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EXHIBIT 8
LOAN AGREEMENT
This Loan Agreement is made and entered into as of December 1, 1999, by
and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and TEKGRAF, INC., a Georgia
corporation ("Tekgraf").
▇▇▇▇▇▇ wishes to borrow $1,775,000 from Tekgraf to enable ▇▇▇▇▇▇ to
purchase shares of Tekgraf's Class A Common Stock, $.001 par value (the "Class A
Stock") and Class B Common Stock, $.001 par value (the "Class B Stock") from
other Tekgraf shareholders. Management of Tekgraf has proposed that all
outstanding Class B Stock be reclassified into Class A Stock on a one-to-one
basis (the "Reclassification"), and ▇▇▇▇▇▇ and Tekgraf acknowledge that certain
benefits would accrue to Tekgraf and its shareholders were the Reclassification
to occur. The purchases by ▇▇▇▇▇▇ would be made in connection with the
Reclassification, to insure that as much of the Class A Stock and Class B Stock
as possible is voted in favor of the Reclassification if it is presented to the
shareholders for approval. Therefore, Tekgraf is agreeable to making the loan to
▇▇▇▇▇▇.
Therefore, in consideration of the premises and mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows.
1. The Loan. Tekgraf hereby agrees to loan to ▇▇▇▇▇▇, and ▇▇▇▇▇▇ hereby
agrees to, and hereby does, borrow from Tekgraf, in reliance on and
subject to the terms and conditions contained herein, the amount of
$1,775,000 (the "Loan"). The Loan is evidenced by a promissory note in
the form attached hereto as Exhibit A and by this reference
incorporated herein and made a part hereof (the "Note").
2. Interest Rate. The outstanding principal balance of the Loan shall bear
interest at the rate per annum that is one fourth of a percentage point
(.25%) above the rate paid by Tekgraf from time to time under its Loan
and Security Agreement dated as of July 2, 1998, between Tekgraf and
[name of bank deleted]. The Tekgraf rate currently is the monthly LIBOR
Index Rate plus 2.5%.
3. Payment. The principal of and all interest accrued on the Loan shall be
due and payable on the first anniversary of this Agreement, or on the
next business day if the first anniversary falls on a weekend or
holiday on which national banks are closed.
4. Prepayment. ▇▇▇▇▇▇ may prepay the Loan, in whole or in part, at any
time without penalty. Prepayments shall be applied consistent with the
terms of the Note.
5. Security. As security for the payment of the Loan, ▇▇▇▇▇▇ has entered
into (a) a Stock Pledge Agreement dated the date hereof (the "Stock
Pledge Agreement") pursuant to which he has pledged to Tekgraf 221,042
shares of Class A Stock and 970,758 shares of Class B Stock, and
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(b) a Collateral Assignment dated the date hereof pursuant to which he
has collaterally assigned to Tekgraf his rights under certain
agreements to purchase additional shares of Class B Stock.
6. Covenants.
(a) At every meeting of the Tekgraf shareholders at which the
Reclassification is submitted for approval, and at every
adjournment thereof, and on every action or approval by written
consent of the Tekgraf shareholders with respect to the
Reclassification, ▇▇▇▇▇▇ shall cause all of his shares of Class A
Stock and Class B (collectively, the "▇▇▇▇▇▇ Shares") to be voted,
or such action to be taken or approval given, in favor of the
Reclassification. ▇▇▇▇▇▇ understands that the Reclassification may
be effected by an amendment to Tekgraf's Articles of Incorporation,
or by other corporate actions submitted to the shareholders for
approval, and ▇▇▇▇▇▇ acknowledges that he will vote all the ▇▇▇▇▇▇
Shares in accordance with the preceding sentence in any way
recommended by Tekgraf's Board of Directors as necessary or
appropriate to effect the Reclassification. ▇▇▇▇▇▇ also agrees to
vote all the ▇▇▇▇▇▇ Shares against, and refrain from taking any
other action with respect to, any proposal to any of the Tekgraf
shareholders which if approved could prevent or delay the
implementation of the Recapitalization. For purposes of this
Agreement, the term "▇▇▇▇▇▇ Shares" shall be deemed to include any
other Tekgraf securities that ▇▇▇▇▇▇ currently or hereafter owns or
controls that are then entitled to vote, including, but not limited
to, common stock and preferred stock as to which ▇▇▇▇▇▇ exercises
voting control at the time of the meeting or other action or
approval.
(b) ▇▇▇▇▇▇ shall use the proceeds of the Loan to purchase an aggregate
of 117,400 shares of Class A Stock and 689,583 shares of Class B
Stock (collectively, the "Purchased Shares") from the following
Tekgraf shareholders in the following amounts, and to make a down
payment for a delayed purchase of an additional 161,333 shares of
Class B Stock (the "Delayed Shares") from the following Tekgraf
shareholders in the following amounts:
Number of Purchased Shares
Class A Stock Class B Stock
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 41,955 189,045
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 75,445 356,888
A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 36,750
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 3,767 90,383
▇▇▇▇ ▇▇▇▇▇▇ 12,750
Number of Delayed Shares
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 55,600
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 105,733
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(c) ▇▇▇▇▇▇ shall use his reasonable efforts to sell as many of the
Purchased Shares as may be necessary to prepay the Loan as soon as
practicable; provided, however, ▇▇▇▇▇▇ shall not be required to
sell any of the Purchased Shares at a price below $2.65 per share
(such amount to be appropriately adjusted in the event of any
future stock split, stock combination, stock dividend, or similar
event). In connection with such sales, ▇▇▇▇▇▇ shall consult with
Tekgraf's Board of Directors with the goal that such sales be
conducted in private transactions if possible, so as not to disrupt
the public trading markets for Tekgraf's stock.
(d) ▇▇▇▇▇▇ hereby grants Tekgraf the option to purchase any or all of
the Purchased Shares from him at a price per share equal to the
following percentage of the average trading price of the Class A
Stock measured over the 20 consecutive trading days on which the
Class A Stock traded, with the last such trading day being not
later than the last business day before the date of exercise of
this option:
If at the time of attempted exercise the average Then the applicable
trading price is: percentage will be:
More than $3.00 and less than or equal to $4.50 90%
More than $4.50 and less than or equal to $6.00 88.5%
More than $6.00 85%
Provided, however, (i) this option shall not be exercisable unless
the trading price is at least $3 per share at the time of attempted
exercise; (ii) this option shall terminate as soon as all of the
principal and interest under the Loan has been paid; and (iii) the
above trading price numbers shall be appropriately adjusted in the
event of any future stock split, stock combination, stock dividend,
or similar event. For purpose of this subsection, the trading price
shall be the last sale price if the Class A Stock is traded on the
Nasdaq National Market, and the average of the last bid and asked
prices if the Class A Stock is traded on another market. To
exercise this option, Tekgraf shall deliver to ▇▇▇▇▇▇ a written
notice of exercise stating the number of shares to be purchased,
and the proposed closing date, which shall be between 10-15
business days after exercise. On the closing date ▇▇▇▇▇▇ shall
deliver such executed documents as may be necessary to transfer the
shares to be purchased by Tekgraf, and Tekgraf shall pay the
purchase price to ▇▇▇▇▇▇, first by treating the payment as a
prepayment under the Note, to the extent of the outstanding
principal and interest, with the balance if any payable in
immediately available funds.
(e) For as long as any principal or interest under the Loan remains
outstanding and unpaid, ▇▇▇▇▇▇ will maintain a life insurance
policy on his life in the amount of $2 million, with Tekgraf as the
beneficiary.
(f) Tekgraf shall indemnify and hold harmless ▇▇▇▇▇▇ and his heirs,
executors, administrators and assigns (collectively, the
"Indemnified Persons") from and against any claim, lawsuit or
proceeding by a third party against an Indemnified Person by reason
of Tekgraf having made
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the Loan to ▇▇▇▇▇▇, ▇▇▇▇▇▇ having accepted the Loan, and ▇▇▇▇▇▇ having
purchased any of the Purchased Shares; provided, however, Tekgraf shall
have no responsibility to indemnify any of the Indemnified Persons
against claims, lawsuits or proceedings based on intentional misconduct
or any violation of applicable securities laws by ▇▇▇▇▇▇.
7. Default. The occurrence of any one or more of the following shall
constitute a default under this Agreement:
(a) ▇▇▇▇▇▇ fails to pay within fifteen (15) days after the date when
due any amount payable under the Note; or
(b) ▇▇▇▇▇▇ is in material breach of this Agreement or the Stock Pledge
Agreement, and such breach is not cured within 30 days after
receiving notice thereof from Tekgraf.
Upon the occurrence of any one or more of the foregoing events of
default, the entire unpaid principal balance of the Loan shall be
immediately due and payable, without presentment, protest, or
further demand or notice of any kind, all of which are hereby
expressly waived. In addition, Tekgraf shall have all the rights
accruing to it under the Stock Pledge Agreement. All rights and
remedies of Tekgraf hereunder are cumulative and may be exercised
successively or concurrently with other rights Tekgraf may have at
law or in equity.
8. Miscellaneous.
(a) Entire Agreement. This Agreement and the instruments, agreements,
and other documents contemplated hereby supersede all prior
discussions, understandings, and agreements between and among the
parties with respect to the matters contained herein, and this
Agreement and the instruments, agreements, and other documents
contemplated hereby contain the sole and entire agreement between
the parties hereto with respect to the matters contemplated herein.
(b) Amendments. This Agreement may not be amended or supplemented
except in writing by the parties hereto.
(c) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
(d) Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of
this Agreement.
(e) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
principals, heirs, legal representatives, assigns and successors.
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(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the United States of America and the
State of Georgia. Tekgraf and ▇▇▇▇▇▇ irrevocably consent to the
exclusive jurisdiction and venue of the courts of any county in the
State of Georgia and the United States District Court for the
Northern District of Georgia, in any judicial proceeding brought to
enforce this Agreement. The parties agree that any forum other than
the State of Georgia is an inconvenient forum and that a lawsuit
(or non-compulsory counterclaim) brought by one party against
another party in a court of any jurisdiction other than the State
of Georgia should be forthwith dismissed or transferred to a court
located in the State of Georgia.
(g) Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or
delivered (i) five (5) days after deposit in the United
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States mail, prepaid, by certified mail, with return receipt
requested; (ii) when delivered personally; (iii) one (1) day after
delivery to a nationally-recognized overnight courier; or (iv) when
transmitted by fax with telephone confirmation of receipt if a copy
is concurrently transmitted by U.S. mail or overnight courier as
stated above; in all cases, if applicable, with delivery prepaid
and addressed to the party to be notified to the address set forth
beneath such party's signature below, or to such other address and
fax number of which a party has given notice to the other party as
provided in this subsection.
(h) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall
be deemed prohibited or invalid under such applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, but such prohibition or invalidity shall not invalidate
the remainder of such provision or the other provisions of this
Agreement.
The parties hereto have executed this Loan Agreement as of the day and
year first written above.
TEKGRAF, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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