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                                          EXECUTION VERSION                                                                                MEMBERSHIP INTEREST PURCHASE AGREEMENT                  by and between         NORSTAN COMMUNICATIONS, INC.,        NXOF INTERMEDIATE HOLDINGS, INC.                                                and                                     BLACK BOX CORPORATION              Dated as of August 17, 2018                                                                

 

                                                                                                              TABLE  OF CONTENTS                                                                            Page   ARTICLE I      DEFINITIONS ............................................................................................ 1  ARTICLE II     SALE AND PURCHASE ........................................................................... 12        2.1   Sale and Purchase of Shares ......................................................................... 12        2.2   Purchase Price .............................................................................................. 12        2.3   Purchase Price Adjustment ............................................................................ 13        2.4   Purchase Price Allocation .............................................................................. 16        2.5   Withholdings .................................................................................................. 16  ARTICLE III    CLOSING AND DELIVERIES ................................................................... 17        3.1   Closing .......................................................................................................... 17        3.2   Deliveries by Seller ........................................................................................ 17        3.3   Deliveries by Buyer ........................................................................................ 18  ARTICLE IV     REPRESENTATIONS AND WARRANTIES OF SELLER .......................... 19        4.1   Organization and Standing; Authority of Seller ................................................ 19        4.2   Capitalization ................................................................................................. 19        4.3   Title ............................................................................................................... 20        4.4   The Subsidiary............................................................................................... 20        4.5   No Conflict; Required Filings and Consents .................................................... 20        4.6   Financial Statements...................................................................................... 21        4.7   Taxes ............................................................................................................ 22        4.8   Title to Properties........................................................................................... 24        4.9   Condition of Assets; Sufficiency ..................................................................... 24        4.10  Real Property................................................................................................. 24        4.11  Compliance with Laws ................................................................................... 24        4.12  Permits .......................................................................................................... 25        4.13  Employee Benefit Plans ................................................................................. 26        4.14  Material Contracts.......................................................................................... 27        4.15  Legal Proceedings ......................................................................................... 29        4.16  Intellectual Property ....................................................................................... 29        4.17  Insurance....................................................................................................... 31        4.18  Personnel ...................................................................................................... 31        4.19  Conduct of Business in Ordinary Course ........................................................ 32        4.20  Customers ..................................................................................................... 32                                          i                                         

 

      4.21  Accounts Receivable...................................................................................... 32        4.22  Inventory ....................................................................................................... 33        4.23  Affiliated Transactions .................................................................................... 33        4.24  Government Contracts ................................................................................... 33        4.25  Environmental Matters ................................................................................... 36        4.26  No Brokers .................................................................................................... 37  ARTICLE V      REPRESENTATIONS AND WARRANTIES OF BUYER ........................... 37        5.1   Investment Intent ........................................................................................... 37        5.2   Organization and Standing ............................................................................. 37        5.3   Authority, Validity and Effect........................................................................... 37        5.4   No Conflict; Required Consents ..................................................................... 38        5.5   Independent Investigation; No Reliance.......................................................... 38        5.6   Financing....................................................................................................... 39        5.7   Solvency........................................................................................................ 40        5.8   Legal Proceedings ......................................................................................... 40        5.9   No Brokers .................................................................................................... 40  ARTICLE VI     COVENANTS AND AGREEMENTS ......................................................... 40        6.1   Interim Operations of the Company ................................................................ 40        6.2   Reasonable Access; Confidentiality................................................................ 42        6.3   Publicity ......................................................................................................... 42        6.4   Records ......................................................................................................... 43        6.5   Exclusive Dealing .......................................................................................... 43        6.6   Reasonable Best Efforts; Cooperation ............................................................ 44        6.7   Antitrust Approvals ......................................................................................... 44        6.8   No Additional Representations ....................................................................... 44        6.9   Employee Matters .......................................................................................... 45        6.10  Financing....................................................................................................... 46        6.11  R&W Policy ................................................................................................... 48        6.12  Insurance Policies.......................................................................................... 48        6.13  Release of Escrow ......................................................................................... 48  ARTICLE VII    CONDITIONS TO CLOSING .................................................................... 49        7.1   Conditions to Obligations of Seller .................................................................. 49        7.2   Conditions to Obligations of Buyer.................................................................. 49        7.3   Frustration of Closing Conditions .................................................................... 50  ARTICLE VIII   TERMINATION OF AGREEMENT............................................................ 50                                          ii                                        

 

      8.1   Termination ................................................................................................... 50        8.2   Effect of Termination ...................................................................................... 51  ARTICLE IX     REMEDIES .............................................................................................. 54        9.1   Survival ......................................................................................................... 54        9.2   Indemnification by Buyer ................................................................................ 54        9.3   Indemnification by Seller ................................................................................ 55        9.4   Exclusive Remedy ......................................................................................... 55        9.5   Limitations on Indemnification Payments to Seller Indemnitees ....................... 55        9.6   Limitations on Indemnification Payments to Buyer Indemnitees....................... 56        9.7   Order of Recovery.......................................................................................... 57        9.8   Procedures .................................................................................................... 58        9.9   Specific Performance ..................................................................................... 61        9.10  Reserved ....................................................................................................... 62        9.11  Adjustment to Purchase Price ........................................................................ 62        9.12  Seller Parent Guarantee................................................................................. 62  ARTICLE X      TAX MATTERS ........................................................................................ 63        10.1  Straddle Periods ............................................................................................ 63        10.2  Cooperation; Audits; Tax Returns ................................................................... 63        10.3  Controversies ................................................................................................ 64        10.4  Amendment of Tax Returns; Tax Elections; Contact with Tax Authorities ........ 65        10.5  Certain Taxes ................................................................................................ 66        10.6  Refunds and Credits ...................................................................................... 66        10.7  Consolidated Items ........................................................................................ 66        10.8  Tax Sharing Agreements................................................................................ 66  ARTICLE XI     MISCELLANEOUS AND GENERAL ......................................................... 66        11.1  Expenses....................................................................................................... 66        11.2  Successors and Assigns ................................................................................ 67        11.3  Third Party Beneficiaries ................................................................................ 67        11.4  Further Assurances........................................................................................ 67        11.5  Notices .......................................................................................................... 67        11.6  Captions ........................................................................................................ 68        11.7  Amendment; Waiver ...................................................................................... 68        11.8  Legal Representation ..................................................................................... 68        11.9  Governing Law............................................................................................... 69        11.10 Consent to Jurisdiction and Service of Process............................................... 69                                          iii                                       

 

11.11 Waiver of Jury Trial ........................................................................................ 69  11.12 Severability .................................................................................................... 70  11.13 Construction .................................................................................................. 70  11.14 Counterparts; Electronic Transmission ........................................................... 70  11.15 Complete Agreement ..................................................................................... 71                                    iv                                        

 

                                                                                                                  SCHEDULES   Schedule 1.1      Acuity Assets  Schedule 3.2(d)   Resignations  Schedule 4.2      Capitalization  Schedule 4.3      Title  Schedule 4.4      The Subsidiary  Schedule 4.5(a)   No Conflict  Schedule 4.5(b)   Required Filings and Consents  Schedule 4.6(b)   Company Financial Statements (GAAP Exceptions)  Schedule 4.7      Taxes  Schedule 4.9      Condition of Assets; Sufficiency  Schedule 4.10     Real Property  Schedule 4.11     Compliance with Laws  Schedule 4.13     Employee Benefit Plans  Schedule 4.14     Material Contracts  Schedule 4.15     Legal Proceedings  Schedule 4.16(a)  Intellectual Property Infringement  Schedule 4.16(b)  Licensed Intellectual Property  Schedule 4.16(c)  Registered Intellectual Property  Schedule 4.16(d)  Third Party Licensed Intellectual Property  Schedule 4.17     Insurance  Schedule 4.19     Conduct of Business in Ordinary Course  Schedule 4.20     Material Customers  Schedule 4.23     Affiliated Transactions  Schedule 4.24     Government Contracts  Schedule 6.1      Interim Operations of the Company  Schedule 6.1(j)   Annual Budget  Schedule 9.3      Indemnification                                     EXHIBITS   Exhibit A         Target Working Capital Calculation and Accounting Principles  Exhibit B         Form of Transition Services Agreement  Exhibit C         Form of Restrictive Covenants Agreement  Exhibit D         Form of Subcontracting Agreements  Exhibit E         Form of Agreement Regarding Guaranties  Exhibit F         Form of Escrow Agreement                                            v                                         

 

                                                                                                 MEMBERSHIP INTEREST PURCHASE AGREEMENT         THIS MEMBERSHIP  INTEREST PURCHASE  AGREEMENT (this “Agreement”), is  dated as of August 17, 2018 (the “Effective Date”), by and between Norstan Communications,  Inc., a Minnesota corporation (“Seller”), NXOF Intermediate Holdings, Inc., a Delaware  corporation (“Buyer”), and Black Box Corporation, a Delaware corporation (“Seller Guarantor”),  solely for purposes of Section 9.12 and Article XI.  Unless the context otherwise requires,  terms used in this Agreement that are capitalized and not otherwise defined in context have the  meanings set forth or cross-referenced in Article I.                                     RECITALS         A.    As of the Effective Date, Seller is the record owner of all of the issued and  outstanding membership interests (the “Shares”) of NextiraOne Federal, LLC, a Delaware  limited liability company (the “Company”), and the Company is the record owner of the  Subsidiary Shares (defined below).         B.    Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of  the Shares upon the terms set forth in this Agreement.         NOW, THEREFORE, in consideration of the foregoing and the respective  representations, warranties, covenants and agreements set forth herein, and subject to the  terms and conditions set forth herein, Seller and Buyer, intending to be legally bound, hereby  agree as follows:                               ARTICLE I  DEFINITIONS         For purposes of this Agreement:         “Action” means any action, suit, hearing, claim, investigation, lawsuit, legal proceeding,  administrative enforcement proceeding or arbitration proceeding (in each case, whether civil,  criminal or administrative or at law or in equity) by or before any Governmental Authority.         “Acuity Assets” shall mean (a) all rights, title and interest, including right of priority in  the patent application set forth on Schedule 1.1 and the subject matter disclosed and/or  claimed therein, (b) all right, title and interest in those certain marks, trademark applications and  trademark registrations set forth in Schedule 1.1 and (c) all Intellectual Property in connection  with clause (a) and clause (b) of this definition and all Intellectual Property related to the Acuity  product.         “Adjustment Escrow Amount” means $3,000,000.         “Adjustment Escrow Fund” means the Adjustment Escrow Amount deposited with the  Escrow Agent, as such amount may increase or decrease over time in accordance with this  Agreement and the Escrow Agreement, including any interest or other amounts earned thereon.         “Affiliate” means with respect to any Person, any Person that directly or indirectly  through one or more intermediaries controls, is controlled by or is under common control with  such Person.         “Agreement” has the meaning set forth in the preamble.      

 

      “Agreement Regarding Guaranties” means the Agreement Related to Guaranties to be  entered into by Seller, Seller Guarantor and Buyer at the Closing, substantially in the form  attached hereto as Exhibit E (which form may revised by the parties hereto prior to the Closing  Date to the extent necessary to reflect the guaranties of Seller Guarantor in favor of the  Company or the Subsidiary that remain outstanding and in effect as of the Closing).         “Alternative Financing” has the meaning set forth in Section 6.10(a).         “Anti-Corruption Laws” has the meaning set forth in Section 4.11(c).         “Antitrust Laws” has the meaning set forth in Section 6.7.         “Arbitration Firm” has the meaning set forth in Section 2.3(c).         “Balance Sheet Date” has the meaning set forth in Section 4.6(a).         “Books and Records” has the meaning set forth in Section 6.4.         “Break Fee” has the meaning set forth in Section 8.2(c).          “Business Day” means any day other than a Saturday, a Sunday or any other day on  which the Federal Reserve Bank of New York is closed.         “Buyer” has the meaning set forth in the preamble.         “Buyer Benefit Plan” has the meaning set forth in Section 6.9(b).         “Buyer Claim” has the meaning set forth in Section 9.8(b)(i).         “Buyer Claim Notice” has the meaning set forth in Section 9.8(b)(i).         “Buyer Indemnitees” has the meaning set forth in Section 9.3.         “Cash” means, as of any time, all cash, cash equivalents and marketable securities of  the Company or the Subsidiary, including all outstanding security or other deposits in cash  (such outstanding security or other cash deposits collectively, the “Cash Deposits”), at such  time, plus any uncleared checks, deposits or inbound wires in transit, minus any checks written  (but not yet cashed) by the Company or the Subsidiary or outbound wires.         “Cash Deposits” has the meaning set forth in the definition of Cash.         “Claim” has the meaning set forth in Section 9.8(a).         “Claim Response” has the meaning set forth in Section 9.8(a).         “Claims Notice” has the meaning set forth in Section 9.8(a).         “Claiming Party” has the meaning set forth in Section 9.8(c).         “Closing” has the meaning set forth in Section 3.1.         “Closing Date” has the meaning set forth in Section 3.1.                                          2    

 

      “Closing Statement” has the meaning set forth in Section 2.3(b).         “Code” means the Internal Revenue Code of 1986, as amended.         “Commitment Letters” has the meaning set forth in Section 5.6.         “Company” has the meaning set forth in the recitals.         “Company Financial Statements” has the meaning set forth in Section 4.6(a).         “Competing Transaction” means (a) any acquisition or purchase of all or a material  portion of the assets of, or of any equity interest in, the Company or the Subsidiary, (b) any  business combination for the acquisition of the Company or the Subsidiary (whether effected by  merger, consolidation, reorganization, recapitalization or otherwise) or (c) any recapitalization or  any sale of any units or other equity interest in the Company or the Subsidiary, in each case  with any party other than with Buyer or an Affiliate of Buyer; provided, however, that in no event  will a Competing Transaction include:                (i) from and after the date hereof: (A) any transaction for the acquisition or        purchase of all or substantially all of the assets of any other subsidiaries or business        units of Seller Guarantor other than the Company (collectively, “RemainCo”), (B) any        business combination (whether effected by merger, tender offer, consolidation,        reorganization, recapitalization or otherwise) for the acquisition of RemainCo or (C) any        recapitalization or sale of any units or other equity securities of RemainCo; and                (ii) from and after September 1, 2018, (A) any business combination (whether        effected by merger, tender offer, consolidation, reorganization, recapitalization or        otherwise) for the acquisition of either Seller Guarantor, as a whole (inclusive of the        Company and the Subsidiary) or (B) any recapitalization of Seller Guarantor as a whole        (other than any issuance of the Company’s or the Subsidiary’s membership interests or        other equity securities) (each of the transactions described in clauses (i) and (ii), a        “Permitted Alternative Transaction”).         “Confidentiality Agreement” has the meaning set forth in Section 6.2(b).         “Consent” means any consent, approval, authorization, waiver, registration, or similar  permission required to be obtained from, filed with or delivered to any Person in connection with  the consummation of the transactions contemplated hereby.         “Consolidated Tax Return” means any Tax Return with respect to any federal, state,  provincial, local, or foreign income Taxes that are paid on an affiliated, consolidated, combined,  unitary or similar basis and that include the Company or the Subsidiary on the one hand, and  Seller or any of its Affiliates (other than the Company and the Subsidiary) on the other hand.         “Continuing Employee” has the meaning set forth in Section 6.9(a).         “Contracts” means all contracts, subcontracts, indentures, notes, bonds (including  surety bonds), loans, instruments, mortgages, franchises, leases, licenses, agreements or other  legally binding understandings or arrangements (including any amendments and other  modifications thereto).                                          3    

 

      “Debt Commitment Letter” has the meaning set forth in Section 5.6.         “Debt Financing” means the debt financing to be provided pursuant to the Debt  Commitment Letter.         “Debt Financing Sources” means the Persons that are party to the Debt Commitment  Letter (including any amendments thereto) that have committed to provide or arrange or have  otherwise entered into agreements in connection with all or any part of the Debt Financing or  other financings (other than the Equity Financing) in connection with the transactions  contemplated by this Agreement, including the parties to any joinder agreements or credit  agreements entered pursuant thereto or relating thereto.         “Dispute Notice” has the meaning set forth in Section 9.8(b)(i).         “Dispute Period” has the meaning set forth in Section 9.8(b)(i).         “Effective Date” has the meaning set forth in the preamble.         “Employee Plans” has the meaning set forth in Section 4.13(a).         “Environmental Laws” means any Laws relating to pollution or the protection of the  environment, worker safety and health, public health as relating to environmental hazards, and  product-related environmental matters.         “Equity Commitment Letter” has the meaning set forth in Section 5.6.         “Equity Financing” means the equity financing to be provided pursuant to the Equity  Commitment Letter.         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended,  and the rules and regulations promulgated thereunder.         “Escrow Agent” means Citibank, N.A. or its successor under the Escrow Agreement.         “Escrow Agreement” means the Escrow Agreement to be entered into by Buyer, Seller  and the Escrow Agent at the Closing, substantially in the form attached hereto as Exhibit F.         “Estimated Indebtedness” has the meaning set forth in Section 2.3(a).         “Estimated Transaction Expenses” has the meaning set forth in Section 2.3(a).         “Estimated Working Capital” has the meaning set forth in Section 2.3(a).         “Ex-Im Laws” means all U.S. and non-U.S. Laws relating to export, reexport, transfer,  import and anti-boycott controls, including, without limitation, the International Traffic in Arms  Regulations, the Export Administration Regulations, the customs and import Laws administered  by U.S. Customs and Border Protection, and the EU Dual Use Regulation.         “Final Adjustment Determination Date” has the meaning set forth in Section 2.3(c).         “Final Allocation” has the meaning set forth in Section 2.4(b).                                          4    

 

      “Final Cash” has the meaning set forth in Section 2.3(b).         “Final Indebtedness” has the meaning set forth in Section 2.3(b).         “Final Transaction Expenses” has the meaning set forth in Section 2.3(b).         “Final Working Capital” has the meaning set forth in Section 2.3(b).         “Financing” means the Debt Financing and the Equity Financing.         “Fundamental Reps” means the representations and warranties set forth in Sections  4.1 (Organization and Standing; Authority of Seller); 4.2 (Capitalization); 4.3 (Title); 4.4 (the  Subsidiary); 4.9(b) (Sufficiency); and 4.26 (No Brokers).         “GAAP” means United States generally accepted accounting principles.          “General Enforceability Exceptions” has the meaning set forth in Section 4.1.         “Governmental Authority” means any United States or non-United States government  or political subdivision, whether federal, state, local, municipal or foreign, or any agency,  department, commission, board, bureau, instrumentality, court, tribunal or arbitral or judicial  body (including any grand jury) of any such government or political subdivision.         “Government Contract” means any prime contract, subcontract, teaming agreement or  arrangement,  joint venture, basic ordering agreement, pricing agreement, letter contract, or  other similar arrangement of any kind, between the Company or the Subsidiary, on the one  hand, and (i) any Governmental Authority, (ii) any prime contractor of a Governmental Authority  in its capacity as a prime contractor, or (iii) any subcontractor with respect to any contract of a  type described in clauses (i) or (ii) above, on the other hand, which is a current Government  Contract or under which the Company has received final payment within three years prior to the  date of this Agreement.  A task, purchase or delivery order under a Government Contract shall  not constitute a separate Government Contract for purposes of this definition, but shall be part  of the Government Contract to which it relates.         “Hazardous Substances” means any chemicals, materials, wastes or substances that  are defined, regulated, determined or identified as toxic or hazardous or as a pollutant or  contaminant under any Environmental Laws (including, without limitation, substances defined as  “hazardous substances”, “hazardous materials”, “hazardous waste” or “pollutant or contaminant”  in the Comprehensive Environmental Response, Compensation and Liability Act, the Resource  Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Water  Drinking Act, or comparable state and local statutes or in the regulations pursuant to said  statutes).         “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as  amended, and the rules and regulations promulgated thereunder.         “Indebtedness” means, as of any time, without duplication, the outstanding principal  amount of, accrued and unpaid interest on, and other payment obligations (including any  prepayment premiums, breakage and other amounts, in each case payable as a result of or in  connection with the consummation of the transactions contemplated by this Agreement or the  repayment on the Closing) arising under, any obligations of the Company or the Subsidiary in                                          5    

 

respect of the following:  (a) any indebtedness for borrowed money; (b) any obligations  evidenced by bonds, debentures, notes, debt securities or other similar instruments; (c) any  obligations as lessee under any financing leases or any leases that are required under GAAP to  be treated as capital leases; (d) all obligations arising out of reimbursement obligations under  drawn but unreimbursed letters of credit issued for the Company’s or the Subsidiary’s account;  (e) obligations for which the Company or the Subsidiary is obligated pursuant to any hedging,  swap or similar arrangement (valued at the termination value thereof); (f) all obligations arising  from installment purchases of property or representing the deferred purchase price of property,  goods or services for which the Company or the Subsidiary is liable, contingently or otherwise;  (g) all accrued and unpaid Taxes; (h) all Past Due Trade Accounts Payable, (i) accrued but  unpaid bonus compensation (including an amount equal to $550,000 with respect to annual  performance-related bonuses, which reflects an agreed allocation of the year-to-date annual  performance-related bonuses), including the employer portion of employment or payroll Taxes  due thereon; (j) all accrued restructuring amounts not yet paid, including the employer portion of  employment or payroll Taxes due with respect to any compensation contained in such  restructuring amounts; (k) all deferred revenue and customer prepayments; (l) all intercompany  Indebtedness between the Seller or any of its Affiliates (other than the Company or the  Subsidiary), on the one hand, and the Company or the Subsidiary, on the other hand; (m) all  obligations of the type referred to in clauses (a) through (l) above (i) that are secured by any  Lien on the assets of the Company or the Subsidiary or (ii) for which the Company or any  Subsidiary is obligated pursuant to any guaranty.  Indebtedness will not include undrawn letters  of credit, or any indebtedness incurred by, on behalf of, or at the direction of, Buyer or any of its  Affiliates in connection with the transactions contemplated by this Agreement.         “Indemnification Basket” has the meaning set forth in Section 9.6(a).         “Indemnifying Party” has the meaning set forth in Section 9.8(c).         “Indemnitees” means the Buyer Indemnitees or the Seller Indemnitees, as the context  requires.         “Information Memorandum” has the meaning set forth in Section 6.8.         “Initial Allocation Statement” has the meaning set forth in Section 2.4(a).         “Initial Purchase Price” has the meaning set forth in Section 2.2(a).         “Intellectual Property” means all of the following: (a) all trademarks and service marks  (registered or unregistered), trade dress, trade names and other names, slogans and indicia of  origin, all registrations or applications for registration in any jurisdiction of any of the foregoing  and all goodwill associated therewith; (b) all patents, patent applications, inventions,  discoveries, ideas and technology including re-issues, continuations, divisions, continuations-in- part, renewals and extensions; (c) all trade secrets, know how, proprietary information,  methods, techniques, processes and methodologies; (d) all works of authorship, writings,  designs, computer programs, software and other works, all copyrights therein and thereto and  applications and registrations in any jurisdiction for the foregoing and all moral rights related  thereto; (e) all databases and all database rights; (f) all internet websites, domain names and  applications and registrations pertaining thereto; and (g) all other intellectual property rights.          “Inventory” has the meaning set forth in Section 4.22.                                          6    

 

      “IRS” means the United States Internal Revenue Service.         “IT Systems” has the meaning set forth in Section 4.16(k)(i).         “Law” means any federal, state, local, foreign or other law (including common law),  statute, code, ordinance, regulation, rule, regulatory or administrative guidance, order,  constitution, treaty, or other restriction or other published authority or guidance of any  Governmental Authority.         “Leased Real Property” has the meaning set forth in Section 4.10.         “Liens” means any mortgage, lien, security interest, option, pledge, deposit, charge,  claim, contractual restriction, easement, hypothecation, restriction or other similar encumbrance,  including any restriction on or transfer or other assignment, as security or otherwise, of or  relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other  attribute of ownership.          “Losses” has the meaning set forth in Section 9.2.         “Lower Working Capital Target” means $22,000,000.         “Material Adverse Effect” means, with respect to Seller or Buyer, as applicable, any  effect, change, condition, occurrence, event, circumstance, result, state of facts or development  that, individually or in the aggregate, (1) materially and adversely affects, or prevents or  materially delays, the ability of Seller or Buyer, as applicable, to perform its respective  obligations under, and consummate the transactions contemplated by, this Agreement, or (2)  has a material adverse effect on the business, assets, liabilities, results of operations or  condition (financial or otherwise), taken as a whole, of:  (a) in the case of Seller, the Company  and the Subsidiary, taken as a whole; and (b) in the case of Buyer, Buyer; but, in the case of  clause (2) only, none of the following, either alone or in combination, shall be deemed to  constitute a Material Adverse Effect:  any effect, condition, change, occurrence, event,  circumstance, result, state of facts or development:  (i) resulting from general economic,  political, financial, banking, credit or securities market conditions including any disruption thereof  and any interest or exchange rate fluctuations; (ii) resulting from the announcement of this  Agreement or the transactions contemplated hereby; (iii) resulting from any changes in  applicable Laws or accounting rules by which the Company or the Subsidiary or the Buyer (or  any of their respective assets or properties) is bound; (iv) resulting from natural disasters, acts  of terrorism or war (whether or not declared), or epidemics or pandemics; (v) arising out of any  action taken with the express written consent of the other party hereto; or (vi) any decline in the  market price or trading volume of Seller Guarantor’s common stock, in and of itself; provided,  that the exception in this clause (vi) shall not prevent the underlying events, changes, effects,  developments, states of facts, conditions, circumstances and occurrences giving rise to or  contributing to such decline from being taken into account in determining whether there has  been a Material Adverse Effect of Seller; provided further, that any effect, change, condition,  occurrence, event, circumstance, result, state of facts or development referred to in clauses (i),  (iii) or (iv) may be taken into account in determining whether a “Material Adverse Effect” has  occurred if such effect, change, condition, occurrence, event, circumstance, result, state of facts  or development has a disproportionate effect on the Company and the Subsidiary, or the Buyer,  as applicable, relative to other companies operating in the industries or markets in which the  Company and the Subsidiary, or the Buyer, as applicable, operate.                                          7    

 

      “Material Contracts” has the meaning set forth in Section 4.14(a).         “Material Customers” has the meaning set forth in Section 4.20.         “Material Suppliers” has the meaning set forth in Section 4.20.         “Net Working Capital” has the meaning set forth on Exhibit A.         “Notice” has the meaning set forth in Section 9.8(b)(i).         “OFAC” has the meaning set forth in the definition of Sanctions Laws.         “Order” means any order, judgment, ruling, injunction, assessment, award, decree,  decision or writ of, or any settlement or agreement with, any Governmental Authority.         “Organizational Documents” has the meaning set forth in Section 4.1.         “Outstanding Claims” means, as of a particular date, any pending Claims by, or  payments for Losses due to Buyer Indemnitees for which a Claims Notice has been given in  accordance with the requirements of this Article IX.         “Past Due Trade Accounts Payable” means, as of any time, (a) amounts listed as one  or more days past due within the AP Aging report in the form, and in accordance with the  methodology, set forth on Exhibit A (excluding intercompany invoices) and (b) accrued AP  invoices that are unvouched and one or more days past due based on the terms of the  applicable invoice.         “Permits” means any license, permit, authorization, certificate of authority, consent,  waiver, qualification or similar document, right or authority that has been issued or granted by  any Governmental Authority.         “Permitted Alternative Transaction” has the meaning set forth in the definition of  Competing Transaction.         “Permitted Liens” means:  (a) Liens solely related to Indebtedness which will be  released at Closing; (b) Liens for Taxes, assessments, reassessments and other charges of  Governmental Authorities not yet due and payable or being contested in good faith by  appropriate proceedings, and for which appropriate reserves have been established in  accordance with GAAP; (c) mechanics’, workmens’, repairmen’s, warehousemen’s, carriers’ or  other like Liens arising or incurred in the ordinary course of business or by operation of law if the  underlying obligations are not delinquent; and (d) with respect to the Leased Real Property:   (i) easements, encroachments, restrictions, rights-of-way and any other non-monetary title  defects; and (ii) zoning, building and other similar restrictions; provided, however, that none of  the foregoing described in this clause (d) will individually or in the aggregate materially impair  the continued ownership (to the extent applicable), use and operation of the property to which  they relate in the business of the Company or the Subsidiary as presently conducted.         “Person” means any individual, sole proprietorship, partnership, corporation, limited  liability company, joint venture, unincorporated society or association, trust or other legal entity  or Governmental Authority.                                          8    

 

      “Pre-Closing Tax Period” means any Tax period (or portion thereof) ending on or  before the Closing Date.         “Privileged Communications” has the meaning set forth in Section 11.8(a).         “Purchase Price” has the meaning set forth in Section 2.2(a).         “R&W Policy” means that certain Buyer-Side Representations and Warranties  Insurance Policy, policy number 18126484, issued by AIG Specialty Insurance Company, under  which Buyer and the Buyer Indemnitees are named or additional insureds.          “Real Property” means all real (immovable) property and interest in real (immovable)  property, real (immovable) property leaseholds and real (immovable) property subleaseholds, all  buildings and other improvements thereon and all appurtenances related thereto.         “Real Property Leases” has the meaning set forth in Section 4.10.         “Release” means any spilling, leaking, pumping, pouring, emitting, emptying,  discharging, injecting, escaping, leaching, dumping, migrating or disposing into the environment  (including the abandonment or discarding of barrels, containers, and other closed receptacles  containing any Hazardous Substance or pollutant or contaminant).         “RemainCo” has the meaning set forth in the definition of Competing Transaction.         “Representatives” of any Person shall mean the directors, officers, employees,  consultants, financial advisors, counsel, accountants and other representatives and agents of  such Person.          “Required Financial Information” has the meaning set forth in Section 6.10(b).         “Resolved Items” has the meaning set forth in Section 2.3(c).         “Response Period” has the meaning set forth in Section 9.8(a).         “Responsible Party” has the meaning set forth in Section 9.8(c).         “Restrictive Covenants Agreement” has the meaning set forth in Section 3.2(j).         “Reviewing Party” has the meaning set forth in Section 2.4(b).         “Sanctioned Country” means any country or region that is the subject or target of a  comprehensive embargo under Sanctions Laws (including Cuba, Iran, North Korea, Sudan,  Syria and the Crimea region of Ukraine).         “Sanctioned Person” means any Person that is the subject or target of sanctions or  restrictions under Sanctions Laws or Ex-Im Laws, including: (i) any Person listed on any  applicable U.S. or non-U.S. sanctions- or export-related restricted party list, including but not  limited to OFAC’s Specially Designated Nationals and Blocked Persons List, List of Persons  Identified as Blocked Solely Pursuant to Executive Order 13599, and Sectoral Sanctions  Identifications List; the Denied Persons, Unverified, and Entity Lists, maintained by the U.S.  Department of Commerce; the Debarred List and non-proliferation sanctions lists maintained by  the U.S. State Department; the EU Consolidated List of Designated Parties, maintained by the                                          9    

 

European Union; the Consolidated List of Assets Freeze Targets, maintained by HM Treasury  (U.K.); and the UN Consolidated List, maintained by the UN Security Council Committee; (ii) any  Person that is, in the aggregate, 50% or greater owned, directly or indirectly, or otherwise  controlled by a Person or Persons described in clause (i) so as to subject the Person to  sanctions; or (iii) any Person that is organized, resident, or located in a Sanctioned Country.          “Sanctioned Target” has the meaning set forth in Section 4.11(d).         “Sanctions Laws” means all U.S. and non-U.S. Laws, regulations, embargoes or  restrictive measures relating to economic or trade sanctions administered or enforced by the  United States (including by the U.S. Department of Treasury Office of Foreign Assets Control  (“OFAC”), the U.S. Department of State, and the U.S. Department of Commerce), Canada, the  United Kingdom, the United Nations Security Council, the European Union, any EU Member  State, or any other relevant Governmental Authority.          “Schedules” means the disclosure schedules delivered by or on behalf of the Company  or Seller, as applicable, prior to or concurrently with the execution and delivery of this  Agreement.         “Section 338(h)(10) Election” has the meaning set forth in Section 10.4(b).         “Section 338 Forms” means all returns, documents, statements, and other forms that  are required to be submitted to any Taxing Authority in connection with a Section 338(h)(10)  Election.  Section 338 Forms shall include any "Statement of Section 338 Election" and IRS  Form 8023 (together with any schedules or attachments thereto) that are required pursuant to  Treasury Regulations Sections 1.338-1 and 1.338(h)(10)-1 to be submitted to the IRS in  connection with a Section 338(h)(10) Election.         “Securities Act” means the Securities Act of 1933, as amended.         “Seller” has the meaning set forth in the preamble.         “Seller Allocation Notice” has the meaning set forth in Section 2.4(b).         “Seller Indemnitees” has the meaning set forth in Section 9.2.         “Seller Guarantor” has the meaning set forth in the preamble.         “Seller’s Knowledge” means the actual knowledge after reasonable inquiry of Jason L.  Alexander, Tamara Cotto, Christopher J. Meilhammer, Jeffrey D. Murray, Elizabeth Steffick,  Jeffrey Whitlock, David J. Russo, Lynn Howell, Gregory Nicholson, Joel T. Trammell and Brian  D. Fisher.         “Seller Taxes” means the following amounts, whenever assessed or levied and  regardless of the Person in charge of payment or collection, except in each case to the extent  included in the definition of Indebtedness:  (i) all Taxes of the Company and the Subsidiary for a  Pre-Closing Tax Period, (ii) Seller’s share of any Transfer Taxes in accordance with Section  10.5, (iii) any several liability of the Subsidiary under Treasury Regulations Section 1.1502-6 or  under any comparable or similar provision under state, local or foreign laws or regulations with  respect to a Consolidated Tax Return for any Pre-Closing Tax Period, and (iv) all Taxes of any  Person imposed on the Company or the Subsidiary as a transferee or successor, by Contract or                                          10    

 

pursuant to any Law (excluding Taxes arising as a result of any commercial Contracts not  primarily relating to Taxes), which Taxes relate to events or transactions occurring prior to the  Closing.         “Shares” has the meaning set forth in the recitals.         “Subcontracting Agreements” has the meaning set forth in Section 3.2(g).         “Subsidiary” means Mutual Telecom Services Inc., a Delaware corporation and wholly- owned subsidiary of the Company.         “Subsidiary Shares” means, collectively, all of the issued and outstanding equity of the  Subsidiary.         “Tax” means any foreign, federal, state, local and other income, alternative or add-on  minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, occupancy,  transfer, fuel, franchise, capital stock, net worth, earnings, profits, registration, license, lease,  service, service use, parking, withholding, payroll, employment, excise, severance, stamp,  occupation, premium, unemployment compensation, workers’ compensation, social security,  retirement, pension plan, property, unclaimed property, real property, escheat, personal  property, intangible property, environmental or windfall profit tax, custom, duty or other tax,  similar governmental fee or other similar assessment or similar charge in the nature of a tax  (including any amounts resulting from the failure to file any Tax Return), together with any  interest, penalties or additions to tax imposed by any Taxing Authority.         “Tax Claim” means any inquiries, audits, investigations, assessments, reassessments or  any other proceedings or similar events conducted by a Taxing Authority with respect to Taxes  of the Company or the Subsidiary.          “Tax Rep” has the meaning set forth in Section 9.1(b).         “Tax Returns” means all Tax returns, amended returns, information returns, statements,  information statements, reports, worksheets, declarations, estimates, schedules, notices,  notifications, elections, certificates or other documents or information and forms required to be  filed or submitted to any Taxing Authority, including any claims for refunds of Taxes and any  attachments thereto, amendments of or supplements of any of the foregoing.         “Taxing Authority” means any Governmental Authority responsible for the  determination, assessment, collection, payment, administration, implementation or enforcement  of, or compliance with, any Tax.         “Termination Date” has the meaning set forth in Section 8.1(b).         “Termination Fee” has the meaning set forth in Section 8.2(b).         “Third Party Claim” has the meaning set forth in Section 9.8(c).         “Transaction Documents” means all agreements and documents contemplated hereby  to be executed and delivered by the parties, including the Subcontracting Agreements, the  Transition Services Agreement, the Restrictive Covenants Agreement, the Agreement  Regarding Guaranties and the Escrow Agreement.                                          11    

 

      “Transaction Expenses” means, to the extent incurred prior to, and remaining unpaid  as of, the Closing, the amount of (i) all fees, costs and expenses of the Company and the  Subsidiary incurred by or on behalf of, or to be paid by, the Company or the Subsidiary in  connection with the transactions contemplated by this Agreement; (ii) all bonus, incentive and  change in control or retention payments payable to employees, officers or directors of the  Company or the Subsidiary (including, for the avoidance of doubt, both the portion thereof  payable at or prior to the Closing and any portion thereof payable following the Closing),  together with the employer-paid portion of any employment and payroll Taxes due thereon,  which become payable or due as a result of the transactions contemplated by this Agreement  and only if triggered without the requirement of any further action by the Company or the  Subsidiary following the Closing (including any termination of employment); provided that in no  event will Transaction Expenses include any fees, expenses or other liabilities to the extent  incurred by or at the direction of Buyer or any of its Affiliates or relating to Buyer’s or its  Affiliates’ financing, including obtaining any consent or waiver relating thereto, for the  transactions contemplated by this Agreement or any other liabilities or obligations incurred or  arranged by or on behalf of Buyer and its Affiliates in connection with the transactions  contemplated by this Agreement, including any fees payable to any financing institution or  lender or the Company’s accountants on behalf of Buyer or its Affiliates; (iii) the total premiums  and associated surplus line Taxes paid or payable with respect to the R&W Policy, in an  aggregate amount not to exceed $400,000, and (iv) 50% of the aggregate amount of any filing  fees payable in connection with any filings required to be made in connection herewith under  the Antitrust Laws.         “Transfer Taxes” means all transfer, documentary, sales, use, stamp, registration and  other such Taxes and fees (including any penalties and interest) incurred in connection with the  transactions contemplated by this Agreement.          “Transition Services Agreement” has the meaning set forth in Section 3.2(f).         “Unresolved Disputed Items” has the meaning set forth in Section 2.3(c).         “Upper Working Capital Target” means $26,000,000.         “Working Capital Overage” means the amount by which Net Working Capital exceeds  the Upper Working Capital Target.         “Working Capital Underage” means the amount by which Net Working Capital is less  than the Lower Working Capital Target.                          ARTICLE II  SALE AND PURCHASE         2.1   Sale and Purchase of Shares.  At the Closing, Seller shall sell, assign and  transfer to Buyer all of the Shares, free and clear of all Liens and Buyer shall pay and deliver, or  cause to be paid and delivered, the Purchase Price to, or for the benefit of, Seller and take the  other actions described in this Article II.         2.2   Purchase Price.               (a)   In full consideration for the transfer of the Shares, Buyer shall pay or        cause to be paid to, or for the benefit of, Seller at the Closing an aggregate amount        equal to $75,000,000 (such amount, the “Initial Purchase Price”), increased by (i) any                                          12    

 

Working Capital Overage, decreased by (ii) any Working Capital Underage, decreased  by (iii) Estimated Indebtedness, and decreased by (iv) Estimated Transaction Expenses  (as finally adjusted in accordance with Section 2.3, the “Purchase Price”).         (b)   Shares.  At the Closing, an amount equal to the Purchase Price, less the  Adjustment Escrow Amount, will be paid to, or for the benefit of, Seller in accordance  with the funds flow statement prepared by Seller and provided to Buyer at least five  Business Days prior to the Closing, payable in cash by bank wire transfer of immediately  available funds to an account or accounts designated by Seller at least five Business  Days prior to the Closing.         (c)   At the Closing, the Buyer will deliver or cause to be delivered to the  Escrow Agent by wire transfer of immediately available funds to an account or accounts  designated by the Escrow Agent at least five Business Days prior to the Closing, a cash  amount equal to the Adjustment Escrow Amount (to be held in the Adjustment Escrow  Fund).         (d)   Cash.  Immediately prior to the Closing, Seller will use reasonable best  efforts to sweep the Cash that is not otherwise required for the continued operation of  the business of the Company and the Subsidiary on the Closing Date.   2.3   Purchase Price Adjustment.         (a)   Estimated Statement.  At least five Business Days (or such other number  of days as may be mutually agreed by the Buyer and Seller) prior to the Closing Date,  Seller shall prepare and deliver, or cause to be prepared and delivered, to Buyer a good  faith estimate of (i) the Net Working Capital prepared in accordance with GAAP, as  expressly modified by the principles set forth on Exhibit A (such estimate,  the “Estimated Working Capital”), (ii) the Indebtedness (the “Estimated  Indebtedness”), and (iii) the Transaction Expenses, in each case, as of the close of  business on the Business Day immediately prior to the Closing Date (the “Estimated  Transaction Expenses”).  As contemplated by Section 2.2(a), if the Estimated Working  Capital is less than the Lower Working Capital Target, then the Initial Purchase Price will  be reduced by the amount of such shortfall, subject to further adjustment as provided in  this Section 2.3.  As contemplated by Section 2.2(a), if the Estimated Working Capital  is greater than the Upper Working Capital Target, then the Initial Purchase Price will be  increased by the amount of such excess, subject to further adjustment as provided in  this Section 2.3.  As contemplated by Section 2.2(a), If the Estimated Working Capital  is equal to or greater than the Lower Working Capital Target and also equal to or lower  than the Upper Working Capital Target, then the Initial Purchase Price will not be  adjusted pursuant to this Section 2.3(a), but will be subject to adjustment as otherwise  provided in this Article II.         (b)   Closing Statement.  Within 45 days after the Closing Date, Buyer shall  prepare and deliver, or cause to be prepared and delivered, to Seller a statement  (the “Closing Statement”), setting forth (i) the actual Net Working Capital, prepared in  accordance with GAAP, as expressly modified by the principles set forth on Exhibit A  (the “Final Working Capital”), (ii) an amount equal to (A) the actual Cash less (B) the  amount of aggregate Cash Deposits included in the calculation of Cash that exceeds  $200,000, if any (such amount, the “Final Cash”), (iii) the actual Indebtedness (the  “Final Indebtedness”), and (iv) the actual Transaction Expenses (the “Final                                    13                 

 

Transaction Expenses”), in each case, as of the close of business on the Business Day  immediately prior to the Closing Date.          (c)   Dispute.  Within 30 days following receipt by Seller of the Closing  Statement, Seller shall deliver written notice to Buyer of any dispute it has with respect  to the preparation or content of the Closing Statement.  If Seller does not notify Buyer of  a dispute with respect to the Closing Statement within such 30-day period, or if Seller  otherwise earlier notifies Buyer in writing that the Seller has no disputes or objections to  the Closing Statement, then such Closing Statement will be final, conclusive and binding  on the parties.  In the event of such notification of a dispute, Buyer and Seller shall  negotiate in good faith to resolve such dispute.  If Buyer and Seller, notwithstanding  such good faith effort, fail to resolve such dispute within 15 days after Seller advises  Buyer of Seller’s objections, then Buyer and Seller jointly shall engage and submit to  Deloitte & Touche LLP (the “Arbitration Firm”) any items that remain in dispute with  respect to the notice of dispute (the “Unresolved Disputed Items”). The parties  acknowledge and agree that the Federal Rules of Evidence Rule 408 shall apply to  Buyer and Seller during such 15-day period of negotiations and any subsequent dispute  arising therefrom. If the Seller and Buyer resolve some or all of such items that are the  subject of such dispute within the foregoing time period (the disputed items so resolved  during such period, the “Resolved Items”) they will document their resolution in a writing  signed by each of them, and such Resolved Items will be final, conclusive and binding  on the parties.  As promptly as practicable thereafter, Buyer and Seller shall each  prepare and submit a presentation to the Arbitration Firm.  Buyer and Seller will use their  respective reasonable best efforts to cause the Arbitration Firm to resolve the dispute  with respect to the Unresolved Disputed Items as soon as practicable thereafter, but in  any event within 30 days after the date on which the Arbitration Firm receives the  presentations by Buyer and Seller.  For the avoidance of doubt, the Arbitration Firm may  look to and resolve only such Unresolved Disputed Items as were submitted to the  Arbitration Firm for resolution and no other items. There shall be no ex parte  communications between any party (or its Representatives) and the Arbitration Firm.  In  resolving any disputed item, the Arbitration Firm may not assign a value to any item  greater than the greatest value for such item claimed by Buyer or Seller or less than the  smallest value for such item claimed by Buyer or the Seller, in each case, in the  presentations by Buyer and Seller.  The costs of any dispute resolution pursuant to this  Section, including the fees and expenses of the Arbitration Firm and of any enforcement  of the determination thereof, shall be borne by the Seller and the Buyer in inverse  proportion as they may prevail on the matters resolved by the Arbitration Firm, which  proportionate allocation shall be calculated on an aggregate basis based on the relative  dollar values of the amounts in dispute and shall be determined by the Arbitration Firm at  the time the determination of such firm is rendered on the merits of the matters  submitted.  Absent fraud, all determinations made by the Arbitration Firm will be final,  conclusive and binding on the parties.         (d)   Access.  For purposes of complying with the terms set forth in this  Section 2.3, Buyer and Seller shall, and shall cause the Company and the Subsidiary to,  reasonably cooperate with and make available to each other and their respective  Representatives all information, records, data and working papers, and shall permit  access to its personnel, as may be reasonably required in connection with the  preparation and analysis of the Closing Statement and the resolution of any disputes  thereunder.                                    14                 

 

      (e)   Adjustment.  Within two Business Days after the date on which the Final  Working Capital, Final Cash, Final Indebtedness, and Final Transaction Expenses are  finally determined pursuant to Section 2.3(c) (the “Final Adjustment Determination  Date”), Seller and Buyer shall jointly determine the amount by which the Initial Purchase  Price would have been adjusted pursuant to Section 2.3(a) had (A) Final Working  Capital (as finally determined pursuant to Section 2.3(c)) been substituted for Estimated  Working Capital at the Closing, (B) the lesser of (1) Final Cash (as fully determined  pursuant to Section 2.3(c)) or (2) $500,000 been added to the Purchase Price at the  Closing, (C) Final Indebtedness (as fully determined pursuant to Section 2.3(c)) been  substituted for Estimated Indebtedness at the Closing, and (D) Final Transaction  Expenses (as fully determined pursuant to Section 2.3(c)) been substituted for  Estimated Transaction Expenses at the Closing.                (i)   If such substitutions or additions would have resulted in a        Purchase Price that is less than the Purchase Price that was paid on the Closing        Date, then Seller and Buyer shall, within five Business Days after the Final        Adjustment Determination Date, jointly instruct the Escrow Agent to disburse        from the Adjustment Escrow Fund by wire transfer of immediately available funds        (i) to the Buyer, the amount of such shortfall, and (ii) immediately thereafter (A) to        Seller, if Seller or its Affiliates have consummated a Permitted Alternative        Transaction on or prior to the Final Adjustment Determination Date, the amount        remaining, if any, in the Adjustment Escrow Fund, or (B) to Seller, if Seller or its        Affiliates have not consummated a Permitted Alternative Transaction on or prior        to the Final Adjustment Determination Date, the amount by which the Adjustment        Escrow Fund (after the payment to the Buyer of the amount contemplated by the        foregoing clause (i)) exceeds $1,000,000, in each case by bank wire transfer of        immediately available funds to the accounts designated in writing by the        applicable party.  If the Adjustment Escrow Fund is insufficient to cover the entire        amount payable to the Buyer pursuant hereto, then the Escrow Agent shall        distribute the entire Adjustment Escrow Fund to the Buyer as provided in the        Escrow Agreement, and the Seller, within five Business Days after the Final        Adjustment Determination Date, shall pay an amount to the Buyer equal to the        amount of such deficiency by bank wire transfer of immediately available funds.                (ii)  If such substitutions and additions would have resulted in a        Purchase Price that is greater than the Purchase Price that was paid on the        Closing Date, then, within five Business Days after the Final Adjustment        Determination Date, (i) Buyer shall pay, or cause to be paid, to Seller, an amount        in cash equal to such excess and (ii) the Seller and the Buyer shall jointly instruct        the Escrow Agent to disburse to the Seller, (A) if Seller or its Affiliates have        consummated a Permitted Alternative Transaction on or prior to the Final        Adjustment Determination Date, all funds remaining, if any, from the Adjustment        Escrow Fund or (B) if Seller or its Affiliates have not consummated a Permitted        Alternative Transaction on or prior to the Final Adjustment Determination Date,        the amount by which the Adjustment Escrow Fund exceeds $1,000,000, in each        case, by bank wire transfer of immediately available funds to the accounts        designated in writing by Seller to Buyer or to the Escrow Agent.               (iii) If such substitutions or additions would have resulted in a        Purchase Price that is equal to the Purchase Price that was paid on the Closing                                    15                 

 

            Date, then there will be no adjustment to Purchase Price pursuant to this Section              2.3(e).                     (iv)  For the avoidance of doubt, all payments made pursuant to this              Section 2.3 will be treated as an adjustment to the Purchase Price for Tax              purposes unless otherwise required by applicable Law.         2.4   Purchase Price Allocation.               (a)   The parties agree that the Purchase Price (and any assumed liabilities as        determined for Tax purposes) paid to Seller will be allocated among the assets of the        Company for all income Tax purposes in a manner consistent with Section 1060 of the        Code and the Treasury Regulations promulgated thereunder.  As soon as practicable        (and in any case within 75 days) following the Final Adjustment Determination Date and        prior to the filing of any Tax Return which includes information related to the transactions        contemplated by this Agreement, Buyer shall prepare and deliver to Seller a draft copy        of IRS Form 8954 and any required exhibits thereto (the “Asset Acquisition        Statement”) allocating the Purchase Price (and other amounts to be treated as        consideration for Tax purposes) in a manner consistent with the preceding sentence for        Seller’s review and comment.                 (b)   Within 30 days after the date of the delivery by Buyer to Seller of the        Asset Acquisition Statement, Seller may deliver written notice to Buyer (the “Seller        Allocation Notice”) of any proposed changes to such allocations in the Asset        Acquisition Statement.  Should Seller timely deliver a Seller Allocation Notice, Seller and        Buyer shall negotiate in good faith to resolve any disputed items set forth therein and        shall reduce such agreement, if any, to writing, and the allocations in the Asset        Acquisition Statement as revised to reflect such agreement shall be the “Final        Allocation”.  Should the parties fail to resolve any disputed items within 30 days of        timely delivery of a Seller Allocation Notice, the parties shall submit the disagreement to        resolution by a mutually agreed upon accounting firm (the “Reviewing Party”), and the        Reviewing Party shall determine (based solely upon representations of the Buyer and        Seller and not by independent review) only those matters in dispute, and will render a        written report as to the disputed matters and the resulting allocation, which report shall        be conclusive and binding upon the parties and shall become the “Final Allocation.”  The        fees, expenses and costs of the Reviewing Party shall be borne by the parties in inverse        proportion to how each party prevails in the dispute, as determined by the Reviewing        Party.               (c)   Buyer, Seller and each of their respective Affiliates shall prepare and file,        and cause their respective Affiliates to prepare and file, their Tax Returns (including IRS        Form 8594, Asset Acquisition Statement Under Section 1060) on a basis consistent with        the Final Allocation, as finally determined pursuant to this Section 2.4, unless otherwise        required by applicable Law.  Any amounts paid between the parties that are treated as        an adjustment to the Purchase Price for applicable Tax purposes shall be taken into        account and reported in a manner consistent with the Final Allocation, as finally        determined pursuant to this Section 2.4.           2.5   Withholdings.  Each of the Buyer, the Company and the Subsidiary shall be  entitled to deduct and withhold from the consideration otherwise payable pursuant to this  Agreement such amounts required to be deducted and withheld with respect to such payment                                          16    

 

under applicable Law; provided, however, if the Buyer determines that an amount is required to  be deducted and withheld with respect to any amounts payable (other than as compensation),  the Buyer shall use commercially reasonable efforts to provide the Seller with written notice of  its intent to deduct and withhold and to provide the Seller with a reasonable opportunity to  provide forms or other evidence that would exempt such amounts from withholding, and the  Buyer shall reasonably cooperate with the Seller to eliminate or reduce the basis for such  deduction or withholding.  Any amounts so deducted and withheld shall be timely paid over to  the appropriate Governmental Authority and, to the extent so deducted and paid over to the  appropriate Governmental Authority, shall be treated for all purposes of this Agreement as  having been paid to the Person in respect of which such deduction and withholding was made.                        ARTICLE III  CLOSING AND DELIVERIES         3.1   Closing.  The consummation of the transactions contemplated hereby  (the “Closing”) will take place remotely via the electronic exchange of documents and  signatures on the second Business Day following the satisfaction or waiver of each of the  conditions set forth in Article VII (other than those conditions that are to be satisfied at the  Closing), which shall in no event be before the 10 th Business Day following the Effective Date,  or on such other date or at such other time and place as the parties hereto mutually agree in  writing (the “Closing Date”).  All proceedings to be taken and all documents to be executed and  delivered by all parties at the Closing will be deemed to have been taken and executed  simultaneously and no proceedings will be deemed to have been taken nor documents  executed or delivered until all have been taken, executed and delivered.  The effective time of  the Closing will be 12:01 a.m. Eastern Time on the Closing Date.         3.2   Deliveries by Seller.  At the Closing, Seller shall deliver, or cause to be  delivered, to Buyer the following items:               (a)   assignment of the Shares, in a form reasonably acceptable to Buyer, duly        executed by Seller;               (b)   termination statements under the Uniform Commercial Code and other        instruments evidencing extinguishment and release of all security interests encumbering        the Shares and any assets of the Company and the Subsidiary, in form and substance        reasonably acceptable to Buyer;               (c)   a certificate from an officer of Seller, given by him or her on behalf of        Seller and not in his or her individual capacity, to the effect that, with respect to Seller,        the conditions set forth in Section 7.2(a), Section 7.2(b) and Section 7.2(f) have been        satisfied;               (d)   written resignations of the directors, managers and certain officers of the        Company and the Subsidiary set forth on Schedule 3.2(d);               (e)   original corporate record books, stock record books or member lists, as        applicable, of the Company and the Subsidiary to the extent not in the possession of the        Company or the Subsidiary as of the Closing;                (f)   a transition services agreement, substantially in the form attached hereto        as Exhibit B, duly executed by the Company and Seller (the “Transition Services        Agreement”);                                           17    

 

            (g)   subcontracting agreements, substantially in the forms attached hereto as        Exhibit D, each duly executed by Seller and the Company (the “Subcontracting        Agreements”);               (h)   a counterpart to the Escrow Agreement, duly executed by the Seller;                (i)   a counterpart to the Agreement Regarding Guaranties, duly executed by        Seller and Seller Guarantor;                (j)   a restrictive covenants agreement, by and among Buyer, the Company        and Seller Guarantor, in the form attached hereto as Exhibit C (the “Restrictive        Covenants Agreement”), duly executed by the Company and Seller Guarantor; and               (k)   a certificate, signed under penalties of perjury and otherwise meeting the        requirements of Treasury Regulation Section 1.1445.2(b) that Seller is not a foreign        person.         3.3   Deliveries by Buyer.  At the Closing, Buyer shall deliver, or cause to be  delivered, to Seller the following items:               (a)   the Purchase Price, paid to the Seller in accordance with the wire        instructions provided to the Buyer pursuant to Section 2.2(b);               (b)   the certificate of incorporation of Buyer, certified as of a recent date by        the Secretary of State of Delaware, and a copy of the bylaws of Buyer, certified by an        officer of Buyer, given by him or her on behalf of Buyer and not in his or her individual        capacity;               (c)   a certificate of the Secretary of State of Delaware as to the good standing        as of a recent date of Buyer in such jurisdiction;               (d)   a counterpart to the Escrow Agreement, duly executed by the Buyer;               (e)   a counterpart to the Agreement Regarding Guaranties, duly executed by        Buyer;                (f)   a counterpart to the Restrictive Covenants Agreement, duly executed by        Buyer; and               (g)   a certificate of an officer of Buyer, given by him or her on behalf of Buyer        and not in his or her individual capacity, to the effect that the conditions set forth in        Section 7.1(a) and Section 7.1(b) have been satisfied.                                          18    

 

          ARTICLE IV  REPRESENTATIONS  AND WARRANTIES  OF SELLER         Except as set forth on the corresponding sections or subsections of the applicable  Schedules, (it being understood that any matter disclosed in any Schedule will be deemed to be  disclosed on any other Schedule if and only to the extent that it is reasonably apparent from the  face of such disclosure that such disclosure is applicable to such other sections or subsections  of such other Schedule or Schedules) Seller represents and warrants to Buyer as follows:         4.1   Organization and Standing; Authority of Seller.  The Seller, the Company and  the Subsidiary are each duly organized, validly existing and in good standing under the laws of  its jurisdiction of incorporation or formation and have full power and authority to own, lease and  operate their respective properties and to carry on their respective business as they are now  being conducted.  The Seller, the Company and the Subsidiary are each duly qualified to do  business, and in good standing, in each jurisdiction in which the character of the properties  owned or leased by it or in which the conduct of its business requires it to be so qualified,  except where the failure to be so qualified or to be in good standing, individually, or in the  aggregate, has not adversely affected, and would not reasonably be expected to adversely  affect the businesses of the Seller, the Company and the Subsidiary in any material respect.   Seller has all requisite power and authority to execute and deliver this Agreement and the  Transaction Documents to which it is or will be a party, and to consummate the transactions  contemplated hereby and thereby.  The execution and delivery of this Agreement and the  Transaction Documents and the consummation of the transactions contemplated hereby and  thereby have been duly and validly authorized by all necessary corporate or other action on the  part of Seller.  This Agreement has been, and upon their execution, each T ransaction Document  to which Seller will be a party will be, duly and validly executed and delivered by Seller and,  assuming the due execution and delivery thereof by Buyer, constitutes or upon their execution  will constitute the legal, valid and binding obligations of Seller, enforceable against it in  accordance with its terms, except as limited by:  (a) applicable bankruptcy, reorganization,  insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights  generally from time to time in effect; and (b) the availability of equitable remedies (regardless of  whether enforceability is considered in a proceeding at law or in equity) (the immediately  preceding clauses (a) and (b), collectively, the “General Enforceability Exceptions”).  The  Seller has made available to the Buyer true and complete copies of the Company’s and the  Subsidiary’s certificate of incorporation, certificate of formation, operating agreement or bylaws  (or equivalent organizational documents) in effect as of the date of this agreement (the  “Organizational Documents”).  Neither the Company nor the Subsidiary is in violation of any  provision of such Organizational Documents.         4.2   Capitalization.  The Shares constitute all of the authorized and issued and  outstanding equity of the Company.  All Shares are duly authorized and validly issued and are  fully paid and non-assessable, were not issued in violation of applicable Law, the Organizational  Documents of the Company or any other contract or arrangement by and among the Company  and the Seller or to which the Company is bound, including any applicable preemptive right, and  except as set forth on Schedule 4.2, are free and clear of all Liens.  All Shares are  uncertificated.  The Company has not issued any equity or membership interests other than the  Shares and there are no:  (a) existing or outstanding rights, Contracts of any character or  securities with equity features or convertible, exercisable or exchangeable into membership  interests of the Company; (b) options, warrants, calls, puts, purchase rights, preemptive rights,  exchange rights, rights of first refusal, subscriptions or other rights, agreements or commitments  obligating the Company to issue, repurchase, transfer or sell any shares of its membership  interests; (c) stock appreciation, phantom stock, profit participation or similar rights with respect                                          19    

 

to the Company; or (d) voting trusts or other agreements or understandings to which the  Company is a party or by which the Company is bound with respect to the voting, transfer or  other disposition of its shares or membership interests.  No Person has been granted any  agreement or option, or any right or option, for the purchase, subscription, allotment or issue of  any equity securities or membership interests of the Company.         4.3   Title.  Except as set forth on Schedule 4.3, Seller:  (a) is the record and  beneficial owner of the Shares; (b) has full power, right and authority, and any approval required  by Law, to make and enter into this Agreement and to sell, assign, transfer and deliver the  Shares to Buyer, free and clear of all Liens, other than as set forth in the following sentence;  and (c) has good and valid title to the Shares, free and clear of all Liens.  Upon the  consummation of the transactions contemplated by this Agreement in accordance with the  terms hereof, at the Closing, Buyer will acquire valid title to the Shares, free and clear of all  Liens, other than Liens created by Buyer.         4.4   The Subsidiary.               (a)   The Subsidiary is the only Person in which the Company owns, directly or        indirectly, any equity interest, membership interest or other interest and the Subsidiary        does not own any equity interest, membership interest, or other interest in any Person.                (b)   Except as set forth on Schedule 4.4, the Company owns all issued and        outstanding Subsidiary Shares free and clear of all Liens.  All Subsidiary Shares are duly        authorized and validly issued and are fully paid and non-assessable, were not issued in        violation of applicable Law, the Organizational Documents of the Subsidiary or any other        contract or arrangement by and among the Subsidiary and the Company or to which the        Subsidiary is bound, including any applicable preemptive right.  The Subsidiary has not        issued any equity or membership interests other than the Subsidiary Shares and there        are no:  (a) existing or outstanding rights, Contracts of any character or securities with        equity features or convertible, exercisable or exchangeable into membership interests of        the Subsidiary; (b) options, warrants, calls, puts, purchase rights, preemptive rights,        exchange rights, rights of first refusal, subscriptions or other rights, agreements or        commitments obligating the Subsidiary to issue, repurchase, transfer or sell any shares        of its membership interests; (c) stock appreciation, phantom stock, profit participation or        similar rights with respect to the Subsidiary; or (d) voting trusts or other agreements or        understandings to which the Subsidiary is a party or by which the Subsidiary is bound        with respect to the voting, transfer or other disposition of its shares or membership        interests.  No Person has been granted any agreement or option, or any right or option,        for the purchase, subscription, allotment or issue of any equity securities or membership        interests of the Subsidiary.         4.5   No Conflict; Required Filings and Consents.               (a)   The execution and delivery of this Agreement and the Transaction        Documents by Seller, the consummation by Seller of the transactions contemplated        hereby and thereby, and the compliance by Seller with any of the provisions hereof or        thereof, do not and will not:  (i) conflict with or result in a breach of any provisions of the        Organizational Documents of Seller, the Company or the Subsidiary; (ii) except as set        forth on Schedule 4.5(a), constitute or result in the breach of any term, condition or        provision of, or constitute a default (or an event that, with notice or lapse of time or both,        would become a default) under, require any consent of or notice to any Person pursuant                                          20    

 

to, or give rise to any right of termination, cancellation, acceleration or amendment with  respect to, or result in the creation or imposition of a Lien upon any property or assets of  Seller, the Company or the Subsidiary pursuant to any note, bond, mortgage, indenture  or Contract to which any of them is a party or by which any of them or their respective  properties or assets may be subject, and that would, individually or in the aggregate, be  material to the Seller, or the Company and the Subsidiary, taken as a whole; or  (iii) violate any Order or Law applicable to Seller, the Company or the Subsidiary or any  of their respective properties or assets.         (b)   Except as set forth on Schedule 4.5(b) or Schedule 4.24, no Consent is  required to be obtained by Seller or the Company for the consummation by Seller of the  transactions contemplated by this Agreement that if not obtained would, individually or in  the aggregate, be material to the Seller, or the Company and the Subsidiary, taken as a  whole or that would prevent or materially delay, the ability of Seller to perform its  obligations under, and consummate the transactions contemplated by, this Agreement  and the Transaction Documents.   4.6   Financial Statements.         (a)   Copies of the following financial statements have been provided to Buyer:   the unaudited consolidated management-reviewed balance sheets of the Company and  the Subsidiary as of March 31, 2018 (the “Balance Sheet Date”) and March 31, 2017,  and the related unaudited consolidated management-reviewed statements of operations  for the calendar years then ended, together with the notes thereto (the “Company  Financial Statements”).         (b)   Except as set forth on Schedule 4.6(b), the Company Financial  Statements have been prepared by management of the Company in accordance with  GAAP applied on a consistent basis through the periods covered thereby (except as  otherwise noted therein and subject, in the case of any unaudited financial statements,  to normal and recurring year-end adjustments and the absence of footnotes, the effects  of which are not material individually or in the aggregate) and fairly present, in all  material respects, the financial position, and results of operations, members’ equity, and  cash flows of the Company and the Subsidiary, on a consolidated basis, as of the dates  and for the periods indicated.  The Company Financial Statements were derived from  the books of account and financial records of the Company.         (c)   The Company has implemented and maintains a system of internal  control over financial reporting that is designed to provide reasonable assurances  regarding the reliability of financial reporting and the preparation of its consolidated  financial statements in accordance with GAAP, and, to the Seller’s Knowledge, such  system of internal control over financial reporting is effective in all material respects for  its intended purpose. In connection with the routine audit practices of the Seller and the  Company, the Company has disclosed to the outside auditors of the Company and the  Seller any fraud, whether or not material, that involves management or other employe es  who have a significant role in the Company’s internal controls over financial reporting.         (d)   Neither the Company nor the Subsidiary has any liabilities or obligations  of any nature, whether or not accrued, contingent or otherwise, whether known or  unknown, except for liabilities and obligations: (a) adequately accrued or reserved  against in the Company Financial Statements; (b) incurred by the Company or the                                    21                 

 

Subsidiary subsequent to the Balance Sheet Date in the ordinary course of business  consistent with past practice; (c) under Material Contracts or under Contracts entered  into in the ordinary course of business which, because of the dollar thresholds set forth  in Section 4.14 below, are not required to be described on Schedule 4.14 (but not  liabilities for breaches of any such Contracts occurring on or prior to the Closing Date);  (d) incurred under this Agreement or the Transaction Documents; or (e) that has not  adversely affected, and would not reasonably be expected to adversely affect the  businesses of the Company and the Subsidiary, taken as a whole, in any material  respect.    4.7   Taxes.  Except as set forth on Schedule 4.7:         (a)   The Company and the Subsidiary have each (i) filed with the appropriate  Taxing Authority all Tax Returns that it was required to file in accordance with all  applicable Laws and all such Tax Returns are true, correct and complete in all material  respects (ii) timely paid to the appropriate Taxing Authority all Taxes due and payable,  whether or not such Taxes are shown as due and payable on any Tax Return, (iii) been  in material compliance with all applicable Laws relating to information reporting of T axes,  and (iv) collected all sales and use Taxes required to be collected and has remitted such  amounts to the appropriate Taxing Authority.  Since the date of the latest Company  Financial Statements of each of the Company and the Subsidiary, as applicable, the  Company and the Subsidiary have not incurred any Tax liabilities other than any Tax  relating to ordinary course operations.         (b)   Neither the Company nor the Subsidiary has agreed to any extension or  waiver of the statute of limitations applicable to any Tax Return, or agreed to any  extension of time with respect to a Tax assessment or deficiency, which period (after  giving effect to such extension or waiver) has not yet expired.         (c)   The Company and the Subsidiary have made available to the Buyer true,  correct and complete copies of all Tax Returns, examination reports, and statements of  deficiencies assessed against, or agreed to by it for all Tax periods beginning on or after  January 1, 2014.         (d)   Neither the Company nor the Subsidiary is a party to any Tax sharing,  Tax indemnity, Tax allocation or similar agreement, other than commercial Contracts not  primarily relating to Taxes.         (e)   The Company and the Subsidiary have each withheld and paid all  material Taxes required to have been withheld and paid in connection with any amounts  paid by the Company or the Subsidiary to any employee, independent contractor,  creditor, stockholder, or other third party.         (f)   There are no Liens for unpaid Taxes on the assets of the Company or the  Subsidiary, except for Permitted Liens.         (g)   There is no Tax Claim presently pending with any Taxing Authority with  respect to the Company or the Subsidiary in respect of any Tax, and to Seller’s  Knowledge no such Tax Claim has been threatened in writing.                                      22                 

 

      (h)   The Company is an entity disregarded as separate from Seller for U.S.  federal income tax purposes, and applicable state and local income tax purposes.  The  Subsidiary has not been a member of an affiliated group of corporations within the  meaning of Section 1504 of the Code filing a consolidated income tax return or a  member of a combined, consolidated or unitary group for state, local or non-U.S. Tax  purposes, other than the group the common parent of which is Seller Guarantor.  Neither  the Company nor the Subsidiary has any liability for Taxes of any Person (other than  Seller Guarantor and any Person included on a Consolidated Tax Return) under  Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S.  Law), as a transferee or successor or by contract (excluding commercial Contracts not  primarily relating to Taxes). Seller Guarantor has filed a consolidated U.S. federal  income Tax Return with the Subsidiary for the taxable year immediately preceding the  current taxable year.         (i)   No written claim has been made by a Taxing Authority, and to Seller’s  Knowledge, no such claim has been threatened, in a jurisdiction where the Company or  the Subsidiary does not file Tax Returns such that the Company or the Subsidiary is or  may be subject to taxation by, or required to file any Tax Return in, that jurisdiction.         (j)   Neither the Company nor the Subsidiary has engaged in any “reportable  transactions” within the meaning of Treasury Regulation Section 1.6011-4(b) (or any  predecessor provision).         (k)   Neither the Company nor the Subsidiary will be required to include any  item of income in, or exclude any item of deduction from, taxable income for any taxable  period (or portion thereof) ending after the Closing Date as a result of any: (i) change in  method of accounting for a Tax period ending on or prior to the Closing Date; (ii) “closing  agreement” as described in Section 7121 of the Code (or any corresponding or similar  provision of state, local, or non-U.S. income Tax law) executed prior to the Closing; (iii)  prepaid amount or deferred revenue received prior to the Closing; (iv) election under  Section 108(i) of the Code made prior to the Closing; (v) any intercompany transaction  or excess loss account under Section 1502 of the Code (or any corresponding or similar  provision of state, local or non-U.S. Law) with respect to a transaction occurring prior to  the Closing, or (vi) an election pursuant to Section 965 of the Code made prior to the  Closing.         (l)   Neither the Company nor the Subsidiary has been the “distributing  corporation” (within the meaning of Section 355(a)(1) of the Code) or the “controlled  corporation” (within the meaning of Section 355(a)(1) of the Code) within the two-year  period ending as of the Closing Date.         (m)   Neither the Company nor the Subsidiary (i) has a permanent  establishment (within the meaning of an applicable Tax treaty) or otherwise has  operations, an office, branch or fixed place of business in a country other than the United  States or (ii) has participated in an international boycott within the meaning of Section  999 of the Code.         (n)   Neither the Company nor any of the Subsidiary currently owns or has  ever owned an interest in passive foreign investment company, as each such term is  defined in Section 1297(a) of the Code.                                    23                 

 

      4.8   Title to Properties.  The Company or the Subsidiary, as applicable, has good  and valid title to, or a valid and enforceable leasehold interest in or other valid right to use, all of  the properties and assets, tangible or intangible, reflected in the 2018 Company Financial  Statements as being owned by the Company or the Subsidiary, or that were acquired since the  Balance Sheet Date, free and clear of all Liens, except for Permitted Liens, excluding properties  and assets sold or disposed of by the Company or the Subsidiary since the Balance Sheet Date  in the ordinary course of business consistent with past practice.         4.9   Condition of Assets; Sufficiency.                 (a)   All items of tangible personal property, which, individually or in the        aggregate, are material to the operation of the business of the Company and the        Subsidiary have been maintained in accordance with normal industry practice, are in        good operating condition and in a state of good maintenance and repair, ordinary wear        and tear excepted, are suitable in all material respects for the purposes currently used        and are available for immediate use in the Company’s and the Subsidiary’s respective        businesses, except for those items being serviced in the ordinary course of business        consistent with past practice.  The personal property owned by the Company and the        Subsidiary and the state of maintenance thereof are in compliance in all material        respects with all applicable Laws.                 (b)   The assets owned or leased by the Company and the Subsidiary,        together with the services to be provided in accordance with the Transition Services        Agreement, constitute all of the assets necessary for the Company and the Subsidiary to        carry on their respective businesses as currently conducted in all material respects.         4.10  Real Property.  Neither the Company nor the Subsidiary owns any Real  Property.  Schedule 4.10 contains a listing of all of the Real Property leased by the Company or  the Subsidiary (the “Leased Real Property”).  The Real Property listed on Schedule 4.10  comprises all material Real Property used in the conduct of the business and operations of the  Company and the Subsidiary as currently conducted.  All Leased Real Property is held under  leases or subleases (collectively, the “Real Property Leases”) that are, in all material respects,  valid instruments, enforceable in accordance with their respective terms, except as limited by  the General Enforceability Exceptions.  There is no default or breach by the Company or the  Subsidiary, as applicable, under any Real Property Lease, and no event has occurred or  circumstance exists which, with the delivery of notice, the passage of time or both, would  constitute such a breach or default, or permit the termination, modification or acceleration of rent  under such leases.  To the Seller’s Knowledge there is no default or beach of any other party  under any such Real Property Lease.  The Company’s and the Subsidiary’s possession and  quiet enjoyment of the Leased Real Property under such leases has not been disturbed, and to  the Seller’s Knowledge, there are no disputes with respect to such Real Property Leases.  True,  complete and accurate copies of each of Real Property Lease and all written amendments,  supplements and modifications thereto have been made available to the Buyer.         4.11  Compliance with Laws.  Except as set forth on Schedule 4.11:               (a)   The Company and the Subsidiary are, and for the past three years have        been, in compliance in all material respects with all Laws and Orders applicable to its        business.                                          24    

 

            (b)   During the past three years, neither the Company nor the Subsidiary has        received written notification or communication from any Governmental Authority        (i) asserting that the Company or the Subsidiary are not in compliance with any Law or        (ii) threatening to revoke any material Permit owned or held by the Company or the        Subsidiary.  No investigation or review by any Governmental Authority with respect to        the Company or the Subsidiary is pending or, to the Seller’s Knowledge, threatened.               (c)   Without limiting the foregoing, none of the Company or the Subsidiary,        nor any Affiliate, director, manager, officer, agent, employee or other Person acting on        behalf of the Company or the Subsidiary has for the three years prior to this Agreement,        directly or indirectly, violated any provision of the U.S. Foreign Corrupt Practices Act of        1977, as amended, or any such other applicable anti-bribery Laws (collectively, “Anti-       Corruption Laws”), including without limitation by: (i) the use of any funds of the        Company or the Subsidiary for unlawful contributions, gifts, entertainment or other        expenses; (ii) making any unlawful payment to foreign or domestic government officials        or employees or to foreign or domestic political parties or campaigns or to any other        Person or Persons from funds of the Company or the Subsidiary; or (iii) making or        receiving any unlawful bribe, rebate, payoff, influence payment, kickback or other similar        unlawful payment.  Neither the Company nor the Subsidiary has at any time in the past        five years, received notice that it is the subject of any investigation, inquiry or        enforcement proceedings by any Governmental Authority or any other Person regarding        any violation or alleged violation under any Anti-Corruption Laws, Sanctions Laws, or        Ex-Im  Laws and no notice of such investigation, inquiry or proceedings are pending or,        to the Seller’s Knowledge, have been threatened and, to the Seller’s Knowledge, there        are no circumstances reasonably likely to give rise to any such investigation, inquiry or        proceedings.  None of the Company, the Subsidiary, nor any Affiliate, director, manager,        officer, agent, employee or other Person acting on behalf of the Company or the        Subsidiary is or has for the three years prior to this Agreement been, (i) a Sanctioned        Person; (ii) organized, resident, or located in a Sanctioned Country; or (iii) engaging in        any transactions, dealings, or activities in violation of any Sanctions Laws or Ex-Im        Laws.               (d)   Neither the Company nor the Subsidiary has engaged in any transaction        or has had other dealings with a Person with whom the Company or the Subsidiary is        prohibited from dealing under the Laws administered by the Office of Foreign Assets        Control or other similar Laws applicable to the Company or the Subsidiary (each such        Person, a “Sanctioned Target”), and, to the Seller’s Knowledge, none of the properties        or assets of any of the Company or the Subsidiary has been sold or leased to, or has        been used in connection with any other transactions or dealings with, a Sanctioned        Target.         4.12  Permits.  The Company and the Subsidiary have all material Permits that are  currently required for the lawful conduct of their respective businesses, as presently conducted,  except where the failure to have any such Permit, individually, or in the aggregate, has not  adversely affected, and would not reasonably be expected to adversely affect the businesses of  the Company and the Subsidiary in any material respect.  The Company or the Subsidiary, as  applicable, is in compliance in all material respects with all such Permits, all of which are in full  force and effect (and will continue to be in full force and effect following the consummation of  the transactions contemplated hereby).                                          25    

 

4.13  Employee Benefit Plans.           (a)   Other than multiemployer plans as defined in Section 3(37) of the ERISA  or Section 414(f) the Code, statutory benefit schemes or similar plans required by  applicable Law, Schedule 4.13(a) sets forth a complete list of:  (i) all “employee benefit  plans,” as defined in Section 3(3) of ERISA; (ii) all other severance pay, salary  continuation, retention, change in control, bonus, incentive, stock option, retirement,  pension, profit sharing or deferred compensation plans, contracts, programs, funds or  arrangements of any kind; and (iii) all other employee benefit plans, contracts, programs,  funds or arrangements in respect of any current employees of the Company and the  Subsidiary that are sponsored or maintained by the Company or the Subsidiary, with  respect to which the Company or the Subsidiary are required to make payments,  transfers, or contributions or with respect to which the Company or the Subsidiary has  any direct or contingent liability (all of the above being hereinafter referred to as  “Employee Plans”).         (b)   Copies of the following materials, to the extent applicable, have been  made available to Buyer:  (i) all current plan documents for each Employee Plan; (ii) all  determination letters from the IRS with respect to any of the Employee Plans; (iii) all  current summary plan descriptions, summaries of material modifications, annual reports,  and summary annual reports with respect to the Employee Plans for the preceding three  years; and (iv) all current trust agreements and insurance contracts relating to the  funding or payment of benefits under any Employee Plan.         (c)   Each Employee Plan has been maintained, operated, and administered in  material compliance with its terms and any related documents or agreements and in  material compliance with all applicable Laws.  Each Employee Plan intended to be  qualified under Section 401(a) of the Code has received a determination or opinion letter  from the IRS stating that it is so qualified, and nothing has occurred that could  reasonably be expected to adversely impact the tax-qualified status of any such  Employee Plan.  All contributions, premiums or payments required to be made with  respect to any Employee Plan have been made on or before their due dates.         (d)   Neither the Company nor the Subsidiary has any direct or contingent  liability with respect to any multiemployer plan (as defined in Section 3(37) of ERISA) or  any plan subject to Title IV of ERISA or Section 412 of the Code.           (e)   There is no pending, or to the Seller’s Knowledge, threatened  assessment, complaint, proceeding, or investigation of any kind in any court or  government agency with respect to any Employee Plan (other than routine claims for  benefits). No Employee Plan or any related trust or other funding medium thereunder or  any fiduciary thereof is, to the Sellers’ Knowledge,  the subject of an audit, investigation  or examination by any Governmental Authority.         (f)   The Company and the Subsidiary have complied with the applicable  obligations under the Patient Protection and Affordable Care Act.         (g)   Each Employee Plan subject to Section 409A of the Code has complied  in form and operations with the requirements of Section 409A of the Code as in effect  from time-to-time.                                     26                 

 

      (h)   Neither the execution of this Agreement nor the consummation of the  transactions contemplated hereby (either alone or together with any other event) will (i)  entitle any current or former employee to any payment or benefit, including any bonus,  retention, severance, retirement or job security payment or benefit, (ii) accelerate the  time of payment or vesting or trigger any payment or funding of compensation or  benefits, or increase the amount payable or trigger any other obligation, under any  Employee Plan or (iii) restrict the right of the Company or the Subsidiary to merge,  amend or terminate any Employee Plan. No amount paid or payable to any Person  under the Employee Plans or otherwise or to any “disqualified individual,” as defined in  Section 280G(c) of the Code, with respect to the Company or the Subsidiary would be  characterized as an “excess parachute payment” (as such term is defined in Section  280G(b)(1) of the Code.    4.14  Material Contracts.         (a)   Set forth on Schedule 4.14 is a list of each of the following Contracts to  which the Company or the Subsidiary is a party or by which any of their respective  properties or assets are bound (other than Employee Plans listed on Schedule 4.13(a))  as of the Effective Date (the Contracts required to be scheduled on Schedule 4.14 are  referred to as the “Material Contracts”):               (i)   each partnership or joint venture Contract;               (ii)  each Contract providing for capital expenditures by the Company        or the Subsidiary with an outstanding amount of unpaid obligations and        commitments in excess of $100,000;               (iii) each Contract with respect to Indebtedness of the Company or the        Subsidiary, including letters of credit, guaranties, indentures, swaps and similar        agreements;                (iv)  each Contract that (A) restricts the Company or the Subsidiary        from engaging, or competing with any Person, in any line of business in any        geographic area or (B) contains a provision of the type commonly referred to as a        “most favored nation” provision;                (v)   each Contract with an Affiliate of the Company or the Subsidiary        (other than contracts between the Company and the Subsidiary);                (vi)  each Contract that relates to the material acquisition or disposition        of any business (whether by merger, sale of equity, sale of assets or otherwise);               (vii) any collective bargaining agreement (or similar labor Contract)        covering any Company employee;               (viii) each material written bonus, pension, profit sharing, retirement or        other form of deferred compensation plan, other than as described in Section        4.13 of this Agreement or listed on Schedule 4.13(a);                                    27                 

 

            (ix)  each Contract under which the Company or the Subsidiary is        lessor of or permits any third party to hold or operate any property, real or        personal, for which the annual payment amount exceeds $100,000;               (x)   each Contract between the Company or the Subsidiary and an        employee or consultant requiring payment of annual compensation or consulting        fees in excess of $200,000;               (xi)  each Contract licensing any Intellectual Property owned or        purported to be owned by the Company or the Subsidiary to a third party;               (xii) each material agent, sales representative, sales or distribution        Contract;                (xiii) each Contract providing for indemnification to or from any Person        with respect to liabilities relating to any current or former business of the        Company, the Subsidiary or any predecessor Person, except commercial        Contracts entered into by the Company or the Subsidiary in the ordinary course        of business that would not otherwise constitute a Material Contract hereunder;               (xiv) each Contract with a Material Customer or Material Supplier;                (xv)  each Contract that is a settlement, conciliation or similar        agreement with any Governmental Authority or pursuant to which the Company        or the Subsidiary will have any material outstanding obligation after the date of        this Agreement;                (xvi) each outstanding proposal that would reasonably be expected to        generate in excess of $1,000,000 of revenue in any twelve-month period;               (xvii) each Contract with “take or pay” provisions or “requirements”        provisions committing a Person to provide the quantity of goods or services        required by another Person involving aggregate payments or consideration of        more than $500,000;                (xviii) each Contract that is a license, sublicense or other agreement in        which the Company or the Subsidiary has received rights from any Person to use        any Intellectual Property (other than non-exclusive, object code, off-the-shelf        “shrink wrap”, “click wrap” and similar software licenses that are non-customized        and are commercially available on reasonable terms to any Person); and                (xix) each other Contract that relates to the purchase, maintenance or        acquisition, or sale or furnishing of goods or services by the Company or the        Subsidiary that involves revenues or expenditures of more than $500,000, except        for Contracts entered into in the ordinary course of business that are expected to        be fully performed within 90 days of the date hereof.         (b)   Each of the Material Contracts is in full force and effect and is a legal,  valid and binding agreement of the Company or the Subsidiary, as applicable, and  assuming such Material Contract is binding and enforceable against the other parties  thereto, is enforceable against the Company or the Subsidiary, as applicable, subject                                    28                 

 

      only to the General Enforceability Exceptions. There is no default or breach by the        Company or the Subsidiary, as applicable, under, nor, to the Seller’s knowledge, is the        Company or the Seller alleged to be in breach of or default in any material respect        under, any Material Contract. To the Seller’s Knowledge, there is no default or breach of        any other party in any material respect under any Material Contract.  True, complete and        accurate copies of each Material Contract and all written amendments, supplements and        modifications thereto, and in the case of any oral Material Contract, a written summary of        the material terms of such Material Contract, have been made available to the Buyer.         4.15  Legal Proceedings.  Except as set forth on Schedule 4.15, there are no, and for  the past three years there have not been any, Actions pending or, to the Seller’s Knowledge,  threatened against the Company or the Subsidiary that (a) involve or could reasonably be  expected to involve an amount in controversy in excess of $100,000 or (b) seek injunctive or  other non-monetary relief that is or could reasonably be expected to be material to the Company  or the Subsidiary.  As of the Effective Date, neither the Company nor the Subsidiary is subject to  any outstanding or unsatisfied Order.         4.16  Intellectual Property.                 (a)   The Company and the Subsidiary own, license or otherwise possess valid        rights to use, all Intellectual Property used in the operation of the Company and the        Subsidiary.  To the Seller’s Knowledge, except as set forth in Schedule 4.16(a), no third        party is or has infringed on any Intellectual Property that is owned or purported to be        owned by the Company or the Subsidiary.  The conduct of the Company and the        Subsidiary, as currently conducted or as currently planned to be conducted, does not        infringe or misappropriate, and has not infringed or misappropriated, any proprietary        right of a third party.  To the Seller’s Knowledge, no valid basis for any such infringement        or misappropriation claim exists.               (b)   Schedule 4.16(b) sets forth a complete list of all licenses, sublicenses        and other agreements in which the Company or the Subsidiary have granted rights to        any Person to make, use, sell, distribute or service any products or services which utilize        or incorporate any Intellectual Property that is owned or purported to be owned by the        Company or the Subsidiary.               (c)   Schedule 4.16(c) sets forth a complete list of all patents, registered        trademarks, pending patent and trademark registration applications, copyright        registrations and domain names owned or purported to be owned by the Company or        the Subsidiary.  All Intellectual Property used in the operation of the Company and the        Subsidiary is free and clear of Liens other than Permitted Liens.               (d)   Schedule 4.16(d) sets forth a complete list of all licenses, sublicenses        and other agreements in which the Company or the Subsidiary has received rights from        any Person to use any Intellectual Property (other than non-exclusive, object code, off-       the-shelf “shrink wrap”, “click wrap” and similar software licenses that are non-       customized and are commercially available on reasonable terms to any Person) and        sets forth which licenses, sublicenses and other agreements will require a third party        consent as a result of or in connection with the consummation of the transactions        contemplated by this Agreement.  No Intellectual Property licensed to the Company or        the Subsidiary has been licensed pursuant to an agreement with Seller or its Affiliates.         Neither the execution and delivery of this Agreement nor the performance of Seller’s                                          29    

 

obligations under this Agreement will cause the Company or the Subsidiary to be in  breach of any license, sublicense or other agreement relating to Intellectual Property  licensed to the Company or the Subsidiary.         (e)   The consummation of the transactions contemplated by this Agreement  will not alter or impair the ownership or right of the Company or the Subsidiary to use  any of the Intellectual Property used in the operation of the Company or the Subsidiary.         (f)   The Company and the Subsidiary have taken reasonable measures to  protect the secrecy, confidentiality and value of all trade secrets used in the business of  the Company and the Subsidiary, including entering into appropriate confidentiality  agreements with all officers, directors, employees, and other Persons with access to  trade secrets.  None of such trade secrets have been disclosed or authorized to be  disclosed to any Person other than to employees or agents of the Company or the  Subsidiary for use in connection with the businesses of the Company or the Subsidiary  or pursuant to a confidentiality or non-disclosure agreement that reasonably protects the  interest of the Company and the Subsidiary in and to such matters.  To the Seller’s  Knowledge, no unauthorized disclosure of any trade secrets has occurred.           (g)   All Intellectual Property developed by or for the Company and the  Subsidiary was conceived, invented, reduced to practice, authored or otherwise created  solely by either employees of the Company or the Subsidiaries acting within the scope of  their employment, or independent contractors of the Company or the Subsidiary  pursuant to agreements containing an assignment of Intellectual Property to the  Company or the Subsidiary.         (h)   None of the Intellectual Property used in the commercial exploitation of  products or the provision of services by or on behalf of the Company or the Subsidiary is  subject to any licensing terms requiring the distribution of source code in connection with  the distribution of any portion of such Intellectual Property or that prohibits the Company  from charging a fee or otherwise limits the Company’s freedom of action with regard to  seeking compensation in connection with sublicensing or distributing any portion of such  Intellectual Property (whether in source code or executable code form) or similar  obligations that require the disclosure, redistribution or licensing of any source code  underlying any such Intellectual Property.         (i)   The consummation of the transactions contemplated by this Agreement  will not result in the loss or impairment of or payment of any additional amounts with  respect to, nor require the consent of any Person in respect of, the Company’s or the  Subsidiary’s right to own, use or hold for use any of the Intellectual Property used or held  for use in the conduct of the business of the Company or the Subsidiary.         (j)   Information Technology.               (i)   The Company or Subsidiary, as the case may be, owns or has        valid rights to access and use all electronic data processing, information        management, computer systems and telecommunications (collectively, “IT        Systems”) used in the operation of the Company and the Subsidiary.  The        Company and the Subsidiary have taken all reasonable steps in accordance with        industry standards to secure the IT Systems from unauthorized access or use by                                    30                 

 

            any Person, and to ensure the continued, uninterrupted and error-free operation              of the IT Systems.                      (ii)  The IT Systems are adequate in all material respects for their              intended use and for the operation of the business of the Company or the              Subsidiary as currently operated and as currently contemplated to be operated              by the Company and the Subsidiary, and are in good working condition (normal              wear and tear excepted), and, to the Seller’s Knowledge, are free of all viruses,              worms, Trojan horses and other known contaminants and do not contain any              bugs, errors or problems of a nature that would materially disrupt their operation              or have a material adverse impact on the operation of the IT Systems.  There has              not been any malfunction with respect to any of the IT Systems since January 1,              2016 that has not been remedied or replaced in all material respects.                     (iii) No capital expenditures are necessary with respect to the use of              the IT Systems other than capital expenditures in the ordinary course of business              that are consistent with the past practice of the Company and the Subsidiary.           4.17  Insurance.  Schedule 4.17 sets forth, as of the Effective Date, all policies of  insurance covering the Company, the Subsidiary and their respective businesses.  All such  policies are in full force and effect, and neither the Company nor the Subsidiary has received  written notice of cancellation, amendment or dispute as to coverage with respect to, or is in  material default with respect to its obligations under, any such insurance policies.  There are no  pending claims against any such insurance policy as to which the insurers have denied liability.   Neither the Company nor the Subsidiary has any self-insurance programs.         4.18  Personnel.                 (a)   Seller has made available to Buyer a true, correct and complete list of all        employees of the Company and the Subsidiary as of the Effective Date, including any        such employees on leave of absence or layoff status, and their respective titles,        positions, rates of base compensation, bonuses, if any, commission structure, if        applicable, aggregate amounts of compensation paid for the fiscal year ended March 31,        2018, work locations, full-time versus part-time statuses, statuses as exempt or        nonexempt from overtime under applicable law, and all independent contractors and        independent consultants of the Company and the Subsidiary and their rates of base        compensation, bonuses, if any, commission structure, if applicable, and aggregate        amounts of compensation paid for the fiscal year ended March 31, 2018 and for the        period beginning April 1, 2018 through June 30, 2018.               (b)   Neither the Company nor the Subsidiary is a party to or subject to any        collective bargaining agreements, nor has it experienced any strike or material        grievance, claim of unfair labor practices, or other collective bargaining dispute within the        past three years.  To the Seller’s Knowledge:  (a) no labor union or other collective        bargaining unit represents or claims to represent any of the Company’s or the        Subsidiary’s employees; and (b) there is no union campaign being conducted to solicit        cards from employees to authorize a union to request a National Labor Relations Board        certifications election with respect to the Company’s or the Subsidiary’s employees.         There are no material disputes pending or, to the Seller’s Knowledge, threatened        between the Company and the Subsidiary, on the one hand, and any of their employees,                                          31    

 

      on the other hand.  The Company and the Subsidiary have properly classified their        employees in all material respects and have withheld and paid all applicable Taxes and        made as appropriate all material filings in connection with services provided by such        employees to the Company and the Subsidiary.         4.19  Conduct of Business in Ordinary Course.  Since March 31, 2018, (x) the  businesses and operations of the Company and the Subsidiary have been conducted in  accordance with the ordinary course of business consistent with past practice, except for  actions taken in connection with the process of selling the Company (including preparing for and  implementing the transactions contemplated by this Agreement) and (y) there has not been any  effect, change, condition, occurrence, event, circumstance, result, state of facts or development  that has had a Material Adverse Effect on the Seller. Except as set forth on Schedule 4.19,  since March 31, 2018, there has been no action or omission to take an action by the Company  or the Subsidiary which, if such action or omission had been taken or made by the Company or  the Subsidiary between the date of this Agreement and the Closing Date, would have required  the consent of the Buyer under Section 6.1 (without giving effect, for purposes of this Section  only, to the provisos contained in Section 6.1(b).         4.20  Customers.  Schedule 4.20 sets forth the ten largest customers of the Company  and the Subsidiary on a consolidated basis (based on the dollar amount of sales to such  customers) for each of the fiscal years ended March 31, 2017 and March 31, 2018 (“ Material  Customers”) and the ten largest suppliers to the Company and the Subsidiary on a  consolidated basis (based on the dollar amount of purchases from such suppliers) for each of  the fiscal years ended March 31, 2017 and March 31, 2018 (“Material Suppliers”).  Except as  set forth on Schedule 4.20, all Material Customers continue to be customers of the Company or  the Subsidiary and no Material Customer has threatened in writing (or, to the Seller’s  Knowledge, orally) to terminate its relationship with the Company and the Subsidiary or reduced  materially or adversely changed in any material respect the terms on which it purchases goods  or services from the Company or the Subsidiary, on a consolidated basis, from the levels  achieved during the fiscal year ended March 31, 2017 or March 31, 2018, as applicable.  Except  as set forth on Schedule 4.20, all Material Suppliers continue to be suppliers of the Company or  the Subsidiary and no Material Supplier has threatened in writing (or, to the Seller’s Knowledge,  orally) to terminate its relationship with the Company and the Subsidiary or reduced materially  or adversely changed in any material respect the terms on which it provides goods or services  to the Company or the Subsidiary, on a consolidated basis, from the levels provided during the  fiscal year ended March 31, 2017 or March 31, 2018, as applicable.  None of the Seller, the  Company nor the Subsidiary has received written (or to the Seller’s Knowledge, oral) notice that  the Company or the Subsidiary will experience in the next 12 months any difficulty in obtaining,  in the desired quantity and quality and at a reasonable price and upon reasonable terms and  conditions, the raw materials, supplies or component products required for the production and  distribution of its products.         4.21  Accounts Receivable.  All accounts receivable of the Company and the  Subsidiary have arisen from bona fide transactions in the ordinary course of business, are  carried at values determined in accordance with GAAP, and to the extent consistent therewith,  consistently applied in accordance with past practice, are adequate for all related liabilities and  obligations and are payable on ordinary trade terms. No material amount of the accounts  receivable is or will be at the Closing subject to any counterclaim or set off.  No Person has any  Lien (other than any Permitted Lien) on any accounts receivable of the Company, the  Subsidiary or any part thereof, and no agreement for deduction, free goods or services, discount  or other deferred price or quantity adjustment has been made by the Company or the Subsidiary                                          32    

 

with respect to any of its respective accounts receivable.  There are no material disputes or  rights of setoff with respect to any of the accounts receivable of the Company or the Subsidiary  that have not been reserved for on the Financial Statements.  Neither the Company nor the  Subsidiary has engaged in any efforts outside the ordinary course of business to accelerate the  collection of its accounts receivable or any activity that reasonably could be expected to result in  sales of a product with payment terms longer than terms customarily offered by the Company or  the Subsidiary for such product.         4.22  Inventory.  Each of the Company and the Subsidiary has good and valid title,  free and clear of any Liens, other than Permitted Liens, to all finished goods inventory,  packaging, labels point of sale materials and other inventories (collectively, “Inventory”) of the  Company and the Subsidiary, respectively.  The Inventory is:  (a) usable and fit for the purpose  for which it was purchased or manufactured; and (b) salable in the ordinary course of business,  in each case subject to adequate reserves for obsolete, excess, damaged, slow-moving or  otherwise unusable Inventory included in the inventory line item reflected on the Company  Financial Statements and as adjusted for the passage of time through the Closing in the  ordinary course of business and in accordance with GAAP, and to the extent consistent  therewith, consistently applied in accordance with past practice.  No Inventory is held on a  consignment basis.  The Inventory set forth on the Company Balance Sheet was valued at the  lower of cost and market value and were properly stated therein in accordance with GAAP  consistently, and to the extent consistent therewith, applied in accordance with past practice.   Except as set forth on Schedule 4.22, none of the Inventory is in the possession of others,  except Inventory in transit in the ordinary course of business.         4.23  Affiliated Transactions.  Except as set forth on Schedule 4.23, no officer,  director, employee or Affiliate of the Company or the Subsidiary or, to the Seller’s Knowledge,  any individual in any such officer’s, director’s, employee’s, or Affiliate’s immediate family or any  entity in which any such Person owns any material beneficial interest, is a party to or has a  direct or indirect material financial interest in any Contract, commitment or transaction with the  Company or the Subsidiary (other than contracts or transactions related to employment) or  owns or has a material financial interest in, directly or indirectly, in whole or in part, any asset or  property used by the Company or the Subsidiary.         4.24  Government Contracts.  Schedule 4.24 sets forth each of the current  Government Contracts that are prime contracts in effect as of the date of this Agreement.   Except as set forth on Schedule 4.24:               (a)   The Company and the Subsidiary have each complied in all material        respects with:  (i) all statutory and regulatory requirements with respect to each        Government Contract awarded to it and each bid, quotation or proposal submitted by it        to any Governmental Authority or any prospective prime contractor or subcontractor to        any Governmental Authority; (ii) each certification it has executed, acknowledged or set        forth with respect to each Government Contract awarded to it and each bid it has        submitted to any Governmental Authority or any prospective prime contractor or        subcontractor to any Governmental Authority; and (iii) all clauses, provisions and        requirements incorporated expressly, by reference or by operation of law in its        Government Contracts. No termination for default, cure notice, show cause notice or        other similar notice has been issued by a Government Entity in writing and remains        unresolved with respect to any material Government Contract. No money due to the        Company or the Subsidiary pertaining to any material Government Contract or        Government Bid has been withheld or set-off. To the Seller’s Knowledge, all invoices                                          33    

 

and claims (including requests for progress payments and provisional costs payments)  submitted under each material Government Contract were accurate in all material  respects as of their submission date. No Organizational Conflict of Interest (as defined in  FAR Subpart 9.5) would prevent either the Company or the Subsidiary from fully  performing each such Government Contract or from being awarded each such  Government Bid.           (b)   To the Seller’s knowledge, neither the Company or the Subsidiary has  taken any action and is not a party to any litigation that could reasonably be expected to  give rise to (i) liability under the False Claims Act or (ii) a successful claim for price  adjustment under the Truthful Cost or Pricing Data Statute (formerly known as the Truth  in Negotiations Act or TINA).          (c)   All certifications, representations or disclosure statements submitted by  the Company or the Subsidiary with respect to any Government Contract were accurate  as of the date of submission, and were properly updated to the extent required by Law,  regulation or contract.         (d)   Neither the Company nor the Subsidiary is currently debarred or  suspended from doing business with any Governmental Authority, nor has it otherwise  been declared ineligible to do business with any Governmental Authority.  To the Seller’s  Knowledge, there are presently no circumstances that would be reasonably expected to  warrant the institution of debarment or suspension or ineligibility proceedings against the  Company or the Subsidiary in the future. In the last three years, neither the Company’s  nor the Subsidiary’s respective directors or officers has been suspended, debarred, or  proposed for debarment by any Government Entity or otherwise excluded by any  Government Entity from participating in any federal procurement or non-procurement  programs.         (e)   No Governmental Authority or any prime contractor or subcontractor to  any Governmental Authority has withheld or setoff, or attempted to withhold or setoff,  monies due to the Company or the Subsidiary under any of its Government Contracts.          (f)   To Seller’s Knowledge, there are no irregularities, misstatements or  omissions contained in any of the Government Contracts or any of the Company’s or the  Subsidiary’s bids, quotations or proposals for Government Contracts, past or present,  that have led to or have a reasonable likelihood of leading to (i) any administrative, civil  or criminal investigation or indictment of the Company or the Subsidiary, (ii) the  recoupment of any payments previously made to the Company or the Subsidiary or (iii)  the assessment of any penalties or damages of any kind against the Company or the  Subsidiary, arising out of such irregularities, misstatements or omissions.          (g)   Neither the Company nor the Subsidiary is undergoing or has undergone  any audit of its compliance with any Government Contract and to Seller’s Knowledge,  there are no anticipated audits in the future, arising under or relating to any Government  Contract, other than customary audits and reviews.         (h)   With respect to any Current Government Contract or other Government  Contract under which final payment was received by the Company within three years  prior to the date of this Agreement, the Company does not have credible evidence:  (i)  that a Principal, Employee, Agent, or Subcontractor (as such terms are defined in FAR                                    34                 

 

52.203-13 (a)) of the Company has committed a violation of federal criminal Law  involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the  United States Code or a violation of the civil False Claims Act or (ii) of any significant  overpayment(s) on such Government Contracts, other than overpayments resulting from  contract financing payment as defined in FAR 32.001, and the Company has not  conducted, and is not currently conducting, an investigation to determine whether  credible evidence exists of such a violation or overpayment.         (i)   As of the Effective Date, there are no existing or, to the Seller’s  Knowledge, threatened claims asserted by a Government Entity or by any prime  contractor, subcontractor or vendor relating to any Government Contract (excluding  claims for payments due in the ordinary course of performance); and, in the last three  years, the Company or the Subsidiary has not asserted any claim or initiated any dispute  proceedings against any Government Entity, prime contractor, subcontractor or vendor  concerning any Government Contract.          (j)   No nonresponsibility determination has been issued against the Company  or the Subsidiary by a Government Entity with respect to any outstanding quotation, bid  or proposal currently submitted to a Government Entity.         (k)   Neither the Company nor the Subsidiary has, within the last three years,  received a substantially adverse or negative past performance evaluation or rating that  could reasonably be expected to adversely affect the potential award of a Government  Contract to the Company or the Subsidiary.         (l)   All Intellectual Property developed or delivered by the Company or the  Subsidiary under or in connection with any Government Contract has been properly and  sufficiently marked so that no more than the minimum rights or licenses required under  applicable regulations have been granted.  All disclosures, elections, and notices  required by applicable Laws and Government Contract terms to satisfy these  requirements, or to protect ownership of any inventions of the Company or the  Subsidiary developed, conceived or first actually reduced to practice in the performance  of work under a Government Contract have been made available to or have been  delivered to Buyer.  Except for minimum rights or licenses required under applicable  regulations to be granted to the United States Government as set forth above, no  Governmental Authority or prime contractor or subcontractor to a Governmental  Authority has obtained, by contract, applicable Laws or otherwise, rights in any  Intellectual Property used in the operation of the Company or the Subsidiary, that will  affect the commercial value thereof.  All Government Contracts and documents related  thereto, in each case, in the possession of the Company or any of its employees or  independent contractors, have been made available or delivered to Buyer.         (m)   The Company and the Subsidiary and their respective employees  possess all requisite facility and personnel security clearances necessary to perform  their obligations under all Government Contracts.  The Company and the Subsidiary are  in material compliance with all requirements of the current version of the National  Industrial Security Program Operating Manual and have not, in the last three years,  received any notice of revocation, suspension or invalidation from the Defense Security  Service or any other Government Entity that remains unresolved with respect to the  Company’s or the Subsidiary’s facility security clearance.                                    35                 

 

            (n)   Currently, and for the last three years, (i) the Company’s and the        Subsidiary’s cost accounting systems comply in all material respects with applicable        laws and regulations (including the FAR cost principles and Cost Accounting Standards,        as defined in FAR Parts 31 and 9900), and no Government Entity has deemed such        system deficient or non-compliant with the requirements of the FAR cost principles or        Cost Accounting Standards, as applicable; and (ii) all direct and indirect costs charged        under a Government Contract were in compliance in all material respects with the FAR        cost principles and the Cost Accounting Standards, as applicable.               (o)   The Company and the Subsidiary’s information systems and information        security safeguards comply in all material respects with applicable laws and regulations,        including requirements set forth in FAR 52.204-21, Basic Safeguarding of Covered        Contractor Information Systems, DFARS 252.204-7012, Safeguarding Covered Defense        Information and Cyber Incident Reporting, and the National Industrial Security Program        Operating Manual (NISPOM) DoD 5220.22-M (May 18, 2006, incorporating Change 2),        as applicable, and no Government Entity has deemed such systems or safeguards        deficient or non-compliant with the applicable laws and regulations.               (p)   In the last three years, neither the Company, nor the Subsidiary have had        or experienced a breach of data security or cybersecurity, whether physical or electronic,        including a “compromise” or a “cyber incident” as defined under DFARS 252.204-7012.                 (q)   In the last three years, the Company and the Subsidiary have complied        with the requirements of each multiple award and federal supply schedule contract in all        material respects.               (r)   In the last six years, with respect to each multiple award and federal        supply schedule contract, the Company or the Subsidiary: (a) has not charged a price        that violates the established basis-of-award price; (b) has complied in all material        respects with the notice and pricing requirements of the Price Reductions Clause (as        implemented in the General Services Administration Acquisition Regulation, 48 CFR        Part 552.238-75), and there are no facts or circumstances that would reasonably be        expected to result in a demand for a refund based upon the failure to comply with the        Price Reductions Clause; and (c) has complied in all respects with all payment        requirements of the Industrial Funding Fee (as implemented in the General Services        Administration Acquisition Regulation, 48 CFR Parts 538.273(b)(1) and 552.238-74) and        there are no facts or circumstances that would reasonably be expected to result in a        demand for additional payment(s) based upon the Company or the Subsidiary’s failure to        comply with the Industrial Funding Fee payments.         4.25  Environmental Matters.  Except as specifically set forth in Section 4.25 of the  Schedules:               (a)   The Company and its Subsidiary, and their respective facilities, are, and        during the past five years have been, in material compliance with all applicable        Environmental Laws.               (b)   Within the past five years, or prior to such time if unresolved, neither the        Company nor the Subsidiary has received any written notice, report, order or other        information regarding any alleged material violation of or a material liability under any        Environmental Law, and there are no written claims alleging a material violation of or                                          36    

 

      liability pursuant to any Environmental Law pending or, to Seller’s Knowledge,        threatened against the Company or its Subsidiaries.               (c)   (i) There has been no Release of, or contamination by, Hazardous        Substances from, on, in, at or under any properties (including any buildings, structures,        improvements, soils or subsurface strata, surface water bodies or drainage ways, and        ground waters thereof) currently or, to Seller’s Knowledge, formerly owned, leased or        operated by or for the Company or its Subsidiary or any predecessor company and (ii)        neither the Company nor its Subsidiary has manufactured, distributed, treated, stored,        disposed of, arranged for or permitted the disposal of, transported, handled, Released or        exposed any Person to any Hazardous Substances, in either case of (i) and (ii)  which        would or in a manner which would reasonably be expected to give rise to a material        liability under any Environmental Law.               (d)   neither the Company nor its Subsidiary have given any release or waiver        of liability that would waive or impair any claim based on the presence or Release of        Hazardous Substances in, on, from or under any real property against a previous owner        of any real property or against any Person who may be potentially responsible for the        presence or Release of Hazardous Substances in, on, from or under any such real        property.               (e)   The Company and its Subsidiary have provided to the Buyer all material        environmental reports in their possession or control or to which they have reasonable        access, including any “Phase I” and “Phase II” environmental site assessments,        addressing locations currently or formerly owned, operated or leased by the Company or        its Subsidiary and their compliance with or liabilities under Environmental Laws.         4.26  No Brokers.  Except for Raymond James & Associates, no broker, finder or  similar agent has been employed by or on behalf of Seller or the Company, and no Person with  which Seller or the Company has had any dealings or communications of any kind is entitled to  any brokerage commission, finder’s fee or any similar compensation in connection with this  Agreement or the transactions contemplated hereby.             ARTICLE V  REPRESENTATIONS  AND WARRANTIES  OF BUYER         Buyer represents and warrants to Seller as follows:         5.1   Investment Intent.  The Shares are being purchased for Buyer’s own account  and not with the view to, or for resale in connection with, any distribution or public offering  thereof within the meaning of the Securities Act and the rules and regulations promulgated  thereunder.         5.2   Organization and Standing.  Buyer is a corporation duly organized, validly  existing and in good standing under the Laws of its jurisdiction of incorporation or formation.   Buyer is duly qualified to do business, and is in good standing, in each jurisdiction in which the  character of the properties owned or leased by it or in which the conduct of its busine ss requires  it to be so qualified, except where the failure to be so qualified or to be in good standing would  not have a Material Adverse Effect on Buyer.         5.3   Authority, Validity and Effect.  Buyer has the requisite power and authority to  execute and deliver this Agreement and all agreements and documents contemplated hereby to                                          37    

 

be executed and delivered by it, and to consummate the transactions contemplated hereby and  thereby without obtaining any additional approvals (whether internal or third party).  The  execution and delivery of this Agreement and such other agreements and documents and the  consummation of the transactions contemplated hereby and thereby, have been duly and validly  authorized by all necessary action on the part of Buyer.  This Agreement has been duly and  validly executed and delivered by Buyer and, assuming the due execution and delivery hereof  by Seller, constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer  in accordance with its terms, except as limited by the General Enforceability Exceptions.         5.4   No Conflict; Required Consents.               (a)   The execution and delivery of this Agreement by Buyer, the        consummation by Buyer of the transactions contemplated hereby, and the compliance        by Buyer with any of the provisions hereof, do not and will not:  (i) conflict with or result        in a breach of any provisions of the Organizational Documents of Buyer; (ii) constitute or        result in the breach of any term, condition or provision of, or constitute a default (or an        event that, with notice or lapse of time or both, would become a default) under, require        any consent of or notice to any Person pursuant to, or give rise to any right of        termination, cancellation, acceleration or amendment with respect to, or result in the        creation or imposition of any Lien upon any property or assets of Buyer pursuant to any        note, bond, mortgage, indenture or Contract to which Buyer is a party or by which Buyer        or any of Buyer’s properties or assets may be subject, and that would, in any such event,        have a Material Adverse Effect on Buyer; or (iii) violate any Order or Law applicable to        Buyer or any of its properties or assets.               (b)   No Consent is required to be obtained by Buyer for the consummation by        Buyer of the transactions contemplated by this Agreement that if not obtained would        have a Material Adverse Effect on Buyer.         5.5   Independent Investigation; No Reliance.  In connection with its investment  decision, Buyer or its Representatives have inspected and conducted such reasonable  independent review, investigation and analysis (financial and otherwise) of the Company and  the Subsidiary as reasonably desired by Buyer.  The purchase of the Shares by Buyer and the  consummation of the transactions contemplated hereby by Buyer are not done in reliance upon  any representation or warranty by, or information from, Seller, the Company, the Subsidiary or  any of their respective Affiliates, employees or Representatives, whether oral or written, express  or implied, including any implied warranty of merchantability or of fitness for a particular  purpose, except for the representations and warranties specifically and expressly set forth in  Article IV (as modified by the Schedules), the certificate delivered in accordance with Section  3.2(c), and in any other Transaction Document and Buyer acknowledges that Seller expressly  disclaims any other representations and warranties.  Buyer acknowledges that neither the  Company nor Seller have made any representations or warranties to Buyer regarding the  probable success or profitability of the Company, the Subsidiary or their respective businesses.   Buyer further acknowledges that none of Seller, the Company, the Subsidiary nor any other  Person has made any representation or warranty, express or implied, as to the accuracy or  completeness of any information regarding the Company, the Subsidiary, their respective  businesses or the transactions contemplated by this Agreement not specifically and expressly  set forth in Article IV (as modified by the Schedules), the certificate delivered in accordance  with Section 3.2(c), or in any other Transaction Document and, other than in the case of fraud,  none of Seller, the Company, the Subsidiary or any other Person will have or be subject to any  liability to Buyer or any other Person resulting from the distribution to Buyer or its                                          38    

 

Representatives or Buyer’s use of any such information, including any confidential information  memoranda distributed on behalf of the Company or the Subsidiary relating to their respective  businesses or other publications or data room (including any electronic or “virtual” data room)  information provided or made available to Buyer or its Representatives, or any other document  or information in any form provided or made available to Buyer or its Representatives, including  management presentations, in connection with the purchase and sale of the Shares and the  transactions contemplated hereby.           5.6   Financing.  As of the Effective Date, Buyer has received (a) an executed equity  commitment letter dated as of the Effective Date (the “Equity Commitment Letter”) from  Guarantor pursuant to which Guarantor has committed, on the terms and subject to the  conditions set forth therein, to provide to Buyer the Equity Financing in cash in an aggregate  amount of at least $33,000,000, and (b) an executed debt commitment letter dated as of the  Effective Date (the “Debt Commitment Letter”, as the same may be amended pursuant to  Section 6.10,  and, together with the Equity Commitment Letter, the “Commitment Letters”)  from PennantPark Investment Advisors, LLC and the lenders that are signatories thereto,  pursuant to which the Debt Financing Sources have committed, on the terms and subject to  (and only to) the conditions set forth therein, to provide to Buyer the Debt Financing in cash in  the aggregate amount set forth in the Debt Commitment Letter.  A true and complete copy of  each fully executed Commitment Letter as in effect on the Effective Date has been provided to  the Company.  A true and complete copy of each fee letter related to the Debt Commitment  Letter, to the extent applicable, as in effect on the Effective Date has been provided to the  Company, except that the numerical fee amounts or other commercially sensitive terms  specified therein may have been redacted in a customary manner.  Buyer has fully paid any and  all commitments or other fees required by the Commitment Letters to be paid on or before the  date of this Agreement.  Each Commitment Letter is valid and binding and in full force and  effect, enforceable against Buyer and, to Buyer’s knowledge, against each other party thereto,  subject to applicable General Enforceability Exceptions.  There are no conditions precedent or  other contingencies related to (i) the Equity Financing or (ii) the Debt Financing, other tha n as  expressly set forth therein.  Assuming the accuracy of the Seller’s representations and  warranties set forth in Article IV and compliance by Seller with its obligations under this  Agreement, and subject to the satisfaction of the conditions contained in Sections 7.1 and 7.2  hereof, Buyer does not have any reason to believe that the Financing will not be available to  Buyer on the Closing Date.  As of the date of this Agreement, none of the respective  commitments contained in the Equity Commitment Letter or Debt Commitment Letter has been  withdrawn or rescinded in any respect.  Neither Buyer nor any of its Affiliates has entered into  any agreement, side letter or other arrangement relating to the Financing or the transactions  contemplated by this Agreement, other than as set forth in the Equity Commitment Letter and  the Debt Commitment Letter (and any fee letters related to the Debt Commitment Letter).  As of  the date of this Agreement, no financing source has notified Buyer or any of its Affiliates in  writing of such financing source’s intention to terminate or withdraw any of the Financing.   Subject to the terms of the Financing and subject to the satisfaction of the conditions contained  in Sections 7.1 and 7.2 hereof, assuming that the representations and warranties in Article IV  are true and correct and that the Seller has complied with its obligations under this Agreement,  the aggregate proceeds contemplated by the Financing pursuant to the Commitment Letters,  together with available cash the Company, will be sufficient for Buyer to complete the  transactions contemplated by this Agreement, to pay the Initial Purchase Price and all fees and  expenses required to be paid by Buyer in connection with the transactions contemplated by this  Agreement.                                          39    

 

      5.7   Solvency.  Assuming that the representations and warranties in Article IV are  true and correct, that the Seller has complied with its obligations under this Agreement, and that  there has not been a material decline in or deterioration of the operations or financial condition  of the Company and/or the Subsidiary between the Effective Date and the Closing, immediately  after giving effect to the transactions contemplated by this Agreement, the Company:  (a) will be  solvent (in that both the fair value of its assets will not be less than the sum of its liabilities and  that the present saleable value of its assets will not be less than the amount required to pay its  probable liabilities as they become absolute and matured); (b) will have adequate capital with  which to engage in its business; and (c) will not have incurred and will not plan to incur liabilities  beyond its ability to pay as they become absolute and matured.         5.8   Legal Proceedings.  As of the Effective Date, there are no Actions pending or,  to the knowledge of Buyer, threatened against or affecting Buyer that, if adversely decided,  would have a Material Adverse Effect on Buyer or prevent the consummation of the tr ansactions  contemplated by this Agreement.         5.9   No Brokers.  No broker, finder or similar agent has been employed by or on  behalf of Buyer, and no Person with which Buyer has had any dealings or communications of  any kind is entitled to any brokerage commission, finder’s fee or any similar compensation in  connection with this Agreement or the transactions contemplated hereby.                     ARTICLE VI  COVENANTS AND AGREEMENTS         6.1   Interim Operations of the Company.  From the Effective Date until the Closing  or the earlier termination of this Agreement, (x) the Seller shall cause each of the Company and  the Subsidiary to, (i) conduct its business in the ordinary course of business consistent with past  practice; (ii) conduct its business in compliance in all material respects with all applicable Laws;  and (iii) use reasonable best efforts to preserve intact its business organization and to preserve  the present commercial relationships with its employees, contractors, consultants, and  customers, and to keep available the services of their respective present officers and  management-level employees; provided that, notwithstanding the foregoing, the Company and  the Subsidiary may use all available Cash to repay any Indebtedness or intercompany payables  prior to the Closing, and (y) except as (i) required by Law (ii) set forth on Schedule 6.1 or (iii)  expressly required by this Agreement: unless Buyer has previously consented thereto in writing  (which consent will not be unreasonably withheld, conditioned or delayed) Seller shall not permit  the Company or the Subsidiary to:               (a)   (i) acquire, or dispose of, any business or any corporation, partnership,        association or other business organization or any material amount of property or assets,        or enter into any joint venture, strategic alliance, exclusive dealing, noncompetition or        similar arrangement; or (ii) expressly cancel any debts owed to or claims held by the        Company or the Subsidiary;               (b)   (i) enter into any Contracts that would constitute a Material Contract,        except Contracts that the Company or the Subsidiary are otherwise negotiating as of the        Effective Date; (ii) amend, modify, renew or terminate any Material Contract (unless the        counterparty is in material default under the applicable Material Contract); or (iii) grant        any release or waiver of compliance with the material terms of any Material Contracts;        except for Material Contracts entered into, renewed or extended in the ordinary course        of business consistent with past practice;                                          40    

 

      (c)   enter into any Contracts with any Affiliates of the Company, except to the  extent required by Law or any existing Contracts;         (d)   except to the extent required by Law or any existing Contracts, enter into,  adopt, amend or terminate any Contract relating to the compensation or severance of  any employee of the Company or the Subsidiary, other than in the ordinary course of  business consistent with past practice or pursuant to annual compensation reviews in  the ordinary course of business consistent with past practice;         (e)   make any amendment to its Organizational Documents;         (f)   declare, set aside, make or pay any dividends or distributions or  repurchase any membership interests or other equity interests;         (g)   issue, transfer, pledge, award, grant, sell, dispose of or otherwise subject  to any Lien, other than Permitted Liens, (i) any properties or assets of the Company or  the Subsidiary, other than sale or transfers of inventory in the ordinary course of  business consistent with past practice or (ii) any membership interests, capital stock or  other equity interests or options, warrants, calls, subscriptions or other rights to purchase  any membership interests, capital stock or other equity interests of the Company or the  Subsidiary (or any securities convertible into or exercisable or exchangeable for such  equity interests) or split, reclassify, combine or subdivide the membership interests,  capital stock or other equity interests of the Company or the Subsidiary;         (h)   redeem, repurchase or otherwise acquire, directly or indirectly, any of the  membership interests, capital stock or other equity interests of the Company or the  Subsidiary;          (i)    incur any Indebtedness (other than draws on existing lines of credit in the  ordinary course of business consistent with past practice) or issue any debt securities or  assume, guarantee or endorse, or otherwise become responsible for, the obligations of  any Person, or make any loans or advances;         (j)   authorize, or make any commitment with respect to, any single capital  expenditure that is not otherwise contemplated in the Company’s and the Subsidiary’s  applicable annual budget, a copy of which is attached hereto as Schedule 6.1(j), and  that is in excess of $100,000 or capital expenditures that are, in the aggregate, in excess  of $150,000 taken as a whole;         (k)   enter into any lease of real property or any material amendment thereof,  or any renewals thereof involving a term of more than one year or rental obligation  exceeding $300,000 per year in any single case;         (l)   adopt any new Employee Plan or employee benefit arrangement or  amend or terminate any Employee Plan or employee benefit arrangement;          (m)   terminate the employment of any officer or key employee other than for  cause, or terminate more than 10 employees at any single site of employment;         (n)   enter into or modify any collective bargaining agreement;                                    41                 

 

            (o)   file an amended Tax Return; extend or waive, or cause to be extended or        waived, any statute of limitations or other period for the assessment of any Tax or        deficiency; make or change any Tax election; change any annual Tax accounting period        or materially change any method of Tax accounting; or initiate, enter into, or participate        in any voluntary disclosure agreement with any Governmental Authority with respect to        Taxes for a Pre-Closing Tax Period, or take any position on any Tax Return inconsistent        with past practice that (A) increases the Company’s or the Subsidiary’s liability for        Taxes, or (B) reduces any Tax attribute of the Company or the Subsidiary (other than        attributes occurring as a result of the transactions contemplated by this Agreement and        properly allocated to and permitted to be deducted in a Pre-Closing Tax Period pursuant        to applicable Law) for any period ending on or after the Closing Date;                (p)   commence or settle any material Action;               (q)    make any changes to its accounting methods, principles or practices,        other than as may be required by GAAP;               (r)   adopt any plan of complete or partial liquidation or otherwise liquidate,        wind up or dissolve; or               (s)   announce any intention, enter into any formal or informal agreement, or        otherwise make a commitment to take any of the actions described in clauses (a)        through (r) of this Section 6.1.         6.2   Reasonable Access; Confidentiality.               (a)   From the Effective Date until the Closing or the earlier termination of this        Agreement, and subject to applicable Law, Seller shall cause the Company and the        Subsidiary to give Buyer and its Representatives, upon reasonable advance notice to        the Company, reasonable access, during normal business hours, to the assets,        properties, books, records and agreements of the Company and the Subsidiary.  Seller        shall, and shall cause the Company and the Subsidiary to, permit Buyer to make such        inspections as Buyer may reasonably require and to furnish Buyer during such period        with all such information relating to the Company and the Subsidiary as Buyer may from        time to time reasonably request.               (b)   Any information provided to or obtained by Buyer or its Representatives        pursuant to Section 6.2(a) will be subject to the non-disclosure letter, dated April        4, 2018, entered into by Buyer or its Affiliate for the benefit of the Company        (the “Confidentiality Agreement”), and must be held by Buyer in accordance with and        be subject to the terms of the Confidentiality Agreement.               (c)   Buyer agrees to be bound by and comply with the provisions set forth in        the Confidentiality Agreement as if such provisions were set forth herein, and such        provisions are hereby incorporated herein by reference and shall continue in full force        and effect until the Closing, at which time the Confidentiality Agreement (and the        provisions incorporated herein by reference) shall terminate.          6.3   Publicity.  Except as may be required to comply with the requirements of any  applicable Law or the rules and regulations of any stock exchange or national market system  upon which the securities of Buyer are listed, no party hereto will issue any press release or                                          42    

 

other public announcement prior to the Closing relating to the subject matter of this Agreement  or the transactions contemplated hereby without the prior approval (which approval will not be  unreasonably withheld, conditioned or delayed) of, in the case of a press release or other public  announcement by Buyer, Seller, and, in the case of a press release or other public  announcement by Seller, Buyer.         6.4   Records.  Subject to Article X, with respect to the financial books and records  and minute books of the Company and the Subsidiary relating to matters pertaining to the  business of the Company and the Subsidiary on or prior to the Closing Date (the “ Books and  Records”):  (a) for a period of five years after the Closing Date, Buyer shall not cause or permit  their destruction or disposal without first offering to surrender them to Seller at Seller’s expense;  and (b) after the Closing, where there is a legitimate purpose, including an audit, assessment or  reassessment of Seller or its Affiliates by the IRS or any other Taxing Authority or an Action  involving Seller or a claim or dispute relating to this Agreement, Buyer shall allow Seller and its  Representatives reasonable access to the Books and Records during regular business hours  upon reasonable request by the Seller; provided however, that, in each case, any such access  to Books and Records shall be conducted in a manner not to unreasonably interfere with the  businesses or operations of the Company or the Subsidiary. Notwithstanding any provision  hereof to the contrary, the access to and disclosure of Books and Records contemplated by this  Section 6.4 shall not be permitted to the extent (a) that it would require Buyer, the Company or  the Subsidiary to disclose information subject to attorney-client privilege, that would conflict with  any confidentiality obligations to which Buyer, the Company or the Subsidiary are bound or that  would violate any applicable Law, or (b) related to any dispute or pending or threatened litigation  between any of the parties and such information is reasonably pertinent thereto.          6.5   Exclusive Dealing.  From the Effective Date through the Closing Date or the  earlier termination of this Agreement pursuant to Section 8.1, without Buyer’s prior written  consent, Seller shall not, and shall cause the Company and the Subsidiary not to, and shall take  all action necessary to ensure that none of their respective Affiliates or Representatives shall,  directly or indirectly, solicit or encourage inquiries or proposals with respect to a (a) Competing  Transaction or (b) Permitted Alternative Transaction that is inclusive of the Company and/or the  Subsidiary (but not Permitted Alternative Transactions that are not inclusive of the Company  and/or the Subsidiary), furnish any non-public information about the Company in relation to a  Competing Transaction, participate in any negotiations, discussions or other contacts  concerning a Competing Transaction, or enter into any agreement, letter of intent, or  agreement-in-principle relating to, or effect or consummate any Competing Transaction.  For the  avoidance of doubt, the foregoing shall not prohibit Seller and its Affiliates and its and their  respective Representatives from engaging in negotiations, discussions or other contacts, in  each case concerning a Permitted Alternative Transaction, but only in the event Seller or its  Affiliates or Representatives receives an unsolicited offer with respect to such a Permitted  Alternative Transaction.  Immediately upon the execution of this Agreement, Seller shall, and  shall cause the Company and the Subsidiary to, and shall take all action necessary to cause  their respective Affiliates or Representatives to, discontinue any ongoing discussions or  negotiations (other than any ongoing discussions with Buyer or its Affiliates or Representatives)  relating to a possible Competing Transaction.  From the Effective Date through the Closing Date  or the earlier termination of this Agreement pursuant to Section 8.1, (a) Seller also will cause its  officers, directors, employees, Representatives, and agents, and their respective Affiliates to  refrain from doing any of the above with respect to a Competing Transaction, and (b) Seller will  immediately (but in any event within 24 hours) notify Buyer if any such bona fide inquiries,  proposals or requests for information are received by, or any such negotiations or discussions  are sought to be initiated with it or any of the other persons or entities referred to above;                                          43    

 

provided, however, that Seller shall have no notification obligation with respect to a Permitted  Alternative Transaction that does not involve an acquisition, whether directly or indirectly, of the  Company and the Subsidiary.         6.6   Reasonable Best Efforts; Cooperation.  Upon the terms and subject to the  conditions set forth in this Agreement, each of the parties hereto agrees to use its reasonable  best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to  assist and cooperate with the other parties hereto in doing, all things necessary, proper or  advisable to consummate and make effective, in the most expeditious manner practicable, the  transactions contemplated by this Agreement and to obtain satisfaction or waiver of the  conditions precedent to the consummation of the transactions contemplated hereby, including:   (a) obtaining all of the necessary Consents from Governmental Authorities and other third  parties and the making of all filings and the taking of all steps as may be necessary to obtain  Consent from, or to avoid an Action by, any Governmental Authority; (b) the defending of any  Actions, whether judicial or administrative, challenging this Agreement or the consummation of  the transactions contemplated hereby, including seeking to have any stay or temporary  restraining order entered by any court or other Governmental Authority vacated or reversed; and  (c) the execution and delivery of any additional instruments necessary to consummate the  transactions contemplated by, and to fully carry out the purposes of, this Agreement.         6.7   Antitrust Approvals.  Seller and Buyer agree that, as of the execution of this  Agreement, no filing under the HSR Act is required.  Should that determination by Seller and  Buyer change, or should Seller and Buyer mutually determine that any other filings with  Governmental Authorities are necessary, Seller and Buyer will, as promptly as practicable and  before the expiration of any relevant legal deadline, but in no event later than five Business  Days following that determination, file, or cause to be filed, with any other Governmental  Authority, any other filings, reports, information and documentation required for the transactions  contemplated hereby pursuant to any Laws relating to antitrust and competition applicable to the  Company or the Subsidiary, if any (the “Antitrust Laws”). Each of the parties hereto will furnish,  or cause to be furnished, to each other’s counsel such necessary information and reasona ble  assistance as the other may request in connection with its preparation of any filing or  submission that is necessary under any Antitrust Laws. Buyer and Seller will each be  responsible for 50% of all filing fees payable in connection with such filings.         6.8   No Additional Representations.  Buyer acknowledges and agrees that none of  Seller, the Company, any of their Affiliates or any Representatives of any of the foregoing (a)  has made or will be deemed to have made (and Buyer and its Affiliates have not relied on) any  representation or warranty, express or implied, as to the accuracy or completeness of any  information regarding the Company or its business or assets, or the transactions contemplated  hereby except as expressly set forth in Article IV (as qualified by the Schedules), the certificate  delivered in accordance with Section 3.2(c), or in any other Transaction Document or (b) other  than in the case of fraud, will have or be subject to any liability or obligation to Buyer or any  other Person resulting from the distribution to Buyer or any of its Affiliates, or Buyer’s or any of  its Affiliates’ use of, any such information, including the Confidential Information Memorandum  prepared by Raymond James & Associates (the “Information Memorandum”) and any  information, document or material made available to Buyer or its Affiliates or any of their  Representatives in certain “data rooms” and online “data sites,” management presentations or  any other form in connection with the transactions contemplated by this Agreement or  otherwise.  In connection with Buyer’s and its Affiliates’ investigation of the Company, Buyer and  its Affiliates have received from or on behalf of the Company certain projections, including  projected statements of operating revenues and income from operations of the Company and                                          44    

 

certain business plan information of the Company.  Buyer acknowledges that there are  uncertainties inherent in attempting to make such estimates, projections and other forecasts and  plans, that Buyer and its Affiliates are familiar with such uncertainties, that Buyer and its  Affiliates are taking full responsibility for making their own evaluation of the adequacy and  accuracy of all estimates, projections and other forecasts and plans so furnished to it (including  the reasonableness of the assumptions underlying such estimates, projections and forecasts),  and that Buyer and its Affiliates shall have no claim against Seller, the Company, any of their  Affiliates or any Representatives of any of the foregoing with respect thereto, other than in the  case of fraud.         6.9   Employee Matters.               (a)   Until March 31, 2019, Buyer will cause the Company and the Subsidiary        to provide to each employee of the Company and the Subsidiary immediately prior to the         Closing who remains employed by the Company or the Subsidiary (collectively, the        “Continuing Employees”) (i) annual base salary, wages, and target cash bonuses that        are no less favorable in the aggregate than the annual base salary, wages and target        cash bonuses (excluding equity incentives), in the aggregate, provided to such        employees prior to the Closing; and (ii) employee benefits that are no less favorable, in        the aggregate, than those provided to Continuing Employees under the Employee Plans        immediately prior to the Closing.               (b)   With respect to any employee benefit plan, program, practice, policy or        arrangement of the Buyer and its Affiliates in which any Continuing Employee becomes        eligible to participate on or after the Closing Date (a “Buyer Benefit Plan”), the Buyer        shall use reasonable best efforts to (or shall use reasonable best efforts to cause its        Affiliates to):  (i) waive all pre-existing condition exclusions or limitations and waiting        periods with respect to participation and coverage requirements applicable to each such        employee and his or her eligible dependents under any such Buyer Benefit Plan        providing welfare benefits to the extent waived under the corresponding Employee Plan;        (ii) provide such employee and his or her eligible dependents with credit for any co-       payments, co-insurance and deductibles paid prior to becoming eligible to participate in        any such Buyer Benefit Plan providing group health benefits under the analogous        Employee Plan (to the same extent that such credit was given under such Employee        Plan) in satisfying any applicable deductible requirements under such Buyer Benefit Plan        during the plan year in which such participation begins; and (iii) give credit to each        Continuing Employee for such Continuing Employee’s years of service with the        Company or the Subsidiary (including recognition of all prior service with any entity that        was recognized by the Company or the Subsidiary prior to the Closing Date), for all        purposes under any such Buyer Benefit Plan (other than for benefit accruals under a        defined benefit pension plan) to the same extent recognized under the corresponding        Employee Plan.                (c)   From and after the Closing Date, the Buyer and the “buying group” (as        defined in Treasury Regulation Section 54.4980B-9, Q&A-2(c)) of which it is a part shall        be solely responsible for providing COBRA continuation coverage pursuant to Section        4980B(f) of the Code, Part 6 of Subtitle B of Title I of ERISA and similar state Law to        those individuals who are M&A qualified beneficiaries (as defined in Treasury Regulation        Section 54.4980B-9, Q&A-4(b)) with respect to the transactions contemplated by this        Agreement and whose qualifying event occurs on or after the Closing Date.                                          45    

 

      (d)   The parties hereby agree that none of the provisions in this Section 6.9  are intended to, and do not, confer upon any Person (including any employee of the  Company or beneficiary or dependent thereof), other than Seller and Buyer, any rights or  remedies (including any third-party beneficiary rights) hereunder, including the right to  enforce any obligations of Seller or Buyer and its Affiliates contained herein.  Nothing  herein shall be deemed to limit the right of Buyer, the Company, the Subsidiary or their  Affiliates from terminating the employment of, or changing the terms and conditions of  employment of, any Continuing Employee, and nothing herein shall be deemed to  amend any Employee Plan, Buyer Benefit Plan, or other employee benefit plan, program  or arrangement.   6.10  Financing.         (a)   Buyer shall use reasonable best efforts to take, or cause to be taken, all  actions and do, or cause to be done, as promptly as possible, all things necessary,  proper or advisable to arrange and obtain the Financing on the terms and conditions  described in the Equity Commitment Letter and the Debt Commitment Letter, including  maintaining in effect the Equity Commitment Letter and the Debt Commitment Letter and  using reasonable best efforts to, as promptly as possible, satisfy on a timely basis all  conditions applicable to Buyer obtaining the Financing set forth therein (including by  consummating the Equity Financing pursuant to the terms of the Equity Commitment  Letter and the Debt Financing pursuant to the terms of the Debt Commitment Letter).   Buyer shall give Seller prompt written notice (i) of any material breach or default (or any  event or circumstance that, with or without notice, lapse of time or both, would  reasonably be expected to result in a breach or default) by any party to the Equity  Commitment Letter or the Debt Commitment Letter of which Buyer becomes aware, (ii)  of the receipt of any written notice or other written communication from any Person with  respect to any (A) actual or potential breach, default, termination or repudiation by any  party to the Equity Commitment Letter or the Debt Commitment Letter or (B) material  dispute or disagreement between or among any parties to the Equity Commitment Letter  or the Debt Commitment Letter (but excluding, for the avoidance of doubt, any ordinary  course negotiations with respect to the terms of the Financing), (iii) in the event Buyer  becomes aware that any portion of the Financing is not reasonably likely to be available  to consummate the transactions contemplated by this Agreement and (iv) of any  termination of the Equity Commitment Letter or the Debt Commitment Letter.  If any  portion of the Debt Financing becomes unavailable on the terms and conditions  contemplated in the Debt Commitment Letter, Buyer shall, without limiting the obligations  of Buyer set forth in the immediately following sentence, use reasonable best efforts to  arrange to obtain alternative financing, including from alternative sources, on terms in  the aggregate not materially less favorable to Buyer (in the reasonable judgment of  Buyer) than the Debt Financing contemplated by the Debt Commitment Letter in an  amount sufficient to consummate the transactions contemplated hereby (“Alternative  Financing”) as promptly as practicable following the occurrence of such event and the  provisions of this Section 6.10 and Section 9.9 shall be applicable to the Alternative  Financing, and, for the purposes of this Section 6.10 and Section 9.9, all references to  the Debt Financing shall be deemed to include such Alternative Financing, all references  to the Debt Commitment Letter shall include the applicable documents for the Alternative  Financing and all references to the Debt Financing Sources shall include the Persons  providing or arranging the Alternative Financing.  Buyer shall not permit, without the prior  written consent of the Company, any amendment or modification to be made to, or any  waiver of any provision or remedy under, any Commitment Letter if such amendment,                                    46                 

 

modification or waiver would (A) reduce the aggregate amount of proceeds from the  Financing available to fund the amounts required to be paid by Buyer under this  Agreement below the amount required to consummate the transactions contemplated by  this Agreement, (B) expand upon the conditions precedent to the receipt of the  Financing in a respect that would make such conditions materially less likely to be  satisfied by the Closing Date or (C) otherwise reasonably be expected to prevent or  materially impair or delay the ability of Buyer to consummate the transactions  contemplated by this Agreement.           (b)   Prior to the Closing, Seller shall use its reasonable best efforts, and shall  cause the Company and the Subsidiary to use their reasonable best efforts to provide, to  the extent within their applicable control, Buyer, such customary cooperation reasonably  requested by Buyer, at Buyer’s sole expense, in connection with the Debt Financing  (provided, however, that such requests shall not unreasonably interfere with the ongoing  operations of Seller and its Affiliates, including the Company and the Subsidiary),  including using its reasonable best efforts to do the following:  (i) furnishing Buyer with  such financial information set forth in paragraph number 5 of the Debt Commitment  Letter (the “Required Financial Information”) and other customary financial information  as reasonably requested by Buyer to enable Buyer to prepare pro forma financial  statements, in each case, to the extent customary and reasonably required pursuant to  such Debt Financing and to the extent reasonably available; (ii) causing a member of the  Company’s management team, with appropriate seniority and expertise, at reasonable  times and upon reasonable notice, to participate in a limited number of presentations to  and meetings with the Debt Financing Sources; (iii) (A) assisting with the preparation of  customary syndication documents and materials required or reasonably requested by  the Debt Financing Sources in connection with the Debt Financing; provided, however,  that any such customary syndication documents and materials shall contain disclosure  and pro forma financial statements reflecting Buyer as the obligor; and (B) executing and  delivering customary authorization letters relating to the Debt Financing; (iv) (A) to assist  in the preparation of definitive financing documentation and the schedules and exhibits  thereto (including loan agreements, guarantees, collateral agreements, hedging  arrangements, and customary officer’s and other closing certificates) as may reasonably  be requested; and (B) to facilitate the pledging of collateral, it being understood that such  documents will not take effect until on or after the Closing; (v) obtaining any Lien  releases, terminations and instruments of discharge (including UCC termination  statements); and (vi) furnishing Buyer promptly with all documentation and other  information required by regulatory authorities under applicable “know your customer”  and anti-money laundering rules and regulations, including the Uniting and  Strengthening America by Providing Appropriate Tools Required to Intercept and  Obstruct Terrorism Act of 2001, as amended, that has been reasonably requested by  Buyer in writing, at least 10 days prior to the Closing Date.         (c)   Notwithstanding the requirements of Section 6.10(b), (i) Buyer shall be  solely responsible for provision of any post-Closing pro forma financial information,  including cost savings, synergies, capitalization, ownership or other pro forma  adjustments and any financial projections of the Company for and after the Closing, (ii)  neither the Company nor the Subsidiary or their respective Representatives shall be  required to enter into any certificate, document, agreement or instrument which will be  effective prior to the Closing, (iii) none of Seller, the Company or the Subsidiary will be  required to pay any commitment or other similar fee or incur any other liability in  connection with the Debt Financing prior to the Closing, and (iv) nothing herein shall                                    47                 

 

      require cooperation or assistance from a Seller, Company or Subsidiary director, officer        or employee to the extent such director, officer or employee is reasonably likely to incur        any personal financial liability by providing such cooperation or assistance that will not        be repaid or reimbursed in full by the Buyer.                (d)   Buyer will promptly, upon request by Seller, reimburse Seller for all        reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees)        incurred by Seller, the Company or the Subsidiary in connection with the cooperation of        Seller, the Company and the Subsidiary contemplated by Section 6.10(b).  Buyer will        indemnify and hold harmless Seller, the Company, the Subsidiary and their respective        Representatives from and against any and all liabilities, losses, damages, claims, costs        or expenses suffered or incurred by any of them in connection with the arrangement of        the Financing (including any action taken in accordance with this Section 6.10) and any        information used in connection therewith.         6.11  R&W Policy.  Prior to the Closing Date, Buyer shall obtain the R&W Policy, and  Seller agrees to reasonably cooperate with Buyer in connection therewith, provided that such  R&W Policy will contain customary terms and conditions, including without limitation, the insurer  thereunder expressly waiving and agreeing not to pursue, directly or indirectly, any subrogation  rights against the Seller or its Affiliates (other than in connection with fraud by Seller or its  Affiliates) with respect to any claim made by any insured thereunder.  From and after the  issuance of the R&W Policy, Buyer shall not amend the R&W Policy in any manner adverse to  Seller without the Seller’s prior written consent or which would otherwise give the insurer  thereunder a right to pursue, directly or indirectly, any subrogation rights against Seller or its  Affiliates (other than in connection with fraud by Seller or any of its Affiliates).         6.12  Insurance Policies.  From and after the Closing Date, the Company and the  Subsidiary shall cease to be insured by the insurance policies of the Seller Guarantor or any of  its Affiliates; provided, however, that the Company and the Subsidiary shall have the benefit  from any Seller Guarantor or any of its Affiliates’ occurrence-based insurance policies that may  provide coverage for claims relating to the Company or the Subsidiary prior to the Closing.  In  furtherance of the foregoing sentence, Seller shall use reasonable efforts to cooperate with  Buyer to make available to Buyer any third party insurance benefits and proceeds, if any, in  respect of any third party claims relating to the Company or the Subsidiary prior to the Closing  under any insurance policy of the Seller Guarantor or its Affiliates.  In connection therewith,  Buyer shall be responsible for any obligations of Seller related to such cooperation, including  any deductibles, retentions or retrospectively-rated premiums, Taxes suffered on the proceeds,  or any reasonable out of pocket expenses suffered or incurred by the Seller or its Affiliates in  connection with such cooperation.  Buyer acknowledges that Seller and Seller Guarantor make  no representations, warranties or covenants that any of such insurance policies provide any  specific insurance coverage or that any insurance proceeds will be available.         6.13  Release of Escrow.  On the date that is 18 months after the Closing Date, the  Buyer and the Seller shall jointly instruct the Escrow Agent to disburse from the Adjustment  Escrow Fund to the Seller by wire transfer of immediately available funds an amount equal to  the amount remaining, if any, in the Adjustment Escrow Fund, less the amount of any  Outstanding Claims as of such date.  Any amounts left in the Adjustment Escrow Fund with  respect to such Outstanding Claims pursuant to the foregoing sentence shall subsequently be  disbursed in accordance with the terms of the Escrow Agreement.                                          48    

 

                     ARTICLE VII  CONDITIONS TO CLOSING         7.1   Conditions to Obligations of Seller.  The obligations of Seller to consummate  the transactions contemplated by this Agreement are subject to the satisfaction, or waiver (if  permitted by applicable Law) in writing by the Seller in its sole discretion, at or prior to the  Closing of each of the following conditions:               (a)   The representations and warranties of Buyer set forth in this Agreement        must be true and correct in all respects (without giving effect to any materiality or        material adverse effect qualifications contained therein) as of the Closing Date as though        made on and as of the Closing Date (except to the extent expressly made as of an        earlier date, in which case, as of such date), except where the failure of such        representations and warranties to be so true and correct would not have, either        individually or in the aggregate, a Material Adverse Effect on Buyer.               (b)   Buyer must have performed in all material respects all obligations        required to be performed by it under this Agreement at or prior to the Closing.               (c)   Buyer must have delivered or caused to be delivered to Seller the items        required by Sections 3.3(b) - 3.3(g).               (d)   None of the parties hereto will be subject to any Law or any temporary,        preliminary or permanent restraining Order of a court of competent jurisdiction that        makes consummation of the transactions contemplated by this Agreement illegal        (substantially on the terms contemplated by this Agreement) or otherwise prohibits the        consummation of the transactions contemplated by this Agreement.         7.2   Conditions to Obligations of Buyer.  The obligations of Buyer to consummate  the transactions contemplated by this Agreement are subject to the satisfaction, or waiver (if  permitted by applicable Law) in writing by the Buyer in its sole discretion, at or prior to the  Closing of each of the following conditions:               (a)   The representations and warranties of Seller set forth in (i) the        Fundamental Reps must be true and correct in all respects as of the Closing Date as        though made on and as of the Closing Date (except to the extent expressly made as of        an earlier date, in which case, as of such date), and (ii) this Agreement and not        referenced in clause (i) must be true and correct in all respects (without giving effect to        any materiality or material adverse effect qualifications contained therein) as of the        Closing Date as though made on and as of the Closing Date (except to the extent        expressly made as of an earlier date, in which case, as of such date), except in the case        of clause (ii) where the failure of such representations and warranties to be so true and        correct would not have, either individually or in the aggregate, a Material Adverse Effect        on Seller.               (b)   Seller must have performed in all material respects all obligations        required to be performed by it under this Agreement at or prior to the Closing Date.               (c)   Seller must have delivered or caused to be delivered to Buyer the items        required by Section 3.2.                                          49    

 

            (d)   None of the parties hereto will be subject to any Law or any temporary,        preliminary or permanent restraining Order of a court of competent jurisdiction that        makes consummation of the transactions contemplated by this Agreement illegal        (substantially on the terms contemplated by this Agreement) or otherwise prohibits the        consummation of the transactions contemplated by this Agreement.               (e)   At or prior to the Closing, the Acuity Assets shall have been assigned to        the Company pursuant to assignment documentation in form and substance reasonably        satisfactory to the Buyer.               (f)   No effect, change, condition, occurrence, event, circumstance, result,        state of facts or development shall have occurred since the date of this Agreement that        has had or would reasonably be expected to have a Material Adverse Effect on the        Seller.         7.3   Frustration of Closing Conditions.  No party hereto may rely on the failure of  any condition set forth in Section 7.1 or Section 7.2, as the case may be, to be satisfied if such  failure was caused by such party’s failure to comply with its obligations to consummate the  transactions contemplated by this Agreement as required by and subject to Section 6.6.                     ARTICLE VIII  TERMINATION OF AGREEMENT         8.1   Termination.  Notwithstanding any other provision of this Agreement, this  Agreement may be terminated at any time prior to the Closing:               (a)   by the mutual written consent of Buyer and Seller;               (b)   by Buyer or Seller, upon written notice to the other party, if the        transactions contemplated by this Agreement have not been consummated on or prior to        August 31, 2018, which date may be extended by either Buyer or Seller (in its sole        discretion) for up to five Business Days upon written notice to the other party, or such        later date, if any, as Buyer and Seller agree upon in writing (the “Termination Date”);        provided, however, that the right to extend the Termination Date or terminate this        Agreement pursuant to this Section 8.1(b) is not available to any party hereto whose        breach of any provision of this Agreement results in or causes the failure of the        transactions contemplated by this Agreement to be consummated by such time;               (c)   by Buyer or Seller, upon written notice to the other party, if a        Governmental Authority of competent jurisdiction and residing in a jurisdiction in which        the Company or the Subsidiary does business has issued an Order or any other action        permanently restraining, enjoining or otherwise prohibiting the consummation of the        transactions contemplated by this Agreement, and such Order has become final and        non-appealable; provided, however, that the right to terminate this Agreement pursuant        to this Section 8.1(c) is not available to any party hereto whose breach of any provision        of this Agreement results in or causes such Order or other action;               (d)   by Seller, upon written notice to Buyer if:  (i) Buyer has breached or failed        to perform any of its covenants or other agreements contained in this Agreement to be        complied with by Buyer such that the closing condition set forth in Section 7.1(b) would        not be satisfied at Closing; or (ii) there exists a breach of any representation or warranty        of Buyer contained in this Agreement such that the closing condition set forth in Section                                          50    

 

7.1(a) would not be satisfied at Closing, and, in the case of clauses (i) and (ii) of this  Section 8.1(d), such breach or failure to perform is incapable of being cured by Buyer  by the Termination Date; provided that Seller may not terminate pursuant to this Section  8.1(d) if the Seller is in material breach of any of its representations, warranties,  covenants or other agreements hereunder such that it would give rise to the failure of the  conditions set forth in Section 7.2(a) or Section 7.2(b);          (e)   by Buyer, upon written notice to Seller if:  (i) Seller has breached or failed  to perform any of its covenants or other agreements contained in this Agreement to be  complied with by them such that the closing condition set forth in Section 7.2(b) would  not be satisfied at Closing; or (ii) there exists a breach of any representation or warranty  of Seller contained in this Agreement such that the closing condition set forth in Section  7.2(a) would not be satisfied at Closing, and, in the case of clauses (i) and (ii) of this  Section 8.1(d), such breach or failure to perform is incapable of being cured by Seller by  the Termination Date; provided that Buyer may not terminate pursuant to this Section  8.1(d) if the Buyer is in material breach of any of its representations, warranties,  covenants or other agreements hereunder such that it would give rise to the failure of the  conditions set forth in Section 7.1(a) or Section 7.1(b);         (f)   by Seller, if (i) all of the conditions set forth in Section 7.2 (other than  those conditions that by their nature are to be satisfied by actions taken at the Closing,  each of which is capable of being satisfied and other than those conditions that have not  been satisfied as a result of Buyer’s breach of this Agreement or the Debt Commitment  Letter) have been satisfied or waived, (ii) Seller has confirmed irrevocably in writing to  Buyer that (A) all of the conditions set forth in Section 7.1 (other than those conditions  that by their nature are to be satisfied by actions taken at the Closing) have been  satisfied or have been waived by Seller and (B) Seller is prepared to consummate the  Closing; provided that such confirmation shall not be delivered earlier than the date that  the Closing should have occurred pursuant to Section 3.1, and (iii) Buyer fails to  consummate the Closing within two Business Days following the date on which the  confirmation has been delivered to Buyer; provided further, that, for the avoidance of  doubt, during such two Business Day period following the date on which the confirmation  has been delivered to Buyer, no party shall be entitled to terminate this Agreement  pursuant to Section 8.1(b); or         (g)   by Seller, in the event that Seller Guarantor enters into a definitive written  agreement with respect to a Permitted Alternative Transaction that includes the  acquisition, whether directly or indirectly, of the Company and the Subsidiary.   Notwithstanding the foregoing, the parties hereto agree that no party shall have the right  to terminate this Agreement pursuant to Section 8.1(b) during the pendency of a legal  proceeding by the other party for specific performance pursuant to Section 9.9.   8.2   Effect of Termination.           (a)   In the event of termination of this Agreement pursuant to Section 8.1 by  either Buyer or Seller, this Agreement will become void and have no effect, without any  liability or obligation on the part of Buyer or Seller, other than the provisions of Section  6.2(b), Section 6.3, this Section 8.2, Section 9.9 and Article XI, which will survive any  termination of this Agreement; provided, however, that, subject to Sections 8.2(b)  through 8.2(e), nothing herein will relieve any party hereto from any liability for claims for                                    51                 

 

material and intentional breach by such party of its covenants or agreements set forth in  this Agreement prior to the Closing.  The Confidentiality Agreement shall not be affected  by a termination of this Agreement.         (b)   In the event that this Agreement is terminated (i) by Seller pursuant to  Sections 8.1(d) or 8.1(f) or (ii) by Seller or Buyer pursuant to Section 8.1(b) (provided,  that neither party shall have the right to terminate this Agreement pursuant to Section  8.1(b) during the pendency of a legal proceeding by the other party for specific  performance pursuant to Section 9.9, and Buyer shall not be permitted to pay the  Termination Fee during the pendency of any such a legal proceeding by Seller) at a time  when this Agreement was terminable by Seller pursuant to Section 8.1(d) (determined  without regard to any applicable cure period otherwise available thereunder) or Section  8.1(f), then, in either case, Buyer shall promptly, but in no event later than five Business  Days after the date of such termination, pay or cause to be paid to Seller or its  designees an amount equal to $2,500,000 (the “Termination Fee”) by wire transfer of  immediately available funds.  If Buyer fails to pay the Termination Fee when due, and, in  order to obtain such payment, Seller or its Affiliates commence an Action that results in a  judgment against Buyer for the Termination Fee, Buyer shall pay to Seller, together with  the Termination Fee, (A) interest on the Termination Fee from the date of termination of  this Agreement at a rate per annum equal to the rate per annum published in the Wall  Street Journal from time to time as the prime lending rate prevailing during any relevant  period plus 4.0% and (B) Seller’s costs and expenses (including reasonable attorneys’  fees) in connection with such Action.  Without limiting Section 9.9, solely for purposes of  establishing the basis for the amount thereof, and without in any way increasing the  amount of the Termination Fee or expanding the circumstances in which the Termination  Fee is to be paid, it is agreed that the Termination Fee is a liquidated damage, and not a  penalty. For the avoidance of doubt, in no event shall Buyer be required to pay the  Termination Fee on more than one occasion.         (c)   In the event that this Agreement is terminated by Seller pursuant to  Section 8.1(g), then Seller shall promptly, but in no event later than five Business Days  after the date of such termination, pay or cause to be paid to Buyer or its designees an  amount equal to $2,500,000 (the “Break Fee”) by wire transfer of immediately available  funds.  If Seller fails to pay the Break Fee when due, and, in order to obtain such  payment, Buyer or its Affiliates commence an Action that results in a judgment against  Seller for the Break Fee, Seller shall pay to Buyer, together with the Break Fee, (A)  interest on the Break Fee from the date of termination of this Agreement at a rate per  annum equal to the rate per annum published in the Wall Street Journal from time to  time as the prime lending rate prevailing during any relevant period plus 4.0% and (B)  Buyer’s costs and expenses (including reasonable attorneys’ fees) in connection with  such Action.  Without limiting Section 9.9, solely for purposes of establishing the basis  for the amount thereof, and without in any way increasing the amount of the Break Fee  or expanding the circumstances in which the Break Fee is to be paid, it is agreed that  the Break Fee is a liquidated damage, and not a penalty.  For the avoidance of doubt, in  no event shall Seller be required to pay the Break Fee on more than one occasion.         (d)   Any claim or cause of action based upon, arising out of, or related to this  Agreement, the Debt Commitment Letter or any other Transaction Agreement may only  be brought against Persons that are expressly named as parties hereto or thereto,  respectively.  Notwithstanding anything herein to the contrary, each of the Seller and the  Company (and their respective former or current stockholders, directors, officers,                                    52                 

 

employees, Affiliates, attorneys, accountants or agents) hereby waives any rights or  claims against any Debt Financing Source with respect to the Debt Financing whether at  law or equity, in contract, tort or otherwise.  No former, current or future direct or indirect  equity holders, controlling Persons, stockholders, directors, officers, employees,  members, managers, agents, Affiliates, general or limited partners or assignees of  Seller, Buyer or any former, current or future direct or indirect equity holder, controlling  Person, stockholder, director, officer, employee, member, manager, general or limited  partner, Affiliate, agent or assignee of any of the foregoing shall have any liability or  obligation for any of the representations, warranties, covenants, agreements, obligations  or liabilities of Seller or Buyer under this Agreement or of or for any Action based on, in  respect of, or by reason of, the transactions contemplated hereby (including the breach,  termination or failure to consummate such transactions), in each case, whether based  on contract, tort or strict liability, by the enforcement of any assessment, by any legal or  equitable proceeding, by virtue of any applicable Law or otherwise and whether by or  through attempted piercing of the corporate or partnership veil, by or through a claim by  or on behalf of any party or other Person or otherwise.  In no event will the Seller be  entitled to specific performance of this Agreement if Buyer pays the Termination Fee in  accordance with the terms of this Agreement, and the Seller’s receipt of the Termination  Fee pursuant to and in accordance with Section 8.1(b) or the right to specific  performance of this Agreement by Seller pursuant to Section 9.9 shall be the sole and  exclusive remedies of the Seller and its former, current, or future stockholders, directors,  officers, employees, Affiliates, attorneys, accountants or agents, and in no event shall  any of the foregoing Persons be entitled to seek or obtain any recovery or judgment in  excess of the Termination Fee pursuant to Section 8.1(b), against Buyer, any Debt  Financing Sources, and any of their respective former, current, or future general or  limited partners, stockholders, managers, members, directors, officers, employees,  Affiliates, Representatives, attorneys, accountants or agents, or, any of their respective  assets for any liability or Damages suffered with respect to this Agreement and the  transactions contemplated under this Agreement (including any breach or failure to  perform by Buyer, whether willfully, intentionally, unintentionally or otherwise), the  termination of this Agreement, the failure of the transactions contemplated under this  Agreement to be consummated for any reason or no reason or any breach of this  Agreement by Buyer, and upon payment of the Termination Fee, none of Buyer, the  Debt Financing Sources, or any of their respective former, current, or future general or  limited partners, stockholders, managers, members, directors, officers, employees,  Affiliates, agents or Representatives shall have any further liability or obligation to the  Seller relating to or arising out of this Agreement or the transactions contemplated under  this Agreement or any claims or actions under applicable Law arising out of any such  breach, termination or failure.  For the avoidance of doubt (and notwithstanding anything  to the contrary), the Buyer shall not have the right to terminate this Agreement pursuant  to Section 8.1(b) (nor shall Buyer be permitted to pay the Termination Fee) during the  pendency of a legal proceeding by the other party for specific performance pursuant to  Section 9.9.         (e)   The parties hereto acknowledge that (i) the agreements contained in this  Section 8.2 are an integral part of the transactions contemplated by this Agreement, (ii)  in light of the difficulty of accurately determining actual damages with respect to the  foregoing, upon any such termination of this Agreement under the circumstances set  forth in Sections 8.2(b) and 8.2(c), the right to such payment constitutes a reasonable  estimate of the Losses that will be suffered by reason of any such termination of this                                    53                 

 

      Agreement and constitutes liquidated damages (and not a penalty), and that, without        these agreements, the parties would not enter into this Agreement.                               ARTICLE IX  REMEDIES         9.1   Survival.  The representations, warranties, covenants and agreements of Seller  and Buyer contained in this Agreement (including the Schedules and exhibits attached hereto  and the certificates delivered pursuant hereto) will survive the Closing but only to the extent  specified in this Section 9.1.               (a)   All covenants and agreements contained in this Agreement (including the        Schedules and exhibits attached hereto and the certificates delivered pursuant hereto)        that contemplate performance thereof prior to the Closing will survive until the 12-month        anniversary of the Closing Date.  All covenants and agreements contained in this        Agreement (including the Schedules and exhibits attached hereto and the certificates        delivered pursuant hereto) that contemplate performance thereof following the Closing        will survive the Closing until the expiration of the statute of limitations following the date        all performance thereunder was due to be performed.               (b)   The representations and warranties of Seller contained in this Agreement        (including the Schedules and exhibits attached hereto and the certificates delivered        pursuant hereto) will survive the Closing Date until the 12-month anniversary of the        Closing Date, provided, however that notwithstanding the foregoing, (i) the Fundamental        Reps will survive the Closing Date until the three year anniversary of the Closing Date;        and (ii) the representations and warranties set forth in Sections 4.7 (Taxes) (the “Tax        Rep”), 4.13 (Employee Benefit Plans) and 4.26 (Government Contracts) will survive the        Closing Date until the six year anniversary of the Closing Date.  Following the applicable        expiration date, all representations and warranties and any claim for indemnification        brought by Buyer on account thereof will terminate.               (c)   The representations and warranties of Buyer contained in this Agreement        (including the Schedules and exhibits attached hereto and the certificates delivered        pursuant hereto) will survive the Closing Date until the 12-month anniversary of the        Closing Date.  Following the applicable expiration date, all representations and        warranties and any claim for indemnification brought by Seller on account thereof will        terminate.               (d)   The ability of any Person to receive indemnification under Sections 9.2 or        9.3 shall terminate on the applicable termination date set forth in this Section 9.1, unless        such Person shall have made a claim for indemnification pursuant to Sections 9.2 or        9.3, prior to such date, as applicable.  If a Person has made a claim for indemnification        pursuant to Sections 9.2 or 9.3 prior to such termination date, then such claim (and only        such claim for such Loss incurred), if then unresolved, shall not be extinguished by the        passage of the deadlines set forth in this Section and shall survive until final        determination in accordance with this Article IX.         9.2   Indemnification by Buyer.  Subject to the limitations set forth in this Article IX  (including the provisions of Section 9.1), from and after the Closing, Buyer will indemnify and  hold harmless Seller and its successors and permitted assigns, and the officers, employees,  directors, managers, members, partners and equityholders of Seller (collectively, the “ Seller  Indemnitees”) from and against, and will pay to the Seller Indemnitees the amount of, any and                                          54    

 

all losses, liabilities, claims, damages, penalties, fines, judgments, awards, settlements, costs,  fees (including reasonable investigation fees), expenses (including reasonable attorneys’ fees),  disbursements and causes of action of every kind and nature (collectively, “Losses”) suffered or  incurred by any of the Seller Indemnitees following the Closing to the extent such Losses result  from or arise out of:  (a) any breach of or inaccuracy in the representations and warranties of  Buyer contained in this Agreement (including the Schedules and exhibits attached hereto and  the certificates delivered pursuant hereto); or (b) any breach of the covenants or agreements of  Buyer contained in this Agreement (including the Schedules and exhibits attached hereto and  the certificates delivered pursuant hereto).         9.3   Indemnification by Seller.  Subject to the limitations set forth in this Article IX  (including the provisions of Section 9.1), from and after the Closing, Seller will indemnify and  hold harmless Buyer and its successors and permitted assigns, and the officers, employees,  directors, managers, members, partners and equityholders of Buyer (collectively, the “Buyer  Indemnitees”) from and against, and will pay to the Buyer Indemnitees the amount of, any and  all Losses suffered or incurred by any of the Buyer Indemnitees following the Closing to the  extent such Losses result from or arise out of:  (a) any breach of or inaccuracy in the  representations and warranties of Seller contained in this Agreement (including the Schedules  and exhibits attached hereto and the certificates delivered pursuant hereto); (b)  any breach of  the covenants or agreements of Seller contained in this Agreement (including the Schedules  and exhibits attached hereto and the certificates delivered pursuant hereto); (c) Seller Taxes  (including each of the items set forth on Schedule 4.7); (d) any of the matters set forth on  Schedule 9.3; and (e) the Specified Matter, as such term is defined in the R&W Policy.         9.4   Exclusive Remedy.  The parties hereto agree that, from and after the Closing,  other than in the case of fraud, the sole and exclusive remedies of the parties for any Losses  based upon, arising out of or otherwise in respect of the matters set forth in this Agreement  (including representations, warranties, covenants and agreements and certificates delivered  pursuant to this Agreement) and the transactions contemplated hereby, whether based in  contract, tort, equity or Law, are the indemnification and reimbursement obligations of the  parties set forth in this Article IX and the R&W Policy; provided that notwithstanding the  foregoing, the parties agree that recovery with respect to disputes referenced in Section 2.3  shall not be limited by this Section 9.4.  The provisions of this Section 9.4 shall not, however,  prevent or limit a cause of action under Section 9.9 to obtain an injunction or injunctions to  prevent breaches of this Agreement or to enforce specifically the terms and provisions hereof.         9.5   Limitations on Indemnification Payments to Seller Indemnitees.   Notwithstanding anything in this Agreement to the contrary (including Section 9.2), the right of  the Seller Indemnitees to indemnification is limited as follows:               (a)   The Seller Indemnitees’ right to indemnification pursuant to Section 9.2        on account of any Losses will be reduced by all insurance or other third party        indemnification proceeds actually received by the Seller Indemnitees.  The Seller        Indemnitees shall use reasonable best efforts to claim and recover any Losses suffered        by the Seller Indemnitees under all such insurance policies and other third party        indemnities.  If the Seller Indemnitees receive any payment from the Buyer in respect of        any Losses pursuant to Section 9.2 and subsequently recover all or a part of such        Losses from a third party under any insurance policy, indemnity, reimbursement        arrangement, or contract, such payment from the third party shall be distributed:  (i) first,        to the Seller Indemnitees in the amount of any deductible or similar amount required to        be paid by the Seller Indemnitees in connection with such insurance policy, indemnity,                                          55    

 

      reimbursement arrangement or contract, (ii) second, to the Buyer in the amount paid to        the Seller Indemnitees by the Buyer in respect of such Losses, and (iii) the balance, if        any, to the Seller Indemnitees.  No payment shall be due under this Section 9.5(a) to        the Buyer to the extent that the Losses with respect to which the payment was received        from the third party were determined net of insurance or other recoveries pursuant to this        Section 9.5(a).               (b)   The Seller Indemnitees will not be entitled to indemnification pursuant to        Section 9.2 for exemplary damages or punitive damages, other than as may be payable        to a third Person under a Third Party Claim.          9.6   Limitations on Indemnification Payments to Buyer Indemnitees.   Notwithstanding anything in this Agreement to the contrary (including Section 9.3), the right of  the Buyer Indemnitees to indemnification is limited as follows:               (a)   The Buyer Indemnitees will be entitled to indemnification pursuant to        Section 9.3 on account of any Losses arising with respect to the matters described in        Section 9.3(a) to the extent (but only to the extent) that the aggregate amount of all        Losses suffered by the Buyer Indemnitees with respect to such matters exceeds        $675,000 (the “Indemnification Basket”) after which point Seller will be liable only for        Losses in excess of such amount; provided that the Indemnification Basket shall be        inapplicable in the case of a breach of any Fundamental Rep or any breach in the case        of fraud.               (b)   In no event will Seller’s liability to Buyer Indemnitees pursuant to Section        9.3 on account of any Losses arising with respect to the matters described in Section        9.3(a) (other than the Fundamental Reps, the Tax Rep or any breach in the case of        fraud) exceed $15,000,000, in the aggregate.               (c)   In no event will Seller’s liability to Buyer Indemnitees pursuant to Section        9.3 on account of any Losses arising with respect to the matters described in Section        9.3(e) exceed $14,500,000, in the aggregate.               (d)   In no event will Seller’s liability to Buyer Indemnitees under this        Agreement exceed, in the aggregate, the proceeds received from Buyer in the form of        cash pursuant to this Agreement (including any adjustment to Purchase Price, as finally        determined pursuant to Section 2.3(e)).               (e)   The Buyer Indemnitees’ right to indemnification pursuant to Section 9.3        on account of any Losses will be reduced by all insurance (including the R&W Policy) or        other third party indemnification proceeds actually received by the Buyer Indemnitees.         Buyer shall use reasonable best efforts to claim and recover any Losses suffered by the        Buyer Indemnitees under all such insurance policies and other third party indemnities.  If        the Buyer Indemnitees receive any payment from the Seller in respect of any Losses        pursuant to Section 9.3 and subsequently recover all or a part of such Losses from a        third party under any insurance policy, indemnity, reimbursement arrangement, or        contract, such payment from the third party shall be distributed:  (i) first, to the Buyer        Indemnitees in the amount of any deductible or similar amount required to be paid by the        Buyer Indemnitees in connection with such insurance policy, indemnity, reimbursement        arrangement or contract, (ii) second, to the Seller in the amount paid to the Buyer        Indemnitees by the Seller in respect of such Losses, and (iii) the balance, if any, to the                                          56    

 

      Buyer Indemnitees.  No payment shall be due under this Section 9.6(e) to the Seller to        the extent that the Losses with respect to which the payment was received from the third        party were determined net of insurance or other recoveries pursuant to this Section        9.6(e).               (f)   The Buyer Indemnitees will not be entitled to indemnification pursuant to        Section 9.3 for Losses to the extent specifically accounted for in the calculation of the        Purchase Price, as finally determined pursuant to Section 2.3.               (g)   Both for purposes of determining breach and for calculating the amount of        any Loss arising from a breach of any representation or warranty subject to        indemnification under Section 9.3(a) (other than with respect to a breach of the        representations and warranties set forth in clause (y) of Section 4.19), all “material,”        “materially,” “in all material respects,” “Material Adverse Effect,” and other like        qualifications shall be disregarded.               (h)   No Buyer Indemnitee shall be entitled to be compensated more than once        for the same Loss.               (i)   Notwithstanding anything contained in Article IX to the contrary, in the        event of any inconsistency between the indemnification provisions contained in this        Article IX and the R&W Policy, the R&W Policy shall control with respect to claims made        pursuant to the R&W Policy.               (j)   The Buyer Indemnitees’ right to indemnification pursuant to Section 9.3        on account of any Loss will be reduced by an amount equal to the net present value of        any tax benefit actually received by the Buyer Indemnitees taking into account (a) any        actual reduction in cash Taxes payable by the Buyer Indemnitees (or an Affiliate thereof)        as a result of the incurrence or payment of such Loss and (b) the reduction or loss of any        deduction resulting from a reduced asset basis attributable to the indemnification        payment being treated as a reduction in the purchase price, in each case, in the Tax        period in which such Loss is paid or incurred or in the immediately succeeding Tax        period thereafter, determined on a “with and without” basis.               (k)   The Buyer Indemnitees will not have the right to indemnification under        this Agreement for any Losses to the extent such Losses are based on Taxes: (i)        attributable to taxable periods (or portions thereof) beginning after the Closing Date,        other than by reason of a breach of the representations or warrants contained in        Sections 4.7(j), 4.7(k), 4.7(l) or the covenants in Article X; (ii) resulting from        transactions or actions taken by Buyer, the Company, the Subsidiary or any of their        respective Affiliates on the Closing Date after the Closing that are not specifically        contemplated by this Agreement and are outside the ordinary course of business        consistent with past practice; or (iii) that result from Buyer’s breach of any of the        covenants contained in Article X.         9.7   Order of Recovery.  Notwithstanding anything in this Agreement to the contrary,  but subject to the limitations set forth in this Article IX, except in the case of fraud, any claim for  indemnification by the Buyer Indemnitees shall be recovered in the following orders of priority:               (a)   any Losses claimed by Buyer Indemnitees pursuant to Section 9.3(a)        other than breaches of the Fundamental Reps, the Tax Rep and claims of fraud shall:  (i)                                          57    

 

first, be applied against the Indemnification Basket, and shall not be recoverable, unless  and until the aggregate amount of Losses sustained by the indemnified party under  Section 9.3(a) exceeds the Indemnification Basket, and then only to the extent of such  excess and (ii) second, be recoverable from the R&W Policy in accordance with the  terms and subject to the limitations set forth therein, which shall be the sole recourse for  all breaches of representations and warranties of Seller (other than the Fundamental  Reps, the Tax Rep and claims for fraud);         (b)   any Losses claimed by Buyer Indemnitees pursuant to Section 9.3(a) for  breaches of the Fundamental Reps shall:  (i) first, be recoverable from the Adjustment  Escrow Fund (to the extent then available) in an amount equal to the difference between  (A) the Indemnification Basket less (B) the total Losses already applied to the  Indemnification Basket pursuant to Sections 9.7(a), 9.7(c) or 9.7(e) at the time of  recovery, (ii) second, be recoverable from the R&W Policy in accordance with the terms  and subject to the limitations set forth therein, (iii) third, be recoverable from the  Adjustment Escrow Fund (to the extent then available), and (iv) finally, be recoverable  directly from Seller solely for Losses resulting therefrom that are in excess of the  amounts then remaining in the Adjustment Escrow Fund, together with the amounts  recovered under the R&W Policy limit;         (c)   any Losses claimed by Buyer Indemnitees pursuant to Section 9.3(a) for  breaches of the Tax Rep shall:  (i) first, be applied against the Indemnification Basket,  and shall not be recoverable, unless and until the aggregate amount of Losses sustained  by the indemnified party under Section 9.3(a) exceeds the Indemnification Basket, and  then only to the extent of such excess, (ii) second, be recoverable from the R&W Policy  in accordance with the terms and subject to the limitations set forth therein, (iii) third, be  recoverable from the Adjustment Escrow Fund (to the extent then available), and (iv)  finally, be recoverable directly from Seller solely for Losses resulting therefrom that are  in excess of the amounts then remaining in the Adjustment Escrow Fund, together with  the amounts recovered under the R&W Policy limit;          (d)   any Losses claimed by Buyer Indemnitees pursuant to Sections 9.3(b),  9.3(c) and 9.3(d) shall be recoverable first, from the Adjustment Escrow Fund (to the  extent then available) and second, from Seller directly, but subject to the limitations in  Section 9.6; and         (e)   any Losses claimed by Buyer Indemnitees pursuant to Section 9.3(e)  shall:  (i) first, be recoverable from the Adjustment Escrow Fund (to the extent then  available) in an amount equal to the difference between (A) the Indemnification Basket  less (B) the total Losses already applied to the Indemnification Basket pursuant to  Sections 9.7(a), 9.7(b) or 9.7(c) at the time of recovery, (ii) second, be recoverable from  the R&W Policy in accordance with the terms and subject to the limitations set forth  therein in respect of the Specified Matter, (iii) third, be recoverable from the Adjustment  Escrow Fund (to the extent then available), and (iv) finally, be recoverable directly from  Seller solely for Losses resulting therefrom that are in excess of the amounts then  remaining in the Adjustment Escrow Fund, together with the amounts recovered under  the R&W Policy in respect of the Specified Matter.                                    58                 

 

9.8   Procedures.         (a)   Notice of Losses by Seller Indemnitee.  Subject to the limitations set forth  in this Article IX,  if any Seller Indemnitee believes in good faith belief that it has a claim  for indemnification pursuant to Section 9.2  (a “Claim”), then Seller shall, as soon as  reasonably practicable after it becomes aware of such Claim, give written notice thereof  (a “Claims Notice”) to Buyer.  A Claims Notice must describe the Claim in reasonable  detail and set forth Seller’s good faith calculation of the Losses incurred or that may be  incurred by the applicable Seller Indemnitee with respect thereto (or good faith estimate  thereof, in the event amount cannot be reasonably determined at the time).  No delay in  or failure to give a Claims Notice by Seller to Buyer pursuant to this Section 9.8(a) will  adversely affect any of the other rights or remedies that Seller has under this  Agreement, or alter or relieve Buyer of its obligation to indemnify the applicable Seller  Indemnitee, except and only to the extent that Buyer is materially prejudiced thereby.   Buyer shall respond to Seller (a “Claim Response”) within 30 days (the “Response  Period”) after the date that the Claims Notice is sent by Seller.  Any Claim Response  must specify whether or not Buyer disputes the Claim described in the Claims Notice.  If  Buyer fails to give a Claim Response within the Response Period, then Buyer will be  deemed not to dispute the Claim described in the related Claims Notice.  If Buyer elects  not to dispute a Claim described in a Claims Notice, whether by failing to give a timely  Claim Response or otherwise, then the amount of Losses alleged in such Claims Notice  will be conclusively deemed to be an obligation of Buyer, and Buyer shall pay, in cash, to  Seller within 15 days after the last day of the applicable Response Period the amount  specified in the Claims Notice.  If Buyer delivers a Claim Response within the Response  Period indicating that it disputes one or more of the matters identified in the Claims  Notice, then Buyer and Seller shall promptly meet and use their reasonable efforts to  settle the dispute.  If Buyer and Seller are unable to reach agreement within 30 days  after the conclusion of the Response Period, then either Buyer or Seller may resort to  other legal remedies, subject to the limitations set forth in this Article IX.         (b)   Notice of Losses by Buyer Indemnitee.               (i)   Claims Notice.  Subject to the limitations set forth in this        Article IX, if any Buyer Indemnitee believes in good faith that it has a claim for        indemnification pursuant to Section 9.3 (a “Buyer Claim”), then Buyer shall, as        soon as reasonably practicable after it becomes aware of such Buyer Claim,        notify Seller of such Buyer Claim by means of a written notice describing the        Buyer Claim in reasonable detail and setting forth Buyer’s good faith calculation        of the Losses incurred or that may be incurred by the applicable Buyer        Indemnitee with respect thereto (or good faith estimate thereof, in the event        amount cannot be reasonably determined at the time) (a “Buyer Claim Notice”        and, together with a Claims Notice, a “Notice”).  No delay in or failure to give a        Claims Notice by Buyer to Seller pursuant to this Section 9.8(b)(i) will adversely        affect any of the other rights or remedies that Buyer has under this Agreement, or        alter or relieve Seller of its obligation to indemnify the applicable Buyer        Indemnitee, except and only to the extent that Seller is materially prejudiced        thereby.  If, by the 30th day following receipt by Seller of a Buyer Claim Notice        (the “Dispute Period”), Buyer has not received from Seller notice in writing that        Seller objects to the Buyer Claim (or the amount of Losses set forth therein)        asserted in such Buyer Claim Notice (a “Dispute Notice”), then then the amount        of Losses alleged in such Buyer Claims Notice will be conclusively deemed to be                                    59                 

 

      an obligation of Seller and Seller shall pay, in cash, to Buyer the amount of        Losses specified in the Buyer Claim Notice, subject to the limitations contained in        this Article IX.               (ii)  Disputes.  If Seller delivers a Dispute Notice to Buyer within the        Dispute Period, Buyer and Seller shall promptly meet and use their reasonable        best efforts to settle the dispute as to whether and to what extent the Buyer        Indemnitees are entitled to reimbursement on account of such Buyer Claim.  If        Buyer and Seller are able to reach agreement within 30 days after Buyer        receives such Dispute Notice, then Seller shall pay in cash, to Buyer an amount        in accordance with such agreement, subject to the limitations contained in this        Article IX.  If Buyer and Seller are unable to reach agreement within 30 days        after Buyer receives such Dispute Notice, then either Buyer or Seller may resort        to other legal remedies, subject to the limitations set forth in this Article IX.  For        all purposes of this Article IX (including those pertaining to disputes under        Section 9.8(a) and this Section 9.8(b)), Buyer and Seller shall cooperate with        and make available to the other party and its respective representatives all        information, records and data, and shall permit reasonable access to its facilities        and personnel, as may be reasonably required in connection with the resolution        of such disputes; provided, however, that no party shall be required to take any        action or provide access to any information (x) that would require such party        (inclusive of the Company and the Subsidiary) to disclose information subject to        attorney-client privilege, that would conflict with any confidentiality obligations to        which such party is bound or that would violate any applicable Law, or (y) related        to any dispute or pending or threatened litigation between any of the parties and        such information is reasonably pertinent thereto.         (c)   Opportunity to Defend Third Party Claims.  Subject to Section 10.3, in the  event of any claim by a third party against a Buyer Indemnitee or Seller Indemnitee for  which indemnification is available hereunder (a “Third Party Claim”), Buyer or Seller, as  the party from which indemnification is sought, as applicable (each an “Indemnifying  Party”), has the right, exercisable by written notice to the other party (the “Claiming  Party”), within 60 days of receipt of a Notice from such Claiming Party, to assume and  conduct the defense of such claim with counsel selected by the Indemnifying Party and  reasonably satisfactory to the Claiming Party; provided, however, that the Indemnifying  Party shall not be entitled to assume the defense of any Third Party Claims (and, subject  to the limitations contained herein, shall be liable for the reasonable fees and expenses  of counsel incurred by the other party in defending such Third Party Claim): (i) if the  Third Party Claim seeks an order, injunction or other equitable relief against the Claiming  Party that cannot be separated from any related claim for money damages; (ii) in the  case of a Third Party Claim against any Buyer Indemnitee, (x) if the assumption of the  defense by the Indemnifying Party could cause any Buyer Indemnitee to lose coverage  under the R&W Policy or (y) if a Buyer Indemnitee or any insurer under the R&W Policy  is required to assume the defense of such Third Party Claim pursuant to the R&W  Policy; or (iii) if in the event the Third Party Claim were to be unfavorably decided, the  Claiming Party would be reasonably likely to be liable for Losses in excess of the  amounts reasonably expected to be received from the Indemnifying Party.  If the  Indemnifying Party is permitted to and has assumed such defense as provided in this  Section 9.8(c), then the Indemnifying Party will not be liable for any legal expenses  subsequently incurred by any Claiming Party or Indemnitee in connection with the  defense of such Third Party Claim.  If the Indemnifying Party does not assume the                                    60                 

 

defense of any Third Party Claim in accordance with this Section 9.8(c), whether  because the assumption of such defense by the Indemnifying Party would be  inappropriate due to an actual or potential conflict of interest or otherwise, then the  Claiming Party may continue to defend such claim at the sole cost of the Indemnifying  Party (subject to the limitations set forth in this Article IX) and the Indemnifying Party  may still participate in, but not control, the defense of such Third Party Claim at the  Indemnifying Party’s sole cost and expense.  Neither party will consent to a settlement  of, or the entry of any judgment arising from, any such Third Party Claim, without the  prior written consent of the other party (such consent not to be unreasonably withheld,  conditioned or delayed), except that no consent of the Seller shall be required if failure to  settle such Third Party Claim would reasonably be expected to cause any Buyer  Indemnitee to lose coverage under the R&W Policy.  In any such Third Party Claim, the  party responsible for the defense of such claim (the “Responsible Party”) shall, to the  extent reasonably requested by the other party, keep such other party informed as to the  status of such claim, including all settlement negotiations and offers.  With respect to any  Third Party Claim, the Claiming Party shall use reasonable best efforts to make available  to the Responsible Party and its representatives all books and records of Claiming Party  (including, if the Buyer is the Claiming Party, the Company and the Subsidiary) relating  to such Third Party Claim and shall cooperate with the Responsible Party in the defense  of the third party claim (at the expense of the Responsible Party); provided, however,  that no party shall be required to provide access to any information or take any other  action that would constitute a waiver of the attorney-client privilege or that would  contravene any Law or binding agreement entered into prior to the date of this  Agreement.  Notwithstanding anything to the contrary in this Agreement, Seller and its  Affiliates, as the Indemnifying Party, shall have the sole right to control any Third Party  Claim for Losses arising pursuant to Section 9.3(e).         (d)   Article X, and not this Section 9.8, shall control with respect to any Tax  Claims.   9.9   Specific Performance.           (a)   Each party’s obligation under this Agreement is unique.  If any party  hereto should breach its covenants or agreements under this Agreement, the parties  hereto each acknowledge that it would be extremely impracticable to measure the  resulting damages; accordingly, subject to Section 9.9(b), the non-breaching party or  parties, in addition to any other available rights or remedies they may have under the  terms of this Agreement, may sue in equity for specific performance or to obtain an  injunction or injunctions to prevent breaches of this Agreement, and each party hereto  expressly waives the defense that a remedy in damages will be adequate and any  requirement under any Law to post security as a prerequisite to obtaining equitable  relief.         (b)   Notwithstanding the foregoing, it is acknowledged and agreed that Seller  shall only be entitled to specific performance or other equitable remedies to enforce  Buyer’s obligations to cause the Equity Financing to be funded and to consummate the  transactions contemplated by this Agreement, in the event that each of the following  conditions has been satisfied: (i) all of the conditions set forth in Section 7.2 have been  satisfied or waived (other than those conditions that by their nature are to be satisfied by  actions taken at the Closing, each of which is capable of being satisfied, other than  those conditions that have not been satisfied as a result of Buyer’s breach of this                                    61                 

 

      Agreement or the Commitment Letters), (ii) Buyer fails to complete the Closing on the        date the Closing should have occurred in accordance with Section 3.1, (iii) the Debt        Financing has been funded or will be funded at the Closing if the Equity Financing is        funded at the Closing and (iv) Seller has confirmed irrevocably in writing that the Closing        will occur if specific performance is granted and the Debt Financing and Equity        Financing are funded.                 (c)   If a court of competent jurisdiction has declined to specifically enforce the        obligations of Buyer to take all actions under this Agreement up to and including the        consummation of the Closing pursuant to a claim for specific performance brought        against Buyer pursuant to this Section 9.9, then the sole and exclusive remedy of Seller,        will be payment of the Termination Fee in accordance with the terms and conditions of        Section 8.2 (and the payment of any amounts pursuant to Section 6.10(d), if        applicable).  For the avoidance of doubt, while Seller may pursue both a grant of specific        performance to the extent permitted by this Section 9.9 and the payment of the        Termination Fee (and the payment of any amounts pursuant to Section 6.10(d), if        applicable), under no circumstances shall Seller be permitted or entitled to receive both        (i) a grant of specific performance to require Buyer to consummate the Closing (and the        payment of any fees, costs and expenses (including legal fees) incurred by Seller and its        Affiliates in connection with Seller’s pursuit of such grant of specific performance, which        Buyer shall pay to Seller if Seller is actually granted specific performance in accordance        with this Section 9.9) and (ii) payment of the Termination Fee (and the payment of any        amounts pursuant to Section 6.10(d), if applicable).         9.10  Reserved.         9.11  Adjustment to Purchase Price.  All indemnification payments made pursuant to  this Article IX will be treated as an adjustment to the Purchase Price unless otherwise required  by applicable Law.         9.12  Seller Parent Guarantee.  Seller Guarantor hereby irrevocably, absolutely and  unconditionally guarantees, as a primary obligation and not as a surety, to Buyer the payment  and performance of the obligations of the Seller under Articles II and IX of this Agreement.   This guaranty is an absolute, unconditional and continuing guaranty of payment and  performance and not of collectability, irrespective of the validity, legality or enforceability of this  Agreement or any Transaction Document.  Seller Guarantor waives promptness, diligence,  presentment, demand, protest, notice of acceptance, notice of any obligations incurred and all  other notices of any kind, all defenses which may be available by virtue of any valuation, stay,  moratorium Law or other similar Law now or hereafter in effect, any right to require the  marshalling of assets of the Buyer, any of its Affiliates or any other entity or other  person  primarily or secondarily liable with respect to any of the guaranteed obligations, and all  suretyship defenses generally.  If any payment in respect of any of the guaranteed obligations is  rescinded after receipt by the Buyer, the guaranty hereunder shall be automatically reinstated  as if no such payment had ever been made.  Seller Guarantor agrees that Buyer shall not be  required to prosecute collection, enforcement or other remedies against Seller or to enforce or  resort to any rights or remedies pertaining thereto, before calling on Seller Guarantor for  payment or performance.  Seller Guarantor hereby waives any and all notice of the creation,  renewal, extension or accrual of the obligations of the Seller Guarantor set forth in this  Agreement and notice of or proof of reliance by Buyer upon this Section 9.12 or acceptance of  this Section 9.12.  The guaranty provided by the Seller Guarantor pursuant to this Section 9.12  is an unconditional guarantee of payment and not of collection and is in no way conditioned                                          62    

 

upon any requirement that the Buyer or any other Person first attempt to collect any amounts  from the Seller or resort to any security or other means of collecting payments required to be  made by the Purchaser hereunder. Seller Guarantor acknowledges that it will receive  substantial direct and indirect benefits from the transactions contemplated by this Agreement  and that the waivers set forth in this Section 9.12 are made knowingly in contemplation of such  benefits.  Seller Guarantor represents and warrants that (a) it is duly organized, validly existing  and in good standing under the Laws of the State of Delaware, (b) it has all requisite corporate  power and authority to execute, deliver and perform its obligations under this Agreement and  this Agreement has been duly executed and delivered by it and, assuming due authorization,  execution and delivery by the other parties hereto, constitutes a valid and binding obligation of  Seller Guarantor, enforceable against Seller Guarantor in accordance with its terms (except as  may be limited by General Enforceability Exceptions), and (c) the execution, delivery and  performance of this Agreement does not contravene any Law to which Seller Guarantor is  subject or result in any breach of any Contract to which Seller Guarantor is a party, other than  such contravention or breach that would not be material to Seller Guarantor or limit its ability to  carry out the terms and provisions of this Agreement.  Any agreement or arrangement with  respect to, or effecting, an asset sale, distribution or liquidation of all or substantially all of Seller  Guarantor’s assets in one or as series of transactions shall expressly provide for the assumption  of the obligations of Seller Guarantor hereunder by the counterparty(ies) to such transaction.                               ARTICLE X  TAX MATTERS         10.1  Straddle Periods.  The Seller and the Buyer shall, if necessary and to the extent  permitted by applicable Law, cause elections to be filed with the relevant tax authorities to treat  the taxable year of the Company and the Subsidiary as terminated on the Closing Date.   Nevertheless, whenever it is necessary to determine the liability for Taxes of the Company and  the Subsidiary for a Straddle Period for purposes of this Agreement, any Taxes of the Company  or the Subsidiary for any Straddle Period shall be apportioned between the portion of such  Straddle Period up to and including the Closing Date and the portion of such Straddle Period  that begins after the Closing Date, (a) in the case of Taxes other than (i) sales, use, value  added, goods and service and other similar Taxes, (ii) employment Taxes, (iii) withholding  Taxes, and (iv) any Tax based on or measured by income, receipts or profits, on a per diem  basis and, (b) in the case of (i) sales, use, value added, goods and services and other similar  Taxes, (ii) employment Taxes, (iii) withholding Taxes, and (iv) any Tax based on or measured  by income, receipts or profits, on a “closing of the books” method as if the relevant Tax period  ended as of the close of business on the Closing Date.  For purposes of this Section 10.1, any  exemption, deduction, credit or other item that is calculated on an annual basis without regard to  actual economic activity shall be allocated to the portion of the Straddle Period in the same  manner as that set forth in clause (a) of this Section 10.1.         10.2  Cooperation; Audits; Tax Returns.               (a)   In connection with the preparation of Tax Returns, the conduct of any Tax        audit or examinations, and any administrative or judicial proceeding relating to Tax,        Buyer and Seller shall cooperate fully with each other, as and to the extent reasonably        requested by the other party, including the furnishing or making available during normal        business hours of records, personnel (as reasonably required), books of account,        powers of attorney or other materials necessary or helpful for the preparation of such        Tax Returns, the conduct of audit examinations or the defense of claims by Taxing        Authorities as to the imposition of Taxes and any assessment or reassessment in        respect of Taxes.  Buyer shall, and shall cause the Company and the Subsidiary to,                                          63    

 

      (i) retain all books and records with respect to Tax matters pertinent to the Company and        the Subsidiary relating to any taxable period beginning before the Closing Date until the        expiration of the applicable statute of limitations (and, to the extent notified by Seller, any        extension thereof) for the respective taxable periods, and to abide by all record retention        Laws and agreements entered into with any Taxing Authority, and (ii) give Seller        reasonable written notice prior to transferring, destroying or discarding any such books        and records and shall allow Seller to take possession of such books and records.               (b)   Buyer and Seller shall, upon the other’s written request, use their        reasonable best efforts to obtain any certificate or other document from any        Governmental Authority or any other Person as may be necessary to mitigate, reduce or        eliminate any Tax that could be imposed in connection with the transactions        contemplated by this Agreement.               (c)   Seller shall prepare, or cause to be prepared, all Tax Returns of the        Company and the Subsidiary for any Tax period ending on or prior to the Closing Date        with an initial due date after the Closing Date, and Buyer shall prepare, or cause to be        prepared, all Tax Returns of the Company or the Subsidiary for any Straddle Period with        an initial due date after the Closing Date and for any Tax period beginning after the        Closing Date.  Any Tax Returns required to be prepared pursuant to this Section 10.2(c)        for a Tax period ending on or before the Closing Date or any Straddle Period shall be        prepared in a manner consistent with the past practice of Seller except as required by        applicable Law or this Agreement.  At least 30 days prior to the due date of any such        Tax Return (after applicable extensions) that is an income Tax Return, or 15 days (or        such short period as circumstances or the nature of the Tax Return may reasonably        require) prior to the due date of any other such Tax Return (after applicable extensions)        that is material but that is not an income tax Return, the party responsible for preparing        such Tax Return will deliver such Tax Return to the other party for such other party’s        review and comment, and the preparing party will incorporate in any such Tax Return        any reasonable comments provided in writing by the other party within 10 days following        receipt of such Tax Return.  For the avoidance of doubt, this Section 10.2 shall not        apply with respect to any Consolidated Tax Returns, which such Tax Returns shall be        prepared and filed by Seller Guarantor.               (d)   Buyer shall file or cause to be filed all Tax Returns required to be        prepared pursuant to Section 10.2(c) as any such Tax Return is finally prepared in        accordance with Section 10.2(c).         10.3  Controversies.  Notwithstanding Section 9.8(c), this Section 10.3 shall control  with respect to any Tax Claims.  Buyer shall promptly notify Seller upon receipt by Buyer or any  Affiliate of Buyer of any notice of any Tax Claim from any Taxing Authority that could affect the  Tax liability of Seller, including as a result of indemnification under this Agreement.  Seller may,  at its expense, participate in and, upon written notice to Buyer, assume the defense of any such  Tax Claim; provided, however, that the failure to provide such notice as provided in this Section  10.3 will not affect Buyer’s right to indemnification under Section 9.3 except to the extent  Seller’s defense of such matter is materially prejudiced by such failure.  If Seller assumes such  defense, then Seller shall have the authority, with respect to any Tax Claim, to represent the  interests of the Company and the Subsidiary before the relevant Taxing Authority and Seller  shall have the right to control the defense, compromise or other resolution of any such Tax  Claim, subject to the limitations contained herein, including responding to inquiries, and  contesting, defending against and resolving any assessment for additional Taxes or notice of                                          64    

 

Tax deficiency or other adjustment of Taxes of, or relating to, such Tax Claim.  Buyer shall have  the right (but not the duty) to participate in the defense of such Tax Claim and to employ  counsel, solely at its own expense, separate from the counsel employed by Seller.  Seller sha ll  not enter into any settlement of or otherwise compromise any such Tax Claim to the extent that  it adversely affects the Tax liability of Buyer, the Company, the Subsidiary or any Affiliate of the  foregoing for a post-Closing Tax period without the prior written consent of Buyer, which  consent shall not be unreasonably withheld, conditioned or delayed.  Seller shall keep Buyer  informed with respect to the commencement, status and nature of any such Tax Claim and will,  in good faith, allow Buyer to consult with Seller regarding the conduct of or positions taken in  any such proceeding.  For the avoidance of doubt, pursuant to Section 10.7, this Section 10.3  does not apply to any Tax Claim related to any Consolidated Tax Return for any Pre-Closing  Period.         10.4  Amendment of Tax Returns; Tax Elections; Contact with Tax Authorities.                 (a)   Neither Buyer nor any of its Affiliates shall amend, refile, revoke or        otherwise modify any Tax Return of the Company or the Subsidiary with respect to a        Pre-Closing Tax Period without the prior written consent of Seller, which consent shall        not be unreasonably withheld, conditioned or delayed.  None of the Buyer, the        Company, or the Subsidiary shall make or change any Tax election that is effective for        Tax purposes on or before the Closing Date, including any Tax election (i) under Section        336 or Section 338 of the Code with respect to the transactions contemplated by this        Agreement (except to the extent otherwise provided in Section 10.4(b)), and (ii) under        Treasury Regulations Section 301.7701-3 (or any similar election under applicable state,        local, or foreign Law) that is effective on or prior to the Closing Date.  None of the Buyer,        the Company, or the Subsidiary shall initiate any voluntary contact with any Taxing        Authority relating to Taxes of the Company or the Subsidiary for any Pre-Closing Tax        Period with any Taxing Authority without the prior written consent of Seller, which        consent shall not be unreasonably withheld, conditioned or delayed.               (b)   With respect to the Seller's sale of the Shares hereunder, at Buyer’s        option, Buyer and Seller shall jointly make all available elections pursuant to Section        338(h)(10) of the Code (or similar state and local elections) (collectively the “Section        338(h)(10) Elections”) in accordance with applicable Tax Laws.  To the extent any        Section 338(h)(10) Elections are made, Buyer and Seller agree to report the transfers        under this Agreement consistent with the Section 338(h)(10) Elections, and shall take no        position contrary thereto unless required to do so by applicable Law.               (c)   Buyer shall be responsible for the preparation and filing of all Section 338        Forms, including IRS Form 8023, in accordance with applicable Tax laws and the terms        of this Agreement.  The Purchase Price (and other amounts to be treated as        consideration for Tax purposes) allocated to the Subsidiary Shares pursuant to Section        2.4(a) shall be further allocated among the assets of the Subsidiary, which allocation will        be prepared and agreed to by the parties in a manner consistent with the procedures set        forth in Section 2.4.  The Seller shall deliver to the Buyer such documents or forms as        are reasonably requested by Buyer to properly complete the Section 338 Forms, at least        65 days prior to the date such Section 338 Forms are required to be filed (or, if later,        within 30 days of such request by Buyer).  The Buyer shall deliver such documents and        forms to the Seller in a form suitable for execution and in a form reasonably acceptable        to Seller at least 45 days prior to the date such Section 338 Forms are required to be        filed, and the Seller shall execute such documents or forms and deliver said executed                                          65    

 

      Section 338 Forms to the Buyer at least 20 days prior to the date such Section 338        Forms are required to be filed.         10.5  Certain Taxes.  Each of Seller and Buyer shall be responsible for the timely  payment of 50% of the Transfer Taxes incurred in connection with consummation of the  transactions contemplated by this Agreement. All necessary Tax Returns and other  documentation with respect to all such Transfer Taxes shall be prepared and filed by the party  required by law to file such Tax Returns at the expense of the Seller.  The parties shall  cooperate in connection with the filing of any such Tax Returns for Transfer Taxes, including  joining in the execution of such Tax Returns.         10.6  Refunds and Credits.  Any Tax refund received by Buyer, the Company or the  Subsidiary (or any of their respective Affiliates), and any amounts credited against any Tax in  lieu of a Tax refund to which Buyer, the Company or the Subsidiary (or any of their respective  Affiliates) shall become entitled, which refund or credit relates to a Pre-Closing Tax Period, shall  be for the account of Seller; provided, that such amounts shall be net of (i) any reasonable third- party out-of-pocket costs incurred in obtaining such refund or credit and (ii) Tax imposed on  such amount (such as federal income Taxes (if any) imposed on a state income Tax refund).  Buyer shall pay, or cause to be paid, to Seller an amount equal to such refund or credit, which  amounts shall be paid by Buyer within five Business Days after receipt or utilization thereof by  bank wire transfer of immediately available funds to the accounts designated in writing by Seller  to Buyer; provided, however, that if there is a subsequent reduction by the applicable Taxing  Authority (or by virtue of a change in applicable Tax Law) of any amounts with respect to which  a payment has been made to Seller pursuant to this Section 10.7, then Seller shall pay to Buyer  an amount equal to such reduction (net of the amounts described in clauses (i) and (ii) above)  plus interest and penalties.         10.7  Consolidated Items.  Notwithstanding anything in this Agreement to the  contrary, (i) Seller and its Affiliates will prepare and file or will cause to be prepared and filed all  Consolidated Tax Returns, (ii) none of Seller or any of its Affiliates will be required to provide  any Person with any Consolidated Tax Return or copy of any Consolidated Tax Return,  including supporting Tax workpapers, and (iii) Seller and its Affiliates will have the exclusive  right to control in all respects any Tax Claim and any other inquiry, audit, investigation,  assessment or other proceeding with respect to any Consolidated Tax Return. For the  avoidance of doubt, Seller and its Affiliates shall include the income of the Company and the  Subsidiary (including any deferred items triggered into income by Treasury Regulations Section  1.1502-13 and any excess loss account taken into income under Treasury Regulations Section  1.1502-19) on the Seller Guarantor’s Consolidated Tax Return for one or more Pre-Closing Tax  Periods.         10.8  Tax Sharing Agreements.  Any Tax sharing, Tax indemnity, Tax allocation or  similar agreement with respect to or involving the Company or the Subsidiary, other than  commercial Contracts not primarily relating to Taxes, shall be terminated as of the Closing Date  and shall have no further effect for any Taxable year (whether the current year, a future year, or  a past year).                     ARTICLE XI  MISCELLANEOUS AND GENERAL         11.1  Expenses.  Except as otherwise set forth in this Agreement, all costs and  expenses (including all legal, accounting, broker, finder or investment banker fees) incurred in  connection with this Agreement and the transactions contemplated hereby are to be paid, in the                                          66    

 

case of the Company, by the Company (if the transactions contemplated by this Agreement are  not consummated), or by Seller (if the transactions contemplated by this Agreement are  consummated), and, in the case of Buyer, by Buyer.          11.2  Successors and Assigns.  This Agreement is binding upon and inures to the  benefit of the parties hereto and their respective successors and permitted assigns, but neither  this Agreement nor any of the rights, interests or obligations hereunder may be assigned or  delegated, in whole or in part, by operation of law or otherwise, by any party hereto without the  prior written consent of the other party hereto; provided, however, that the Buyer may assign all  or any portion of its rights under this Agreement to (i) any Affiliate of the Buyer (provided that  Buyer shall remain liable for the obligations hereunder) or (ii) any lender to Buyer as security for  obligations to such lender in respect of the financing arrangements entered into in connection  with the transactions contemplated by this Agreement and any refinancings, extensions,  refundings or renewals of such financing arrangements, in each case, without the prior consent  of the Seller.         11.3  Third Party Beneficiaries.  Each party hereto intends that this Agreement does  not benefit or create any legal or equitable right or cause of action in or on behalf of any Person  other than the parties hereto and their respective successors and permitted assigns; provided  that the Debt Financing Sources shall be express third party beneficiaries of, and shall be  entitled to rely on, Sections 8.2, 11.7, 11.9, 11.10, 11.11 and this Section 11.3.         11.4  Further Assurances.  Subject to Section 6.6, (a) the parties hereto shall  execute such further instruments and take such further actions as may reasonably be necessary  to carry out the intent of this Agreement, including as applicable, with respect to the Material  Contracts, the Government Contracts, the Transaction Agreements and other agreements and  documents contemplated by this Agreement and (b) shall cooperate affirmatively with the other  parties hereto, to the extent reasonably requested by such other parties, to make available and  enforce the rights and obligations of the parties, including with respect to the foregoing  agreements, herein provided.         11.5  Notices.  Any notice or other communication provided for herein or given  hereunder to a party hereto must be in writing and:  (a) sent by facsimile transmission; (b) sent  by electronic mail; (c) delivered in person; (d) mailed by first class registered or certified mail,  postage prepaid; or (e) sent by Federal Express or other overnight courier of national reputation,  in each case, addressed as follows (or in the case of delivery via e-mail, to the e-mail addresses  previously provided by the parties):                     If to Seller:                           c/o Black Box Corporation                          1000 Park Drive                          Lawrence, Pennsylvania 15055                          Attention:  Ron Basso, Executive Vice President, General                                      Counsel and Secretary                                          67    

 

                  with a copy (not constituting notice) to:                           Jones Day                          500 Grant Street, Suite 4500                          Pittsburgh, PA 15219                          Attention:  David A. Grubman                          Facsimile No.: (412) 394-7959   and with respect to Buyer to such address as Buyer notifies Seller (from time to time) in writing  as above provided, or with respect to Seller to such other address as Seller notifies Buyer in  writing as above provided.  Each such notice or communication will be effective:  (i) if given by  facsimile, then when the successful sending of such facsimile is electronically confirmed; (ii)  if  given by electronic mail, then when confirmation of successful transmission is received; or (iii)  if  given by any other means specified in the first sentence of this Section 11.5, then upon delivery  or refusal of delivery at the address specified in this Section 11.5.         11.6  Captions.  The captions and headings contained in this Agreement are for  convenience of reference only and do not form a part of this Agreement.         11.7  Amendment; Waiver.  This Agreement may be amended or modified only by an  instrument in writing duly executed by Seller and Buyer.  At any time, Seller or Buyer may:   (a) extend the time for the performance of any of the obligations or other acts of the parties  hereto; (b) waive any inaccuracies in the representations and warranties contained herein or in  any document delivered pursuant hereto; or (c) waive compliance with any of the covenants,  agreements or conditions contained herein, to the extent permitted by applicable Law.  Any  agreement to any such extension or waiver will be valid only if set forth in a writing signed by  Seller, if Seller is making the waiver, or Buyer, if Buyer is making the waiver.  No waiver of any  provision hereunder or any breach or default thereof shall extend to or affect in any way any  other provision or prior or subsequent breach or default.  Notwithstanding anything to the  contrary contained herein, Sections 8.2, 11.3, 11.9, 11.10, 11.11 and this Section 11.7 (and  any provision of this Agreement to the extent a modification or waiver of such provision would  modify the substance of Sections 8.2, 11.3, 11.9, 11.10, 11.11 and this Section 11.7) may not  be modified or waived in any manner that is materially adverse in any respect to the Debt  Financing Sources without the prior written consent of the Debt Financing Sources         11.8  Legal Representation.                 (a)   Buyer further agrees that, as to all communications involving attorney-       client confidences between and among Jones Day, as counsel for Seller, the Company,        the Subsidiary or their respective Affiliates, Seller, the Company, the Subsidiary or their        respective Affiliates made in connection with the transactions contemplated by or in        connection with this Agreement (collectively, the “Privileged Communications”), the        attorney-client privilege and the expectation of client confidence with respect to the        Privileged Communications belongs to Seller and may be controlled by Seller and will        not pass to or be claimed by Buyer or any of its respective subsidiaries (including,        following the Closing, the Company and the Subsidiary).  The Privileged        Communications are the property of Seller and, from and after the Closing, none of        Buyer, its subsidiaries (including, following the Closing, the Company and the        Subsidiary) or any Person purporting to act on behalf of or through Buyer or such        subsidiaries will seek to obtain the Privileged Communications, whether by seeking a        waiver of the attorney-client privilege or through other means.  Buyer, and its respective                                          68    

 

      subsidiaries (including, following the Closing, the Company and the Subsidiary), together        with any of their respective Affiliates, successors or assigns, further agree that no such        party may use or rely on any of the Privileged Communications in any action against or        involving any of Seller or any of their respective Affiliates after the Closing.  The        Privileged Communications may be used by Seller or any of their respective Affiliates in        connection with any dispute that relates to the transactions contemplated by or in        connection with this Agreement, including in any claim for indemnification brought by        Buyer.  Notwithstanding the foregoing, in the event that a dispute arises between Buyer        or any of its respective subsidiaries and a third party (other than a party to this        Agreement or any of its Affiliates) after the Closing, Buyer and its subsidiaries may        assert the attorney-client privilege to prevent disclosure of confidential communications        by counsel to such third party, provided that neither Buyer nor its subsidiaries (including,        following the Closing, the Company and the Subsidiary) may waive such privilege        without the prior written consent of Seller.               (b)   If Seller so desires, and without the need for any consent or waiver by the        Company, the Subsidiary or Buyer, Jones Day shall be permitted to represent Seller or        its Affiliates after the Closing in connection with any matter, including any matter related        to the transactions contemplated by this Agreement, any other agreements referenced        herein or any disagreement or dispute relating thereto.  Without limiting the generality of        the foregoing, after the Closing, Jones Day shall be permitted to represent Seller , its        agents and Affiliates, or any one or more of them, in connection with any negotiation,        transaction or dispute (including any litigation, arbitration or other adversary proceeding)        with Buyer, the Company, the Subsidiary or any of their respective agents or Affiliates        under or relating to this Agreement, any transaction contemplated by this Agreement,        and any related matter, such as claims or disputes arising under other agreements        entered into in connection with this Agreement, including with respect to any        indemnification claims.  Upon and after the Closing, the Company and the Subsidiary        shall cease to have any attorney-client relationship with Jones Day, unless and to the        extent Jones Day is specifically engaged in writing by the Company or the Subsidiary to        represent such company after the Closing and either such engagement involves no        conflict of interest with respect to Seller or Seller consents in writing at the time to such        engagement.  Any such representation of the Company or the Subsidiary by Jones Day        after the Closing shall not affect the foregoing provisions hereof.         11.9  Governing Law.  This Agreement is to be governed by, and construed and  enforced in accordance with, the laws of the State of Delaware, without regard to its rules of  conflict of laws.         11.10 Consent to Jurisdiction and Service of Process.  The parties hereto submit to  the exclusive jurisdiction of the Court of Chancery of the State of Delaware, provided that if  jurisdiction is not then available in such court, then to the jurisdiction of any federal court located  in the State of Delaware in respect of the interpretation and enforcement of the provisions of this  Agreement and waive, and will not assert, any defense in any Action for the interpretation or  enforcement of this Agreement, that they are not subject to the courts’ jurisdiction or that the  Action may not be brought or is not maintainable in such courts or that this Agreement may not  be enforced in or by such courts or that their respective property is exempt or immune from  execution, that the Action is brought in an inconvenient forum or that the venue of the Action is  improper.  Service of process with respect thereto may be made upon the parties hereto by  mailing a copy thereof by registered or certified mail, postage prepaid, to that party at the  applicable address provided in Section 11.5.  Notwithstanding the foregoing, each of the parties                                          69    

 

hereto agrees that it will not bring or support any issue, claim, demand, action or cause of action  arising in whole or in part under, related to, based on, or in connection with, this Agreement o r  the subject matter hereof, including, without limitation any dispute arising out of or relating in  any way to the Debt Financing, against any Debt Financing Source in any forum other any New  York State or Federal court sitting in the Borough of Manhattan, New York, New York.         11.11 Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED  BY APPLICABLE  LAW THAT CANNOT BE WAIVED, EACH PARTY HEREBY IRREVOCABLY WAIVES AND  COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR  OTHERWISE) ANY RIGHT TO TRIAL BY JURY  IN  ANY FORUM IN RESPECT OF ANY  ISSUE,  CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING  IN  WHOLE OR IN  PART UNDER,  RELATED TO, BASED ON, OR IN  CONNECTION  WITH, THIS AGREEMENT  OR THE SUBJECT MATTER HEREOF (INCLUDING  THE DEBT FINANCING),  WHETHER  NOW EXISTING  OR HEREAFTER ARISING  AND WHETHER SOUNDING  IN  TORT OR  CONTRACT OR OTHERWISE.  ANY PARTY HERETO MAY FILE AN ORIGINAL  COUNTERPART OR A COPY OF THIS   SECTION 11.11 WITH ANY COURT AS WRITTEN  EVIDENCE  OF THE CONSENT OF EACH SUCH  PARTY TO THE WAIVER OF ITS RIGHT TO  TRIAL BY JURY.         11.12 Severability.  Any term or provision of this Agreement that is invalid or  unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such  invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and  provisions of this Agreement or affecting the validity or enforceability of any of the terms or  provisions of this Agreement in any other jurisdiction, so long as the economic or legal  substance of the transactions contemplated hereby is not affected in any manner materially  adverse to any party hereto.  If any provision of this Agreement is so broad as to be  unenforceable, the provision will be interpreted to be only so broad as is enforceable, so long as  the economic or legal substance of the transactions contemplated hereby is not affected in any  manner materially adverse to any party hereto.  Upon any determination that any term or other  provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties  shall negotiate in good faith to modify this Agreement so as to effect the original intent of the  parties as closely as possible and in an acceptable manner in order that the transactions  contemplated by this Agreement are consummated as originally contemplated to the greatest  extent possible.         11.13 Construction.  The parties hereto have participated jointly in the negotiation and  drafting of this Agreement.  If an ambiguity or question of intent or interpretation arises, then this  Agreement will be construed as drafted jointly by the parties hereto and no presumption or  burden of proof will arise favoring or disfavoring any party hereto by virtue of the authorship of  any of the provisions of this Agreement.  Unless otherwise indicated to the contrary herein by  the context or use thereof:  (a) any reference to any federal, state, local or foreign statute or law  will be deemed also to refer to all rules and regulations promulgated thereunder; (b) all  references to the preamble, recitals, Sections, Articles, Exhibits or Schedules are to the  preamble, recitals, Sections, Articles, Exhibits or Schedules of or to this Agreement; (c)  the  words “herein”, “hereto”, “hereof” and words of similar import refer to this Agreement as a whole  and not to any particular section or paragraph hereof; (d) masculine gender shall also include  the feminine and neutral genders and vice versa; (e) words importing the singular shall also  include the plural, and vice versa; (f) the words “include”, “including” and “or” shall mean without  limitation by reason of enumeration; (g) all references to “$” or dollar amounts are to lawful  currency of the United States of America; and (h) the word “will” shall be construed to have the  same meaning and effect as the word “shall.”                                          70    

 

      11.14 Counterparts; Electronic Transmission.  This Agreement may be executed in  separate counterparts, each of which will be deemed an original, but all of which together will  constitute one and the same instrument.  Delivery of an executed signature page to this  Agreement by facsimile or other electronic transmission (including in Adobe PDF format) will be  effective as delivery of a manually executed counterpart to this Agreement.         11.15 Complete Agreement.  This Agreement and the Schedules and exhibits hereto  and the other documents delivered by the parties hereto in connection herewith, together with  the Confidentiality Agreement, contain the complete agreement between the parties hereto with  respect to the transactions contemplated hereby and thereby and supersede all prior  agreements and understandings between the parties hereto with respect thereto.            [Remainder of Page Intentionally Blank – Signature Page Follows]                                          71    

 

                                                                                       IN  WITNESS WHEREOF, Seller, Buyer and Seller Guarantor have executed this  Agreement or caused this Agreement to be executed as of the day and year first above written.                                           SELLER:                                                                                  NORSTAN COMMUNICATIONS, INC.                                                                                                                           By: /s/ David J. Russo                                            Name: David J. Russo                                            Title: President                                                                                                                           BUYER:                                                                                  NXOF INTERMEDIATE HOLDINGS, INC.                                                                                                                           By: /s/ Michael Lustbader                                            Name: Michael Lustbader                                            Title: President                                             SELLER GUARANTOR (solely for purposes                                         of Section 9.12 and Article XI):                                                                                  BLACK BOX CORPORATION                                                                                                                           By: /s/ David J. Russo                                            Name: David J. Russo                                            Title: Executive Vice President, Chief                                                  Financial Officer and Treasurer                                               

 

                                                                                               EXHIBIT A   Target Working Capital Calculation and Accounting Principles                                                                                       [See attached]                                                  

 

                                                                           EXHIBIT B   Form of Transition Services Agreement                                                         [See attached]                                        

 

               EXHIBIT C   Form of Restrictive Covenants Agreement                                                            [See attached]                                         

 

            EXHIBIT D   Form of Subcontracting Agreements                                                   [See attached]                                      

 

               EXHIBIT E   Form of Agreement Regarding Guaranties                                                             [See attached]                                         

 

        EXHIBIT F   Form of Escrow Agreement                                       [See attached]a15041757375exhibitca769

                    RESTRICTIVE  COVENANTS  AGREEMENT         This RESTRICTIVE COVENANTS AGREEMENT (this “Agreement”), dated as of August [__],  2018,  by  and  among  (a)  NXOF Intermediate  Holdings,  Inc.,  a  Delaware  corporation  (“Buyer”), (b)  NextiraOne  Federal,  LLC,  a  Delaware  limited  liability  company  (the “Company”), and (c) Black Box  Corporation, a Delaware corporation (the “Restricted Party”). Buyer, the Company, and the Restricted  Party, are each a “Party” and collectively, the “Parties.”                                 W I T N E S S E T H:         WHEREAS, pursuant to the Membership Interest Purchase Agreement, dated as of August 17,  2018 (as such agreement may be amended or otherwise modified from time to time in accordance with its  terms, the “Purchase Agreement”), by and among Buyer, Restricted Party and Norstan Communications,  Inc., a Minnesota corporation (“Seller”), Buyer will purchase from Seller, and Seller will sell to Buyer, all  of  the  issued  and  outstanding  membership  interests  of  the  Company for the consideration described  therein (the “Transaction”).         WHEREAS,  the  Parties  are  entering  into  this  Agreement  for  the  purpose  of  preserving  the  proprietary  rights,  going  business  value  and  goodwill  of  the  Company  by  assuring  that  neither  the  Restricted Party nor any of its controlled Affiliates (a) use or disclose any Confidential Information, (b)  compete  with  the  Company and its Subsidiaries or (c) solicit to hire or hire certain employees of the  Company and its Subsidiaries (after giving effect to the consummation of the Transaction), except as  expressly permitted by this Agreement.         WHEREAS,  the  execution  of  this  Agreement  by  the  Restricted  Party  constitutes  a  material  inducement to Buyer to execute, deliver and consummate the transactions contemplated by the Purchase  Agreement.         NOW,  THEREFORE,  in  consideration  of  the  foregoing  and  the  mutual  covenants  and  agreements contained herein, Buyer, the Company and the Restricted Party, intending to be legally bound,  hereby covenant and agree as follows:         1.    Definitions.   Capitalized  terms  used  but  not  defined  herein  shall  have such meanings  ascribed to them in the Purchase Agreement. As used herein, the following terms shall have the following  meanings:         (a)   “Business” means the business engaged in by the Company and the Subsidiary as of the  date of this Agreement, being the development, design and provision of systems integration services and  managed  services  to  support  the  modernization  of  voice,  data  and  video  communications systems,  command  and  control  solutions,  extensible  data  center  operations,  physical  security  solutions  and  applications and systems that enable mission critical capabilities across U.S. Department of Defense and  U.S.  Federal  Government  civilian  government agencies.   Notwithstanding  the  foregoing,  the  term  Business shall not include products sold by Restricted Party’s Technology Product Solutions business  where sales of services are incidental to the sale of the products.         (b)   “Change of Control” means any “person” or “group” (as such terms are used in Sections  13(d)  and  14(d)  of  the  Securities  Exchange  Act  of  1934,  as  amended  (the  “Exchange  Act”)),  shall  become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial  owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 50%  or more of the voting capital stock of the Restricted Party.   1    

 

                                                                                       (c)   “Confidential  Information”  means  any  information  concerning  the  Company  and  its  current or future subsidiaries or the financial condition, business, operations or prospects of the Company  and its current or future subsidiaries or business that is confidential or proprietary to the Company or the  Subsidiary, provided that  the  term  “Confidential  Information”  does  not  include  information  that  Restricted Party can reasonably demonstrate (i) is or becomes generally available and known to the public  other  than  as  a  result  of  a  disclosure  by  such  Restricted  Party  or  any  of  its controlled Affiliates or  Representatives in violation of this Agreement, (ii) was or becomes available to such Restricted Party on  a non-confidential basis from a source other than the Company or any of its Subsidiaries or any of their  respective  Representatives  or  (iii)  is  independently  developed  or  acquired  by  Restricted  Party  or  its  controlled  Affiliates without use of, or reference to, any Confidential Information, provided that such  source is or was (at the time of receipt of the relevant information) not, to the best of such Restricted  Party’s knowledge, bound by a confidentiality agreement with (or other confidentiality obligation to) the  Company or another person.         (d)   “controlled” shall mean the possession, directly or indirectly, of the power to direct or  cause the direction of the management and policies of such Person, whether through the ownership of  voting  securities,  acting  as  general  partner  of  a limited partnership or managing member of a limited  liability  company, by contract or otherwise.         (e)   “Representatives” means, with respect to any Person, its partners, directors, officers,  employees, agents, counsel, investment advisers or representatives.         2.    Non-Competition,  Non-Solicitation  and  Non-Hire  Covenants.   The  Restricted  Party  acknowledges  and  agrees  that  it  will  receive  a  direct  and  substantial  benefit  from  the  transactions  contemplated  by  the  Purchase  Agreement  and  that  execution  and  delivery  of  this  Agreement  is  a  condition to Buyer’s obligation to enter into the Purchase Agreement and to consummate the transactions  contemplated thereby.  Accordingly, and in order to protect the Confidential Information, goodwill and  employee  relationships  of  the  Company  and  its  Subsidiary,  and  in  return  for  new  and  valuable  consideration set forth in this Agreement and the Purchase Agreement, the Parties agree as follows:         (a)   Non-Competition:   During  the  period commencing on the date of this Agreement and  ending  on  the  fifth anniversary of the Closing Date (except (and then only to the extent) as set forth  below) the Restricted Party and each of its controlled Affiliates shall not do any of the following:                 (i)   directly or indirectly, own, operate or manage, conduct or participate or engage  in, or bid for, invest in or otherwise pursue a business, company, partnership, organization, proprietorship,  or other Person, that is engaged in, or owns or controls any Person that is engaged in, the Business in any  jurisdiction where the Company or its Subsidiary markets, sells, or solicit customers for its products; and                (ii)  directly or indirectly, individually or on the account of any other Person, with  respect to the Business, solicit business from any customer set forth on Exhibit A hereto, or otherwise  interfere with the business relationship between the Company or any of its subsidiaries, and any such  customer.           In addition, and without limiting  the prohibitions in Section 2, for the period equal to the lesser of  (i) three (3) years following the consummation of the Change of Control or (ii) five (5) years from the  date of this Agreement, the Restricted Party shall not, and shall cause each of its Affiliates (whether or not  a Controlled Affiliate)  not to, use the name or trade name “Black Box” to engage in any of the activities  prohibited under Section 2(a)(i).    2    

 

                                                                                       (b)   Non-Solicitation and No-Hire:               (i)   The Restricted Party shall not, and shall cause its Affiliates not to, (A) for the  period commencing on the Closing Date and ending on the third anniversary of the Closing Date, either  alone or in concert with others, directly or indirectly (1) hire, solicit for employment or attempt to hire or  solicit for employment, whether or not for consideration, any Person who is a manager, director, vice  president or senior vice president, of the Company or the Subsidiary, in each case, as of the Closing Date  or  (2) induce  or  attempt  to  induce  any  such  Person  to  terminate  his  or  her  employment  or  other  relationship with the Company or its Subsidiary, or take any action to materially assist or aid any other  Person  in  identifying,  hiring  or  soliciting  any such Person; or (B) for the period commencing on the  Closing Date and ending six months following the Closing Date, either alone or in concert with others,  directly or indirectly (1) hire, solicit for employment or attempt to hire or solicit for employment, whether  or  not  for  consideration, any employee of the Company or the Subsidiary not otherwise described in  subsection (i)(A)(1) above, in each case, as of the Closing Date or induce or attempt to induce any such  Person to terminate his or her employment or other relationship with the Company or the Subsidiary, or  take any action to materially assist or aid any other Person in identifying, hiring or soliciting any such  Person. Notwithstanding the foregoing, Restricted Party and its controlled Affiliates shall not be restricted  from (A) engaging in general or public solicitations or advertising not targeted at such Persons described  in subsections (i)(A)(1) and (i)(B)(1) above or (B) hiring any such Person who has terminated his or her  relationship with the Company or the Subsidiary no less than three months prior to the initial solicitation  by Restricted Party or its controlled Affiliates, as applicable.               (ii)  Neither Buyer nor the Company shall, and shall cause their respective controlled  Affiliates not to, (A) for the period commencing on the Closing Date and ending on the third anniversary  of  the  Closing  Date,  either  alone  or  in  concert  with  others,  directly  or indirectly (1) hire, solicit for  employment or attempt to hire or solicit for employment, whether or not for consideration, any Person  who is a manager, director, vice president or senior vice president, of Restricted Party or its controlled  Affiliates, in each case, as of the Closing Date or (2) induce or attempt to induce any such Person to  terminate his or her employment or other relationship with Restricted Party or its controlled Affiliates, or  take any action to materially assist or aid any other Person in identifying, hiring or soliciting any such  Person;  or  (B)  for  the  period  commencing on the Closing Date and ending six months following the  Closing Date, either alone or in concert with others, directly or indirectly (1) hire, solicit for employment  or  attempt  to  hire  or  solicit  for  employment,  whether  or  not for consideration, any employee of the  Restricted Party or its controlled Affiliates not otherwise described in subsection (ii)(A)(1) above, in each  case, as of the Closing Date or (2) induce or attempt to induce any such Person to terminate his or her  employment or other relationship with Restricted Party or its controlled Affiliates, or take any action to  materially  assist  or  aid  any  other  Person  in  identifying,  hiring  or  soliciting  any  such  Person.  Notwithstanding the foregoing, none of Buyer and the Company nor their respective controlled Affiliates  shall be restricted from (A) engaging in general or public solicitations or advertising not targeted at such  Persons described in subsections (ii)(A)(1) and (ii)(B)(1) above or (B) hiring any such Person who has  terminated  his  or  her  relationship  with  Restricted Party  or  its  controlled  Affiliates no less than three  months prior to the initial solicitation by Buyer, the Company or their respective controlled Affiliates, as  applicable.         (c)   The Restricted Party acknowledges and agrees that the time, scope, geographic area and  other provisions of this Section 2 have been specifically negotiated and the Restricted Party agrees that  the restrictions and covenants contained in this Section 2 are reasonable and necessary for the protection  of the legitimate  business interests and goodwill of the Company and any Subsidiary or Affiliate thereof,  and that such covenants were material to Buyer’s decision to enter into the Purchase Agreement.    3    

 

                                                                                 Notwithstanding any other provision in this Agreement to the contrary, Section 2(a)(i) and Section 3 of  this Agreement shall automatically terminate and have no further force or effect upon the earlier of (x) the  date  that  is  36  months  after  the  date  of  the  consummation  of  a  Change  of  Control  or  (y)  the  fifth  anniversary of the Closing Date.         3.    Non-Disparagement  Covenant. Neither  the  Restricted  Party  or  any  of  its  controlled  Affiliates, on the one hand, nor the Buyer, the Company or any of their respective controlled Affiliates,  on the other hand, shall each directly or indirectly, in its own capacity or through another Person, make or  publish derogatory or disparaging comments about the other Party or any of (a) its officers, directors,  employees,  shareholders,  members  or  agents,  individually  and  in  their  official  capacities,  or  (b)  its  products. The foregoing will not restrict or impede any Party or its controlled Affiliates from exercising  protected legal rights to the extent that such rights cannot be waived by agreement or from providing  truthful statements in response to any Governmental Entity, subpoena power, legal process, testimony or  filings.         4.    Confidentiality.  The Restricted Party agrees that Confidential Information has been made  available  to such Restricted Party in connection with its ownership of the Company.  The Restricted Party  acknowledges and agrees that it will not directly or indirectly (i) for a period of five (5) years, use all or  any portion of the Confidential Information to evaluate or engage in any business competitive with the  Business or (ii) disclose or otherwise make available  Confidential Information to any Person, provided  that Confidential Information may be disclosed (i) to such Restricted Party’s Representatives, and (ii) to  the extent required by applicable law, rule or regulation (including complying with any oral or written  questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or  similar process to which such Restricted Party is subject), provided that such Restricted Party gives the  Company prompt notice of such request(s), to the extent practicable (and not prohibited by law), so that  the  Company  may  seek,  at  its  expense,  an  appropriate  protective  order  or  similar  relief  (and  such  Restricted Party shall cooperate with such efforts by the Company).  The foregoing shall not apply (and  the Restricted Party shall be permitted to disclose Confidential Information) (i) as may be required (as  advised to the Restricted Party by its outside legal counsel) to comply with, and not be in violation of, the  requirements of applicable law (including securities laws, rules and regulations) or the rules or regulations  of any applicable stock exchange or (ii) in the event of any request by a regulatory body having oversight  of Restricted Party or its controlled Affiliates or Representatives in connection with an ordinary course  audit  or  review  not  specifically  targeted  at  the  Confidential  Information  or  the  Company  or  the  Subsidiary.  If, in the absence of a protective order or other appropriate remedy hereunder, Restricted  Party  or  its  controlled  Affiliates  or  Representatives  are  nonetheless  compelled  to  disclose  any  Confidential Information, then Restricted Party or its Representatives may disclose such portion of the  Confidential  Information  as  is  legally  required  to  be  disclosed  without liability under this Agreement;  provided that Restricted Party will furnish only that portion of the Confidential Information which it is  advised  by outside legal counsel it is legally required and shall use commercially reasonable efforts to  obtain assurances that such Confidential information will be accorded confidential treatment.         5.    Miscellaneous.         (a)   Remedies.  The Parties agree that each Party will suffer irreparable damage in the event  that any of the provisions of this Agreement are not performed in accordance with their respective terms,  or are otherwise breached or violated, and that money damages or other legal remedies will not be an  adequate remedy for any such damages.  Accordingly, each Party acknowledges and hereby agrees that in  the event of any breach or threatened breach by any Party of its covenants or obligations set forth in this  Agreement,  each  Party  shall  be  entitled  to  obtain  an  injunction  or  injunctions  to  prevent  or  restrain  breaches or threatened breaches of this Agreement by such Party, and to specifically enforce the terms  and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance   4    

 

                                                                                 with, the covenants and obligations of such Party under this Agreement. Each Party hereby agrees that the  only permitted objection that it may raise in response to any action for the equitable remedy of specific  performance to prevent or restrain breaches or threatened breaches of this Agreement is that it contests the  existence of a breach or threatened breach of this Agreement, and each Party hereby waives any defenses  in any action for specific performance, including the defense that a remedy at law would be adequate.         (b)   Severability;  Modification.   Each  of  the  Parties  to  this  Agreement  recognizes  and  acknowledges that the covenants and provisions contained in this Agreement are properly required for the  adequate  protection  of  the  Company  and  Buyer, and the goodwill and Confidential Information to be  acquired by Buyer as part of the Transaction. Each of the Parties to this Agreement also recognizes and  acknowledges that the covenants and provisions contained in this Agreement are an inherent part of the  transactions contemplated by the Purchase Agreement and are accepted as part of the consideration paid.  Consequently, if any court determines that any part of this Agreement, including any of the covenants set  forth in Section 2, or any part thereof, is invalid or unenforceable, the remainder of this Agreement shall  not thereby be affected and shall be given full effect, without regard to the invalid portions.  If any court  determines that any of the covenants set forth in Section 2, or any part thereof, is unenforceable because  of the duration of such provision or the area covered thereby, such court shall have the power to reduce  the duration or area of such provision and, in its reduced form, such provision shall then be enforceable  and  shall  be  enforced.   Should  any court refuse to enforce or reform any such covenant, then such  unenforceable  covenant  (or  portion  thereof)  shall  be severed from this Agreement and the remaining  covenants shall be enforceable and valid.  The Restricted Party hereby waives any and all right to attack  the validity  of the covenants set forth in Section 2 on the grounds of the breadth of their geographic scope  and/or the length of their term.         (c)   Governing Law.  This Agreement shall be governed by and construed in accordance with  the Laws of the State of Delaware without giving effect to the principles of conflicts of law thereunder.         (d)   CONSENT  TO  JURISDICTION;  SERVICE  OF  PROCESS;  WAIVER  OF  JURY  TRIAL.  ALL  JUDICIAL PROCEEDINGS BROUGHT AGAINST THE PARTIES ARISING OUT OF  OR  RELATING  TO  THIS  AGREEMENT,  OR  ANY  OBLIGATIONS  HEREUNDER,  SHALL  BE  BROUGHT  EXCLUSIVELY  IN  ANY  STATE  OR  FEDERAL  COURT  OF  COMPETENT  JURISDICTION  IN  THE  STATE  OF  DELAWARE.   BY  EXECUTING  AND  DELIVERING  THIS  AGREEMENT,    THE   PARTIES    IRREVOCABLY    (I)  ACCEPT   GENERALLY     AND  UNCONDITIONALLY  THE  EXCLUSIVE  JURISDICTION AND VENUE OF  THESE COURTS; (II)  WAIVE  ANY  OBJECTIONS  WHICH  SUCH  PARTY  MAY  NOW OR HEREAFTER HAVE TO THE  LAYING OF VENUE  OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT  OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO  IN  CLAUSE (I) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVE AND AGREE NOT TO  PLEAD  OR  CLAIM  IN ANY SUCH COURT THAT SUCH ACTION OR PROCEEDING BROUGHT  IN  ANY  SUCH  COURT  HAS  BEEN  BROUGHT  IN  AN  INCONVENIENT  FORUM;  (III)  AGREE  THAT  SERVICE  OF  ALL  PROCESS  IN  ANY SUCH PROCEEDING IN ANY SUCH COURT MAY  BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH  PARTY  AT  THEIR  RESPECTIVE  ADDRESSES  PROVIDED  IN  ACCORDANCE  WITH SECTION  5(i); AND (IV) AGREE THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT  TO CONFER PERSONAL JURISDICTION OVER SUCH PARTY IN ANY SUCH PROCEEDING IN  ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN  EVERY  RESPECT.   TO  THE  EXTENT  NOT  PROHIBITED  BY  APPLICABLE  LAW  THAT  CANNOT  BE  WAIVED,  THE  PARTIES  UNCONDITIONALLY   AND  IRREVOCABLY  WAIVE  THEIR  RIGHT  TO  TRIAL  BY  JURY  IN  ANY  SUCH  JUDICIAL  PROCEEDING  OR  OTHER  ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT.      5    

 

                                                                                       (e)   Entire Agreement; No Other Representations.  This Agreement, the Purchase Agreement  and the other documents delivered by the parties hereto in connection herewith and therewith, contain the  complete agreement among the parties hereto with respect to the transactions contemplated hereby and  thereby  and supersede all prior agreements and understandings among the parties hereto with respect  thereto.  The parties acknowledges that no promises, covenants or representations, oral or written, have  been made other than those expressly stated herein, and that none of the parties has not relied on any other  promises, covenants or representations in signing this Agreement.         (f)   No Waiver.  The failure of any Party to insist, in any one or more instances, upon the  strict performance of the terms and conditions of this Agreement shall not be construed as a waiver or  relinquishment of any right hereunder nor of the future performance of any such terms and conditions.         (g)   Amendment.  This Agreement may not be amended or modified except by an instrument  in writing signed by, or on behalf of Buyer, the Company and the Restricted Party.         (h)   Breach  of  this  Agreement  by  an  Affiliate  of  a  Party.  Each  of  the  Parties  shall  be  responsible for any breach of or noncompliance with the terms of this Agreement by any of his or its  Affiliates.          (i)   Notice. All  notices, requests, demands and other communications under this Agreement  shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) when  sent  by  facsimile  (with  written  confirmation  of  transmission),  (c)  upon   receipt  of  confirmation  of  successful transmission when sent by electronic mail or (d) one (1) Business Day following the day sent  by overnight courier (with written confirmation of receipt), in each case to the parties at the following  addresses (or at such other address for a party as shall be specified by like notice):               If to the Restricted Party:                     Black Box Corporation                    1000 Park Drive                    Lawrence, PA 15055                    Attn: Ron Basso                                  With copies to:                     Jones Day                     500 Grant Street, Suite 4500                    Pittsburgh, PA 15219                    Attn: David Grubman                    Fax: (412) 394-7959   and with respect to Buyer to such address as Buyer notifies the Restricted Party (from time to time) in  writing as above provided, or with respect to the Restricted Party to such other address as the Restricted  Party notifies Buyer in writing as above provided.           (j)   Assignment.  No Party shall assign all or any part of this Agreement, nor shall any Party  assign or delegate any of its rights or duties hereunder, without the prior written consent of the other  Parties (which consent may be withheld for any reason) and any assignment or delegation made without  such consent shall be void, except that the Buyer may assign its rights and obligations hereunder to any of  its lenders as collateral security, without the consent of any other Person.  Subject to the foregoing, this   6    

 

                                                                                 Agreement shall be binding upon and inure to the benefit of each Party and his or its respective successors  and assigns.         (k)   No Third Party Beneficiaries.  With the exception of the parties hereto, there shall exist  no right of any Person to claim a beneficial interest in this Agreement or any rights occurring by virtue of  this Agreement.         (l)   Termination.   Notwithstanding  anything  herein  to  the  contrary,  if  the  Purchase  Agreement is validly terminated prior to the occurrence of the Closing thereunder, then this Agreement  automatically shall terminate and be of no further force and effect.          (m)   Headings.  The headings contained in this Agreement are inserted for convenience only  and  shall  not  be  considered  in  interpreting  or  construing  any  of  the  provisions contained  in  this  Agreement.         (n)   Counterparts.  This Agreement may be executed in any number of counterparts and by  the Parties in separate counterparts, each of which when so executed shall be deemed to be an original  and all of which taken together shall constitute one and the same instrument.  This Agreement and any  signed agreement or instrument entered into in connection with this Agreement, and any amendments or  waivers  hereto  or  thereto,  to  the  extent  signed and delivered by means of a facsimile machine or by  electronic mail delivery of a “.pdf” format (or similar format) data file, shall be treated in all manner and  respects as an original agreement or instrument and shall have the same binding legal effect as if it were  the original signed version thereof delivered in person. No Party to any such agreement or instrument  shall raise the use of a facsimile machine or electronic mail transmission of a “.pdf” format (or similar  format) data file to deliver a signature to this Agreement or any amendment hereto or the fact that any  signature or agreement or instrument was transmitted or communicated through the use of a facsimile  machine or electronic mail transmission of a “.pdf” format (or similar format) data file as a defense to the  formation of a contract and each Party forever waives any such defense.                                      *    *    *   7    

 

      IN WITNESS WHEREOF, the Parties have executed this Restrictive Covenants Agreement as of  the day and year first written above.                                       NXOF INTERMEDIATE  HOLDINGS, INC.:                                                                              By: _________________________________________                                       Name:                                       Title:                                                                              

 

                                                                                                                     COMPANY:                                       NEXTIRAONE  FEDERAL,  LLC                                       By: _________________________________________                                       Name:                                      Title:                                                                         9    

 

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