforceable covenants shall be deemed
eliminated from the provisions hereof for the purpose of such proceeding to the
extent necessary to permit the remaining separate covenants to be enforced in
such a proceeding. The parties intend to have covenants enforceable to the
fullest extent of the law as to scope, time and geography.
(c) The parties agree that due to the unique nature of the
services and capabilities of the Seller, there can be no adequate remedy at law
for any breach of their respective obligations hereunder, that any such breach
may allow the Seller, Seller's shareholders and/or third parties to unfairly
compete with Purchaser or its affiliates resulting in irreparable harm to
Purchaser or its affiliates, and therefore, that upon any such breach or any
threat thereof, Purchaser or its affiliates shall be entitled to appropriate
equitable relief in addition to whatever remedies it might have at law.
(d) The Seller acknowledges, represents and warrants to Purchaser
that the covenants of each in this Section 3.2 are reasonably necessary for the
protection of Purchaser's interests under this Agreement and are not unduly
restrictive upon Seller.
Section 3.3 Interim Period Services. Pursuant to the terms of the
Services Agreement, dated as of even date herewith, by and between Seller and
Purchaser, a copy of which is attached hereto as Exhibit D, Seller shall provide
certain services to Purchaser for a limited period of time.
Section 3.4 Parts Availability. Purchaser agrees to provide to
Seller and its successors that will be providing services outside North America
other than parts distribution for a period of two (2) years following the
Closing Date parts at a price which is the greater of (i) Seller's previous
standard cost as of the date hereof plus 50%, or (ii) the current acquisition
price for such part plus 50%.
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Section 3.5 Employees and Employee Benefit Matters.
(a) Purchaser shall offer employment to each employee listed on
Schedule 3.5(a) hereto, on terms and conditions substantially the same as
currently offered to similarly situated employees of Tekgraf. Payroll for all
Employees shall be prorated between Seller and Purchaser as of the Closing Date.
(b) For a period of not less than 6 months from the Closing Date,
Purchaser will provide compensation for the benefit of employees that accept
employment with Purchaser (the "Employees") that are substantially the same as
that offered by Seller. To the extent permitted by Purchaser's employee benefit
plans, each Employee's years of service recognized under Seller's or its
affiliates' plans or benefit arrangements will be credited by Purchaser for
purposes of satisfying eligibility and vesting requirements of Purchaser's
employee benefit plans and benefit arrangements. To the extent permitted by
Purchaser's employee benefit plans and benefit arrangements, all Employees shall
be able to participate in the Purchaser's employee plans and benefit
arrangements as of the Closing Date to the same extent as other similarly
situated employees of Tekgraf. To the extent permitted by Purchaser's employee
benefit plans, Purchaser will take all reasonable actions necessary to accept
direct rollover contributions into its employee benefit plans from the eligible
plans of Seller or any of its affiliates to the extent Purchaser offers similar
plans.
(c) As of the date hereof, Purchaser and Tekgraf shall, jointly
and severally, assume all responsibility and liability for (i) wages, bonuses
and salaries of Employees accrued after the Closing Date, (ii) accrued vacation
of Employees up to the equivalent that each Employee would have been otherwise
entitled as an employee of Purchaser, and Seller shall directly pay each
Employee for any accrued vacation in excess of such equivalent amount on the
Closing Date; (iii) all claims by Employees and beneficiaries for severance or
other termination benefits based on events occurring after the Closing Date
(including, but not limited to, any liability, obligation or expense arising
under the Workers Adjustment and Retraining Notification Act in respect of the
Transaction); and (iv) all claims relating to the terms and conditions of
employment, hiring, firing, supervision, occupational safety and health,
workplace, wages and hours, promotion, employment practices or treatment of
Employees or beneficiaries to the extent such matter arises from and relates to
events after the Closing Date. For a period of six months from the Closing Date,
Purchaser shall provide severance benefits for Employees that are substantially
the same as the severance plans provided by Seller as of the date hereof.
Effective as of the Closing Date and at all times thereafter, Purchaser shall be
responsible for the payment, sponsorship, funding, operation, investment and
administration of all compensation, employee plans and benefit arrangements
provided for any Employees or beneficiaries in accordance with the terms and
conditions of Purchaser's plans and arrangements. Seller shall be responsible
for all wages, bonuses, salaries and sick pay of Employees accrued on or prior
to the Closing Date.
(d) Purchaser and Seller will cooperate in insuring that benefit
coverage under Seller's or its affiliates' welfare benefit plans for Employees
covered thereunder prior to the Closing Date is coordinated with coverage under
Purchaser's benefit arrangements provided after the Closing Date. Without
limiting the generality of the foregoing, to the extent permitted by Purchaser's
employee plans and benefit arrangements, Purchaser will use its
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reasonable efforts to ensure that Purchaser's benefit arrangements will provide
that any benefit related expenses incurred by any Employee on or prior to the
Closing, will be taken into account for the purposes of satisfying deductible
and co-insurance requirements and satisfaction of maximum out-of-pocket
provisions to the same extent as if such expenses had been incurred after the
Closing. To the extent specifically permitted by Purchaser's employee plans and
benefit arrangements, Purchaser will use reasonable efforts to eliminate any
rating period or exclusion or limitation for pre-existing conditions with
respect to the benefits provided thereunder.
Section 3.6 Further Assurances. After the Closing Date, each
party shall prepare, execute, and deliver, at the preparer's expense, such
further instruments, and shall take or cause to be taken such other or further
action, as any party shall reasonably request of any other party at any time or
from time to time in order to consummate, in any other manner, the terms and
provisions of this Agreement.
Section 3.7 Warn Act Compliance. Seller shall take all actions
necessary on the part of Seller to comply with all applicable WARN Act laws and
regulations.
ARTICLE IV
INDEMNIFICATION
Section 4.1 Indemnification of Purchaser. The Seller hereby
agrees to indemnify and hold harmless Purchaser and Tekgraf (collectively the
"Indemnified Parties") against any and all losses, liabilities, damages,
demands, claims, suits, actions, judgments, causes of action, assessments,
costs, and expenses, including, without limitation, interest, penalties,
attorneys' fees, any and all expenses incurred in investigating, preparing, and
defending against any litigation, commenced or threatened, and any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation (collectively, "Damages"), asserted against, resulting from, imposed
upon, or incurred or suffered by the Indemnified Parties directly or indirectly,
as a result of or arising from any inaccuracy in or breach or nonfulfillment of
any of the representations, warranties, covenants, or agreements made by the
Seller in this Agreement or any facts or circumstances constituting such an
inaccuracy, breach, or nonfulfillment (all of which shall be referred to as
"Seller Indemnifiable Claims").
Section 4.2 Indemnification of the Seller. Purchaser and Tekgraf
hereby, jointly and severally, agree to indemnify and hold harmless the Seller
against any and all Damages, asserted against, reasonably resulting from,
imposed upon, or incurred or suffered by Seller as a result of or arising from
any inaccuracy in or breach or nonfulfillment of any of the representations,
warranties, covenants, or agreements made by Purchaser or Tekgraf in this
Agreement or any facts or circumstances constituting such an inaccuracy, breach,
or nonfulfillment (all of which shall be referred to as "Purchaser Indemnifiable
Claims").
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Section 4.3 Procedure for Indemnification with Respect to
Third-Party Claims.
(a) If any party hereto determines to seek indemnification (the
party seeking such indemnification hereinafter referred to as the "Indemnified
Party" and the party against whom such indemnification is sought is hereinafter
referred to as the "Indemnifying Party") under this Article IV with respect to
Seller Indemnifiable Claims where the Indemnified Party is Purchaser or Tekgraf
or Purchaser Indemnifiable Claims where the Indemnified Party is the Seller
(such claims shall be referred to herein as "Indemnifiable Claims") resulting
from the assertion of liability by third parties, the Indemnified Party shall
give notice to the Indemnifying Party within 30 days of the Indemnified Party
becoming aware of any such Indemnifiable Claim or of facts upon which any such
Indemnifiable Claim will be based; the notice shall set forth such material
information with respect thereto as is then reasonably available to the
Indemnified Party. In case any such liability is asserted against the
Indemnified Party, and the Indemnified Party notifies the Indemnifying Party
thereof, the Indemnifying Party will be entitled, if such Indemnifying Party so
elects by written notice delivered to the Indemnified Party within 15 days after
receiving the Indemnified Party's notice, to assume the defense thereof with
counsel satisfactory to the Indemnified Party. Notwithstanding the foregoing,
(i) the Indemnified Party shall also have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of the Indemnified Party unless the Indemnified Party shall reasonably determine
that there is a conflict of interest between or among the Indemnified Party and
the Indemnifying Party with respect to such Indemnifiable Claim, in which case
the fees and expenses of such counsel will be borne by the Indemnifying Party,
(ii) the Indemnified Party shall have no obligation to give any notice of any
assertion of liability by a third party unless such assertion is in writing, and
(iii) the rights of the Indemnified Party to be indemnified hereunder in respect
of Indemnifiable Claims resulting from the assertion of liability by third
parties shall not be adversely affected by their failure to give notice pursuant
to the foregoing unless, and, if so, only to the extent that the Indemnifying
Party is materially prejudiced thereby; provided, however, the Indemnifying
Party shall not be liable for attorneys' fees and expenses incurred by the
Indemnified Party prior to the Indemnified Party's giving notice to the
Indemnifying Party of an Indemnifiable Claim. With respect to any assertion of
liability by a third party that results in an Indemnifiable Claim, the parties
hereto shall make available to each other all relevant information in their
possession material to any such assertion.
(b) In the event that the Indemnifying Party, within 15 days after
receipt of the aforesaid notice of an Indemnifiable Claim, fails to assume the
defense of the Indemnified Party against such Indemnifiable Claim, the
Indemnified Party shall have the right to undertake the defense, compromise, or
settlement of such action on behalf of and for the account, expense, and risk of
the Indemnifying Party, but the Indemnified Party shall not, without the
Indemnifying Party's written consent (which consent shall not be unreasonably
withheld), settle or compromise any Indemnifiable Claim or consent to entry of
any judgment in respect thereof unless such settlement, compromise or consent
includes as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party and the Indemnifying Party a release from all
liability in respect of such Indemnifiable Claim.
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(c) Notwithstanding anything in this Article IV to the contrary,
(i) if there is a reasonable probability that an Indemnifiable Claim may
materially adversely affect the Indemnified Party, the Indemnified Party shall
have the right to participate in such defense, compromise, or settlement, but
the Indemnifying Party shall not, without the Indemnified Party's written
consent (which consent shall not be unreasonably withheld), settle or compromise
any Indemnifiable Claim or consent to entry of any judgment in respect thereof
unless such settlement, compromise, or consent includes as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party a
release from all liability in respect of such Indemnifiable Claim.
Section 4.4 Procedure For Indemnification with Respect to
Non-Third Party Claims. In the event that the Indemnified Party asserts the
existence of a claim giving rise to Damages (but excluding claims resulting from
the assertion of liability by third parties), it shall give written notice to
the Indemnifying Party. Such written notice shall state that it is being given
pursuant to this Section 4.4, specify the nature and amount of the claim
asserted and indicate the date on which such assertion shall be deemed accepted
and the amount of the claim deemed a valid claim (such date to be established in
accordance with the next sentence). If the Indemnifying Party, within 10 days
after the mailing of notice by the Indemnified Party, shall not give written
notice to the Indemnified Party announcing their intent to contest such
assertion of the Indemnified Party, such assertion shall be deemed accepted and
the amount of claim shall be deemed a valid claim. In the event, however, that
the Indemnifying Party contests the assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. If the parties hereto,
acting in good faith, cannot reach agreement with respect to such claim within
ten (10) days after notice thereof, such claim will be submitted to and settled
by arbitration pursuant to Section 5.10 hereof.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1 Notice. All notices and other communications required
or permitted under this Agreement shall be delivered to the parties at the
address set forth below their respective signature blocks, or at such other
address that they designate by notice to all other parties in accordance with
this Section 5.1. Any party delivering notice to Purchaser shall also deliver a
copy to: Wade Stribling, Nelson Mullins Riley & Scarborough, L.L.P., First Union
Plaza, Suite 1400, 999 Peachtree Street, N.E., Atlanta, Georgia 30309. All
notices and communications shall be deemed to have been received unless
otherwise set forth herein: (i) in the case of personal delivery, on the date of
such delivery; (ii) in the case of telex or facsimile transmission, on the date
on which the sender receives confirmation by telex or facsimile transmission
that such notice was received by the addressee, (iii) in the case of recognized,
nationwide overnight air courier, on the next business day following the day
sent, and (iv) in the case of mailing by first class certified or registered
mail, postage prepaid, return receipt requested, on the fourth business day
following such mailing.
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Section 5.2 Entire Agreement. This Agreement, the exhibits and
schedules hereto, and the documents referred to herein embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to said subject matter.
Section 5.3 Binding Effect: Assignment. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon the Purchaser, its successors and permitted assigns, and
Seller and its successors and permitted assigns. Neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be transferred or
assigned (by operation of law or otherwise) by any party hereto without the
prior written consent of the other parties.
Section 5.4 Expenses of Transaction. Each party shall pay its
professional fees and expenses incurred in connection with the negotiation and
closing of this Agreement. The expenses of the preparation of Annual Financial
Statements shall be borne by Seller. Purchaser shall pay all applicable sales,
income, use, excise, transfer, documentary, and any other taxes arising out of
the transactions contemplated herein.
Section 5.5 Waiver; Consent. This Agreement may not be changed,
amended, terminated, augmented, rescinded, or discharged (other than by
performance), in whole or in part, except by a writing executed by the parties
hereto, and no waiver of any of the provisions or conditions of this Agreement
or any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given or
consented thereto. Except to the extent that a party hereto may have otherwise
agreed in writing, no waiver by that party of any condition of this Agreement or
breach by the other party of any of its obligations or representations hereunder
or thereunder shall be deemed to be a waiver of any other condition or
subsequent or prior breach of the same or any other obligation or representation
by the other party, nor shall any forbearance by the first party to seek a
remedy for any noncompliance or breach by the other party be deemed to be a
waiver by the first party of its rights and remedies with respect to such
noncompliance or breach.
Section 5.6 Counterparts. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
Section 5.7 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
Section 5.8 Remedies of the Parties. The Seller acknowledges
that, in addition to all other remedies to which Purchaser is entitled,
Purchaser shall have the right to enforce the terms of this Agreement by a
decree of specific performance, provided Purchaser is not in material default
hereunder. The parties also agree that the rights and remedies of each party to
this Agreement set forth in this Agreement and in all of the exhibits and
schedules attached
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hereto and documents referred to herein shall be cumulative and shall inure to
the benefit of each such party.
Section 5.9 Governing Law. This Agreement shall in all respects
be construed in accordance with and governed by the laws of the State of
California (without regard to its conflicts of laws or principles).
Section 5.10 Arbitration; Attorneys' Fees.
(a) The parties agree to use reasonable efforts to resolve any
dispute arising out of this Agreement, but should a dispute remain unresolved
ten (10) days following notice of the dispute to the other party (but in no
event prior to said ten (10) days, except as specifically provided otherwise
herein), such dispute shall be finally settled by binding arbitration in
Atlanta, Georgia if the dispute is brought by Seller or in Anaheim, California
if the dispute is brought by Purchaser or Tekgraf, in accordance with the then
current Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") or such other mediation or arbitration service as shall be mutually
agreeable to the parties, and judgment upon the award rendered by the arbitrator
shall be final and binding on the parties and may be entered in any court having
jurisdiction thereof; provided, however, that any party shall be entitled to
appeal a question of law or determination of law to a court of competent
jurisdiction; and provided, further, however, that the parties may first seek
appropriate injunctive relief prior to, and/or in addition to pursuing
negotiation or arbitration. Such arbitration shall be conducted by an arbitrator
chosen by mutual agreement of the parties, or failing such agreement, an
arbitrator appointed by the AAA. There shall be limited discovery prior to the
arbitration hearing as follows: (a) exchange of witness lists and copies of
documentary evidence and documents related to or arising out of the issues to be
arbitrated, (b) depositions of all party witnesses, and (c) such other
depositions as may be allowed by the arbitrator upon a showing of good cause.
Depositions shall be conducted in accordance with the Georgia Code of Civil
Procedure or the California Code of Civil Procedure (depending on the forum for
such arbitration) and questions of evidence in any hearings shall be resolved in
accordance with the Federal Rules of Evidence. The arbitrator shall be required
to provide in writing to the parties the basis for the award or order of such
arbitrator, and a court reporter shall record all hearings (unless otherwise
agreed to by the parties), with such record constituting the official transcript
of such proceedings.
(b) In the event of arbitration or litigation filed or instituted
between the parties with respect to this Agreement, the prevailing party will be
entitled to receive from the other party all costs, damages and expenses,
including reasonable attorney's fees, incurred by the prevailing party in
connection with that action or proceeding whether or not the controversy is
reduced to judgment or award. The prevailing party will be that party who may be
fairly said by the arbitrator(s) or the court to have prevailed on the major
disputed issues.
20
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
"PURCHASER"
CALGRAPH TECHNOLOGY SERVICES, INC.,
A GEORGIA CORPORATION
By: /s/ William M. Rychel
-------------------------------------------
Name: William M. Rychel
--------------------------------------
Title: President and CEO
-------------------------------------
Address: 6000 Lake Forrest Drive
Suite 110
Atlanta, Georgia 30328
"TEKGRAF"
TEKGRAF, INC., A GEORGIA CORPORATION
By: /s/ William M. Rychel
-------------------------------------------
Name: William M. Rychel
--------------------------------------
Title: President and CEO
-------------------------------------
Address: 6000 Lake Forrest Drive
Suite 110
Atlanta, Georgia 30328
"SELLER"
CALCOMP TECHNOLOGY, INC., A DELAWARE
CORPORATION
By: /s/ John J. Millerick
-------------------------------------------
Name: John J. Millerick
--------------------------------------
Title: Senior Vice President and CFO
-------------------------------------
Address: 2411 West LaPalma Avenue
Anaheim, California 92803
21
