SUPPORT AGREEMENT
EXHIBIT 10.2
EXECUTION COPY
THIS SUPPORT AGREEMENT (the “Agreement”) is made and entered into as of January 24,
2008, by and among (i) Insight Enterprises, Inc., a Delaware corporation (“Buyer”), (ii)
Insight Networking Services, LLC, a Delaware limited liability company (“Acquisition Sub”),
(iii) AVNET, INC., a New York corporation (“Avnet”), (iv) CALENCE HOLDINGS, INC., an
Arizona corporation (“Holdings”), (v) XXXXXXX X. XXXX, an individual (“Xxxx”), (vi)
XXXXXXX X. XXXXXXXXX, an individual (“Porthouse”), (vii) XXXXXXX X. XXXXXXX, XX., an
individual (“X. Xxxxxxx”), (viii) XXXX XXXXX XXXXX XXXXXXX, an individual (“X.
Xxxxxxx”), (ix) the XXXXXXX X. XXXXXXX IRREVOCABLE TRUST, ESTABLISHED JANUARY 1, 2001 (the
“RJL Trust”), (x) the XXXX XXXXX XXXXXXX IRREVOCABLE TRUST, ESTABLISHED JANUARY 1, 2001
(the “MDL Trust”) (the MDL Trust and the RJL Trust are collectively referred to as the
“Xxxxxxx Trusts”) (the Xxxxxxx Trusts, X. Xxxxxxx, and X. Xxxxxxx are collectively referred
to as the “Xxxxxxx Supporters”) (Fong, Porthouse, X. Xxxxxxx, X. Xxxxxxx, the RJL Trust,
and the MDL Trust are collectively referred to herein as the “Founding Stockholders”).
Recitals
A. Buyer, Acquisition Sub, and Calence, LLC, a Delaware limited liability company (the
“Company”), are parties to that certain Agreement and Plan of Merger dated as of January
24, 2008 (the “Merger Agreement”), pursuant to which Acquisition Sub will merge with and
into the Company (the “Merger”).
B. Avnet and Holdings own all of the membership interests of the Company, and the Founding
Stockholders own certain of the issued and outstanding shares of common stock of Holdings.
C. As a condition for Buyer and Acquisition Sub to enter into the Merger Agreement and to
consummate the Merger, Avnet, Holdings, and the Founding Stockholders are entering into this
Agreement.
D. Capitalized terms used, but not defined, herein shall have the meaning given to them in the
Merger Agreement.
Agreement
NOW, THEREFORE, in consideration of the promises and of the mutual covenants contained herein,
the parties agree as follows:
1. No Negotiation. Until the Merger is consummated or the Merger Agreement is terminated in
accordance with its terms, each of Avnet, Holdings, and each Founding Stockholder agrees that he,
she, or it shall not, and shall cause their respective Affiliates not to, directly or indirectly,
solicit, initiate, encourage, or entertain any inquiries, offers, or proposals from, discuss or
negotiate with, provide any nonpublic information to, or consider the merits of any inquiries,
offers, or proposals from any Person (other than Buyer or its Affiliates) relating to any business
combination transaction involving the Company, including the sale of the Company’s membership
interests, the merger or consolidation of the Company, or the sale of a material portion of the
Company’s assets. Each of Avnet, Holdings, and each Founding Stockholder agrees that he, she, or
it shall notify Buyer immediately if any Person makes any proposal, offer, counter-offer, inquiry
or contact with respect to any of the foregoing, including a summary of the terms of such proposal,
offer, counter-offer, inquiry or contact and the identity of the Person making it.
2. Representations and Warranties.
(a) Equity Ownership.
i. Avnet. Avnet represents and warrants that it is the record and beneficial owner of the
membership interests of the Company set forth on Schedule 2(a) attached hereto (the
“Avnet Interests”). Except as provided in the Company Operating Agreement, Avnet
represents and warrants that the Avnet Interests (i) are not subject to or bound by any agreement
affecting or relating to Avnet’s right to transfer the Avnet Interests, and (ii) are free and clear
of all Liens. Except as provided in the Company Operating Agreement, there are no voting trusts,
proxies, or any other agreements or understandings with respect to the voting of the Avnet
Interests to which Avnet is a party.
ii. Holdings. Holdings represents and warrants that it is the record and beneficial owner of the
membership interests of the Company set forth on Schedule 2(a) (the “Holdings
Interests”). Except as provided in the Company Operating Agreement, Holdings represents and
warrants that the Holdings Interests (i) are not subject to or bound by any agreement affecting or
relating to Holdings’ right to transfer the Holdings Interests, and (ii) are free and clear of all
Liens. Except as provided in the Company Operating Agreement, there are no voting trusts, proxies,
or any other agreements or understandings with respect to the voting of the Holdings Interests to
which Holdings is a party.
iii. Xxxx. Xxxx represents and warrants that he is the record and beneficial owner of the shares of
common stock of Holdings set forth on Schedule 2(a) (the “Xxxx Stock”). Except as
set forth on Schedule 2(a), Xxxx represents and warrants that the shares of Xxxx Stock (i)
are not subject to or bound by any agreement affecting or relating to Xxxx’x right to transfer the
Xxxx Stock, and (ii) are free and clear of all Liens. There are no voting trusts, proxies, or any
other agreements or understandings with respect to the voting of the Xxxx Stock to which Xxxx is a
party.
iv. Porthouse. Porthouse represents and warrants that he is the record and beneficial owner of the
shares of common stock of Holdings set forth on Schedule 2(a) (the “Porthouse
Stock”). Porthouse represents and warrants that the shares of Porthouse Stock (i) are not
subject to or bound by any agreement affecting or relating to Porthouse’s right to transfer the
Porthouse Stock, and (ii) are free and clear of all Liens. There are no voting trusts, proxies, or
any other agreements or understandings with respect to the voting of the Porthouse Stock to which
Porthouse is a party.
x. X. Xxxxxxx. X. Xxxxxxx represents and warrants that he is the record and beneficial owner of the
shares of common stock of Holdings set forth on Schedule 2(a) (the “X. Xxxxxxx
Stock”). X. Xxxxxxx represents and warrants that the shares of X. Xxxxxxx Stock (i) are not
subject to or bound by any agreement affecting or relating to X. Xxxxxxx’x right to transfer the X.
Xxxxxxx Stock, and (ii) are free and clear of all Liens. There are no voting trusts, proxies, or
any other agreements or understandings with respect to the voting of the X. Xxxxxxx Stock to which
X. Xxxxxxx is a party.
vi. X. Xxxxxxx. X. Xxxxxxx represents and warrants that she is the record and beneficial owner of
the shares of common stock of Holdings set forth on Schedule 2(a) (the “X. Xxxxxxx
Stock”). X. Xxxxxxx represents and warrants that the shares of X. Xxxxxxx Stock (i) are not
subject to or bound by any agreement affecting or relating to X. Xxxxxxx’x right to transfer the X.
Xxxxxxx Stock, and (ii) are free and clear of all Liens. There are no voting trusts, proxies, or
any other agreements or understandings with respect to the voting of the X. Xxxxxxx Stock to which
X. Xxxxxxx is a party.
vii. The Xxxxxxx Trusts. The Xxxxxxx Supporters represent and warrant that the Xxxxxxx Trusts are
the record and beneficial owner of the shares of common stock of Holdings set forth on Schedule
2(a) (the “Xxxxxxx Trust Stock”). The Xxxxxxx Supporters represent and warrant that
the shares of Xxxxxxx Trust Stock (i) are not subject to or bound by any agreement affecting or
relating to the Xxxxxxx Trusts’ right to
transfer the Xxxxxxx Trust Stock, and (ii) are free and clear of all Liens. There are no voting
trusts, proxies, or any other agreements or understandings with respect to the voting of the
Xxxxxxx Trust Stock to which any of the Xxxxxxx Supporters is a party.
(b) Authority, Approval, and Enforceability.
i. Avnet. Avnet represents and warrants that it has the requisite power and authority to duly
execute, deliver, and perform this Agreement, and to perform its obligations hereunder. The
execution, delivery, and performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action on the part of
Avnet and no other proceedings on the part of Avnet are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Avnet and constitutes the legal, valid, and binding obligation of Avnet, enforceable
in accordance with its terms, except as such enforcement may be limited by general equitable
principles or by applicable bankruptcy, insolvency, moratorium, or other similar laws and judicial
decisions from time to time in effect which affect creditors’ rights generally.
ii. Holdings. Holdings represents and warrants that it has the requisite power and authority to
duly execute, deliver, and perform this Agreement, and to perform its obligations hereunder. The
execution, delivery, and performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action on the part of
Holdings and no other proceedings on the part of Holdings are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Holdings and constitutes the legal, valid, and binding obligation of Holdings,
enforceable in accordance with its terms, except as such enforcement may be limited by general
equitable principles or by applicable bankruptcy, insolvency, moratorium, or other similar laws and
judicial decisions from time to time in effect which affect creditors’ rights generally.
iii. Xxxx. This Agreement has been duly executed and delivered by Xxxx and constitutes the legal,
valid, and binding obligation of Xxxx, enforceable in accordance with its terms, except as such
enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or other similar laws and judicial decisions from time to time in effect which affect
creditors’ rights generally.
iv. Porthouse. This Agreement has been duly executed and delivered by Porthouse and constitutes the
legal, valid, and binding obligation of Porthouse, enforceable in accordance with its terms, except
as such enforcement may be limited by general equitable principles or by applicable bankruptcy,
insolvency, moratorium, or other similar laws and judicial decisions from time to time in effect
which affect creditors’ rights generally.
x. X. Xxxxxxx. This Agreement has been duly executed and delivered by X. Xxxxxxx and constitutes
the legal, valid, and binding obligation of X. Xxxxxxx, enforceable in accordance with its terms,
except as such enforcement may be limited by general equitable principles or by applicable
bankruptcy, insolvency, moratorium, or other similar laws and judicial decisions from time to time
in effect which affect creditors’ rights generally.
vi. X. Xxxxxxx. This Agreement has been duly executed and delivered by X. Xxxxxxx and constitutes
the legal, valid, and binding obligation of X. Xxxxxxx, enforceable in accordance with its terms,
except as such enforcement may be limited by general equitable principles or by applicable
bankruptcy, insolvency, moratorium, or other similar laws and judicial decisions from time to time
in effect which affect creditors’ rights generally.
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vii. The Xxxxxxx Trusts. Xxxxxx Xxxxx Xxxxxx, III, as trustee of The Xxxxxxx X. Xxxxxxx Irrevocable
Trust, established January 1, 2001, and the Xxxx Xxxxx Xxxxxxx Irrevocable Trust, established
January 1, 2001, has the requisite power and authority to execute, deliver, and perform this
Agreement on behalf of the Xxxxxxx Trusts. All action necessary to bind each of the Xxxxxxx Trusts
to this Agreement has been taken, in each case in accordance with the terms of the appropriate
trust documents. This Agreement has been duly executed and delivered by the Xxxxxxx Trusts and
constitutes the legal, valid, and binding obligation of the Xxxxxxx Trusts, enforceable in
accordance with its terms, except as such enforcement may be limited by general equitable
principles or by applicable bankruptcy, insolvency, moratorium, or other similar laws and judicial
decisions from time to time in effect which affect creditors’ rights generally.
(c) Holdings Capitalization. Each Founding Stockholder represents and warrants that all shares
of capital stock of Holdings are owned beneficially and of record as set forth in Schedule
2(c) attached hereto. Each Founding Stockholder further represents and warrants that, except
as set forth on Schedule 2(c), there are no other authorized, issued, or outstanding
capital stock of Holdings, or securities convertible into or exchangeable or exercisable for
capital stock of Holdings, or outstanding options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, contracts, commitments, understandings, or arrangements
of any character by which Holdings, any Founding Stockholder, or any other Person is bound to
issue, transfer, sell, repurchase, retire, or cause to be issued, transferred, sold, repurchased,
or retired any capital stock of Holdings or securities convertible into or exchangeable or
exercisable for capital stock of Holdings, or obligating Holdings to grant, extend, or enter into
any such options, warrants, calls, preemptive rights, subscriptions, or other rights, agreements,
contracts, commitments, understandings, or arrangements.
(d) Company Capitalization. Each of Avnet and each Founding Stockholder represents and
warrants that the matters set forth in Section 2.3 of the Merger Agreement are true and correct in
all material respects.
(e) Full Disclosure.
i. Avnet represents and warrants that Buyer has been furnished with all facts that are
material to the Special Indemnity Matter (as defined in Schedule 4(d) attached hereto) and that are
within the Knowledge of Avnet. For purposes of this Section 2(e)(i), “Knowledge of
Avnet” means the actual knowledge of (A) Xxx Xxxxxx, Avnet’s Chief Executive Officer, (B) Xxxxx
Xxxx, Avnet’s General Counsel, (C) Xxx Xxxxxxxx, Avnet’s Chief Financial Officer, and (D) Xxxx
Xxxxx, Avnet’s Chief Ethics and Compliance Officer, with respect to the Special Indemnity Matter.
ii. Xxxx represents and warrants that Buyer has been furnished with all facts that are
material to the Special Indemnity Matter and that are within the Knowledge of Xxxx. For purposes
of this Section 2(e)(ii), “Knowledge of Xxxx” means the actual knowledge, after
reasonable inquiry, of Xxxx with respect to the Special Indemnity Matter.
iii. Porthouse represents and warrants that Buyer has been furnished with all facts that are
material to the Special Indemnity Matter and that are within the Knowledge of Porthouse. For
purposes of this Section 2(e)(iii), “Knowledge of Porthouse” means the actual
knowledge, after reasonable inquiry, of Porthouse with respect to the Special Indemnity Matter.
iv. X. Xxxxxxx represents and warrants that Buyer has been furnished with all facts that are
material to the Special Indemnity Matter and that are within the Knowledge of X. Xxxxxxx. For
purposes of this Section 2(e)(iv), “Knowledge of X. Xxxxxxx” means the actual
knowledge of X. Xxxxxxx with respect to the Special Indemnity Matter.
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x. X. Xxxxxxx represents and warrants that Buyer has been furnished with all facts that are
material to the Special Indemnity Matter and that are within the Knowledge of X. Xxxxxxx. For
purposes of this Section 2(e)(v), “Knowledge of X. Xxxxxxx” means the actual
knowledge of X. Xxxxxxx with respect to the Special Indemnity Matter.
vi. The Xxxxxxx Trusts represent and warrant that Buyer has been furnished with all facts that
are material to the Special Indemnity Matter and that are within the Knowledge of the Xxxxxxx
Trusts. For purposes of this Section 2(e)(vi), “Knowledge of the Xxxxxxx Trusts”
means the actual knowledge of X. Xxxxxxx with respect to the Special Indemnity Matter.
3. Release of Escrow Interest. Each of Avnet, Holdings, and the Founding Stockholders hereby
releases any and all interests it, he, or she might have in the Escrow Amount until such time as
the Escrow Amount is actually distributed to Avnet and Holdings pursuant to the Merger Agreement.
Avnet, Holdings, and the Founding Stockholders acknowledge that a portion or all of the Escrow
Amount may not be distributed to Avnet and Holdings at any particular time or at all, and any
distributions that are made will be subject to the terms and conditions of the Merger Agreement and
the Escrow Agreement.
4. Indemnification.
(a) Employee Benefits/ERISA and Tax Indemnification.
i. Avnet shall indemnify, defend, and hold harmless Buyer and its Subsidiaries, Affiliates,
successors, assigns, officers, directors, stockholders, and employees (the “Buyer Indemnified
Parties”) from and against all Damages incurred by any Buyer Indemnified Party that arise out
of or result from (A) any Taxes arising from or with respect to the AES Transferred Assets or the
operation of the AES Business that are incurred in or attributable to any period, or any portion of
any period, ending on or prior to February 1, 2006 (except as otherwise provided in the
Contribution Agreement, as defined below), and (B) any liability retained by Avnet pursuant to
Section 5.8 of the Contribution Agreement arising in respect of or relating to AES Business
Employees or any AES Employee Plan. For purposes of this Section 4, “AES Transferred
Assets,” “AES Business,” “AES Business Employees,” and “AES Employee
Plan” shall have the meanings given to them in that certain Asset Contribution Agreement, dated
as of November 28, 2005, by and among, Avnet, Calence, Inc., the stockholders named therein, and
the Company (the “Contribution Agreement”). Such obligation to indemnify shall survive for
the applicable statute of limitations plus 60 days, unless before such indemnification period
expires Buyer shall have delivered to Avnet a Claim Notice with respect to which any claim for
indemnification under this Section 4(a)(i) has not been finally resolved, in which case
such obligation to indemnify shall continue beyond such period but only with respect to any such
unresolved claim and only until such unresolved claim is finally resolved. For the avoidance of
doubt, Avnet’s obligation to indemnify under this Section 4(a)(i) shall not be limited by
any provision contained in Article VIII of the Contribution Agreement, including without
limitation, Sections 8.1, 8.2(b) and 8.2(d) thereof.
ii. Each Founding Stockholder shall indemnify, defend, and hold harmless the Buyer Indemnified
Parties from and against all Damages incurred by any Buyer Indemnified Party that arise out of or
result from (A) any Taxes arising from or with respect to the Calence Transferred Assets or the
operation of Calence that are incurred in or attributable to any period, or any portion of any
period, ending on or prior to February 1, 2006 (except as otherwise provided in the Contribution
Agreement), and (B) any liability retained by Holdings pursuant to Section 5.8 of the Contribution
Agreement arising in respect of or relating to Calence Employees or any Calence Employee Plan. For
purposes of this Section, “Calence Transferred Assets,” “Calence,” “Calence
Employees,” and “Calence Employee Plan” shall have the meanings given to them in the
Contribution Agreement. Such obligation
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to indemnify shall survive for the applicable statute of limitations plus 60 days, unless
before such indemnification period expires Buyer shall have delivered to the Member Agent a Claim
Notice with respect to which any claim for indemnification under this Section 4(a)(ii) has
not been finally resolved, in which case such obligation to indemnify shall continue beyond such
period but only with respect to any such unresolved claim and only until such unresolved claim is
finally resolved. For the avoidance of doubt, each Founding Stockholder’s obligation to indemnify
under this Section 4(a)(ii) shall not be limited by any provision contained in Article VIII
of the Contribution Agreement, including without limitation, Sections 8.1, 8.3(b) and 8.3(d)
thereof.
iii. Any claim for indemnification under this Section 4(a) may be made only under this
Agreement, and not under the Merger Agreement.
(b) Fraud Indemnification. Each of Avnet and each Founding Stockholder shall severally (in
accordance with each party’s Proportionate Share), but not jointly, indemnify, defend, and hold
harmless the Buyer Indemnified Parties from and against all Damages incurred by any of them that
arise out of or result from any fraud by the Company in connection with the representations and
warranties of the Company set forth in Article II of the Merger Agreement. Such obligation to
indemnify shall terminate on the later of (i) the 36-month anniversary of the Closing, and (ii) the
earlier of (w) 30 days after the completion of Buyer’s financial audit for the year ending December
31, 2010 and (x) March 31, 2011, unless before such termination Buyer shall have delivered to the
Member Agent a Claim Notice with respect to which any claim for indemnification under this
Section 4(b) has not been finally resolved, in which case such obligation to indemnify
shall continue beyond such period but only with respect to any such unresolved claim and only until
such unresolved claim is finally resolved. For purposes of this Agreement, “Proportionate
Share” shall mean, as to each Indemnifying Party, the greater of (i) the Proportionate Share
percentage set forth opposite such party’s name on Schedule 4(b) attached hereto and (ii)
(x) in the case of Avnet, Avnet’s Pro Rata Portion of the Company immediately prior to the
Effective Time and (y) in the case of each Founding Stockholder, the quotient of the number of
shares of common stock of Holdings set forth on Schedule 2(a) for such Founding Stockholder
divided by the total number of shares of common stock of Holdings set forth on Schedule
2(a) for all Founding Stockholders multiplied by Holdings’ Pro Rata Portion of the Company
immediately prior to the Effective Time.
(c) Support Agreement Indemnification.
i. Avnet. Avnet shall indemnify, defend, and hold harmless the Buyer Indemnified Parties from and
against all Damages incurred by any Buyer Indemnified Party that arise out of or result from (A)
any breach of any of the representations and warranties of Avnet in this Agreement, and (B) any
breach by Avnet of any of its covenants in this Agreement.
ii. Holdings. Holdings shall indemnify, defend, and hold harmless the Buyer Indemnified Parties
from and against all Damages incurred by any Buyer Indemnified Party that arise out of or result
from (A) any breach of any of the representations and warranties of Holdings in this Agreement, and
(B) any breach by Holdings of any of its covenants in this Agreement.
iii. Xxxx. Xxxx shall indemnify, defend, and hold harmless the Buyer Indemnified Parties from and
against all Damages incurred by any Buyer Indemnified Party that arise out of or result from (A)
any breach of any of the representations and warranties of Xxxx in this Agreement, and (B) any
breach by Xxxx of any of his covenants in this Agreement; or (C) any claim related to or arising
under the Xxxx Security Agreements as defined in Schedule 2(a) attached hereto.
iv. Porthouse. Porthouse shall indemnify, defend, and hold harmless the Buyer Indemnified Parties
from and against all Damages incurred by any Buyer Indemnified Party that
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arise out of or result from (A)
any breach of any of the representations and warranties of Porthouse in this Agreement, and (B) any
breach by Porthouse of any of his covenants in this Agreement.
x. X. Xxxxxxx. X. Xxxxxxx shall indemnify, defend, and hold harmless the Buyer Indemnified Parties
from and against all Damages incurred by any Buyer Indemnified Party that arise out of or result
from (A) any breach of any of the representations and warranties of X. Xxxxxxx in this Agreement,
and (B) any breach by X. Xxxxxxx of any of his covenants in this Agreement.
vi. X. Xxxxxxx. X. Xxxxxxx shall indemnify, defend, and hold harmless the Buyer Indemnified Parties
from and against all Damages incurred by any Buyer Indemnified Party that arise out of or result
from (A) any breach of any of the representations and warranties of X. Xxxxxxx in this Agreement,
and (B) any breach by X. Xxxxxxx of any of her covenants in this Agreement.
vii. The Xxxxxxx Trusts. The Xxxxxxx Trusts shall indemnify, defend, and hold harmless the Buyer
Indemnified Parties from and against all Damages incurred by any Buyer Indemnified Party that arise
out of or result from (A) any breach of any of the representations and warranties of the Xxxxxxx
Trusts in this Agreement, and (B) any breach by the Xxxxxxx Trusts of any of their covenants in
this Agreement.
(d) Special Indemnity.
i. Each of Avnet and each Founding Stockholder shall, on a joint and several basis, indemnify,
defend, and hold harmless the Buyer Indemnified Parties from and against all Losses incurred by any
of them that arise out of or result from the Special Indemnity Matter (as defined in Schedule 4(d)
attached hereto). Such obligation to indemnify shall survive for a period of seven years following
the Closing Date, unless before such indemnification period expires Buyer shall have delivered to
the Member Agent a Claim Notice with respect to which any claim for indemnification under this
Section 4(d) has not been finally resolved, in which case such obligation to indemnify
shall continue beyond such period but only with respect to any such unresolved claim and only until
such unresolved claim is finally resolved. For purposes of the indemnity provided in this
Section 4(d), “Losses” shall mean any and all Damages, restitution, and punitive
and exemplary damages. Notwithstanding the foregoing, (i) the indemnification obligations under
this Section 4(d) shall be several (in accordance with each party’s Proportionate Share),
and not joint, for any Losses related to any single incident or series of related incidents
occurring solely on or after February 1, 2006 and (ii) no Founding Stockholder shall have any
liability under this Section 4(d) for any Losses related to any single incident or series
of related incidents occurring solely prior to February 1, 2006.
ii. The amount of any Losses subject to indemnification under Section 4(d) shall be
calculated net of any amounts that are actually recovered by Buyer or its Affiliates under
insurance policies or other collateral sources (such as contractual indemnities of any Person that
are contained outside this Agreement), and Buyer hereby covenants that, to the extent related to
claims for indemnification already paid pursuant to Section 4(d), neither it nor its
Affiliates will release any such collateral sources from any obligations those sources may have and
that Buyer and its Affiliates will use commercially reasonable efforts to pursue all such insurance
claims or other collateral sources promptly and in good faith. In the event any such amounts
recoverable under insurance policies or other collateral sources are not received before any claim
for indemnification is paid pursuant to Section 4(d), then Buyer and its Affiliates shall
use commercially reasonable efforts to pursue such insurance policies or collateral sources, and in
the event it receives any recovery, the amount of such recovery shall be applied first, to
reimburse Buyer and its Affiliates for their out-of-pocket expenses (including reasonable
attorneys’ fees) expended in pursuing such recovery, and second, to refund any payments made by the
Members that would not have been so paid had such recovery been obtained prior to such payment. In
addition, all
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Losses subject to indemnification hereunder shall be calculated net of any Tax
Benefits that are realized
by Buyer or its Affiliates as a result thereof; provided, however, that if
such reduction in Tax liability of Buyer is subsequently required to be paid to a Governmental
Authority, then the Members shall make a payment to Buyer in the amount equal to the excess of (i)
the amount of such payment made by Buyer to the Governmental Authority over (ii) the Subsequent Tax
Benefit.
(e) Procedure. The parties hereto agree that any claim made pursuant to this Section 4
shall be subject to and conducted in accordance with the indemnification procedures set forth in
Section 8.3(a) of the Merger Agreement, except that (i) notice of any Proceeding that has commenced
on or prior to the Closing Date shall be deemed given by the Indemnified Party, (ii) reference to
“Section 8(a)” therein shall be deemed to refer to the applicable Section herein, and (iii) any
Proceeding relating to the Special Indemnity Matter shall be subject to and conducted in accordance
with the procedures set forth in that certain letter dated as of the date hereof among the parties
hereto.
(f) Assumption of Indemnification Obligations; Limitations. In the event that Avnet or any of
its successors or assigns (i) consolidates with or merges into any other Person and is not the
continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or a substantial portion of its properties and assets to any Person (whether by sale,
merger, distribution, dividend, operation of law, or otherwise), then, and in each such case and as
a condition precedent to the validity of any such action, proper provision will be made so that the
successors and assigns of Avnet shall fully assume the obligations thereof set forth in this
Section 4. The indemnification provided under this Section 4 shall be subject to
that certain letter dated as of the date hereof among the parties hereto executed in connection
with the Merger.
5. Bonding Matters. Buyer and Avnet shall use their respective reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done and cooperate with each
other in order to do, all things necessary to replace, effective as of the Closing Date, all bid
and performance bonds and/or similar payment guarantees identified on Schedule 5 attached
hereto (the “Bond Schedule”) issued by or for the account of Avnet to support the Company’s
business (collectively, the “Avnet Performance Bonds”). Avnet agrees to provide Buyer an
updated Bond Schedule at least five Business Days prior to the anticipated Closing Date. In the
event any Avnet Performance Bond is not so replaced, effective as of the Closing Date, Buyer hereby
guarantees, on an absolute and unconditional basis, payment in full of any amounts Avnet is
required from time to time to pay under any Avnet Performance Bond; provided, however, that such
payment guarantee shall terminate upon issuance by a bank reasonably acceptable to Avnet of one or
more standby letters of credit having an aggregate face amount equal to Avnet’s maximum exposure
under all outstanding Avnet Performance Bonds and that include irrevocable instructions permitting
Avnet to draw upon such letters of credit to reimburse Avnet for any payment Avnet is required to
make under any Avnet Performance Bond. Any payment required to be made by Buyer to Avnet under
this Section 5 shall be made promptly and in any event within five Business Days after
notice from Avnet of its payment under any Avnet Performance Bond, which notice shall indicate with
reasonable specificity the Avnet Performance Bond that required payment and the date and amount of
such payment.
6. Member Clawbacks.
(a) Purchase Price Adjustment. If (i) the Final Adjustment Amount Due results in a downward
adjustment to the Purchase Price and (ii) the downward adjustment to the Purchase Price exceeds the
Post-Closing Adjustment Escrow (the “Adjustment Shortfall Amount”), then Avnet and the
Founding Stockholders shall promptly (and in any event within five Business Days following the date
on which the Final Adjustment Amount Due is finally determined pursuant to the Merger Agreement)
pay, or
cause to be paid to Buyer, in cash, an amount equal to the Adjustment Shortfall Amount;
provided,
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however, that each party’s maximum liability under this Section 6(a) shall not
exceed its Proportionate Share of the Adjustment Shortfall Amount.
(b) Earn-Out Payments. Avnet and each Founding Stockholder agrees to pay its Proportionate
Share of any Earn-Out Overpayment Amount in accordance with Section 1.12(a) of the Merger
Agreement.
(c) Tax Benefits. Avnet and each Founding Stockholder agrees to pay its Proportionate Share of
any amounts required to be paid to Buyer under the proviso to Section 8.2(c) of the Merger
Agreement, such payment to be made within five Business Days of receipt of notice that such payment
is due.
7. Member Agent.
(a) Appointment. Each of Avnet and Holdings hereby designates Xxxx to serve as its
representative (the “Member Agent”) for all purposes under the Merger Agreement, including
receipt of disclosures, granting and/or executing consents or waivers, receiving notices, and
agreeing to and executing amendments and/or modifications to the Merger Agreement. The Member
Agent hereby accepts such appointment and agrees to be bound by the terms of the Merger Agreement.
The designation by Avnet and Holdings of the Member Agent may not be revoked without the written
consent of Buyer.
(b) Member Agent’s Authority. The Member Agent is authorized to (i) give and receive notices
and communications, (ii) authorize delivery to Buyer of monies from the Escrow Fund in satisfaction
of claims made by Buyer, (iii) deliver notices of objection, (iv) agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of courts and awards
of arbitrators with respect to such claims, and (v) take all actions necessary or appropriate in
the judgment of Member Agent to carry out his responsibilities, exercise his authority, and
represent the interests of the Members.
(c) Successor Member Agent. The Members can appoint a different Member Agent from time to time
upon not less than thirty (30) days prior written notice to Buyer. However, the Member Agent
cannot be removed unless holders of an at least 80% interest in the Escrow Fund agree to the
removal and to the identity of the substituted agent. Any vacancy in the position of Member Agent
can be filled by approval of the holders of a majority in interest of the Escrow Fund.
(d) Bond and Compensation. No bond will be required of the Member Agent, and the Member Agent
will not receive compensation for his services.
(e) Notices. Notices or communications to or from the Member Agent will constitute notice to
or from each of the Members.
(f) Liability. The Member Agent will not be liable to any Member for any act done or omitted
under the Merger Agreement as Member Agent while acting without gross negligence, in good faith,
and in the exercise of reasonable judgment.
(g) Member Agent Action. A decision, act, consent, or instruction of the Member Agent will
constitute a decision of all the former Members for whom a portion of the Escrow Fund otherwise
payable to them is deposited in the Escrow Fund and will be final, binding, and conclusive upon
each of such former Members, and Buyer may rely upon any such decision, act, consent, or
instruction of the Member Agent as being the decision, act, consent, or instruction of each former
9
Member. Buyer is hereby relieved from any liability to any Person for any acts done by them
in accordance with such Member Agent decision, act, consent, or instruction.
8. Voting Agreement
(a) Holdings and each Founding Stockholder represents and warrants that (i) the consummation
of the Merger and the other transactions contemplated thereby have been duly authorized, adopted,
and approved by the Board of Directors of Holdings (the “Holdings Board”) and (ii) the shares of
common stock of Holdings (the “Holdings Common Stock”) held by the Founding Stockholders, in the
aggregate, constitute 94.25% of the voting power of Holdings.
(b) Holdings shall, and the Founding Stockholders agree to cause Holdings to, (i) promptly
take all action necessary in accordance with applicable law and its Articles of Incorporation and
Bylaws to convene, not later than fifteen (15) Business Days following the date hereof, a special
meeting of its stockholders (the “Special Meeting”) to approve the Merger and the other
transactions contemplated thereby and (ii) (x) include in the notice to Holdings’ stockholders of
the Special Meeting the recommendation of the Holdings Board to vote in favor of the transactions
contemplated by the Merger and (y) not change such recommendation at any time prior to the earlier
of the Effective Date and the termination of the Merger Agreement in accordance with Article VII
thereof. The stockholder vote or consent required for approval of the Merger will be no greater
than that required by applicable law.
(c) Each Founding Stockholder agrees, during the period commencing on the date hereof and
continuing until the earlier of the Effective Time and the termination of the Merger Agreement in
accordance with Article VII thereof, and in respect of all shares of Holdings Common Stock set
forth on Schedule 2(a) attached hereto owned beneficially and of record by such Founding
Stockholder, to (i) appear (in person or by proxy) at the Special Meeting for the purpose of
obtaining a quorum and (ii) vote (A) in favor of the approval of any matter to be approved by the
stockholders of Holdings to facilitate the transactions contemplated by the Merger Agreement,
including the Merger, (B) against any proposal made in opposition to, or in competition or
inconsistent with, the Merger, including the adoption thereof or the consummation thereof,
including any amendment of Holdings organizational documents or other proposal or transaction
involving Holdings which amendment or other proposal or transaction would in any manner impede,
interfere with, materially delay, frustrate, prevent, or nullify or result in a breach of any
representation or warranty, covenant, agreement or other obligation of Holdings under or with
respect to the Merger or any of the transactions contemplated thereby, and (C) against any action
or agreement that would reasonably be expected to result in any condition to the consummation of
the Merger set forth in Article V of the Merger Agreement not being fulfilled.
(d) Without the prior written consent of Buyer, each Founding Stockholder agrees, during the
period commencing on the date hereof and continuing until the earlier of the Effective Time and the
termination of the Merger Agreement in accordance with Article VII thereof, not to (i) directly or
indirectly Transfer or offer to Transfer any shares of Holdings Common Stock, (ii) enter into any
voting arrangement, whether by proxy (except as set forth in paragraph (c) above), voting agreement
or otherwise, with respect to such Holdings Common Stock or (iii) otherwise restrict the ability of
such Founding Stockholder freely to exercise all voting rights with respect thereto. Any action
attempted to be taken in violation of the preceding sentence will be null and void. For purposes
hereof, “Transfer” means, with respect to any shares of Holdings Common Stock, the sale, grant,
assignment, transfer, pledge, encumbrance, hypothecation or other disposition of such shares or the
beneficial ownership thereof (including by operation of law), or the entry into any contract to
effect any of the foregoing, including, for purposes of this Section 8, the transfer or
sharing of any voting power of such security or other rights in or of such security (except as set
forth in paragraph (c) above), the granting of any proxy with respect to
10
such security (except as set forth in paragraph (c) above), depositing such security into a
voting trust or entering into a voting agreement with respect to such security.
(e) Holdings agrees to provide Buyer written notice promptly upon receiving stockholder
approval of the Merger.
(f) Holdings and each Founding Stockholder recognizes and acknowledges that a breach by any
such party of any covenants or agreements contained in this Section 8 will cause Buyer to
sustain damages for which it would not have an adequate remedy at law for money damages, and
therefore Holdings and each Founding Stockholder agrees that in the event of any such breach, or
threatened breach, Buyer shall be entitled to seek the remedy of specific performance of such
covenants and agreements and injunctive and other equitable relief in addition to any other remedy
to which they may be entitled, at law or in equity, and that any requirement for the posting of a
bond or similar requirement in any such proceeding is hereby irrevocably waived.
9. Miscellaneous.
(a) Governing Law. The provisions of this Agreement and the documents delivered pursuant
hereto shall be governed by and construed in accordance with the laws of the state of Delaware
(excluding any conflict of law rule or principle that would refer to the laws of another
jurisdiction).
(b) Entire Agreement; Amendments; Waivers. This Agreement together with the Merger Agreement
and any other Collateral Agreement to which any party hereto is a party constitutes the entire
agreement between and among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other agreements between
the parties in connection with the subject matter hereof except as set forth specifically herein or
contemplated hereby. No supplement, modification, or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other provision hereof
(regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
(c) Schedules. The Schedules referred to herein are attached hereto and incorporated herein by
this reference.
(d) Severability. Any term or provision of this Agreement that is held by a court of competent
jurisdiction or other authority to be invalid, void, or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in any other situation
or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other
authority declares that any term or provision hereof is invalid, void or unenforceable, the parties
agree that the court making such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or phrases, or to replace
any invalid, void, or unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or unenforceable term
or provision.
(e) References and Construction.
i. Whenever required by the context, and as used in this Agreement, the singular number shall
include the plural and pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identification of the Person may require.
11
ii. The provisions of this Agreement shall be construed according to their fair meaning and
neither for nor against any party hereto irrespective of which party caused such provisions to be
drafted. Each of the parties acknowledges that it has been represented by an attorney in
connection with the preparation and execution of this Agreement.
(f) Binding Effect and Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and assigns, but neither
this Agreement nor any of the rights, benefits, or obligations hereunder shall be assigned, by
operation of law or otherwise, by any party hereto without the prior written consent of the other
parties, except that Buyer may assign all or any portion of its rights, interests or obligations to
one or more Subsidiaries of Buyer, which assignees may thereafter assign any such rights, interests
or obligations to one or more Subsidiaries; provided, however, that no such assignment by Buyer or
any such subsequent assignment shall relieve Buyer of any of its obligations hereunder.
(g) Notices. Any notice, request, instruction, correspondence, or other document to be given
hereunder by any party hereto to another (herein collectively called “Notice”) shall be in
writing and delivered personally or mailed by registered or certified mail, postage prepaid and
return receipt requested, or by telecopier, as follows:
IF TO BUYER OR ACQUISITION SUB: |
Insight Enterprises, Inc. 0000 X. Xxxx Xxxxx |
|
| Xxxxx, Xxxxxxx 00000 | ||
| Attn.: Xxxxxxx X. Xxxxxxxx | ||
| Fax No.: (000) 000-0000 | ||
| With a copy (which shall not constitute Notice) to: | ||
| Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP | ||
| 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 | ||
| Xxx Xxxxxxx, Xxxxxxxxxx 00000 | ||
| Attn.: Xxxxx X. XxXxxxxx, Esq. | ||
| Fax No.: (000) 000-0000 | ||
IF TO HOLDINGS:
|
Calence Holdings, Inc. | |
| 0000 X. Xxxxxxxxxxxx Xxxx., 0xx Xxxxx | ||
| Xxxxx, Xxxxxxx 00000 | ||
| Attn.: Xxxxxxx X. Xxxx | ||
| Fax No.: (000) 000-0000 | ||
| With a copy (which shall not constitute Notice) to: | ||
| Xxxxxxxxx Traurig, LLP | ||
| 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
| Attn.: Xxxxx X. Xxxxxx, Esq. | ||
| Fax No.: (000) 000-0000 |
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IF TO AVNET:
|
Avnet, Inc. | |
| 0000 Xxxxx 00xx Xxxxxx | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
| Attn.: Xxxxx X. Xxxx, Esq. | ||
| Fax No.: (000) 000-0000 | ||
IF TO MEMBER AGENT:
|
Xxxxxxx X. Xxxx | |
| 0000 Xxxx Xx Xxxxxx Xxx | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
IF TO THE FOUNDING STOCKHOLDERS: |
At the address set forth under their names on the signature page hereto. |
Each of the above addresses for notice purposes may be changed by providing appropriate notice
hereunder. Notice given by personal delivery or registered mail shall be effective upon actual
receipt. Notice given by telecopier shall be effective upon receipt by the sender of an electronic
confirmation of delivery if received during the recipient’s normal business hours, or at the
beginning of the recipient’s next normal business day after receipt if not received during the
recipient’s normal business hours. All Notices by telecopier shall be confirmed by the sender
thereof promptly after transmission in writing by first class mail or personal delivery. Anything
to the contrary contained herein notwithstanding, Notices to any party hereto shall not be deemed
effective with respect to such party until such Notice would, but for this sentence, be effective
both as to such party and as to all other Persons to whom copies are provided above to be given.
(h) Multiple Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
(i) Dispute Resolution. If there is a dispute arising out of or relating to this Agreement,
the parties agree to resolve such dispute in the manner set forth in Section 9.4 of the Merger
Agreement.
(j) Attorneys’ Fees. In the event any suit or other legal proceeding is brought for the
enforcement of any of the provisions of this Agreement, including without limitation, any
proceeding brought under Section 9(i) hereof, the parties hereto agree that the prevailing
party or parties shall be entitled to recover from the other party or parties upon final judgment
on the merits reasonable attorneys’ fees, including attorneys’ fees for any appeal, and costs
incurred in bringing such suit or proceeding.
(k) Support Agreement Controls. In the event that any provision of this Agreement conflicts
with any provision of the Merger Agreement, the provisions of this Agreement shall prevail.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Buyer, Acquisition Sub, Avnet, Holdings, and the Founding Stockholders
have caused this Support Agreement to be executed as of the date first written above.
BUYER:
Insight Enterprises, Inc.,
a Delaware corporation
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
Name: Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
ACQUISITION SUB:
Insight Networking Services, LLC,
a Delaware limited liability company
a Delaware limited liability company
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
Name: Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
AVNET
Avnet, Inc.,
a New York Corporation
a New York Corporation
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Its: Senior Vice President and General Counsel
Name: Xxxxx X. Xxxx
Its: Senior Vice President and General Counsel
HOLDINGS
Calence Holdings, Inc.
an Arizona corporation
an Arizona corporation
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Its: Chief Executive Officer
Name: Xxxxxxx Xxxx
Its: Chief Executive Officer
14
MEMBER AGENT
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Address:
FOUNDING STOCKHOLDERS
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Address:
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Address:
/s/ Xxxxxxx X. Xxxxxxx, Xx.
Xxxxxxx X. Xxxxxxx, Xx.
Xxxxxxx X. Xxxxxxx, Xx.
Address:
/s/ Xxxx Xxxxx Xxxxx Xxxxxxx
Xxxx Xxxxx Xxxxx Xxxxxxx
Xxxx Xxxxx Xxxxx Xxxxxxx
Address:
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Xxxxxxx X. Xxxxxxx Irrevocable Trust, established
January 1, 2001
January 1, 2001
By: /s/ Xxxxxx Xxxxx Xxxxxx, III, Trustee
Name: Xxxxxx Xxxxx Xxxxxx, III
Its: Trustee
Name: Xxxxxx Xxxxx Xxxxxx, III
Its: Trustee
Address:
Xxxx Xxxxx Xxxxxxx Irrevocable Trust, established
January 1, 2001
January 1, 2001
By: /s/ Xxxxxx Xxxxx Xxxxxx, III, Trustee
Name: Xxxxxx Xxxxx Xxxxxx, III
Its: Trustee
Name: Xxxxxx Xxxxx Xxxxxx, III
Its: Trustee
Address:
16
