PARTNERSHIP INTEREST PURCHASE AGREEMENT dated December 10, 2010 by and among BRIGHTPOINT NORTH AMERICA L.P., TOUCHSTONE ACQUISITION LLC, TOUCHSTONE WIRELESS REPAIR AND LOGISTICS, LP, TOUCHSTONE WIRELESS INVESTMENT PARTNERS, LLC and the LIMITED PARTNERS
Exhibit 10.1
EXECUTION VERSION
dated December 10, 2010
by and among
BRIGHTPOINT NORTH AMERICA L.P.,
TOUCHSTONE ACQUISITION LLC,
TOUCHSTONE WIRELESS REPAIR AND LOGISTICS, LP,
TOUCHSTONE WIRELESS INVESTMENT PARTNERS, LLC and the
LIMITED PARTNERS
Table of Contents | Page | |||
1. Definitions |
1 | |||
1.1. Certain Definitions |
1 | |||
1.2. Terms Defined Elsewhere |
9 | |||
2. Purchase and Sale of Equity Interests |
11 | |||
2.1. Basic Transaction |
11 | |||
2.2. Purchase Price |
11 | |||
2.3. Purchase Price Adjustments. |
11 | |||
2.4. The Closing |
16 | |||
2.5. Deliveries at the Closing |
16 | |||
2.6. Purchase Price Allocation |
18 | |||
3. Representations and Warranties Concerning the Sellers |
19 | |||
3.1. Authorization |
19 | |||
3.2. Ownership of Equity Interests |
19 | |||
3.3. Noncontravention |
19 | |||
3.4. Broker Fees |
19 | |||
4. Representations and Warranties Concerning the Company and its Subsidiaries |
19 | |||
4.1. Organization and Authorization |
19 | |||
4.2. Subsidiaries |
20 | |||
4.3. Capitalization |
21 | |||
4.4. Noncontravention |
21 | |||
4.5. Title to Assets |
21 | |||
4.6. Broker Fees |
22 | |||
4.7. Financial Statements; Indebtedness |
22 | |||
4.8. No Undisclosed Liabilities |
22 | |||
4.9. Events Subsequent to Most Recent Fiscal Year End |
23 | |||
4.10. Legal Compliance |
24 | |||
4.11. Tax Matters |
25 | |||
4.12. Real Property |
26 | |||
4.13. Intellectual Property |
27 | |||
4.14. Information Technology |
29 | |||
4.15. Material Contracts |
30 | |||
4.16. Licenses and Authorizations |
31 | |||
4.17. Insurance |
32 | |||
4.18. Litigation |
32 | |||
4.19. Employees and Independent Contractors |
33 | |||
4.20. Employee Benefits |
34 | |||
4.21. Environment, Health and Safety Matters |
37 | |||
4.22. Accounts Receivable |
38 |
i
Table of Contents | Page | |||
4.23. Customers and Suppliers |
38 | |||
4.24. Inventory |
39 | |||
4.25. Certain Business Relationships With the Company and its Subsidiaries |
39 | |||
4.26. Product Warranties; Latent Defects |
39 | |||
4.27. Illegal Payments |
39 | |||
4.28. Bank Accounts; Power of Attorney |
40 | |||
4.29. State Takeover Statutes |
40 | |||
4.30. No Limitation |
40 | |||
5. Representations and Warranties of Buyer |
41 | |||
5.1. Organization of BPNA |
41 | |||
5.2. Organization of BPGP |
41 | |||
5.3. Authorization of Transaction |
41 | |||
5.4. Noncontravention |
42 | |||
5.5. Broker Fees |
42 | |||
5.6. Litigation |
42 | |||
5.7. Purchase for Investment |
42 | |||
5.8. Sufficient Financing |
42 | |||
5.9. No Knowledge of Misrepresentation or Omission |
42 | |||
5.10. Investigation; No Reliance |
43 | |||
6. Covenants of the Sellers Prior to the Closing Date |
43 | |||
6.1. Access and Investigation |
43 | |||
6.2. Operation of the Business |
44 | |||
6.3. Commercially Reasonable Efforts |
46 | |||
6.4. Consents and Approvals |
46 | |||
6.5. Audited Financials |
48 | |||
6.6. No Solicitation of Transactions |
48 | |||
6.7. Public Announcements |
49 | |||
6.8. Termination of Agreements |
49 | |||
6.9. Bonus Calculation |
49 | |||
7. Conditions Precedent |
49 | |||
7.1. Conditions Precedent to Obligations of Buyer |
49 | |||
7.2. Conditions Precedent to Obligations of the Sellers |
50 | |||
8. Post-Closing Covenants |
51 | |||
8.1. Further Assurances |
51 | |||
8.2. Transition |
51 | |||
8.3. Record Retention |
52 | |||
8.4. Nondisclosure; Noncompetition; Nonsolicitation; Nondisparagement |
52 | |||
8.5. Nondisparagement |
55 |
ii
Table of Contents | Page | |||
8.6. Reserved |
55 | |||
8.7. Directors’ and Officers’ Indemnification |
55 | |||
9. Indemnification |
56 | |||
9.1. Sellers’ Indemnification |
56 | |||
9.2. Sellers’ Indemnification Related to the Company’s Representations, Warranties and Non-Performance |
56 | |||
9.3. Buyer’s and the Company’s Indemnification |
57 | |||
9.4. Indemnification Procedures |
58 | |||
9.5. Limits on Indemnification |
59 | |||
9.6. Survival of Representations and Warranties |
61 | |||
9.7. Mitigation; Losses Net of Insurance, Etc. |
61 | |||
9.8. Tax Treatment of Indemnity Payments |
61 | |||
9.9. Distributions from Escrow Fund |
62 | |||
9.10. Sole Remedy/Waiver |
62 | |||
9.11. No Consequential Damages |
62 | |||
9.12. Other Limitations |
63 | |||
9.13. Seller Representative |
63 | |||
10. Termination |
65 | |||
10.1. Termination |
65 | |||
10.2. Effect of Termination |
66 | |||
11. Tax Matters |
66 | |||
11.1. Pre-Closing Tax Returns |
66 | |||
11.2. Straddle Period Tax Returns |
66 | |||
11.3. Transfer Taxes |
67 | |||
11.4. Cooperation on Tax Matters |
67 | |||
11.5. Audits |
67 | |||
12. Additional Terms and Provisions |
68 | |||
12.1. No Third-Party Beneficiaries |
68 | |||
12.2. Entire Agreement |
68 | |||
12.3. Schedules |
68 | |||
12.4. Assignment |
69 | |||
12.5. Notices |
69 | |||
12.6. Controlling Law |
70 | |||
12.7. Jurisdiction and Process |
70 | |||
12.8. Waiver of a Jury Trial |
71 | |||
12.9. Specific Performance |
71 | |||
12.10. Amendments and Waivers |
71 | |||
12.11. Severability; No Waiver |
71 |
iii
Table of Contents | Page | |||
12.12. Expenses |
72 | |||
12.13. Full Understanding |
72 | |||
12.14. Construction |
72 | |||
12.15. Counterparts |
72 | |||
12.16. Headings |
72 | |||
12.17. References |
72 | |||
12.18. Provision Respecting Legal Representation |
72 |
iv
Table of Contents | Page | ||
EXHIBITS |
|||
Exhibit A
|
Ownership of Equity Interests | ||
Exhibit B | Seller’s Equity Interest Assignment Form | ||
Exhibit C | Form of Escrow Agreement | ||
Exhibit D | Working Capital Calculation and Related Accounting Principles |
v
PARTNERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) dated December 10, 2010
(the “Agreement Date”) by and among Brightpoint North America L.P., a Delaware limited
partnership (“BPNA”), Touchstone Acquisition LLC, an Indiana limited liability company
(“BPGP” and, collectively with BPNA, “Buyer”), Touchstone Wireless Repair and
Logistics, LP, a Pennsylvania limited partnership (the “Company”), Touchstone Wireless
Investment Partners, LLC, a Pennsylvania limited liability company and the general partner of the
Company (the “General Partner”), and all of the limited partners of the Company listed on
Exhibit A attached hereto (collectively, the “Limited Partners” and, together with
the General Partner, the “Sellers”). Buyer, the Sellers and the Company are referred to
collectively herein as the “Parties.”
PREAMBLE
WHEREAS, the General Partner is the owner of 100% of the general partnership interests (the
“GP Interests”) in, and the sole General Partner of, the Company;
WHEREAS, the Limited Partners, collectively, are the owners of 100% of the limited partnership
interests in the Company (the “LP Interests” and, together with the GP Interests, the
“Equity Interests”); and
WHEREAS, this Agreement contemplates a transaction in which Buyer will purchase from the
Sellers, and the Sellers will sell to Buyer, all of the Equity Interests.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and intending to
be legally bound hereby, the Parties agree as follows:
1. Definitions.
1.1. Certain Definitions. Capitalized terms used and not otherwise defined herein
shall have the following meanings:
(a) “Accounting Arbitrator” means a Neutral Accounting Firm mutually agreed upon by
the Buyer and Seller Representative.
(b) “Accounting Principles” means those principles set forth on Exhibit D
hereto.
(c) “Acquisition Proposal” means any inquiry, offer or proposal concerning any (a)
merger, consolidation, equity exchange, reorganization, recapitalization, business combination, or
other similar transaction in which the other party thereto or its stockholders will own 20% or more
of the combined voting power of the surviving entity resulting from any such
1
transaction, (b) sale,
lease, exchange, mortgage, pledge, transfer or other disposition of assets of the Company or its
Subsidiaries, as the case may be, representing 20% or more of the consolidated assets of the
Company taken as a whole in a single transaction or series of related transactions, (c) any other
transaction or series of related transactions pursuant to which any third party proposes to acquire
control of assets of the Company or its Subsidiaries having a fair market value equal to or greater
than 20% of the fair market value of all of the assets of the Company or its Subsidiaries, as the
case may be, taken as a whole, immediately prior to such transaction, or (d) any agreement to
engage in any of the foregoing (in each case, other than the transactions contemplated by this
Agreement).
(d) “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act.
(e) “Authorizations” means, as to any Person, all licenses, permits, franchises,
orders, approvals, concessions, clearances, registrations, qualifications and other authorizations
issued or granted to such Person under applicable foreign, federal, state and local laws or by any
Governmental Authority.
(f) “Business Day” means any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which banking institutions
located in the State of New York are authorized or required by law or other governmental action to
close.
(g) “Business of the Company” means the business of providing logistics, repair or
consignment resale services for cellular phones or smart phones, in each case with a voice
transmission capability, or cable or set top boxes.
(h) “Cash” means, as of any date, any cash on hand, cash in bank or other accounts,
readily marketable securities, and other cash-equivalent liquid assets of any nature as of such
date, determined in accordance with the Accounting Principles.
(i) “COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code §4980B.
(j) “Code” means the Internal Revenue Code of 1986, as amended.
(k) “Company Competitor” means a business that is directly competitive with the
Business of the Company; provided, however, that any business that provides logistics, repair, or
consignment resale services to electronic devices other than cellular phones or smart phones, in
each case with a voice transmission capability, or cable or set top boxes, or
any business that provides products or services other than logistics, repair, or consignment resale
services to wireless carriers, insurers, manufacturers, suppliers, distributors, retailers,
logistics or
2
repair providers shall in no event be a Company Competitor.
(l) “Contract” means, whether written or oral, any note, bond, mortgage, indenture,
contract, agreement, license, lease, purchase order, sales order or other legally binding
commitment or obligation, express or implied, to which a Person is a party or by which a Person or
its assets or properties are bound.
(m) “Current Assets” means, without duplication, the sum of (a) trade and other
accounts receivable, (b) prepaid expenses (including prepaid Taxes), (c) inventory, and (d) other
assets that would be accounted for as current assets, determined in accordance with the Accounting
Principles, but excluding Cash.
(n) “Current Liabilities” means, without duplication, the sum of (a) trade and other
accounts payable, (b) accrued salaries and bonuses, and (c) other liabilities that would be
accounted for as current liabilities in accordance with the Accounting Principles, but excluding
any (x) Indebtedness and (y) Unpaid Transaction Expenses; all as determined in accordance with the
Accounting Principles.
(o) “Employee Benefit Plan” means any employee benefit plan as defined in Section 3(3)
of ERISA, any “voluntary employees’ beneficiary association” within the meaning of
Section 501(c)(9) of the Code, “welfare benefit fund” within the meaning of Section 419 of the
Code, or “qualified asset account” within the meaning of Section 419A of the Code, and any other
material plan, program, policy or arrangement for or regarding bonuses, commissions, incentive
compensation, severance, vacation, pensions, profit sharing, retirement, payroll savings, stock
options, stock purchases, stock awards, stock ownership, phantom stock, stock appreciation rights,
equity compensation, medical/dental expense payment or reimbursement, disability income or
protection, sick pay, group insurance, self insurance, death benefits, employee welfare or fringe
benefits of any nature, including those benefiting retirees or former employees.
(p) “Environmental Laws” means all applicable federal, state, local and foreign or
international laws and any implementing regulations, legally binding agency guidance or policy as
well as applicable common laws relating to the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or protection of human health
as it relates to exposure to Hazardous Materials including, without limitation, relating to (i)
Releases or threatened Releases of Hazardous Materials, (ii) the manufacture, processing,
distribution, use, treatment, storage, transport or management of Hazardous Materials, (iii) the
management of asbestos or lead in buildings or other structures, or (iv) the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act,
the Hazardous Materials Transportation Act and the Occupational Health and Safety Act (to the
extent related to worker exposure to Hazardous Materials).
3
(q) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and
all rulings and regulations promulgated thereunder.
(r) “ERISA Affiliate” means any entity, trade or business (whether or not
incorporated) that is part of the same controlled group with, under common control with, part of an
affiliated service group with, or part of another arrangement that includes, the Company or any
ERISA Affiliate within the meaning of Code Section 414(b), (c), (m) or (o).
(s) “Escrow Agent” means JPMorgan Chase Bank, N.A.
(t) “Escrow Agreement” means the escrow agreement to be entered into on the Closing
Date by and among Buyer, Escrow Agent and the Seller Representative, on behalf of the Sellers, in
substantially the form attached hereto as Exhibit C (the “Escrow Agreement”).
(u) “Excluded Intellectual Property Losses” means any and all Losses: (i) arising out
of or caused by any claim or Proceeding for patent or other Intellectual Property infringement made
by a party against whom Buyer, the Company or either of their respective Affiliates has initiated
patent or other Intellectual Property infringement Proceedings or to whom Buyer, the Company or
either of their respective Affiliates has delivered a written notice, or otherwise made a claim, of
patent or other Intellectual Property infringement, in either case with respect to ICE; (ii)
arising out of or caused by the use of ICE outside of the United States; or (iii) arising from and
after the filing of any patent application with respect to ICE.
(v) “Fundamental Representations” means those representations and warranties set forth
in Sections 3.1 (Authorization), 3.2 (Ownership of Equity Interests), 3.3
(Noncontravention), 3.4 (Broker Fees), 4.1 (Organization and Authorization),
4.2 (Subsidiaries), 4.3 (Capitalization) and 4.6 (Broker Fees).
(w) “GAAP” means United States generally accepted accounting principles as in effect
as of the date of this Agreement.
(x) “Governmental Authority” means any executive, legislative, judicial, regulatory or
administrative government authority, including, without limitation, any federal, state, local or
foreign government or any subdivision, agency, instrumentality, authority (including any
regulatory, administrative, and self-regulatory authority), department, commission, board or bureau
thereof or any federal, state, local or foreign court or tribunal.
(y) “Hazardous Materials” means any toxic or hazardous substance, material, or waste,
and any other contaminant, pollutant or constituent thereof, whether liquid, solid, semi-solid,
sludge and/or gaseous, including without limitation, chemicals, compounds, by-products, pesticides,
asbestos containing materials, petroleum or petroleum products, and polychlorinated biphenyls, and
any other toxic or hazardous material or substance, whether waste materials, raw
4
materials or
finished products regulated or governed by any Environmental Law.
(z) “ICE” means the Company’s inventory control environment and all related
Intellectual Property and Information Technology as constituted as of the date hereof.
(aa) “Indebtedness” means, with respect to any Person, (a) all obligations of such
Person, whether or not contingent, for borrowed money of whatsoever nature including, without
limitation, (i) any loan or other financial credit facilities, (ii) any outstanding letters of
credit, to the extent funded, (iii) any off balance sheet financial obligations in the nature of
indebtedness for borrowed money, (iv) any capitalized leases, and (v) with respect to the Company,
(A) any obligation to repay the Commonwealth of Pennsylvania amounts owed under the Settlement and
Release Agreement by and between the Company and the Commonwealth of Pennsylvania, (B) any payments
required to be made to the Sellers by the Company as a result of the transaction contemplated by
this Agreement, (C) any obligations under the unsecured notes payable resulting from the
acquisition of the Company’s Series B Preferred Interests, (D) payment obligations under the
Settlement Agreement and Mutual Release, dated as of March 31, 2009, by and among the Company, the
General Partner, Striker Investment Partners, LLC, Striker Partners I, L.P., BKI Enterprises, Inc.
and Xxxxx Xxxxxxx and (b) any guarantees of the obligations described in clause (a) above of any
other Person.
(bb) “Information Technology” means all computer hardware, Software, microprocessors,
networks, firmware and other information technology and communications equipment used in the
operations of the Company and its Subsidiaries.
(cc) “IRS” means the Internal Revenue Service.
(dd) “Knowledge of the Company,” “to the Company’s Knowledge” and similar
phrases mean the knowledge of Xxxx X. Xxxxxx, Xxxxx Xxxxx Xxxxxx, II, Xxxxx X. Xxxxxx, Xxxxx
Xxxxxx, Xxxxxxxx Xxxxx, Xxxxx Xxxxxxx and Xxxx Xxxxxx, after due inquiry. For purposes of this
Section 1.1(dd), “due inquiry” shall mean solely the oral inquiry of any other Company
employee heading any department responsible for a subject area addressed by the representations and
warranties of the Company set forth in this Agreement.
(ee) “Liabilities” means any direct or indirect Indebtedness, liability or obligation,
known or unknown, fixed or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise.
(ff) “Licenses” means all material licenses, franchises, permits and other similar
requirements of or with any Governmental Authority which are held by a Party as of the date hereof.
(gg) “Losses” of a Person means any and all losses, liabilities, damages, claims,
awards, judgments, reasonable costs and reasonable expenses (including, without limitation, the
5
costs of reasonable investigation, remediation and attorneys’ fees) suffered or incurred by such
Person; provided, however, that such term shall not include any damages based on any multiple of
profits or earnings or incidental, punitive, special, indirect or consequential damages except in
the case of fraud or intentional misrepresentation or to the extent actually payable to a third
party in respect of a third-party claim; provided, further, that the Losses of the Buyer Group
shall in no event include any Excluded Intellectual Property Losses.
(hh) “Material Adverse Effect” means, with respect to any Person, any change, effect,
event, circumstance, occurrence or state of facts that, individually or in the aggregate, has had a
material and adverse effect on the business, assets, financial condition or results of operations
of such Person and its Subsidiaries, taken as a whole; provided, however, that none of the
following shall be deemed, either alone or in combination, to constitute a Material Adverse Effect
on such Person: (i) any adverse effect to the extent attributable to the announcement or pendency
of the transactions contemplated by this Agreement; (ii) except to the extent that they affect the
Person in a materially disproportionate manner relative to other U.S. companies, any adverse effect
attributable to conditions generally affecting (A) the industries in which each of the such Person
and its Subsidiaries and its Subsidiaries participate, (B) the U.S. economy as a whole or global
economic conditions, or (C) the financial, banking, currency or capital markets in general (whether
in the United States or any other country or in any international market) or changes in currency
exchange rates or currency fluctuations; (iii) any adverse effect resulting from or relating to
compliance with the terms of, or the taking of any action required by, this Agreement (including
any adverse effect that results from Buyer’s refusal to permit the Company upon the Company’s
request to take any of the actions itemized in Section 6.2 hereof); (iv) any adverse effect
arising from or relating to any change in accounting requirements or principles or any change in
applicable laws, rules or regulations or the interpretation or enforcement thereof; (v) any adverse
effect resulting from acts of war, hostilities or terrorism; or (vi) with respect to the Company,
any adverse effect attributable to actions of Buyer. References in this Agreement to dollar amount
thresholds shall not be deemed to be evidence of a Material Adverse Effect or materiality.
(ii) “Most Recent Balance Sheet” means the balance sheet contained within the Most
Recent Financial Statements.
(jj) “Multiemployer Plan” has the meaning set forth in ERISA §3(37) or Code §414(f).
(kk) “Net Working Capital” means, for purposes of Section 2.3 herein, the
difference between (a) Current Assets of the Company as of the close of business on the Business
Day before the Closing Date, and (b) Current Liabilities of the Company as of the close of business
on the Business Day before the Closing Date and calculated in accordance with the example set forth
in Exhibit D and the Accounting Principles.
(ll) “Neutral Accounting Firm” means an independent accounting firm of
6
nationally
recognized standing that has not rendered services to any of Buyer or any Affiliate thereof, the
Sellers or any Affiliate thereof, or the Company or any Subsidiary thereof within twenty-four (24)
months prior to the date of retention of such accounting firm.
(mm) “OEM” means an original equipment manufacturer of wireless telecommunication
devices and/or related accessories.
(nn) “Open Source Materials” means Software that is (i) distributed under any of the
following license or distribution models: open source, public source, freeware, or any modification
or derivative thereof, including by way of example and not limitation, the GNU general public
license, limited GPL or other similar open source license; or (ii) otherwise licensed under any
terms or conditions that impose any requirement that any Software using, linked with,
incorporating, distributed with, based on, derived from or accessing the Software code: (1) be made
available or distributed in source code form; (2) be licensed for the purpose of making derivative
works; (3) be licensed under terms that allow reverse engineering, reverse assembly or disassembly
of any kind; or (4) be redistributable at no charge.
(oo) “Ordinary Course of Business” means the ordinary course of business consistent
with past practice.
(pp) “Person” means an individual, a partnership, a corporation, limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political subdivision
thereof).
(qq) “Pre-Closing Tax Period” means any Tax period ending on or before the Closing
Date.
(rr) “Prime Rate” means the prime rate of interest as from time to time published by
The Wall Street Journal (Eastern Edition).
(ss) “Proprietary Software” means any Software developed by or for the Company or any
of its Subsidiaries for use in the business of the Company or its Subsidiaries. Without limiting
the breadth of the foregoing, the term Proprietary Software shall include ICE, but shall not be
deemed to include Third Party Software.
(tt) “Reportable Event” has the meaning set forth in ERISA §4043.
(uu) “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
(vv) “Security Interest” means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (i) liens for Taxes not yet due and payable or for
7
Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (ii) mechanics’,
workmen’s, repairmen’s, warehousemen’s, processor’s, landlord’s, carrier’s, maritime, materialmen’s
or similar liens, including all statutory liens arising or incurred in the ordinary course of
business, (iii) liens arising in connection with worker’s compensation, unemployment insurance, old
age pensions and social security benefits which are not overdue or are being contested in good
faith by appropriate proceedings and for which provision for the payment of such liens has been
reflected in the Financial Statements, (iv) liens (A) incurred or deposits made in the ordinary
course of business to secure the performance of bids, tenders, statutory obligations, fee and
expense arrangements with trustees and fiscal agents (exclusive of obligations incurred in
connection with the borrowing of money or the payment of the deferred purchase price of property)
and (B) securing surety, indemnity, performance, appeal and release bonds and (v) any minor
imperfection of title, easements, encroachments, covenants, rights of way, minor defects, minor
irregularities or encumbrances on title or similar lien.
(ww) “Software” means computer software programs, code, and software systems,
including, without limitation databases, libraries, tool sets, compilers, interfaces between
systems, user interfaces, higher level “proprietary” languages and materials comprising or included
in such programs or systems, and all related documentation, however fixed, whether in source code
or object code format or in any other form or format.
(xx) “Straddle Tax Period” means any Tax period beginning before and ending after the
Closing Date.
(yy) “Subsidiary” means any entity with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.
(zz) “Target Net Working Capital” means Nine Million Three Hundred Thousand Dollars
($9,300,000).
(aaa) “Tax” or “Taxes” means (a) any foreign, federal, state or local income,
earnings, profits, gross receipts, franchise, capital stock, net worth, sales, use, value added,
occupancy, general property, real property, personal property, intangible property, transfer, fuel,
excise, escheat, unclaimed property, payroll, withholding, unemployment compensation, social
security, retirement, environmental (including any Taxes imposed under Section 59A of the Code) or
other tax of any nature; or (b) any deficiency, interest or penalty imposed with respect to any of
the foregoing.
(bbb) “Tax Returns” means all returns and reports, amended returns, information
returns, statements, declarations, estimates, schedules, notices, notifications, forms, elections,
certificates or other documents required to be filed or submitted to any Governmental Authority
with respect to the determination, assessment, collection or payment of any Tax or in connection
8
with the administration, implementation or enforcement of, or compliance with, any Tax.
(ccc) “Taxing Authority” means any domestic, foreign, federal, national, state, county
or municipal or other local government, any subdivision, agency, commission or authority thereof,
or any quasi-governmental body exercising tax regulatory authority.
(ddd) “Unpaid Transaction Expenses” means all expenses incurred and payable by the
Company related to the negotiation and execution of this Agreement and all other agreements and the
transactions contemplated hereby and thereby, including, without limitation, financial advisory and
attorneys fees, to the extent not paid at or prior to Closing.
1.2. Terms Defined Elsewhere. The following terms are defined elsewhere in this
Agreement, as indicated below:
“Adjustment Calculation”
|
Section 2.3.1(ii) | |
“Adjustment Escrow”
|
Section 2.2 | |
“Agreement”
|
Introduction | |
“Agreement Date”
|
Introduction | |
“Asset Acquisition Statement”
|
Section 2.6 | |
“Basket”
|
Section 9.5.1 | |
“BPGP”
|
Introduction | |
“BPNA”
|
Introduction | |
“Buyer”
|
Introduction | |
“Buyer Ceiling”
|
Section 9.5.3 | |
“Buyer Group”
|
Section 9.1 | |
“Buyer Schedules”
|
Section 5 | |
“Ceiling”
|
Section 9.5.2 | |
“Closing”
|
Section 2.4 | |
“Closing Balance Sheet”
|
Section 2.3.1(ii) | |
“Closing Date”
|
Section 2.4 | |
“Closing Date Cash Calculation”
|
Section 2.3.2(ii) | |
“Closing Date Debt Calculation”
|
Section 2.3.2(ii) | |
“Company”
|
Preamble | |
“Company Client”
|
Section 8.4.3 | |
“Company’s Employee Benefit Plans”
|
Section 4.20.1 | |
“Company Inventory”
|
Section 4.24 | |
“Confidential Information”
|
Section 8.4.1(i) | |
“Confidential Records”
|
Section 8.4.2 | |
“Deemed Purchased Assets”
|
Section 2.6 | |
“Employees”
|
Section 4.19 | |
“Environmental Claims”
|
Section 4.21.4 |
9
“Equity Interests”
|
Preamble | |
“Escrow Agreement”
|
Section 2.2 | |
“Escrow Fund”
|
Section 2.2 | |
“Estimated Closing Date Cash Adjustment”
|
Section 2.3.2(i) | |
“Estimated Closing Date Debt Adjustment”
|
Section 2.3.3(i) | |
“Estimated Net Working Capital”
|
Section 2.3.1(i) | |
“Estimated Net Working Capital Adjustment”
|
Section 2.3.1(i) | |
“Final Determination”
|
Section 9.8 | |
“Financial Statements”
|
Section 4.7.1 | |
“General Partner”
|
Introduction | |
“GP Interests”
|
Preamble | |
“HSR Act”
|
Section 6.4 | |
“Indemnification Escrow”
|
Section 2.2 | |
“Indemnification Matter”
|
Section 9.4 | |
“Indemnification Notice”
|
Section 9.4 | |
“Indemnitee”
|
Section 9.4 | |
“Indemnitor”
|
Section 9.4 | |
“Intellectual Property”
|
Section 4.13 | |
“Limited Partners”
|
Introduction | |
“LP Interests”
|
Preamble | |
“Material Contracts”
|
Section 4.15 | |
“Most Recent Annual Financial Statements”
|
Section 4.7.1 | |
“Most Recent Audited Financial Statements”
|
Section 4.7.1 | |
“Most Recent Financial Statements”
|
Section 4.7.1 | |
“Most Recent Fiscal Year End”
|
Section 4.7.1 | |
“Net Working Capital Calculation”
|
Section 2.3.1(ii) | |
“Net Working Capital Disputed Items”
|
Section 2.3.1(iv) | |
“Objection Notice”
|
Section 2.3.1(iii) | |
“Parties”
|
Introduction | |
“Preliminary Net Working Capital Excess”
|
Section 2.3.1(i) | |
“Preliminary Net Working Capital Shortfall”
|
Section 2.3.1(i) | |
“Proceedings”
|
Section 4.18.1 | |
“Protected Agents”
|
Section 8.7.1 | |
“Purchase Price”
|
Section 2.2 | |
“Registered Intellectual Property”
|
Section 4.13.2 | |
“Relevant Parties”
|
Section 8.4.3 | |
“Revised Statement”
|
Section 2.6 | |
“Reportable Transaction”
|
Section 4.11.5 | |
“Schedules”
|
Section 3 | |
“Sellers”
|
Introduction |
10
“Seller Indemnitee”
|
Section 9.3 | |
“Seller Representative”
|
Section 9.13.2 | |
“Source Code”
|
Section 4.13.4 | |
“Tax Closing Agreement”
|
Section 4.11.8 | |
“Tax Ruling”
|
Section 4.11.8 | |
“Third Party Licenses”
|
Section 4.13.4 | |
“Third Party Software”
|
Section 4.13.4 | |
“Transfer Taxes”
|
Section 11.2 |
2. Purchase and Sale of Equity Interests.
2.1. Basic Transaction. On and subject to the terms and conditions of this Agreement,
Buyer agrees to purchase from the Sellers, and each Seller agrees to sell to Buyer, all of the
Equity Interests owned by such Seller for the consideration specified below in Section 2.2.
2.2. Purchase Price. Buyer agrees to pay to the Sellers the aggregate sum of Eighty
Million Dollars ($80,000,000) (the “Purchase Price”) which shall be paid as follows: (a)
Seventy Million Four Hundred Thousand Dollars ($70,400,000) to be paid by Buyer at the Closing to
the Seller Representative on behalf of the Sellers, by wire transfer in immediately available funds
to the account(s) to be designated by the Seller Representative to Buyer at least two (2) Business
Days prior to Closing, (b) Nine Million Five Hundred Thousand Dollars ($9,500,000) to be deposited
by Buyer at the Closing with Escrow Agent, in readily available funds, of which (i) Nine Million
Dollars ($9,000,000) (the “Indemnification Escrow”) shall be held in escrow until April 30,
2012, pursuant to the terms and conditions of the Escrow Agreement, and (ii) Five Hundred Thousand
Dollars ($500,000) (the “Adjustment Escrow,” and together with the Indemnification Escrow,
the “Escrow Fund”) shall be held in escrow, pursuant to the terms and conditions of the
Escrow Agreement and (c) One Hundred Thousand Dollars ($100,000) to be paid by Buyer at the Closing
by wire transfer in immediately available funds to the account to be specified by the Seller
Representative to Buyer at least two (2) Business Days prior to Closing, representing the Seller
Representative Reserve provided for by Section 9.13.4. The Indemnification Escrow shall
secure the Sellers’ indemnification obligations pursuant to Section 9.1 and Section
9.2 of this Agreement, and the Adjustment Escrow shall secure the Sellers’ obligations with
respect to any adjustments to the Purchase Price in accordance with Section 2.3 of this
Agreement.
2.3. Purchase Price Adjustments.
2.3.1 Net Working Capital Adjustment. The Purchase Price shall be adjusted (such
adjustment may be positive or negative), if at all, on a dollar-for-dollar basis as set forth
below:
11
(i) Within two (2) Business Days prior to the Closing, the Sellers shall cause the Company to
prepare and deliver to Buyer an officer’s certificate of the Company that contains a good faith and
reasonable best estimate of the Net Working Capital of the Company as of the close of business on
the Business Day before the Closing Date (the “Estimated Net Working Capital”), the
components of which Estimated Net Working Capital shall be prepared in accordance with the
Accounting Principles. If the Estimated Net Working Capital exceeds the Target Net Working
Capital, then the Purchase Price payable to the Seller Representative on behalf of the Sellers at
the Closing pursuant to Section 2.2 shall be increased by an amount equal to the amount by
which the Estimated Net Working Capital exceeds the Target Net Working Capital (the
“Preliminary Net Working Capital Excess”). If the Estimated Net Working Capital is less
than the Target Net Working Capital, then the Purchase Price payable to the Seller Representative
on behalf of the Sellers at the Closing pursuant to Section 2.2 shall be decreased by an
amount equal to the amount by which the Target Net Working Capital exceeds the Estimated Net
Working Capital (the “Preliminary Net Working Capital Shortfall,” and together with the
Preliminary Net Working Capital Excess, the “Estimated Working Capital Adjustment”).
(ii) Within ninety (90) calendar days after the Closing Date, Buyer shall prepare and deliver
to the Seller Representative an unaudited statement of Net Working Capital of the Company as of the
close of business on the Business Day before the Closing Date (the “Statement of Net Working
Capital”) which shall also set forth a calculation of Net Working Capital determined from the
Statement of Net Working Capital (the “Net Working Capital Calculation”) and the amount, if
any, by which the Net Working Capital so determined is less than or greater than the Estimated Net
Working Capital (the “Adjustment Calculation”). The Statement of Net Working Capital, the
Net Working Capital Calculation and the Adjustment Calculation shall be prepared in accordance with
the Accounting Principles, provided that the Statement of Net Working Capital, the Net Working
Capital Calculation and the Adjustment Calculation shall not have footnotes or other audit
disclosures. In the event that the Closing Date does not occur at a financial week- or month-end
for accounting purposes, the Parties shall agree on mutually acceptable roll forward or roll back
procedures.
(iii) On or prior to the thirtieth (30th) calendar day following Buyer’s delivery
of the Statement of Net Working Capital, the Net Working Capital Calculation and the Adjustment
Calculation, the Seller Representative may deliver to Buyer a written notice stating in reasonable
detail the Seller Representative’s objections (an “Objection Notice”) to the Statement of
Net Working Capital or the determination of the Net Working Capital Calculation or the Adjustment
Calculation. During such thirty (30) calendar day period, Buyer shall provide the Seller
Representative and its independent accountants and other authorized representatives with access, at
reasonable times and upon reasonable notice, to the Company’s facilities, books and records and its
personnel and accountants. Any Objection Notice shall specify in reasonable detail the dollar
amount of any objection and the reasonable basis therefore. Any determination set forth on the
Statement of Net Working Capital, the Net Working Capital Calculation or the
12
Adjustment Calculation
to which the Seller Representative does not object in the Objection Notice shall be deemed
acceptable and shall be final and binding upon the Parties upon delivery of the Objection Notice.
If the Seller Representative does not deliver to Buyer an Objection Notice within such thirty
(30)-day period, then the Statement of Net Working Capital, the Net Working Capital Calculation and
the Adjustment Calculation will be conclusive and binding upon the Parties and the Net Working
Capital Calculation and the Adjustment Calculation set forth with the Statement of Net Working
Capital will constitute the Net Working Capital Calculation and the Adjustment Calculation for
purposes of determining additional amounts to be paid from the Sellers to Buyer or from Buyer to
the Sellers pursuant to Section 2.3.1(v) below.
(iv) Following Buyer’s receipt of any Objection Notice, the Seller Representative and Buyer
shall attempt to negotiate in good faith to resolve such dispute. In the event that the Seller
Representative and Buyer fail to agree on any of the Seller Representative’s proposed adjustments
set forth in the Objection Notice within thirty (30) days after Buyer receives the Objection
Notice, the Seller Representative and Buyer agree that an Accounting Arbitrator shall make the
final determination regarding the proposed adjustments set forth in the Objection Notice that are
not resolved by the Seller Representative and Buyer (the “Net Working Capital Disputed
Items”); provided that if the Parties are unable to agree on a Neutral Accounting Firm to act
as Accounting Arbitrator, each of Buyer, on the one hand, and the Seller Representative, on the
other hand, shall select a Neutral Accounting Firm and such firms together shall select the Neutral
Accounting Firm to act as the Accounting Arbitrator. The Buyer and the Seller Representative
shall use reasonable efforts to cause the Accounting Arbitrator to render a decision resolving the
matters in dispute within 30 days following the submission of such matters to the Accounting
Arbitrator. Buyer and the Seller Representative each shall provide the Accounting Arbitrator with
their respective determinations of the Net Working Capital Disputed Items. The Accounting
Arbitrator shall make an independent determination on the Net Working Capital Disputed Items and
the resultant Net Working Capital Calculation that shall be final and binding on the Sellers and
Buyer. The determination of the Net Working Capital Disputed Items by the Accounting Arbitrator
shall be based on whether such Net Working Capital Disputed Items have been calculated in
accordance with the standards set forth in this Agreement, and the Accounting Arbitrator is not to
make any other determination. The Accounting Arbitrator shall not assign a value to any item
greater than the greatest value for such item claimed by Buyer or the Seller Representative or less
than the smallest value for such item claimed by Buyer or the Seller Representative and shall be
limited to the selection of either Buyer’s or the Seller Representative’s position on a disputed
item (or a position in between the positions of Buyer and the Seller Representative) based solely
on presentations and supporting material provided by the Parties and not pursuant to any
independent review. The Accounting Arbitrator shall not impose an alternative resolution outside
the bounds set in the preceding sentence. Buyer and the Seller Representative shall make readily
available to the Accounting Arbitrator all relevant books and records relating to the Net Working
Capital Calculation and all other items reasonably requested by the Accounting Arbitrator. The
fees, costs and expenses of the Accounting Arbitrator shall be paid pro rata by
13
each Party in
relation to the proportional difference between the Accounting Arbitrator’s final determination of
the Net Working Capital Calculation (and the other price adjustments called for by this Section
2.3) and each Party’s Net Working Capital Calculation (and such other adjustments).
(v) If the Estimated Net Working Capital exceeds the Net Working Capital Calculation, then
Buyer shall have the right to be paid out of the Adjustment Escrow, within five (5) Business Days
of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period
for the Seller Representative to deliver an Objection Notice, an amount equal to the amount by
which the Estimated Net Working Capital exceeds the Net Working Capital Calculation, together with
interest thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including
the date of payment. If the Net Working Capital Calculation exceeds the Estimated Net Working
Capital, then Buyer shall pay to the Seller Representative on behalf of the Sellers by wire
transfer of immediately available funds, within five (5) Business Days of a final determination by
the Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative
to deliver an Objection Notice, an amount equal to the amount by which the Net Working Capital
Calculation exceeds the Estimated Net Working Capital (Buyer to pay each Seller his or its pro rata
share of such shortfall), together with interest thereon at the Prime Rate (as of the Closing Date)
from the Closing Date to and including the date of payment.
2.3.2 Cash Adjustment. The Purchase Price shall be further adjusted upward on a
dollar-for-dollar basis by the amount of any Cash held by the Company as of the Business Day before
the Closing Date as set forth below:
(i) Within two (2) Business Days prior to the Closing, the Sellers shall cause the Company to
prepare and deliver to Buyer an officer’s certificate of the Company that contains a good faith and
reasonable best estimate of the Cash of the Company as of the close of business on the Business Day
before the Closing Date (“Estimated Closing Date Cash”), which Estimated Closing Date Cash
shall be prepared using the same methodologies provided for in Section 2.3.1(i). The
Purchase Price payable to the Sellers at the Closing pursuant to Section 2.2 shall be
increased by an amount equal to the Estimated Closing Date Cash (the “Estimated Closing Date
Cash Adjustment”).
(ii) The Estimated Closing Date Cash shall be reconciled after the Closing Date using the same
methodologies provided for in Section 2.3.1(ii) to determine the actual Cash as of the
Business Day before the Closing Date (“Closing Date Cash Calculation”).
(iii) The mechanisms for dispute resolution provided for in Section 2.3.1 shall also
govern any dispute as to the Closing Date Cash Calculation.
(iv) If the Estimated Closing Date Cash exceeds the Closing Date Cash Calculation, then Buyer
shall have the right to be paid out of the Adjustment Escrow,
14
within five (5) Business Days of a
final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for
the Seller Representative to deliver an Objection Notice, an amount equal to the amount by which
the Estimated Closing Date Cash exceeds the Closing Date Cash Calculation, together with interest
thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date
of payment. If the Closing Date Cash Calculation exceeds the Estimated Closing Date Cash, then
Buyer shall pay to the Seller Representative on behalf of the Sellers by wire transfer of
immediately available funds, within five (5) Business Days of a final determination by the
Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to
deliver an Objection Notice, an amount equal to the amount by which the Closing Date Cash
Calculation exceeds the Estimated Closing Date Cash (Buyer to pay each Seller his or its pro rata
share of such shortfall), together with interest thereon at the Prime Rate (as of the Closing Date)
from the Closing Date to and including the date of payment.
2.3.3 Debt Adjustment. The Purchase Price shall be adjusted downward on a
dollar-for-dollar basis by the amount of any Indebtedness of the Company as of the Business Day
before the Closing Date as set forth below:
(i) Within two (2) Business Days prior to the Closing, the Sellers shall cause the Company to
prepare and deliver to Buyer an officer’s certificate of the Company that contains a good faith and
reasonable best estimate of the Indebtedness of the Company as of the close of business on the
Business Day before the Closing Date (the “Estimated Closing Date Debt”), which Estimated
Closing Date Debt shall be prepared using the same methodologies provided for in Section
2.3.1(i). The Purchase Price payable to the Sellers at the Closing pursuant to Section
2.2 shall be decreased by an amount equal to the Estimated Closing Date Debt (the
“Estimated Closing Date Debt Adjustment”).
(ii) The Estimated Closing Date Debt shall be reconciled after the Closing Date using the same
methodologies provided for in Section 2.3.1(ii) to determine the actual Indebtedness as of
the Business Day before the Closing Date (“Closing Date Debt Calculation”).
(iii) The mechanisms for dispute resolution provided for in Section 2.3.1 shall also
govern any dispute as to the Closing Date Debt Calculation.
(iv) If the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, then Buyer
shall have the right to be paid out of the Adjustment Escrow, within five (5) Business Days of a
final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for
the Seller Representative to deliver an Objection Notice, an amount equal to the amount by which
the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, together with interest
thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date
of payment. If the Estimated Closing Date Debt exceeds the Closing Date Debt Calculation, then
Buyer shall pay to the Seller Representative on
15
behalf of the Sellers by wire transfer of
immediately available funds, within five (5) Business Days of a final determination by the
Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to
deliver an Objection Notice, an amount equal to the amount by which the Estimated Closing Date Debt
exceeds the Closing Date Debt Calculation (Buyer to pay each Seller his or its pro rata share of
such shortfall), together with interest thereon at the Prime Rate (as of the Closing Date) from the
Closing Date to and including the date of payment.
2.3.4 Escrow Crossing. In the event that the Adjustment Escrow is not sufficient to
satisfy any amount due to Buyer under this Section 2.3, the Sellers shall promptly, but in
no event later than five (5) Business Days following final resolution of such amount under this
Section 2.3, pay the unpaid balance to Buyer; provided, that in lieu of seeking such
payment from the Sellers, the unpaid balance due may, at the sole discretion of Buyer, be satisfied
promptly upon notice of such election from the Indemnification Escrow. Following final resolution
of the adjustments to Purchase Price pursuant to this Section 2.3 and the payment, if any,
to Buyer of any amount due to Buyer pursuant to this Section 2.3 from the Adjustment
Escrow, the Seller Representative and Buyer shall promptly deliver a joint written instruction to
the Escrow Agent instructing it to release all remaining funds in the Adjustment Escrow to the
Seller Representative on behalf of the Sellers.
2.4. The Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place two (2) days after satisfaction or waiver of all of the
conditions (other than those conditions that by their terms are to be satisfied at the Closing but
subject to the satisfaction or waiver (to the extent permitted hereunder) of such conditions) set
forth in Section 7 (the “Closing Date”), at the offices of Blank Rome LLP located
at 405 Lexington Avenue, New York, New York 10174.
2.5. Deliveries at the Closing.
2.5.1 Closing Deliveries by the Sellers. At or prior to the Closing, the Sellers
shall deliver or cause to be delivered to Buyer, and, in the case of the delivery in Section
2.5.1(iii), to Buyer and the Escrow Agent:
(i) a statement certified by the chief financial officer or treasurer of the Company setting
forth the Estimated Net Working Capital, the Estimated Closing Date Cash and the Estimated Closing
Date Debt;
(ii) an assignment executed and delivered by each Seller of that Seller’s Equity Interests,
which assignment is substantially in the form of the instrument attached to this Agreement as
Exhibit B;
16
(iii) a counterpart of the Escrow Agreement, duly executed by the Seller Representative;
(iv) the resignations, effective as of the Closing, of all of the officers of the Company and
each of its Subsidiaries, except for such Persons as shall have been designated in writing at least
five (5) Business Days prior to the Closing by the Buyer to the Sellers;
(v) “payoff” letters or similar releases or confirmations from third parties, in forms
reasonably satisfactory to Buyer, confirming that the Indebtedness of the Company set forth on
Section 2.5.1(v) of the Schedules shall be repaid as of the Closing Date; it being
understood that the Buyer shall cause any such Indebtedness to be paid off as of Closing;
(vi) a copy of (i) the certificate of limited partnership, certificate of formation (or other
similar organizational document), as amended, of the Company, certified by the Secretary of State
in its jurisdiction of organization, as of a date not earlier than five (5) Business Days prior to
the Closing and accompanied by a certificate of the Secretary of the Company and the applicable
Subsidiary, dated as of the Closing, stating that no amendments have been made to such certificate
of limited partnership since such date, and (ii) the limited partnership agreement of the Company
(or similar document) and each of its Subsidiaries, certified by the Secretary of the Company and
the applicable Subsidiary;
(vii) a good standing certificate for the Company from the Secretary of State in its
jurisdictions of organization and from the Secretary of State in each other jurisdiction set forth
beside the Company’s name on Section 2.5.1(vii) of the Schedules, in each case dated as of
a date not earlier than five (5) Business Days prior to the Closing;
(viii) a certificate of the Secretary of the Company certifying the names and signatures of
the officers of the Company authorized to sign this Agreement and the other documents to be
delivered by the Company hereunder and thereunder;
(ix) a certificate of non-foreign status (in a form reasonably acceptable to Buyer) pursuant
to Treasury Regulation Section 1.1445-2(b)(2);
(x) a certificate executed by the Seller Representative, on behalf of the Sellers, dated as of
the Closing Date certifying to Buyer the satisfaction of the conditions set forth in Section
7.1(i) (the “Seller Closing Certificate”); and
(xi) those other documents listed on Section 2.5.1 of the Schedules.
2.5.2 Closing Deliveries of Buyer. At the Closing, Buyer shall deliver or cause to be
delivered, in the case of the delivery in Section 2.5.2(i) to the Seller Representative
17
on
behalf of the Sellers, and in the case of the delivery in Section 2.5.2(ii), to the Seller
Representative and the Escrow Agent:
(i) the Purchase Price specified in Section 2.2, minus the Escrow Fund,
plus or minus, as applicable, the Estimated Working Capital Adjustment,
plus the Estimated Closing Date Cash Adjustment, if any, minus the Estimated
Closing Date Debt Adjustment, if any; and
(ii) a counterpart of the Escrow Agreement, duly executed by Buyer and the Escrow Agent.
2.6. Purchase Price Allocation. As soon as practicable after the Closing Date, Buyer
shall prepare and deliver to the Sellers a statement (the “Asset Acquisition Statement”)
allocating the Purchase Price (plus assumed liabilities, if any, to the extent properly taken into
account under Section 1060 of the Code) among the assets of the Company (the “Deemed Purchased
Assets”) as required for United States federal income tax purposes, which shall be prepared in
accordance with the principles set forth in Section 2.6.1 of the Schedules. Buyer shall prepare
and deliver to the Sellers from time to time revised copies of the Asset Acquisition Statement (the
“Revised Statement”) so as to report any matters on the Asset Acquisition Statement that
need updating. The Purchase Price (plus assumed liabilities, if any, to the extent properly taken
into account under Section 1060 of the Code) paid by Buyer for the Deemed Purchased Assets shall be
allocated in accordance with the Asset Acquisition Statement or, if applicable, the last Revised
Statement, provided by Buyer to the Sellers, and all Tax Returns and reports filed by Buyer and the
Sellers shall be prepared consistently with such allocations, unless otherwise required pursuant to
a “determination” within the meaning of Section 1313(a) of the Code or pursuant to any analogous
foreign legislation. The Asset Acquisition Statement and any Revised Statement shall be subject to
the reasonable review and approval of the Sellers. In the event that the Sellers object in writing
to either the Asset Acquisition Statement or any Revised Statement, Buyer and the Sellers shall use
good faith efforts to resolve the dispute within thirty (30) days of the Sellers’ objection. If
Buyer and the Sellers are unable to resolve the dispute within such thirty (30) day period, the
matter or matters in dispute (and only such matters) shall be promptly submitted to the Neutral
Accounting Firm. Within thirty (30) days of the submission of the matter or matters in dispute,
such Neutral Accounting Firm shall render its determination with respect to such matter or matters
in dispute (and only such matters) and such determination shall be binding on both the Sellers and
Buyer. The fees and expenses of such Neutral Accounting Firm shall be borne equally by the
Sellers, on the one hand, and Buyer, on the other hand.
18
3. Representations and Warranties Concerning the Sellers. Each Seller represents and
warrants to Buyer, severally as to itself or himself only and not jointly, except as set forth in
the disclosure schedules delivered to Buyer (the “Schedules”), as of the date hereof, as
follows:
3.1. Authorization. Such Seller has the full legal capacity to execute and deliver
this Agreement and to perform his or its obligations hereunder. This Agreement has been duly and
validly executed and delivered by such Seller and constitutes the valid and legally binding
obligation of such Seller, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors’ rights generally and subject, as to enforceability, to general principles
of equity.
3.2. Ownership of Equity Interests. Such Seller holds and owns the Equity Interests
set forth opposite his or its name on Section 3.2 of the Schedules, which, as of the
Closing Date, are free and clear of any restrictions on transfer, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and demands.
3.3. Noncontravention. Neither the execution and the delivery of this Agreement by
such Seller, nor the consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any Governmental Authority to which such Seller is subject, or (ii) conflict
with, result in a breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any notice under any
material agreement, Contract, lease or License to which such Seller is a party or by which any of
them are bound or to which any of his or its respective assets are subject (or result in the
imposition of any Security Interest upon any of its assets).
3.4. Broker Fees. Such Seller does not have any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the transactions contemplated
by this Agreement for which Buyer will become liable or obligated. For purposes of clarification,
all broker fees due to Xxxxxx Xxxxxxxx & Co. and in connection with the transactions contemplated
by this Agreement shall be the responsibility and obligation of the Sellers and not the Company.
4. Representations and Warranties Concerning the Company and its Subsidiaries. The
Company represents and warrants to Buyer, except as set forth in the Schedules, as of the date
hereof, as follows:
4.1. Organization and Authorization.
4.1.1 The Company is a limited partnership duly organized, validly existing, and in good
standing under the laws of the State of Pennsylvania; its status is active; and it has the power
and authority to own or lease its properties and to conduct its business as it
19
is now being
conducted. The copies of the certificate of limited partnership and limited partnership agreement
of the Company previously made available by the Company to Buyer are true, correct and complete.
The Company is duly licensed or qualified and in good standing as a foreign corporation in each
jurisdiction in which the ownership of its property or the character of its activities requires it
to be so licensed or qualified, except such jurisdictions where the failure to so qualify has not
had a Material Adverse Effect on the Company.
4.1.2 The Company has the requisite limited partnership power and authority to execute and
deliver this Agreement and to perform the Company’s obligations hereunder. This Agreement has been
duly and validly executed and delivered by the Company and constitutes the valid and legally
binding obligation of the Company, enforceable in accordance with its terms and conditions, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors’ rights generally and subject, as to enforceability, to general principles
of equity. None of the Company nor its Subsidiaries needs to give any notice to, make any material
filing with, or obtain any material authorization, consent, or approval of any Governmental
Authority in order for the Parties to consummate the transactions contemplated by this Agreement.
4.1.3 Section 4.1.3 of the Schedules lists the officers of the Company and all of the
directors, members, officers or similar officials, as applicable, of each Subsidiary, as of the
date hereof.
4.2. Subsidiaries.
(i) Set forth on Section 4.2 of the Schedules is a complete and accurate list of each
Subsidiary of the Company. Each Subsidiary of the Company has been duly formed and is validly
existing under the laws of the jurisdiction of its formation and has the requisite power and
authority to own or lease its properties and to conduct its business as it is now being conducted.
The copies of the organizational documents of each Subsidiary of the Company previously made
available by the Company to Buyer are true, correct and complete. The Company owns all of the
capital stock, membership interests or other ownership interest in each of its Subsidiaries.
(ii) Each Subsidiary of the Company is duly licensed or qualified and in good standing in each
jurisdiction in which its ownership of property or the character of its activities is such as to
require it to be so licensed or qualified, except such jurisdictions where the failure to so
qualify has not had a Material Adverse Effect on the Company. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other Contracts or commitments that require any of the Company or its Subsidiaries to
sell, transfer, or otherwise dispose of any partnership interests or membership interests of any of
its Subsidiaries or that require any Subsidiary of the Company
20
to issue, sell, or otherwise cause
to become outstanding any of its own capital stock or membership interests.
4.3. Capitalization.
(i) General Partner is the sole general partner of the Company, and the Sellers are all of the
limited partners of the Company. All of the issued and outstanding GP Interests have been validly
issued and are outstanding and are owned beneficially and of record by General Partner, free and
clear of all Security Interests. All of the issued and outstanding LP Interests have been validly
issued and are outstanding and are owned beneficially and of record by the Sellers, free and clear
of all Security Interests. The GP Interests and the LP Interests are the only issued and
outstanding securities or partnership interests of the Company. The aggregate of all of the Equity
Interests set forth on Section 3.2 of the Schedules represents all of the issued and
outstanding partnership interests in the Company.
(ii) There are no outstanding or authorized subscriptions, options, warrants, rights
(including preemptive rights, conversion rights and exchange rights), calls, convertible securities
or other agreements or commitments of any character relating to the GP Interests or the LP
Interests obligating the Company to issue any securities of any kind. There are no outstanding or
authorized phantom securities, profit participation or similar rights with respect to the Company
or any of its Subsidiaries. There are no voting trusts, proxies, or other agreements to which any
Seller or the Company is a party with respect to the GP Interests, the LP Interests or any
interests the Company owns in its Subsidiaries.
4.4. Noncontravention. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Authority to which the Company or its Subsidiaries is subject or
any provision of the organizational documents of the Company or any of its Subsidiaries, or (ii)
conflict with, result in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or require any notice
under any material agreement, Material Contract, material lease or material License to which the
Company or its Subsidiaries is a party or by which any of them are bound or to which any of their
respective assets are subject (or result in the imposition of any Security Interest upon any of
their respective assets).
4.5. Title to Assets. The Company and its Subsidiaries have good and marketable title
to, or a valid leasehold or rental interest in, the tangible properties and assets they purport to
own or lease, or shown on the Most Recent Balance Sheet or acquired, rented or leased after the
date thereof, free and clear of all Security Interests, except for properties and assets disposed
of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet. The Company
and its Subsidiaries own or have valid rights to use, free and clear of all Security Interests, all
of the assets used in the conduct of current business of the Company and its
21
Subsidiaries. Such
assets are sufficient for Buyer to continue to operate the business of the Company and its
Subsidiaries in the same manner as it is currently conducted.
4.6. Broker Fees. Neither the Company nor its Subsidiaries has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Buyer will become liable or obligated.
4.7. Financial Statements; Indebtedness.
4.7.1 Attached hereto as Section 4.7.1 of the Schedules are the following financial
statements of the Company and its Subsidiaries (collectively the “Financial Statements”):
(i) audited consolidated balance sheets and statements of income, changes in partners’ equity, and
statements of cash flow as of and for the calendar year ended December 31, 2008; (ii) audited
consolidated balance sheets and statements of income, changes in partners’ equity, and statements
of cash flow (the “Most Recent Audited Financial Statements”) as of and for the calendar
year ended December 31, 2009 (the “Most Recent Fiscal Year End”), and (iii) unaudited
consolidated balance sheets as of the fiscal month ended October 30, 2010 and statements of income
and statements of cash flow for the ten (10) month period ended October 30, 2010 (the “Most
Recent Financial Statements”) for the Company and its Subsidiaries. The Financial Statements
(including the notes thereto, where applicable) have been prepared in accordance with GAAP applied
in a manner consistent with the Company’s past practice and on a consistent basis throughout the
periods covered thereby and present fairly in all material respects the financial condition of
Company and its Subsidiaries as of such dates and the results of operations of the Company and its
Subsidiaries for such periods in accordance with GAAP; provided, however, that the Most Recent
Financial Statements lack footnotes, normal year-end reclassifications, adjustments and other
presentation items, which in the aggregate are not material in amount. Other than as set forth in
Section 4.8, the Company makes no other representations with regard to the Financial
Statements. Other than as set forth in this Section 4.7, the Company and its Subsidiaries
make no representations with regard to the financial information of the Company or its Subsidiaries
(including any estimates, projections, plans or budgets).
4.7.2 The Company has no Indebtedness.
4.8. No Undisclosed Liabilities. The Company and its Subsidiaries have no Liabilities
of a type required to be reflected on a consolidated balance sheet prepared in accordance with
GAAP, other than (1) Liabilities fully and adequately reflected in the Most Recent Audited
Financial Statements or Most Recent Financial Statements and (2) those incurred since the date of
the Most Recent Audited Financial Statements in the Ordinary Course of Business.
22
4.9. Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent Fiscal
Year End, there has been no Material Adverse Effect on the Company.
4.9.1 Since the Most Recent Fiscal Year End, none of the Company or its Subsidiaries has:
(i) pledged or hypothecated any of its assets or otherwise permitted any of its material
assets to become subject to any Security Interest other than in the ordinary course of business
consistent with past practice;
(ii) incurred any material obligation in an amount in excess of $100,000 other than in the
ordinary course of business consistent with past practice;
(iii) made any loan or advance to any Person other than in the ordinary course of
business consistent with past practice;
(iv) assumed, guaranteed or otherwise become liable for any obligation of any Person (other
than the Company or its Subsidiaries) other than in the ordinary course of business
consistent with past practice;
(v) committed for any capital expenditure individually in an amount in excess of $50,000 and
in the aggregate in an amount in excess of $200,000;
(vi) purchased, leased, sold, abandoned or otherwise acquired or disposed of any business or
assets other than in the ordinary course of business consistent with past practice;
(vii) waived or released any material right or canceled or forgiven any debt or claim
other than in the ordinary course of business consistent with past practice;
(viii) discharged any material Security Interest or discharged or paid any indebtedness or
other obligation other than in the ordinary course of business consistent with past
practice;
(ix) assumed or entered into any material Contract other than in the ordinary course of
business consistent with past practice other than this Agreement;
(x) amended or terminated any material Contract;
(xi) materially increased, or authorized a material increase in, the compensation or benefits
paid or provided to any of its directors, officers or employees;
23
(xii) established, adopted or amended (including any amendment with a future effective date)
any of the Company’s Employee Benefit Plans;
(xiii) declared, accrued, set aside, or paid any dividend or made any other distribution in
respect of any Equity Interests of other securities, Cash or other assets;
(xiv) repurchased, redeemed or otherwise reacquired any Equity Interests or other securities;
(xv) sold or otherwise issued any Equity Interests or any other securities;
(xvi) amended its organizational documents;
(xvii) been a party to any merger, consolidation, recapitalization, reclassification of
equity, or similar transaction;
(xviii) accrued any deferred bonuses or compensation due to any Seller, employee or agent of
the Company or any of its Subsidiaries, or paid any such deferred bonuses or compensation;
(xix) changed any of its methods of accounting or accounting practices in any respect;
(xx) made any material Tax election; or
(xxi) agreed or committed to take any action described in the foregoing clauses.
4.10. Legal Compliance. Each of the Company and its Subsidiaries is in compliance in
all material respects with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local,
and foreign governments (and all agencies thereof), and no material action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice of any Governmental Authority
is pending against any of them alleging any failure so to comply. Neither the Company nor any
Subsidiary has, since January 1, 2006, received any written communication from any Government
Authority alleging that the Company or any Subsidiary is not in compliance in any material respect
with any law. Notwithstanding the foregoing, no representation or warranty is made under this
Section 4.10 in respect of any (i) employee benefit matters, which are addressed in
Section 4.20 (as to which no representation or warranty is made except as set forth in
Section 4.20), (ii) intellectual property matters, which are addressed in Section
4.13 (as to which no representation or warranty is made except as set forth in Section
4.13), (iii) matters relating to Taxes, which are addressed in Section 4.11 (as to
which no
24
representation or warranty is made except as set forth in Section 4.11), (iv)
environmental matters which are addressed in Section 4.21 (as to which no representation or
warranty is made except as set forth in Section 4.21) and (v) employees and independent
contractor matters, which are addressed in Section 4.19 (as to which no representation or
warranty is made except as set forth in Section 4.19).
4.11. Tax Matters.
4.11.1 (i) Each of the Company and each Subsidiary has properly and timely filed all material
Tax Returns required to be filed by it, each of which were prepared and completed in all material
respects in compliance with all applicable laws; (ii) each of the Company and each Subsidiary has
paid all material Taxes required to be paid by it (whether or not shown on a Tax Return); (iii)
there are no agreements or waivers currently in effect that provide for an extension of time for
the assessment of any Tax against the Company or any Subsidiary and (iv) no claim has ever been
made by a Taxing Authority in a jurisdiction where a Tax Return is not filed by or on behalf of the
Company or a Subsidiary that the Company or such Subsidiary is subject to Tax in that jurisdiction.
4.11.2 No audits or other administrative proceedings or court proceedings have ever been
conducted, are presently pending or, to the Knowledge of the Company, threatened with regard to any
Taxes or Tax Return of the Company or the Subsidiaries.
4.11.3 The Company has made available to Buyer complete copies of (i) all federal, state,
local and foreign Tax Returns of the Company and the Subsidiaries relating to the taxable periods
ending on or after December 31, 2007 and (ii) any audit report issued within the last five years
relating to any material Taxes due from or with respect to the Company or the Subsidiaries.
Neither the Company nor its Subsidiaries files Tax Returns in any foreign jurisdiction.
4.11.4 There are no liens for Taxes upon any asset or property of the Company or the
Subsidiaries except liens for Taxes not yet due and payable.
4.11.5 Each of the Company and the Subsidiaries has complied in all material respects with the
provisions of the Code relating to the withholding and payment of Taxes, including, without
limitation, the withholding and reporting requirements under Code sections 1441 through 1464, 3401
through 3406, and 6041 through 6049, as well as similar provisions under any state and local or
other laws, and has, within the time and in the manner prescribed by law, withheld from employee
wages and paid over to the proper Governmental Authorities all amounts required. Each of the
Company and the Subsidiaries has undertaken in good faith to appropriately classify all service
providers as either employees or independent contractors for all Tax purposes. Each of the Company
and the Subsidiaries (i) has withheld and remitted all applicable nonresident partner Taxes to the
appropriate Governmental Authority, (ii) has collected and remitted all applicable sales and/or use
Taxes to the appropriate Governmental
25
Authority, or (iii) has obtained, in good faith, any
applicable sales and/or use Tax exemption certificates.
4.11.6 Each of the Company and the Subsidiaries (i) has disclosed to the IRS on the
appropriate Tax Returns any Reportable Transaction in which it has participated and (ii) has
retained all documents and other records pertaining to any Reportable Transaction in which it has
participated, including documents and other records listed in Treasury Regulation Section
1.6011-4(g) and any other documents or other records which are related to any Reportable
Transaction in which it has participated but not listed in Treasury Regulation Section 1.6011-4(g).
For purposes of this Agreement, the term “Reportable Transaction” means any transaction
listed in Treasury Regulation Section 1.6011-4(b).
4.11.7 Neither the Company nor any Subsidiary is currently or has ever been a party to or
bound by any contract, agreement or other arrangement (whether or not written) that (i) requires
the Company or such Subsidiary to make any Tax payment to or for the account of any other Person,
(ii) affords any other Person the benefit of any net operating loss, net capital loss, investment
Tax credit, foreign Tax credit, charitable deduction or any other credit or Tax attribute which
could reduce Taxes (including, without limitation, deductions and credits related to alternative
minimum Taxes) of the Company or such Subsidiary or (iii) requires or permits the transfer or
assignment of income, revenues, receipts or gains to the Company or the Subsidiary from any other
Person.
4.11.8 Neither the Company nor any Subsidiary has received any Tax Ruling or entered into a
Tax Closing Agreement with any Taxing Authority that would have a continuing effect after the
Closing Date. For purposes of the preceding sentence, the term “Tax Ruling” means written
rulings of a Taxing Authority relating to Taxes, and the term “Tax Closing Agreement” means
a written and legally binding agreement with a Taxing Authority relating to Taxes. No power of
attorney currently in force has been granted by the Company or any Subsidiary concerning any Tax
matter.
4.11.9 None of the Sellers of the Company is a “foreign person” as such term is defined in
Section 1445 of the Code.
4.11.10 The representations and warranties in this Section 4.11 are the sole and
exclusive representations and warranties of the Company concerning Tax matters.
4.12. Real Property.
4.12.1 Neither the Company nor any of its Subsidiaries owns any real property.
4.12.2 Section 4.12.2 of the Schedules lists all real property leased or subleased to
any of the Company and its Subsidiaries and lists the respective leases and
26
subleases. With
respect to each material lease and sublease listed in Section 4.12.2 of the Schedules:
(i) the lease or sublease or easement interest is legal, valid, binding, enforceable, and in
full force and effect in all material respects, subject only to any Security Interests that do not
materially interfere with the present uses of such property;
(ii) neither the Company nor any of its Subsidiaries and, to the Knowledge of the Company, no
other party to the lease, sublease or easement interest is in material breach thereunder; and
(iii) all facilities leased or subleased thereunder have received all material approvals of
Governmental Authorities (including Licenses) required of the Company or its Subsidiaries in
connection with the operation thereof, and have been operated and maintained in accordance with
applicable laws, rules, and regulations in all material respects.
4.13. Intellectual Property.
4.13.1 For purposes of this Agreement, “Intellectual Property” means: (i) trademarks,
service marks, trade names, logos, trade dress, domain name registrations and other indicia of
source, whether registered or unregistered, and all registrations and applications for registration
of the foregoing, all renewals of the foregoing, and all associated goodwill; (ii) mask works,
moral rights, works of authorship in any medium of expression, whether or not published, all
copyrights, all registrations and applications for registration of such copyrights, and all
extensions and renewals of copyrights; (iii) patents (including utility and design patents) and
patent applications (including design, utility and provisional patent applications), utility
models, industrial design registrations, and all issuances, divisions, continuations,
continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and
applications; (iv) trade secrets and rights arising under proprietary or confidential information
or know-how, including processes, procedures, techniques, designs, research and development,
computer software source and object code, inventions and invention disclosures (whether or not
patentable or reduced to practice), specifications, customer lists, ideas, methodologies,
algorithms and formulae; (v) domain names and uniform resource locators and registrations for any
of the forgoing; and (vi) all databases and data collection and all rights therein.
4.13.2 Section 4.13.2 of the Schedules lists all: (i) patents and patent applications
(including all provisional applications, divisions, continuations, continuations in party, patents
of improvement, design patents and registered industrial designs); (ii) copyright registrations and
applications for registration of copyrights; (iii) registered trademarks and applications for
registration of trademarks, and (iv) domain name registrations owned by the Company or any of its
Subsidiaries as of the date hereof (“Registered Intellectual Property”). The Registered
Intellectual Property is owned by the Company or the applicable Subsidiary free and clear of any
Security Interest. All necessary registration, maintenance and renewal fees due
27
prior to the
Closing Date in connection with the Registered IP have been made and all necessary documents,
recordations and certificates in connection with maintaining and/or renewing such Registered
Intellectual Property have been filed. To the Knowledge of the Company, there are no facts or
circumstances that exist that would render any of the Company Registered Intellectual Property
invalid or unenforceable. The Company and its Subsidiaries own or have the right to use all
Intellectual Property used in the operation of its business of the Company and its Subsidiaries, it
being understood that the foregoing is not to be construed as a representation or warranty with
respect to infringement, which is the subject of the next sentence in this Section 4.13.2.
None of the Company, its Subsidiaries, or the Proprietary Software, infringe, misappropriate or
otherwise violate the Intellectual Property rights of another Person. None of the Company or any
Subsidiary has any notice of the commencement of any Proceedings instituted against the Company or
any Subsidiary alleging (i) that the Company or any Subsidiary is infringing or otherwise violating
any Person’s Intellectual Property, or (ii) challenging the extent, validity or enforceability of
the Registered Intellectual Property or the Company’s (or the applicable Subsidiary’s) ownership
thereof.
4.13.3 None of the Proprietary Software has been subject to any proceeding or outstanding
decree, order, judgment, injunction, settlement, opposition, arbitration, mediation, or written
demand or claim, whether brought by a third party by the Company or any of its Subsidiaries. To the
Knowledge of the Company, no circumstances or grounds exist that would give rise to such a dispute
and Company has not sent or received any written notice of any allegations of such a dispute.
4.13.4 The Proprietary Software is owned by the Company or the applicable Subsidiary free and
clear of any Security Interest. No third party was involved in the creation, design, development,
programming, maintenance, or modification of the Proprietary Software. No Open Source Materials are
imbedded in, bundled with or incorporated in the Proprietary Software. Except for the customer
Contracts identified in Section 4.15 of the Schedules, Company has not entered into any
other Contract that permits any third party to access or use the Proprietary Software. To the
extent such items exist and to Company’s Knowledge, there are no material errors in the technical
documentation, specifications, manuals, user guides, and source language statements associated
with, used or produced in the development of such Proprietary Software. The Company and any of its
Subsidiaries have not granted any exclusive license with respect to, or authorized the retention of
any exclusive rights in or joint ownership of the Proprietary Software. Company and its
Subsidiaries have taken all commercially reasonable steps to protect and safeguard the confidential
and proprietary nature of the Proprietary Software. The Company and its Subsidiaries have not
disclosed the human readable software source code, any portion or aspect thereof, or any
proprietary information or algorithm contained or embedded therein of its Proprietary Software (the
“Source Code”) to any third party. Company has not entered into any Contract that provides
for or requires the escrowing of the Source Code with any third party. The Source Code is
maintained in secure, electronically controlled source code repository systems, and the Company has
undertaken a
28
Statement on Auditing Standards (SAS) No. 70 Type 1 audit of its control systems,
which detected no material deficiencies in the Company’s Source Code controls. The Proprietary
Software was developed by employees of the Company or its Subsidiaries in the performance of their
job responsibilities for the Company or the applicable Subsidiary.
4.13.5 Section 4.13.5 of the Schedules sets forth a list of all third party Software
integrated or incorporated within the ICE, other than the application platform, identified to
Buyer, upon which ICE was developed (the “Third Party Licenses”), setting forth as to each
such item as applicable, the name of the item and the licensor or vendor (collectively, the third
party Software and the application platform shall be referred to as “Third Party
Software”). None of the Company or any Subsidiary has any ongoing obligation of payment with
respect to Third Party Licenses, including by way of example and not limitation, support or
maintenance obligations. None of the Company or the applicable Subsidiary is, and to the Knowledge
of the Company, no counterparty to a Third Party License is in breach of any such Third Party
License, and the consummation of the transactions contemplated hereunder will not constitute a
breach or default under or trigger any right of rescission, renegotiation, cancellation or
termination under any Third Party License.
4.13.6 The representations contained in this Section 4.13 shall be the exclusive
representations and warranties with respect to intellectual property matters.
4.14. Information Technology.
4.14.1 The Company and its Subsidiaries either own or have all the necessary rights to use the
Information Technology as currently used in connection with the operations of the Company and its
Subsidiaries, it being understood that the foregoing is not to be construed as a representation or
warranty with respect to infringement, which is the subject of Section 4.13.2.
4.14.2 The Company and its Subsidiaries are not in breach of and have not received any notice
alleging that they are in breach of any Contract that provides the Company with the rights to use
such Information Technology.
4.14.3 The Information Technology is in all material respects adequate for the current
business needs of the Company and its Subsidiaries.
4.14.4 The Information Technology performs in substantial compliance with the specifications
and documentation for such Information Technology, allowing for defects, errors or interruptions of
service as would not reasonably be expected to have a Material Adverse Effect on the Company.
4.14.5 The Company and any of its Subsidiaries have the necessary rights to all of its
critical records, systems, controls and/or data used by the Company or any Subsidiary
29
to continue
with the operation of its business, and to the extent any such records, systems, controls, and/or
data are hosted by a third party, the Company and/or its Subsidiaries have taken commercially
reasonable efforts to protect such information from further disclosure to other third parties and
to regularly back up such information to protect from data loss.
4.14.6 The Company has taken commercially reasonable efforts to insure that the Information
Technology, Proprietary Software and/or any component thereof do not contain any virus, malware,
worm or other malicious or disabling code.
4.14.7 The Company and each of its Subsidiaries have formulated a documented disaster recovery
plan under which each has set out procedures that will be implemented if the Information Technology
or the data stored thereon suffers a material disruption or malfunction. To the Knowledge of the
Company, the disaster recovery plans are sufficient to ensure that any such material disruption or
malfunction does not lead to a Material Adverse Effect on the Company or its Subsidiaries.
4.15. Material Contracts. Section 4.15 of the Schedules lists the following
Contracts to which any of the Company and its Subsidiaries is a party as of the date hereof
(collectively the “Material Contracts”):
(i) any agreement (or group of related agreements) that involves the performance of services
by the Company and its Subsidiaries in exchange for payment in excess of $100,000 and has an
expected duration of not less than twelve (12) months;
(ii) any agreement (or group of related agreements) that involves payments by the Company or
any of its Subsidiaries in excess of $100,000 or payments to the Company or any of its Subsidiaries
in excess of $100,000 and has an expected duration of not less than twelve (12) months;
(iii) any agreement (or group of related agreements) for the lease or purchase of real
property to or from any Person;
(iv) any agreement (or group of related agreements) for the lease of personal property to or
from any Person providing for lease payments in excess of $100,000 per annum and a term of at least
twelve (12) months;
(v) any agreement (or group of related agreements) for the purchase or sale of raw materials,
commodities, supplies, products, or other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of more than one (1) year and involve
consideration in excess of $100,000;
(vi) any agreement concerning a partnership or joint venture;
30
(vii) any agreement (or group of related agreements) under which it has created, incurred,
assumed, or guaranteed any Indebtedness, or any capitalized lease obligation, or under which it has
imposed a Security Interest on any of its material assets, tangible or intangible;
(viii) any material agreement concerning limiting the Company’s ability to compete with any
Person;
(ix) any severance for the benefit of its current or former directors, officers, and
employees;
(x) any collective bargaining agreement;
(xi) any agreement for the employment of any individual or entity on a full-time, part-time,
consulting, or other basis providing annual compensation in excess of $100,000;
(xii) any agreement under which it has advanced or loaned any amount to any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xiii) any OEM repair and/or refurbishment certifications;
(xiv) any prior acquisition, merger or purchase agreements; or
(xv) any agreement regarding licensing of, or permitting the use of, Software.
The Company has delivered or made available to Buyer a correct and complete copy of each
written agreement listed in Section 4.15 of the Schedules (as amended to date). With
respect to each such agreement: (A) the agreement is in full force and effect; (B) the agreement
is a legal, valid, binding and enforceable obligation of the Company or its Subsidiaries (as the
case may be) and to the Company’s Knowledge, is the legal, valid, binding and enforceable
obligation of the other Parties thereto, each subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights
generally; and (C) neither the Company nor any of its Subsidiaries and, to the Knowledge of the
Company, no other party is in material breach or default thereof.
4.16. Licenses and Authorizations. Section 4.16 of the Schedules contains a
true and correct list of all Licenses of the Company as the date hereof. The Company holds all
Licenses which are material to or necessary for it to own, lease and operate its assets and
properties and conduct its business as heretofore conducted. All such Licenses are in full force
and effect, as of the date hereof, and neither the Company nor any of its Subsidiaries is, as of
the date hereof, in material default (or with the giving of notice or lapse of time or both, would
be in
31
default) under any such Licenses. There are no Proceedings pending or, to the Knowledge of
the Company, threatened in writing that seek the revocation, cancellation, suspension or adverse
modification thereof. All required filings with respect to such Licenses have been timely made and
all required applications for renewal thereof have been timely filed. No consent, notice or other
notification is required under any License as a result of the transactions contemplated hereby.
Notwithstanding the foregoing, no representation or warranty is made under this Section
4.16 in respect of any (i) employee benefit matters, which are addressed in Section
4.20 (as to which no representation or warranty is made except as set forth in Section
4.20), (ii) intellectual property matters, which are addressed in Section 4.13 (as to
which no representation or warranty is made except as set forth in Section 4.13), (iii)
matters relating to Taxes, which are addressed in Section 4.11 (as to which no
representation or warranty is made except as set forth in Section 4.11), (iv) environmental
matters which are addressed in Section 4.21 (as to which no representation or warranty is
made except as set forth in Section 4.21) and (v) employees and independent contractor
matters, which are addressed in Section 4.19 (as to which no representation or warranty is
made except as set forth in Section 4.19).
4.17. Insurance. Section 4.17 of the Schedules sets forth an accurate
description of each insurance policy currently maintained by the Company and its Subsidiaries with
respect to their respective properties, assets and business as of the date hereof. To the
Knowledge of the Company, all of such insurance policies are legal, valid, binding and enforceable
and in full force and effect, and neither the Company nor any of its Subsidiaries is in material
breach or default (or with the giving of notice or lapse of time or both, would be in material
default) with respect to its obligations under such insurance policies (including with respect to
payment of premiums). As of the date hereof, neither the Company nor any of its Subsidiaries has
received (a) any written notice of cancellation or notice of failure to renew of any such insurance
policy or refusal of coverage thereunder, (b) any written notice that any issuer of such policy has
filed for protection under applicable bankruptcy laws or is otherwise in the process of liquidating
or has been liquidated, or (c) any other written notice that such policies are no longer in full
force or effect or that the issuer of any such policy is no longer willing or able to perform its
obligations thereunder.
4.18. Litigation.
4.18.1 There is no (i) outstanding order, injunction or any other judgment of any kind
whatsoever of any court, administrative agency, regulatory authority or arbitration tribunal
against the Company or (ii) suit, litigation, arbitration, hearing or any other judicial proceeding
of any kind or nature whatsoever (“Proceedings”) pending, or to the Company’s Knowledge,
threatened in writing, against the Company or any of its Subsidiaries (including any of their
assets or properties). Neither the Company nor any of its Subsidiaries has received any written
notice of any investigation of any Governmental Authority against the Company or any of its
Subsidiaries. True and correct copies of all complaints, pleadings, petitions, notices, motions
and other material papers filed in connection with the Proceedings listed on Section 4.18.1
of the
32
Schedules have been delivered to Buyer. There are no Proceedings pending or, to the
Company’s Knowledge, threatened, against the Company which would give rise to any right of
indemnification on the part of any officer, director, employee or agent of the Company or its
Subsidiaries or heirs, executors or administrators thereof against the Company, its Subsidiaries or
any successors.
4.18.2 Section 4.18.1 of the Schedules sets forth each Proceeding against the Company
or its Subsidiaries since January 1, 2009 that has since been fully adjudicated, settled, resolved
or is otherwise no longer pending as of the Closing Date.
4.19. Employees and Independent Contractors.
4.19.1 Section 4.19.1 of the Schedules contains an accurate and complete list of all
of the salaried employees of the Company and each of its Subsidiaries who receive salary in excess
of $100,000 per annum (including any such person who is on a leave of absence or on layoff status)
(“Employees”) and, as of the date hereof, (i) their titles or responsibilities; (ii) their
dates of hire; (iii) their current salaries or wages and all bonuses, commissions and incentives
paid at any time during the past twelve (12) months; (iv) any specific bonus, commission or
incentive plans or agreements for or with them; (v) each Company’s Employee Benefit Plan in which
they participate; and (vi) any outstanding loans or advances made to them.
4.19.2 Section 4.19.2 of the Schedules contains an accurate and complete list as of
the date hereof of all sales representatives and independent contractors engaged by the Company or
any of its Subsidiaries who receive payments from the Company in excess of $50,000 per annum or who
have been engaged by the Company or its Subsidiaries for the entirety of the twelve-month period
ending on the date hereof and (i) their payment arrangements, and (ii) a brief description of their
jobs or projects currently in progress.
4.19.3 No employee of the Company or its Subsidiaries has an employment Contract with the
Company.
4.19.4 The Company and its Subsidiaries are in compliance in all material respects with all
applicable labor and employment laws and regulations. To the Knowledge of the Company, none of the
Company nor any of its Subsidiaries has committed any unfair labor practice. To the Knowledge of
the Company, there is no organizational effort presently being made or threatened by or on behalf
of any labor union with respect to employees of any of Company or any of its Subsidiaries.
4.19.5 Neither the Company nor any of its Subsidiaries has experienced any material labor
problem including, but not limited to, any strike, slowdown, picketing, boycott or work stoppage.
33
4.19.6 To the Company’s Knowledge, no Employee of the Company or any of its Subsidiaries is a
party to or is bound by any confidentiality agreement, non-competition agreement or other Contract
with any Person other than the Company or its Subsidiaries that would reasonably be expected to
have an adverse effect on the performance by such employee of any of his duties or responsibilities
as an employee of the Company or any of its Subsidiaries.
4.19.7 As of the date hereof, no Employee of the Company or any of its Subsidiaries has
indicated in writing an intention to terminate or has terminated his or her employment within six
(6) months prior to the date hereof.
4.19.8 Other than as set forth in Sections 4.8 and 4.19, the representations
contained in this Section 4.19 shall be the exclusive representations and warranties with
respect to employee and independent contractor matters.
4.20. Employee Benefits.
4.20.1 Section 4.20.1 of the Schedules contains an accurate and complete list of all
of the Employee Benefit Plans which the Company, or any ERISA Affiliate, sponsors, maintains or
contributes to, is required to contribute to, or has or would reasonably be expected to have any
material liability of any nature with respect to, whether known or unknown, direct or indirect,
fixed or contingent, for the benefit of present or former employees of the Company (referred to
collectively as the “Company’s Employee Benefit Plans” and individually as a “Company’s
Employee Benefit Plan”). Accurate and complete copies of all of the Company’s Employee Benefit
Plans have been made available to Buyer as well as the most recent determination letter issued, if
any, or if none, IRS opinion or advisory letter issued with respect to a Company’s Employee Benefit
Plan that is intended to be a qualified plan within the meaning of Section 401(a) of the Code, all
pending applications for rulings, determination letters, opinions, no action letters and similar
documents filed with any governmental agency (including the Department of Labor and the IRS),
current summary plan descriptions, service agreements, stop loss insurance policies, and all
related contracts and documents (including, but not limited to, all compliance reports and testing
results for the past three years, employee summaries and material employee communications), all
closing letters, audit finding letters, revenue agent findings and similar documents. None of the
Company’s Employee Benefit Plans is subject to Title IV of ERISA or Code Section 412. None of the
Company’s Employee Benefit Plans is a Multiple Employer Plan or Multiemployer Plan under Code
Section 413(c) or 414(f). None of the Company’s Employee Benefit Plans provides a self-insured
benefit. No employer, other than the Company or an ERISA Affiliate, is permitted to participate or
participates in the Company’s Employee Benefit Plans and no leased employees (as defined in
Section 414(n) of the Code) or independent contractors are eligible for, or participate in, the
Company’s Employee Benefit Plans. None of the Company’s Employee Benefit Plans promises or
provides health, life or other welfare benefits to retirees or former employees, or severance
benefits, except as required by
34
Code Section 4980B, Sections 601 through 609 of ERISA, or
comparable state statutes which provide for continuing health care coverage.
4.20.2 Neither the Company nor any ERISA Affiliate has (i) proposed any Employee Benefit Plan
which it plans to establish, sponsor, maintain or to which it will be required to contribute, or
(ii) proposed any material changes to any of the Company’s Employee Benefit Plans now in effect.
Each of the Company’s Employee Benefit Plans that provides a self-insured health benefit is subject
to a stop-loss insurance policy in which the Company is an insured party and no facts exist which
would form the basis for any denial of coverage under such policy.
4.20.3 With respect to the Company’s Employee Benefit Plans, the Company and each ERISA
Affiliate will have made, on or before the Closing Date, all contributions to (including premium
payments with respect to insurance policies), and payments from each of the Company Employee
Benefit Plans required to be made on or before the Closing Date.
4.20.4 The Company has made available to Buyer an accurate and complete copy of the three most
recent Annual Reports (Form 5500 series), accompanying schedules and any other form or filing
required to be submitted to any governmental agency with regard to each of the Company’s Employee
Benefit Plans and the most current actuarial report, if any, with regard to each of the Company’s
Employee Benefit Plans.
4.20.5 All of the Company’s Employee Benefit Plans are, and have been, operated in material
compliance with their provisions and with all applicable laws including ERISA and the Code and the
regulations and rulings thereunder. With respect to each of the Company’s Employee Benefit Plans
that is intended to be qualified under Section 401(a), each such plan has been determined by the
IRS to be so qualified as to form, and each trust forming a part thereof has been determined by the
IRS to be exempt from tax pursuant to Section 501(a) of the Code, and with respect to each of the
Company’s Employee Benefit Plans that is intended to be a “voluntary employees’ beneficiary
association” within the meaning of Section 501(c)(9) of the Code, each such association has been
determined by the IRS to have such status. To the Knowledge of the Company, no reason exists that
would cause such qualified or Section 501(c)(9) status to be revoked for any period. The Company,
its ERISA Affiliates, and all fiduciaries of the Company’s Employee Benefit Plans have materially
complied with the provisions of the Company’s Employee Benefit Plans and with all applicable laws
including ERISA and the Code and the regulations and rulings thereunder. None of Company’s
Employee Benefit Plans is a “MEWA” as defined in Section 3(40)(A) of ERISA. No non-exempt
prohibited transaction under Section 406 or 407 of ERISA or Section 4975 of the Code has occurred
with respect to any of Company’s Employee Benefit Plans.
4.20.6 Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
35
any severance,
unemployment compensation or golden parachute payment) becoming due from the Company or any ERISA
Affiliate under any of the Company’s Employee Benefit Plans, (ii) increase any benefits otherwise
payable under any of the Company’s Employee Benefit Plans, or (iii) result in the acceleration of
the time of payment or vesting of any such benefits to any extent.
4.20.7 There are no pending actions, claims or lawsuits that have been filed against any of
the Company’s Employee Benefit Plans, the assets of any of the trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of any such plan (other than routine benefit
claims). To the Knowledge of the Company, there are no facts which could reasonably form the basis
for any such action, claim or lawsuit. There are no investigations or audits by any government
agency of any of the Company’s Employee Benefit Plans, any trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of any such plan that have been instituted or
threatened.
4.20.8 The Company and/or its ERISA Affiliates can terminate each of the Company’s Employee
Benefit Plans without further material liability to the Company and/or its ERISA Affiliates. No
action or omission of the Company, or any ERISA Affiliate, or any director, officer, or agent
thereof in any way restricts, impairs or prohibits the Company or any ERISA Affiliate, or any
successor, from amending, merging, or terminating any of the Company’s Employee Benefit Plans in
accordance with the express terms of any such plan and applicable law.
4.20.9 To the Knowledge of the Company, no event has occurred nor is reasonably likely to
occur which will result in the Company having any material liability in connection with any
Employee Benefit Plans of any ERISA Affiliate.
4.20.10 Each of the Company’s Employee Benefit Plan that is a “nonqualified deferred
compensation plan” (as defined for purposes of Section 409A(d)(1) of the Code) is in material
compliance with Section 409A of the Code and the rules and regulations issued thereunder as to both
form and operation. No stock option or equity unit option granted under any of the Company’s
Employee Benefit Plans has an exercise price that was less than fair market value of the underlying
stock or equity unit (as the case may be) as of the date such option or unit was granted or has any
feature for the deferral of compensation that would render the grant subject to Section 409A of the
Code. No Company Employee Benefit Plan triggers the imposition of Taxes under Section 409A of the
Code and Company is not a party to, and is not otherwise obligated under, any contract, plan or
arrangement that provides for the gross-up of the Taxes imposed by section 409A(a)(1)(B) of the
Code.
4.20.11 Effective immediately preceding the Closing Date, the General Partner shall have duly
adopted a resolution terminating the Touchstone Wireless Repair and Logistics, LP 401(k) Retirement
Plan.
36
4.20.12 The representations contained in this Section 4.20 shall be the exclusive
representations and warranties with respect to employee benefit matters.
4.21. Environment, Health and Safety Matters.
4.21.1 Each of the Company and its Subsidiaries is and has been in compliance for the past
five years in all material respects with all Environmental Laws, except for such non-compliance
that has been resolved in all material respects.
4.21.2 Without limiting the generality of the foregoing, each of the Company and its
Subsidiaries has obtained, has complied in all material respects with, and is in compliance in all
material respects with, all permits and approvals under Environmental Law required for the
operation of its business as currently and formerly conducted, and all such permits and approvals
are in full force and effect.
4.21.3 None of the Company nor its Subsidiaries, has received any written notice of any actual
or alleged material violation by the Company or its Subsidiaries of Environmental Laws from any
Governmental Authority or any other person, or any material liabilities or potential liabilities of
the Company or its Subsidiaries arising under or related to Environmental Laws (including but not
limited to liabilities arising in connection with employee exposure to Hazardous Materials,
personal injury, damage to real property, natural resource damage and response costs), except for
such violations and liabilities that have been resolved in all material respects.
4.21.4 There are no material claims arising under or related to Environmental Laws
(“Environmental Claims”) pending or, to the Knowledge of the Company, threatened against
the Company or its Subsidiaries, or against any person whose liability for any such Environmental
Claim has been retained or assumed by the Company or its Subsidiaries. None of the Company nor its
Subsidiaries has treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any Hazardous Materials, or owned or operated any property or
facility in a manner that has resulted in any material, unresolved Environmental Claims or, to the
Knowledge of the Company, would result in any material Environmental Claims, including any
liability for employee exposure to Hazardous Materials, response costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant to Environmental Laws.
4.21.5 Neither this Agreement nor the consummation of the transaction that is the subject of
this Agreement will trigger any requirement under Environmental Laws for site investigation or
cleanup, or notification to or consent of Governmental Authority or third parties, pursuant to any
of the so-called transaction-triggered or responsible property transfer Environmental Laws.
37
4.21.6 Notwithstanding any other provisions of this Agreement, Section 4.21
contains the Sellers’ and the Company’s sole representations and warranties regarding environmental
matters, including any matters related to Environmental Laws, Environmental Claims, and Hazardous
Materials.
4.22. Accounts Receivable. Section 4.22 of the Schedules sets forth the
Company’s accounts receivable outstanding as of the date hereof, presented on an aged basis, and
separately identifies the name of each account debtor and the total amount of each related accounts
receivable. All of the Company’s accounts receivable represent bona fide amounts owed for
products previously delivered or services previously rendered, and none of the Company’s accounts
receivable represent a billing for products or services not yet delivered. All of the Company’s
accounts receivable are valid receivables and are current and, to the Company’s Knowledge,
collectible. Except to the extent reserved against or reflected on the Financial Statements, to
the Knowledge of the Company, there is no reason why the Company’s accounts receivable would not be
collectible in the Ordinary Course of Business.
4.23. Customers and Suppliers.
4.23.1 Section 4.23.1 of the Schedules sets forth, as of the date hereof, the top
ten (10) customers of the Company as measured by gross revenue since January 1, 2010. No such top
ten customer of the Company has cancelled or otherwise terminated, or, to the Company’s Knowledge,
threatened in writing to cancel, terminate or otherwise adversely modify in any material respect,
its relationship with the Company or has during the last twelve (12) months decreased materially,
or, to the Company’s Knowledge, threatened in writing to decrease or limit its usage of the
services or products of the Company, in each case whether as a result of the transactions
contemplated hereby or otherwise. Neither the Company nor, to the Knowledge of the Company, any
such customer, has materially breached any Contract between them, except where such breach has been
cured as of the date of this Agreement.
4.23.2 Section 4.23.2 of the Schedules sets forth, as of the date hereof, the top
ten (10) suppliers of the Company as measured by purchases since January 1, 2010. The Company has
no sole source suppliers. No such top ten supplier of the Company has cancelled or otherwise
terminated, or, to the Company’s Knowledge, threatened in writing to cancel, terminate or otherwise
adversely modify in any material respect, its relationship with the Company or has during the last
twelve (12) months decreased materially, or, to the Company’s Knowledge, threatened in writing to
decrease or limit materially, its services, supplies or materials to the Company, in each case
whether as a result of the transactions contemplated hereby or otherwise. Neither the Company nor,
to the Knowledge of the Company, any such supplier, has materially breached any Contract between
them except where such breach has been cured as of the date of this Agreement.
4.23.3 Section 4.23.3 of the Schedules sets forth all of the OEM repair and/or
refurbishment certifications of the Company as of the date hereof. No OEM has cancelled
38
or
otherwise terminated, or, to the Company’s Knowledge, threatened in writing to cancel or otherwise
terminate or otherwise adversely modify in any material respect, its relationship with the Company
or has during the last twelve (12) months decreased materially, or, to the
Company’s Knowledge, threatened in writing to decrease or limit materially, Company’s
authority to repair and/or refurbish products, in each case whether as a result of the transactions
contemplated hereby or otherwise.
4.24. Inventory. All inventory of the Company and its Subsidiaries as shown on
the Most Recent Balance Sheet (the “Company Inventory”) is (i) in good and merchantable
condition and (ii) of a quality and quantity usable, leasable or saleable in the ordinary course of
business, except as to inventory for which adequate reserves have been provided in accordance with
GAAP. The aggregate value of the Company Inventory, net of reserves for excess and obsolete
inventory, has been recorded at the lower of cost or market value in accordance with GAAP.
Section 4.24 of the Schedules includes an estimate of the reserve for excess and obsolete
inventory as of the Closing in accordance with GAAP. Section 4.24 of the Schedules also
includes the Company’s good faith best estimate, as of the date hereof (which estimate shall be
updated as of a date within ten (10) days prior to the Closing), of all amounts of inventories in
transit to the Company’s facilities but not otherwise included in the Company Inventory. The
Company and its Subsidiaries own or owned all right, title and interest in and to such Company
Inventory, subject to the Security Interests described on Section 4.24 of the Schedules,
all of which Security Interests shall be released at or prior to Closing.
4.25. Certain Business Relationships With the Company and its Subsidiaries. None
of the Sellers nor its Affiliates (other than the Company or its Subsidiaries) is or has been
involved in any material business arrangement or relationship with any of the Company or its
Subsidiaries (apart from ordinary course employment relationships), and none of the Sellers nor its
Affiliates owns any material asset, tangible or intangible, which is used in the business of any of
the Company and its Subsidiaries.
4.26. Product Warranties; Latent Defects. There exists no pending or, to the
Knowledge of the Company, threatened, Proceeding by or before any court or Governmental Authority
relating to any product or service alleged to have been distributed, completed or sold by the
Company or its Subsidiaries to others. There exists no pending or, to the Knowledge of the
Company, threatened product liability Proceedings relating to the business of the Company and its
Subsidiaries.
4.27. Illegal Payments. None of the Company, any of its Subsidiaries nor any of
their respective directors, officers, employees or agents, has directly or indirectly given or
agreed to give any illegal gift, contribution, payment or similar benefit to any supplier,
customer, governmental official or employee or other Person to assist in connection with any actual
or proposed transaction or made or agreed to make any illegal contribution, or reimbursed any
illegal political gift or contribution made by any other Person, to any candidate for federal,
state,
39
local or foreign public office, (A) which violates any applicable law, including but not
limited to, the Foreign Corrupt Practices Act of 1977, as amended, or might subject Buyer to any
damages or penalties in any civil, criminal or governmental litigation or proceeding, or (B) the
non-continuation of which has had or may reasonably be likely to have a Material Adverse Effect on
the Company and its Subsidiaries.
4.28. Bank Accounts; Power of Attorney. Section 4.28 of the Schedules
sets forth (i) the name of each bank in which the Company or any Subsidiary has an account or safe
deposit box and the names of all Persons authorized to draw thereon or to have access thereto, and
(ii) the names of all Persons, if any, holding powers of attorney from the Company or any
Subsidiary and a summary statement of the terms thereof.
4.29. State Takeover Statutes. No “control share acquisition,” “fair price” or
other anti-takeover regulations enacted under state law or laws in the United States apply to this
Agreement or the other transactions contemplated hereby. If any anti-takeover statute is or shall
become applicable to this Agreement or other transactions contemplated hereby, the Sellers shall
grant, or the Seller Representative shall cause the Company to grant, such approvals and take such
actions as are reasonably necessary so that the transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions contemplated hereby. No
anti-takeover provision in any governing documents of the Company is applicable to this Agreement
or the other transactions contemplated hereby.
4.30. No Limitation. No investigation or due diligence conducted by, or knowledge
obtained by, Buyer shall limit, modify or negate any of the foregoing representations and
warranties.
EXCEPT AS SPECIFICALLY AND EXPRESSLY SET FORTH IN SECTIONS 3 AND 4 HEREOF, (I) NONE OF THE SELLERS,
THE COMPANY OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES MAKES ANY REPRESENTATION OR
WARRANTIES OF ANY KIND OR NATURE WITH RESPECT TO THE COMPANY, ITS SUBSIDIARIES OR THEIR RESPECTIVE
BUSINESSES OR THE MATTERS CONTEMPLATED HEREBY, AND (II) ALL WARRANTIES (WHETHER WRITTEN OR ORAL,
EXPRESS OR IMPLIED) IN REGARD TO MERCHANTIBILITY, FITNESS FOR A PARTICULAR PURPOSE, CONDITION OR
DESIGN OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE OR OTHERWISE ARE EXPRESSLY EXCLUDED.
BUYER ACKNOWLEDGES AND AGREES THAT IT IS NOT RELYING ON ANY STATEMENT OR REPRESENTATION MADE BY OR
ON BEHALF OF THE SELLER, THE COMPANY, ITS SUBSIDIARIES OR THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY
SPECIFICALLY SET FORTH IN SECTIONS 3 OR 4 HEREOF. BUYER FURTHER ACKNOWLEDGES THAT NONE OF THE
SELLERS, THE
40
COMPANY, ITS SUBSIDIARIES OR ANY OTHER PERSON OR ENTITY WILL HAVE OR BE SUBJECT TO ANY
LIABILITY TO BUYER RESULTING FROM THE DISTRIBUTION TO BUYER OR ITS REPRESENTATIVES OR BUYER’S USE
OF ANY INFORMATION REGARDING THE COMPANY, ITS SUBSIDIARIES OR THEIR RESPECTIVE BUSINESSES NOT
EXPRESSLY SET FORTH IN THIS AGREEMENT, INCLUDING ANY PROJECTIONS OR OTHER INFORMATION PROVIDED BY
ANY SELLER, THE SELLER REPRESENTATIVE, THE COMPANY OR ITS SUBSIDIARIES OR BY ANY OF THEIR
REPRESENTATIVES OR AGENTS.
5. Representations and Warranties of Buyer. Each of BPNA and BPGP represents and
warrants to the Sellers, except as set forth in the schedule delivered to the Sellers (the
“Buyer Schedules”), as follows:
5.1. Organization of BPNA. BPNA is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State of Delaware; its status is active; and
it has the corporate power and authority to own or lease its properties and to conduct its business
as it is now being conducted. The copies of the certificate of limited partnership and limited
partnership agreement of BPNA previously made available by BPNA to the Sellers are true, correct
and complete. BPNA is duly licensed or qualified and in good standing as a foreign entity in each
jurisdiction in which the ownership of its property or the character of its activities requires it
to be so licensed or qualified, except such jurisdictions where the failure to so qualify has not
had a Material Adverse Effect on BPNA.
5.2. Organization of BPGP. BPGP is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Indiana; its status is
active; and it has the corporate power and authority to own or lease its properties and to conduct
its business as it is now being conducted. BPGP is duly licensed or qualified and in good standing
as a foreign entity in each jurisdiction in which the ownership of its property or the character of
its activities requires it to be so licensed or qualified, except such jurisdictions where the
failure to so qualify has not had a Material Adverse Effect on BPGP.
5.3. Authorization of Transaction. Each of BPNA and BPGP has full corporate
power and authority to execute and deliver this Agreement and to perform its respective obligations
hereunder. This Agreement has been duly and validly executed and delivered by each of BPNA and
BPGP and constitutes the valid and legally binding obligation of each of BPNA and BPGP, enforceable
in accordance with its terms and conditions, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity. Except as set forth
on Section 5.3 of the Schedules, neither of BPNA or BPGP needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any Governmental Authority or
other third party in order to consummate the transactions contemplated by this Agreement.
41
5.4. Noncontravention. Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Authority to which either of BPNA or BPGP is subject or any
provision of its charter or bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any material agreement, contract, lease
or License to which either BPNA or BPGP is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any of its assets),
except in each case for violations, breaches, defaults, required consents, terminations,
accelerations, Security Interests or
rights that in the aggregate would not reasonably be expected to have a material adverse
effect on BPNA or BPGP.
5.5. Broker Fees. Each of BPNA and BPGP does not have any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Sellers will become liable or obligated. For purposes of
clarification, all broker fees due to The Blackstone Group and in connection with the transactions
contemplated by this Agreement shall be the responsibility and obligation of Buyer and not the
Sellers.
5.6. Litigation. There is no action, suit, review, proceeding or investigation
pending or, to the knowledge of Buyer, threatened (a) against Buyer or any of its Affiliates with
respect to which there is a reasonable likelihood of a determination that would have a material
adverse effect on the ability of Buyer to perform its obligations under this Agreement, or (b) that
seeks to enjoin or obtain damages in respect of the consummation of the transactions contemplated
hereby. Neither Buyer nor any of its Affiliates is subject to any outstanding orders, rulings,
judgments, or decrees that would have a material adverse effect on the ability of Buyer to perform
its obligations under this Agreement.
5.7. Purchase for Investment. Buyer is purchasing the securities being purchased
by it pursuant to Section 2 hereof for investment and not with a view to any public resale
or other distribution thereof, except in compliance with applicable securities laws including the
Securities Act of 1933, as amended.
5.8. Sufficient Financing. As of the Closing, Buyer will have the financial
capability, pursuant to its existing credit facilities, to purchase the Equity Interests and
consummate the transactions contemplated by this Agreement on the terms and subject to the
conditions set forth herein. Buyer has no reason to believe that there are any conditions to the
payment of such cash which might not be satisfied by Buyer as of the date hereof and as of the
Closing.
5.9. No Knowledge of Misrepresentation or Omission. Buyer has no knowledge that
the representations and warranties of either the Company or each Seller made in
42
this Agreement
qualified as to materiality are not true and correct, or that those not so qualified are not true
and correct in all material respects.
5.10. Investigation; No Reliance. Buyer acknowledges and agrees that it (a) has
made its own inquiry and investigation into, and based thereon has formed an independent judgment
concerning, the Company and its Subsidiaries, their business and the transactions contemplated
hereby. Buyer is knowledgeable about the industry in which the Company and its Subsidiaries
operate and is capable of evaluating the merits and risks of its purchase of the Equity Interests
as contemplated by this Agreement and is able to bear the substantial economic risk of such
investment for an indefinite period of time. Buyer has been afforded access to the books and
records, facilities and personnel of the Company and its Subsidiaries for purposes of conducting a
due diligence investigation of the Company and its Subsidiaries and has been furnished with or
given access to such information about the Company and its Subsidiaries as it
has requested, all to the satisfaction of Buyer. Buyer acknowledges, without limiting the
foregoing, that neither any Seller nor the Company is making any representation or warranty with
respect to (a) except as otherwise expressly set forth in Sections 3 and 4 hereof,
any information made available to Buyer or its representatives in the “data room” created for
purposes of the sale of the Company or (b) any financial projections, estimates or forecasts
relating to the Company or its Subsidiaries. With respect to any such projections, estimates or
forecasts delivered or made available by or on behalf of the Company or any Seller, Buyer
acknowledges that (a) there are uncertainties inherent in attempting to make projections, estimates
or forecasts, (b) it is familiar with such uncertainties, (c) it is taking full responsibility for
making its evaluation of the adequacy and accuracy of such projections, estimates and forecasts so
furnished to it (including the reasonableness of the assumptions underlying such projections,
estimates or forecasts) and (d) it shall make no claim against the Sellers (or any of their
partners, directors, officers, employees, advisors, managers, agents, shareholders, members,
consultants, investment bankers, brokers, representatives, controlling persons or affiliates) or
any other person with respect thereto.
6. Covenants of the Sellers Prior to the Closing Date.
6.1. Access and Investigation.
(i) Between the date of this Agreement and the Closing Date, the Sellers and the Company
shall (a) afford Buyer and its representatives, upon reasonable advance notice, reasonable access
to the Contracts and books and records of the Company during regular business hours or at such
other time agreed to by Buyer and the Seller Representative, and (b) furnish Buyer with such
additional financial, operating, and other data and information relating to the Company as Buyer
reasonably requests. The foregoing access rights shall not include the right to (i) take any
samples or conduct other invasive environmental investigations, (ii) have access to any information
the disclosure of which is restricted by contract or applicable law (including without limitation
the Health Insurance Portability and Accountability Act of
43
1996 or the regulations issued
thereunder) or which would result in the waiver of any privileges. Buyer and its representatives
and agents shall not contact or hold discussions with suppliers, customers or any officers or
employees of the Company or its Subsidiaries without the prior written consent of the Company (such
consent not to be unreasonably withheld).
(ii) All information made available or obtained pursuant to Section 6.1.1 shall be
held by Buyer in accordance with, and subject to the terms of the Confidentiality Agreement,
effective as of July 23, 2010, by and between the Company and Buyer, as amended by the First
Amendment thereto, effective August 9, 2010 (the “Confidentiality Agreement”). The Parties
hereby agree that, notwithstanding anything to the contrary contained in the Confidentiality
Agreement, the Confidentiality Agreement shall survive from the date hereof until the Closing, and
if the Closing shall occur, the Confidentiality Agreement shall terminate at Closing.
6.2. Operation of the Business. Between the date hereof and the earlier of the
Closing Date and the termination of this Agreement pursuant to or in accordance with Section
10
hereof, except as otherwise contemplated by this Agreement or otherwise taken with the prior
written consent of Buyer (not to be unreasonably withheld), the Company shall:
(i) conduct the business of the Company substantially in the ordinary course of business
consistent with past practice;
(ii) comply in all material respects with all requirements of all applicable laws;
(iii) use commercially reasonable efforts to preserve intact its current business
organization, keep available the services of its current employees and agents, and maintain
business relations and goodwill with suppliers, customers, landlords, creditors, employees, agents,
licensees, clients and others having business relationships with it;
(iv) otherwise report periodically to Buyer, at Buyer’s reasonable request, concerning
operations of the Company;
(v) not permit, allow or suffer any asset of the Company to become subjected to any
Security Interest other than in the ordinary course of business or except to the extent any such
Security Interest is to be released or fully discharged at or prior to Closing;
(vi) except as set forth on Section 6.2(vi) of the Schedules, not commit for any
capital expenditure individually in an amount in excess of $50,000 and in the aggregate in an
amount in excess of $200,000;
44
(vii) not pledge or hypothecate any of its assets or otherwise permitted any of its
material assets to become subject to any Security Interest other than in the ordinary course of
business consistent with past practice;
(viii) except as set forth on Section 6.2(viii) of the Schedules, incur any
material obligation in an amount in excess of $100,000 other than in the ordinary course of
business consistent with past practice;
(ix) not make any loan or advance to any Person other than in the ordinary
course of business consistent with past practice;
(x) not assume, guarantee or otherwise become liable for any obligation of any Person
(other than the Company or its Subsidiaries) other than in the ordinary course of
business consistent with past practice;
(xi) not purchase, lease, sell, abandoned or otherwise acquire or dispose of any business
or material assets other than in the ordinary course of business consistent with past
practice;
(xii) not waive or release any material right or canceled or forgiven any debt owed to the
Company or claim of the Company other than in the ordinary course of business consistent
with past practice;
(xiii) except as set forth on Section 6.2(xiii) of the Schedules, not amend or
terminate any material Contract other than in the ordinary course of business;
(xiv) not sell or otherwise issue any Equity Interests or any other securities;
(xv) not amend its organizational documents;
(xvi) not be a party to any merger, consolidation, recapitalization, reclassification of
equity, or similar transaction;
(xvii) not declare, accrue, set aside, or pay any dividend or make any other distribution
in respect of any Equity Interests of other securities, Cash or other assets;
(xviii) not make any material Tax election;
(xix) not increase Liabilities with respect to any of the Company’s Employee Benefit Plans
or become obligated to contribute to any Employee Benefit Plan not included on Section
4.20.1 of the Schedules; and
45
(xx) not agree or commit to take any action described in the foregoing clauses.
6.3. Commercially Reasonable Efforts. Between the date of this Agreement and the
Closing Date, the Company, its Subsidiaries, the Sellers and Buyer shall use commercially
reasonable efforts to take all action and to do all things necessary, proper or advisable in order
to consummate and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 7); provided,
however, that except as explicitly set forth in Section 6.4, the Parties shall not be
required to take any action, including paying or committing to pay any amount to (or incurring any
obligation in favor of) any person from whom such consent may be required. Buyer acknowledges that
certain consents and waivers with respect to the transactions contemplated hereby may be required
from parties to Contracts or other agreements, contracts or licenses of the Company or its
Subsidiaries, that such consents and waivers have not been obtained as of the date hereof and may
not be obtained prior to the Closing, and that so long as the Company has made commercially
reasonable efforts to obtain material consents requested by the Buyer prior to the Closing, no
representation, warranty or covenant of the Sellers or the Company contained herein shall be deemed
breached, and, other than the documents listed on Section 2.5.1 of the Schedules, to be
delivered by the Sellers pursuant to Section 7.1(v), no condition shall be deemed to not have been
satisfied, as a result of the failure to obtain any such consent or waiver or the consequences
thereof.
6.4. Consents and Approvals.
(i) Each of Buyer, the Company and the Sellers shall use its commercially reasonable
efforts to (i) obtain from any Governmental Authority any consents,
licenses, permits, waivers, clearances approvals, authorizations or orders required to be
obtained or made by the Company, Sellers or Buyer or any of their respective Subsidiaries, or avoid
any action or proceeding by any Governmental Authority (including, without limitation, those in
connection with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR
Act”) in connection with the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, (ii) promptly, but in no event later than one
(1) Business Day after execution of this Agreement, make or cause to be made the applications or
filings required to be made by Buyer, the Company, the Sellers or any of their respective
Subsidiaries under or with respect to the HSR Act (which such filings shall include requesting
early termination of the waiting period under or with respect to the HSR Act) or any other
applicable laws in connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, (iii) comply at the earliest practicable
date with any request under or with respect to the HSR Act and any such other applicable laws for
additional information, documents or other materials received by Buyer, the Company, the Sellers or
any of their respective Subsidiaries from the Federal Trade Commission or the Department of Justice
or any other Governmental Authority in connection
46
with such applications or filings or the
transactions contemplated hereby and (iv) coordinate and cooperate with, and give due consideration
to all reasonable additions, deletions or changes suggested by the other party in connection with,
making (A) any filing under or with respect to the HSR Act or any such other applicable laws and
(B) any filings, conferences or other submissions related to resolving any investigation or other
inquiry by any such Governmental Authority. Each of Buyer, the Company and the Sellers shall
furnish to the other party all information necessary for any such application or other filing to be
made in connection with the transactions contemplated hereby. Each of Buyer, the Company and the
Sellers shall promptly inform the other Parties hereto of any material communication with, and any
proposed understanding, undertaking or agreement with, any Governmental Authority regarding any
such application or filing. If any of Buyer, the Company or any Seller hereto intends to
independently participate in any meeting with any Governmental Authority in respect of any such
filings, investigation or other inquiry, then such Party shall give the other Parties reasonable
prior notice of such meeting and invite representatives of the other Parties to participate in the
meeting with the Governmental Authority unless prohibited by such Governmental Authority. Buyer,
the Company and the Sellers shall coordinate and cooperate with one another in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any Party in connection with all meetings, actions and proceedings
under or relating to any such application or filing.
(ii) From the date of this Agreement until the consummation of the transactions
contemplated hereby, the Company and the Sellers shall give (or shall cause their respective
Subsidiaries to give) any material notices required to be given to third parties to the extent
requested by Buyer, and use, and cause their respective Subsidiaries to use, commercially
reasonable efforts to obtain any material third party consents required to consummate the
transactions contemplated hereby pursuant to agreements or contracts of the Company; provided,
however, that the Company and the Sellers shall coordinate and cooperate with the Buyer in
determining whether any actions, notices, consents, approvals or waivers are required to be given
or obtained, or should be given or obtained from parties to any Contract in connection with
consummation of the transactions contemplated hereby and seeking any such actions, notices,
consents approvals or waivers. Notwithstanding the foregoing or anything to the contrary herein, no
Party shall be required to make any payment to any third party or agree to any limitation on the
conduct of its business, in order to obtain any such consent. No Party shall have any obligation
with respect to this Section 6.4(ii) following the Closing.
(iii) From the date of this Agreement until the consummation of the transactions
contemplated hereby, each of Buyer, the Company and the Sellers shall promptly notify one another
in writing of any pending or, to the Knowledge of Buyer, the Company or the Sellers, threatened
action, suit, arbitration or other proceeding or investigation by any Governmental Authority or any
other Person (i) challenging or seeking material damages in connection with the transactions
contemplated hereby or (ii) seeking to restrain or prohibit the consummation of the transactions
contemplated hereby or otherwise limit in any material respect
47
the right of Buyer or any affiliate
of Buyer to own or operate all or any portion of the businesses or assets of the Company or any
Company Subsidiary or the right of any Seller to receive the Purchase Price. The Parties will give
one another the opportunity to consult regarding the defense or settlement of any such litigation
and shall consider the other Parties’ views with respect to such litigation and prior to the
termination of the Agreement under Section 10 hereof shall not settle any such litigation
without the prior written consent of the other Parties hereto, which will not be unreasonably
withheld or delayed.
(iv) If any administrative or judicial action or proceeding is instituted (or threatened
to be instituted) by a Governmental Authority challenging the transaction contemplated hereby as
violative of any applicable law, each of Buyer, the Company and the Sellers shall cooperate and use
their best efforts to contest and resist, except insofar as the Parties may otherwise agree, any
such action or proceeding, including any action or proceeding that seeks a temporary restraining
order or preliminary injunction that would prohibit, prevent or restrict consummation of the
transactions contemplated hereby.
(v) Notwithstanding anything set forth in this Section 6.4 and any other provision
hereof, in connection with the receipt of any necessary governmental approvals or clearances
(including under the HSR Act), none of the Sellers, Buyer, the Company or their respective
Affiliates shall be required to sell, hold separate or otherwise dispose of or conduct their
business in a specified manner, or agree to sell, hold separate or otherwise dispose of or conduct
their business in a specified manner, or permit the sale, holding separate or other disposition of,
any assets of the Sellers, Buyer, the Company or their respective Affiliates or the conduct of
their business in a specified manner.
6.5. Audited Financials. Following the date of this Agreement, the Sellers will,
at Buyer’s expense, take all actions reasonably requested by Buyer to assist Buyer in connection
with Buyer’s preparation of the financial statements and other information it will be required to
file with the Securities and Exchange Commission under Rule 3-05 of Regulation S-X.
6.6. No Solicitation of Transactions. Prior to the earlier of (A) the Closing
Date or (B) the termination of this Agreement in accordance with the provisions of Xxxxxxx
00, xxxx of the Sellers or the Company (or any of its Subsidiaries) will, nor will any of them
knowingly permit their officers, directors, employees or agents, investment bankers,
attorneys, accountants or other advisors or representatives, to directly or indirectly (i) solicit,
initiate, encourage or knowingly facilitate (including by furnishing nonpublic information) any
inquiries or the making of any proposal or offer that constitutes, or may reasonably be expected to
lead to, an Acquisition Proposal, (ii) participate in any discussions or negotiations in
furtherance of such inquiries or to obtain an Acquisition Proposal, or the making of any proposal
that constitutes any Acquisition Proposal, or provide any confidential information or data with
respect to an Acquisition Proposal, (iii) agree to, approve or recommend any Acquisition Proposal,
or (iv) execute or enter into any letter of intent, agreement in principle, merger agreement,
memorandum
48
of understanding, term sheet or other similar document related to an Acquisition
Proposal. Each of the Sellers and the Company agrees that it and each of their respective
Subsidiaries and each of their respective representatives shall immediately cease any and all
existing activities, discussions or negotiations with any third parties conducted heretofore with
respect to any Acquisition Proposal.
6.7. Public Announcements. Buyer and Sellers agree to consult with each other
before issuing any press release or making any other public statement with respect to this
Agreement or the transactions contemplated hereby and, except for any press releases and public
statements the making of which may be required by applicable law, or any applicable stock exchange
or NASDAQ rule or any listing agreement, no Party will issue any such press release nor make any
such public statement unless the content of such press release or public statement shall have been
agreed upon by the Parties.
6.8. Termination of Agreements. Effective only upon completion of the Closing,
each Seller and the Company hereby terminate the agreements set forth on Section 6.8 of the
Schedules. Buyer shall amend and restate the Third Amended and Restated Limited Partnership
Agreement of the Company dated November 11, 2008 and effective as of November 2, 2007, by and among
the General Partner and the Limited Partners immediately following completion of the Closing.
6.9. Bonus Calculation. Following the Closing, Buyer shall cause the Company to
pay employee bonuses for the year ended December 31, 2010 in the aggregate amount accrued on the
Net Working Capital Calculation under the Company’s bonus plan in accordance with the parameters
set forth on Section 6.9 of the Schedules (including to any such employee who becomes a consultant
after the Closing). Payment of such bonuses will be subject to the Buyer’s normal review process,
confirmation of the Company’s 2010 EBITDA and each employee’s personal goals/objectives results;
provided, that if and to the extent such bonuses are not paid to the employees (or consultants),
the amount of such bonuses not so paid shall be promptly thereafter paid by Buyer to the Seller
Representative.
7. Conditions Precedent.
7.1. Conditions Precedent to Obligations of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the fulfillment (or, to
the extent permitted by applicable law, waiver), on or prior to the Closing Date, of each of the
following conditions:
(i) the representations and warranties of the Sellers and the Company set forth in this
Agreement (i) to the extent qualified by materiality or Material Adverse Effect, shall be true and
correct and (ii) to the extent not qualified by materiality or Material Adverse Effect, shall be
true and correct in all material respects, in each case, as of the date of this Agreement and as of
the Closing as though made at and as of the Closing, except that
49
any such representations and
warranties expressly made as of a specified date shall only need to be true and correct as of such
date (in which case such representations and warranties qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all material respects, on and
as of such earlier date);
(ii) the Sellers and the Company shall have performed and complied in all material
respects with all covenants required in this Agreement to be performed or complied with by them on
or prior to the Closing Date;
(iii) there shall not have been or occurred any event, change, occurrence or circumstance
after the date hereof and prior to the Closing that, individually or in the aggregate with any such
events, changes, occurrences or circumstances, has had or would reasonably be expected to have a
Material Adverse Effect on the Company;
(iv) no Proceedings shall have been instituted or claim or demand made against the
Sellers, the Company or Buyer which could reasonably be expected to restrain or prohibit, the
consummation of the transactions contemplated hereby, and there shall not be in effect any order by
a Governmental Authority of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;
(v) the Sellers, the Company and Buyer shall have obtained the documents listed on
Section 2.5.1 of the Schedules, and the waiting period under the HSR Act, if applicable,
and any extensions thereof shall have expired or been terminated;
(vi) the General Partner shall have duly adopted a resolution terminating the Touchstone
Wireless Repair and Logistics, LP 401(k) Retirement Plan;
(vii) any revocation period required under applicable law for the documents listed on
Section 7.1(vii) of the Schedules shall have elapsed; and
(viii) Buyer shall have received the items to be delivered in Section 2.5.1.
7.2. Conditions Precedent to Obligations of the Sellers. The obligations of the
Sellers to consummate the transactions contemplated by this Agreement are subject to the
fulfillment (or, to the extent permitted by applicable law, waiver), on or prior to the Closing
Date, of each of the following conditions:
(i) the representations and warranties of Buyer set forth in this Agreement (i) to the
extent qualified by materiality, Material Adverse Effect or similar qualification contained
therein, shall be true and correct and (ii) to the extent not qualified by
materiality, Material Adverse Effect or similar qualification contained therein, shall be true
and correct in all material respects, in each case, as of the date of this Agreement and as of the
50
Closing as though made at and as of the Closing, except that any such representations and
warranties expressly made as of a specified date shall only need to be true and correct as of such
date (in which case such representations and warranties qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all material respects, on and
as of such earlier date);
(ii) Buyer shall have performed and complied in all material respects with all covenants
required by this Agreement to be performed or complied with by it on or prior to the Closing Date;
(iii) no Proceedings shall have been instituted or claim or demand made against the
Sellers, the Company or Buyer which could reasonably be expected to restrain or prohibit the
consummation of the transactions contemplated hereby, and there shall not be in effect any order by
a Governmental Authority of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;
(iv) the waiting period under the HSR Act, if applicable, and any extensions thereof shall
have expired or been terminated; and
(v) the Seller Representative, the Sellers and/or the Escrow Agent, as the case may be,
shall have received the items listed in Section 2.5.2.
8. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing:
8.1. Further Assurances. From time to time after the Closing, without additional
consideration, each Party will execute and deliver such further instruments and take such other
action as may be necessary or reasonably requested by another Party to make effective the
transactions contemplated by this Agreement and the transactions contemplated hereby and to provide
such other Party with the intended benefits of this Agreement. Without limiting the foregoing,
upon reasonable request of Buyer after the Closing Date, each Seller shall, as applicable, execute,
acknowledge and deliver all such further assurances, deeds, assignments, consequences, powers of
attorney and other instruments and paper as may be required to sell, transfer, assign, convey and
deliver to Buyer all right, title and interest in, to and under the Equity Interests.
8.2. Transition. Each Seller will not take any action that is designed or
intended to have the effect of discouraging any customer, supplier, or other business associate of
any of the Company or its Subsidiaries from maintaining the same business relationships with the
Company and its Subsidiaries after the Closing as it maintained with the Company and its
Subsidiaries prior to the Closing.
51
8.3. Record Retention. Buyer and each Seller, on behalf of itself or himself
individually and to the extent that such Party has such books and records in its possession as of
or following the Closing Date, agrees (i) to hold all of the books and records of the Company
existing on the Closing Date and not to destroy or dispose of any thereof for a period of seven (7)
years from the Closing Date, and (ii) following the Closing Date, to afford the other Parties, any
of their Affiliates and their accountants and counsels, during normal business hours, upon
reasonable request, reasonable access to such books, records and other data to the extent that such
access may be requested for any purpose (other than litigation between or among Parties), at no
cost to any Seller; provided, however, that such access rights shall be exercised in a manner so as
to maintain the privileged nature of any information that may be subject to attorney-client
privilege.
8.4. Nondisclosure; Noncompetition; Nonsolicitation; Nondisparagement. Each of
the Sellers and the Company recognize that due to the nature of such Seller’s relationship with the
Company, each such Seller has had and will have access to and has developed and will develop
confidential business information, proprietary information, and trade secrets relating to the
business and operations of the Company and its Affiliates. Each Seller acknowledges that such
information is valuable to the business of the Company and its Affiliates, and that disclosure to,
or use for the benefit of, any person or entity other than the Company or its Affiliates, would
cause substantial damage to the Company. For purposes of this Section 8.4, reference to
the “Company” shall include both the Company and each Subsidiary of the Company as of the date
hereof.
8.4.1 Confidential Information.
(i) Subject to subsection (iii) below, each Seller shall at all times, except as required
by law, maintain the confidentiality of Confidential Information of the Company, and except, to the
extent applicable, in connection with his duties as an employee of the Company, such Seller shall
not directly or indirectly disclose any such information to any Person, nor shall the Seller use
Confidential Information of the Company for any purpose except for the benefit of the Company.
“Confidential Information” means the following: trade secret information; client or
customer lists, including their identities, contacts, business and financial needs and information;
Company pricing information; survey information; computer software, passwords, programs, data or
other information; Company marketing plans, projections and presentations; Company financial and
budget information; and all other business-related information of the Company on the Closing Date
which has not been publicly disclosed by the Company or its Affiliates. This restriction shall
apply regardless of whether such Confidential Information is in written, graphic, recorded,
photographic or any machine-readable form or is orally conveyed to, or memorized by, such Seller.
(ii) Each Seller’s duty of confidentiality with regard to the Confidential Information
shall not extend to: (A) any Confidential Information that, at the time of
52
disclosure, had been
previously published and was part of the public domain; (B) any Confidential Information that is
published or becomes publicly available after disclosure, unless such publication is a breach of
this Agreement by such Seller; and (C) any Confidential Information that is obtained by such Seller
other than in connection with the performance of his
duties hereunder from a third person not known by such Seller to be prohibited from disclosing
such information to such Seller by a legal, contractual or fiduciary obligation.
(iii) In the event that a Seller is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena or other process) to disclose any
Confidential Information (including the terms of this Agreement) other than in respect of any
Proceeding between any Seller and Buyer, such Seller agrees to: (A) give prompt written notice to
the Company of such request or subpoena in order to allow the Company an opportunity to seek an
appropriate protective order or to waive its compliance with the provisions of this Agreement; and
(B) cooperate with the Company and with counsel for the Company in responding to such request or
subpoena as provided below. If the Company fails to obtain a protective order and does not waive
its rights to confidential treatment under this Agreement, each Seller may disclose only that
portion of any Confidential Information that such Seller is compelled to disclose pursuant to an
enforceable order. Each Seller further agrees that in no event will such Seller oppose action by
the Company to obtain an appropriate protective order or other reliable promises that confidential
treatment will be accorded to the Confidential Information. The provision of Confidential
Information to a third party representing a Seller in connection with litigation or arbitration
between the Parties or a dispute being resolved pursuant to Section 2.3 of this Agreement
or otherwise in the course of enforcing such Seller’s rights under this Agreement shall not be
considered a violation of this Section 8.4.1.
8.4.2 Confidentiality and Surrender of Records. Without the prior written consent
by the Company, each Seller shall not at any time, except as required by law, directly or
indirectly publish, make known or in any fashion disclose any Confidential Records to, or permit
any inspection or copying of Confidential Records by, any individual or entity other than in the
course of such individual’s or entity’s employment by the Company, nor shall such Seller retain,
and will deliver promptly to the Company, any of the same and any other Company records or property
following termination of his employment hereunder for any reason or upon request by the Company.
For purposes hereof, “Confidential Records” means those portions of correspondence,
memoranda, files, manuals, books, lists, financial, operating or marketing records, magnetic tape,
or electronic or other media or equipment of any kind in such Seller’s possession or under his
control or accessible to him which contain any Confidential Information. All Confidential Records
shall be and remain the sole property of the Company. The provision of Confidential Records to a
third party representing a Seller in connection with litigation or arbitration between the Parties
or a dispute being resolved pursuant to Section 2.3 of this Agreement or otherwise in the
course of enforcing such Seller’s rights under this Agreement shall not be considered a violation
of this Section 8.4.2.
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8.4.3 Non-Solicitation; Non-Competition. For a period of three (3) years from the
Closing Date, each of EW Investment, LP, Striker Partners I, L.P. and Xxxx X. Xxxxxx shall not
engage in any of the following activities, either directly or indirectly (individually, or through
or on behalf of another entity, as owner, partner, employee, agent or consultant, or in any other
capacity):
(i) seek, solicit, or attempt to establish on behalf of any Company Competitor, a business
relationship with any Person who was a client, customer, OEM, employee, agent (excluding employees,
who are addressed in Section 8.4.3(ii) or Xxxxx Xxxxx Xxxxxx, II) or representative
(excluding professional service providers such as accountants or legal, tax or financial advisors)
of the Company during the twenty-four (24) months preceding the Closing Date, or was solicited
directly by the Seller during the six (6) months preceding the Closing Date to become a client,
customer, supplier, employee, salesman, agent or representative of the business of the Company
(each a “Company Client”);
(i) solicit, encourage, or engage in any activity to induce any employee of the Company or
its Subsidiaries to terminate employment with the Company, or to become employed by any other
Person. For purposes of this Section 8.4.3(ii), the term employee includes any individual
who is an employee of or consultant to the Company or its Subsidiaries during the twelve (12) month
period prior to the Closing Date, other than Xxxxx Xxxxx Xxxxxx, II; provided, however, that the
foregoing provision will not prevent EW Investment, LP or Striker Partners I, L.P. from soliciting
any such person (a) as a result of placing advertisements in trade journals, newspapers, internet
or similar publications or (b) as a result of the efforts of executive recruiters or other third
parties who contact such persons without any direct or indirect solicitation by or knowing
encouragement from EW Investment, LP, Striker Partners I, L.P., Striker Investment Group or any
employees of Striker Investment Group, L.P. (collectively, the “Relevant Parties”); or
(ii) establish, engage, own, manage, operate, join or control, or participate in the
establishment, ownership, management, operation or control of, or be a director, officer, employee,
salesman, agent or representative of, or be a consultant to, any Company Competitor; provided,
however, that it shall not be a violation of this Section 8.4 for any Relevant Party to
own, directly or indirectly, solely as an investment, securities of any Person that are traded on a
national securities exchange or the Nasdaq Stock Market (or a recognized securities exchange
outside the U.S.) if such Relevant Party does not, directly or indirectly, own more than 3% or more
of the voting securities of such Person; provided, further, that it shall not be a violation of
this Section 8.4 for Xxxxxxx X. Xxxxxx to own, directly or indirectly, solely as an investment,
securities of any Person that are traded on a national securities exchange or the Nasdaq Stock
Market (or a recognized securities exchange outside the U.S.) if Xxxxxxx X. Xxxxxx does not,
directly or indirectly, own 5% or more of the voting securities of such Person.
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8.4.4 Acknowledgment. Each Seller acknowledges that the covenants of such Seller
set forth in this Section 8.4 are an essential element of this Agreement and that, but for
such Seller’s agreement to comply with these covenants, Buyer would not have entered into this
Agreement. Each Seller acknowledges that this Section 8.4 constitutes an independent
covenant that shall not be affected by performance or nonperformance of any other provision of this
Agreement by Buyer. Each Seller has independently consulted with his or its respective counsel (as
the case may be) and after such consultation agrees that the covenants set forth in this
Section 8.4 are reasonable and proper.
8.5. Nondisparagement.
(i) From and after the Closing Date, each Seller and Striker Partners I, L.P. shall not at
any time disparage the business of the Company, Buyer or any of their respective Affiliates after
the Closing Date or their relationships with any of their respective past, existing or prospective
customers, employees, suppliers or other business relationships; provided, that the making of any
claim or initiation of a Proceeding pursuant to this Agreement or the enforcement of such Seller’s
rights under this Agreement against Buyer or its Affiliates will not in and of itself violate this
Section 8.5(i).
(ii) From and after the Closing Date, the Buyer shall not at any time disparage any of the
Sellers or any of their respective Affiliates or their relationships with any of their respective
past, existing or prospective customers, employees, suppliers or other business relationships;
provided, that the making of any claim or initiation of a Proceeding against a Seller will not
in and of itself violate this Section 8.5(ii).
8.6. Reserved.
8.7. Directors’ and Officers’ Indemnification.
8.7.1 Buyer and each Seller agree that, to the maximum extent permitted by applicable law,
all rights to indemnification and exculpation from liability for acts or omissions occurring prior
to the Closing Date now existing in favor of the current or former general partners (or any
directors, officers, managers, members of the board of advisors, or members of any such general
partner), directors, officers, employees and other agents of the Company and its Subsidiaries
(collectively, “Protected Agents”), including as provided in the limited partnership
agreement of the Company, will survive the Closing and will continue in full force and effect in
accordance with their respective terms for a period of not less than six (6) years after the
Closing Date.
8.7.2 From and after the Closing Date, Buyer shall, and shall cause the Company and its
Subsidiaries to, indemnify, defend, and hold harmless each Person that is now, or has been at any
time prior to the date hereof or who becomes prior to the Closing, a Protected Agent, against any
and all losses, damages, liabilities, deficiencies, claims, interest, awards,
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judgments, penalties,
fees, costs and expenses (including amounts paid in respect of judgments, fines, penalties or
settlement of any Proceeding and legal fees and expenses reasonably incurred in connection with any
pending or threatened Proceeding) arising out of or relating to any threatened or actual Proceeding
based in whole or in part on or arising out of or relating in whole or in part to the fact that
such Person is or was a partner (or director, officer, manager, member of the board of advisors, or
member of any such partner) member, director, officer, manager, employee or other agent of the
Company or its Subsidiaries on or prior to the Closing Date and whether asserted or claimed prior
to, or at or after, the Closing Date, in each case, to the full extent permitted under applicable
law to indemnify such Persons, provided, that Buyer shall not, and shall not be required to, cause
the Company and its Subsidiaries to pay expenses in advance of the final disposition of any such
proceeding to each such indemnified person.
9. Indemnification.
9.1. Sellers’ Indemnification. Following the Closing and subject to the
limitations and conditions set forth in this Section 9, each Seller shall, on a several
basis, indemnify and hold harmless Buyer, and its successors and assigns, and its directors,
officers, members, employees, agents and representatives (collectively, the “Buyer Group”)
from and against any and all Losses arising out of or caused by any or all of the following:
9.1.1 Seller’s Misrepresentation. Any breach of any warranty or representation
made by such Seller in Section 3 of this Agreement, it being understood that no Seller
shall be liable for the breach of, or inaccuracy in, any representations or warranties made by any
other Seller.
9.1.2 Seller’s Nonperformance. Any failure or refusal of such Seller to satisfy
or perform any covenant of such Seller set forth in this Agreement required to be satisfied or
performed by such Seller pursuant to this Agreement, it being understood that no Seller shall be
liable for the breach of, or failure to perform, any covenants made by any other Seller.
9.1.3 Notwithstanding the foregoing, for so long as any amounts remain in the
Indemnification Escrow, to the extent the Buyer Group is entitled to indemnification for Losses
pursuant to this Section 9.1, Buyer must first seek recovery of such Losses from the
Indemnification Escrow. To the extent the Buyer Group is entitled to indemnification for Losses
pursuant to this Section 9.1 in excess of the funds remaining in the Indemnification
Escrow, it is understood that Buyer and other members of the Buyer Group shall be required to
pursue, on a several basis, the Seller who breached the representation, warranty or covenant in
question, and no other Seller shall be liable for such breach.
9.2. Sellers’ Indemnification Related to the Company’s Representations, Warranties and
Non-Performance. Following the Closing and subject to the limitations and conditions set
forth in this Section 9, the Sellers shall on a several basis, indemnify and hold
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harmless
the Buyer Group from and against any and all Losses arising out of or caused by any or all of the
following:
9.2.1 Company’s Misrepresentation. Any breach of any warranty or representation
made by the Company in Section 4 of this Agreement.
9.2.2 Company’s Pre-Closing Nonperformance. Any failure or refusal of the Company
to satisfy or perform any covenant of the Company set forth in this Agreement required to be
satisfied or performed by the Company pursuant to this Agreement, but only to the extent such
covenant and failure relates to the performance of obligations prior to the Closing Date.
9.2.3 Unpaid Transaction Expenses. Any failure by the Company or the Sellers to
have paid all Unpaid Transaction Expenses concurrent with or prior to the Closing.
9.2.4 Notwithstanding the foregoing, for so long as any amounts remain in the
Indemnification Escrow, to the extent the Buyer Group is entitled to indemnification for Losses
pursuant to this Section 9.2, Buyer must first seek recovery of such Losses from the
Indemnification Escrow. To the extent the Buyer Group is entitled to indemnification for Losses
pursuant to this Section 9.2 in excess of the funds remaining in the Indemnification
Escrow, it is understood that Buyer and other members of the Buyer Group shall be required to
pursue, on a several basis, the Sellers pro rata (it being understood that a Seller’s “pro rata”
portion shall be based on the percentages set forth next to each Seller’s name on Section 9
of the Schedules).
9.3. Buyer’s and the Company’s Indemnification. Following the Closing, the Buyer
and the Company shall indemnify and hold harmless the Sellers, their successors and assigns and
their directors, officers, members, employees, agents and representatives (each a “Seller
Indemnitee”), from and against any and all Losses, arising out of or caused by, any of the
following:
9.3.1 Buyer’s Misrepresentation. Any breach of any warranty or representation
made by Buyer in this Agreement.
9.3.2 Buyer’s Nonperformance. Any failure or refusal by Buyer to satisfy or
perform any covenant, term or condition of this Agreement required to be satisfied or performed by
it pursuant to this Agreement.
9.3.3 Company’s Post-Closing Nonperformance. Any failure or refusal of the
Company to satisfy or perform any covenant of the Company set forth in this Agreement required to
be satisfied or performed by the Company pursuant to this Agreement, but only to the extent such
covenant and failure relates to the performance of obligations from and after the Closing Date.
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9.4. Indemnification Procedures. With respect to each event, occurrence or matter
(“Indemnification Matter”) as to which any member of the Buyer Group or any of the Company
or the Sellers, as the case may be (in either case, referred to collectively as, the
“Indemnitee”), is or may reasonably be entitled to indemnification from the Sellers under
Section 9.1 or 9.2 or from Buyer or the Company under Section 9.3, as the
case may be (in either case referred to collectively as, the “Indemnitor”):
9.4.1 Notice. Within ten (10) calendar days after the Indemnitee receives written
documents underlying the Indemnification Matter or, if the Indemnification Matter does not involve
a third-party action, suit, claim or demand, as promptly as practicable after the Indemnitee first
has actual knowledge of the Indemnification Matter or of other matters from which an
Indemnification Matter is reasonably likely to result, the Indemnitee shall give written notice
coupled with reasonable supporting detail to the Indemnitor of the nature of the Indemnification
Matter and the amount demanded or claimed in connection therewith (“Indemnification
Notice”), together with copies of any such written documents. No indemnification for Losses
associated with an Indemnification Matter shall be available if (i) the related Indemnification
Notice is not timely given and (ii) such failure to provide a timely Indemnification Notice
prejudices the Indemnitor’s ability to remedy, remediate, mitigate or
otherwise minimize the effect of the underlying Indemnification Matter. Any action required to
be taken by, or any notice required to be delivered to, the Sellers under this Section 9.4
may be taken by, or delivered to, the Seller Representative on behalf of the Sellers.
9.4.2 Defense. If a third-party action, suit, claim or demand is involved, then,
upon receipt of the Indemnification Notice, the Indemnitor shall have thirty (30) calendar days
after said notice is given to elect, by written notice given to the Indemnitee, to undertake,
conduct and control, through counsel of its own choosing which is reasonably acceptable to the
Indemnitee and at Indemnitor’s sole expense, the good faith settlement or defense of such claim,
and the Indemnitee shall cooperate with the Indemnitor in connection therewith; provided: (a) all
settlements require the prior reasonable consultation with the Indemnitee and the prior written
consent of the Indemnitee, which consent shall not be unreasonably withheld, provided that the
Indemnitor may settle any such claim without the prior consent of the Indemnitee if such settlement
involves the full release of the Indemnitee and the Indemnitor agrees to pay all amounts payable
pursuant to such settlement, and (b) the Indemnitee shall be entitled to participate in such
settlement or defense through counsel chosen by the Indemnitee, provided that Indemnitee
acknowledges and accepts in writing full liability for the applicable Indemnification Matter and
the fees and expenses of such counsel shall be borne by the Indemnitee. So long as the Indemnitor
is contesting any such claim in good faith, the Indemnitee shall not pay or settle any such claim;
provided, however, that notwithstanding the foregoing, the Indemnitee shall have the right to pay
or settle any such claim at any time, provided that in such event the Indemnitee shall waive any
right of indemnification therefor by the Indemnitor. If the Indemnitor does not make a timely
election to undertake the good faith defense or settlement of the claim as aforesaid, then the
Indemnitee shall have the right to contest, settle or compromise the claim at
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its exclusive discretion, at the risk and expense of the Indemnitor. In any event, the
Indemnitor and the Indemnitee shall fully cooperate with each other in connection with the defense
of such claim, including without limitation by furnishing all available documentary or other
evidence as is reasonably requested by the other. If the Indemnitee fails to consent to a
settlement that imposes only monetary damages, then the Indemnitor’s liability with respect to such
matter shall be limited to the amount of such rejected settlement.
9.4.3 Payments. All amounts owed by the Indemnitor to the Indemnitee (if any) shall
be paid in full within ten (10) Business Days after a final judgment (without further right of
appeal) determining the amount owed is rendered, or after a final settlement or agreement as to the
amount owed is executed, unless otherwise provided in such final settlement or agreement.
9.5. Limits on Indemnification. Indemnification under this Section 9 shall be
limited as follows:
9.5.1 Basket. No Seller shall have liability under Section 9 unless and until
the aggregate amount otherwise payable to the Buyer Group under this Section 9 exceeds Six
Hundred Fifty Thousand Dollars ($650,000) (the “Basket”), in which event the applicable
member of Buyer Group entitled to indemnification pursuant to this Section 9 shall be
entitled to only those amounts in excess of the Basket; provided, however, that the limitations set
forth in this Section 9.5.1 shall not apply in the case of any Indemnification Matter to
the extent that such Indemnification Matter arises out of or involves Losses incurred due to (i) a
breach of any Fundamental Representation or representation set forth in Section 4.11 (Tax
Matters), (ii) fraud by the Sellers or the Company, or (iii) the failure of a Seller to satisfy or
perform any post-Closing covenant under the terms of this Agreement.
9.5.2 Ceiling. The Sellers’ total liability in the aggregate under this Section
9 shall not exceed Nine Million Dollars ($9,000,000) (the “Ceiling”), and no Seller’s
aggregate liability under this Section 9 shall exceed the amount equal to the lesser of:
(x) such Seller’s pro rata portion of the Ceiling and (y) such Seller’s pro rata portion of the
Losses for which the Buyer Group is entitled to be indemnified under this Section 9 (it
being understood that a Seller’s “pro rata” portion shall be based on the percentages set forth
next to each Seller’s name on Section 9 of the Schedules); provided, however, that the
limitations set forth in this Section 9.5.2 shall not apply in the case of any
Indemnification Matter to the extent such Indemnification Matter arises out of or involves Losses
incurred due to (i) a breach of any Fundamental Representation or representation set
forth in Section 4.11 (Tax Matters), (ii) fraud by the Sellers or the Company or (iii) the
failure of a Seller to satisfy or perform any post-Closing covenant under the terms of this
Agreement.
9.5.3 Buyer Ceiling. The Buyer’s total liability in the aggregate under this
Section 9 shall not exceed the Purchase Price; provided, however, that the limitations set
forth in this Section 9.5.3 shall not apply in the case of any Indemnification Matter to
the extent
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such Indemnification Matter arises out of or involves Losses incurred due to (i) fraud by the Buyer
or (ii) the failure of the Buyer to satisfy or perform any post-Closing covenant under the terms of
this Agreement.
9.5.4 Threshold. No member of the Buyer Group shall be entitled to indemnification
under this Section 9 with respect to any Indemnification Matter unless the Losses therefrom
exceed Twenty Thousand Dollars ($20,000); provided, however, that the limitations set forth in this
Section 9.5.4(i) shall not apply in the case of any Indemnification Matter to the extent
that such Indemnification Matter arises out of or involves Losses incurred due to (i) a breach of
any Fundamental Representation, (ii) fraud by the Sellers or the Company, or (iii) the failure of a
Seller to satisfy or perform any post-Closing covenant under the terms of this Agreement.
9.5.5 Excluded Intellectual Property Losses. Notwithstanding anything to the contrary
herein, no member of the Buyer Group shall be entitled to any indemnification for any Excluded
Intellectual Property Losses.
9.5.6 Recourse to Escrow. Without limiting the foregoing:
(i) the sole source of indemnification under this Section 9 for Losses incurred by the
Buyer Group shall be the amount then remaining in the Indemnification Escrow, and no member of the
Buyer Group shall have recourse directly to any Seller for any such Losses;
(ii) upon depletion or exhaustion of the Indemnification Escrow, no Seller shall have any
further liability or obligation under Section 9.2; and
(iii) the aggregate amount of Losses for which the Buyer Group shall be indemnified under
Section 9.2 shall not exceed the amount of the Indemnification Escrow;
(iv) provided, however, that the limitations set forth in Sections 9.5.6(i) - (iii)
shall not apply in the case of any Indemnification Matter to the extent that such Indemnification
Matter arises out of or involves Losses incurred due to (i) a breach of any Fundamental
Representation or representation set forth in Section 4.11 (Tax Matters), (ii) fraud by the
Sellers or the Company or (iii) the failure of a Seller to satisfy or perform any post-Closing
covenant under the terms of this Agreement.
9.5.7 Pro-Rata Liability. Notwithstanding anything to the contrary contained herein,
the aggregate amount of Losses for which the Buyer Group shall be indemnified by any Seller under
any provisions of this Section 9 (including in the circumstances where the limitations set
forth in Sections 9.5.6(i)-(iii) do not apply) shall not exceed the amount equal to the
lesser of: (x) such Seller’s pro rata portion of the Purchase Price and (y) such
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Seller’s pro rata portion of the Losses for which the Buyer Group is entitled to be indemnified (it
being understood that a Seller’s “pro rata” portion shall be based on the percentages set forth
next to each Seller’s name on Section 9 of the Schedules).
9.6. Survival of Representations and Warranties. All representations and warranties,
and all covenants and agreements to be performed prior to Closing shall survive the execution and
delivery hereof and the Closing hereunder until the close of business on April 30, 2012; provided
that (i) the representations set forth in Section 4.11 (Tax Matters) shall survive until
sixty (60) days after the expiration of the applicable statute of limitations for the applicable
underlying claim, including any extensions or waivers thereof, and (ii) the covenants of the
Parties to be performed after the Closing Date shall survive for a period expiring on the third
anniversary of the Closing, except Sections 8.4.1 and 8.4.2, which shall survive
the Closing indefinitely, and Section 8.3, which shall survive for a period expiring on the
seventh anniversary of the Closing Date, and (iii) the Fundamental Representations and any claims
in connection with fraud shall survive indefinitely.
9.7. Mitigation; Losses Net of Insurance, Etc. Each Party shall take
reasonable steps to mitigate and otherwise minimize the Losses upon and after becoming aware of any
event that would be reasonably expected to give rise to any Indemnification Matter. The amount of
any Loss for which indemnification is provided under Section 9 shall be net of (a) any
amounts recovered by the Indemnitee pursuant to any indemnification by or indemnification or other
agreement with any third party, (b) any insurance proceeds (calculated net of any increase in
insurance premiums resulting from the related claims under applicable insurance policies) or other
cash receipts or sources of reimbursement received in respect of such Loss (each source named in
clauses (a) and (b), a “Collateral Source”), (c) an amount equal to the Tax benefit, if
any, realized by the Indemnitee attributable to such Loss and (d) any specific accruals or reserves
(or overstatement of liabilities in respect of actual liability) included in the Financial
Statements or which are reflected in the Net Working Capital Calculation or the Closing Date Debt
Calculation. The Parties shall take and shall cause their Affiliates to take all reasonable steps
to mitigate any Loss upon becoming aware of any event that would reasonably be expected to, or
does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy a
breach that gives rise to the Loss. Indemnification under this Section 9 shall not be
available to Buyer or the Sellers, as the case may be, unless the Party seeking indemnification
under this Section 9 first uses its reasonable best efforts to seek recovery from all
Collateral Sources.
9.8. Tax Treatment of Indemnity Payments. The Parties agree to treat any
indemnification payments made to Buyer pursuant to this Agreement as an adjustment to the final
Purchase Price, unless otherwise required by Tax law or unless a Final Determination with respect
to the indemnified Party or any of its Affiliates causes any such payment not to be treated as an
adjustment to the Purchase Price. For purposes of this agreement “Final Determination”
means (i) with respect to federal income Taxes, a “determination” as defined in Section 1313(a) of
the Code or execution of an IRS Form 870-AD and (ii) with respect to Taxes other than
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federal income Taxes, any final determination of liability in respect of a Tax that, under
applicable law, is not subject to further appeal, review or modification through proceedings or
otherwise (including the expiration of a statute of limitations or a period for the filing of
claims for refunds, amended returns or appeals from adverse determinations).
9.9. Distributions from Escrow Fund. In the event that (a) the Seller Representative
shall not have objected to the amount claimed by Buyer for indemnification with respect to any Loss
in accordance with the procedures set forth in the Escrow Agreement or (b) the Seller
Representative has delivered notice of its disagreement as to the amount of any indemnification
requested by Buyer and either (i) the Seller Representative (on behalf of the Sellers) and Buyer
shall have subsequent to the giving of such notice, mutually agreed that the Sellers are obligated
to indemnify Buyer for a specified amount and Buyer and the Seller Representative shall have so
jointly notified the Escrow Agent or (ii) a final nonappealable judgment shall have been rendered
by the court having jurisdiction over the matters relating to such claim by Buyer for
indemnification from the Sellers and the Escrow Agent shall have received in the case of clause (i)
above, written instructions from the Seller Representative (on behalf of the Sellers) and Buyer or,
in the case of clause (ii) above, a copy of the final nonappealable judgment of the court, the
Escrow Agent shall deliver to Buyer from the Escrow Fund any amount determined to be owed to Buyer
under Sections 9.1 or 9.2 in accordance with the Escrow Agreement.
9.10. Sole Remedy/Waiver. Buyer acknowledges and agrees that following the Closing
its sole and exclusive remedy with respect to any and all claims relating to the subject matter of
this Agreement (including any misrepresentations relating thereto or breach of or inaccuracy in any
representations or warranties) shall be pursuant to the indemnification provisions set forth in
this Section 9. Buyer hereby waives, to the fullest extent permitted under applicable law,
any and all rights, remedies, claims and causes of action (including rights of contribution, if
any) it, the Company or its Subsidiaries may have against the Sellers or any of their Affiliates or
representatives arising under or based upon any federal, state or local statute, law, ordinance,
rule, regulation or judicial decision (including any such relating to environmental matters or
arising under or based upon any securities law, common law or otherwise) and whether such rights or
remedies are based upon contract, tort or otherwise.
9.11. No Consequential Damages. Notwithstanding anything to the contrary contained
herein, no Indemnitor shall be liable to or otherwise responsible to any Indemnitee or any other
Person based on any multiple of profits or earnings or incidental, punitive, special, indirect or
consequential damages, resulting from, arising out of or incident to any Indemnification Matter or
the enforcement by any person of its rights to indemnification under this agreement, except in the
case of fraud or intentional misrepresentation or to the extent actually payable to a third party
in respect of a third-party claim.
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9.12. Other Limitations. No claim for indemnity for a particular breach of a
representation or warranty shall be made by any Party entitled to indemnification under this
Section 9 if: (i) such claim is based on an event occurring prior to the Closing but after
the date hereof, (ii) such event was disclosed prior to the Closing to the Buyer (in the case of a
claim of a member of the Buyer Group) or the Sellers (in the case of a claim of a Seller
Indemnitee) in a writing which describes such event in reasonable detail on the Seller Closing
Certificate and (iii) the Closing occurs.
9.13. Seller Representative.
9.13.1 By the execution and delivery of this Agreement, each of the Sellers hereby irrevocably
constitutes and appoints Touchstone Wireless Investment Partners, LLC, as the true and lawful agent
and attorney in fact (in such capacity, the “Seller Representative”) of the Sellers with
full power of substitution to act in the name, place and stead of the Sellers with respect to this
Agreement, the Escrow Agreement and the transactions contemplated hereby and thereby as the Seller
Representative may deem appropriate, and to act on behalf of the Sellers in any litigation or
arbitration involving this Agreement or the Escrow Agreement, do or refrain from doing all such
further acts and things, and execute all such documents as the Seller Representative shall deem
necessary or appropriate in connection with the transactions contemplated by this Agreement and the
Escrow Agreement, including the power:
(i) to act for the Sellers with regard to matters pertaining to the determination of the
Purchase Price, the adjustment to the Purchase Price and pertaining to the indemnification referred
to in this Agreement, including the power to settle any indemnity claim on behalf of the Sellers
and to transact matters of litigation;
(ii) to execute and deliver all ancillary agreements, certificates and documents that the
Seller Representative deems necessary or appropriate in connection with the consummation of the
transactions contemplated by this Agreement and the Escrow Agreement;
(iii) to authorize the release of funds, to receive funds and to give receipts for funds,
including the Purchase Price and in respect of any adjustments to the Purchase Price or any amounts
distributed under the Escrow Agreement;
(iv) to negotiate, arbitrate and settle any adjustment to the Purchase Price under Section
2.3;
(v) to do or refrain from doing any further act or deed on behalf of the Sellers that the
Seller Representative deems necessary or appropriate in its sole discretion
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relating to the subject matter of this Agreement or the Escrow Agreement as fully and completely as
the Sellers could do if personally present;
(vi) to receive service of process in connection with any claims under this Agreement or the
Escrow Agreement;
(vii) to sign the Seller Closing Certificate on behalf of each Seller unless such Seller has
otherwise previously advised the Seller Representative in writing prior to Closing (it being
understood that Buyer shall have the right to rely on such executed Seller Closing Certificate as
binding on each Seller); and
(viii) to accept notices in accordance with Section 12.5.
9.13.2 Touchstone Wireless Investment Partners, LLC hereby agrees and consents to its
appointment as the Seller Representative pursuant to this Section 9.13 effective as of the
date of this Agreement. The appointment of the Seller Representative shall be deemed coupled with
an interest and shall be irrevocable, and Buyer and any other Person may conclusively and
absolutely rely, without inquiry, upon any action or decision of the Seller Representative in all
matters referred to herein; provided, however, that the Seller Representative shall have the right
to resign and appoint a successor Seller Representative on thirty (30) days’ advance notice to the
Sellers and Buyer. All actions and decisions of Seller Representative shall be binding and
conclusive on each Seller. All notices required to be made or delivered by Buyer to the Sellers
shall be made to the Seller Representative for the benefit of the Sellers and shall discharge in
full all notice requirements of Buyer to the Sellers with respect thereto. The Sellers hereby
confirm all that the Seller Representative shall do or cause to be done by virtue of its
appointment as the Seller Representative of the Sellers. The Seller Representative will have no
liability to the Sellers or their successors or assigns with respect to actions taken or omitted to
be taken in its capacity as Seller Representative, and shall be entitled to indemnification from
the Sellers against any loss, liability or expenses arising out of actions taken or omitted to be
taken in its capacity as the Seller Representative (such indemnification rights to include the
right to set off any such loss, liability or expense against payments due to the Sellers). All fees
and expenses incurred by the Seller Representative pursuant to this Agreement shall be paid by the
Sellers in accordance with their pro rata shares of the purchase price. For the avoidance of doubt,
the Sellers agree that there shall be no recourse to the Seller Representative directly or
personally for any payments required to be made by the Seller Representative in its capacity as
such hereunder.
9.13.3 If any individual Seller should die or become incapacitated, if any trust or estate
should terminate or if any other similar event should occur, any action taken by the Seller
Representative pursuant to this Section 9.13 shall be valid as if such death or incapacity,
termination or other event had not occurred, regardless of whether or not the Seller Representative
or Buyer shall have received notice of such death, incapacity, termination or similar event.
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9.13.4 The Sellers acknowledge and agree that One Hundred Thousand Dollars ($100,000) (the
“Seller Representative Reserve”) of the Purchase Price will be withheld from the Closing
Date Purchase Price to cover the costs and expenses of the Seller Representative, including
expenses associated with 2010 Tax preparation, dissolution and winding up of the General Partner
and legal and accounting fees incurred prior to or after the Closing. To the extent the Seller
Representative Reserve is not used, in the discretion of the Seller Representative, it shall be
paid to the Sellers based on their pro rata shares of the purchase price, following the Seller
Representative’s determination that such reserve is no longer necessary to or advisable in the
Seller Representative’s discharge of its duties hereunder.
10. Termination.
10.1. Termination. This Agreement may be terminated at any time prior to the Closing
Date:
(i) by mutual written consent of Buyer, on the one hand, and the Seller Representative, on the
other hand;
(ii) by either of the Seller Representative, on the one hand, or Buyer, on the other hand, by
written notice to the other; if (a) the Closing shall not have been consummated by December 31,
2010; provided, however, that the right to terminate this Agreement under this Section
10.1(ii) shall not be available to any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before
such date, or (b) any Governmental Authority of competent jurisdiction shall have issued an order,
injunction, decree or any other judgment of any kind whatsoever or taken any other action (which
action the Parties shall have used their commercially reasonable efforts to lift), which
permanently restrains, enjoins or otherwise prohibits or makes illegal the consummation of the
transactions contemplated hereby, and such order, decree, judgment, injunction or other action
shall have become final and non-appealable; provided, however, that the Party terminating this
Agreement pursuant to this Section 10.1(ii) shall have used its commercially reasonable
efforts to have such action vacated;
(iii) by written notice from Buyer to the Seller Representative (if Buyer is not in material
breach of any of its representations, warranties, covenants and agreements under this Agreement),
if the Company or any Seller breaches or fails to perform in any material respect any of its
representations, warranties or covenants contained in this Agreement; or
(iv) by written notice from the Seller Representative to Buyer (if the Company and Sellers are
not in material breach of any of their representatives and warranties, covenants and agreements
under this Agreement) if Buyer breaches or fails to
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perform in any material respect any of its representations, warranties or covenants contained
in this Agreement.
10.2. Effect of Termination. If this Agreement is terminated pursuant to Section
10.1, all obligations of the Parties under this Agreement will terminate, except that the
obligations in Sections 9.10 (Sole Remedy/Waiver), 12.6 (Controlling Law),
12.7 (Jurisdiction and Process), 12.8 (Waiver of a Jury Trial), 12.9 (Specific
Performance) and 12.12 (Expenses) will survive; provided, however, that, if this Agreement is
terminated by a Party because of the breach of this Agreement by another Party of any of its
covenants or obligations contained in this Agreement, or because one or more of the conditions to
the terminating Party’s obligations under this Agreement is not satisfied as a result of the other
Party’s failure to comply with its covenant or obligations contained in this Agreement, then the
terminating Party’s right to pursue all legal remedies will survive such termination unimpaired
(including under Section 12.9 (Specific Performance)). Nothing in this Section 10.2
shall be deemed to release any Party from any liability for any breach by such Party of the terms,
conditions, covenants and other provisions of this Agreement or to impair the right of any Party to
compel specific performance by any other Party of its obligations under this Agreement.
11. Tax Matters.
11.1. Pre-Closing Tax Returns. Sellers shall prepare or cause to be prepared all Tax
Returns with respect to the Company and its Subsidiaries for Pre-Closing Tax Periods that are
required to be filed after the Closing Date. Sellers shall prepare such Tax Returns consistent
with the past practices of the Company and its Subsidiaries unless contrary to applicable law.
Sellers shall file all Pre-Closing Tax Period Tax Returns on or before the due date, as extended by
any proper extension. Sellers shall include on the Tax Returns for the Pre-Closing Tax Periods the
income of the Company and its Subsidiaries for all applicable Pre-Closing Tax Periods. The Sellers
shall timely pay all Taxes of the Company and its Subsidiaries required to be paid in connection
with any Pre-Closing Tax Periods to the extent in excess of the amounts included in the calculation
of Net Working Capital; the remaining amount of Taxes of the Company and its Subsidiaries required
to be paid in connection with any Pre-Closing Tax Periods shall be paid by Buyer and any such
payment shall be made by Buyer to the Seller Representative within five calendar days of the date
when the Sellers notify Buyer of an amount of such Taxes that are payable to the relevant
Governmental Authority. The Sellers shall pay all fees and expenses associated with preparing the
Tax Returns for the Pre-Closing Tax Periods.
11.2. Straddle Period Tax Returns. Buyer shall prepare or cause to be prepared and
timely file or cause to be timely filed any Tax Returns of the Company and its Subsidiaries for
Straddle Tax Periods that are required to be filed after the Closing Date. Buyer shall prepare
such Tax Returns consistent with the past practices of the Company and its Subsidiaries unless
contrary to applicable law. The Sellers shall pay to Buyer an amount equal to the portion of such
Taxes of the Company and its Subsidiaries which relates to the portion of such Straddle Tax
66
Period ending on the Closing Date; provided, however, that the Sellers shall only be liable
for Taxes in excess of the amounts included in the calculation of Net Working Capital. Any such
payment for Taxes for any Straddle Tax Period shall be made by the Sellers to Buyer within five
calendar days of the date when Buyer notifies the Seller Representative of an amount of such Taxes
that are payable to the relevant Governmental Authority. For purposes of this Section
11.2, in the case of any Taxes that are imposed on a periodic basis and are payable for a
Straddle Tax Period, the portion of such Tax which relates to the portion of such Tax period ending
on the Closing Date shall (a) in the case of any Tax other than Taxes based upon or related to
income or receipts, be deemed to be the amount of such Tax for the entire Tax period multiplied by
a fraction the numerator of which is the number of days in the Tax period ending on the Closing
Date and the denominator of which is the number of days in the entire Tax period, and (b) in the
case of any Tax based upon or related to income or receipts be deemed equal to the amount which
would be payable if the relevant Tax period ended on the Closing Date. Any credits relating to a
Straddle Tax Period shall be taken into account as though the relevant Tax period ended on the
Closing Date. All determinations necessary to give effect to the foregoing allocations shall be
made in a manner consistent with prior practice (to the extent permitted by law) of the Company and
its Subsidiaries.
11.3. Transfer Taxes. Notwithstanding any other provisions of this Agreement to the
contrary, the Sellers shall pay one-half and Buyer shall pay one-half of all sales, use, stock
transfer, stamp, recording, real property transfer and similar Taxes (“Transfer Taxes”), if
any, required to be paid in connection with the sale of the Equity Interests contemplated by this
Agreement. The Sellers, after the review and consent by Buyer, shall file such applications and
documents as shall permit any such Transfer Taxes to be assessed and paid on or prior to the
Closing in accordance with any available pre-sale filing procedure. Buyer shall execute and
deliver all instruments and certificates necessary to enable the Sellers to comply with the
foregoing. Buyer shall complete and execute a resale or other exemption certificate with respect
to the inventory items sold hereunder, and shall provide the Sellers with an executed copy thereof.
11.4. Cooperation on Tax Matters. The Sellers and Buyer shall cooperate fully, as and
to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns
pursuant to this Agreement and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other Party’s request) the provision of
records and information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
11.5. Audits. Buyer shall provide the Seller Representative with notice of any
written inquiries, audits, examinations or proposed adjustments by the IRS or any other
Governmental Authority, which relate to any Pre-Closing Tax Periods within thirty (30) calendar
days of receipt of such notice. The Seller Representative shall have the sole right to represent
the
67
interests of Company and its Subsidiaries in any Tax audit or other proceeding relating to any
Pre-Closing Tax Period, to employ counsel of its choice at its own expense, and to settle any
issues and to take any other actions in connection with such proceedings relating to such taxable
periods; provided, however, that (i) the Sellers must acknowledge in writing their liability under
this Agreement to hold Buyer and the Company harmless against the full amount of any adjustment
which may be made as a result of such Tax audit or other proceeding relating to any Pre-Closing Tax
Period; (ii) the Seller Representative (a) shall use reasonable efforts to inform Buyer of the
status of any such proceedings, (b) shall make available to Buyer (at Buyer’s cost and expense)
copies of any pleadings, correspondence, and other documents as Buyer may reasonably request, (c)
shall consult with Buyer prior to the settlement of any such proceedings and (d) shall obtain the
prior written consent of Buyer prior to the settlement of any such proceedings that would affect
Buyer in any taxable period ending after the Closing Date, which consent shall not be unreasonably
withheld; provided further, however, that Buyer and counsel of its own choosing shall have the
right to participate in, but not direct, the prosecution or defense of such proceedings at Buyer’s
sole expense. Buyer shall have the right to control all other Tax audits or proceedings of Company;
provided, however, that Buyer shall not settle any such proceedings without the consent of the
Sellers, which consent shall not be unreasonably withheld, if the Sellers would incur any
additional Taxes for (i) Pre-Closing Tax Periods or (ii) the portion of the Straddle Tax Period
ending on the Closing Date. Buyer and the Company shall execute and deliver to the Seller
Representative such powers of attorney and other documents as may be necessary or appropriate to
give effect to the foregoing.
12. Additional Terms and Provisions.
12.1. No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors and permitted
assigns.
12.2. Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the extent they related
in any way to the subject matter hereof (other than the Confidentiality Agreement); provided,
however, that the exhibits and schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
12.3. Schedules. Schedule references in this Agreement refer to the Schedules.
Certain information included in the Schedules has been included solely for informational purposes.
The inclusion of information in the Schedules shall not be deemed an admission or acknowledgement
that such information is required to be listed in the schedules, that such items are material to
the Company or its Subsidiaries, that such items are expected to have a Material Adverse Effect or
that such items are within or outside of the ordinary course of business. Furthermore, the
inclusion in the Schedules of information or the exclusion of information from
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the Schedules will not be deemed to establish any level of materiality for purposes of this
Agreement. The Schedules are arranged in sections corresponding to those contained in this
Agreement merely for convenience, and the disclosure of an item in one section or subsection of the
Schedules as an exception will be deemed adequately disclosed as an exception with respect to all
other covenants, representations or warranties to the extent the relevance of such disclosure is
reasonably apparent on its face to such other covenants, representations or warranties,
notwithstanding the presence or absence of any appropriate section or subsection of the Schedules
with respect to such other covenants, representations or warranties or an appropriate cross
reference thereto. The information and statements contained in the Schedules are not intended to
constitute and shall not be construed as constituting, representations, warranties, covenants or
agreements of the Sellers except as and to the extent provided in the text of this Agreement. Any
summary or description of any law or regulation, contract or other document contained in the
schedules is qualified in its entirety by the full text of such law or regulation, contract or
other document.
12.4. Assignment. No Party hereto shall assign this Agreement or any part hereof
without the prior written consent of the other Parties; provided, however, Buyer may assign its
rights and obligations under this Agreement, in whole or in part, without consent, to any of its
Subsidiaries or Affiliates or any Person that acquires all or substantially all of the capital
stock or assets of Buyer or the Company and its Subsidiaries, provided that Buyer shall remain
directly liable for all of its obligations hereunder notwithstanding any such assignment. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective permitted successors and assigns.
12.5. Notices. All notices and other communications among the Parties shall be in
writing and shall be deemed to have been duly given (a) when delivered in person or by a nationally
recognized overnight courier service (costs prepaid), (b) five (5) days after posting in the United
States mail having been sent registered or certified mail return receipt requested, or (c) when
delivered by facsimile and promptly confirmed by delivery in person or post as aforesaid in each
case, with postage prepaid, addressed as follows:
If to the Seller Representative, to:
Touchstone Wireless Investment Partners, LLC
c/o Striker Partners
The Xxxxxx Group
0000 Xxxx Xxxxxxx Xxxx
Building 2, Suite 000
Xxxxxxx Xxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
c/o Striker Partners
The Xxxxxx Group
0000 Xxxx Xxxxxxx Xxxx
Building 2, Suite 000
Xxxxxxx Xxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
69
with copies to:
Dechert LLP
Xxxx Centre
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
Dechert LLP
Xxxx Centre
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to Buyer, to:
Brightpoint, Inc.
0000 Xxxxxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Legal Department
Fax No.: (000) 000-0000
0000 Xxxxxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Legal Department
Fax No.: (000) 000-0000
with copies to:
Blank Rome LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
or to such other address or addresses as the Parties may from time to time designate in writing.
12.6. Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
12.7. Jurisdiction and Process. In any action between or among any of the Parties,
whether arising out of this Agreement, any of the agreements contemplated hereby or otherwise, (a)
each of the Parties irrevocably consents to the exclusive jurisdiction and venue of the federal and
state courts located in New York, New York, (b) if any such action is commenced in a state court,
then, subject to applicable law, no Party shall object to the removal of such action to any federal
court located in New York, New York, (c) each of the Parties irrevocably agrees to designate a
service company located in the United States as its agent for service of process and consents to
service of process by first class certified mail, return receipt requested, postage prepaid, to the
address at which such Party is located, and (d) the prevailing Parties shall be
70
entitled to recover their reasonable attorneys’ fees, costs and disbursements from the other
Parties (in addition to any other relief to which the prevailing Parties may be entitled).
12.8. Waiver of a Jury Trial. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY
COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY ACTION OR PROCEEDING WHATSOEVER BETWEEN THEM
RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL INSTEAD BE TRIED IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
12.9. Specific Performance. The Parties agree that irreparable damage may occur if
any provision of this Agreement were not performed in accordance with the terms hereof and that the
Parties shall be entitled (without the requirement to post a bond or other security) to an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in addition to any other remedy to which they are entitled
at law or in equity. The rights and remedies of the Parties shall be cumulative (and not
alternative).
12.10. Amendments and Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by Buyer and the Seller Representative. No
waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
12.11. Severability; No Waiver. Any term or provision of this Agreement that is
invalid 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. Except as
otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any Party, and no course of dealing between or
among any of the Parties, shall constitute a waiver of, or shall preclude any other or further
exercise of, any right, power or remedy.
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12.12. Expenses. Each of the Parties hereto will bear its own costs and expenses
(including legal, investment banker, and accounting fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
12.13. Full Understanding. Each of the Parties hereto hereby acknowledges and
confirms that his or its representatives have read and understand the entirety of this Agreement,
including, without limitation, the representations and warranties, covenants and indemnification
obligations contained herein.
12.14. Construction. In construing this Agreement, including the exhibits and
schedules hereto, the following principles shall be followed: (a) the terms “herein,” “hereof,”
“hereby,” “hereunder” and other similar terms refer to this Agreement as a whole and not only to
the particular Article, Section or other subdivision in which any such terms may be employed; (b)
except as otherwise set forth herein, references to Articles, Sections, schedules and exhibits
refer to the Articles, Sections, schedules and exhibits of this Agreement, which are incorporated
in and made a part of this Agreement; (c) a reference to any Person shall include such Person’s
predecessors; (d) all accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP; (e) no consideration shall be given to the headings of the Articles,
Sections, schedules, exhibits, subdivisions, subsections or clauses, which are inserted for
convenience in locating the provisions of this Agreement and not as an aid in its construction; (f)
the word “includes” and “including” and their syntactical variants mean “includes, but is not
limited to” and “including, without limitation,” and corresponding syntactical variant expressions;
(g) a defined term has its defined meaning throughout this Agreement, regardless of whether it
appears before or after the place in this Agreement where it is defined, including in any schedule
or exhibit; (h) the word “dollar” and the symbol “$” refer to the lawful currency of the United
States of America; (i) the plural shall be deemed to include the singular and vice versa; and (h)
unless the context of this Agreement clearly requires otherwise, words importing the masculine
gender shall include the feminine and neutral genders and vice versa.
12.15. Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together will constitute one and the same
instrument.
12.16. Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
12.17. References. All words used in this Agreement shall be construed to be of such
number and gender as the context requires or permits.
12.18. Provision Respecting Legal Representation. Each of the Parties hereby agrees,
on its own behalf and on behalf of its directors, members, partners, officers, employees and
affiliates, that Dechert LLP may serve as counsel to any of the Sellers or the Company and
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their respective Affiliates (individually and collectively, the “Seller Group”), on the one
hand, and the Company, on the other hand, in connection with the negotiation, preparation,
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby, and that, following consummation of the transactions contemplated hereby, Dechert LLP (or
any successor) may serve as counsel to the Seller Group or any individual member thereof or any
director, member, partner, officer, employee or affiliate of any member of the Seller Group or the
Company, in connection with any Proceeding, claim or obligation arising out of or relating to this
Agreement or the transactions contemplated by this Agreement, notwithstanding such representation
and each of the Parties hereby consents thereto and waives any conflict of interest arising
therefrom, and each of such Parties shall cause any affiliate thereof to consent to waive any
conflict of interest arising from such representation.
-Signature Page Follows-
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Agreement Date.
BUYER:
BRIGHTPOINT NORTH AMERICA L.P.
By: Brightpoint North America, Inc., its general partner
By: Brightpoint North America, Inc., its general partner
By: | /s/ XXXXXX X. XXXXX | |||
Name: | Xxxxxx X. Xxxxx | |||
Title: | Executive Vice President and Secretary |
TOUCHSTONE ACQUISITION LLC |
||||
By: | /s/ XXXXXX X. XXXXX | |||
Name: | Xxxxxx X. Xxxxx | |||
Title: | Executive Vice President and Secretary |
THE COMPANY:
TOUCHSTONE WIRELESS REPAIR AND LOGISTICS, LP |
||||
By: | /s/ XXXX XXXXXX | |||
Name: | Xxxx Xxxxxx | |||
Title: | Chief Executive Officer | |||
[Signature Page to Interest Purchase Agreement]
THE SELLERS:
TOUCHSTONE WIRELESS INVESTMENT PARTNERS, LLC |
||||
By: | /s/ Xxxxx X. Xxxxxx | |||
Name: | Xxxxx X. Xxxxxx | |||
Title: | Authorized Person | |||
IMAGE 1 WIRELESS, INC. |
||||
By: | /s/ Xxxxx Xxxxx Xxxxxx XX | |||
Name: | Xxxxx Xxxxx Xxxxxx, II | |||
Title: | President | |||
EW INVESTMENT, LP |
||||
By: | /s/ Xxxxx X. Xxxxxx | |||
Name: | Xxxxx X. Xxxxxx | |||
Title: | Authorized Person | |||
/s/ Xxxx X. Xxxxxx |
[Signature Page to Interest Purchase Agreement]
/s/ Xxxxx Xxxxxxxx |
||
/s/ Xxxxx Xxxxxx |
||
/s/ Xxxxx Xxxxxxx |
||
/s/ Xxxxx Xxxx |
||
/s/ Xxxxxxx Xxxx |
||
/s/ Xxxxx Xxxxx |
||
/s/ Xxxxx Xxxxxx |
Solely with respect to Sections 8.4.3 and 8.5(i):
STRIKER PARTNERS I, L.P. |
||||
By: | /s/ Xxxxx X. Xxxxxx | |||
Name: | Xxxxx X. Xxxxxx | |||
Title: | Managing Principal |
[Signature Page to Interest Purchase Agreement]