LIMITED LIABILITY COMPANY INTEREST PURCHASE AGREEMENT July 9, 2008 LIMITED LIABILITY COMPANY INTEREST PURCHASE AGREEMENT
EXHIBIT 10.70
LIMITED
LIABILITY COMPANY INTEREST
PURCHASE
AGREEMENT
July 9,
2008
LIMITED
LIABILITY COMPANY INTEREST
PURCHASE
AGREEMENT
THIS
LIMITED LIABILITY COMPANY INTEREST PURCHASE AGREEMENT (the “Agreement”) is made as of July
8, 2008, by and between Allied
Digital Services Limited, an Indian limited company (“Buyer”) and En Pointe Technologies Sales,
Inc., a Delaware corporation (“Seller”), with reference to
the following:
RECITALS
A. Seller
currently holds all outstanding membership interests in En Pointe Global Services,
LLC, a Delaware limited liability company (the “Company”), as such interest is
more fully described in that certain Amended and Restated Limited Liability
Company Agreement dated as of July 9, 2008 (the “Company
Agreement”). Seller’s membership interests are comprised of
80,500 Series A Common
Units (the “Series A
Units”) and 19,500 Series B Common Units
(the “Series B
Units”).
B. The
Company currently has no operations, employees, consultants, assets or
liabilities.
C. Seller
provides certain information technology services and Seller wishes to transfer
the employees, consultants and assets necessary to perform those services to the
Company. The Company has not filed, and does not currently intend to
file, an election on IRS Form 8832, Entity Classification Election, electing to
be classified as a corporation for U.S. federal income tax purposes under Treas.
Regulation Section 301.7701-3(c).
D. Once
the Seller’s business has been transferred to the Company, Seller desires to
sell the Series A Units, and Buyer desires to purchase such Series A Units,
under the terms and conditions set forth herein. Seller and Buyer
intend to treat such sale and purchase of Series A Units, for U.S. federal
income tax purposes, under the guidance of Revenue Ruling 99-5, as if Buyer
purchased from Seller an 80.50% interest in each of the Company’s assets, and as
if the such assets purchased by the Buyer and the assets retained by the Seller
were contributed to the Company as a newly formed partnership.
E. The
transfer of assets and employees and the purchase of the Series A Units are
collectively referred to herein as the “Transaction.” After
the consummation of the Transaction the parties intend for the Seller to
continue to provide support and other services to the Company pursuant to the
terms of an agreement that will become effective upon the closing of the
Transaction.
NOW,
THEREFORE, in consideration of the foregoing promises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
AGREEMENT
1. DEFINITIONS.
In
addition to the terms previously defined or defined elsewhere in the Agreement,
the following terms shall have the meanings ascribed to them in this Section
1:
1.1 Agreement. This
Limited Liability Company Interest Purchase Agreement, including all amendments
hereto, and all exhibits referred to herein.
1.2 Acquisition
Proposal. Any proposal or offer made by any Person other than
Buyer or any Subsidiary of Buyer to acquire, directly or indirectly, the
Business Assets, or any portion thereof, whether by merger, tender offer,
exchange offer, sale of assets or similar transactions involving the Seller, or
any operating or business unit of the Seller.
1.3 Alternative Cash Earnout
Amount. Thirteen Million Three Hundred Forty-five Thousand
Dollars ($13,345,000).
1.4 Assignment. Assignment
of LLC Membership Interest in the form attached hereto as 1.
1.5 Business. The
provision of the following information technology infrastructure support
services: (i) managed IT services, (ii) deployment & refresh,
(iii) IMAC, (iv) maintenance, (v) help desk, (vi) IT infrastructure management,
(vii) disposal, (viii) remote IT operations and (ix) remote security
management.
1.6 Business
Assets. Those assets set forth on Schedule 1.6 hereto
which are currently owned by Seller but will be transferred to the Company prior
to Closing. Seller shall transfer the Business Assets to the Company
free and clear of all Liens and all Liabilities (other than Liens for Taxes not
yet due and payable), and the Company shall not, by virtue of the transfer of
the Business Assets, assume or become responsible for any Liabilities, Taxes or
Contracts of the Seller or any other Person of any kind, character or
description, whether accrued, absolute, contingent or otherwise, unless such
assumption or responsibility is expressly approved in writing by
Buyer.
1.7 Buyer
Indemnitees. As defined in Section 9.3(a)
below.
1.8 Cash
Consideration. Eight Million Dollars ($8,000,000) as such
amount is subject to adjustment pursuant to Section 2
below.
1.9 Cash Earnout
Amount. Two Million Dollars ($2,000,000).
1.10 Claim. An
action, suit, claim or counterclaim or legal, administrative or arbitral
proceeding or investigation.
1.11 Closing. The
consummation of the transactions contemplated by this Agreement shall take place
at 10:00 a.m., California time, at the offices of DLA Piper US LLP, 1999 Avenue
of the Stars, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, on the third (3rd)
business day after all of the conditions precedent to Closing hereunder shall
have been satisfied or waived, or at such other date, time and place as the
Parties shall mutually agree upon.
1.12 Company
Liabilities. The Liabilities of the Company set forth in Schedule 1.12
hereto.
1.13 Consultant. Any
non-Employee that provides services to, or on behalf of, the Seller in
connection with the Business identified in Schedule 1.13
hereto. Schedule
1.13 shall
include the name, title, current compensation arrangement, accrued compensation,
accrued benefits and any other compensatory or other arrangements between the
Seller and such consultants.
1.14 Contract. All
agreements, whether oral or written and whether express or implied, including,
without limitation, contracts, contract rights, promises, commitments,
undertakings, customer accounts, orders, leases, guarantees, warranties,
representations and franchises, and all renewals, replacements and substitutions
therefor.
1.15 Conversion
Ratio. Shall mean the average of the Rupee to Dollar currency
exchange rate published in the Wall Street Journal for the ten (10) consecutive
trading days preceding the date of Closing.
1.16 Customers. Those
parties identified in Schedule
1.16 hereto that Seller has
provided services to in connection with the Business during the past twelve
months. Schedule
1.16 shall identify the
amount of revenue generated by each Customer over the twelve full months
preceding the date of this Agreement.
1.17 Damages. As
defined in Section
9.3(a) below.
1.18 Dollar. Shall
mean the currency of the United States of America and expressed as
“$.”
1.19 Effective
Date. The date in the introductory paragraph of this
Agreement.
1.20 Employees. The
employees of Seller involved in the Business identified in Schedule 1.20
hereto that the parties contemplate will be transferred to the Company either
immediately prior to, concurrent with or following the,
Closing. Schedule
1.20 shall include the name,
title, current salary, accrued compensation, accrued benefits and any other
compensatory or other arrangements between the Seller and such
employees.
1.21 Escrow
Agent. As defined in Section 9.2
below.
1.22 Escrow
Agreement. The Escrow Agreement shall be the document in the
form attached hereto as 1.
1.23 Governmental
Body. Any domestic or foreign national, state or municipal or
other local government or multi-national body, any subdivision, agency,
commission or authority thereof, of any quasi-governmental or private body
exercising any regulatory or taxing authority thereunder.
1.24 Intellectual Property
Rights. As defined in Section
3.5.
1.25 Leases. Those
property leases set forth in Schedule 1.25 which represent
facilities that the Company will occupy following the Closing in connection with
the operation of the Business.
1.26 Leasing
Agreement. The Employee Leasing Agreement in the form attached
hereto as 1.
1.27 Liability. Any
direct or indirect indebtedness, liability, assessment, expense, claim, loss,
damage, deficiency, obligation or responsibility, known or unknown, disputed or
undisputed, joint or several, vested or unvested, executory or not, fixed or
unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or unsecured,
determinable or undeterminable, accrued or unaccrued, absolute or not, actual or
potential, contingent or otherwise (including any liability under any
guarantees, letters of credit, performance credits or with respect to insurance
loss accruals).
1.28 License
Agreement. The Trademark License Agreement in the form
attached hereto as 1.
1.29 Lien. Any
mortgage, lien (including mechanics, warehousemen, laborers and landlords
liens), claim, pledge, charge, community property interest, condition, equitable
interest, right-of-way, easement, encroachment, security interest, preemptive
right, right of first refusal or similar restriction or right, option, judgment,
title defect or encumbrance of any kind.
1.30 LLC
Interest. Seller’s entire interest in the Company, as
described in the Company Agreement, including, without limitation, the Series A
Units and the Series B Units and Seller’s capital account, liquidation and
distribution rights under the Company Agreement.
1.31 Material Adverse
Effect. Any change or other event that, individually or in the
aggregate (taking into account all other such changes or effects) that is, or is
reasonably likely to be, materially adverse to the Business, provided that a
Material Adverse Effect shall not include (i) changes in general United States
economic conditions or in the United States securities markets in general that
do not affect the Business in a materially disproportionate manner relative to
other companies in the same industry; (ii) any event, change, circumstance or
effect that generally affects the industry in which the Business operates
(including legal and regulatory changes), so long as any such event, change,
circumstance or effect does not affect the Business in a materially
disproportionate manner relative to other companies in such industry, or (iii)
any adverse effects, including but not limited to losses of customers or
suppliers or changes in such relationships, caused directly or indirectly by the
execution, announcement or performance of this Agreement or the pendency of the
Transaction; (iv) any delays or cancellations of orders or payments for the
Business’s products or services caused directly or indirectly by the execution,
announcement or performance of this Agreement or the pendency of the
Transaction; (v) acts taken pursuant to or in accordance with this Agreement or
at the request of the Buyer; or (vi) acts of terrorism or war (whether or not
declared). Where otherwise explicitly stated, Material Adverse Effect
shall relate to the named entity instead of the Business.
1.32 Net Assets
.. As of any applicable date of determination, all leasehold
improvements, computer equipment, tools, software, spare parts and other
tangible assets, unrestricted cash, certificates of deposit and any other cash
on hand of the Company less any Company Liabilities.
1.33 Parent Securities
Filings. Forms, reports and documents filed by En Pointe
Technologies, Inc. with the U.S. Securities and Exchange
Commission.
1.34 Person. An
individual, corporation, partnership, limited partnership, limited liability
company, limited liability partnership, syndicate, person (including a “person”
as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder), trust,
association, entity or government or political subdivision, agency or
instrumentality of a government.
1.35 Purchase
Price. As defined in Section 2.2
below.
1.36 Referral
Agreement. The Sales Agency and Referral Agreement in the form
attached hereto as 1.
1.37 Required
Consents. Those consents from the third parties identified in
Schedule 1.37
hereto.
1.38 Seller Disclosure
Schedule. As defined in the preamble to Section
3.
1.39 Seller Earnout
Shares. Seven Hundred Forty-Five Thousand (745,000) Ordinary
shares of Buyer.
1.40 Services
Agreement. The Services Agreement in the form attached hereto
as Exhibit
F.
1.41 Subcontract
Agreement. The Subcontract Agreement in the form attached
hereto as Exhibit
G.
1.42 Target
Revenues. Company revenues, as determined by United States generally
accepted accounting principles of
$30,000,000 during the twelve month period ending
June 30, 2009. The calculation
of Target Revenues will be made within 45 days of June 30,
2009.
1.43 Taxes. Any
and all taxes, charges, fees, premiums, levies, interest, penalties, additions
to tax or other similar assessments, including, but not limited to, income,
excise, property, transfer, sales, use, value added and franchise taxes and
custom’s duties, imposed by any Governmental Body.
1.44 Transaction
Documents. Shall mean this Agreement, the Assignment, the
Escrow Agreement, the License Agreement, the Services Agreement, the Leasing
Agreement, the Referral Agreement and the Subcontract Agreement.
2. PURCHASE AND
SALE.
2.1 Purchase of Series A
Units. Subject to the terms and conditions of, and in reliance
upon the representations and warranties and covenants in, this Agreement,
concurrently with Closing, Seller shall sell to Buyer, and Buyer shall purchase,
the Series A Units. The transfer of the Series A Units will be
evidenced by the Assignment, and shall be effective upon the
Closing.
2.2 Purchase Price and
Payment. Subject to the adjustment provisions set forth below
in this Section
2, elsewhere in the Agreement and in the Escrow Agreement, the
consideration for the transactions contemplated by this Agreement (the “Purchase Price”) shall be (i)
the Cash Consideration, (ii) the Cash Earnout Amount and (iii) either the Seller
Earnout Shares or the Alternative Cash Earnout Amount. The payment of
the Cash Consideration, as adjusted pursuant to the terms of this Section 2, shall be
made via wire transfer of immediately available funds from Buyer to an account
specified by Seller within 12 days from date of signing of this
agreement. Upon receipt of funds Seller shall within 3
days issue 27587 series A units to the buyer. The Buyer and Seller acknowledge
and intend that the Purchase Price shall be the entire consideration to be paid
to Seller in connection with the sale of the Series A Units and that Seller
shall not be entitled to any other monetary or non-monetary consideration,
notwithstanding any assets, working capital, or cash held by the Company at
Closing and otherwise available for distribution or any changes in the business
of the Company.
2.3 Adjustment to Cash
Consideration. The amount of the Cash Consideration to be paid
by Buyer to Seller at Closing shall be reduced by an amount that equals the sum
of: (i) the amount, if any, that the Net Assets is less than $1,000,000 and (ii)
the aggregate amount of Company Liabilities (which shall include, without
limitation, Liabilities associated with the transfer of the Employees to the
Company).
2.4 Transfer Taxes; Asset
Allocation Schedule.
(a) The
Seller shall be responsible for the payment of any Taxes arising out of or in
connection with Seller’s transfer of the Business Assets to the Company,
provided that Buyer shall promptly reimburse Seller for one half of such Tax
payments following receipt of evidence of Seller’s payment of such
Taxes.
(b) Seller
shall prepare or cause to be prepared and file or cause to be filed all ad
valorem, property (whether real or personal) and similar Tax Returns (“Property Tax Returns”) and
reports relating to the Business Assets for all periods ending on or prior to
the Closing Date that are required to be filed on or after the Closing
Date. The Company shall prepare or cause to be prepared and file or
cause to be filed all other Property Tax Returns or reports related to the
Business Assets. Any ad valorem, property (whether real or personal)
property Taxes and similar obligations that are levied with respect to the
Business Assets for assessment periods within which the Closing Date occurs
(collectively, the “Apportioned
Obligations”) shall be apportioned between Seller and the Company as of
the Closing Date based on the number of days in any such period falling on or
before the Closing Date, on the one hand, and after the Closing Date, on the
other hand (it being understood that the Seller is retaining liability and shall
indemnify and hold the Company harmless from the portion of each such
Apportioned Obligation attributable to the number of days in the relevant
assessment period up to and including the Closing Date).
(c) The Buyer
shall deliver to the Seller, no later than sixty (60) days after the Closing
Date, a proposed allocation, for U.S. federal income tax purposes and pursuant
to Section 1060 of the Code and the regulations thereunder, of the Purchase
Price among the assets deemed purchased for U.S. federal income tax purposes
(the “Proposed
Allocation”) that the parties anticipate will be in substantially the
form attached hereto as Schedule 2.4(c).
(d) Promptly
following receipt of the Proposed Allocation, Seller shall review the same and,
within thirty (30) days after Seller’s receipt of such Proposed Allocation, may
deliver to Buyer a certificate executed by the Seller setting forth objections
to the proposed allocation (an "Objection Notice"), together
with a summary of the reasons therefor and calculations which, in Seller’s view,
are necessary to eliminate such objections. If Seller does not
deliver an Objection Notice within such thirty (30) day period, the Proposed
Allocation shall be the final allocation of the purchase price and other
relevant items among the Purchased Assets (the "Final
Allocation").
(e) If the
Seller delivers an Objection Notice within such thirty (30) day period, the
Buyer and the Seller shall use their reasonable attempts to resolve by written
agreement any differences identified in the Objection Notice within the
succeeding five (5) days and, if they are able to resolve all such differences,
the allocation agreed to shall be the Final Allocation. If any
objections raised by Seller in the Objection Notice are not resolved within the
five (5) day period next following such thirty (30) day period, then the Buyer
and the Seller shall submit the objections that are then unresolved (together
with any agreed adjustments) to an independent certified public accounting firm
mutually agreed to by the Buyer and the Seller, who shall be directed by the
Buyer and the Seller to resolve the unresolved objections within the next ten
(10) days and to deliver written notice to each of the Buyer and the Seller
setting forth its resolution of the disputed matters. The costs of
the independent certified public accounting firm shall be shared equally between
the Buyer and the Seller and the allocation resulting from the decision of the
independent certified public accounting firm shall be the Final
Allocation.
(f) Any
allocation that becomes the Final Allocation pursuant to the preceding
provisions of this Section 2.4 shall be
final and binding as between the Buyer and the Seller and their respective
affiliates. Each party shall file all U.S. federal and state Tax
returns and information reporting forms required to be filed in accordance with
the Final Allocation. Except as otherwise required by Law, neither
the Buyer nor the Seller shall take a position inconsistent with the Final
Allocation on any Tax return; provided however that for purposes of clarity, an
amount included in the Tax basis of the Business Assets by Buyer shall not be
required to be taken into account or reported by Seller (including for purposes
of Internal Revenue Service Form 8594) to the extent such amount is not required
to be treated as an amount realized by Seller for Tax purposes.
3. REPRESENTATIONS AND
WARRANTIES OF SELLER.
The
Seller (for purposes of this Section 3, the term
“Seller” shall include
all affiliates and subsidiaries of Seller except for Premier BPO, Inc. and Ovex
Technologies (Private) Limited), represents and warrants to Buyer that the
statements contained in this Section 3 are true
and correct as of the date hereof and as of the Closing (as if each such
representation and warranty were made on the Closing), except as set forth in a
disclosure schedule of even date herewith and delivered by the Seller to Buyer
(the “Seller Disclosure
Schedule”):
3.1 LLC
Interest. The Series A Units and the Series B Units represent
all ownership interests in the Company. Seller has good, valid and
marketable title to its LLC Interest, free and clear of all Liens and
restrictions of every kind and nature and Seller can transfer title to the
Series A Units pursuant to the terms hereof free and clear of all Liens and
restrictions of every kind and nature (other than restrictions on transfer
imposed by federal and state securities’ laws and the Company
Agreement).
3.2 Corporate
Standing. The Company is duly organized, validly existing and
in good standing under the laws of Delaware. The Company has the
power and authority to conduct its business as it is currently
conducted. The Company is qualified to do business as a foreign
corporation in all jurisdictions in which it has employees, properties or
operations sufficient to require such qualification, except to the extent that a
failure to qualify would not have a Material Adverse Effect.
3.3 Authority. Seller
has the requisite power and authority to enter into this Agreement, transfer the
Business Assets to the Company and to sell the Series A
Units. Seller, and all affiliates of Seller, have taken all such
action as may be necessary and proper for Seller to authorize this Agreement,
the execution and delivery hereof, the consummation of the transactions
contemplated hereby and the execution and delivery of each of the documents
required to be delivered hereunder. This Agreement has been duly
executed and delivered by Seller and is valid, binding and enforceable in
accordance with its terms against Seller, subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors’ rights generally or to general principles of
equity.
3.4 Consents;
Conflicts. Other than the Required Consents, the execution and
delivery of this Agreement by Seller and the consummation of the transactions by
Seller provided hereunder, (i) do not require any third party consent, or notice
to any third party or any permit, authorization, or filing with any Governmental
Body, except for such consents, notices, permits or authorizations the failure
of which to be made or obtained would not have a Material Adverse Effect and
(ii) will not violate, conflict with, result in the breach of, or cause the
acceleration of or default under any provision of any obligation, mortgage,
lien, lease, agreement, instrument, law, order, arbitration award, judgment or
decree to which Seller is a party (collectively or individually) or by which
Seller is subject or bound, except for violations, breaches or defaults which
would not have a Material Adverse Effect.
3.5 Intellectual
Property. At the Closing, the Company will own or possess
sufficient legal rights to all trademarks, service marks, trade names,
copyrights, trade secrets, patents, information and other proprietary rights
necessary to conduct the Business (collectively “Intellectual Property Rights”)
and, to the Seller’s knowledge, such Intellectual Property Rights do not
conflict with, or infringe upon, the rights of others. At the
Closing, the Company will not be bound by, or a party to any options, licenses
or agreements of any kind with respect to the Intellectual Property Rights of
the Company or any other person or entity, other than licenses or agreements
relating to the Company’s use rights regarding “off the shelf” or standard
products and as otherwise contemplated by this Agreement. The Company
has received no notice that it is infringing upon, violating or otherwise acting
adversely to the right or claimed right of any person or entity under or with
respect to any Intellectual Property Rights or licenses of third
parties. The Company is not aware of any violation by a third party
of any of the Company’s Intellectual Property Rights. The Company is
not obligated or under any liability to make payments by way of royalties, fees
or otherwise to any owner, licensor of, other claimant to, or party to any
option, license or agreement of any kind with respect to, any Intellectual
Property Rights except for commercially available software which the Company
licenses on standard terms.
3.6 Compliance with Laws and
Other Instruments.
(a) Seller
has conducted the Business in a manner that is in compliance with all applicable
laws, regulations, judgments, decrees and orders of the United States of America
and all states, foreign countries or other governmental bodies and agencies
having jurisdiction over the Business or the Business Assets except where such
noncompliance would not have a Material Adverse Effect. The Company
is not in breach of or default under or, to its knowledge, alleged to be in
breach of or default under, any Contract that relates to the Business or the
Business Assets.
(b) Section 3.6(b) of the
Seller Disclosure Schedule sets forth all Customer Contracts as well as any
other Contract that is material to the conduct of the Business (collectively,
the “Material
Contracts”). Seller has made available to Buyer a complete and
accurate copy of each written Material Contract and all amendments or
modifications thereto.
3.7 Employees and
Consultants. The Seller is not aware that any Employee or
Consultant is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of such Person’s best efforts to promote the interests of the Company or
that would conflict with the Business. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Business will, to the
Seller’s knowledge, conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such Employees or Consultants is now
obligated. The Company is not a party to or bound by any currently
effective written employment contract with any Employee. The Company
has no deferred compensation, pension, profit sharing, bonus, insurance,
severance or any other similar employee benefit plan or obligation covering any
of its Employees other than as set forth on the Seller Disclosure
Schedule. The Company is not bound by or subject to any written or
oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of the Company, has
sought to represent any of the Employees, representatives or agents of the
Company. There are no asserted controversies or labor disputes or
union organization activities pending or, to the knowledge of the Company,
threatened, between it and the Employees. To the Company’s knowledge,
the Company has complied in all material respects with all applicable state and
federal equal employment opportunity and other laws related to the Employees and
Consultants. The Company is not aware of any Employee or Consultant
who intends, or has expressed an intention, to terminate his or her employment
with the Company, nor does the Company have a present intention to terminate the
services of any Employee or Consultant.
3.8 Title to
Property. The Company has good and marketable title to all of
its properties and assets free and clear of all Liens except for Liens for
current Taxes not yet due and payable. The plants, property and
equipment that will be used in the operation of the Business are in all material
respects in reasonably functional operating condition and repair, subject to
normal wear and tear.
3.9 Taxes. Seller
and the Company have timely filed or timely requested extensions to file those
Tax returns which are currently due or, if not yet due, will timely file or
timely request extensions to file all Tax returns required to be filed by them
with respect to the Business Assets and the Company for all taxable periods
ending on or before the Closing and all such Tax returns are, or will be when
filed, true, correct and complete in all material respects. The
Seller and the Company have paid to the appropriate Governmental Body, or, if
payment is not yet due, will pay, all Taxes imposed on Seller or the Company or
for which the Seller or the Company will be liable with respect to the Business
and the Company, whether to taxing authorities or to other persons (pursuant to
a Tax sharing agreement or otherwise) for all taxable periods beginning on or
before the Closing Date. Seller and the Company have not received
notice of a determination by a Governmental Body that Taxes are owed by the
Seller with respect to the Business Assets or the Company that has not been
resolved as of the date of Closing and, to Seller’s and the Company’s knowledge,
no Tax deficiency is proposed or threatened with respect to the Business Assets
or operation of the Business
3.10 Solvency. No
insolvency proceeding of any character including bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting, the Seller (other than as a creditor), the Business, or
any of the Business Assets are pending or are being contemplated by the Seller,
or are, to the knowledge of the Seller, being threatened against the Seller by
any other Person, and the Seller has not made any assignment for the benefit of
creditors or taken any action in contemplation of which that would constitute
the basis for the institution of such insolvency
proceedings. Immediately after giving effect to the consummation of
the transactions contemplated by this Agreement: (a) the Seller will be able to
pay its Liabilities as they become due; and (b) taking into account all pending
and threatened litigation, final judgments against the Seller in actions for
money damages are not reasonably anticipated to be rendered at a time when, or
in amounts such that, the Seller will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as well as all other
obligations of the Seller.
3.11 Litigation. Other
than as disclosed in the Parent Securities Filings filed since July 1, 2007,
there is no litigation, proceeding or investigation, either pending or, to
Seller’s knowledge, threatened, relating to Seller, Seller’s title to the LLC
Interest, the Business, the Business Assets, the Employees or the Consultants,
the outcome of which
would have
a Material Adverse Effect.
3.12 Securities
Filings. The Seller has filed and made available to Buyer and
its representatives, the Parent Securities Filings for the last three (3) years
prior to the date of this Agreement. As of the respective dates they
were filed, (i) the Parent Securities Filings were prepared in all material
respects in accordance with the requirements of the applicable laws of the U.S.
Securities and Exchange Commission and (ii) none of the Parent Securities
Filings contained any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except to the extent superseded by a Parent Securities
Filing filed subsequently and prior to the date hereof.
4. REPRESENTATIONS AND
WARRANTIES OF BUYER.
Buyer
(for purposes of this Section 4, the term
“Buyer” shall include
all affiliates and subsidiaries of Buyer) represents and warrants to Seller that
the statements contained in this Section 4 are true
and correct as of the date hereof and as of the Closing (as if each such
representation and warranty were made on the Closing), except as set forth in a
disclosure schedule of even date herewith and delivered by the Buyer to Seller
(the “Buyer Disclosure
Schedule”):
4.1 Corporate
Standing. Buyer is duly organized, validly existing and in
good standing under the laws of India. Buyer has the power and
authority to carry on its business as currently conducted.
4.2 Authority. Buyer
has the requisite power and authority to execute, deliver and perform its
obligations under this Agreement. Buyer and all affiliates of Buyer
have taken all such action as may be necessary and proper to authorize this
Agreement, the execution and delivery hereof, the consummation of the
transactions contemplated hereby and the execution and delivery of each of the
documents required to be delivered hereunder. This Agreement has been
duly executed by Buyer and is valid, binding and enforceable in accordance with
its terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors’
rights generally or to general principles of equity.
4.3 Capitalization.
(a) The
authorized share capital stock of the Buyer consists of 25,000,000 Equity Shares
of Rs 10 each aggregating to Rs 250,000,000.00 As of May 31,
2008,17,350,280 equity shares of Buyer were issued and outstanding,
all of which are duly authorized, validly issued, fully paid and nonassessable
and free of all preemptive rights (ii) none of the outstanding capital stock of
the Buyer were held in the treasury of the Buyer and (iii) 439,460 shares were
reserved for future issuance pursuant to stock options. Except as set
forth in Section
4.3 of the Buyer Disclosure Schedule, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of the Buyer or obligations of the Buyer
to issue or sell any shares of capital stock of, or other equity interests in,
the Buyer. All shares of the capital stock of the Buyer subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Buyer to repurchase, redeem or
otherwise acquire any shares of the capital stock of the Buyer.
(b) The
Seller Earnout Shares will (i) be duly authorized, validly issued, fully paid
and non-assessable and not subject to preemptive rights created by statute, the
governing corporate documents of Buyer or any agreement to which the Buyer is a
party or is bound, (ii) when issued, have all necessary approvals from the
requisite Governmental Bodies, and (iii) when issued will be transferable
without restriction thereon
4.4 Consents;
Conflicts. The execution and delivery of this Agreement by
Buyer and the consummation of the transactions provided hereunder, (i) do not
require any third party consent or any permit, authorization, or filing with any
Governmental Body except for such consents, notices, permits or authorizations
the failure of which to be made or obtained would not have a Material Adverse Effect, (ii) will not violate
the governing corporate documents of Buyer as the same may have been amended
from time to time, and (iii) will not violate, conflict with, result in breach
of, or cause the acceleration of or default under any provision of any material
obligation, mortgage, lien, lease, agreement, instrument, law, order,
arbitration award, judgment or decree to which Buyer is a party or by which
Buyer is subject or bound except for such consents, notices, permits or
authorizations the failure of which to be made or obtained would not have a
Material Adverse
Effect.
4.5 Compliance with Laws and
Other Instruments. The Buyer has conducted its business in a
manner that is in compliance with applicable laws, regulations, judgments,
decrees and orders of India and all states, foreign countries or other
governmental bodies and agencies having jurisdiction over its business except
where such noncompliance would not have aMaterial Adverse
Effect on Buyer. The Buyer is not in breach of or default
under or, to its knowledge, alleged to be in material breach of or default under
of its material Contracts, and the Buyer does not know of any condition or
circumstances that, currently or after notice or the lapse of time, is likely to
result in a breach of, default under or loss of benefits under any such material
Contract.
4.6 Securities
Filings. The Buyer has filed and made available to Seller and
its representatives, all forms, reports and documents required to be filed by it
with all applicable Governmental Bodies relating to its securities during the
last three (3) years prior to the date of this Agreement (collectively, the
“Buyer Securities
Filings”). As of the respective dates they were filed, (i) the
Buyer Securities Filings were prepared, and all forms, reports and documents
filed with any Governmental Body after the date of this Agreement, will be
prepared, in all material respects in accordance with the requirements of the
applicable laws of the applicable governing Governmental Body and (ii) none of
the Buyer Securities Filings contained, nor will any forms, reports and
documents filed after the date of this Agreement contain, any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading, except to the
extent superseded by a Buyer Securities Filing filed subsequently and prior to
the date hereof.
4.7 Title to
Property. The Buyer has good and marketable title to all of
its properties and assets except for Liens incurred in the normal course of
business.
4.8 Solvency. No
insolvency proceeding of any character including bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting,
the Buyer (other than as a creditor) are pending or are being contemplated by
the Buyer, or are, to the knowledge of the Buyer, being threatened against the
Buyer by any other Person, and the Buyer has not made any assignment for the
benefit of creditors or taken any action in contemplation of which that would
constitute the basis for the institution of such insolvency
proceedings. Immediately after giving effect to the consummation of
the transactions contemplated by this Agreement: (a) the Buyer will be able to
pay its Liabilities as they become due; and (b) taking into account all pending
and threatened litigation, final judgments against the Buyer in actions for
money damages are not reasonably anticipated to be rendered at a time when, or
in amounts such that, the Buyer will be unable to satisfy any such judgments
promptly in accordance with
their terms (taking into account the maximum probable amount of such
judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered) as well as all other obligations of the
Buyer.
4.9 Litigation. Other
than as disclosed in the Buyer Securities Filings filed since July 1, 2007,
there is no litigation, proceeding or investigation, pending or, to the Buyer’s
knowledge, threatened, relating to Buyer, the outcome of which would have a Material Adverse
Effect.
4.10 Financing. The
Buyer has all funds necessary to consummate the transactions contemplated by
this Agreement.
5. POST-SIGNING
COVENANTS.
5.1 Conduct of
Business. From the date hereof through the date of Closing,
except as contemplated by this Agreement, the Seller agrees:
(a) Not to
amend the Company Agreement;
(b) Not to
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other
reorganization;
(c) Not to
take any action, or refrain from taking any action, the result of which would be
reasonably likely to cause any of the representations and warranties of the
Seller contained in Section 3 to be no
longer true and correct in all material respects; or take any action, or refrain
from taking any action, that would be a material breach of any covenant of
Seller contained herein.
5.2 Consents, Filings and
Authorizations; Efforts to Consummate. As promptly as
practicable after the date hereof, Buyer and Seller shall make all filings and
submissions under such laws as are applicable to them or to their respective
affiliates and as may otherwise be required for them to consummate the
transactions contemplated by this Agreement in accordance with the terms of this
Agreement and shall consult with each other prior to such filing and shall not
make any such filing or submission to which the Seller or Buyer, as the case may
be, reasonably objects in writing. All such filings shall comply in
form and content in all material respects with applicable
laws. Subject to the terms and conditions herein, each party, without
payment or further consideration, shall use commercially reasonable efforts to
take or cause to be taken all action and to do or cause to be done all things
necessary, proper or advisable under applicable laws, to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated by
this Agreement, including, but not limited to, obtaining all required consents,
whether private or governmental, required in connection with such party’s
performance of such transactions and each party shall cooperate with the other
in all of the foregoing.
5.3 Exclusivity. From
and after the Effective Date until the earlier of the Closing or termination of
this Agreement in accordance with its terms, the Seller shall not (and the
Seller shall cause the officers, directors, employees, representatives and
agents of the Seller, including investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any Person or
group (other than Buyer, any of its affiliates or representatives) concerning
any Acquisition Proposal. The Seller shall not approve or recommend,
or propose to approve or recommend any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal. Upon execution of
this Agreement, the Seller shall immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and the Seller shall request (or if the Seller has the
contractual right to do so, demand) the return of all documents and other data
previous furnished to others in connection with the Seller’s efforts in
connection with such potential transaction. The Seller shall
immediately notify Buyer of the existence of any proposal or inquiry received by
the Seller, and the Seller shall immediately communicate to Buyer the terms of
any proposal or inquiry which the Seller may receive (and shall immediately
provide to Buyer copies of any written materials received by the Seller in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the party making such proposal or inquiry.
5.4 Notices of Certain
Events. Prior to the Closing, the Seller, on the one hand, and
Buyer, on the other hand, shall promptly notify the other of:
(a) any
notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the Transaction;
(b) any
notice or other oral or written communication from any Governmental Body in
connection with the Transaction or relating to the Business Assets;
(c) any
event, condition or circumstance occurring from the date hereof through the
Closing that would constitute a violation or breach of any representation or
warranty, whether made as of the date hereof or as of the Closing, or that would
constitute a violation or breach of any covenant of any party;
(d) any
failure of the Seller or Buyer, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder;
(e) any
material developments affecting the assets, Liabilities, business prospects,
financial condition, operations, results of operations or customer, supplier or
employee relations of the Seller with respect to the Business or the Business
Assets; and
(f) any
change that could reasonably be expected to have a Material Adverse Effect, or
could delay or impede the ability of the Seller or Buyer to perform its
obligations pursuant to this Agreement and to consummate the
Transaction.
5.5 Employment
Matters.
(a) From the
date hereof through the Closing, the Seller shall cooperate with and permit
Buyer to communicate in writing with the Employees, at reasonable times and upon
reasonable notice, concerning Buyer’s plans, operations and general personnel
matters and to interview the Employees and review the personnel records and such
other information concerning the Employees as Buyer may reasonably request
(subject to obtaining any legally required permission and to other applicable
laws). The Seller shall be solely responsible for any notification
and Liability under the Worker Adjustment and Retraining Notification Act
relating to any termination of any of its employees from employment with the
Seller occurring prior to or after the date of this Agreement, whether or not in
connection with the Transaction. Other than the specific Liabilities
set forth in Schedule
5.5(a), the Seller shall be responsible for all Liabilities for employee
or independent contractor compensation and benefits accrued or otherwise arising
out of services rendered by its Employees, directors and independent contractors
prior to the Closing or arising by reason of actual, constructive or deemed
termination of their service relationship with the Seller at Closing, including
all costs relating to the continuation of health benefits under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, with respect to Employees
not hired by Buyer after the Closing Date.
(b) No
provision of this Section 5.5 shall
create any third party beneficiary or other rights in any Employee or former
employee in respect of continued or resumed employment in the Seller’s Business,
or with the Company or Buyer, and no provision of this Section 5.5 shall
create any rights in any such persons in respect of any benefits that may be
provided under any plan or arrangement which may be established by the Company
or Buyer.
5.6 Public
Announcements. From and after the date of this Agreement until
the Closing, Buyer and the Seller agree not to make any public announcement or
other disclosure concerning this Agreement or the transactions contemplated
herein without obtaining the prior consent of the other party as to form,
content and timing; provided, however, that a party’s consent shall not be
unreasonably withheld. Notwithstanding the foregoing, if, upon advice
of legal counsel, either party determines that public announcement or disclosure
is required by applicable law, then the other party shall have the right to
review and comment upon (but not approve) any such press release or public
statement prior to its issuance, which review and comment shall be
expeditious.
5.7 Confidentiality. Buyer
and Seller shall comply with, and shall cause their officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, the “Representatives”) to comply
with, all of their respective obligations under the Confidentiality Agreement
dated [April 22,] 2008 (the “Confidentiality Agreement”)
between Seller and Buyer. Buyer and Seller will hold, and will cause
their Representatives to hold, in confidence all documents and information
furnished to them by or on behalf of the other party in connection with the
transactions contemplated by this Agreement in accordance with the provisions of
the Confidentiality Agreement.
5.8 Expenses. Except
as otherwise specifically provided in this Agreement, each of the parties shall
bear its own expenses incurred in connection with the preparation, execution and
performance of this Agreement and the Transaction, including all fees and
expenses of its representatives, provided that Buyer shall reimburse Seller for
one half of any sales, transfer or other Taxes paid by Seller arising out of or
in connection with Seller’s transfer of the Business Assets to the Company
pursuant to Section 2.4(a) above.
5.9 Customer
Notifications. Promptly following the execution of this
Agreement, Seller and Buyer shall discuss and mutually agree upon which
Customers shall receive written notification of the transactions contemplated by
this Agreement and a corresponding request for approval and acknowledgement of
the assignment and/or transfer to the Company of the services that are provided
in connection with the Business, which are currently being provided by the
Seller to such Customers. Any such notification shall be in the form
of a letter reviewed and approved by Buyer, which approval shall not be
unreasonably withheld.
6. CONDITIONS TO
CLOSING.
6.1 Conditions to the
Obligations of the Seller and the Buyer. The obligations of
the Seller and Buyer to consummate the Transaction are subject to the
satisfaction or, if permitted by applicable law, waiver of the following
conditions on or prior to the Closing:
(a) No
statute, rule or regulation shall have been enacted, and no temporary
restraining order, preliminary or permanent injunction issued by any court of
competent jurisdiction shall be in effect, preventing the consummation of the
Transaction; provided, however, that each party shall have used its reasonable
best efforts to prevent that entry of such orders or injunctions and to appeal
as promptly as possible any such orders or injunctions that may be entered;
and
(b) All
consents, approvals and authorizations legally required to be obtained to
consummate the Transaction shall have been obtained from all Governmental Bodies
except to the extent that such failure would not result in a Material Adverse
Effect.
6.2 Conditions to Obligations of
the Seller. The obligations of the Seller to consummate the
Transaction is subject to the fulfillment prior to the specified date or at the
time of Closing of the following conditions with respect to Buyer, any one or
more of which may be waived in whole or in part by the Seller (and which
unsatisfied conditions, if any, shall be deemed waived upon the
Closing):
(a) Each of
the representations and warranties of Buyer contained in this Agreement, any
Transaction Document to which it is a party and in any certificate or other
writing delivered by Buyer pursuant hereto that is expressly qualified by a
reference to materiality shall be true, complete and correct as so qualified,
and each of the representations and warranties of Buyer that is not so qualified
shall be true and correct in all material respects both when made and on and as
of the Closing as if made at and as of the Closing (other than representations
and warranties which address matters only as of a certain date which shall have
been true, complete and correct as of such certain date), with only such
exceptions as would not have a Material Adverse Effect on Buyer.
(b) Buyer
shall have performed and complied in all material respects with all agreements,
obligations and covenants set forth in this Agreement and required to be
performed or complied with by it on or prior to the Closing.
(c) Evidence
of the initiation of a wire transfer for the Cash Consideration portion of the
Purchase Price shall have been provided by Buyer to Seller.
(d) Buyer
shall have delivered to the Seller the following:
a) A
certificate, dated as of the date of Closing, executed on behalf of Buyer by an
officer of Buyer and certifying that the matters set forth in Section 6.2(a) and
(b) hereof have
been satisfied; and
b) Duly
executed copies of each Transaction Document to be executed and delivered by the
Buyer.
6.3 Conditions to Obligations of
Buyer. The obligations of Buyer to consummate the Transaction
is subject to the fulfillment prior to the specified date or at the time of
Closing of the following conditions with respect to the Seller, any one or more
of which may be waived in whole or in part by Buyer (and which unsatisfied
conditions, if any, shall be deemed waived upon the Closing):
(a) Each of
the representations and warranties of the Seller contained in this Agreement,
any Transaction Document to which its is a party and in any certificate or other
writing delivered by the Seller pursuant hereto that is expressly qualified by a
reference to materiality shall be true, complete and correct as so qualified,
and each of the representations and warranties of Seller that is not so
qualified shall be true, complete and correct in all material respects both when
made and on and as of the Closing as if made at and as of the Closing (other
than representations and warranties which address matters only as of a certain
date which shall have been true, complete and correct as of such certain date),
with only such exceptions as would not have a Material Adverse
Effect.
(b) The
Seller shall have performed and complied in all material respects with all
agreements, obligations and covenants set forth in this Agreement and required
to be performed or complied with by it on or prior to the date of
Closing.
(c) During
the period from the date hereof to the Closing, there shall not have occurred
any Material Adverse Effect.
(d) The
Business Assets shall have been transferred or assigned from the Seller to the
Company free and clear of all Liens (other than Liens for Taxes not yet due and
payable) and the Seller shall have taken all steps necessary to terminate all
UCC financing statements which have been filed with respect to such Lien or
other security interests.
(e) The
Seller shall have executed and delivered the Transaction Documents.
(f) The
Seller shall have delivered to Buyer the following:
a) A
certificate, dated as of the Closing, executed on behalf of the Seller by the
Chief Executive Officer of the Seller and certifying that the matters set forth
in Section
6.3(a), (b) and (c) hereof have been
satisfied and attaching: (A) a true calculation of the Company’s Net Assets as
of the Closing in a form that identifies the type and value of the Net Assets;
(B) a true accounting of the Company Liabilities as of the Closing; (C) an
updated Schedule 1.13 (Consultants); and (D)
an updated Schedule
1.20 (Employees);
b) A
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
the Seller certifying, among other things, that attached or appended to such
certificate: (A) is a true and correct copy of the Company Agreement, and all
amendments thereto and (B) is a true copy of all corporate actions taken by
Seller, including resolutions of its board of directors authorizing the
consummation of the Transaction and the execution, delivery and performance of
this Agreement and each of the Transaction Documents to be delivered by the
Seller pursuant hereto;
c) Certificates
of good standing (including tax good standings) from the appropriate state
agencies, dated as of a date not more than fifteen (15) days prior to Closing,
certifying that the Seller and the Company are in good standing in the State of
Delaware, the State of California and in such other jurisdictions as the
Business Assets may be located; and
d) True,
correct and complete copies of all Required Consents.
7. THE PARTIES’ OBLIGATIONS
AFTER CLOSING.
7.1 Contributions to Company
Working Capital. Immediately following the Closing, Buyer (or
an affiliate of Buyer) and Seller (or an affiliate of Seller) shall wire
$4,025,000 and $975,000, respectively, as a capital contribution to the Company,
which the Company shall use for working capital and operational
purposes.
7.2 Referral
Arrangement. The parties shall maintain a business referral
relationship pursuant to the terms of the Referral Agreement.
7.3 Subcontractor
Arrangement. Seller agrees that for any Customer who does not
specifically consent to the assignment of that Customer’s applicable contract to
the Company prior to Closing, that Seller shall use the Company as the exclusive
subcontractor for services to be provided to such Customers pursuant to the
terms of the Subcontractor Agreement.
7.4 Employee Leasing
Arrangement. In order to maintain certain certification
standards, including, without limitation, with respect to Cisco, Hewlett
Packard, Symantec, Microsoft, etc., Seller will retain certain employees
necessary for such certifications. Such employees will be on Seller’s
payroll but will render services to the Company and the Company will pay the
costs for such employees pursuant to the terms of the Leasing
Agreement.
7.5 Noncompete.
(a) During
the three year period commencing on the Effective Date, Seller (for purposes of
this Section
7.5(a), the term “Seller” shall include all
affiliates and subsidiaries of Seller except for Premier BPO, Inc. and Ovex
Technologies (Private) Limited) shall not directly or indirectly (a) own,
manage, operate or control, or prepare to or plan to conduct or assist any
person or entity to conduct or (b) participate in the ownership, management,
operation or control of, or be employed by, or act as a consultant, advisor,
creditor, agent, employee, joint venturer, shareholder, partner, member or other
security holder or creditor to or be connected in any manner with any business,
corporation, person, firm or other entity that is engaged in any business that
is competitive with the Business of the Company conducted in the United States
(a “Company Competitive
Business”); provided, however, that nothing
herein shall prohibit Seller’s acquisition of up to five percent (5%) of any
class of securities of a Company Competitive Business (but without otherwise
participating in or contributing to the activities of such Company Competitive
Business). During the three year period commencing on the Effective
Date, Seller shall not directly or indirectly (a) solicit or attempt to solicit,
divert or take away or attempt to divert or take away, or otherwise interfere in
any fashion with, any former or existing partner, customer, client, account,
other business source, prospect or other potential business source for the
purpose of selling to such persons any service which is similar to or
competitive with any service sold or rendered by the Company related to the
Company Competitive Business, or (b) induce, influence, solicit, hire, engage or
attempt to induce, influence, solicit, hire or engage any employee of or
consultant to the Company to do any of the foregoing or to discontinue such
person's association with the Company or obtain such person as an employee,
consultant, or in a similar capacity for another business; provided, however, that the
foregoing limitations shall not apply to general solicitations by Seller that
are not specifically directed at the foregoing persons or
entities. Notwithstanding anything in this Section 7.5 to the
contrary, in the event that Seller sells some or all of its business after the
date of this Agreement (other than as contemplated by this Agreement), the
purchaser of such business shall not be bound by this Section
7.5.
(b) During
the three year period commencing on the Effective Date, Buyer (for purposes of
this Section
7.5(b), the term “Buyer” shall include all
affiliates and subsidiaries of Seller including the Company) shall not directly
or indirectly (a) own, manage, operate or control, or prepare to or plan to
conduct or assist any person or entity to conduct or (b) participate in the
ownership, management, operation or control of, or be employed by, or act as a
consultant, advisor, creditor, agent, employee, joint venturer, shareholder,
partner, member or other security holder or creditor to or be connected in any
manner with any business, corporation, person, firm or other entity that is
engaged in the United States in the business of hardware sales, software sales,
configuration services or third party warranty services (a “Seller Competitive
Business”);
provided, however, that nothing
herein shall prohibit Buyer’s acquisition of up to five percent (5%) of any
class of securities of a Seller Competitive Business (but without otherwise
participating in or contributing to the activities of such Seller Competitive
Business). During the three year period commencing on the Effective
Date, Buyer shall not directly or indirectly (a) solicit or attempt to solicit,
divert or take away or attempt to divert or take away, or otherwise interfere in
any fashion with, any former or existing partner, customer, client, account,
other business source, prospect or other potential business source for the
purpose of selling to such persons any product or service which is similar to or
competitive with any product or service sold or rendered by the Seller or any
affiliate related to the Seller Competitive Business, or (b) induce, influence,
solicit, hire, engage or attempt to induce, influence, solicit, hire or engage
any employee of or consultant to the Seller to do any of the foregoing or to
discontinue such person's association with the Seller or obtain such person as
an employee, consultant, or in a similar capacity for another business; provided, however, that the
foregoing limitations shall not apply to general solicitations by Buyer that are
not specifically directed at the foregoing persons or entities.
7.6 Receipt of
Funds.
(a) If Seller
(including its affiliates) receives any payments or other revenues after the
effective date that are related in whole or in part to services provided by the
Company after effective date, then Seller shall provide the Company
with prompt written notice of the receipt of such amounts. The
written notice referred to in the preceding sentence shall provide the following
information: (i) the total amount of such payment and the name of the Customer
or other party that provided the payment and (ii) the amount, if any, of the
payment that the Seller believes is applicable to services provided after the
effective date (including detailed documentation of such
services). Seller shall return that portion of the payments to the
Company that Seller believes is applicable to services provided by the Company
along with the written notice described above.
(b) If the Company (including its
affiliates) receives any payments or other revenues after the
effective date that are related in whole or in part to services
provided by the Seller (including its affiliates) prior to
effective date, then the Company shall provide Seller with
prompt written notice of the receipt of such amounts. The written
notice referred to in the preceding sentence shall provide the following
information: (i) the total amount of such payment and the name of the Customer
or other party that provided the payment and (ii) the amount, if any, of the
payment that the Company believes is applicable to services provided prior to
the effective date (including detailed documentation of such
services). The Company shall return that portion of the payments to
Seller that the Company believes is applicable to services provided by Seller
along with the written notice described above.
7.7 Delivery of Company
Property. At Closing, Seller agrees to promptly deliver to the
Company the Business Assets as well as all customer lists, customer account
records, business plans, training and operation materials and memoranda,
personnel records, pricing information, financial information concerning or
relating solely to the Business (whether printed or in electronic or digital
form).
8. TERMINATION OF THE
AGREEMENT.
8.1 Termination of
Agreement. This Agreement may be terminated and the
Transaction may be abandoned at any time prior to the Closing:
(a) By mutual
written consent of the Seller and Buyer;
(b) By either
the Seller or Buyer if the Closing has not occurred on or prior to the thirtieth
(30th) day
following the date of this Agreement (the “Final Date”) and if failure of
the Closing to occur is not the result of a breach of this Agreement or a
willful failure to complete the closing conditions by the party who is
terminating the Agreement;
(c) By the
Seller, if there has been a material misrepresentation or breach by Buyer of a
representation, warranty or covenant contained herein which would result in the
failure to satisfy one or more of the conditions set forth in Sections 6.2(a) or
6.2(b), and in
any such case, such breach shall be incapable of being cured or, if capable of
being cured, shall not have been cured by the Final Date;
(d) By Buyer,
if there has been a material misrepresentation or breach by Seller of a
representation, warranty or covenant contained herein which would result in the
failure to satisfy one or more of the conditions set forth in Sections 6.3(a) or
6.3(b), and in
any such case, such breach shall be incapable of being cured or, if capable of
being cured, shall not have been cured by the Final Date;
(e) By Buyer,
on the one hand, or the Seller, on the other hand, if there shall be any law
that makes consummation of the Transaction illegal or otherwise prohibited, or
if any order enjoining Buyer, on the one hand, or the Seller, on the other hand,
from consummating the Transaction is entered and such order shall have become
final and nonappealable, provided that the party seeking to terminate this
Agreement pursuant to this provision shall have used all reasonable efforts to
remove or vacate such order.
8.2 Effect of Termination; Right
to Proceed. In the event of the termination or abandonment of
this Agreement and the Transaction by any party hereto pursuant to the terms of
this Agreement, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination or abandonment of the Transaction is made, and there shall be no
liability or obligation thereafter on the part of Buyer or the Seller except (a)
for fraud and (b) for breach of this Agreement prior to such termination or
abandonment of the Transaction; provided, however, that the provisions of
Sections 5.7, 5.8, 5.9 and 10 shall remain in full force and effect and survive
any termination of this Agreement.
9. SURVIVAL, ESCROW AND
INDEMNIFICATION.
9.1 Survival of Representations
and Warranties. Each party hereto has the right to rely fully
upon the representations, warranties, covenants and agreements of the other
party contained in this Agreement or in any certificate delivered pursuant to Section 6.2(d) or Section 6.3(f) of this Agreement or disclosed
on any Schedule hereto unless waived by the parties. All of the
representations, warranties, covenants, agreements and Closing certifications
made by each party herein shall survive the execution and delivery of this
Agreement and the Closing for one (1) years; provided further,
that: (a) Claims related to fraud, criminal activity or intentional misstatement
or misconduct by either party shall survive for the applicable statute of
limitations; and (b) Claims related to Sections 9.3(c) and
9.3(d) shall
survive for the applicable statute of limitations. There shall be no
termination of any such representation or warranty as to which a Claim has been
asserted prior to the termination of such survival period.
9.2 Escrow.
(a) Within seventy-five (75) days following Closing or
signing of this agreement, Buyer shall deposit the Cash Earnout Amount
and either the Seller Earnout Shares or the Alternative Cash Earnout Amount, as
applicable (the “Seller Escrow
Amounts”) with U.S. Bank, N.A. (or other institution selected by the
Buyer with the reasonable consent of the Seller) as escrow agent (the “Escrow Agent”), such deposit
to be governed by the terms of the Escrow Agreement. In addition to
pursuing indemnification obligations directly from Seller, the Seller
Escrow Amounts shall be available to compensate the Buyer Indemnitees pursuant
to the indemnification obligations of the Seller set forth in Section
9.3(h). Except with respect to Section 9.3(h), the
Seller Escrow Amounts shall not be available to compensate the Buyer Indemnitees
for any other indemnification obligations of the Seller, rather, Buyer shall
pursue indemnification from Seller directly with respect to such indemnification
obligations. Pursuant to the terms of the Escrow Agreement, the
Seller Escrow Amounts shall be released by the Escrow Agent to Seller fourteen
months after the Closing.1
(b) Within seven (7) days following Closing, Seller
shall deposit 52,913 Series A Units (the
“Escrow Units”) with the
Escrow Agent, such deposit to be governed by the terms of the Escrow
Agreement. The Escrow Units shall not be available to compensate the
Seller Indemnitees pursuant to the indemnification obligations of the Buyer set
forth below, rather, Seller shall pursue any indemnification from Buyer
directly. Notwithstanding the foregoing, (i) if Buyer fails to
deliver the Cash Earnout Amount and either the Seller Earnout Shares or the
Alternative Cash Earnout Amount within seventy-five (75) calendar days of the
Closing, Seller may elect at its sole discretion, in lieu of some or all of such
Cash Earnout Amount and either Seller Earnout Shares or Alternative Cash Earnout
Amount, to receive a pro rata release of the Escrow Units back to Seller, or
(ii) in the event that either the Seller Earnout Shares are not freely tradable
or the Alternative Cash Earnout Amount has not been delivered on the one year
anniversary of the Closing, Seller may elect at its sole discretion to surrender
some or all of the Seller Earnout Shares back to Buyer in exchange for the pro
rata release of the Escrow Units back to Seller. Pursuant to the terms of
the Escrow Agreement, in the event that neither of (i) or (ii) above has
occurred, the Escrow Units will be eligible for release by the Escrow Agent
twelve months after the Closing. Buyer covenants and agrees that in
the event that any of (i) or (ii) above has occurred, it will immediately
execute and deliver such documents and take such actions as are reasonably
necessary to effect the assignment or return of the Escrow Units to Seller and
will promptly reimburse Seller for any additional Taxes that Seller incurs as a
result of such event. Further, Buyer and Seller agree that to the extent that Buyer no longer has a majority ownership interest in the Company, they shall execute and deliver any and all
documents necessary to vote their membership interests so that Buyer will
designate one representatives on the Managing Board (as defined in the Company Agreement) and Seller will designate two representatives on
the Managing Board
9.3 Indemnification by
Seller. Subject to the provisions set forth in Section 9.1 and
Section 9.6, the Seller shall indemnify, save and hold Buyer and its
representatives (collectively, “Buyer Indemnitees”) harmless
from and against all demands, claims, allegations, assertions, actions or causes
of action, assessments, losses, damages, deficiencies, Liabilities, costs and
expenses (including reasonable legal fees, interest, penalties, and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing; collectively, “Damages”) with respect to or
arising from:
(a) The
Seller’s breach of any representation or warranty contained in this Agreement,
the Transaction Documents to which the Seller is a party or in any certificate
or document furnished pursuant hereto by the Seller;
(b) The
Seller’s breach or non fulfillment of any covenant or agreement made by the
Seller in or pursuant to this Agreement or exhibits and schedules attached in
any Transaction Document.
(c) Any Taxes
arising as a result of the Seller’s operation of the Business or ownership of
the Business Assets prior to the Closing;
(d) Any
Liability arising out of the ownership or operation of the Business Assets or
the Business prior to the Closing;
(e) Buyer’s
failure to obtain any consent required under the terms of a Lease;
(f) Any
specifics from the Seller Disclosure Schedule;
(g) Seller’s
failure to obtain board of directors consent to consummate the
transactions contemplated by this Agreement;
(h) The
Company’s failure, for any reason, to achieve Target Revenues (for the purposes
of this subsection, The valuation will be readjusted and shall be
calculated on a ratio of 30:29 basis (e.g. for each $30 shortfall in the Target
Revenues, the valuation adjustment shall be $29
(i) any and
all Damages arising from any action or order incidental to the foregoing or the
enforcement of such indemnification.
9.4 Indemnification by
Buyer . Subject to the provisions set forth in Section 9.1 and
Section 9.6, the Buyer shall indemnify, save and hold Seller and its
representatives (collectively, “Seller Indemnitees”) harmless from and against
all demands, claims, allegations, assertions, actions or causes of action,
assessments, losses, damages, deficiencies, Liabilities, costs and expenses
(including reasonable legal fees, interest, penalties, and all reasonable
amounts paid in investigation, defense or settlement of any of the foregoing;
collectively, “Damages”)
with respect to or arising from:
(a) The
Buyer’s breach of any representation or warranty contained in this Agreement,
the Transaction Documents to which the Buyer is a party or in any certificate or
document furnished pursuant hereto by the Buyer;
(b) The
Buyer’s breach or non fulfillment of any covenant or agreement made by the Buyer
in or pursuant to this Agreement or in any Transaction Document to which the
Buyer is a party;
(c) Any Taxes
arising as a result of the Buyer’s operation of the Business or ownership of the
Business Assets after the Closing;
(d) Any
Liability arising out of the ownership or operation of the Business Assets or
the Business after the Closing;
(e) Buyer’s
failure to obtain to obtain board of directors consent to consummate
the transactions contemplated by this Agreement;
(f) Any
specifics from the Buyer Disclosure Schedule; and
(g) Any and
all Damages arising from any action or order incidental to the foregoing or the
enforcement of such indemnification.
9.5 Notice of
Claims. If any Buyer Indemnitee or Seller Indemnitee
(collectively, an “Indemnitee” or “Indemnitees”) believes that it
has suffered or incurred or will suffer or incur any Damages for which it is
entitled to indemnification under this Section 9, such
Indemnitee shall so notify the Seller or the Buyer, as applicable (each, an
“Indemnitor”), with
reasonable promptness and reasonable particularity in light of the circumstances
then existing. If any Claim is instituted by or against a third party
with respect to which the Indemnitee intends to claim any Damages, such
Indemnitee shall promptly notify the Indemnitor of such Claim. The
notice provided by the Indemnitee to the Indemnitor shall describe the Claim
(the “Asserted
Liability”) in reasonable detail and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Damages that have
been or may be suffered by the Indemnitee. The failure of an
Indemnitee to give any notice required by this Section shall not affect any of
such Party’s rights under this Section 9 or
otherwise except and to the extent that such failure is prejudicial to the
rights or obligations of the Indemnitor.
9.6 Limitation of Claims Against
the Seller.
(a) The
Liability of the Indemnitors for indemnifiable Damages pursuant to this Section 9 shall not
be payable unless and until the aggregate amount of Damages suffered or incurred
by the Buyer Indemnitees, on the one hand, or the Seller Indemnitees, on the
other hand, exceeds $250,000; thereafter, the Buyer Indemnitees or the Seller
Indemnitees, as applicable, shall be entitled to seek compensation for all
Damages including the $250,000 threshold set forth in this Section 9.6;
provided, that the limitation set forth in this Section 9.6 shall not
apply to any Damages arising from, or directly or indirectly relating to (i) any
fraud, criminal activity or intentional misstatement or misconduct by the
Indemnitor, (ii) Sections 9.3(c),
(d), (e), (g) or (h), or (iii) Sections 9.4(c),
(d) or (e).
(b) The
Indemnitors shall not have any Liability for indemnifiable damages pursuant to
this Section
9 to the extent the aggregate amount of Damages suffered or
incurred by the Indemnitees exceeds Three Million Dollars ($3,000,000);
provided, that any Damages arising from, or directly or indirectly relating to
(i) fraud, criminal activity or intentional misstatement or misconduct by the
Indemnitor, (ii) Sections 9.3(c),
(d), (g) or (h), or (iii) Sections 9.4(c),
(d) or (e) shall not be
subject to, or limited by the limitation upon the indemnification amounts set
forth in this Section
9.6(b).
(c) For all
purposes of this Section 9, “Damages” shall be net of any
insurance or other recoveries payable to an Indemnitee or its affiliates in
connection with the facts giving rise to the right of
indemnification.
9.7 Survival of Indemnification
Claims. The indemnification obligations set forth in this
Section 9 shall survive the Closing.
9.8 Tax Effect of
Indemnification Payments. Any indemnity payments made by the
Seller to Buyer Indemnitees pursuant to this Agreement shall be treated for all
Tax purposes as adjustments to the Purchase Price.
10. MISCELLANEOUS
PROVISIONS.
10.1 Modifications;
Waiver. No modification or waiver of this Agreement or any
part hereof shall be valid or effective unless in writing and signed by the
party sought to be charged therewith and no waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other or subsequent breach
or condition, whether of like or different nature. No course of
dealing between the parties hereto will be deemed effective to modify, amend or
discharge any part of this Agreement or the rights or obligations of any party
hereunder.
10.2 Partial
Invalidity. If any provision of this Agreement shall be held
by competent authority to be invalid or unenforceable, such provision shall be
construed so as to be limited or reduced to be enforceable to the maximum extent
compatible with the law as it shall then appear. The total invalidity
or unenforceability of any particular provision of this Agreement shall not
affect the other provisions hereof and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were
omitted.
10.3 Notices. Any
notice or other communication required or permitted under this Agreement shall
be in writing and shall be deemed to have been duly given (i) upon delivery,
(ii) on the first day following delivery to a nationally recognized United
States overnight courier service, fee prepaid, return receipt or other
confirmation of delivery requested, or (iii) upon confirmation of receipt by
telefacsimile. Any such notice or communication shall be directed to
a party at its address set forth below or at such other address as may be
designated by a party in a notice given to all other parties hereto in
accordance with the provisions of this Section.
Buyer’s Address for
Notice:
Allied
Digital Services Ltd
Attention:
▇▇▇▇▇ ▇▇▇▇
77/79
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (91-22-220-02020
Facsimile: 91-22-220-64170
With a
copy to (which shall not constitute notice): :
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
DLA Piper
US LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Seller’s Address for
Notice:
En
Pointe Technologies
Attention:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (310—337-5250
Facsimile: (▇▇▇-▇▇▇-▇▇▇▇
With a
copy to (which shall not constitute notice):
▇▇▇▇ ▇.
▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
10.4 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California pertaining to contracts made
and to be wholly performed within such state, without taking into account
conflicts of laws principles.
10.5 Further
Assurances. The parties agree to take such further actions and
execute such additional documents and instruments as may be reasonably required
by the parties hereto or in order to more effectively carry out the terms of
this Agreement and the intentions of the parties.
10.6 Jurisdiction and
Venue. In the event that any legal proceedings are commenced
in any court with respect to any matter arising under this Agreement, the
parties hereto specifically consent and agree that the courts of the State of
California and/or the United States Federal Courts located in the State of
California shall have exclusive jurisdiction over each of the parties and such
proceedings. The parties hereto agree that they will not contest the
venue of any such action brought in Los Angeles County, California and/or the
United States District Court for the Southern District of
California.
10.7 Attorneys’
Fees. Should any party hereto employ an attorney for the
purpose of enforcing or construing this Agreement, or any judgment based on this
Agreement, in any legal proceeding whatsoever, including insolvency, bankruptcy,
arbitration, declaratory relief, or other litigation, the prevailing party shall
be entitled to receive from the other party or parties thereto reimbursement for
all attorneys’ fees and all costs, including, but not limited to, service of
process costs, expert witness fees, and the cost of any bonds, and such
reimbursement shall be included in any judgment or final order issued in that
proceeding.
10.8 Headings. Except
for the provisions of Section 1, the
headings contained in this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
10.9 Gender. Whenever
the context may require, any pronoun used herein shall include the corresponding
masculine, feminine or neuter forms and the singular of nouns, pronouns and
verbs shall include the plural and vice versa.
10.10 Fair
Meaning. This Agreement shall be construed according to its
fair meaning, the language used shall be deemed the language chosen by the
parties hereto to express their mutual intent, and no presumption or rule of
strict construction will be applied against any party hereto.
10.11 Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of such counterparts shall together constitute but one and
the same instrument which may be sufficiently evidenced by one
counterpart.
10.12 Binding Effect;
Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. No party may assign its rights or obligations under this
Agreement without receipt of the other parties’ prior written
consent.
10.13 Entire
Agreement. This Agreement and the schedules and exhibits
hereto, as well as the Confidentiality Agreement, contains the entire
understanding and agreement between the parties hereto and supersedes any prior
understandings, memoranda or other written or oral agreements between or among
any of them respecting the within subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between or among any of the parties relating to the subject matter of this
Agreement which are not fully expressed herein or expressly incorporated
herein.
10.14 Exhibits. All
exhibits to which reference is made in this Agreement are deemed to be
incorporated by each reference as if fully set forth.
10.15 Opportunity to Consult with
Counsel. Seller and Buyer each acknowledge that they have had
a reasonable opportunity to consult with their own independently selected legal
counsel concerning the meaning and terms of this Agreement and the consequences
of entering into it. Each party represents and warrants that it is
entering into this Agreement of its own free will, based on its own business
judgment and is not relying on any representations or warranties by any party
except as expressly set forth in this Agreement.
IN
WITNESS WHEREOF, the parties hereto have duly executed this Limited Liability
Company Interest Purchase Agreement as of the date first set forth
above.
|
BUYER:
Allied Digital Services
Limited,
an Indian limited company
By:
/s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇
Title:
Chairman & Managing Director
|
SELLER:
En Pointe Technologies Sales,
Inc.,
a Delaware corporation
By:
/s/ Attiazaz ("▇▇▇") Din
Name:
Attiazaz ("▇▇▇") Din
Title:
Chief Executive Officer
|
|
COMPANY:
En Pointe Global Services, LLC,
a
Delaware limited liability
company
By:
/s/ Attiazaz ("▇▇▇") Din
Name:
Attiazaz ("▇▇▇") Din
Title:
Chief Executive Officer
|
EXHIBIT
A
ASSIGNMENT
OF LLC INTEREST
THIS
ASSIGNMENT OF LLC INTEREST (“Assignment”) is made effective
as of July 9, 2008 (the “Effective Date”), by and
between En Pointe Technologies
Sales, Inc., a Delaware corporation (“Assignor”), and Allied Digital Services Limited, an
Indian limited company (“Assignee”), with reference to
the following:
A. WHEREAS,
Assignor holds a membership interest, comprised of 80,500 Series A Common Units
(“Series A Units”), in
En Pointe Global
Services, LLC, a Delaware limited liability company (the “Company”), as such interest is
more fully described in the Company
Agreement:.
B. Assignor
and Assignee, among others, have entered into that certain Limited Liability
Company Interest Purchase Agreement, executed concurrently herewith, regarding
the purchase and sale of the Series A Units (the
“Purchase
Agreement”).
C. Pursuant
to the Purchase Agreement, Assignor desires to assign the Series A Units to Assignee,
and Assignee desires to accept such assignment.
D. The parties agree that 80,500 of the Series A Units or a
part thereof may be held in the name of Allied Digital Services Inc US, a wholly
owned subsidiary of Assignee or any other subsidiary which is majority owned by
Allied Digital Services Ltd..
E. Capitalized
terms not otherwise defined herein shall have the meaning set forth in the
Purchase Agreement.
NOW,
THEREFORE, the parties agree as follows:
1. ASSIGNMENT. Assignor
hereby assigns, conveys, transfers and delivers to Assignee the Series A Units.
2. ACCEPTANCE OF ASSIGNMENT AND
ASSUMPTION. Assignee hereby accepts such assignment of the
Series A Units. Assignee hereby
agrees to be bound by the Company Agreement. Assignee acknowledges
and agrees (i) that the Series A Units are
being purchased for its own account for investment purposes and without the
intent of participating in a distribution or resale of the Series A Units, (ii) that the
Series A Units are
restricted securities under the Securities Act of 1933, as amended (the “Securities Act”), and may not
be sold or transferred absent registration or an applicable exemption from the
registration requirements of such Act and compliance with the terms of the
Company Agreement. Assignee represents that it is an “accredited
investor” as defined in the rules promulgated under the Securities
Act.
3. GENERAL
PROVISIONS.
3.1 Necessary
Acts. Each party agrees to perform any further acts, and to
execute and deliver any additional documents that may be reasonably necessary or
required by the parties hereto in order to carry out the intent and provisions
of this Assignment and the transactions contemplated hereby.
3.2 Entire
Agreement. This instrument contains the entire agreement
between the parties relating to the rights granted and the obligations herein
assumed. Any oral representations or modifications concerning this
instrument shall be of no force and effect, excepting a subsequent modification
in writing, signed by the party to be charged.
3.3 Captions;
Interpretation. Paragraph headings or captions are inserted as
a matter of convenience and reference, and in no way define, limit, extend or
describe the scope of this Assignment or any provision hereof. No
provision in this Assignment is to be interpreted for or against either party
because that party or the legal representative of that party drafted such
provision.
3.4 Governing
Law. This Assignment shall be governed by, construed and
enforced in accordance with the laws of the State of California.
3.5 Counterparts. This
Assignment may be executed in counterparts by the parties hereto and will become
effective and binding upon the parties at such time as all of the signatories
hereto have signed a counterpart of this Assignment. All counterparts
so executed shall constitute one instrument binding on all the parties
hereto.
3.6 Successors and
Assigns. This instrument shall bind and inure to the benefit
of the respective heirs, personal representatives, grantees, successors and
assigns of the parties hereto.
3.7 Attorneys
Fees. Should any party hereto employ an attorney for the
purpose of enforcing or construing this Agreement, or any judgment based on this
Assignment, in any legal proceeding whatsoever, including insolvency,
bankruptcy, arbitration, declaratory relief, or other litigation, the prevailing
party shall be entitled to receive from the other party or parties thereto
reimbursement for all attorneys’ fees and all costs, including, but not limited
to, service of process costs, expert witness fees, and the cost of any bonds,
and such reimbursement shall be included in any judgment or final order issued
in that proceeding.
IN
WITNESS WHEREOF, Assignee and Assignor have caused this Assignment to be
executed effective as of the date first above written.
|
ASSIGNOR:
En Pointe Technologies Sales,
Inc.,
a
Delaware corporation
By: /s/ Attiazaz ("▇▇▇")
Din
Name: Attiazaz ("▇▇▇")
Din
Title: Chief Executive
Officer
|
ASSIGNEE:
Allied Digital Services
Limited,
an Indian limited company
By: /s/ ▇▇▇▇▇
▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇
Title: Chairman & Managing
Director
|
1.
EXHIBIT
B
ESCROW
AGREEMENT
1.
EXHIBIT
C
LEASING
AGREEMENT
1.
EXHIBIT
D
LICENSE
AGREEMENT
1.
EXHIBIT
E
REFERRAL
AGREEMENT
EXHIBIT
F
SERVICES
AGREEMENT
EXHIBIT
G
SUBCONTRACT
AGREEMENT
|
DEFINITIONS
|
2
|
|
|
1.1
|
Agreement
|
2
|
|
|
1.2
|
Acquisition
Proposal
|
2
|
|
|
1.3
|
Assignment
|
2
|
|
|
1.4
|
Business
|
2
|
|
|
1.5
|
Business
Assets
|
2
|
|
|
1.6
|
Buyer
Indemnitees
|
2
|
|
|
1.7
|
Cash
Consideration
|
2
|
|
|
1.8
|
Cash
Earnout Amount
|
2
|
|
|
1.9
|
Claim
|
2
|
|
|
1.10
|
Closing
|
2
|
|
|
1.11
|
Company
Liabilities
|
2
|
|
|
1.12
|
Consultant
|
3
|
|
|
1.13
|
Contract
|
3
|
|
|
1.14
|
Conversion
Ratio
|
3
|
|
|
1.15
|
Customers
|
3
|
|
|
1.16
|
Damages
|
3
|
|
|
1.17
|
Dollar
|
3
|
|
|
1.18
|
Effective
Date
|
3
|
|
|
1.19
|
Employees
|
3
|
|
|
1.20
|
Escrow
Agent
|
3
|
|
|
1.21
|
Escrow
Agreement
|
3
|
|
|
1.22
|
Governmental
Body
|
3
|
|
|
1.23
|
Intellectual
Property Rights
|
3
|
|
|
1.24
|
Leases
|
3
|
|
|
1.25
|
Leasing
Agreement
|
4
|
|
|
1.26
|
Liability
|
4
|
|
|
1.27
|
License
Agreement
|
4
|
|
|
1.28
|
Lien
|
4
|
|
|
1.29
|
LLC
Interest
|
4
|
|
|
1.30
|
Material
Adverse Effect
|
4
|
|
|
1.31
|
Net
Assets
|
4
|
|
|
1.32
|
Parent
Securities Filings
|
5
|
|
|
1.33
|
Person
|
5
|
|
|
1.34
|
Purchase
Price
|
5
|
|
|
1.35
|
Referral
Agreement
|
5
|
|
|
1.36
|
Required
Consents
|
5
|
|
|
1.37
|
Seller
Disclosure Schedule
|
5
|
|
|
1.38
|
Seller
Earnout Shares
|
5
|
|
|
1.39
|
Services
Agreement
|
5
|
|
|
1.40
|
Subcontract
Agreement
|
5
|
|
|
1.41
|
Target
Revenues
|
5
|
|
|
1.42
|
Taxes
|
5
|
|
|
1.43
|
Transaction
Documents
|
5
|
|
2.
|
PURCHASE
AND SALE
|
5
|
|
|
2.1
|
Purchase
of Series A Units
|
5
|
|
|
2.2
|
Purchase
Price and Payment
|
6
|
|
|
2.3
|
Adjustment
to Cash Consideration
|
6
|
|
|
2.4
|
Transfer
Taxes; Asset Allocation Schedule
|
6
|
|
3.
|
REPRESENTATIONS
AND WARRANTIES OF SELLER
|
7
|
|
|
3.1
|
LLC
Interest
|
8
|
|
|
3.2
|
Corporate
Standing
|
8
|
|
|
3.3
|
Authority
|
8
|
|
|
3.4
|
Consents;
Conflicts
|
8
|
|
|
3.5
|
Intellectual
Property
|
8
|
|
|
3.6
|
Compliance
with Laws and Other Instruments
|
9
|
|
|
3.7
|
Employees
and Consultants
|
9
|
|
|
3.8
|
Title
to Property
|
10
|
|
|
3.9
|
Taxes
|
10
|
|
|
3.10
|
Solvency
|
10
|
|
|
3.11
|
Litigation
|
10
|
|
|
3.12
|
Securities
Filings
|
10
|
|
4.
|
REPRESENTATIONS
AND WARRANTIES OF BUYER
|
11
|
|
|
4.1
|
Corporate
Standing
|
11
|
|
|
4.2
|
Authority
|
11
|
|
|
4.3
|
Capitalization
|
11
|
|
|
4.4
|
Consents;
Conflicts
|
12
|
|
|
4.5
|
Compliance
with Laws and Other Instruments
|
12
|
|
|
4.6
|
Securities
Filings
|
12
|
|
|
4.7
|
Title
to Property
|
12
|
|
|
4.8
|
Solvency
|
12
|
|
|
4.9
|
Litigation
|
13
|
|
|
4.10
|
Financing
|
13
|
|
5.
|
POST-SIGNING
COVENANTS
|
13
|
|
|
5.1
|
Conduct
of Business
|
13
|
|
|
5.2
|
Consents,
Filings and Authorizations; Efforts to Consummate
|
13
|
|
|
5.3
|
Exclusivity
|
14
|
|
|
5.4
|
Notices
of Certain Events
|
14
|
|
|
5.5
|
Employment
Matters
|
15
|
|
|
5.6
|
Public
Announcements
|
15
|
|
|
5.7
|
Confidentiality
|
15
|
|
|
5.8
|
Expenses
|
16
|
|
|
5.9
|
Customer
Notifications
|
16
|
|
6.
|
CONDITIONS
TO CLOSING
|
16
|
|
|
6.1
|
Conditions
to the Obligations of the Seller and the
Buyer16
|
|
|
6.2
|
Conditions
to Obligations of the Seller
|
16
|
|
|
6.3
|
Conditions
to Obligations of Buyer
|
17
|
|
7.
|
THE
PARTIES’ OBLIGATIONS AFTER CLOSING
|
18
|
|
|
7.1
|
Contributions
to Company Working Capital
|
18
|
|
|
7.2
|
Referral
Arrangement
|
18
|
|
|
7.3
|
Subcontractor
Arrangement
|
18
|
|
|
7.4
|
Employee
Leasing Arrangement
|
18
|
|
|
7.5
|
Noncompete
|
19
|
|
|
7.6
|
Receipt
of Funds
|
20
|
|
|
7.7
|
Delivery
of Company Property
|
20
|
|
8.
|
TERMINATION
OF THE AGREEMENT
|
20
|
|
|
8.1
|
Termination
of Agreement
|
20
|
|
|
8.2
|
Effect
of Termination; Right to Proceed
|
21
|
|
9.
|
SURVIVAL,
ESCROW AND INDEMNIFICATION
|
21
|
|
|
9.1
|
Survival
of Representations and Warranties
|
21
|
|
|
9.2
|
Escrow
|
21
|
|
|
9.3
|
Indemnification
by Seller
|
22
|
|
|
9.4
|
Indemnification
by Buyer
|
23
|
|
|
9.5
|
Notice
of Claims
|
24
|
|
|
9.6
|
Limitation
of Claims Against the Seller
|
24
|
|
|
9.7
|
Survival
of Indemnification Claims
|
25
|
|
|
9.8
|
Tax
Effect of Indemnification Payments
|
25
|
|
10.
|
MISCELLANEOUS
PROVISIONS
|
25
|
|
|
10.1
|
Modifications;
Waiver
|
25
|
|
|
10.2
|
Partial
Invalidity
|
25
|
|
|
10.3
|
Notices
|
25
|
|
|
10.4
|
Governing
Law
|
26
|
|
|
10.5
|
Further
Assurances
|
26
|
|
|
10.6
|
Jurisdiction
and Venue
|
26
|
|
|
10.7
|
Attorneys’
Fees
|
26
|
|
|
10.8
|
Headings
|
27
|
|
|
10.9
|
Gender
|
27
|
|
|
10.10Fair
Meaning27
|
|
|
10.11Counterparts27
|
|
|
10.12Binding
Effect; Assignment27
|
|
|
10.13Entire
Agreement27
|
|
|
10.14Exhibits27
|
|
|
10.15Opportunity
to Consult with Counsel27
|
|
1.
|
ASSIGNMENT
|
1
|
|
2.
|
ACCEPTANCE
OF ASSIGNMENT AND ASSUMPTION
|
1
|
|
3.
|
GENERAL
PROVISIONS
|
1
|
|
|
3.1
|
Necessary
Acts
|
1
|
|
|
3.2
|
Entire
Agreement
|
1
|
|
|
3.3
|
Captions;
Interpretation
|
2
|
|
|
3.4
|
Governing
Law
|
2
|
|
|
3.5
|
Counterparts
|
2
|
|
|
3.6
|
Successors
and Assigns
|
2
|
|
|
3.7
|
Attorneys
Fees
|
2
|