SCSC 8-K
Scansource, Inc. (SCSC)
8-K
2026-08-20
For: 2026-08-19
View Original
Added on
August 20, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 19, 2026
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement
Stock Purchase Agreement
On August 19, 2026, ScanSource, Inc. (the “Company”) entered into a stock purchase agreement (the “MicroAge Purchase Agreement”), by and among the Company, MicroAge Acquisition Corp. (“MicroAge”), the shareholders of MicroAge, as sellers (each a “Seller” and, collectively, the “Sellers”), and MAAC Group, as seller representative (the “Seller Representative”), pursuant to which the Company agreed to acquire all of the issued and outstanding capital stock of MicroAge (the “Acquisition”). MicroAge is a technology provider offering solutions in managed cloud, data center, cybersecurity, IT, help desk and other similar technologies.
Subject to customary post-closing working capital and other adjustments, the purchase price consists of $220.5 million to be paid in cash at closing. $3 million and $6.8 million will be held in escrow to support the post-closing obligations of the Sellers to satisfy any purchase price adjustments and cover any post-closing indemnification claims, respectively.
The MicroAge Purchase Agreement contains customary representations and warranties and covenants from the Sellers for a transaction of this type. The Sellers have agreed to indemnify the Company against certain liabilities, subject to amount limits and other exceptions. The Sellers also have agreed to certain post-closing covenants relating to the confidentiality and employee non-solicitation obligations of certain Sellers, and the agreement of each Seller not to compete with certain aspects of the business of MicroAge following the closing of the transaction.
The Acquisition is expected to close in September 2026 following the satisfaction of, and subject to, customary conditions, including the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain third-party consents.
The MicroAge Purchase Agreement may be terminated (i) by mutual written consent of the Company and the Seller Representative, (ii) by the Seller Representative after 5:00 p.m. EST on September 1, 2026 if the closing has not occurred and the Sellers are not in material breach of the MicroAge Purchase Agreement, (iii) by either the Company or the Seller Representative in the event of a material breach by the Sellers or the Company, respectively, of the MicroAge Purchase Agreement or (iv) by any final non-appealable order prohibiting consummation of the Acquisition.
The foregoing description is qualified by reference to the MicroAge Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
The MicroAge Purchase Agreement and the foregoing description of the MicroAge Purchase Agreement has been included to provide investors and shareholders with information regarding the terms of the MicroAge Purchase Agreement. It is not intended to provide any other factual information about the Company or any of its subsidiaries. The representations, warranties and covenants contained in the MicroAge Purchase Agreement were made by the parties thereto only for purposes of the MicroAge Purchase Agreement and as of specific dates; were made solely for the benefit of the parties to the MicroAge Purchase Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the MicroAge Purchase Agreement (such disclosures include information that has been included in the Company’s public disclosures, as well as additional non-public information); may have been made for the purposes of allocating contractual risk between the parties to the MicroAge Purchase Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and reports and documents filed with the Securities and Exchange Commission. Accordingly, investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries. Additionally, the representations, warranties, covenants, conditions and other terms of the MicroAge Purchase Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations, warranties, covenants, conditions and other terms may change after the date of the MicroAge Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Forward-Looking Statements
This report contains, or may be deemed to contain, “forward-looking statements” (as defined in the U.S. Private Securities Litigation Reform Act of 1995, as amended). In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,”
“estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it can give you no assurance these expectations will prove to have been correct. These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include the risks and uncertainties inherent in the transactions contemplated by the MicroAge Purchase Agreement and in the Company’s business, including, without limitation: the occurrence of any event, change or other circumstances that could give rise to the termination of the MicroAge Purchase Agreement; the risk that the conditions to the closing are not satisfied; and the risk that the Acquisition will not be consummated within the expected time period or at all. Other important factors that could cause actual results to differ materially from the Company’s expectations are set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026. In light of these risks, uncertainties, and other factors, the forward-looking statements might not prove to be accurate and you should not place undue reliance upon them. All forward-looking statements speak only as of the date made and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Item 2.02. Results of Operations and Financial Condition
On August 20, 2026, ScanSource, Inc. (the "Company") issued a press release announcing its financial results for its fourth quarter and fiscal year ended June 30, 2026. A copy of the press release and accompanying Earnings Infographic are attached as Exhibits 99.1 and 99.2 hereto, incorporated herein by reference and also made available through the Company’s website at www.scansource.com. An updated investor presentation will be made available on the Company's website within approximately two weeks.
The information in Item 2.02 of this Report, including the Exhibits 99.1 and 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any other filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit Number | Description | ||||
| 2.1 | |||||
| 99.1 | |||||
| 99.2 | |||||
| 99.3 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ScanSource, Inc. | |||||||||||||||||||||||
| Date: | August 20, 2026 | /s/ STEVE JONES | |||||||||||||||||||||
| Steve Jones | |||||||||||||||||||||||
| Senior Executive Vice President and Chief Financial Officer | |||||||||||||||||||||||
Exhibit 2.1 Execution Version STOCK PURCHASE AGREEMENT by and among SCANSOURCE, INC., as Buyer, MICROAGE ACQUISITION CORP., as the Company, THE SHAREHOLDERS OF MICROAGE ACQUISITION CORP., as Sellers, and MAAC GROUP, LLC, as Seller Representative August 19, 2026 Exhibit 2.1 i TABLE OF CONTENTS Page ARTICLE I DEFINITIONS ........................................................................................................ 1 ARTICLE II PURCHASE AND SALE OF STOCK............................................................... 19 2.1 Purchase and Sale ................................................................................................. 19 2.2 Purchase Price ....................................................................................................... 19 2.3 The Closing ........................................................................................................... 19 2.4 Payment of the Purchase Price .............................................................................. 20 2.5 Purchase Price Adjustment ................................................................................... 21 2.6 Withholdings ......................................................................................................... 23 2.7 FIRPTA ................................................................................................................. 24 ARTICLE III REPRESENTATIONS AND WARRANTIES ABOUT SELLERS .............. 24 3.1 Organization, Power and Authorization ............................................................... 24 3.2 Binding Effect; Noncontravention; Authority ...................................................... 24 3.3 Brokerage .............................................................................................................. 25 3.4 Ownership of Stock............................................................................................... 25 3.5 Limitations of Representations and Warranties .................................................... 25 3.6 Governmental Consents ........................................................................................ 26 3.7 Litigation ............................................................................................................... 26 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS ABOUT THE ACQUIRED COMPANIES ...................................................................... 26 4.1 Organization, Power and Authorization, Brokerage ............................................. 26 4.2 Binding Effect and Noncontravention .................................................................. 27 4.3 Capitalization; Subsidiaries .................................................................................. 28 4.4 Financial Statements ............................................................................................. 28 4.5 Subsequent Events ................................................................................................ 29 4.6 Title to Tangible Personal Property ...................................................................... 30 4.7 Compliance With Laws......................................................................................... 30 4.8 Tax Matters ........................................................................................................... 31 4.9 Environmental Matters.......................................................................................... 33 4.10 Anti-Bribery .......................................................................................................... 34 4.11 Trade Compliance ................................................................................................. 34 4.12 Outbound Investment ............................................................................................ 35 4.13 Intellectual Property .............................................................................................. 35 4.14 Real Property ........................................................................................................ 40 4.15 Litigation ............................................................................................................... 42 4.16 Employee Benefits ................................................................................................ 42 4.17 Insurance ............................................................................................................... 44 4.18 Contracts ............................................................................................................... 45 4.19 Employees ............................................................................................................. 47 4.20 Affiliate Transactions............................................................................................ 49 4.21 Inventory ............................................................................................................... 49 ii 4.22 Receivables and Payables ..................................................................................... 50 4.23 Permits and Licenses............................................................................................. 50 4.24 Major Customers and Vendors ............................................................................. 50 4.25 Product Claims ...................................................................................................... 51 4.26 Data Privacy .......................................................................................................... 51 4.27 Minute Books ........................................................................................................ 53 4.28 Bank Accounts; Managers and Officers ............................................................... 53 4.29 Limitations on Representations and Warranties ................................................... 53 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER ............................ 54 5.1 Organization, Power and Authorization ............................................................... 54 5.2 Binding Effect and Noncontravention .................................................................. 54 5.3 Brokerage .............................................................................................................. 55 5.4 Litigation ............................................................................................................... 55 5.5 Investment ............................................................................................................. 55 5.6 Sufficiency of Funds ............................................................................................. 55 5.7 Solvency ................................................................................................................ 56 5.8 R&W Insurance .................................................................................................... 56 5.9 No Foreign Person ................................................................................................ 56 5.10 Acknowledgement by Buyer................................................................................. 56 ARTICLE VI COVENANTS ..................................................................................................... 57 6.1 Pre-Closing Covenants.......................................................................................... 57 6.2 Certain Post-Closing Covenants ........................................................................... 61 6.3 Certain Tax Covenants .......................................................................................... 63 6.4 WARN Act............................................................................................................ 67 6.5 No Control of Other Party’s Business .................................................................. 67 6.6 Employee Matters ................................................................................................. 68 6.7 Termination of 401(k) Plan; Section 280G ........................................................... 68 6.8 Confidentiality ...................................................................................................... 69 6.9 Use of Names ........................................................................................................ 69 ARTICLE VII SURVIVAL AND RECOVERY ...................................................................... 70 7.1 Survival ................................................................................................................. 70 7.2 Indemnification by Sellers .................................................................................... 70 7.3 Indemnification by Buyer ..................................................................................... 71 7.4 Indemnification Procedures .................................................................................. 71 7.5 Limitation of Liability........................................................................................... 73 7.6 Recovery; Payments.............................................................................................. 74 7.7 Exclusive Remedy ................................................................................................ 74 7.8 Acknowledgment by Buyer .................................................................................. 74 7.9 RWI Policy............................................................................................................ 75 7.10 Special Indemnity Escrow .................................................................................... 75 ARTICLE VIII CLOSING CONDITIONS ............................................................................. 76 8.1 Conditions to Obligations of all Parties ................................................................ 76 8.2 Conditions to Buyer’s Obligations........................................................................ 76 iii 8.3 Conditions to Sellers’ and the Company’s Obligations ........................................ 79 ARTICLE IX MISCELLANEOUS ........................................................................................... 79 9.1 Transaction Expenses............................................................................................ 79 9.2 Amendments ......................................................................................................... 79 9.3 Successors and Assigns......................................................................................... 80 9.4 Governing Law ..................................................................................................... 80 9.5 Service of Process: Venue .................................................................................... 80 9.6 Specific Performance and Remedies .................................................................... 80 9.7 WAIVER OF JURY TRIAL ................................................................................. 81 9.8 Notices .................................................................................................................. 81 9.9 Schedules and Exhibits ......................................................................................... 82 9.10 Counterparts .......................................................................................................... 82 9.11 No Third Party Beneficiaries ................................................................................ 82 9.12 Headings ............................................................................................................... 82 9.13 Entire Agreement .................................................................................................. 82 9.14 Severability ........................................................................................................... 83 9.15 Construction .......................................................................................................... 83 9.16 Public Announcements ......................................................................................... 83 9.17 Conflict of Interest ................................................................................................ 83 9.18 Seller Representative ............................................................................................ 85 9.19 Termination ........................................................................................................... 86
iv EXHIBITS AND SCHEDULES Exhibit A Escrow Agreement Exhibit B Estimated Indebtedness Exhibit C Net Working Capital Calculation Exhibit D RWI Policy Exhibit E Restrictive Covenant Agreements Disclosure Schedule Exhibit 2.1 # v STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of August 19, 2026, by and among (a) ScanSource, Inc., a South Carolina corporation (“Buyer”), (b) the parties set forth under the heading “Sellers” on the signature pages hereto (collectively, the “Sellers”), (c) MicroAge Acquisition Corp., a Delaware corporation (the “Company”), and (d) MAAC Group, LLC, an Arizona limited liability company, solely in its capacity as the Seller Representative (as defined herein). Buyer, Sellers, and the Company are referred to in this Agreement as the “Parties.” BACKGROUND A. Sellers own all of the issued and outstanding equity interests of the Company, which consists of 322,515 shares of Class A Common Stock, $0.001 par value (the “Class A Common Stock”), and 34,735 shares of Class B Common Stock, $0.001 par value (the “Class B Common Stock” and, together with the Class A Common Stock, the “Stock”). B. The Company owns all of the issued and outstanding equity interests of MicroAge Intermediate Corp., a Delaware corporation (“Intermediate”), and Intermediate owns (i) all of the outstanding equity interests in Frontier Technology, LLC dba MicroAge, an Arizona limited liability company (“MicroAge”), and (ii) all of the outstanding equity interests in Custom Storage, LLC, a Delaware limited liability company (“cStor”, and collectively with Intermediate and MicroAge, the “Subsidiaries”). C. Sellers desire to sell to Buyer, and Buyer desires to purchase from Sellers, all of the Stock, for the consideration and in accordance with the terms and subject to the conditions set forth in this Agreement. D. Concurrently with the execution of this Agreement, and as a condition and material inducement to the willingness of Buyer to enter into this Agreement, the Company is entering into restrictive covenant agreements set forth on Exhibit E with each of MAAC Group, LLC, Rob Zack, Larry Fulop, Larry Gentry and Tracey Hayes (collectively, the “Restrictive Covenant Agreements”), which Restrictive Covenant Agreements shall be effective as of and contingent upon the Closing. NOW, THEREFORE, the Parties agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, the following terms have the meanings set forth below: “Acceptance Notice” has the meaning set forth in Section 2.5(b). “Accounts Receivable” has the meaning set forth in Section 4.22(a). “Acquired Companies” means the Company and the Subsidiaries. 2 “Acquisition Proposal” has the meaning set forth in Section 6.1(e). “Adjusted Cash Consideration” has the meaning set forth in Section 2.5(d). “Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, contract or otherwise. “Agreement” has the meaning set forth in the Background. “Agreement Period” has the meaning set forth in Section 2.5(c). “AI Data” means any data processed by or for the Acquired Companies in connection with the development, training, improvement, marketing, provision, deployment, or use of Company AI Products, including all AI Inputs and data outputs generated or produced by the Company AI Products. “AI Inputs” means any training data, validation data, test data, scraped data, and other data sets or databases, content, or materials of any nature (including text, numbers, images, photos, graphics, video, audio or computer code) used to develop, train, finetune, enhance, validate, test or improve any AI Technologies. “AI Technologies” means (a) any and all machine learning, deep learning, generative and other artificial intelligence technologies, including algorithms, Software or machine-based systems that (i) parse data contextually to provide or analyze information, (ii) imitate cognitive human intelligence, (iii) use neural networks, statistical learning algorithms or reinforcement learning, or (iv) infer from the input received how to generate outputs such as predictions, content, recommendations, or decisions, or (b) any other definitions provided by applicable Legal Requirement or the Acquired Companies in any of its written policies, procedures and contracts, for “artificial intelligence,” “generative artificial intelligence,” “artificial general intelligence,” “large language model,” “foundation model,” “machine learning,” “algorithm,” and any similar term. “Anti-Bribery Laws” has the meaning set forth in Section 4.10. “Antitrust Laws” has the meaning set forth in Section 6.1(d)(ii). “Base Purchase Price” has the meaning set forth in Section 2.2(a). “Benefit Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and any other material employee benefit plan, program or arrangement providing for compensation other than regular salary or wages or benefits that any of the Acquired Companies maintains, contributes to or has any liability for the benefit of any current or former employee or service provider (or their beneficiaries) of any of the Acquired Companies. 3 “Books and Records” means all books, files, reports, plans, records, manuals, maps and engineering data held by any Acquired Company. “Business” means the business of the Acquired Companies as conducted on the date of this Agreement. “Business Day” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in the State of New York or the State of South Carolina. “Buyer” has the meaning set forth in the introductory paragraph. “Buyer Indemnitees” has the meaning set forth in Section 7.2. “Cash” means the amount of unrestricted cash and cash equivalents, in each case, to the extent held in U.S. accounts, of the Acquired Companies as of immediately prior to the Closing, and determined and calculated in accordance with GAAP, (i) net of any bank overdrafts, issued but uncleared checks, wire or electronic transfers in transit or drafts written or issued by the Acquired Companies, (ii) including any deposited but uncleared checks, wire or electronic transfers in transit or drafts received by the Acquired Companies, and (iii) excluding Restricted Cash; provided, that Cash shall not include any current assets which are taken into account in the calculation of Net Working Capital. “Certificate” means the Certificate of Incorporation of the Company filed with the Delaware Secretary of State on June 23, 2020. “Change of Control Payments” means, if any, the obligation of any of the Acquired Companies to pay any bonuses, change of control payments or similar payments made or triggered in connection with the transactions contemplated by this Agreement, including the Acquired Companies’ share of any payroll, employment or similar Taxes payable with respect to all such amounts. “Citibank Agreement” means that certain Supplier Agreement, dated December 7, 2020, by and between MicroAge and each and any of Citibank, N.A., its branches and subsidiaries and affiliates, as amended by that certain Existing Supplier Account Amendment, dated December 16, 2025. “Claim” means any claims, counterclaims, demands, actions, suits, and causes of action, whether class, individual, or otherwise in nature, in law or in equity. “Class A Common Stock” has the meaning set forth in the Background. “Class B Common Stock” has the meaning set forth in the Background. “Closing” has the meaning set forth in Section 2.3. “Closing Balance Sheet” has the meaning set forth in Section 2.5(a).
4 “Closing Calculations” has the meaning set forth in Section 2.5(a). “Closing Cash Consideration” means an amount equal to (a) the Base Purchase Price, (b) plus Estimated Cash, (c) plus the amount (if any) by which the Estimated Net Working Capital exceeds the Target Net Working Capital by more than the NWC Collar, (d) minus the amount (if any) by which the Estimated Net Working Capital is less than the Target Net Working Capital by more than the NWC Collar, (e) minus Estimated Indebtedness, (f) minus Estimated Transaction Expenses, (g) minus the Post-Closing Adjustment Escrow Amount, (h) minus the Seller Corrective Action Escrow Amount, (i) minus the SALT Matters Escrow Amount, (j) minus the Seller Representative Fund Amount, (k) minus the Special Indemnity Escrow Amount, (l) plus any amount paid by or on behalf of the Acquired Companies to Key Government Finance, Inc., pursuant to the Key Government Finance Agreement (as defined in the Disclosure Schedule), (m) plus any amount paid by or on behalf of the Acquired Companies to Citibank, N.A.., pursuant to the Citibank Agreement. “Closing Date” has the meaning set forth in Section 2.3. “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Commercial Tax Agreement” means customary commercial agreements not primarily related to Taxes that contain agreements or arrangements relating to the apportionment, sharing, assignment or allocation of Taxes (such as financing agreements with Tax gross-up obligations or leases with Tax escalation provisions). “Company” has the meaning set forth in the introductory paragraph. “Company Intellectual Property” has the meaning set forth in Section 4.13(e). “Company IT Systems” has the meaning set forth in Section 4.13(k). “Company AI Products” has the meaning set forth in Section 4.13(p). “Company Products” means any service, product, website, application or platform, including all Software, and documentation related thereto, created, developed (including under development), sold, marketed, performed, licensed, distributed, hosted or otherwise provided by or on behalf of the Acquired Companies. “Company Software” means all Software and programs owned, purported to be owned, used or held for use by the Acquired Companies in connection with the conduct of its business, including all computer software, electronic delivery platforms and databases operated by the Acquired Companies on or for its website or used by the Acquired Companies in connection with processing customer orders, storing customer information or storing or archiving data. “Company Source Code” means the source code for the Company Products and the source code for any Owned Software, including any and all repositories of such source code. “Confidentiality Agreement” has the meaning set forth in Section 6.1(c). 5 “Contract” means any written or oral contract, lease, license, deed, mortgage, indenture, sales order, accepted purchase order, note or other legally binding agreement, instrument, arrangement, promise, obligation, understanding, undertaking or commitment, whether express or implied. “cStor” has the meaning set forth in the Background. “Cyber Tail Policy” has the meaning set forth in Section 6.2(c)(iii). “D&O Indemnitees” has the meaning set forth in Section 6.2(c)(ii). “D&O Tail Policy” has the meaning set forth in Section 6.2(c)(iii). “Deal Communications” has the meaning set forth in Section 9.17(d). “Decrease Amount” has the meaning set forth in Section 2.5(d)(ii). “Deferred Taxes” means (a) any Taxes attributable to the Pre-Closing Tax Period or any amounts received in the Pre-Closing Tax Period that have been deferred or will be deferred to the Closing Date or any date thereafter (whether or not such Taxes are due and payable as of the Closing Date), including but not limited to, Taxes deferred pursuant to IRS Revenue Procedure 2004-34, Sections 455, 456, 460 or 481 of the Code or any corresponding or similar provisions of the Code, and (b) any deferred Taxes attributable to the income inclusion pursuant to Section 965 of the Code, in each case, whether or not such deferral is elective. “Direct Claim” has the meaning set forth in Section 7.4(a). “Disclosure Schedule” means the disclosure schedule prepared by or on behalf of Sellers and the Company attached to this Agreement, which sets forth the exceptions to the representations and warranties contained in Articles III and IV and certain other information called for by the Agreement. “Domain Name Registrar” means any entity that manages, registers or performs similar or related functions related to the use, reservation or ownership of domain names. “Embargoed Jurisdictions” has the meaning set forth in Section 4.11. “Employee” means any current employee of the Acquired Companies. “Environmental Laws” means all Legal Requirements concerning occupational safety and health hazards, pollution, or protection of the environment or natural resources, or the presence, use, production, generation, handling, transportation, treatment, storage, distribution, labeling, testing, processing, Release, threatened Release, control or cleanup of, or exposure to, any Hazardous Material. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. “ERISA Affiliate” has the meaning set forth in Section 4.16(c) 6 “Escrow Agent” means Wilmington Trust, National Association. “Escrow Agreement” means the Escrow Agreement to be entered into at the Closing by and among Buyer, the Seller Representative, and the Escrow Agent, in substantially the form attached as Exhibit A. “Estimated Cash” means Cash, estimated in good faith by Sellers. “Estimated Indebtedness” means the Indebtedness, estimated in good faith by Sellers. “Estimated Net Working Capital” means the Net Working Capital, estimated in good faith by Sellers. “Estimated Statement” has the meaning set forth in Section 2.2. “Estimated Transaction Expenses” means the Transaction Expenses, estimated in good faith by Sellers. “Factoring Agreements” means: (a) that certain Receivables Purchase Agreement, dated July 14, 2020, by and between MicroAge and each and any of MUFG Union Bank, N.A., its subsidiaries and affiliates; and (b) the Citibank Agreement. “Final Cash” means Cash as finally determined pursuant to Section 2.5. “Final Determination” means, with respect to Income Taxes that are the subject to any Seller Corrective Action or SALT Matter, (a) a closing or settlement agreement entered into with a Taxing Authority establishing the amount of such Taxes, (b) a private letter ruling issued by a Taxing Authority with respect to such Taxes or (c) a final decision of a court of competent jurisdiction with respect to such Taxes that is non-appealable or in respect of which the period for appeal has lapsed. “Final Indebtedness” means Indebtedness as finally determined pursuant to Section 2.5. “Final Net Working Capital” means the Net Working Capital as finally determined pursuant to Section 2.5. “Final Transaction Expenses” means Transaction Expenses as finally determined pursuant to Section 2.5. “Financial Statements” has the meaning set forth in Section 4.4. “Firm” has the meaning set forth in Section 9.17(a). “FIRPTA Certificate” has the meaning set forth in Section 2.7. “Fraud” means an actual (and not constructive, imputed, reckless or negligent) knowing and intentional common law fraud by a Seller, the Company, or Buyer in the making of the representations and warranties contained in Article III, Article IV, or Article V, respectively, and not with respect to any other matters; provided that, such actual knowing and intentional common 7 law fraud of such Person specifically excludes any statement, representation or omission made negligently or recklessly and will only be deemed to exist if (a) such Person had actual knowledge that the representations and warranties made by such Person were inaccurate when made, (b) such representations and warranties were made with the express intent to induce a Party to rely thereon and that such Party would take action or inaction to such Party’s detriment, (c) such reliance and subsequent action or inaction by such Party was justifiable and (d) such action or inaction resulted in actual material damages to such Party. “Fundamental Representations” means the representations and warranties set forth in Section 3.1 (Organization, Power, Authority), Section 3.2(a) (Binding Effect), Section 3.3 (Brokerage), Section 3.4 (Ownership of Stock), Section 4.1 (Organization, Power, Authority, Brokerage), Section 4.2(a) (Binding Effect), Section 4.3 (Capitalization; Subsidiaries), and Section 4.8 (Tax Matters). “GAAP” means United States generally accepted accounting principles as in effect from time to time. “Government Entity” means U.S. or non-U.S. (a) national, federal, state, county, provincial, municipal, local or foreign or supranational government, or any political subdivision thereof, (b) entity exercising executive, legislative, judicial, regulatory, tribunal, taxing or administrative functions of or pertaining to government, (c) any arbitrator or arbitral body or panel, department, ministry, instrumentality, agency, court, commission or body of competent jurisdiction, and (d) any state-owned or -controlled enterprise. “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. “Hazardous Material” means any pollutant, contaminant, hazardous substance, hazardous waste, medical waste, special waste, toxic substance, toxic chemical, any petroleum or petroleum- derived substance, waste or additive, asbestos, asbestos-containing material, polychlorinated biphenyl, per- or polyfluoroalkyl substance, radioactive substance, or other compound, element, material or substance (including products) that is regulated or may give rise to liability under any Environmental Law. “Improvements” has the meaning set forth in Section 4.14(b)(viii). “Inbound IP Contract” has the meaning set forth in Section 4.13(a). “Income Tax” means U.S. federal income Tax and any other income or franchise Tax imposed on or measured by net income. “Income Tax Liability Amount” means an amount (which shall not be less than zero in the aggregate) equal to the sum of all Income Taxes of (or otherwise imposed on) the Company or any of its Subsidiaries arising in or relating to any Pre-Closing Tax Period that begins on or after January 1, 2025 and for which an originally filed Income Tax Tax Return has not yet been filed prior to the Closing Date (or for which such Income Tax Return has been filed prior to the Closing Date but not all Taxes shown thereon have been fully paid prior to the Closing Date); provided, that the Income Tax Liability Amount shall (a) in the case of any Income Tax for any Straddle
8 Period, be determined in accordance with Section 6.3(f); (b) take into account (1) all Transaction Deductions of the Company or any of its Subsidiaries, as applicable and (2) without duplication, the overpayment (if any) of Income Taxes by the Company or any of its Subsidiaries, as applicable, made prior to the Closing (including estimated tax payments made by the Company or any of its Subsidiaries, as applicable, prior to the Closing), in each case of clauses (1) and (2), which are available under applicable Income Tax Legal Requirements to reduce the liability of the Company or any of its Subsidiaries, as applicable, for Income Taxes for the applicable Pre-Closing Tax Period at a “more likely than not” or higher standard of comfort; (c) exclude any Income Taxes attributable to (i) transactions undertaken by or at the direction of Buyer or any of its Affiliates (including after the Closing, the Company and its Subsidiaries) outside of the ordinary course on the Closing Date after the time of the Closing and not contemplated by this Agreement or (ii) any election under Section 338 or Section 336 of the Code made by Buyer with respect to the acquisition of the Company and its Subsidiaries pursuant to this Agreement; (d) exclude all deferred Tax assets and deferred Tax liabilities established to reflect timing differences between book and Tax income; (e) be calculated on a jurisdiction-by-jurisdiction basis, on an entity-by- entity basis (or Tax group-by-Tax group basis, if applicable), and on a Tax-by-Tax basis, and in each case, each separate amount so calculated shall not be less than zero; (f) include any Deferred Taxes, and (g) initially include $363,230 for any Taxes resulting from the Tax Election (subject to increase or decrease based on the actual amount of Taxes payable in connection therewith as part of the determination of Final Indebtedness). “Increase Amount” has the meaning set forth in Section 2.5(d)(i). “Indebtedness” means (a) all indebtedness for borrowed money (including the principal amount thereof or, if applicable, the accreted amount thereof and the amount of accrued and unpaid interest thereon); (b) all obligations evidenced by notes, bonds, debentures, mortgage or other instruments (whether or not convertible and including the principal amount thereof or, if applicable, the accreted amount thereof and the amount of any accrued and unpaid interest thereon); (c) all obligations under any debt security, interest rate, currency or other hedging or swap, forward, derivative obligation or other similar arrangement; (d) any obligations or indebtedness under any letter of credit or letter of guaranty (only to the extent drawn), bankers’ acceptance or similar instrument or facility; (e) any obligation for the deferred purchase price of properties, assets or services with respect to which any Acquired Company is liable as obligor (including purchase price adjustments, “holdback” or similar payments, and the maximum amount of any potential earn-out payments); (f) any unpaid judgments, settlements, fines, penalties or damages (liquidated or otherwise) with respect to any Proceedings payable by any Acquired Company, in each case to the extent related to the period at and prior to Closing; (g) (i) any obligation, whether interest bearing or otherwise, of any Acquired Company owed to any Seller or any Affiliate of any Seller (other than ordinary course employment related compensation or benefits and obligations arising under this Agreement), including, without limitation, any declared but unpaid distributions or dividends, and any unpaid management, monitoring, or sponsor fees or reimbursable costs and expenses incurred in connection with any advisory services or similar arrangement, and (ii) any amounts payable to any former equity holder of any Acquired Company; (h) any intercompany obligations, payables or loans of the Acquired Companies that would require payment to Person(s) that are not Acquired Companies; (i) all indebtedness secured by any lien on property owned subject to such lien whether or not the indebtedness secured has been assumed; (j) all capital leases, including, without limitation, all amounts representing the capitalization of 9 rentals in accordance with GAAP; (k) all customer deposits, advances, or prepayments or other amounts received from customers for goods or services not yet provided or performed, including, without limitation, such obligations recorded in accounts #12200 and #24310 adjusted to reflect the cost to serve/earn assuming an estimated gross margin of 22%; (l) the net collected balance for deferred vendor financing in account #24200, less any amounts in prepaid marketing; (m) all customer overpays, duplicate pays, or credits in Accounts Receivable that represent net credit balances in customer Accounts Receivable; (n) the Income Tax Liability Amount; (o) Sellers’ share of any Transfer Taxes pursuant to Section 6.3(d); (p) any interest, premiums, penalties (including prepayment penalties), “make whole amounts,” breakage costs, change of control payments, costs, expenses and other obligations that would arise relating to any of the foregoing, including as a result of or in connection with repayment of any of the items set forth in clauses (a) through (o); and (q) all guarantees with respect to liabilities of a type described in any of clauses (a) through (p) above; provided, that “Indebtedness” shall exclude (i) Transaction Expenses, (ii) amounts which are taken into account in the calculation of Net Working Capital, and (iii) any obligations under the Factoring Agreements. Exhibit B constitutes Sellers’ illustrative example of the items comprising Indebtedness as of the date hereof, however the contents of such exhibit shall in no way be determinative of Buyer’s good faith calculation of Indebtedness in accordance with this definition included in Buyer’s Closing Calculations or in any dispute between the parties arising under and to be resolved in accordance with the terms of Section 2.5. “Indemnified Party” has the meaning set forth in Section 7.4(a). “Indemnifying Party” has the meaning set forth in Section 7.4(a). “Independent Auditors” has the meaning set forth in Section 2.5(c). “Insurance Policies” has the meaning set forth in Section 4.17. “Intellectual Property” means any and all intellectual property, proprietary and industrial rights, including any common law and statutory rights in any jurisdiction throughout the world in, arising out of, or associated with: (a) patents and patent applications, including all reissues, divisionals, renewals, provisionals, continuations, continuations-in-part, extensions and reexaminations thereof; (b) works of authorship and copyrights, and registrations and applications for registration thereof; (c) trademarks, service marks, trade dress, logos, trade names and other source identifiers, and registrations and applications for registration thereof; (d) trade secrets, business, technical and know-how information, including inventions, whether patentable or unpatentable, and confidential information; (e) rights of publicity; (f) industrial designs; (g) proprietary databases and data compilations; (h) all moral and economic rights of authors and inventors, however denominated; (i) Software (including source and object code) and (j) any other intellectual property, proprietary or industrial rights. “Intentional Breach” means, with respect to any agreement or covenant of a party in this Agreement, an action or omission taken or omitted to be taken by such party in material breach of such agreement or covenant that the breaching party intentionally takes (or omits to take) with actual knowledge that such action or omission would cause such material breach of such agreement or covenant. 10 “Intermediate” has the meaning set forth in the Background. “International Trade Laws” has the meaning set forth in Section 4.11. “Inventory” has the meaning set forth in Section 4.21. “Knowledge” means, with respect to a Person, the actual knowledge of such Person, after reasonable inquiry. The Company’s Knowledge means only the Knowledge of Rob Zack, Larry Gentry, Larry Fulop, Tracey Hayes, Tim McCulloch, Alex Ryals, and James Unruh, in each case after reasonable inquiry. “Latest Balance Sheet” has the meaning set forth in Section 4.4. “Latest Balance Sheet Date” means June 30, 2026. “Leased Real Property” has the meaning set forth in Section 4.14(a). “Legal Requirement” means any U.S. or non-U.S. law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, judgment, order, decree, treaty, rule, regulation, ruling, determination, charge, direction or other restriction of an arbitrator or Government Entity. “Licensed Intellectual Property” means all Intellectual Property licensed to the Company and its Subsidiaries pursuant to an Inbound IP Contract. “Lien” means any lien, pledge, hypothecation, option, charge, easement, encroachment, encumbrance, claim or security interest, equitable interest, attachment, deed of trust, mortgage, conditional sales agreement, restriction on transfer or other similar encumbrance of any kind or nature whatsoever. “Lookback Date” means, with respect to the Company, Intermediate, and MicroAge, June 23, 2020, and, with respect to cStor, July 15, 2022. “Loss” means, with respect to any Person, any liability, cost, damage, deficiency, penalty, fine, lien, fee, or other loss or expense, including court costs and reasonable attorneys’ fees and expenses, against or affecting such Person, whether direct or indirect, known or unknown, and whether or not accrued, absolute, contingent, liquidated, or matured, but excluding punitive damages. “Major Customers” has the meaning set forth in Section 4.24. “Major Vendors” has the meaning set forth in Section 4.24. “Material Adverse Effect” means any change, event, occurrence, state of facts, condition, circumstance, matter, development or effect (each, an “Effect”), or series of related Effects that, individually or in the aggregate, is, or would reasonably be expected to be, materially adverse to (x) the assets, properties, liabilities, business, operations, results of operations or financial condition of the Acquired Companies, taken as a whole or (y) the ability of the Company to 11 perform its material obligations under this Agreement or to consummate the transactions contemplated hereby; provided, however, that, solely in the case of the foregoing clause (x), any Effect arising from or relating to any action taken by any of the following will be excluded from the definition of “Material Adverse Effect” and from the determination of whether such a Material Adverse Effect has occurred: (a) any changes in general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally, or any changes affecting the industry generally in which the Acquired Companies operate, (b) any changes in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the world, including changes in the price of commodities, fuel costs, raw materials or other supplies used in the business of the Acquired Companies and any decline in the price of any security or any market index, (c) any changes in political conditions in the United States or any other country or region in the world, acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism), earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires or other natural disasters, weather conditions and other force majeure events or calamities, or any escalation or worsening relating to the foregoing, including any escalation or worsening of stoppages, shutdowns or habits or behavior of people, or any response of any Government Entity (including requirements for business closures or “sheltering-in-place”), related to any of the foregoing (other than those changes or other effects that are described in clause (d) below), (d) any pandemic, public health event, or outbreak of disease or illness, in each case in the United States or any other country or region in the world or any escalation or worsening relating to the foregoing, including any escalation or worsening of stoppages, shutdowns or habits or behavior of people, or any response of any Government Entity (including any requirements for business closures or “sheltering-in-place”), related to any of the foregoing, (e) changes in Legal Requirements or other legal or regulatory conditions (or the interpretation thereof), (f) changes in GAAP or other accounting standards (or the interpretation thereof), (g) the announcement of this Agreement, the transactions contemplated hereby or the identity of Buyer, (h) the taking of any action which is expressly required by this Agreement, or (i) any failure, in and of itself, by the Company or its Subsidiaries to meet internal or external projections or forecasts or revenue or earnings predictions (but, for the avoidance of doubt, not the underlying Effects that caused such failure, unless such underlying Effects are otherwise excluded from this definition of Material Adverse Effect); provided, further, that, in the cause of clauses (a) through (f), such Effect shall be taken into account in determining whether a Material Adverse Effect has occurred to the extent it has a disproportionate impact on the Acquired Companies or the Business relative to other similarly situated businesses in the industry or markets in which the Acquired Companies and the Business operate (and then only to the extent of such disproportionate impact). “Material Contracts” has the meaning set forth in Section 4.18(a). “MicroAge” has the meaning set forth in the Background. “Net Working Capital” means the net working capital of the Acquired Companies as of 12:01 a.m., Mountain Standard Time, on the Closing Date, computed in accordance with the QofE and Exhibit C. “Non-Controlling Party” has the meaning set forth in Section 7.4(b)(iv).
12 “NWC Collar” means $1,500,000. “Objection Notice” has the meaning set forth in Section 2.5(b). “Organizational Documents” means (a) the articles, by laws or certificate of incorporation, memorandum or articles of association, all certificates of determination and designation the bylaws, or any unanimous shareholders agreement of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate or articles of limited partnership of a limited partnership; (d) the operating agreement, limited liability company agreement, and the certificate or articles of organization or formation of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation, or organization of any other Person; and (f) any amendment to any of the foregoing. “Open Source Software” means any Software (a) subject to any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation), (b) licensed pursuant to a license or other agreement commonly referred to as an “open source”, “free software”, “copyleft” or “community source code” license, or (c) any similar license, including but not limited to any license approved by the Open Source Initiative, or any Creative Commons License. For the avoidance of doubt, Open Source Software include without limitation Software licensed pursuant to any version of the GNU Affero General Public License, GNU General Public License, GNU Lesser General Public License, BSD License, Apache License, Mozilla Public License, MIT License, Common Public License, Server Side Public License, any derivative of any of the foregoing licenses, or any other public source code license arrangement. “Outbound IP Contract” has the meaning set forth in Section 4.13(c). “Outside Date” has the meaning set forth in Section 9.19(a)(ii). “Owned Intellectual Property” means all Intellectual Property in which an Acquired Company has (or purports to have) an ownership interest of any nature (whether exclusively, jointly with another Person or otherwise). “Owned Software” means Company Software for which the underlying Intellectual Property constitute Owned Intellectual Property. “Order” means any order, writ, injunction, stipulation, judgment, ruling, assessment, arbitration award, plan or decree issued by a Government Entity. “Parachute Payment Waiver” has the meaning set forth in Section 6.7(b). “Parties” has the meaning set forth in the Background. “Permits” has the meaning set forth in Section 4.23. “Permitted Liens” means (a) liens for Taxes, assessments and other governmental charges that are not yet due and payable or that may be paid thereafter without penalty or the amount or 13 validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (b) liens arising under original purchase price conditional sales contracts and equipment leases with third parties; (c) Liens that relate to the Real Property which do not impair the occupancy or present uses of such property or asset in the ordinary course of business and which do not in any case detract from the value of the property or asset subject thereto; (d) any zoning or other governmentally established restrictions or encumbrances as to which no material violation or encroachment exists; (e) pledges or deposits to secure obligations under Legal Requirements related to workers or unemployment compensation or similar legislation or to secure public or statutory obligations; (f) mechanic’s, materialman’s, warehouse man’s, supplier’s, vendor’s or similar liens arising or incurred in the ordinary course of business securing amounts that are not overdue or the amount or validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; and (g) Liens in connection with the Factoring Agreements. “Person” means an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization, an estate, a labor union or a Government Entity. “Personal Information” means all data or information that constitutes personal data, personal information, personally identifiable information, personal health information, personally identifiable financial information, or any equivalent term under Legal Requirement. “Post-Closing Adjustment Escrow Amount” means $3,000,000. “Pre-Closing Tax Period” means any taxable period of the Acquired Companies ending on or before the Closing Date. “Pre-Closing Taxes” means (a) any and all Taxes (or the non-payment thereof) of the Company and its Subsidiaries in respect of all Pre-Closing Tax Periods (in the case of any Straddle Period, as determined in accordance with Section 6.3), including for the avoidance of doubt any Taxes that relate to the Seller Corrective Actions; (b) any and all Deferred Taxes for which the Company is liable; and (c) any Transfer Taxes allocated to Sellers under Section 6.3(d); but only to the extent such Taxes are not included in Indebtedness and not paid at or prior to Closing. “Privacy Agreements” means any Contracts (or portions thereof) to which any of the Acquired Companies is a party and pursuant to which any of the Acquired Companies has binding obligations with respect to the Processing of Personal Information, including, without limitation, any Contracts with third party analytics or advertising providers. “Privacy and Information Security Policies” means policies, notices or statements of the Acquired Companies relating to the Processing of Personal Information, including, without limitation, any website or publicly posted policies, notices or statements. “Privacy Laws” means all applicable Legal Requirements, binding codes of conduct and self-regulatory guidelines regarding privacy, security, data breach notification, website privacy policies, wiretapping, the interception of electronic communications, the tracking or monitoring of online activity, data/web scraping or the Processing of Personal Information, including, but not 14 limited to, in each case as applicable: (a) the Federal Trade Commission Act; (b) the Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”), the Telephone Consumer Protection Act (“TCPA”) and other Legal Requirements governing marketing communications; (c) the Children’s Online Privacy Protection Act; (d) the California Consumer Privacy Act, the California Privacy Rights Act, the California Invasion of Privacy Act, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Texas Data Privacy and Security Act and other U.S. state data privacy laws; (e) the EU General Data Protection Regulation as, to the extent applicable, implemented into national law and as may be amended from time to time, the Swiss Federal Act on Data Protection and the EU ePrivacy Directive 2002/58/EC as amended and replaced from time to time; (f) the UK Data Protection Act and the UK GDPR; (g) the Canadian Personal Information Protection and Electronic Documents Act; (h) the Payment Card Industry Data Security Standards; (i) the Fair Credit Reporting Act; (j) the Gramm Leach Bliley Act; (k) HIPAA and HITECH; (l) Executive Order 14117 "Preventing Access to Americans' Bulk Sensitive Personal Data and United States; (m) Legal Requirements applicable to the Processing of biometric identifiers or biometric information, including the Illinois Biometric Information Privacy Act; (n) Legal Requirements applicable to the use of cookies, pixels, web beacons and tracking technologies; and (o) implementing rules or regulations applying to the foregoing. “Privacy Requirements” means Privacy Agreements, Privacy and Information Security Policies and any Privacy Laws. “Process”, “Processed” or “Processing” means any operation or set of operations which is performed on Personal Information or on sets of Personal Information, whether or not by automated means, such as receipt, collection, recording, organization, structuring, compilation, storage, adaptation or alteration, processing, sharing, safeguarding, security (technical, physical or administrative), retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure, destruction or transfer (including cross-border). “Proceeding” means any action, suit, claim, charge, complaint, litigation, arbitration, mediation, hearing, audit, inquiry, investigation or other proceeding, whether civil, criminal, administrative, regulatory or otherwise, at law or in equity, whether formal or informal, whether public or private, by or before any Government Entity or arbitrator. “Pro Rata Share” means, with respect to each Seller, the percentage set forth opposite such Seller’s name on Section 1 of the Disclosure Schedule. “Privileged Deal Communications” has the meaning set forth in Section 9.17(d). “Public Official” means (i) any director, officer, employee or representative of any Government Entity; (ii) any director, officer, employee or representative of any commercial enterprise that is owned or controlled by a Government Entity; (iii) any officer, employee or representative of any public international organization, such as the International Monetary Fund, the United Nations or the World Bank; (iv) any Person acting in an official capacity for any Government Entity, enterprise, or organization identified above; and (v) any political party, party official, or candidate for political office. 15 “Purchase Price” has the meaning set forth in Section 2.2. “QofE” means that certain Financial Due Diligence Databook dated July 31, 2026, prepared by Baker Tilly and reflecting the performance of the Acquired Companies through June 30, 2026. “RWI Policy” means that certain buyers’ side representation and warranty insurance policy relating to the transactions contemplated by this Agreement to be issued by RP Underwriting, Inc. to Buyer as of the Closing. “Real Property” has the meaning set forth in Section 4.14(a). “Real Property Laws” has the meaning set forth in Section 4.14(b)(viii). “Real Property Leases” has the meaning set forth in Section 4.14(b). “Registered Intellectual Property” means all Owned Intellectual Property that is registered, filed or issued under the authority of, with or by any Government Entity and any domain names that are filed or registered with any Domain Name Registrar. “Release” means any release, spill, emission, leaking, pumping, pouring, emptying, leaching, escaping, dumping, injection, deposit, discharge or disposing of any Hazardous Material in, onto or through the environment. “Related Party Agreements” has the meaning set forth in Section 4.20. “Required Consents” has the meaning set forth in Section 8.2(d). “Representative” means, with respect to any Person, such Person's directors, legal representatives, officers, employees, counsel, financial advisors, accountants, financing sources, auditors, agents and other authorized representatives (whether third-party or otherwise). “Restricted Cash” means all cash or cash equivalents not available for immediate and general use by the Acquired Companies or that is otherwise restricted, reserved, set aside or earmarked (pursuant to contract, applicable Legal Requirement or otherwise) for the payment of any liabilities. “Restricted Stock” has the meaning set forth in Section 2.4(d). “SALT Matters” means any U.S. state and local Tax liability related to the Acquired Companies’ unfiled Tax Returns for Pre-Closing Tax Periods relating to their nexus obligations and state and local apportionment issues. “SALT Matters Escrow Amount” means $500,000. “SALT Matters Escrow Period” has the meaning set forth in Section 6.3(h)(ii). “Sanctions” has the meaning set forth in Section 4.11.
16 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Security Incident” means any (a) accidental, unlawful or unauthorized access, use, loss, exfiltration, disclosure, alteration, destruction, encryption, compromise, or other Processing of Personal Information and/or confidential information; (b) accidental, unlawful or unauthorized occurrence or series of related occurrences on or conducted through the Acquired Companies’ information technology systems and assets (“IT Systems”) that jeopardizes or impacts the confidentiality, integrity, or availability of the IT Systems or any Personal Information or confidential information stored or otherwise Processed therein; or (c) occurrence that constitutes a “data breach,” “security breach,” “personal data breach,” “security incident,” “cybersecurity incident,” or any similar term under any applicable Privacy Requirements. “Seller Corrective Action Escrow Amount” means $4,300,000. “Seller Corrective Action Escrow Period” has the meaning set forth in Section 6.3(h)(i). “Seller Corrective Actions” means any and all actions taken, or caused to be taken, by the Seller Representative to remedy or otherwise correct erroneous filings (or failure to file) of federal Income Tax Returns and payments (or failure to make payments) of federal Income Taxes of the Company or Intermediate for Pre-Close Tax Periods, including refund claims, submission of private letter ruling requests, payments of Taxes and communications with Taxing authorities with respect thereto. The Parties acknowledge that the Seller Corrective Actions are intended to occur prior to the Closing. “Sellers” has the meaning set forth in the introductory paragraph. “Seller Indemnitees” has the meaning set forth in Section 7.3. “Seller Representative” has the meaning set forth in Section 9.18. “Seller Representative Fund Amount” means $1,000,000. “Seller Tax Contests” has the meaning set forth in Section 6.3(g)(ii). “Software” means (a) computer programs, including all software implementations of algorithms, models and methodologies, whether in source code or object code; (b) databases and compilations, including all data and collections of data, whether machine readable or otherwise; (c) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, APIs, operating systems, application systems, reports, formats, firmware, development tools, templates, command structures, menus, buttons and icons; (d) processes, know-how, operating procedures, methods, documentation, including user manuals and other training documentation, developers’ kits, utilities, developers’ notes, and technical manuals related to any of the foregoing; and (e) all derivations, updates, enhancements and customizations of any of the foregoing. “Special Indemnity Claim” has the meaning set forth on Section 7.10(a). 17 “Special Indemnity Escrow Account” has the meaning set forth in Section 7.10(a). “Special Indemnity Escrow Amount” means $2,000,000. “Special Indemnity Escrow Period” has the meaning set forth in Section 7.10(b). “Stock” has the meaning set forth in the Background. “Stockholders’ Agreement” means the Stockholders’ Agreement of the Company, dated July 10, 2020. “Straddle Period” means any taxable period that begins on or before, and ends after, the Closing Date. “Straddle Period Tax Contest” has the meaning set forth in Section 6.3(g)(ii). “Subsidiaries” has the meaning set forth in the Background. “Tail Policies” has the meaning set forth in Section 6.2(c)(iii). “Target Net Working Capital” means ($19,000,000). “Tax” or “Taxes” means (a) any U.S. federal, state or local or non-U.S. tax, charge, fee, levy, impost, duty, tariff or other similar assessment or charge of any kind whatsoever imposed by any Government Entity (whether disputed or not), including net income, gross income, gross receipts, capital stock, franchise, earnings, profits, gains, payroll, employment, withholding, social security, unemployment, disability, real property, ad valorem/personal property, escheat, unclaimed property, stamp, excise, license, natural resource, severance, premium, environmental (including taxes under Section 59A of the Code), customs, duties, capital stock, windfall profits, goods and services, documentary, registration, recordation, occupation, sales, use, transfer, value added, alternative minimum, estimated or other tax, including any interest, penalty or addition thereto imposed by any Taxing Authority, and (b) any Loss for any amount described in clause (a) imposed as a result of being or ceasing to be a member of any consolidated, combined or unitary group for filing purposes (including any Loss under Treasury Regulation Section 1.1502-6 or any corresponding or similar provision of state, local or non-U.S. Tax Legal Requirement), as a transferee or successor, by Contract, by operation of applicable Legal Requirement or otherwise. “Tax Contest” means any audit, examination, claim, dispute, litigation, proceeding, refund claim, or other administrative or judicial action by or before any Taxing Authority relating to Taxes, Tax Returns, or Tax refunds. “Tax Election” means an “eligible acquisition transaction election” as provided in Rev. Proc. 2015-13, 2015-5 I.R.B. 419, and filling of IRS Form 3115 with respect to the Company to properly state the Company’s tax basis in the assets acquired pursuant to the acquisitions of each of MicroAge and cStor and to immediately recognize any income for federal, state and local income Tax purposes resulting from any disallowed deductions that were previously taken into account. 18 “Tax Proceeding” has the meaning set forth in Section 4.8(f). “Tax Refund” has the meaning set forth in Section 6.3(c). “Tax Return” means any return, report, information return or other document relating to Taxes required to be filed with any Taxing Authority. “Taxing Authority” means any Government Entity responsible for the administration or imposition of any Tax. “Third-Party Claim” has the meaning set forth in Section 7.4(b)(i). “TMN License Agreement” has the meaning set forth in the Disclosure Schedule. “Training Datasets” has the meaning set forth in Section 4.13(p). “Transaction Deductions” means, without duplication, any deduction permitted under applicable Legal Requirements attributable to (a) Transaction Expenses or other similar costs paid on or prior to the Closing Date or included in the computation of Final Net Working Capital; (b) any unamortized debt issuance costs and any other fees, expenses, and interest (including amounts treated as interest for Income Tax purposes) that were incurred in connection with the Indebtedness (or payment thereof) or included in the computation of Final Net Working Capital; (c) any bonuses or other deferred compensation that have been accrued in the computation of Final Net Working Capital or paid prior to the Closing Date, but are not deductible for Income Tax purposes until after the Closing Date. “Transaction Documents” means this Agreement, the Escrow Agreement, the Restrictive Covenant Agreements, and any other document expressly contemplated by this Agreement. “Transaction Expenses” means all expenses of the Acquired Companies incurred or to be incurred in connection with the preparation, execution and consummation of this Agreement, the transactions contemplated hereby to be consummated on or before the Closing Date, and the Closing, and which, in each case, have not been paid as of the Closing, including, without limitation (a) the fees and disbursements of lawyers, investment bankers, accountants, and other advisors and service providers, payable by any of the Acquired Companies pursuant to Section 9.1, (b) any Change of Control Payments, (c) fifty percent (50%) of the fees of the Escrow Agent, (d) all fees, costs and expenses required to be paid in connection with obtaining the Required Consents, (e) fifty percent (50%) of the costs, fees and expenses incurred in connection with obtaining the Tail Policies, (f) the $50,000 fee incurred in connection with the termination of the TMN License Agreement, and (g) in respect of any Taxes arising under the foregoing fees and expenses. “Transfer Tax” has the meaning set forth in Section 6.3(d). 19 ARTICLE II PURCHASE AND SALE OF STOCK 2.1 Purchase and Sale. At the Closing, subject to the terms and conditions set forth in this Agreement, Buyer will purchase from Sellers, and Sellers will sell, convey, assign, transfer and deliver to Buyer, all of Sellers’ right, title and interest in and to the Stock, free and clear of all Liens (other than restrictions on transfer arising under U.S. securities Legal Requirements other than as a result of a violation or noncompliance in respect thereof). 2.2 Purchase Price. The aggregate purchase price for the Stock (as it may be adjusted in accordance with this Agreement, the “Purchase Price”) will equal the sum of: (a) $220,500,000 (the “Base Purchase Price”); (b) plus, Cash; (c) plus, the amount (if any) by which the Net Working Capital exceeds the Target Net Working Capital by more than the NWC Collar; (d) minus, the amount (if any) by which the Net Working Capital is less than the Target Net Working Capital by more than the NWC Collar; (e) minus, the amount of Indebtedness of the Acquired Companies as of immediately prior to the Closing; and (f) minus, the amount of the Transaction Expenses. The Purchase Price will be paid by Buyer as described in Section 2.4 and adjusted, if at all, pursuant to Section 2.5. No later than three Business Days prior to the Closing Date, the Seller Representative shall deliver to Buyer a statement (the “Estimated Statement”) setting forth in reasonable detail, together with reasonably detailed supporting documentation (and the components thereof), Sellers’ good faith calculations of Estimated Net Working Capital, Estimated Cash, Estimated Indebtedness, Estimated Transaction Expenses and the resulting calculation of Closing Cash Consideration. The calculations in the Estimated Statement will be computed in accordance with the QofE and Exhibit C. Sellers and the Company shall, and the Company shall cause the Acquired Companies to, provide all information and access reasonably requested by Buyer in connection with Buyer’s good faith review of the Estimated Statement prior to Closing, and Sellers shall consider in good faith any comments from Buyer and update to the Estimated Statement to reflect any agreed upon changes; provided, that in the event any changes to the Estimated Statement are not agreed between the Parties in connection with the foregoing, then Sellers’ calculations set forth in the Estimated Statement delivered prior to the Closing shall control. 2.3 The Closing. The closing of the purchase and sale of the Stock and the transactions relating thereto (the “Closing”) will take place via electronic, facsimile and/or overnight delivery of documents no later than the fifth business day following the satisfaction or waiver of each of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions
20 at such time), or at such other time as Buyer and the Seller Representative mutually agree in writing. The date of the Closing is the “Closing Date.” 2.4 Payment of the Purchase Price. At the Closing: (a) Purchase Price. Buyer will pay the Purchase Price as follows: (i) Post-Closing Adjustment Escrow Amount. Buyer will deliver the Post-Closing Adjustment Escrow Amount to the Escrow Agent by wire transfer or delivery of other immediately available funds to an account designated by the Escrow Agent to be held in escrow pursuant to the terms of the Escrow Agreement and distributed in accordance with Section 2.5(d). (ii) Seller Corrective Action Escrow Amount. Buyer will deliver the Seller Corrective Action Escrow Amount to the Escrow Agent by wire transfer or delivery of other immediately available funds to an account designated by the Escrow Agent to be held in escrow pursuant to the terms of the Escrow Agreement and distributed in accordance with Section 6.3(h)(i). (iii) SALT Matters Escrow Amount. Buyer will deliver the SALT Matters Escrow Amount to the Escrow Agent by wire transfer or delivery of other immediately available funds to an account designated by the Escrow Agent to be held in escrow pursuant to the terms of the Escrow Agreement and distributed in accordance with Section 6.3(h)(ii). (iv) Special Indemnity Escrow Amount. Buyer will deliver the Special Indemnity Escrow Amount to the Escrow Agent by wire transfer or delivery of other immediately available funds to an account designated by the Escrow Agent to be held in escrow pursuant to the terms of the Escrow Agreement and distributed in accordance with Section 7.10. (v) Closing Cash Consideration. Buyer will deliver to the Seller Representative, for further distribution to each Seller in accordance with such Seller’s Pro Rata Share, the Closing Cash Consideration. Buyer will deliver such amount by wire transfer or delivery of other immediately available funds to the account designated by Seller Representative in writing to Buyer. Each Seller acknowledges and agrees that the foregoing allocation of the Purchase Price among Sellers complies with the requirements of the Certificate and the Stockholders’ Agreement and waives any and all claims such Seller may have against any Party (including any other Seller or Buyer) or the Company in connection with such allocation. Further, each Seller waives any rights to notice under the Certificate or the Stockholders’ Agreement in connection with the execution, delivery and performance of this Agreement. (b) Indebtedness. On behalf of the Acquired Companies and at the direction of the Seller Representative, Buyer will deliver payment to the appropriate Persons in respect of the Indebtedness of the Acquired Companies as of immediately prior to the Closing, if any, pursuant to payoff letters or invoices delivered by such Persons to Buyer and the Acquired Companies in form and substance reasonably satisfactory to Buyer and the Seller Representative, except for such 21 Indebtedness, if any, that Buyer and the Seller Representative agree in writing will remain in place following the Closing. (c) Transaction Expenses. On behalf of the Acquired Companies and Sellers and at the direction of the Seller Representative, Buyer will deliver payment to the appropriate Persons in respect of the Transaction Expenses in the amounts indicated in writing by the Seller Representative in the Estimated Statement, by wire transfer or delivery of other immediately available funds to the accounts designated by the Seller Representative in the Estimated Statement; provided, that any Transaction Expenses that are compensatory in nature and subject to withholding or payroll Taxes shall by paid to the Acquired Companies’ payroll provider for further payment to the applicable payee thereof. (d) Restricted Shares. To the extent any shares of Stock being sold by Sellers were issued subject to vesting, repurchase or forfeiture conditions (the “Restricted Stock”), all such vesting, repurchase or forfeiture conditions shall be satisfied as of the Closing. Notwithstanding anything to the contrary in this Agreement (including Section 2.6), Buyer (and any other Person that has any withholding obligation with respect to any payment made in respect of the Restricted Stock) shall be entitled to deduct and withhold from any amount otherwise payable in respect of the Restricted Stock any Taxes required to be deducted and withheld under any provision of applicable Legal Requirements. To the extent any outstanding promissory notes are secured by a pledge of Restricted Stock, the Company and Buyer shall be entitled to satisfy and repay such promissory notes at Closing by deducting and withholding from the amounts otherwise payable in respect of the Restricted Stock pursuant to this Agreement. Prior to the Closing, the Company shall take all necessary and appropriate action to effectuate the provisions of this Section 2.4(d). 2.5 Purchase Price Adjustment. Following the Closing Date, the Purchase Price will be adjusted as set forth below: (a) Closing Balance Sheet Preparation. Buyer will prepare and deliver to the Seller Representative within 90 days after the Closing Date a statement, setting forth in reasonable detail, together with reasonably detailed supporting documentation (and the components thereof), Buyer’s good faith calculation of Net Working Capital, Cash, Indebtedness, and Transaction Expenses (the “Closing Calculations”). The Closing Calculations will be computed in accordance with the QofE and Exhibit C. Buyer will provide all information and access reasonably requested by the Seller Representative in connection with the Seller Representative’s good faith review of the Closing Calculations, including the work papers and back-up materials used in preparing the Closing Calculations, and the books, records and financial staff of the Acquired Companies, in each case, solely to the extent relevant for the purposes of verifying the accuracy of the calculations set forth therein; provided, that the foregoing are each subject to (i) any applicable privileges (including attorney-client privilege, the attorney work product doctrine or any similar protections, (ii) contractual obligations, including the terms of any confidentiality agreement to which Buyer or any of the Acquired Companies are a party, and (iii) prior execution of customary access letters (if necessary). (b) Closing Calculations Review. Within 45 days following Buyer’s delivery of the Closing Calculations to the Seller Representative, the Seller Representative will give Buyer 22 a written notice stating either (i) the Seller Representative’s acceptance, without objection, of the Closing Calculations (an “Acceptance Notice”) or (ii) the Seller Representative’s objections to the Closing Calculations (an “Objection Notice”). Any Objection Notice shall specify in reasonable detail the nature and basis of any disagreement so asserted, together with reasonably detailed supporting documentation; provided, that any item or amount of the Closing Calculations not disputed by the Seller Representative in the Objection Notice shall be final and binding for all purposes hereunder. If the Seller Representative gives Buyer an Acceptance Notice or does not give Buyer an Objection Notice within such 45-day period, then the Closing Calculations will be conclusive and binding upon the Parties and the calculations of Net Working Capital, Cash, Indebtedness, and Transaction Expenses set forth in the Closing Calculations will constitute the Final Net Working Capital, Final Cash, Final Indebtedness, and Final Transaction Expenses, respectively. (c) Audit Review. If the Seller Representative timely delivers to Buyer an Objection Notice pursuant to Section 2.5(b), then, for a period of 30 days after Buyer receives the Objection Notice (the “Agreement Period”), Buyer and the Seller Representative will negotiate in good faith to resolve all of the issues set forth in the Objection Notice. In the event that Buyer and the Seller Representative fail to resolve all of the issues set forth in the Objection Notice during the Agreement Period, (i) Buyer and the Seller Representative will jointly retain Forvis Mazars, or if such firm is unwilling or unable to serve, any other specific partner at a nationally recognized firm of certified public accountants mutually acceptable to Buyer and the Seller Representative (the “Independent Auditors”) to make the determination of the Final Net Working Capital, Final Cash, Final Indebtedness, and Final Transaction Expenses, as applicable to the extent remaining in dispute, in accordance with the terms of this Agreement within the 30-day period immediately following the Agreement Period, and (ii) Buyer and the Seller Representative will each provide the Independent Auditors with their respective determinations of the Net Working Capital, Cash, Indebtedness, and Transaction Expenses. The Independent Auditors, acting as experts and not arbitrators, will consider only those items and amounts in Buyer’s and the Seller Representative’s respective determinations of the Net Working Capital, Cash, Indebtedness, and Transaction Expenses that are identified as being items and amounts to which Buyer and the Seller Representative have been unable to agree. In resolving any such disputed item or amount, the Independent Auditors may not assign a value to any item or amount that is higher than the highest value for such item or amount claimed by either party or lower than the lowest value for such item or amount claimed by either party. The Independent Auditor’s role is to resolve accounting disputes only, and shall not make any legal determination. The Independent Auditors’ determination of the Final Net Working Capital, Final Cash, Final Indebtedness, and Final Transaction Expenses will be based on the definitions of “Net Working Capital”, “Cash”, “Indebtedness” and “Transaction Expenses” contained in this Agreement. Assuming compliance with the immediately preceding sentence, the determination of the Final Net Working Capital, Final Cash, Final Indebtedness and Final Transaction Expenses by the Independent Auditors will be final, conclusive and binding upon the Parties, absent fraud or manifest error, and may be enforced by a court of competent jurisdiction in the same manner as though determined and rendered in binding arbitration. The fees, costs and expenses of the Independent Auditors will be allocated to Buyer and Sellers based upon the percentage that the portion of the contested amount not awarded bears to the amount actually contested, as determined by the Independent Auditors. The Parties shall have no ex parte communications with the Independent Auditor. 23 (d) Adjustment Payment. Upon the determination, in accordance with this Section 2.5, of the Final Net Working Capital, Final Cash, Final Indebtedness and Final Transaction Expenses, the Closing Cash Consideration will be recalculated using the Final Net Working Capital, Final Cash, Final Indebtedness, and Final Transaction Expenses in lieu of the Estimated Net Working Capital, Estimated Cash, Estimated Indebtedness, and Estimated Transaction Expenses used in the calculation of the Closing Cash Consideration (the “Adjusted Cash Consideration”). (i) If the Adjusted Cash Consideration exceeds the Closing Cash Consideration (the amount by which the Adjusted Cash Consideration exceeds the Closing Cash Consideration is referred to herein as the “Increase Amount”), then, within five days after the determination of the Final Net Working Capital, Final Cash, Final Indebtedness and Final Transaction Expenses pursuant to this Section 2.5, (A) Buyer will cause to be paid to the Seller Representative, for further distribution to each Seller in accordance with such Seller’s Pro Rata Share, the Increase Amount by wire transfer or delivery of other immediately available funds to an account designated in writing by the Seller Representative, and (B) Buyer and the Seller Representative will cause the Escrow Agent to disburse to the Seller Representative, for further distribution to each Seller in accordance with such Seller’s Pro Rata Share, the Post-Closing Adjustment Escrow Amount. Notwithstanding anything herein to the contrary, Buyer shall not have any liability for any amounts due to Sellers pursuant to this Section 2.5(d)(i) in excess of the Post-Closing Adjustment Escrow Amount. (ii) If the Adjusted Cash Consideration is less than the Closing Cash Consideration (the amount by which the Adjusted Cash Consideration is less than the Closing Cash Consideration is referred to herein as the “Decrease Amount”), then, within five days after the determination of the Final Net Working Capital, Final Cash, Final Indebtedness and Final Transaction Expenses pursuant to this Section 2.5, Buyer and the Seller Representative will cause the Escrow Agent to disburse the Decrease Amount to Buyer from the Post-Closing Adjustment Escrow Amount. In the event the Decrease Amount is less than the Post-Closing Adjustment Escrow Amount, Buyer and the Seller Representative will cause the Escrow Agent to disburse to the Seller Representative, for further distribution to each Seller in accordance with such Seller’s Pro Rata Share, the amount by which the Post-Closing Adjustment Escrow Amount exceeds the Decrease Amount. Notwithstanding anything herein to the contrary, Buyer agrees that its sole and maximum recourse in respect of payment of any Decrease Amount will be the right to seek payment out of the Post-Closing Adjustment Escrow Amount in accordance with the terms of this Agreement and the Escrow Agreement. (iii) If the Adjusted Cash Consideration is equal to the Closing Cash Consideration, then, within five days after the determination of the Final Net Working Capital and Final Cash pursuant to this Section 2.5, Buyer and the Seller Representative will cause the Escrow Agent to disburse to the Seller Representative, for further distribution to each Seller in accordance with such Seller’s Pro Rata Share, the Post-Closing Adjustment Escrow Amount. 2.6 Withholdings. Buyer (and any other Person that has any withholding obligation with respect to any payment made pursuant to this Agreement) shall be entitled to deduct and withhold from any amount otherwise payable pursuant to this Agreement any Taxes required to be deducted and withheld under any provision of applicable Legal Requirements;
24 provided that, except with respect to any amounts deducted and withheld as a result of the Seller Representative’s failure to deliver the form described under Section 2.7, Buyer or such other Person shall use commercially reasonable efforts to provide the Seller Representative with notice as soon as reasonably practicable prior to withholding any amounts pursuant to this Section 2.6 from any amount payable to Sellers under this Agreement, and shall use commercially reasonable efforts to work in good faith with the Seller Representative to minimize any such withheld amounts to the extent permitted by applicable Legal Requirements. To the extent that amounts are so withheld and are paid over to the applicable Government Entity in accordance with applicable Legal Requirements, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. 2.7 FIRPTA. The Seller Representative shall deliver to Buyer a certificate (the “FIRPTA Certificate”), dated as of the Closing Date, from the Company satisfying the requirements set forth in Treasury Regulation Sections 1.1445 2(c)(3) and 1.897 2(h), and in form and substance reasonably satisfactory to Buyer, certifying that the Company is not nor has been a “United States real property holding corporation” (as defined in Section 897(c)(2) of the Code) at any time during the five (5) years preceding the date of the certificate. ARTICLE III REPRESENTATIONS AND WARRANTIES ABOUT SELLERS Except as otherwise set forth on the Disclosure Schedule, each Seller, individually and not jointly, represents and warrants to Buyer that: 3.1 Organization, Power and Authorization. Such Seller has all requisite power and full legal right to enter into, deliver and perform its obligations under each Transaction Document to which such Seller is a party and to sell, transfer and deliver to Buyer all of the Stock owned by such Seller. If such Seller is an entity, such Seller (a) is duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as applicable, and (b) has Organizational Documents that are in full force and effect and is not in material violation of any provision thereof. Such Seller’s execution, delivery and performance of each Transaction Document to which such Seller is a party have been duly authorized by such Seller. 3.2 Binding Effect; Noncontravention; Authority. (a) This Agreement has been duly executed and delivered by such Seller and constitutes, and each other Transaction Document to which such Seller is a party when executed and delivered will constitute, a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity). (b) The execution, delivery and performance by such Seller of the Transaction Documents to which such Seller is a party do not (i) violate any Legal Requirement to which such Seller is subject or, if such Seller is an entity, any provision of its Organizational Documents, (ii) 25 conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any material agreement, Contract, Permit, lease, license, instrument or other arrangement to which such Seller is a party or by which such Seller is bound or to which the assets of such Seller or the Stock owned by such Seller are subject, except where such conflict, breach, default or other event or right would not reasonably be expected to have the effect of preventing, delaying, making illegal such Seller’s ability to perform any of its obligations under this Agreement and any Transaction Document to which such Seller is a party, or (iii) require any authorization, consent, approval, order, permit, filing, registration, declaration or notice by, with or to any Person, except any such authorization, consent, approval, order, permit, filing, registration, declaration or notice the failure of which to give, make or obtain would not reasonably be expected to have the effect of preventing, delaying, making illegal or otherwise interfering with such Seller’s ability to perform any of its obligations under this Agreement and any Transaction Document to which such Seller is a party. 3.3 Brokerage. Such Seller has not retained any broker, finder, investment banker, financial advisor or similar intermediary in connection with this Agreement or the transactions contemplated by this Agreement. Except for any payment that Buyer would make for the benefit of Sellers as provided for in Section 2.4(c), Buyer will not have any obligation to pay any broker’s, finder’s, investment banker’s, financial advisor’s or similar fee in connection with this Agreement or the transactions contemplated by this Agreement by reason of any action taken by or on behalf of Sellers. 3.4 Ownership of Stock. Such Seller holds of record, owns beneficially, and has good and marketable title to the Stock set forth opposite such Seller’s name on the Disclosure Schedule, free and clear of all Liens (other than transfer restrictions imposed by national, federal or state securities Legal Requirements). The Stock held by such Seller constitutes all of the equity interests in the Company owned beneficially or held of record by such Seller as of the date of this Agreement. Except as set forth on Section 3.4 of the Disclosure Schedule, such Seller does not own any other securities of any Acquired Company of any class or kind, including any debt securities, and does not have any right or option to subscribe for or purchase any shares or other equity securities or debt securities of any Acquired Company. Other than pursuant to this Agreement, such Seller has not granted any option, warrant or other right to any Person to acquire any Stock, and such Seller is not party to any voting agreement, voting trust, registration rights agreement or other similar agreement or arrangement with respect to the Stock. 3.5 Limitations of Representations and Warranties. EXCEPT IN THE CASE OF ANY FRAUD, BUYER ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III (AS MODIFIED BY THE DISCLOSURE SCHEDULE), NO SELLER NOR ANY OF ITS RESPECTIVE AFFILIATES MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO SUCH SELLER OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH SELLER DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SUCH SELLER, ANY OF ITS AFFILIATES, OR ANY OF ITS OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES, AGENTS OR REPRESENTATIVES AND IF MADE, SUCH REPRESENTATION OR WARRANTY MAY NOT BE RELIED UPON BY BUYER OR ANY 26 OF ITS AFFILIATES AND REPRESENTATIVES AS HAVING BEEN AUTHORIZED BY SUCH SELLER OR ANY OF ITS AFFILIATES OR REPRESENTATIVES. EXCEPT IN THE CASE OF ANY FRAUD AND FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III (AS MODIFIED BY THE DISCLOSURE SCHEDULE), EACH SELLER HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, OPINION, PROJECTION, FORECAST, STATEMENT, MEMORANDUM, PRESENTATION, ADVICE OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO BUYER OR ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, PROJECTION, FORECAST, STATEMENT, MEMORANDUM, PRESENTATION, ADVICE OR INFORMATION THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER BY ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR REPRESENTATIVE OF THE ACQUIRED COMPANIES, SUCH SELLER OR ANY OF SUCH SELLER’S AFFILIATES, INCLUDING ANY INFORMATION MADE AVAILABLE IN ANY VIRTUAL OR PHYSICAL DATA ROOM). NO SELLER MAKES ANY REPRESENTATIONS OR WARRANTIES TO BUYER REGARDING THE PROBABLE SUCCESS OR PROFITABILITY OF THE BUSINESS CONDUCTED BY THE ACQUIRED COMPANIES. 3.6 Governmental Consents. Except for compliance with, and filings as may be required under, the HSR Act and any other applicable Antitrust Law, no consent, approval or authorization of, or registration, qualification or filing with, any Government Entity is required for the execution, performance and delivery of this Agreement or any other Transaction Document to which such Seller is to be a party by such Seller or for the consummation by such Seller of the transactions contemplated hereby and thereby. 3.7 Litigation. No Proceeding is pending or, to such Seller’s Knowledge, threatened against such Seller with respect to such Seller’s execution, performance and delivery of this Agreement or any Transaction Document to which such Seller is to be a party or the consummation by such Seller of the transactions contemplated hereby or thereby. No Proceeding is pending or, to such Seller’s Knowledge, threatened against such Seller before any arbitrator or court or other Government Entity which (a) if adversely determined, would be likely to result in payments, penalties or fines payable by any Acquired Company, or (b) challenges the validity of this Agreement or any other Transaction Document or any action taken or to be taken in connection herewith or therewith. Such Seller does not have any plan to initiate any Proceeding against another Person relating to the transaction contemplated hereby or that could reasonably be expected to affect the transferability of the Stock pursuant to this Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS ABOUT THE ACQUIRED COMPANIES Except as otherwise set forth on the Disclosure Schedule, Sellers represent and warrant to Buyer that: 4.1 Organization, Power and Authorization, Brokerage. 27 (a) Each of the Acquired Companies (i) is duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as applicable, and (ii) has all requisite corporate or other organizational power, legal right and authority necessary to enter into, deliver and perform its obligations pursuant to each of the Transaction Documents to which it is a party. Each Acquired Company’s execution, delivery and performance of each Transaction Document to which it is a party have been duly authorized by all requisite corporate or other organizational action of such Acquired Company. (b) Each of the Acquired Companies has all requisite corporate or other organizational power and authority to carry on its business as currently conducted and to own and use the properties owned and used by it. Each of the Acquired Companies is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a Material Adverse Effect. True, correct and complete copies of the Organizational Documents of each Acquired Company have been made available to Buyer, and each such Organizational Document is in full force and effect and no Acquired Company is in material breach or violation of any provision thereof. (c) Except for BofA Securities, Inc., none of the Acquired Companies have retained any broker, finder, investment banker, financial advisor or similar intermediary in connection with this Agreement or the transactions contemplated hereby or thereby for which Buyer or any Acquired Company would have any liability or obligation following the Closing. Except for any payment that Buyer would make for the benefit of the Acquired Companies as provided for in Section 2.4(c), Buyer will not have any obligation to pay any broker’s, finder’s, investment banker’s, financial advisor’s or similar fee in connection with this Agreement or the transactions contemplated by this Agreement by reason of any action taken by or on behalf of the Acquired Companies. 4.2 Binding Effect and Noncontravention. (a) The Transaction Documents to which each of the Acquired Companies is a party, when executed and delivered, will constitute a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity). (b) The execution, delivery and performance by each of the Acquired Companies of the Transaction Documents to which it is a party do not (i) violate any material Legal Requirement to which it is subject or its Organizational Documents, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, cancel, lose any material benefit under, or require any notice under any material agreement, Contract, Permit, lease, license, instrument, Lien or other material interest to which such Acquired Company is a party, by which such Acquired Company is bound or to which its assets are subject, (iii) result in the creation of any Lien on any assets of such Acquired Company (except Permitted Liens), or (iv) require any authorization, consent, approval, order, permit, filing, registration, declaration or notice by, with or to any Person, except for
28 compliance with, and filings as may be required under, the HSR Act and any other applicable Antitrust Laws. 4.3 Capitalization; Subsidiaries. (a) Section 4.3(a)(i) of the Disclosure Schedule sets forth the authorized equity interests of the Company, a correct and complete list of the Persons that own all of the issued and outstanding equity interests of the Company, and the number and class of equity interests held by each such Person, in each case as of the date hereof. The Stock constitutes all of the issued and outstanding equity interests of the Company. All of the Stock has been duly authorized, is validly issued, fully paid and nonassessable and was not issued in violation of any preemptive right, right of first refusal or similar right. Except as set forth in the Stockholders’ Agreement and Section 4.3(a)(ii) of the Disclosure Schedule, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or other Contracts or commitments that could require the Company to issue, sell, repurchase, redeem or otherwise cause to become outstanding or acquire any of its capital stock. Other than the Subsidiaries, the Company does not own or have any right to acquire any equity interests in any Person. (b) Section 4.3(b) of the Disclosure Schedule sets forth (i) the name and jurisdiction of organization of each Subsidiary, (ii) the authorized and outstanding equity interests of each Subsidiary, (iii) the holders thereof and the number and class of equity interests held by each such holder, and (iv) each jurisdiction in which each Subsidiary is qualified to do business. All of the issued and outstanding equity interests of each of the Subsidiaries are owned, directly or indirectly, by the Company, free and clear of all Liens other than restrictions imposed by applicable securities Legal Requirements. All such equity interests have been duly authorized and are validly issued, fully paid and nonassessable. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or other contracts or commitments that could require any of the Subsidiaries to issue, sell, repurchase, redeem or otherwise cause to become outstanding or acquire any of its equity interests. None of the Subsidiaries owns or has any right to acquire any equity interests in any Person. (c) Except for the Stockholders’ Agreement and as set forth on Section 4.3(c) of the Disclosure Schedule, there are no voting trusts, equityholder agreements, proxies, registration rights agreements or other agreements or understandings in effect with respect to the voting, transfer or registration of any Stock or any other equity interests of any Acquired Company. (d) There are, and since the Lookback Date, have been, no Proceedings or disputes between any Acquired Company, on the one hand, and any current or former holder of Stock or any other equity interests of any Acquired Company, on the other hand, with respect to their ownership of Stock or such other equity interests. 4.4 Financial Statements. Attached to Section 4.4 of the Disclosure Schedule are true, correct and complete copies of the following financial statements: (a) the audited consolidated balance sheet of the Acquired Companies and the consolidated statement of operations, consolidated statement of stockholders’ equity and consolidated statement of cash 29 flows and notes thereto, in each case as of and for the fiscal year ended December 31, 2024 and December 31, 2025 and (b) the unaudited consolidated balance sheet (the “Latest Balance Sheet”) of the Acquired Companies and the consolidated statement of operations, consolidated statement of stockholders’ equity and consolidated statement of cash flows as of and for the six (6) month period then ended on the Latest Balance Sheet Date (collectively, the “Financial Statements”). The Financial Statements have been prepared in all material respects in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and present fairly, in all material respects, the financial condition of the Acquired Companies as of such dates and the results of operations for the periods specified; provided, that the unaudited Financial Statements described in clause (b) above are subject to normal year-end adjustments, which are not material individually or in the aggregate, and absence of footnotes and other presentation items. The Financial Statements have been prepared from, and are consistent with, the books and records of the Acquired Companies, which books and records are true and correct in all material respects. 4.5 Subsequent Events. Since the Latest Balance Sheet Date: (a) there has not been any event, occurrence, condition, change, development or effect that, individually or in the aggregate, has had or would reasonably be expected to result in a Material Adverse Effect, and (b) except as expressly contemplated by this Agreement or as set forth on Section 4.5 of the Disclosure Schedule, no Acquired Company has: (i) incurred, assumed or guaranteed any Indebtedness; (ii) mortgaged, pledged or subjected any of its assets to any Lien (other than Permitted Liens); (iii) sold, assigned, transferred, leased or licensed any material assets, except in the ordinary course of business; (iv) sold, assigned, transferred, leased or licensed any material Intellectual Property, except non-exclusive licenses granted in the ordinary course of business; (v) issued, sold or transferred any of its equity interests, securities convertible into its equity interests, or warrants, options or other rights to acquire its equity interests; (vi) made any material capital expenditures or commitments therefor, except in the ordinary course of business and involving no more than $100,000 individually, or $200,000 in the aggregate; (vii) declared or made any payment or distribution of cash or other property to Sellers with respect to the Stock or purchased or redeemed any equity interests; (viii) made any changes in any employee compensation, benefits, severance or termination agreement, other than routine salary increases or renewal of existing Benefit Plans, in each case, in the ordinary course of business; 30 (ix) changed in any material respect its cash management practices, accounts receivable collection practices, accounts payable payment practices, billing practices, pricing policies or credit policies; (x) made any loans, advances or capital contributions to, or investments in, any Person, other than advances to employees in the ordinary course of business; (xi) waived, released, assigned, settled or compromised any material rights, claims or Proceedings, other than in the ordinary course of business; (xii) amended or modified its Organizational Documents; (xiii) made any change in any method of accounting practice, except (A) as required by GAAP or applicable Legal Requirement or (B) disclosed in the notes to the Financial Statements; (xiv) incurred damage, destruction or loss, not otherwise covered by insurance, in an amount in excess of $50,000; (xv) entered into any material transaction, including any acquisition (by merger, consolidation, acquisition of stock or assets, or otherwise) of any corporation, partnership or other business organization or Person or any property or assets of any Person, other than in the ordinary course of business or as contemplated herein; (xvi) terminated any Material Contract, amended (including with respect to payment terms), modified, waived, released or assigned any right or claims under any Material Contract (but excluding any purchase orders or change orders entered into in the ordinary course of business); (xvii) entered into, amended or terminated any Contract, arrangement or transaction with any Seller or any Affiliate of Seller, other than employment Contracts or arrangements entered into the ordinary course of business; or (xviii) agreed to do any of the foregoing. 4.6 Title to Tangible Personal Property. The Acquired Companies have good, valid and marketable title to, or a valid leasehold interest in, all tangible personal property reflected on the Latest Balance Sheet or otherwise used or held for use in the conduct of the Business, free and clear of all Liens (other than Permitted Liens), except assets disposed of in the ordinary course of business since the Latest Balance Sheet Date. Such tangible personal property is in good operating condition and repair in all material respects, ordinary wear and tear excepted, and is sufficient in all material respects for the conduct of the business of the Acquired Companies as currently conducted. 4.7 Compliance With Laws. The Acquired Companies have complied with, and are in compliance with, all applicable Legal Requirements in all material respects. Since the Lookback Date, none of the Acquired Companies have received any written notice of, or to the Company’s Knowledge, been charged with or been subject to, any Proceeding involving any actual 31 or alleged violation of any Legal Requirement, except as would not reasonably be expected to be material to the Acquired Companies, taken as a whole. To the Company’s Knowledge, no event has occurred, and no circumstance exists, in each case that (with or without notice or lapse of time), would reasonably be expected to constitute or result in a violation by any Acquired Company of, or a failure on the part of any Acquired Company to comply with, any material Legal Requirement applicable to such Acquired Company and its business, operations and assets as currently operated. 4.8 Tax Matters. Except as set forth on Section 4.8 of the Disclosure Schedule: (a) Each Acquired Company has timely and properly filed all Tax Returns for Income Tax and other material Tax Returns that it was required to file and all such Tax Returns were true, correct and complete in all material respects. All Income Taxes and other material Taxes (whether or not shown on any Tax Return) required to be paid by, or otherwise imposed on, any Acquired Company have been timely paid. (b) The Taxes of (or otherwise imposed on) the Acquired Companies (i) did not, as of the Latest Balance Sheet Date, materially exceed the amount accrued for current Taxes payable (for clarity, excluding any deferred Tax liabilities established to reflect timing differences between book and Tax income) set forth on the face of the consolidated balance sheet of the Acquired Companies included in the Financial Statements (rather than in any notes thereto), and (ii) will not, as of the Closing Date, materially exceed the amount of Taxes of the Acquired Companies taken into account in the computation of the Purchase Price. (c) Each Acquired Company has (i) properly collected all material sales, use, value added, goods and services and similar Taxes required to be collected, (ii) properly paid all such sales, use, value added, goods and services and similar Taxes required to be paid to the appropriate Taxing Authority in accordance with applicable Legal Requirements, and (iii) received and maintained (and submitted to the appropriate Taxing Authority if necessary) all records and supporting documents (including any applicable exemption certificates or other proof of exemption) with respect to any such sales, use, value added, goods and services or similar Taxes in the manner required by applicable Legal Requirements. (d) All material Taxes that the Acquired Companies are required by applicable Legal Requirements to withhold (including those pertaining to employees, independent contractors, creditors or members) have been duly withheld and collected and have been paid in full to the appropriate Taxing Authority or, if not yet due and payable, have been properly set aside in segregated accounts to be paid to the appropriate Taxing Authority. (e) No Acquired Company has agreed to any extension or waiver of the statute of limitations applicable to any Tax Return, or agreed to any extension of time with respect to a Tax assessment or deficiency, which period (after giving effect to such extension or waiver) has not expired, other than extensions of time to file Tax Returns obtained in the ordinary course of business. (f) No Taxing Authority has notified any Acquired Company in writing of any proposed deficiency or assessment with respect to the Acquired Companies, which deficiency or
32 assessment has not been paid in full and finally settled. There are no pending or in-progress Proceedings with respect to Taxes (“Tax Proceedings”) pertaining to any Acquired Company, and no Tax Proceedings have been threatened in writing or are being discussed with any Taxing Authority. There are no ongoing or pending audits by any Taxing Authority against any Acquired Company for any material liability in respect of the Company or its Subsidiaries. (g) No Acquired Company has ever engaged in a trade or business, or has ever had a “permanent establishment” (within the meaning of an applicable Tax treaty) or fixed place of business, in any country other than its country of formation. No written claim has been made by a Taxing Authority in a jurisdiction where any Acquired Company does not file Tax Returns such that any Acquired Company is or may be subject to taxation by, or required to file any Tax Returns in, that jurisdiction. (h) No Acquired Company is a party to any Tax allocation or sharing agreement, in each case other than any Commercial Tax Agreement. No Acquired Company has any material liability for the Taxes of any other Person under Treasury Regulation Section 1.1502- 6 (or any similar provision of state, local or foreign Legal Requirement). (i) No Acquired Company has engaged in a “reportable transaction” within the meaning of Section 6707A(c)(2) of the Code and Treasury Regulation Section 1.6011-4(b)(2) that could affect its Taxes for a period not closed by the applicable statute of limitations. (j) No Acquired Company (i) has been a member of a combined, consolidated, unitary or similar group (other than a group of which one of the Acquired Companies is the common parent), or (ii) is a party to or bound by any Tax allocation, Tax sharing, Tax indemnity, Tax reimbursement or similar Contract (other than customary commercial agreements entered into with unrelated third parties in the ordinary of business the primary purpose of which is not related to Taxes). No Acquired Company has any liability for the Taxes of another Person (i) as a result of being or ceasing to be a member of any Tax group, including under Treasury Regulations Section 1.1502-6 (or any corresponding or similar provision of state, local or non-U.S. Tax Legal Requirement), or (ii) as a transferee or successor, by Contract (other than customary commercial agreements entered into with unrelated third parties in the ordinary course of business the primary purpose of which is not related to Taxes), by operation of applicable Legal Requirement or otherwise. (k) No Acquired Company, Buyer and any Affiliate of Buyer will be required to include any item in taxable income or exclude any item of deduction or loss from taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of (i) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Legal Requirement) executed by an Acquired Company prior to the Closing, (ii) any installment sale or open transaction effected by Acquired Company prior to the Closing, (iii) any change in method of accounting (including adjustments pursuant to Section 481 of the Code) made, or any improper method of accounting used, by an Acquired Company prior to the Closing, or (iv) any deferred revenue or prepaid amount accrued or received by Acquired Company on or prior to the Closing Date. 33 (l) None of the Acquired Companies has been either a “distributing corporation” or a “controlled corporation” within the respective meanings of such terms under Section 355(a)(1)(A) of the Code (or any corresponding or similar provision of state, local or non- U.S. Tax Legal Requirement) in a transaction that was purported or intended to be governed in whole or in part by Section 355 or 361 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Legal Requirement) (i) in the two years before the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” within the meaning of Section 355(e) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Legal Requirement) in connection with the transactions contemplated by this Agreement. (m) There are no Liens for Taxes (other than statutory Liens for current Taxes not yet due and payable) upon any asset of the Acquired Companies or upon any of the Stock. (n) There is no power of attorney given by and currently binding upon the Acquired Companies with respect to Taxes for any period for which the statute of limitations (including any waivers or extensions) has not yet expired, which power of attorney will remain outstanding after the Closing Date. (o) None of the Acquired Companies is, nor has ever been during the five-year period preceding the date hereof, a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Legal Requirement). (p) None of the Acquired Companies has received or requested any private letter rulings from the IRS (or any comparable Tax rulings from any other Taxing Authority). (q) Each of the Acquired Companies is in compliance in all material respects with all terms and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement, approval or order, and the consummation of the transactions contemplated by this Agreement will not have any adverse effect on the validity and effectiveness of any such Tax exemption, Tax holiday or other Tax reduction agreement, approval or order or otherwise result in the termination or recapture of any grant, Tax subsidy, Tax rate reduction, Tax credit, or other Tax incentive. (r) The prices for any property or services (or for the use of any property) provided by or to the Acquired Companies are arm’s length prices for purposes of all applicable transfer pricing Legal Requirements, including Section 482 of the Code and the Treasury Regulations thereunder. 4.9 Environmental Matters. Each of the Acquired Companies is and, since the Lookback Date, has been in compliance with all applicable Environmental Laws except where the failure to comply would not have a Material Adverse Effect. Each of the Acquired Companies has obtained, filed timely application to renew, and is in compliance with all permits, licenses and other authorizations and approvals that are required pursuant to Environmental Laws for the occupation of the Real Property and the operation of the Business except where the failure to comply would not have a Material Adverse Effect, and all such Permits, licenses and other authorizations and approvals are currently effective and valid and are set forth on Section 4.23 of 34 the Disclosure Schedule. No Acquired Company is subject to any outstanding Order under any Environmental Law, or party to or, to the Company’s Knowledge, threatened to be made a party to, any proceeding, hearing, legal action, suit, arbitration or other legal or administrative proceeding under any Environmental Law, and since January 1, 2025, none of the Acquired Companies have received any written notice from any Government Entity of any actual or alleged violations or material liabilities, including any investigatory, remedial or corrective obligations, arising under Environmental Laws. There has been no Release or threatened Release of any Hazardous Material at, on, under or from, and no Hazardous Material is present at, on or under, any property currently owned, leased or operated by any Acquired Company, or any other location, except as would not reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance by each of the Acquired Companies of the Transaction Documents to which it is a party do not require any authorization, consent, approval or notice by or to any other Person under any Environmental Law where the failure to obtain such authorization, consent, approval or notice from any such Person would result in a Material Adverse Effect. 4.10 Anti-Bribery. The Acquired Companies, and their respective officers, directors, director equivalents, employees, and other Representatives, are and since the Lookback Date: (i) have been in compliance in all material respects with the anti-bribery and anti-corruption Legal Requirements of each jurisdiction in which an Acquired Company has operated, including the U.S. Foreign Corrupt Practices Act of 1977, as amended (collectively, “Anti-Bribery Laws”), and (ii) have not paid, given, offered or promised to pay, or authorized or ratified the payment or transfer, directly or indirectly, of any monies or anything of value to any Public Official or other Person, for the purpose of corruptly influencing any act or decision of such Public Official or of a Government Entity, or any other Person, to obtain or retain business, to direct business to any Person, or to secure any other improper benefit or advantage. The Acquired Companies are not subject, and since the Lookback Date have not been subject, to any Proceedings or made any disclosures, voluntary or otherwise, to any Government Entity relating to the Anti-Bribery Laws. The Acquired Companies have instituted and maintained policies, procedures, and internal controls reasonably designed to promote compliance with Anti-Bribery Laws. 4.11 Trade Compliance. The Acquired Companies, and their respective officers, directors, director equivalents, employees, and other Representatives, are and since the Lookback Date have been, in compliance in all material respects with all applicable international trade control compliance Legal Requirements, including but not limited to: (a) U.S. Legal Requirements governing economic sanctions, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control codified at 31 C.F.R. Part 500 et. seq., and the U.S. Department of State (“Sanctions”); (b) U.S. Legal Requirements governing the exportation of goods, technology, software, and services, including the Export Administration Regulations (15 C.F.R. § 730 et seq.), and the International Traffic in Arms Regulations (22 C.F.R. § 120 et seq.); (c) U.S. Legal Requirements governing the importation of goods, including laws administered by U.S. Customs and Border Protection; and (d) U.S. Legal Requirements governing international boycotts administered by the U.S. Department of Commerce and the Internal Revenue Service (collectively, the “International Trade Laws”). Since the Lookback Date, no Acquired Company or its directors, director equivalents, officers, or, to the Company’s Knowledge, employees or other Representatives, has been: (1) the target of Sanctions, (2) owned fifty percent (50%) or more, individually or in aggregate, directly or indirectly, by Persons that are the targets of Sanctions, or (3) located, organized, or ordinarily resident in a jurisdiction subject to comprehensive Sanctions 35 (including Cuba, Iran, North Korea, Syria, and the Crimea, so-called Donetsk People’s Republic, or so-called Luhansk People’s Republic regions of Ukraine (“Embargoed Jurisdictions”)). Since the Lookback Date, no Acquired Company has engaged in any unlawful dealings or transactions, directly or indirectly, with any Person: (a) that at the time of the dealing or transaction was the subject of Sanctions; or (b) located, organized, or ordinarily resident in a then-Embargoed Jurisdiction. The Acquired Companies are not subject, and since the Lookback Date have not been subject, to any Proceedings, or made any disclosures, voluntary or otherwise, to any Government Entity relating to International Trade Laws. 4.12 Outbound Investment. No Acquired Company is a “covered foreign person” as that term is defined in 31 C.F.R. § 850.209. 4.13 Intellectual Property. (a) Section 4.13(a) of the Disclosure Schedule accurately identifies: (i) each item of Registered Intellectual Property; (ii) the jurisdiction in which such item of Registered Intellectual Property has been registered or filed and the applicable registration or serial number; (iii) the application or registration date; (iv) the application or registration number; (v) the name of the owner of record of such item of Registered Intellectual Property and the nature of such ownership interest, and (vi) each action, filing and payment that must be taken or made on or before the date that is one hundred twenty (120) days after the date of this Agreement in order to maintain such item of Registered Intellectual Property in full force and effect. Each such item of Registered Intellectual Property is valid and subsisting and, excluding pending applications, enforceable, and all necessary registration, maintenance and renewal fees currently due in connection with such Registered Intellectual Property have been paid, and all necessary documents, recordations and certificates in connection with such Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of prosecuting, perfecting and maintaining such Registered Intellectual Property. (b) Section 4.13(b) of the Disclosure Schedule accurately identifies each Contract pursuant to which any Intellectual Property is or has been licensed or assigned to an Acquired Company or under which an Acquired Company has been granted any other rights thereto, including a covenant not to sue, but excluding (i) licenses for off-the-shelf software (including software as a service) not incorporated into any Company Product available on standard terms entered into in the ordinary course of business, (ii) licenses to Open Source Software, and (iii) non-disclosure agreements entered into in the ordinary course of business (each, an “Inbound IP Contract”). There are no royalties, fees, commissions, or other amounts payable by any Acquired Company to any other Person upon or for the use of any Owned Intellectual Property. (c) Section 4.13(c) of the Disclosure Schedule accurately identifies each Contract pursuant to which any Person has been granted any license under, or otherwise has received or acquired any right (whether or not currently exercisable and including a right to receive a license) or interest in, any Owned Intellectual Property, but excluding (i) non-disclosure agreements entered into in the ordinary course of business and (ii) licenses and rights under Owned Intellectual Property granted to service providers of the Acquired Companies solely to permit such service providers to provide services for the sole benefit of the Acquired Companies, and (iii) non-
36 exclusive limited licenses and rights under Owned Intellectual Property granted to Acquired Companies’ customers pursuant to the Acquired Companies’ form of customer agreement, a copy of which has been made available to Buyer (each, an “Outbound IP Contract”). Except as set forth on Section 4.13(c) of the Disclosure Schedule, no Acquired Company is bound by or subject to any Contract containing any covenant or other provision that in any way limits or restricts the ability of such Acquired Company to use, exploit, assert or enforce any Owned Intellectual Property anywhere in the world. (d) Section 4.13(d) of the Disclosure Schedule accurately identifies each Contract between the Acquired Companies, on the one hand, and one of their respective employees, consultants or independent contractors, on the other hand, in which any such employee, consultant or independent contractor expressly reserved or retained any rights in Owned Intellectual Property. Each current or former employee, consultant or independent contractor of an Acquired Company who is or was involved in the creation or development of any material Owned Intellectual Property has signed a valid and enforceable agreement containing an irrevocable assignment of such Owned Intellectual Property to an Acquired Company (or, in the case of any consultant or independent contractor who provided services to an Acquired Company through an entity, to such entity who in turn assigned all such rights to an Acquired Company) and containing customary confidentiality and non-disclosure provisions protecting the Owned Intellectual Property. To the Company’s Knowledge, no such employee, consultant, or independent contractor is or has been in breach of any such agreement, and no employee, consultant or independent contractor, or current or former stockholder, officer, director, agent, vendor, or customer of an Acquired Company has any claim, right (whether or not currently exercisable), or interest in or to any Owned Intellectual Property. (e) The Acquired Companies, collectively, (i) solely and exclusively own all right, title, and interest to and in the Owned Intellectual Property, and (ii) have valid, enforceable, sufficient and continuing rights to use, practice, perform, sell, license and otherwise exploit, pursuant to a written Inbound IP Contract, all other Intellectual Property used or held for use in the business of the Acquired Companies (together with the Owned Intellectual Property, the “Company Intellectual Property”), and except as set forth on Section 4.13(e) of the Disclosure Schedule, in each case, free and clear of any Liens. The Owned Intellectual Property together with the Licensed Intellectual Property constitutes all Intellectual Property necessary to operate the business of the Acquired Companies as currently conducted in all material respects, including the development, sale, marketing, licensing, distribution or other commercialization of the Company Products. The Acquired Companies have taken reasonable steps to maintain the confidentiality of and otherwise protect their respective rights in all proprietary information pertaining to them and all of their respective trade secrets. No Affiliate of an Acquired Company (including any Seller), other than an Acquired Company, is the owner of any Intellectual Property or technology material to the business of any Acquired Company as currently conducted, including with respect to the Company Products. (f) Except as set forth in Section 4.13(f) of the Disclosure Schedule, since the Lookback Date, to the Knowledge of the Company, no Person has infringed, misappropriated, diluted, or otherwise violated, and no Person is currently infringing, misappropriating, diluting, or otherwise violating, any Owned Intellectual Property. Since the Lookback Date, the Acquired Companies have not provided any Person with any written notice regarding any actual, alleged, or 37 suspected infringement, misappropriation, dilution, or violation of any Owned Intellectual Property. (g) No Owned Intellectual Property has been or is subject to any Order of any Government Entity restricting the use, transfer or licensing of any Owned Intellectual Property by any Acquired Company. Except as set forth in Section 4.13(g) of the Disclosure Schedule, since the Lookback Date, no Acquired Company has: (i) transferred or assigned ownership of any Owned Intellectual Property that was, at the time of transfer or assignment, material to any Acquired Company; (ii) granted any exclusive license of or exclusive right to Owned Intellectual Property; or (iii) authorized or agreed to joint ownership of Owned Intellectual Property. (h) The transactions contemplated hereby will not result in, or give any other Person the right or option to cause (or purport to result in or give any other Person the right or option to cause), pursuant to any Contract to which an Acquired Company is a party: (i) a loss of, or imposition of any Lien on, any Owned Intellectual Property; (ii) the release, disclosure or delivery of any Company Intellectual Property; (iii) the granting, assigning or transferring to any Person any right in or license to any Company Intellectual Property; (iv) the termination or material alteration of any Acquired Company’s right in or to any Company Intellectual Property; or (v) Buyer, the Acquired Companies or any of their respective Affiliates being obligated to pay any royalties or other amounts to any Person in excess of those payable by any Acquired Company prior to the Closing. (i) Since the Lookback Date, none of (i) the Acquired Companies, (ii) the operation of the business of the Acquired Companies (including the making, use, offer for sale, sale, importation, exportation, distribution, performance, commercialization or other disposal or exploitation of the Company Products), or (iii) the use of Company Intellectual Property in connection with the foregoing (ii), has infringed (directly, contributorily, by inducement or otherwise), misappropriated, diluted or otherwise violated or made unlawful use of, any Intellectual Property of any Person. Since the Lookback Date, no infringement, misappropriation, dilution, violation or similar claim or proceeding has been pending or, to the Company’s Knowledge, threatened against any Acquired Company or against any other Person who is or may be entitled to be indemnified, defended, held harmless or reimbursed by any Acquired Company with respect to such claim or Proceeding. No Acquired Company has received any written notice or other communication (in writing or otherwise), including any letter or other written communication suggesting or offering that any Acquired Company obtain a license to any Intellectual Property, with respect to, and, to the Company’s Knowledge, there are no facts or circumstances that would reasonably be expected to give rise to, any Proceeding (A) relating to any actual, alleged or suspected infringement, misappropriation, dilution or violation by any Acquired Company or by any current or former employee or agent of any Acquired Company of any Intellectual Property of any Person, or (B) challenging the validity or enforceability of any Owned Intellectual Property or the sufficiency of any Company Intellectual Property. (j) The Company Software is free of any viruses, worms and other material known contaminants and does not contain any bugs, errors or problems of a material nature that disrupt its operation or have an adverse impact on the operation of other software programs or operating systems. To the Company’s knowledge, no Company Software contains any code designed or intended to, or that could reasonably be expected to, perform any of the following 38 functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of a computer system or network or other device on which such code is stored or installed; or (ii) compromising the privacy or data security of a user or damaging or destroying any data or file without the user’s consent. (k) The Acquired Companies, collectively, own or have a valid right to access and use all material computer systems, programs, networks, hardware, software, software engines, database, operating systems, websites, website content and links and equipment used to process, store, maintain and operate data, information and functions owned, used or provided by the Acquired Companies (the “Company IT Systems”). The Company IT Systems that are currently used by the Acquired Companies constitute all the information and communications technology reasonably necessary to carry on the businesses of the Acquired Companies as conducted. The consummation of the transactions contemplated hereby will not impair or interrupt in any material respect: (i) any Acquired Company’s access to and use of, or their respective right to access and use, the Company IT Systems or any third-party databases or third-party data used in connection with the businesses of the Acquired Companies as currently conducted; and (ii) to the extent applicable, the Acquired Companies’ customers’ access to and use of the Company IT Systems. Since the Lookback Date, the Acquired Companies have taken all commercially reasonable steps in accordance with industry standards to secure the Company IT Systems from unauthorized access or use by any Person and to ensure the continued, uninterrupted and error-free operation of the Company IT Systems. Since the Lookback Date, there has been no malfunction, failure, continued substandard performance, denial of service, or other cyber incident, or other impairment of the Company IT Systems that has resulted in, or is reasonably likely to result in, a material disruption or damage to the businesses of the Acquired Companies that has not been remedied. Since the Lookback Date, there: (x) have been no unauthorized intrusions or breaches of security with respect to the Company IT Systems; (y) has not been any material malfunction of the Company IT Systems that has not been remedied or replaced in all respects; and (z) has been no material unplanned downtime or service interruption with respect to any Company IT Systems. The Acquired Companies have in effect industry standard disaster recovery plans and procedures in the event of a malfunction of or unauthorized access to any Company IT Systems. (l) No funding of a Government Entity, or funding, facilities or resources of a university, college, hospital, military, other educational institution or research center or direct funding from third parties was used in the creation or development of any Owned Intellectual Property. To Company’s knowledge, no current or former employee, consultant or independent contractor of an Acquired Company, who was involved in, or who contributed to, the creation or development of any Company Product or Owned Intellectual Property, has performed services for a Government Entity, university, college, hospital, military, or other educational institution or research center during a period of time (or for the one year period preceding the period of time) during which such employee, consultant or independent contractor was also performing services for an Acquired Company. No Acquired Company has made, directly or indirectly, any commitments, promises, submissions, suggestions, statements or declarations to any standards- setting bodies, industry groups or other similar organizations (including any commitments, promises, submissions, suggestions, statements or declarations that would obligate any Acquired Company to grant licenses to any Person or otherwise impair or limit any Acquired Company’s control of any Intellectual Property or Company Product). 39 (m) Section 4.13(l) of the Disclosure Schedule sets forth a list of all Open Source Software that has been used in, incorporated into, integrated or bundled with any Company Product or Owned Software, and for each such item of Open Source Software: (i) the name of the Open Source Software; (ii) the name and version number of the applicable license; (iii) the manner in which such Open Source Software is used; (iv) whether such Open Source Software was modified by or on behalf of an Acquired Company; and (v) whether such Open Source Software was distributed by or on behalf of an Acquired Company. (n) The Acquired Companies are in material compliance with all licenses for Open Source Software used by the Acquired Companies in any manner. The Acquired Companies do not use, and since the Lookback Date have not used, any Open Source Software or any modification or derivative thereof in a manner that would condition the license governing such Open Source Software on the Acquired Companies’ (A) distributing or disclosing any Company Product or Owned Software in source code form; (B) licensing any Company Product, Owned Software or Intellectual Property for the purpose of making modifications or derivative works; or (C) licensing or distributing any Company Product, Owned Software or Intellectual Property at no charge. No Acquired Company is a contributor, committer, or submitter with respect to any open source projects and, to the Company’s Knowledge, their respective current and former employees have not released, licensed, distributed, or made accessible any software under any Open Source Software license during the period such current and former employees were employed by an Acquired Company. (o) No Person other than current employees of the Acquired Companies involved in the development and maintenance of the Company Source Code has had access to or possession of, or any right or license to access or possess, any Company Source Code. The Acquired Companies are not bound by any Contract pursuant to which any Acquired Company (i) is obligated to provide or license to any Person any Company Source Code or (ii) has deposited or may be required to deposit with any escrow agent or other Person any Company Source Code. No Person has claimed or demanded that any Company Source Code that is held in escrow be delivered or released by the escrow agent, and no Company Source Code which is held in escrow has ever been delivered or released by the escrow agent to any Person other than the Acquired Companies. To the Company’s Knowledge, no event has occurred and no circumstance exists that, with or without the passage of time, is reasonably likely to entitle any Person to receive any Company Source Code from any other Person. The Company Source Code and the Owned Software contain customary annotations and programmer’s comments, and otherwise have been documented in a professional manner that is both consistent with customary code annotation conventions and standard practices in the software industry. (p) Section 4.13(p) of the Disclosure Schedule accurately lists and identifies (i) all AI Technologies used by the Acquired Companies in connection with the operation of their business together with the Contract under which any third-party AI Technology is used and the purposes for which the Acquired Companies use or have used each AI Technology; (ii) AI Inputs that the Acquired Companies have used in the development, ongoing operation, or improvement of any Company Products (“Training Datasets”); and (iii) any and all Company Products that employ, deploy, leverage, or make use of AI Technologies (“Company AI Products”).
40 (q) The Acquired Companies, collectively, solely and exclusively own or have valid, enforceable, sufficient and continuing rights to use, all Training Datasets as have been and are currently used by the Acquired Companies. To the Company’s knowledge, the Acquired Companies (i) have not included and do not include in any Training Datasets, any of the Acquired Companies’ trade secrets or confidential or proprietary information, or the trade secrets or confidential or proprietary information of any other Person to which an obligation of confidentiality is owed; and (ii) do not and have not used any AI Technologies in a manner that would in any way qualify or limit the Acquired Companies’ ownership of, or otherwise impair the Acquired Companies’ ability to use, commercialize or otherwise exploit the Owned Intellectual Property or Company Products. The Acquired Companies (A) use and have used all AI Technologies, including in connection with the development, training, improvement, marketing, provision, deployment or use of any Company AI Products, in compliance with all applicable license terms, consents, agreements, Legal Requirements and industry standards relating to AI Technologies, (B) have implemented and maintained appropriate controls, policies, procedures, safeguards, measures, plans and technologies to eliminate bias from all Company AI Products and to mitigate other risks associated with the use of AI Technologies, and (C) make and have made all disclosures required by applicable Legal Requirements with respect to use of AI Technologies to any Person using such AI Technologies. With respect to AI Data, the Acquired Companies (1) have obtained all material licenses, consents, and permissions, provided all material notices and disclosures, and otherwise have all rights to collect and use all such AI Data as currently used by the Acquired Companies, and (2) comply and have complied with all terms and use restrictions of any license, consent, permission or other Contracts and any terms of use, terms of service or other terms governing the collection and use of such AI Data. 4.14 Real Property. (a) Set forth on Section 4.14(a) of the Disclosure Schedule is a true and complete list of all real property leased by each of the Acquired Companies (the “Leased Real Property”), including (i) the street address of each Leased Real Property, (ii) the lease pursuant to which any Acquired Company leases any Leased Real Property (each, a “Real Property Lease”), (iii) the Acquired Company that is tenant under such Real Property Lease, and (iv) the name of the landlord under such Real Property Lease. No Acquired Company owns or has ever owned any real property and no Acquired Company is a party to any agreement or option to purchase any real property or interest therein. (b) The Company has delivered or made available to Buyer a true and complete copy of each of the Real Property Leases and all guaranties and other agreements with respect to the Real Property Leases. Except as set forth on Section 4.14(b) of the Disclosure Schedule: (i) no Persons other than the Acquired Companies have any legal, valid, binding and enforceable right or option to acquire or lease any portion of or interest in the Leased Real Property or have the right to use any of the Leased Real Property and none of the Acquired Companies have subleased, licensed or otherwise granted any person the right to use or occupy the Leased Real Property or any portion thereof; (ii) each Acquired Company has a valid leasehold interest in all of the Leased Real Property, free and clear of all Liens except Permitted Liens and has not assigned or 41 granted any Lien in such Real Property Leases or any interest therein and the Real Property Leases are in full force and effect; (iii) each Real Property Lease is a valid and binding agreement, enforceable in accordance with its terms, except as limited by Legal Requirements affecting the enforcement of creditors' rights generally, by general equitable principles or by the discretion of any Government Entity before which any action seeking enforcement may be brought, and except as would not reasonably be expected to result in liability to any Acquired Company; (iv) the Acquired Companies are not in default of, or received any written notice of any default or event that, with notice or lapse of time, or both, would reasonably be expected to constitute a default by such Acquired Company under any Real Property Leases; (v) to the Company’s Knowledge, no other party to any Real Property Leases is in default of such Real Property Leases, or has received any written notice of any default or event that, with notice or lapse of time, or both, would constitute a default by such party under any Real Property Leases; (vi) to the Company’s Knowledge, there are no disputes pending or threatened with respect to any Real Property Leases; (vii) no Acquired Company has received written notice that any public improvements have been commenced or are planned that will result in special assessments against or otherwise materially adversely affect the Leased Real Property; (viii) to the Company’s Knowledge, all buildings, structures, fixtures, building systems and equipment leased pursuant to the Real Property Leases, and all components thereof (the “Improvements”) are in good condition and repair, ordinary wear and tear expected, and are sufficient for the operation of the Acquired Companies’ business. To the Company’s Knowledge, there are no structural deficiencies or latent defects affecting any of the Improvements and there are no facts or conditions affecting any of the Improvements that would individually or in the aggregate, interfere in any respect with the use or occupancy of the Improvements or any portion thereof in the operation of the Acquired Companies’ business as currently conducted thereon. The Leased Real Property is in compliance in all material respects with all applicable building, zoning, subdivision, health and safety and other land use laws, and all insurance requirements affecting the Real Property Leases (collectively, the “Real Property Laws”), and the current use and occupancy of the Real Property Leases and operation of the Acquired Companies’ business thereon do not violate any Real Property Laws in any material respect. No Acquired Company has received any written notice of violation of any Real Property Law and to the Company’s Knowledge there is no basis for the issuance of any such notice or the taking of any action for such violation; (ix) No Acquired Company has received any notice from any Government Entity having jurisdiction over the Leased Real Property threatening a suspension, revocation, modification or cancellation of any permit and to the Company’s Knowledge there is no basis for the issuance of any such notice or the taking of any such action; 42 (x) The Acquired Companies have not received any written notice of violation of any easement, covenant, condition, restriction or similar provision in any instrument of record or other unrecorded agreement affecting such Leased Real Property, and to the Company’s Knowledge there is no basis for the issuance of any such notice or the taking of any action for such violation; (xi) no Real Property Lease requires, or is supported by, a guaranty (of payment, performance or otherwise) from the Acquired Companies or any Affiliate of any Acquired Company; (xii) no tenant improvements, tenant improvements allowances, rent credits, rent abatements, free rent periods, leasing commissions, refurbishment allowances or similar landlord work, payments or inducements are pending, outstanding, unperformed or unpaid under any Real Property Leases, and no Acquired Company has any continuing obligation to construct, install or pay for any tenant improvements or related allowances; (xiii) no Acquired Company owes any brokerage commissions or finder’s fees with respect to any Real Property Lease; and (xiv) to the Company’s Knowledge, there are no pending, contemplated or threatened condemnation, expropriation, takings proceedings or other Proceedings in eminent domain against all or any portion of the Leased Real Property. To the Company’s Knowledge, there are no (i) public improvements which have been commenced or completed and for which an assessment may be levied against the Real Property, or (ii) planned improvements which may result in any assessment against the Leased Real Property, in each case for which there is no current assessment. 4.15 Litigation. No Acquired Company is (a) subject to any outstanding Order issued by any Government Entity that would reasonably be expected to be material to the Acquired Companies, individually or taken as a whole, or (b) party to or, to the Company’s Knowledge, threatened to be made a party to any Proceeding that would reasonably be expected to result in material liability to the Acquired Companies or any individual Acquired Company (and in no event in excess of $50,000 individually or cumulatively) or would reasonably be expected to result in material injunctive or equitable relief against any Acquired Company. No Acquired Company has initiated or, to the Company’s Knowledge, plans to initiate any Proceeding against any Person that is material to the Acquired Companies. 4.16 Employee Benefits. (a) Section 4.16(a) of the Disclosure Schedule lists each Benefit Plan. Each Benefit Plan has been maintained in material compliance with its terms (in form and in operation) and with applicable Legal Requirements. (b) Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and has a favorable advisory, opinion or determination letter from the Internal Revenue Service to the effect that such Benefit Plan is qualified as to form with respect to all applicable requirements of the Code other than those for which the remedial amendment period under Section 401(b) of the Code has not expired and, to the Company’s Knowledge, nothing has 43 occurred since the date of such advisory, opinion or determination letter that could reasonably be expected to adversely affect the qualification of such Benefit Plan. (c) No Acquired Company or any ERISA Affiliate maintains, contributes to or has any liability with respect to any (i) “defined benefit plan” (as defined in Section (3)(35) of ERISA), or (ii) any “multiemployer plan” (as defined in Section (3)(37) or 4001(a)(3) of ERISA) , or (iii) a plan described in Section 413 of the Code, or (iv) a plan subject to Title IV of ERISA, or (v) a plan subject to the minimum funding standards of Section 412 of the Code or Section 302 of ERISA, or (vi) a plan maintained in connection with any trust described in Section 501(c)(9) of the Code. The term “ERISA Affiliate” means any Person that, together with any Acquired Company, would be deemed a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code. (d) With respect to each Benefit Plan, the Company has delivered or made available to Buyer correct and complete copies of (to the extent applicable): (i) each Benefit Plan document (including all amendments and related trust documents) which implements each such Benefit Plan, (ii) the most recent summary plan descriptions provided to participants, (iii) the most recent determination letter received from the Internal Revenue Service, (iv) the most recent annual report (Form 5500 series) as filed with the Internal Revenue Service, (v) any non-routine correspondence to or from any Government Entity received in the last three years, (vi) all discrimination tests for the most recent three plan years, and (vii) related administrative service agreements, group annuity contracts, and group insurance contracts. (e) There are no pending or, to the Company’s Knowledge, threatened claims by or on behalf of any Benefit Plan, any employee or beneficiary covered under any Benefit Plan, any Government Entity or otherwise involving any Benefit Plan (other than routine claims for benefits). (f) There are no nonexempt prohibited transactions within the meaning of Section 4975 of the Code or Section 406 of ERISA with respect to any Benefit Plan that would result in any material liability. No Acquired Company is subject to any liability or penalty under Sections 4980H of the Code or Title I of ERISA. The Acquired Companies have complied in all material respects with all applicable health care continuation requirements in Section 4980B of the Code and in ERISA, and the provisions of the Patient Protection and Affordable Care Act. All contributions, reserves or premium payments required to have been made or accrued, or that are due, as of the date hereof to or with respect to the Benefit Plans have been timely made or accrued. (g) Except as set forth on Section 4.16(g) of the Disclosure Schedule, no amount that could be received (whether in cash or property or the vesting of property) as a result of any of the transactions contemplated by this Agreement by any employee, officer or director of any Acquired Company or any of their respective Affiliates who is a “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) under any employment, severance or termination agreement, other compensation arrangement or Benefit Plan would be characterized as an “excess parachute payment” (as such term is defined in Section 280G(b)(1) of the Code). (h) The execution of this Agreement and the consummation of the transactions contemplated hereby and thereby (alone or together with any other event which, standing alone,
44 would not by itself trigger such entitlement or acceleration) will not (i) entitle any current or former employee or other service provider of any Acquired Company to any payment, forgiveness of indebtedness, vesting, distribution, or increase in benefits under or with respect to any Benefit Plan, (ii) otherwise trigger any acceleration (of vesting or payment of benefits or otherwise) under or with respect to any Benefit Plan, or (iii) trigger any obligation to fund any Benefit Plan. (i) No Benefit Plan provides, or creates any liability to provide, welfare benefits with respect to any former or current employee, or any spouse or dependent of any such employee, beyond the employee’s retirement or other termination of employment, (i) other than coverage mandated by Part 6 of Title I of ERISA or Section 4980B of the Code, (ii) through the end of the month in which their employment terminates, or (iii) life insurance benefits attributable to a death on or prior to the date of termination of employment. (j) No Benefit Plan that constitutes a “nonqualified deferred compensation plan” as defined in Section 409A(d)(1) of the Code subject to Section 409A of the Code has failed to comply with Section 409A of the Code in a manner that could reasonably be expected to result in any tax, interest or penalty thereunder. No Acquired Company has any liability or obligation to pay or reimburse any taxes, or related penalties or interest, that may be incurred pursuant to Code Section 4999 or Code Section 409A. (k) This Section 4.16 contains the sole and exclusive representations and warranties of the Company with respect to any ERISA and employee benefit plan matters. 4.17 Insurance. (a) Section 4.17(a) of the Disclosure Schedule contains a true, correct and complete list of each insurance policy, bond or other form of insurance maintained by or for the benefit of each Acquired Company (the “Insurance Policies”), including (i) the name of the insurer, (ii) the Acquired Company insured thereunder, (iii) the policy number, (iv) the type of policy, and (v) the policy term. (b) With respect to each Insurance Policy: (i) such Insurance Policy is in full force and effect and enforceable in accordance with its terms, (ii) all premiums due thereunder have been paid as of the date hereof, (iii) and none of the Acquired Companies and, to the Company’s Knowledge, no other party to such Insurance Policy, is in material default with respect to its obligations and no event has occurred which, with notice or lapse of time, or both, would reasonably be expected to constitute a breach or default by the Acquired Companies or permit termination of such Insurance Policy. (c) As of the date hereof, no written notice of cancellation, termination, non- renewal, material premium increase or material coverage reduction has been received by any Acquired Company with respect to any Insurance Policy. The Insurance Policies meet all contractual and statutory requirements to which the Acquired Companies are subject. There have been no material gaps in insurance coverage that could expose the Acquired Companies to any material uninsured liability for events that occurred prior to the date of this Agreement. (d) Section 4.17(a) of the Disclosure Schedule sets forth (i) a list of all pending claims under any Insurance Policy and (ii) the claims history since January 1, 2024 for the 45 Acquired Companies or otherwise related to the Business to the extent involving claims in excess of $50,000. 4.18 Contracts. (a) Section 4.18(a) of the Disclosure Schedule contains a true, correct and complete list of each of the following Contracts, agreements or other arrangements to which any Acquired Company is a party or by which any of Acquired Company’s respective assets or properties are bound, but excluding purchase orders and change orders entered thereunder into in the ordinary course of business (the “Material Contracts”): (i) any Contract or group of Contracts with any Person (or related Persons) involving or resulting in payments to or for the benefit of the Acquired Companies in excess of $500,000 in the aggregate during each of the fiscal year ended December 31, 2025 or during the six (6) month period ended on the Latest Balance Sheet Date (other than open purchase orders made in the ordinary course of business); (ii) any Contract or group of Contracts with any Person (or related Persons) involving or resulting in expenditures by any Acquired Company in excess of $1,000,000 in the aggregate during each of the fiscal year ended December 31, 2025 or during the six (6) month period ended on the Latest Balance Sheet Date (other than open purchase orders made in the ordinary course of business); (iii) any Contract for the employment of any Person on a full-time, part- time, consulting or other basis (A) providing annual cash or other compensation in excess of $100,000, or (B) providing for the payment of any cash or other compensation or benefits upon the consummation of the transactions contemplated by this Agreement or other Transaction Document; (iv) any Contract, guaranty or indenture relating to Indebtedness of such Acquired Company or the mortgaging or pledging of any asset of such Acquired Company; (v) any Contract that restricts the ability of such Acquired Company to engage in any line of business or compete with any Person; (vi) any (i) joint venture, strategic alliance, partnership, licensing, franchise, manufacturer, or development Contract or (ii) other Contract that involves a sharing of revenues, profits, losses, costs or liabilities by any Acquired Company, on the one hand, and any Person, on the other hand (other than the Organizational Documents of the Acquired Companies); (vii) any Contract under which such Acquired Company is (A) lessee of or holds or operates any tangible personal property owned by any other Person in which the aggregate annual rental payments exceed $50,000, or (B) lessor of or permits any other Person to hold or operate any tangible personal property owned by such Acquired Company; (viii) any Contract with a Government Entity; 46 (ix) any Contract containing any material indemnification rights or obligations other than those incurred in the ordinary course of business; (x) any settlement or conciliation of any Proceeding that contains any remaining or ongoing material obligations on the part of any Acquired Company, other than customary confidentiality obligations; (xi) any Contract relating to (i) the acquisition of any business (whether by merger, sale of stock, sale of assets or otherwise) by any Acquired Company or (ii) the divestiture or disposition by any Acquired Company of a material portion of its properties or assets, in each case of clauses (i) and (ii) pursuant to which any of the parties thereto has any remaining obligations or liabilities; (xii) any Contract that provides for “most favored nations” terms or establishes an exclusive or priority sale or minimum purchase obligation with respect to any product, service or geographic location but, for the avoidance of doubt, excluding non-exclusive restrictions limiting the geographic scope of such Contract to the entire United States entered into in the ordinary course of business; (xiii) any Contract containing non-solicitation provisions restricting the ability of any Acquired Company to hire or retain any employees, customers, vendors, suppliers or other service providers, other than pursuant to non-disclosure agreements entered into in the ordinary course of business; (xiv) any Contract that contains a standstill or similar agreement pursuant to which any Acquired Company has agreed not to acquire assets or securities of a third party; (xv) any Contract granting to any Person a right of first refusal, right of first offer or similar preferential right to purchase any equity interests or assets of any Acquired Company; (xvi) any Contract providing for capital expenditures in excess of $100,000 individually; (xvii) any Contract under which any Acquired Company has made, or that obligates any Acquired Company to make, a loan or capital contribution to, or investment in, any Person, other than advances to employees in the ordinary course of business; (xviii) any collective bargaining agreement or Contract with any labor union; (xix) any Related Party Agreements; (xx) any Contract relating to the borrowing of money or to mortgaging, pledging or otherwise placing a Lien on any material portion of any Acquired Company’s assets; (xxi) any Contract under which any Acquired Company has advanced or loaned any amount to any of its directors, members of its board of managers, officers or employees; 47 (xxii) any Contract with a Major Customer; (xxiii) any Contract with a Major Vendor; (xxiv) any Inbound IP Contract; (xxv) any Outbound IP Contract; or (xxvi) any Contract that commits any Acquired Company to enter into any of the foregoing. (b) Each Material Contract is in full force and effect and constitutes a valid and binding obligation of the applicable Acquired Company and, to the Company’s Knowledge, each other party thereto, enforceable against such parties in accordance with its terms except (i) as such enforceability may be limited by applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and applicable equitable principles (whether considered in a proceeding at law or in equity), and (ii) where the failure to be legal, valid, binding or enforceable would not reasonably be expected to be material to the Acquired Companies, taken as a whole. No Acquired Company is in material violation or breach of or material default under any Material Contract, and no event has occurred which, with notice or lapse of time or both, would constitute a material breach or default or permit termination, material modification or acceleration under any Material Contract. To the Company’s Knowledge, the other parties to each Material Contract are not in material violation or breach of or material default thereunder and no such other party has delivered written notice of its intention to terminate, cancel, not renew or materially modify any Material Contract. The Company has made available to Buyer a true, correct and complete copy of each written Material Contract, together with all material amendments, waivers and other changes thereto, and a written description of the material terms of each oral Material Contract. 4.19 Employees. (a) Section 4.19(a) of the Disclosure Schedule sets forth a true and complete list, as of the date hereof, of each employee of the Acquired Companies, including their respective names, titles, business location, employing entity, current annual salary or hourly rate, date of hire, classification as exempt or non-exempt under applicable state or federal overtime Legal Requirements, vacation accrual rate and accrued but unused vacation, visa type (if any), and active or inactive status (and, if inactive, the type of leave and expected return to work date, if applicable). Section 4.19(a) of the Disclosure Schedule also sets forth a list of all employment agreements to which any Acquired Company is a party that are not terminable at will by the Acquired Company without the payment of severance or provision of advance written notice. (b) No Acquired Company is a party to, bound by, subject to or currently in negotiations regarding any collective bargaining agreement or similar labor contract with any labor union, works council or employee representative body, and no employees of any Acquired Company are represented by any union, works council or employee representative body. There are no pending or, to the Company’s Knowledge, threatened, and for the past three years there has been no pending or, to the Company’s Knowledge, threatened, organizational campaigns, organizing activity, card solicitations, petition, picketing, or other unionization activity seeking
48 recognition of a collective bargaining unit relating to any Acquired Company or any employees thereof. As of the date of this Agreement, there are no, and for the three-year period ending on the date of this Agreement there never have been any, strikes, labor disputes, work stoppages, requests for representation, pickets or work slow-downs due to labor disagreements as to employees of the Acquired Companies. (c) Section 4.19(c) of the Disclosure Schedule accurately lists all current independent contractors and consultants of the Acquired Companies, as of the date of this Agreement. Section 4.19(c) of the Disclosure Schedule also sets forth a list of all contracts with independent contractors or consultants (or similar arrangements) to which any Acquired Company is a party that are not terminable at will by the Acquired Company without the provision of advance written notice. (d) The Acquired Companies are in material compliance with, and for the past three (3)-year period ending on the date of this Agreement have been in material compliance with, all applicable Legal Requirements relating to labor, employment, and employment practices, including those relating to labor management relations, wages, hours, overtime, employee classification, discrimination, sexual harassment, sexual misconduct, civil rights, affirmative action, work authorization, immigration, safety and health, workers compensation, continuation of coverage under group health plans, wage payment and the payment and withholding of Taxes, retaliation, whistleblowing, disability rights or benefits, equal opportunity, plant closures and layoffs, terminations, fair labor standards, family and medical leave, sick leave, or any other labor and employment-related matters. There are no Proceedings against any Acquired Company pending or to the Knowledge of the Company, threatened, and there have been no proceedings pending or, to the Company’s Knowledge, threatened against any Acquired Company for the three-year period ending on the date of this Agreement, under any Legal Requirement relating to employees or employment practices or with respect to breaches of any such Legal Requirement. (e) Within the last three (3) years, no Acquired Company has taken any action that would constitute a “mass layoff” or “plant closing” within the meaning of the WARN Act, and any similar state or local statute, rule or regulation, nor has any such mass layoff or plant closing with respect to any Acquired Company been planned or announced. (f) Within the last three (3) years, no Acquired Company (i) has been found in material violation of any Legal Requirements relating to employees or other labor-related matters; (ii) is or has been a party to, or otherwise bound by, any consent decree with, or citation by, any Government Entity relating to current or former employees, officers or directors or employment practices; and (iii) is or has been subject to any audit or investigation by the National Labor Relations Board, the Equal Employment Opportunity Commission, Occupational Safety and Health Administration, the Department of Labor, U.S. Citizen and Immigration Services, or any comparable Government Entity, or subject to fines, penalties, or assessments associated with such audits or investigations. (g) All compensation, including wages, commissions, bonuses, fees and other compensation, payable to all employees, independent contractors, or consultants for services performed on or prior to the date of this Agreement have been paid in full, and there are no outstanding agreements, understandings or commitments of the Acquired Companies with respect 49 to any compensation, commissions, bonuses or fees, except for commissions and bonuses earned in the ordinary course of business but not yet payable in accordance with the applicable commission or bonus plan set forth on Section 4.16(a) of the Disclosure Schedule. The Acquired Companies have properly classified all employees, independent contractors, or consultants as employees, independent contractors, leased employees or as persons exempt from overtime pay for all purposes and has made all appropriate filings in connection with services provided by, and compensation paid to, such employees, independent contractors, and consultants. (h) Since the Lookback Date, there has been no allegation brought (internally or otherwise) by any current or former employee of, or any current or former independent contractor or consultant to, the Acquired Companies, or by any applicant for employment with the Acquired Companies, that an officer, director, or management employee of the Acquired Companies has engaged in sexual harassment, employment discrimination, or misconduct. (i) All employees of the Acquired Companies employed in the United States are: (i) United States citizens or lawful permanent residents of the United States; (ii) aliens whose right to work in the United States is unrestricted; or (iii) aliens who have valid, unexpired work authorizations issued by the United States government. No Acquired Company has been the subject of an immigration compliance or employment visit from, been assessed any fine or penalty by, or been the subject of any written order or directive of, the United States Department of Labor, the United States Department of Justice, the United States Department of Homeland Security, the U.S. Citizen and Immigration Services, or any other similar Government Entity. 4.20 Affiliate Transactions. Except as set forth on Section 4.20 of the Disclosure Schedule (the “Related Party Agreements”), no Seller nor, to the Company’s Knowledge, any current or former equity holder, officer, director, manager, or employee of any Acquired Company, or any Affiliate or family member of any of the foregoing: (a) is a party to any agreement, Contract, commitment or transaction with any Acquired Company; (b) has any ownership interest in any property or asset used by any Acquired Company in the Business; (c) has a material interest in any Person that purchases from, or sells or furnishes to, any Acquired Company any goods or services; (d) provides material services to any Acquired Company (other than employment by such Person); (e) has borrowed money from or loaned money to any Acquired Company that is currently outstanding; or (f) is a party to any Contract or ongoing transaction or business relationship with, or has any claim or right against, any Acquired Company. 4.21 Inventory. Subject to reserves reflected in the Financial Statements, as adjusted to reflect operations thereafter in accordance with past practices, the inventory of each Acquired Company, including all raw materials, work-in-progress, finished goods and packaging materials (collectively, the “Inventory”), (a) is of good, merchantable quality, quantity and condition, useable and saleable in the ordinary course of business consistent with past practice, (b) is not obsolete, damaged, defective, slow-moving or excessive, except as would not be material to the Acquired Companies, taken as a whole, (c) is reflected on the books and records of the Acquired Companies in accordance with GAAP, consistently applied, and (d) does not include goods held on consignment. Since the Latest Balance Sheet Date, the Acquired Companies have purchased Inventory in the ordinary course of business consistent with past practice. 50 4.22 Receivables and Payables. (a) All accounts receivable, notes receivable and other receivables (whether billed or unbilled) of the Acquired Companies reflected on the Financial Statements or otherwise arising in the ordinary course of business (the “Accounts Receivable”): (i) represent amounts receivable for products actually delivered or services actually provided (or, in the case of non- trade accounts or notes, represent amounts receivable in respect of other bona fide business transactions), in each case in the ordinary course of business; (ii) constitute only valid, undisputed claims of the Acquired Companies not subject to any counterclaim, set-off or other defense or counterclaim that would materially adversely affect the business conducted by the Acquired Companies; (iii) subject to an adequate reserve for bad debts shown on the Financial Statements or, with respect to Accounts Receivable arising after the date of the Financial Statements, on the accounting records of the Acquired Companies, to the Company’s Knowledge, are collectible in the ordinary course of business using normal collection practices at the aggregate recorded amounts thereof, less the amount of applicable reserves for doubtful accounts and allowances and discounts, which reserves have been established in accordance with GAAP consistently applied; and (iv) do not represent obligations for goods sold on consignment. Since the Latest Balance Sheet Date, each Acquired Company has collected their respective Accounts Receivable in the ordinary course of business, and none of them has accelerated any such collections. (b) All of the accounts payable and notes payable of the Acquired Companies reflected in the Financial Statements arose in bona fide, arms-length transactions in the ordinary course of business. Since the Latest Balance Sheet Date, the Acquired Companies have paid their accounts payable in the ordinary course of business and in a manner consistent with past practice, except for accounts payable contested in good faith. No such accounts payable is past due or otherwise in default in its payment, except as would not be material to the Acquired Companies, taken as a whole. 4.23 Permits and Licenses. Section 4.23 of the Disclosure Schedule contains a true, correct and complete list of all material licenses, permits, certificates of authority, authorizations, approvals, registrations, variances and similar consents granted or issued by any Government Entity to any of the Acquired Companies necessary to conduct the Business as currently conducted (the “Permits”). All of the Permits are currently effective, valid and in full force and effect and are sufficient to enable the Acquired Companies to conduct the Business in material compliance with all Legal Requirements relating to the Permits. Each Acquired Company is, and since July 15, 2022 has been, in compliance in all material respects with all such Permits. No Acquired Company has received any written notice from any Government Entity regarding any actual or proposed revocation, suspension, cancellation, termination, non-renewal or material modification of any Permit. 4.24 Major Customers and Vendors. Section 4.24 of the Disclosure Schedule sets forth a complete and accurate list of the names of the Acquired Companies’ (a) fifteen largest customers for the 12-month period ended December 31, 2025 and for the six (6) months ended as of the Latest Balance Sheet Date, showing the approximate aggregate total revenues to the Acquired Companies from each such customer during such period (the “Major Customers”), and (b) fifteen largest vendors (as measured by payments to third parties) for the 12-month period ended December 31, 2025 and for the six (6) months ended as of the Latest Balance Sheet Date, 51 showing the approximate aggregate total payment in dollars by such Acquired Company to each such vendor during each such period (the “Major Vendors”). No Major Customer or Major Vendor has given written notice that it intends to cease doing business with any Acquired Company or decrease the amount of business it does with any Acquired Company in any material respect. No Acquired Company is engaged in any material dispute with any Major Customer or Major Vendor, and to the Company’s Knowledge, no Major Customer or Major Vendor has (i) declared bankruptcy or ceased business, (ii) experienced, or is reasonably likely to experience, a force majeure or similar event, or (iii) modified, or provided written notice to any Acquired Company of its intention to modify, any material terms with respect to its business arrangements, practices or relationship with the Acquired Companies, other than the expected completion of any project or provision of services in the ordinary course of business. 4.25 Product Claims. There are no material claims pending or, to the Company’s Knowledge, threatened against the Acquired Companies with respect to the quality of or absence of defects in the Company Products. Since the Lookback Date, the Acquired Companies have not paid or been required to pay direct, incidental or consequential damages to any Person in connection with any Company Products. Since the Lookback Date, there have been no recalls, withdrawals, claims for breach of any express or implied warranty, returns with respect to any defective Company Product, or other similar federal or state actions with respect to defective Company Products that have, for any individual Company Product, exceeded $25,000, and, to the Company’s Knowledge, no Company Product recall is currently threatened in writing. 4.26 Data Privacy. (a) The Acquired Companies and, to the Company’s Knowledge, any Person acting on behalf of the Acquired Companies, (i) comply and have, at all times for the past three (3) years, complied with all Privacy Requirements in all material respects, (ii) made available, publicly posted or displayed Privacy and Information Security Policies to individuals as required by Privacy Requirements, (iii) and obtained all necessary consents prior to the collection or other Processing of any Personal Information, including, without limitation, in connection with targeted advertising, cross-context behavioral advertising or similar activities or the use of any biometric information or biometric identifiers. None of such Privacy and Information Security Policies is, or at any time in the past (3) years, has been misleading or deceptive or contained any omissions in any material respect. The Acquired Companies have made available to Buyer true, correct and complete copies of all Privacy and Information Security Policies maintained in the Acquired Companies ordinary course of Business. (b) None of the Acquired Companies (i) Processes Personal Information of children under the age of 13 or any person that would be a minor under Privacy Laws, or (ii) “sells” or “shares” (as such terms are defined by Privacy Laws) the Personal Information of any Person. The Acquired Companies’ use of cookies, tracking technologies, session replay technologies, pixels or pen registers, in each case, complies with Privacy Requirements. The Acquired Companies do not engage in any undisclosed collection or other Processing of Personal Information on its websites or other third party websites. (c) All marketing e-mails, texts, SMS messages, phone calls and other communications by the Acquired Companies comply with the CAN-SPAM Act, the TCPA and all
52 other Privacy Laws. To the extent required by Privacy Laws, the Acquired Companies obtain required consents to send such communications, provide a method to opt-out of the receipt of such communications and honor any received opt-out requests. (d) Where required by Privacy Requirements, the Acquired Companies have entered into agreements with all third parties that Process Personal Information on behalf of the Acquired Companies (“Service Providers”) that require such Service Providers to (i) comply with applicable Privacy Requirements, (ii) take reasonable steps to protect and secure Personal Information from Security Incidents; and (iii) restrict use and disclosure of Personal Information to those authorized or required under the applicable servicing, outsourcing, processing, or similar arrangement or as otherwise required by Privacy Requirements. To the Company’s Knowledge, no Service Provider has violated such agreement with the Acquired Companies in any material respect. The Acquired Companies conduct reasonable due diligence on Service Providers designed to ensure such Service Providers comply with Privacy Requirements prior to and, as appropriate, during the engagement of such Service Providers. (e) The Acquired Companies have implemented and maintained commercially reasonable technical, physical and administrative safeguards, no less than those required by Privacy Requirements, including commercially reasonable data backup, data storage, system redundancy, incident response, disaster recovery and business continuity plans and measures, designed to protect Personal Information in the possession or control of the Acquired Companies from Security Incidents. The Acquired Companies have conducted or undergone privacy and data security audits at reasonable and appropriate intervals, included as may be required by Privacy Laws, and have resolved any privacy or data security issues identified in such audits. Neither the Acquired Companies nor to the Company’s Knowledge, any Service Provider has suffered a Security Incident involving any data, including Personal Information, collected or possessed by or on behalf of, or otherwise subject to the possession or control of any of the Acquired Companies or any Service Provider. Neither the Acquired Companies nor, to the Company’s Knowledge, any Service Provider notified or been required to notify any Person or Government Entity of any Security Incident. Neither the Acquired Companies nor, to the Company’s Knowledge, any Person acting on the behalf or at the direction of the Acquired Companies has: (i) paid any perpetrator of any Security Incident; or (ii) paid any third Person with actual or alleged information about a Security Incident, pursuant to a request for payment from or on behalf of such perpetrator or other third Person. (f) None of the Acquired Companies is subject to or has received any notice (including from third parties acting on its behalf) of any action, claims, charges, investigations, or regulatory inquiries related to or alleging the violation of any Privacy Requirements. To the Company’s Knowledge, there are no facts or circumstances that could form the basis of any such action, claim, charge, investigation or regulatory inquiry. (g) The Acquired Companies have implemented and maintained commercially reasonable measures, policies, procedures and systems for receiving and appropriately responding to requests from individuals regarding their Personal Information. There are no unsatisfied requests from individuals or other third parties to the Acquired Companies seeking to exercise any data protection or privacy rights (such as rights to access, rectify or delete Personal Information, to 53 restrict or object to Processing of Personal Information or relating to data portability) for which the applicable deadline to respond has passed. (h) To the extent the Acquired Companies deploy or use any automated decision-making technology or artificial intelligence system in a manner that requires a risk assessment or impact assessment under applicable Privacy Laws, the Acquired Companies have completed such risk assessments or impact assessments as and when required and have implemented commercially reasonable measures designed to address any risks identified therein. (i) The Acquired Companies are not subject to any contractual requirements or other legal obligations that, following the Closing, require the delivery of any notice to or obtaining consent from any Person, or, would prohibit any of the Acquired Companies from Processing or receiving any data, including Personal Information, in the same manner in which any of the Acquired Companies Processed or received such data prior to the Closing. The execution, delivery and performance of this Agreement, including the transfer of Personal Information in connection with the transactions contemplated by this Agreement, complies with all applicable Privacy Requirements in all material respects. 4.27 Minute Books. The minute books and other corporate records of the Acquired Companies made available to Buyer are true, correct and complete in all material respects and contain a complete and accurate summary in all material respects of all meetings of and actions taken by directors, shareholders, managers and members, as applicable, since the Lookback Date. Each Acquired Company’s stock ledger, equity records and similar ownership records are true, correct and complete in all material respects and accurately reflect all equity transactions and the current equity ownership of each Acquired Company. 4.28 Bank Accounts; Managers and Officers. (a) Section 4.28 of the Disclosure Schedule sets forth a true, correct and complete list of (i) the name and address of each bank or financial institution in which any Acquired Company has an account, safe deposit box or lockbox, (ii) the number of each such account, safe deposit box or lockbox and the names of all Persons authorized to draw thereon or having signatory power or access thereto, (iii) each letter of credit with respect to which any Acquired Company is an applicant or beneficiary, whether drawn or undrawn, and (iv) each performance bond to which any Acquired Company is a party. No such performance bonds have been called. (b) Section 4.28(b) of the Disclosure Schedule sets forth a list of the current directors, managers and officers, as applicable, of each Acquired Company. 4.29 Limitations on Representations and Warranties. EXCEPT IN THE CASE OF ANY FRAUD, BUYER ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III AND THIS ARTICLE IV (EACH AS MODIFIED BY THE DISCLOSURE SCHEDULE) AND IN ANY TRANSACTION DOCUMENT DELIVERED BY ANY SELLER OR ACQUIRED COMPANY, NONE OF THE COMPANY, ANY SELLER OR ANY OTHER PERSON MAKES, OR HAS BEEN AUTHORIZED BY THE COMPANY, ANY SELLER OR ANY OF THEIR 54 RESPECTIVE AFFILIATES TO MAKE, ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO THE COMPANY, ITS SUBSIDIARIES, ANY SELLER AND THEIR RESPECTIVE AFFILIATES AND REPRESENTATIVES, THE STOCK, ANY OTHER SECURITIES OF THE COMPANY OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND THE COMPANY AND EACH SELLER DISCLAIM ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY THE COMPANY, ANY SELLER, ANY AFFILIATE OF THE FOREGOING OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES, AGENTS OR REPRESENTATIVES AND IF MADE, SUCH REPRESENTATION OR WARRANTY MAY NOT BE RELIED UPON BY BUYER OR ANY OF ITS AFFILIATES AND REPRESENTATIVES AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLER OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES. EXCEPT IN THE CASE OF ANY FRAUD AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III AND THIS ARTICLE IV (EACH AS MODIFIED BY THE DISCLOSURE SCHEDULE) AND IN ANY TRANSACTION DOCUMENT DELIVERED BY ANY SELLER OR ACQUIRED COMPANY, THE COMPANY AND EACH SELLER HEREBY DISCLAIM ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, OPINION, PROJECTION, FORECAST, STATEMENT, MEMORANDUM, PRESENTATION, ADVICE OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO BUYER OR ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, PROJECTION, FORECAST, STATEMENT, MEMORANDUM, PRESENTATION, ADVICE OR INFORMATION THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER BY ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT OR REPRESENTATIVE OF THE COMPANY OR ANY OF ITS AFFILIATES, INCLUDING ANY INFORMATION MADE AVAILABLE IN ANY VIRTUAL OR PHYSICAL DATA ROOM). NEITHER THE COMPANY NOR ANY SELLER MAKES ANY REPRESENTATIONS OR WARRANTIES TO BUYER REGARDING THE PROBABLE SUCCESS OR PROFITABILITY OF THE BUSINESS CONDUCTED BY THE COMPANY AND ITS SUBSIDIARIES. ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to each Seller that: 5.1 Organization, Power and Authorization. Buyer is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of South Carolina. Buyer has all requisite organizational power, legal right and authority necessary to enter into, deliver and perform its obligations pursuant to each of the Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. Buyer’s execution, delivery and performance of each Transaction Document to which it is a party have been duly authorized by all requisite organizational action of Buyer. 5.2 Binding Effect and Noncontravention. (a) This Agreement has been duly executed and delivered by Buyer and constitutes, and each other Transaction Document to which Buyer is a party when executed and 55 delivered will constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity). (b) The execution, delivery and performance by Buyer of the Transaction Documents to which it is a party do not (i) violate any material Legal Requirement to which Buyer is subject or its Organizational Documents, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel or require any notice under any material agreement, contract, lease, license, instrument or other material arrangement to which Buyer is a party or by which Buyer is bound or to which Buyer’s assets are subject, (iii) result in the creation of any Lien on any assets of Buyer, or (iv) require any authorization, consent, approval or notice by or to any Person, except, in each case of clauses (i) through (iv), as would not reasonably be expected to prevent, materially delay or materially impair Buyer’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby or as may be required under applicable Antitrust Laws. 5.3 Brokerage. Buyer has not retained any broker in connection with the transactions contemplated by this Agreement. Sellers will not have any obligation to pay any broker’s, finder’s, investment banker’s, financial advisor’s or similar fee in connection with this Agreement or the transactions contemplated by this Agreement by reason of any action taken by or on behalf of Buyer. 5.4 Litigation. Buyer is not (a) subject to any outstanding injunction, judgment, order or decree, or (b) party to or, to Buyer’s Knowledge, threatened to be made a party to, any proceeding, hearing, legal action, suit, arbitration or other legal or administrative proceeding, which, in each case, would reasonably be expected to have an adverse effect on Buyer’s ability to consummate the transactions contemplated by this Agreement or otherwise perform its obligations under any Transaction Document to which it is a party. 5.5 Investment. Buyer is acquiring the Stock for its own account, for investment only, and not with a view toward, or for sale in connection with, any distribution thereof, nor with the present intention of distributing or selling the Stock. Buyer will not offer to sell or otherwise dispose of the Stock in violation of any Legal Requirement applicable to any such offer, sale or other disposition. Buyer acknowledges that (a) the Stock has not been registered under the Securities Act or any state securities laws, (b) there is no public market for the Stock and there can be no assurance that a public market will develop, and (c) Buyer is capable of bearing the economic risk of its investment in the Stock. Buyer is an “accredited investor” within the meaning of the Securities and Exchange Commission Rule 501 of Regulation D of the Securities Act, as presently in effect. 5.6 Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to perform its obligations under this Agreement, including payment of the Purchase Price.
56 5.7 Solvency. Immediately after giving effect to the transactions contemplated hereby and assuming the accuracy of the representations and warranties of Sellers in Article III and Article IV and the satisfaction of the conditions to Buyer’s obligation to consummate such transactions as set forth herein, (a) the amount of the “fair saleable value” of the assets of each of Buyer and its subsidiaries (including the Acquired Companies) will exceed (i) the value of all liabilities of Buyer and its subsidiaries (including the Acquired Companies), including contingent and other liabilities, and (ii) the amount that will be required to pay the probable liabilities of Buyer and its subsidiaries (including the Acquired Companies) on their existing debts (including contingent liabilities) as such debts become absolute and matured, (b) each of Buyer and its subsidiaries (including the Acquired Companies) will not have an unreasonably small amount of capital for the operation of the business in which it is engaged or proposed to be engaged, and (c) each of Buyer and its subsidiaries (including the Acquired Companies) will be able to pay its liabilities, including contingent and other liabilities, as they mature. For purposes of the foregoing, “not have an unreasonably small amount of capital for the operation of the business in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and other liabilities, as they mature” means that such Person will be able to generate enough cash from operations, asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due. The transactions contemplated hereby are not being made by Buyer with the intent to hinder, delay or defraud any present or future creditors of Buyer or its subsidiaries (including, following the Closing, the Acquired Companies). 5.8 R&W Insurance. As of the date hereof, Buyer has obtained a binder for coverage related to the RWI Policy, a true, correct and complete copy of which has been provided to the Company and the Seller Representative and is attached as Exhibit D. 5.9 No Foreign Person. Buyer is not a “foreign person” as defined by 31 C.F.R. § 800.216. 5.10 Acknowledgement by Buyer. In connection with its investment decision, Buyer and/or its representatives have inspected and conducted such reasonable independent review, investigation and analysis (financial and otherwise) of the Acquired Companies as desired by Buyer. Except in the case of any Fraud, the purchase of the Stock by Buyer and the consummation of the transactions contemplated hereby by Buyer are not done in reliance upon any representation or warranty by, or information from, Sellers, the Acquired Companies, the Seller Representative or any of their respective Affiliates, employees or representatives, whether oral or written, express or implied, including any implied warranty of merchantability or of fitness for a particular purpose, except for the representations and warranties specifically and expressly set forth in Article III and Article IV (in each case, as modified by the Disclosure Schedule) or in any Transaction Document delivered by any Seller or Acquired Company, and Buyer acknowledges that Sellers and the Acquired Companies expressly disclaim any other representations and warranties. Such purchase and consummation are instead done entirely on the basis of Buyer’s own investigation, analysis, judgment and assessment of the present and potential value and earning power of the Acquired Companies, as well as those representations and warranties by Sellers specifically and expressly set forth in Article III and Article IV (in each case, as modified by the Disclosure Schedule). Buyer acknowledges that Sellers and the Company have not made any representations or warranties to Buyer regarding the probable success or profitability of the Acquired Companies or the Business. Buyer further acknowledges that none of Sellers, the 57 Acquired Companies, the Seller Representative, nor any other Person has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Company, its Subsidiaries, its business or the transactions contemplated by this Agreement not specifically and expressly set forth in Article III and Article IV (in each case, as modified by the Disclosure Schedule) or in any Transaction Document delivered by a Seller or Acquired Company, and none of Sellers, the Acquired Companies or any other Person will have or be subject to any liability to Buyer resulting from the distribution to Buyer or its representatives of, or Buyer’s use of, any such information, including any confidential information memoranda distributed on behalf of the Acquired Companies relating to their respective businesses or other publications or data room (including any electronic or “virtual” data room) information provided or made available to Buyer or its representatives, or any other document or information in any form provided or made available to Buyer or its representatives, including management presentations, in connection with the purchase and sale of the Stock and the transactions contemplated hereby, except in the case of any Fraud. ARTICLE VI COVENANTS 6.1 Pre-Closing Covenants. With respect to the period between the execution of this Agreement and the Closing: (a) General. Each of the Parties will use his, her or its reasonable best efforts to take all actions and to do all things necessary in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the conditions set forth in Article VIII). (b) Operation of the Company. Except (i) as consented to in writing by Buyer (which consent will not be unreasonably withheld, conditioned or delayed), (ii) as required by applicable Legal Requirement or existing contract, (iii) as otherwise contemplated by this Agreement or the other Transaction Documents, the Company will, and will cause the other Acquired Companies to, use commercially reasonable efforts to (1) conduct the business of the Acquired Companies in the ordinary course of business, (2) maintain its organization, assets and properties and to preserve its current relationships with customers, employees, suppliers and others having business dealings with it, (3) maintain its books and records in the usual, regular and ordinary manner, on a basis consistent with past practice, and (4) preserve the goodwill and ongoing operations of its business, and without limiting the generality of the foregoing clauses, none of the Acquired Companies shall: (i) amend or modify any of its Organizational Documents; (ii) issue, grant, sell or pledge any additional equity interests or securities convertible into or exchangeable for any equity interests of the Acquired Companies; (iii) incur or assume any material Indebtedness or guarantee any material Indebtedness (other than (A) Indebtedness which will be discharged at Closing, (B) intercompany Indebtedness between or among the Acquired Companies, or (C) borrowings under any existing credit facility in the ordinary course of business); 58 (iv) sell, assign, transfer, convey, lease or otherwise dispose of any material assets or properties of the Acquired Companies, except in the ordinary course of business; (v) mortgage, pledge or subject to any Lien (other than a Permitted Lien) any portion of the Acquired Companies’ material assets; (vi) except in the ordinary course of business, terminate any Material Contract, amend (including with respect to payment terms), enter into, modify, extend, waive, release or assign any right or claims under any Material Contract, or enter into any contract that would be a Material Contract if entered into prior to the date hereof; (vii) enter into any material hedge agreement or other material off balance sheet structure or transaction or modify the terms of any existing Indebtedness for borrowed money in a manner that would reasonably be expected to be, individually or in the aggregate, material to the Acquired Companies; (viii) acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any Person or any material assets, other than purchases in the ordinary course of business; (ix) except for renewal of existing Benefit Plans in the ordinary course of business or pursuant to a Legal Requirement or as explicitly provided for in this Agreement, (A) adopt or materially amend any Benefit Plan, (B) commence any enrollment process with respect to any deferred compensation plan or program or allow any employees or other service providers to participate in any deferred compensation plan or program following the date hereof, (C) take any action to accelerate the vesting or payment of, or otherwise fund or secure the payment of, any compensation or benefits under any Benefit Plan, or (D) increase the base salary or wage rate, commission, bonus, or other compensation payable to, or enter into or modify any employment, bonus, equity, severance, insurance, pension or similar agreement with, any current or former officer, director, manager, employee or independent contractor, except for entering into offer letters or employment agreements in the ordinary course of business with employees with annual base salary of less than $150,000; (x) make any loans, advances or capital contributions to, or investments in, any Person (other than loans or advances to employees in the ordinary course of business or any transaction between or among the Acquired Companies); (xi) enter into any contract that purports to limit, curtail or restrict the ability of any Acquired Company to engage or compete in any line of business in any material respect or the Processing of Personal Information by the Company in any material respect; (xii) commit, defer, make or incur any capital expenditures that, individually or in the aggregate, are in excess of $100,000; (xiii) (A) change its material accounting policies or procedures, except to the extent required to conform with GAAP, or (B) change its fiscal year; 59 (xiv) defer payment of any accounts or any discount, accommodation or other concession (in each case, other than in the ordinary course of business), in order to accelerate or induce the collection of any receivable; (xv) pay, discharge, settle, cancel or satisfy any claims, liabilities or other obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or any action, other than the payment, discharge or satisfaction of (A) liabilities reflected or reserved against on the Financial Statements, or (B) liabilities incurred since the Latest Balance Sheet Date in the ordinary course of business, or initiate any action; (xvi) disclose any material trade secrets of the Acquired Companies to any other Person (other than in the ordinary course of business consistent with past practice to a Person bound by adequate confidentiality obligations); (xvii) negotiate, modify, extend or enter into any collective bargaining agreement or other similar labor union contract, or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representative for any employees of the Acquired Companies; (xviii) except for the Seller Corrective Actions, (A) make, change or revoke any Tax election, (B) file any amended Tax Return, (C) change any Tax accounting periods, practice or methods, (D) settle, adjust or compromise any Tax proceeding, (E) enter into or amend any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Legal Requirement) or other contract with any Government Entity related to any Tax, (F) waive or extend any applicable statute of limitations with respect to any Tax, or (G) enter into any contract to surrender or relinquish any claim for a refund of Taxes; (xix) knowingly waive, release, limit or condition any restrictive covenants obligation of any current or former employee or independent contractor of the Acquired Companies; (xx) effectuate a “Mass Layoff” or “Plant Closing” as those terms are defined in the WARN Act or comparable conduct under any applicable state or local Legal Requirement, that would trigger the requirements of the WARN Act or any comparable state or local Legal Requirement; or (xxi) agree in writing, or otherwise commit, to take any of the foregoing actions. (c) Access to Information. The Company will, and will cause the other Acquired Companies to, permit Buyer and its representatives (including legal counsel and accountants) to have reasonable access, during normal business hours upon reasonable advance notice and in a manner so as not to unreasonably interfere with the normal business operations of the Acquired Companies, to all premises, properties, personnel, books, records, contracts and documents of or pertaining to the Acquired Companies; provided, however, that the Acquired Companies will not be required to provide access to, or to disclose information to, Buyer or any other Person if such access or disclosure (i) would be in violation of applicable Legal
60 Requirements, (ii) would be a violation or constitute a breach of any provision of any contract or agreement to which any Acquired Company is a party, or (iii) would constitute a waiver of or would reasonably be expected to jeopardize the attorney-client or other privilege held by any of the Acquired Companies (provided that the Company shall use commercially reasonable efforts to allow for such access or disclosure in a manner that does not result in a loss of such privilege). Notwithstanding the foregoing, (1) neither Buyer nor any Person acting for or on behalf of Buyer will have any contact with respect to the transactions contemplated by this Agreement with any employee, consultant, customer, supplier, distributor, partner, financing source, licensor, licensee, lessor or other Person having a relationship with any of the Acquired Companies, except with the prior written consent of the Company (not to be unreasonably withheld, conditioned or delayed), and (2) no Seller nor any Acquired Company will be required, prior to the Closing, to disclose (or to provide access to any of its offices, properties, books or records that would reasonably be expected to result in the disclosure to such Persons or others of) any confidential information relating to non-public customer personal data, nor will any Seller or Acquired Company be required to permit Buyer or its Affiliates or representatives to have access to or to copy or remove from the offices or properties of any Seller or the Acquired Companies or any of their respective Affiliates any documents, drawings or other materials that would reasonably be expected to reveal any such confidential information. Buyer will hold and treat, and cause its Affiliates and representatives to hold and treat, in confidence all documents and information concerning the Acquired Companies furnished to Buyer in connection with the transactions contemplated hereby in accordance with that certain Confidentiality and Nondisclosure Agreement, dated June 8, 2026 (the “Confidentiality Agreement”), between Buyer and the Company, which agreement will remain in full force and effect in accordance with its terms until the Closing, at which time the Confidentiality Agreement shall terminate and be of no further force or effect. (d) Efforts to Consummate; Regulatory Approvals. (i) Buyer, on the one hand, and the Company, on the other hand, have, prior to the date hereof, made or caused to be made all filings and submissions required of such party under any applicable Legal Requirements, including the HSR Act and other Antitrust Laws, for the consummation of the transactions contemplated by this Agreement (with the filing under the HSR Act specifically requesting early termination of the waiting period prescribed by the HSR Act). (ii) Buyer and the Company will use their reasonable efforts (A) to take, or cause to be taken, all actions necessary to expeditiously consummate the transactions contemplated by this Agreement, including using reasonable best efforts to obtain all permits, make all necessary government filings, respond to government requests for information, and obtain all necessary governmental, judicial or regulatory actions or non-actions, orders, waivers, consents, clearances, extensions and approvals that are required for or in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents; (B) comply at the earliest practicable date with any request under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other United States federal or state or foreign Legal Requirements that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, the “Antitrust Laws”) for additional information, documents, or other materials received by each of them or any of the Acquired Companies from any Government 61 Entity in respect of such filings or such transactions, (C) to take, or cause to be taken, any and all reasonable actions necessary to satisfy all conditions to such party’s obligations as set forth in Article VIII; and (D) to execute and deliver all agreements and documents required by the terms of this Agreement to be executed by such party on or prior to the Closing. Each of Buyer and the Company shall, and shall cause its Affiliates to, exercise reasonable best efforts to prevent the entry in any Action brought by a Government Entity pursuant to the Antitrust Laws which would prohibit, make unlawful or delay the consummation of the transactions contemplated hereby. None of Seller, Buyer, the Acquired Companies or their respective Affiliates will extend any waiting period or extension thereof or comparable period under the HSR Act or other Antitrust Laws or enter into any agreement with any Government Entity to consummate the transactions contemplated hereby, except with the prior written consent of the other parties. Buyer will be responsible for all filing fees under the HSR Act and under any other Legal Requirements applicable to the Parties. (e) No Shop. Until the earlier of (i) the Closing Date, or (ii) the termination of this Agreement, (A) Sellers and the Company will not, and the Company will cause the other Acquired Companies and their respective officers, directors, employees and other agents not to, directly or indirectly, take any action to solicit, initiate or encourage any offer or proposal or indication of interest in a merger, consolidation or other business combination involving any equity interest in, or a material portion of the assets of, any of the Acquired Companies (each, an “Acquisition Proposal”), other than in connection with the transactions contemplated by this Agreement and (B) Sellers and the Company will, and the Company will cause the other Acquired Companies to, remove any and all access from any Person other than Buyer or representatives of Buyer to any virtual data room or other electronic data site containing information regarding a transaction. Sellers and the Company shall, and shall cause the other Acquired Companies to, promptly (but in any event within twenty-four (24) hours of receipt thereof) notify Buyer orally and in writing of any Acquisition Proposal that is received by Sellers or any Acquired Company, or any of their respective representatives after the date hereof, which notice shall include the identity of the Person making or submitting such Acquisition Proposal, and the terms and conditions thereof. (f) Contact with Customers and Suppliers. Notwithstanding anything to the contrary contained herein, prior to the Closing Date, without the prior written consent of the Company, which may not be unreasonably withheld, conditioned or delayed, Buyer will not contact any suppliers, to, customers of, or other business relations of any of the Acquired Companies (other than contacts in the ordinary course of business without reference to the transactions contemplated hereby or the Acquired Companies). If the Company consents to any such contact, the Company will be given the reasonable opportunity to participate in any discussions and meetings, and copied on all correspondence, with any such Persons prior to Closing, except as otherwise agreed in writing by the Company. 6.2 Certain Post-Closing Covenants. Following the Closing: (a) Further Assurances. The Parties will execute and deliver such further instruments of conveyance and transfer and take such other action as may be reasonably necessary to effect the transactions contemplated by this Agreement. 62 (b) Record Retention. Following the Closing and for a period of seven (7) years from and after the Closing Date, Buyer will retain all Books and Records relating to periods prior to the Closing that are in existence on the Closing Date and grant to the Seller Representative and its representatives during regular business hours and upon reasonable advance notice to Buyer the right, at the expense of the Seller Representative, (i) to inspect and copy the Books and Records and (ii) to have personnel of Buyer made available to them or to otherwise cooperate to the extent reasonably requested by the Seller Representative, solely in connection with (A) preparing and filing Tax Returns and/or any Tax inquiry, audit, investigation or dispute, or (B) defending or pursuing any litigation, audit, dispute, claim or investigation other than any such proceedings that are adverse to Buyer or any Acquired Company; provided, however, that none of Buyer or any of the Acquired Companies shall be required to (x) violate any obligation of confidentiality, Order or applicable Legal Requirement to which such Person is subject, (y) disclose any trade secrets of the Acquired Companies, or (z) waive any attorney-client privilege, attorney work-product privilege or similar privilege which any of them may possess in discharging its obligations pursuant to this Section 6.2(b). No such Books and Records will be destroyed by Buyer without first advising the Seller Representative in writing and giving the Seller Representative a reasonable opportunity to obtain copies thereof at the Seller Representative’s expense. (c) Director and Officer Liability and Indemnification. (i) From and after the Closing Date, Buyer will, or will cause the Acquired Companies to, preserve and maintain, to the fullest extent permitted under applicable Legal Requirements, the rights to indemnification to which the individuals who on or prior to the Closing Date were directors, officers or employees of any of the Acquired Companies (collectively, the “D&O Indemnitees”) are entitled to with respect to all acts or omissions by them in their capacities as such. Buyer agrees that all rights of the D&O Indemnitees to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Closing Date as provided in the respective governing documents of the Acquired Companies as now in effect, and any indemnification agreements or arrangements of the Acquired Companies, will survive the Closing Date and will continue in full force and effect in accordance with their terms. For a period of six (6) years from and after the Closing Date, such rights will not be amended, or otherwise modified in any manner that would adversely affect the rights of the D&O Indemnitees, unless such modification is required by applicable Legal Requirements. (ii) For a period of six (6) years from and after the Closing Date, Buyer will, or will cause the Acquired Companies (as applicable) to, cause the governing documents of the Acquired Companies to retain the current provisions regarding indemnification of directors, officers, employees and agents, which provisions in each case will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the D&O Indemnitees. (iii) The Company shall negotiate and purchase, and after the Closing, Buyer will cause to be maintained in effect, an insurance “tail” or other insurance in form and substance reasonably satisfactory to Buyer sufficient to cover (A) with respect to the period beginning on the Closing Date and ending on the sixth (6th)-year anniversary thereof, the current directors’ and officers’ liability insurance for acts or omissions occurring prior to the Closing Date with respect to those persons who are currently covered by each Acquired Companies’ directors’ 63 and officers’ liability insurance policy on terms with respect to such coverage and amount no less favorable to each Acquired Companies’ directors and officers currently covered by such insurance than those of such policy in effect on the date hereof (the “D&O Tail Policy”) and (B) with respect to the period beginning on the Closing Date and ending on the third (3rd)-year anniversary thereof, the current cyber liability insurance for acts or omissions occurring prior to the Closing Date with respect to those persons who are currently covered by each Acquired Companies’ cyber liability insurance policy on terms with respect to such coverage and amount that are no less favorable than the coverage provided under such policy in effect on the date hereof (the “Cyber Tail Policy” and together with the D&O Tail Policy, the “Tail Policies”). All costs and expenses related to the Tail Policies shall be borne fifty percent (50%) by Buyer and fifty percent (50%) by Sellers. (iv) The provisions of this Section 6.2(c): (A) are intended to be for the benefit of, and will be enforceable by, each D&O Indemnitee, his or her heirs and his or her representatives; and (B) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise. (v) In the event that Buyer or any of its successors or assigns (A) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger; or (B) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision will be made so that the successors and assigns of Buyer will assume all of the obligations thereof set forth in this Section 6.2(c). (vi) The obligations of Buyer under this Section 6.2(c) will not be terminated or modified in such a manner as to adversely affect any D&O Indemnitee to whom this Section 6.2(c) applies without the consent of the affected D&O Indemnitee (it being expressly agreed that the D&O Indemnitees to whom this Section 6.2(c) applies will be third party beneficiaries of this Section 6.2(c). 6.3 Certain Tax Covenants. (a) Certain Conventions. Buyer shall prepare and file all Tax Returns of the Acquired Companies required to be filed after the Closing Date other than Tax Returns prepared as part of the Seller Corrective Actions, and in the case of any such Tax Returns related to income Taxes, Buyer shall provide the Seller Representative with a copy of such Tax Return no later than 30 days before the due date for filing such Tax Return (taking into account any applicable extensions) and shall consider any comments from the Seller Representative in good faith. The Seller Representative shall prepare and file all Tax Returns of the Acquired Companies prepared as part of the Seller Corrective Actions. For purposes of preparing and filing Tax Returns of the Acquired Companies with respect to transactions contemplated by this Agreement, to the extent such Tax Returns could reasonably be expected to affect the determination of Indebtedness, Net Working Capital or Purchase Price, in each case, as finally determined under Section 2.5 of this Agreement, or give rise to an indemnity obligation of Sellers, the Parties will use the following conventions:
64 (i) the Acquired Companies will make the election under Revenue Procedure 2011-29 to apply the 70% safe harbor to any “success based fee” as defined in Treasury Regulation Section 1.263(a)-5(f) for purposes of determining Transaction Deductions; (ii) any gains, income, deductions, losses, or other items resulting from transactions outside of the ordinary course occurring on the Closing Date and not contemplated by this Agreement, but after the Closing, including any relating to the financing of the acquisition of the Acquired Companies by Buyer or any of its Affiliates, will be treated as occurring after the Closing Date and the Parties will utilize to the extent applicable (and cause their Affiliates to utilize) the “next day rule” in accordance with Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) (and any analogous provision of foreign, state or local Legal Requirements) for purposes of reporting such items on their respective Tax Returns; (iii) Buyer will not make an election under Section 336 or 338 of the Code with respect to the transactions contemplated by this Agreement; (iv) Buyer will be permitted to cause the Company to make the Tax Election; and (v) any and all Transaction Deductions will be allocated to the Pre- Closing Tax Period to the maximum extent permitted under applicable Legal Requirements determined at a “more likely than not” or higher standard of comfort. (b) Certain Post-Closing Actions. Except as otherwise required by applicable Legal Requirements or specifically contemplated by this Agreement, neither Buyer nor any of its Affiliates (including, after Closing, the Acquired Companies) will (i) file, amend, refile, supplement, revoke or otherwise modify any Tax Return or Tax election of the Acquired Companies with respect to a Pre-Closing Tax Period, (ii) make any Tax election with respect to any such Tax Return of any Acquired Company that has retroactive effect to any such Tax year, (iii) take any action to extend the applicable statute of limitations with respect to any such Tax Returns of the Acquired Companies, (iv) initiate any voluntary contact with a Taxing Authority with respect to a Tax Return of any Acquired Company for a Pre-Closing Tax Period, (v) file a Tax Return for a Pre-Closing Tax Period in a jurisdiction in which an Acquired Company did not file a Tax Return, or (vi) take any other action relating to Taxes that creates or that could create a Tax liability on the Closing Date (other than as expressly contemplated by this Agreement) that is outside the ordinary course of business, in each such case without the prior written consent of the Seller Representative, which consent shall not be unreasonably withheld, conditioned or delayed. (c) Tax Refunds. Buyer shall pay to the Seller Representative, for further distribution to Sellers, the amount of any Tax refunds (or credits received in lieu of Tax refunds) of the Company or any of its Subsidiaries for any Pre-Closing Tax Period (which, for the avoidance of doubt, shall include any Tax refunds (or credits received in lieu thereof) resulting from an overpayment of Taxes for any Pre-Closing Tax Period and the portion of a Straddle Period ending on the Closing Date, including for the avoidance of doubt Tax refunds arising from the Seller Corrective Actions, Seller Corrective Actions Tax Contests and any other SALT Matter, as determined in accordance with the methodology set forth in Section 6.3(f)) that are specifically set forth on Section 6.3(c) hereto, and which (i) are received by Buyer or any of its Affiliates after the 65 Closing; (ii) were not taken into account to reduce the Income Tax Liability Amount or Net Working Capital, in each case, as finally determined pursuant to Section 2.5; (iii) do not arise out of, or relate to, the carryback of any deductions, losses, credits or other items from a Post-Closing Tax Period or any Tax period beginning on or after the Closing Date; (iv) do not result from the payment, following the Closing, of any Taxes by Buyer or any of its Affiliates (except to the extent that such Taxes were accrued for in the Income Tax Liability Amount or Net Working Capital, in each case, as finally determined pursuant to Section 2.5); and (v) are not required to be paid to another Person (other than Buyer or one of its Affiliates) pursuant to a contract or agreement that was in existence at the Closing (each, a “Tax Refund”); provided, that the amount payable to the Seller Representative under this Section 6.3(c) as a result of the receipt of any Tax Refund shall be net of any reasonable, out-of-pocket costs or expenses (including Taxes) incurred by Buyer or any of its Affiliates in connection with the pursuit or receipt of such Tax Refund. Buyer shall, and shall cause the Acquired Companies to, elect to receive any overpayment of Income Taxes for any Pre-Closing Tax Period as a cash refund (rather than as a credit to be applied to a subsequent taxable period) to the maximum extent permitted by applicable Legal Requirements. Any amounts payable by Buyer to the Seller Representative under this Section 6.3(c) shall be paid promptly after receipt by Buyer or any of its Affiliates of any such Tax Refund (or in the case of a credit, the date of filing the Tax Return (other than an estimated Tax Return) upon which the Tax Refund was utilized). Buyer will cause the Company or any of its Subsidiaries, as applicable, to use commercially reasonable efforts to make all filings and take all commercially reasonable actions that are reasonably requested by the Seller Representative and that are necessary to secure such Tax Refunds as promptly as possible; provided, however, that Sellers shall reimburse Buyer for any reasonable, out-of-pocket costs or expenses that are incurred by Buyer or any of its Affiliates as a result of making such requested filings or taking such requested actions. If the amount of any Tax Refund that was previously paid to the Seller Representative under this Section 6.3(c) is subsequently reduced or disallowed, Sellers shall promptly pay to Buyer such reduced or disallowed amount together with any interest, penalties, or other additional amounts imposed by the applicable Government Entity. For U.S. federal and applicable state and local income tax purposes, the Parties agree to treat any payment made pursuant to this Section 6.3(c) as an adjustment to the Purchase Price, unless a different treatment is otherwise required by applicable Legal Requirements. (d) Transfer Taxes. Buyer and Sellers will each be responsible for fifty percent (50%) of any stamp, transfer, recordation, documentary, sales and use, value added, registration and other similar Taxes and fees (including any penalties and interest) incurred in connection with, or as a consequence of, this Agreement or any other transaction contemplated hereby (“Transfer Tax”). Buyer shall file all necessary Tax Returns with respect to such Transfer Taxes, provided that the Seller Representative shall provide Buyer any cooperation reasonably requested by Buyer in connection therewith and shall reasonably cooperate with Buyer to obtain any lawfully available reduction or exemption from any Transfer Tax. (e) Consolidated Income Tax Return. Buyer will elect to file a consolidated U.S. federal income Tax Return with the Acquired Companies for the taxable year of Buyer that includes the day after the Closing Date. (f) Straddle Period Taxes. With respect to any Straddle Period, the amount of Taxes that are allocable to the Pre-Closing Tax Period shall: (a) in the case of any real property, 66 personal property or other similar ad valorem Taxes imposed on a periodic basis with respect to any property or asset of the Company or any of its Subsidiaries, be the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days in the portion of the Straddle Period ending on and including the Closing Date, and the denominator of which is the number of calendar days in the entire Straddle Period, provided that any such Taxes pertaining to property or assets acquired after the Closing shall be allocated entirely to the Post-Closing Tax Period, and (b) in the case of all other Taxes, be deemed to be equal to the amount that would be payable if the Tax period ended on the Closing Date, based on an interim closing of the books as of the close of business on the Closing Date. Notwithstanding the foregoing, any transactions (and any Taxes related thereto) undertaken by or at the direction of Buyer or any of its Affiliates (including, after the Closing, the Company and its Subsidiaries) not in the Ordinary Course that occur after the time of Closing on the Closing Date and that is not contemplated by this Agreement shall be treated as occurring in a Post-Closing Tax Period. (g) Tax Contests. (i) Generally. Subject to Section 6.3(g)(ii), from and after the Closing, Buyer shall have the right to control, conduct, and settle any and all Tax Contests relating to the Acquired Companies. (ii) Seller Tax Contests. Notwithstanding Section 6.3(g)(i): a. Seller Representative shall have the right to control, conduct, and settle any Tax Contest to the extent such Tax Contest arises out of or relates solely to any Pre- Closing Taxes with respect to which Sellers may be required to indemnify Buyer (each, a “Seller Tax Contest”); provided, however, that (A) Seller Representative shall keep Buyer reasonably informed of the status of any such Seller Tax Contest; (B) Buyer shall have the right, at its own cost and expense, to participate in any such Seller Tax Contest; and (C) Seller Representative shall not settle, compromise, or abandon any Seller Tax Contest, or accept any proposed adjustment, without the prior written consent of Buyer (not to be unreasonably withheld, conditioned, or delayed) to the extent that such settlement, compromise, abandonment, or adjustment could reasonably be expected to increase the Tax liability of the Acquired Companies or Buyer for any Post-Closing Tax Period; and b. Buyer shall be entitled to control any Tax Contest relating to a Straddle Period (a “Straddle Period Tax Contest”); provided, however, to the extent a Straddle Period Tax Contest could reasonably give rise to an indemnification obligation of Sellers (A) Buyer shall keep the Seller Representative reasonably informed of the status of any such Straddle Period Tax Contest; (B) the Seller Representative shall have the right, at its own cost and expense, to participate in any such Straddle Period Tax Contest; and (C) Buyer shall not settle, compromise, or abandon any Straddle Period Tax Contest, or accept any proposed adjustment, without the prior written consent of the Seller Representative (not to be unreasonably withheld, conditioned, or delayed) to the extent that such settlement, compromise, abandonment, or adjustment could reasonably be expected to result in an indemnification obligation of Sellers. (h) Tax Matters Escrows. 67 (i) The Seller Corrective Action Escrow Amount shall be held in escrow with the Escrow Agent until the earlier of (A) the date that is 24 months following the Closing Date, and (B) a Final Determination with respect to the Seller Corrective Actions (the “Seller Corrective Action Escrow Period”). Within two (2) Business Days following the expiration of the Seller Corrective Action Escrow Period, Buyer and the Seller Representative shall jointly instruct the Escrow Agent to release (x) all or a portion of the Seller Corrective Action Escrow Amount sufficient to pay any amount due to the applicable Taxing Authority in connection with a Final Determination made or issued with respect to the Seller Corrective Actions, if any, to the Company (or a party designated by Buyer for purposes of remitting such amount to the applicable Taxing Authority) and the Company (or such party designated by Buyer) shall promptly remit such amount to the applicable Taxing Authority, and (y) any remaining Seller Corrective Action Escrow Amount, less the amount of any claim made by Buyer in respect of a Seller Corrective Action that has not been fully resolved or subject to a Final Determination, to the Seller Representative, for distribution to each Seller in accordance with such Seller’s Pro Rata Share. The Seller Corrective Action Escrow Amount shall be used solely to address the Seller Corrective Actions. (ii) The SALT Escrow Amount shall be held in escrow with the Escrow Agent until the earlier of (i) the date that is 24 months following the Closing Date, and (ii) a Final Determination with respect to the last remaining SALT Matter (the “SALT Matters Escrow Period”). During the SALT Matters Escrow Period, if a Final Determination is made or issued, Buyer and the Seller Representative shall jointly instruct the Escrow Agent to release all or a portion of the SALT Matters Escrow Amount sufficient to pay the amount due to the applicable Taxing Authority in connection with such Final Determination, if any, to the Company (or a party designated by Buyer for purposes of remitting such amount to the applicable Taxing Authority) and the Company (or such party designated by Buyer) shall promptly remit such amount to the applicable Taxing Authority. Within two (2) Business Days following the expiration of the SALT Matters Escrow Period, Buyer and the Seller Representative shall jointly instruct the Escrow Agent to release any remaining balance of the SALT Matters Escrow Amount, less the amount of any claim made by Buyer in respect of a SALT Matter that has not been fully resolved or subject to a Final Determination, to the Seller Representative, for further distribution to each Seller in accordance with such Seller’s Pro Rata Share. The SALT Matters Escrow Amount shall be used solely to address the SALT Matters. 6.4 WARN Act. In any termination or layoff of any employee of any of the Acquired Companies by Buyer or any of the Acquired Companies on or after the Closing, Buyer and the Acquired Companies will comply fully, if applicable, with the WARN Act and all other applicable Legal Requirements, including those prohibiting discrimination and requiring notice to employees. Buyer will not, and will cause the Acquired Companies not to, at any time prior to 60 days after the Closing Date, effectuate a “plant closing” or “mass layoff” as those terms are defined in the WARN Act affecting in whole or in part any facility, site of employment, operating unit or employee of the Acquired Companies without complying fully with the requirements of the WARN Act. Buyer and the Acquired Companies will bear the cost of compliance with (or failure to comply with) any such Legal Requirements. 6.5 No Control of Other Party’s Business. Except with respect to certain consent rights expressly set forth in this Agreement, nothing will give Buyer, directly or indirectly,
68 the right to control or direct the Acquired Companies’ business or operations prior to the Closing and, prior to the Closing, Sellers will exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their and the Acquired Companies’ respective operations. 6.6 Employee Matters. For a period of 12 months following the Closing, Buyer will provide or will cause the Acquired Companies to provide, all Employees with compensation and terms and conditions of employment that are substantially comparable in the aggregate to those in effect immediately prior to the Closing and employee benefits (other than any equity or other long-term incentive benefits and any applicable Change of Control Payments) that are substantially comparable in the aggregate to those in effect immediately prior to the Closing Date. Following the Closing, each Employee will receive service credit for purposes of eligibility to participate and vesting (but not for benefit accrual purposes) for employment, compensation, and employee benefit plan purposes with the Company prior to the Closing. Each Employee will also receive service credit for purposes of calculating the level of benefits with respect to severance, vacation, personal days off and any other welfare-type benefits where service is a factor in calculating benefits. Buyer will use commercially reasonable efforts to (a) cause to be waived all pre-existing condition exclusions and actively at work requirements and similar limitations, eligibility waiting periods and evidence of insurability requirements under any Buyer employee benefit plans to the extent waived or satisfied by an Employee under any Benefit Plan as of the Closing Date and (b) cause any deductible, co-insurance and covered out-of-pocket expenses paid on or before the Closing Date by any Employee (or covered dependent thereof) to be taken into account for purposes of satisfying the corresponding deductible, coinsurance and maximum out of pocket provisions after the Closing Date under any applicable Buyer employee benefit plan in the year of initial participation. Notwithstanding any of the foregoing to the contrary, none of the provisions contained herein will (x) operate to duplicate any benefit provided to any Employee or the funding of any such benefit, or (y) to restrict the rights of the Acquired Companies with respect to terminating the employment of any such Employee. This Section 6.6 is not intended, and will not be deemed, to confer any rights or remedies upon any Person, to amend or otherwise modify any Benefit Plan or other compensation or benefits plan or arrangement, other than the Parties and their respective successors and permitted assigns, to create any agreement of employment with any Person or to otherwise create any third-party beneficiary to this Agreement. 6.7 Termination of 401(k) Plan; Section 280G. (a) If requested by Buyer, the Acquired Companies will adopt, or will cause to be adopted, all necessary corporate resolutions (which shall be subject to Buyer’s reasonable review and approval) effective as of no later than one day prior to Closing (but such termination may be contingent upon the Closing) (i) to terminate each 401(k) Plan sponsored or maintained by an Acquired Company, (ii) ceasing all contributions to such 401(k) Plan, and (iii) fully vesting all participants thereunder. For this purpose, the term “401(k) Plan” means any plan intended to be qualified under Code Section 401(a) which includes a cash or deferred arrangement intended to qualify under Code Section 401(k). (b) The Acquired Companies shall obtain prior to the initiation of the requisite shareholder approval procedure below, a waiver of the right to receive payments that could constitute “parachute payments” under Section 280G of the Code and regulations promulgated 69 thereunder (a “Parachute Payment Waiver”) from each Person the Acquired Companies reasonably believes is a “disqualified individual” (within the meaning of Section 280G of the Code and the regulations promulgated thereunder) and who might otherwise receive, has received, or has the right or entitlement to receive any parachute payment under Section 280G of the Code, and the Acquired Companies shall have delivered each such Parachute Payment Waiver to Buyer on or before the Closing Date. The Acquired Companies shall solicit prior to Closing the approval by such number of shareholders as is required by the terms of Section 280G(b)(5)(B) of the Code so as to render the parachute payment provisions of Section 280G of the Code inapplicable to any and all payments and/or benefits provided pursuant to contracts or arrangements that, in the absence of the executed Parachute Payment Waivers by the affected Persons above, might otherwise result, separately or in the aggregate, in the payment of any amount and/or the provision of any benefit that would not be deductible by reason of Section 280G of the Code, with such shareholder approval to be solicited in a manner which satisfies all applicable requirements of such Section 280G(b)(5)(B) of the Code and the Treasury Regulations thereunder, including Q-7 of Section 1.280G-1 of such Treasury Regulations. The form of Parachute Payment Waiver, and disclosure document and other materials to solicit any such shareholder vote shall each be in a form reasonably acceptable to Buyer. 6.8 Confidentiality. From and after the Closing Date, Sellers shall hold, and shall cause their respective Affiliates and representatives to hold, in confidence any and all non- public confidential or proprietary information, materials and trade secrets, whether in written, verbal, graphic or other form, relating to the Acquired Companies, the Business or Buyer or any of their respective Affiliates and not use such information or trade secrets for any reason or purpose whatsoever or disclose to any Person such information or trade secrets; provided, however, that no such Person shall be prevented from (i) making disclosures required by applicable Legal Requirements (with written notice to Buyer, to the extent permissible under applicable Legal Requirements), or (ii) making disclosures to any Government Entity to report potential violations of applicable Legal Requirements (with written notice to Buyer, to the extent permissible under applicable Legal Requirements). If the disclosure of such information or trade secrets is required by applicable Legal Requirements, Sellers or such other party shall (a) cooperate with and provide Buyer an opportunity to object to the disclosure and shall, to the extent legally permissible, give Buyer as much prior written notice as is possible under the circumstances, (b) only disclose such information or trade secrets as is required by applicable Legal Requirements to be disclosed which Seller or such other party is advised by its counsel is legally required to be disclosed and (c) use its respective commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to any such information or trade secrets so disclosed. 6.9 Use of Names. From and after the Closing Date, Sellers shall not, and shall cause their respective Affiliates not to: (a) market or offer any products or services using any of the words or terms (in any combination) that are identical or confusingly similar to, or a colorable imitation or dilutive of any of the words and terms ever used by the Acquired Companies to market or offer any of the Acquired Companies’ products or services; or (b) use the names set forth in Section 6.9 of the Disclosure Schedule or any confusingly similar name, including on stationery, business cards or signage. 70 ARTICLE VII SURVIVAL AND RECOVERY 7.1 Survival. (a) The representations and warranties of the parties set forth in this Agreement or any Disclosure Schedule, annex, exhibit, or other Transaction Document, shall not survive the Closing Date and shall terminate effective as of the Closing, such that no claim for breach of any representation or warranty, detrimental reliance, or other right or remedy (whether in contract, in tort, at law, or in equity) may be brought with respect to such representations and warranties after the Closing Date (other than other than Claims of Fraud against the Person who committed such Fraud). (b) The covenants, obligations, and agreements shall survive for a period of three years after the Closing Date unless the covenant, obligation or agreement specifies a different term, in which case such covenant, obligation, or agreement shall survive for the period provided therein, if any, or until fully performed; provided, however, that the indemnification obligations of Sellers set forth in Section 7.2(c) shall survive for a period of six (6) years after the Closing Date. (c) The parties specifically and unambiguously intend that the survival periods that are set forth in this Section 7.1 replace any statute of limitations that would otherwise be applicable and any corresponding Loss shall terminate concurrently with the expiration of such applicable survival period set forth in this Section 7.1. 7.2 Indemnification by Sellers. Subject to the limitations set forth herein, from and after the Closing until the expiration of all remaining survival periods under Section 7.1, Sellers, severally and not jointly (based on the Pro Rata Share of each Seller), shall indemnify, defend, and hold harmless Buyer, the Company, their respective Affiliates, and the respective officers, directors, employees, stockholders, agents, Representatives, successors, and assigns of each of the foregoing Persons (the “Buyer Indemnitees”) from and against all Losses to the extent arising from or relating to: (a) any breach or violation of any covenant, obligation, or agreement of Sellers contained in this Agreement to be performed in whole or in part after the Closing; (b) any Indebtedness or any unpaid Transaction Expenses that are not paid at Closing or pursuant to Section 2.2(f) as part of the Purchase Price or accounted for in the post- Closing adjustment pursuant to Section 2.5; (c) any Pre-Closing Taxes, except to the extent such Taxes were taken into account in the determination of Final Indebtedness or Final Net Working Capital (in each case, as finally determined pursuant to Section 2.5 of this Agreement), and, without duplication, except for any Taxes relating to the Tax Election; provided, that notwithstanding anything to the contrary in Section 7.1(b), the indemnification obligation under this Section 7.2(c) shall survive until the date that is six (6) years after the Closing Date; and (d) the matters set forth on Section 7.2(d) of the Disclosure Schedule. 71 7.3 Indemnification by Buyer. Subject to the limitations set forth herein, from and after the Closing until the expiration of all remaining survival periods under Section 7.1, Buyer shall indemnify, defend and hold harmless Sellers, their respective Affiliates, and the respective officers, directors, trustees, beneficiaries, employees, stockholders, agents, Representatives, successors, and assigns of each of the foregoing Persons (the “Seller Indemnitees”) from and against all Losses to the extent arising from or relating to any breach or violation of any covenant, obligation, or agreement of Buyer contained in this Agreement to be performed in whole or in part after the Closing. 7.4 Indemnification Procedures. (a) Direct Claims. If a party entitled to indemnification under this Article VII (the “Indemnified Party”) believes that a Claim against another party exists for which indemnity may be sought under this Article VII (a “Direct Claim”), and such Indemnified Party intends to seek indemnity pursuant to this Article VII, the Indemnified Party shall promptly provide the other party (the “Indemnifying Party”) with written notice of such Direct Claim, stating (i) the nature, basis, the amount Losses incurred by the Indemnified Party in connection with such Direct Claim (to the extent known or of a nature that can reasonably be estimated, which amount shall not be conclusive of the final amount of such Loss), (ii) the method of computation of such Losses (to the extent known or of a nature that can reasonably be estimated), (iii) any other remedy sought thereunder, (iv) any relevant time constraints relating thereto, (v) references to the provisions of this Agreement applicable thereto, and (vi) to the extent practicable, any other material details pertaining thereto, along with copies of the relevant documents evidencing such Losses. The failure of the Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced thereby (provided, that the Indemnifying Party shall not be liable for any expense incurred during the period in which the Indemnified Party failed to give such notice). (b) Third-Party Claims. (i) If any Indemnified Party receives written notice (or otherwise becomes aware) of the assertion of any Claim by a third-party Person for which indemnity may be sought under this Article VII (a “Third-Party Claim”), and such Indemnified Party intends to seek indemnity pursuant to this Article VII, the Indemnified Party shall promptly (but no later than 30 calendar days of the earlier of receiving such written notice or becoming aware of such Third- Party Claim) provide the Indemnifying Party with written notice of such Third-Party Claim, (1) the nature, basis, the amount Losses incurred by the Indemnified Party in connection with such Third- Party Claim (to the extent known or of a nature that can reasonably be estimated, which amount shall not be conclusive of the final amount of such Loss), (2) the method of computation of such Losses (to the extent known or of a nature that can reasonably be estimated), (3) any other remedy sought thereunder, (4) any relevant time constraints relating thereto, (5) references to the provisions of this Agreement applicable thereto, and (6) to the extent practicable, any other material details pertaining thereto, along with copies of the relevant documents evidencing such Losses. The failure of the Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced thereby (provided, that the Indemnifying Party shall not be liable for any expense incurred during the period in which the Indemnified Party failed to give such notice).
72 (ii) The Indemnifying Party shall be entitled to participate in the defense of such Third-Party Claim and, if it so chooses, to assume control of the defense thereof at its expense with counsel selected by the Indemnifying Party by delivering written notice of such election to the Indemnified Party within 30 days of the Indemnifying Parties’ receipt of the notice such Third-Party Claim; provided, however, that the Indemnifying Party shall not be entitled to assume control of such defense and shall pay the reasonable fees and expenses of counsel retained by the Indemnified Party if (1) the Third-Party Claim relates to or arises in connection with any criminal litigation, or (2) the Indemnified Party has been advised in writing by legal counsel that that a conflict exists between the Indemnified Party and the Indemnifying Party in connection with the defense of the Third-Party Claim (as determined by the conflicts of interest rules restricting attorney conduct in the applicable jurisdiction if counsel for the Indemnifying Party were to act as counsel for the Indemnified Party). (iii) If the Indemnifying Party undertakes to defend against such Third- Party Claim: (1) the Indemnifying Party shall use commercially reasonable efforts to defend the Third-Party Claim actively and diligently; and (2) the Indemnifying Party shall not, without the prior written consent of the Indemnified Party, consent to any settlement or the entry of any judgment which (A) does not contain an unconditional release of the Indemnified Party from the subject matter of the settlement, or (B) would provide for any admission of criminal liability or any injunctive relief or other non-monetary obligation affecting the Indemnified Party. Notwithstanding the foregoing, if a Third-Party Claim seeks injunctive relief or other non- monetary relief against any of the Acquired Companies, the Indemnifying Party shall not, without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned, or delayed), (x) consent to any settlement, compromise, or the entry of any judgment with respect to such Third-Party Claim, or (y) make any material decision with respect to the conduct or strategy of the defense of such Third-Party Claim, including the selection of counsel. If the Indemnifying Party elects not to defend (whether explicitly or by its failure to timely deliver notice of election to assume defense) any Third-Party Claim, contests its obligation to indemnify the Indemnified Party for Losses relating to such Third-Party Claim under this Agreement, or is not entitled to assume the defense of any Third-Party Claim, the Indemnified Party may defend against, negotiate, settle, or otherwise deal with such Third-Party Claim. (iv) The party not controlling the defense of a Third-Party Claim (the “Non-Controlling Party”) may participate therein at its own expense. The party controlling such defense (the “Controlling Party”) will keep the Non-Controlling Party reasonably advised of the status of such suit or proceeding and the defense thereof and will consider in good faith recommendations made by the Non-Controlling Party with respect thereto. The Non-Controlling Party will furnish the Controlling Party with such relevant information as it may have with respect to such Third-Party Claim (including copies of any summons, complaint, or other pleading which may have been served on such party and any written Claim, demand, invoice, billing, or other document evidencing or asserting the same) and will otherwise cooperate with reasonable requests for assistance by the Controlling Party in the defense of such Third-Party Claim. If the Indemnifying Party has assumed the defense, appeal, or settlement proceedings of the Third-Party Claim in accordance herewith, the Indemnified Party will not admit any liability, file any papers, or consent to the entry of any judgment or enter into any settlement agreement, compromise, or discharge with respect to the Third-Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned, or delayed). 73 7.5 Limitation of Liability. (a) The amount of any Loss for which indemnification is provided under this Article VII shall be net of any amounts actually recovered by the Indemnified Party (including under the RWI Policy, as applicable, and other insurance policies) with respect to such Loss, net of out-of-pocket costs and expenses of obtaining such recoveries or insurance proceeds (which, with respect to insurance proceeds, shall include any applicable premiums or deductibles). (b) If an Indemnified Party recovers an amount from a third-party Person in respect of Losses that are the subject of indemnification hereunder after all or a portion of such Losses have been paid by an Indemnifying Party pursuant to this Article VII then the Indemnified Party shall promptly remit to the Indemnifying Party the excess (if any) of (i) (A) the amount paid by the Indemnifying Party in respect of such Losses, plus (B) the amount received by the Indemnified Party in respect thereof, minus (ii) the full amount of the Losses. (c) Notwithstanding anything to the contrary in this Agreement, other than Claims of Fraud against the Person who committed such Fraud, all Losses incurred by any Buyer Indemnitee that arise from, relate to, or are in connection with any inaccuracy or breach of any representation or warranty made by any Seller in this Agreement or any other Transaction Document shall be paid and satisfied solely from the RWI Policy. Buyer hereby acknowledges and agrees (on behalf of itself, its Affiliates, and the other Buyer Indemnitees) that its only recourse in the event of any breach or inaccuracy of any representation or warranty under this Agreement shall be to file a claim under the RWI Policy and no Claim may be brought against any Seller or their respective Affiliates or representatives with respect thereto other than in respect of any Fraud. (d) Notwithstanding anything to the contrary in this Agreement, the maximum aggregate, cumulative liability of (i) Sellers for any and all Losses arising pursuant to this Agreement or in connection with the transactions contemplated hereby shall not exceed the Base Purchase Price actually received by Sellers in cash, and (ii) Buyer for any and all Losses arising pursuant to this Agreement or in connection with the transactions contemplated hereby shall not exceed the Base Purchase Price. (e) In the event that the Buyer Indemnitees have the right to assert a claim for indemnification under Section 7.2(c), the Buyer Indemnitees shall first make a claim on the RWI Policy and shall use commercially reasonable efforts to seek recovery under the RWI Policy for such Losses. No party shall be entitled to any payment, adjustment, or indemnification more than once with respect to the same matter, including under this Article VII, the RWI policy, the calculation of Net Working Capital, the calculation of Indebtedness, the calculation of Transaction Expenses or otherwise. To the extent any Buyer Indemnitee actually recovers under the RWI Policy with respect to any Losses for which Sellers have made an indemnification payment pursuant to this Article VII, Buyer shall promptly remit to the Seller Representative, for distribution to each Seller in accordance with such Seller’s Pro Rata Share, the amount of such recovery, net of any reasonable and documented out-of-pocket costs of recovery and any applicable retention, deductible or similar amount borne by Buyer under the RWI Policy. (f) For purposes of this Article VII, all materiality and Material Adverse Effect qualifiers contained in Article III, Article IV, or Article V shall be disregarded for purposes of 74 determining whether a breach of a representation or warranty has occurred and the amount of Losses resulting from such breach; provided, however, that this Section 7.5(f) shall not apply to the definition of Material Contract. 7.6 Recovery; Payments. The Indemnifying Party will pay or cause to be paid all indemnifiable Losses for which it is liable pursuant to this Article VII, by wire transfer of immediately available funds, no later than 5 Business Days following any final determination of such Loss and the Indemnifying Party’s liability therefor. A “final determination” will exist when (i) the parties to the dispute have reached an agreement in writing, or (ii) a court of competent jurisdiction will have entered a final, non-appealable Order with respect to such Loss. Any payments made pursuant to this Article VII shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by applicable Legal Requirement. 7.7 Exclusive Remedy. Each of the parties hereto acknowledge and agree that the sole and exclusive remedy with respect to any and all Claims (other than Claims arising from Fraud which shall be brought solely against the Person(s) who committed such Fraud) for any breach of any representation, warranty, covenant, agreement, or obligation set forth herein or otherwise relating to the subject matter of this Agreement or the transactions contemplated hereby, including any claim for detrimental reliance, breach of contract, or other right or remedy (whether in contract, in tort, at law, or in equity) shall be pursuant to the provisions set forth in this Article VII; provided, however, that this Section 7.7 shall not limit any Person’s right to seek and obtain any relief to which any Person shall be entitled pursuant to Section 9.6. In furtherance of the foregoing, (a) Buyer hereby waives (on behalf of itself, its Affiliates, and all other Buyer Indemnitees), and from and after the Closing shall cause the Company to waive, to the fullest extent permitted under applicable Legal Requirements, any and all rights and Claims (whether in law or in equity and whether sounding in contract, tort, or otherwise), other than Claims of Fraud solely against the Person(s) who committed such Fraud, it may have against any Seller or their respective Affiliates arising out of this Agreement, the other Transaction Documents, any certificates delivered under this Agreement, the transactions contemplated hereby and thereby, any applicable Legal Requirements (including any relating to environmental matters), or otherwise, except pursuant to the indemnification provisions set forth in this Article VII, and (b) each Seller hereby waives (on behalf of itself, its Affiliates, and all other Seller Indemnitees), to the fullest extent permitted under applicable Legal Requirements, any and all rights and Claims (whether in law or in equity and whether sounding in contract, tort, or otherwise), other than Claims of Fraud solely against the Person(s) who committed such Fraud, it may have against Buyer or its Affiliates arising out of this Agreement, the other Transaction Documents, any certificates delivered under this Agreement, the transactions contemplated hereby and thereby, any applicable Legal Requirements, or otherwise, except pursuant to the indemnification provisions set forth in this Article VII. 7.8 Acknowledgment by Buyer. Buyer has conducted to its satisfaction an independent investigation and verification of the financial condition, results of operations, assets, liabilities, properties and projected operations of the Acquired Companies, and, in making its determination to proceed with the transactions contemplated by this Agreement, except in the case of any Fraud, Buyer (a) has relied solely on the results of its independent investigation and verification and the representations and warranties of Sellers expressly and specifically set forth in Article III and Article IV, as qualified by the Disclosure Schedule, and (b) has not relied on the 75 accuracy or completeness of any other information provided to (or otherwise acquired by) Buyer. The representations and warranties of Sellers expressly and specifically set forth in Article III and Article IV, as qualified by the Disclosure Schedule, constitute the sole and exclusive representations, warranties, and statements (including by omission) of any kind of any of Sellers and the Acquired Companies in connection with the transactions contemplated by this Agreement, and all other representations, warranties, and statements (including by omission) of any kind or nature, express or implied, in connection with the transactions contemplated by this Agreement are specifically disclaimed by Sellers and the Acquired Companies, including, for the avoidance of doubt, with respect to the accuracy or completeness of any other information provided to (or otherwise acquired by) Buyer. EXCEPT IN THE CASE OF ANY FRAUD AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLERS EXPRESSLY AND SPECIFICALLY SET FORTH IN ARTICLE III AND ARTICLE IV, RESPECTIVELY, AS QUALIFIED BY THE DISCLOSURE SCHEDULE, (I) BUYER IS ACQUIRING THE ACQUIRED COMPANIES ON AN “AS IS, WHERE IS” BASIS AND (II) NONE OF THE ACQUIRED COMPANIES, SELLERS, NOR ANY OTHER PERSON, WHETHER IN ANY INDIVIDUAL, CORPORATE OR ANY OTHER CAPACITY, IS MAKING, AND BUYER IS NOT RELYING ON, ANY REPRESENTATIONS, WARRANTIES, OR OTHER STATEMENTS (INCLUDING BY OMISSION) OF ANY KIND WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO ANY MATTER CONCERNING THE ACQUIRED COMPANIES OR ANY OF THEIR BUSINESSES OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR THE ACCURACY OR COMPLETENESS OF ANY INFORMATION PROVIDED TO (OR OTHERWISE ACQUIRED BY) BUYER. 7.9 RWI Policy. Buyer acknowledges and agrees that, as of the date hereof, Buyer has obtained a conditional binder to the RWI Policy, and that a true and correct copy of such conditional binder has been provided to the Seller Representative. Prior to the Closing, Buyer will take all action necessary to obtain and bind, and will obtain and bind at its sole cost and expense, the RWI Policy, which will contain the same terms and conditions in the conditional binder provided to the Seller Representative, except as consented to by the Seller Representative in writing (such consent not to be unreasonably withheld, conditioned or delayed). The RWI Policy will provide that (a) the insurer thereunder will have no subrogation rights against any Seller or the Seller Representative except, in the case of Sellers, solely in the case of Fraud, (b) Sellers and their respective Affiliates are express third party beneficiaries of the RWI Policy with respect to the matters set forth in clause (a), and (c) the RWI Policy may not be amended or modified with respect to the matters set forth in clauses (a) or (b) in any manner adverse to Sellers or the Seller Representative, in each case without the prior written consent of the Seller Representative (on behalf of Sellers) (such consent not to be unreasonably withheld, conditioned or delayed). Buyer acknowledges that its obligations set forth in this Agreement are not contingent or conditioned upon the procurement of the RWI Policy. 7.10 Special Indemnity Escrow. (a) At the Closing, Buyer will deliver the Special Indemnity Escrow Amount to the Escrow Agent, to be held in escrow pursuant to the terms of the Escrow Agreement and released in accordance with this Section 7.10 (such escrow account, the “Special Indemnity Escrow Account”). The Special Indemnity Escrow Amount shall serve as security for, and shall
76 be available to satisfy, any and all Losses for which the Buyer Indemnitees are entitled to indemnification pursuant to Section 7.2(d) (each, a “Special Indemnity Claim”). The Buyer Indemnitees’ right to recover from the Special Indemnity Escrow shall be in addition to, and not in lieu of, any other rights or remedies available to the Buyer Indemnitees under this Article VII (without duplication of recovery); provided, that Buyer shall use commercially reasonable efforts to mitigate Losses and pursue any applicable insurance coverage. During the Special Indemnity Escrow Period, upon the final determination of any Losses for which Sellers may be liable in accordance with Section 7.6, (i) first, the Seller Representative and Buyer shall promptly, and in any event within five (5) Business Days after such final determination, submit joint written instructions to the Escrow Agent instructing the Escrow Agent to release to Buyer the amount of such Losses from the Special Indemnity Escrow Account, and (ii) second, the Sellers shall pay or cause to be paid to the Buyer Indemnitees the amount of any Losses not covered by the Special Indemnity Escrow Amount. (b) The Special Indemnity Escrow Amount shall be held in escrow until the date that is twelve (12) months following the Closing Date (the “Special Indemnity Escrow Period”). Within five (5) Business Days following the expiration of the Special Indemnity Escrow Period, Buyer and the Seller Representative shall jointly instruct the Escrow Agent to release to the Seller Representative, for further distribution to each Seller in accordance with such Seller’s Pro Rata Share, the then-remaining balance of the Special Indemnity Escrow Amount less the amount of any claim made by Buyer in respect of a Special Indemnity Claim that has not been fully resolved in accordance with this Article VII. The Special Indemnity Escrow Amount shall be used solely to address the matters set forth on Section 7.2(d) of the Disclosure Schedule. ARTICLE VIII CLOSING CONDITIONS 8.1 Conditions to Obligations of all Parties. Each of the obligations of the Parties to be performed hereunder will be subject to the satisfaction (or waiver by such Party) at or prior to the Closing of each of the following conditions: (a) Orders. There will not be in effect any Order restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby. (b) HSR. All waiting periods and other approvals applicable to the transactions contemplated hereby under the HSR Act will have expired or been earlier terminated. 8.2 Conditions to Buyer’s Obligations. Each of the obligations of Buyer to be performed hereunder will be subject to the satisfaction (or the waiver by Buyer) at or prior to the Closing of each of the following conditions: (a) Representations and Warranties. The representations and warranties of Sellers (i) set forth in Article III and Article IV of this Agreement (other than the Fundamental Representations) will be true and correct on and as of the date hereof and the Closing Date with the same force and effect as though made on and as of such date (except for representations and warranties that speak as of a particular date, which will have been true and correct only as of such particular date), except in each case where the failure of such representations and warranties to be 77 so true and correct would not have, individually or in the aggregate, a Material Adverse Effect, (ii) set forth in Section 4.5(a) will be true and correct in all material respects as of the date of this Agreement, and (iii) set forth in the Fundamental Representations will be true and correct in all respects as of the date hereof and the Closing Date other than any de minimis inaccuracies (except in the case of Section 4.3 (Capitalization; Subsidiaries) which shall be true and correct in all respects) with the same force and effect as though made on and as of such date (except for representations and warranties that speak as of a particular date, which will have been true and correct only as of such particular date); and Sellers and the Company will have delivered to Buyer a certificate dated as of the Closing and signed by Sellers and the Company to all such effects. (b) Performance. Sellers and the Company will have performed and complied, in all material respects, with all agreements, obligations and conditions required by this Agreement to be performed or complied with by them on or prior to the Closing Date; and Sellers and the Company will have delivered to Buyer a certificate dated as of the Closing Date and signed by Sellers and the Company to all such effects. (c) No Material Adverse Effect. Since the date hereof and prior to the Closing, no Material Adverse Effect shall have occurred; and Sellers and the Company will have delivered to Buyer a certificate dated as of the Closing and signed by Sellers and the Company to all such effects. (d) Sellers’ Closing Deliveries. The Seller Representative will deliver the following documents to Buyer (duly executed as appropriate): (i) the Escrow Agreement; (ii) each payoff letter or invoice relating to the payment of the Indebtedness contemplated by Section 2.4(b), including, without limitation, the UMB Loan Agreement (as defined in the Disclosure Schedule), evidencing the payment in full and discharge of such Indebtedness upon receipt of a specified amount, as well as customary release documentation evidencing the release, discharge, removal and termination of all Liens securing such Indebtedness, including applicable UCC-3 termination statements and customary intellectual property releases; (iii) either (A) evidence that all amounts due and payable pursuant to the Northpoint Loan Agreement (as defined in the Disclosure Schedule) have been paid in full, or (B) a UCC-3 termination statement terminating the UCC lien in favor of Northpoint Commercial Finance LLC; (iv) a UCC-3 termination statement terminating the UCC lien in favor of Citibank, N.A., pursuant to the Citibank Agreement, if the Citibank Agreement does not qualify as an exception under Buyer’s credit facilities with its applicable lenders; (v) a UCC-3 termination statement terminating the UCC lien in favor of Key Government Finance, Inc., pursuant to the Key Government Finance Agreement (as defined in the Disclosure Schedule), if the Key Government Finance Agreement (as defined in the Disclosure Schedule) does not qualify as an exception under Buyer’s credit facilities with its applicable lenders; 78 (vi) each payoff letter or invoice relating to the payment Transaction Expenses contemplated by Section 2.4(c), including a payoff letter, in form and substance satisfactory to Buyer, from BofA Securities, Inc., duly executed and in full force and effect confirming that upon payment of the amounts set forth in such payoff letter, all obligations under the engagement letter among BofA Securities, Inc. and the Acquired Companies will be satisfied in full, such engagement letter will be deemed terminated, and the Acquired Companies and Buyer and Affiliates will be released from any and all claims BofA Securities, Inc. may have in respect of such engagement letter or related to the transactions contemplated by this Agreement (provided that all indemnification provisions in such engagement letter or any exhibit or appendix thereto will survive such termination); (vii) a certificate or certificates evidencing the Stock and executed assignments of the Stock, in form and substance reasonably satisfactory to Buyer; (viii) the consents listed on Section 8.2(d) of the Disclosure Schedule (the “Required Consents”); (ix) evidence of termination of the Related Party Agreements without (subject to Section 6.2(c)) any liability of the Acquired Companies or Buyer thereunder from and after the Closing, including, without limitation, the Stockholder Agreement, effective as of or prior to the Closing, in each case in form and substance satisfactory to Buyer; (x) the Restrictive Covenant Agreements; (xi) the Tail Policies, which have been obtained and are in full force and effect; (xii) the FIRPTA Certificate; (xiii) duly executed resignation letters, in form and substance satisfactory to Buyer, of each member of the board of managers or directors of the Acquired Companies, as applicable, and each officer of the Acquired Companies, effective as of the Closing; (xiv) good standing certificates (or the equivalent) with respect to each Acquired Company issued by the Secretary of State or analogous government office in such entity’s jurisdiction or organization, in each case dated as of a date not more than five (5) Business Days prior to the Closing Date; (xv) a duly executed assignment agreement, in form and substance satisfactory to Buyer, assigning any of High Frontier 3, LLC’s, CSI-AZ Holdings Inc.’s and their Affiliates’ (other than the Acquired Companies’) rights in and to any Intellectual Property created, developed or reduced to practice by employees or contractors of the Acquired Companies to the Acquired Companies; (xvi) evidence of delivery of notice of termination of the TMN License Agreement, including the payment of the termination fee thereunder; and 79 (xvii) all corporate books and records and other property of the Acquired Companies in the possession of any Seller or any of his, her or its Affiliates (other than the Acquired Companies. 8.3 Conditions to Sellers’ and the Company’s Obligations. Each of the obligations of Sellers and the Company to be performed hereunder will be subject to the satisfaction (or the waiver by Sellers and the Company) at or prior to the Closing of each of the following conditions: (a) Representations and Warranties. Buyer’s representations and warranties contained in this Agreement will be true and correct in all material respects on and as of the Closing Date with the same force and effect as though made on and as of such date (except for representations and warranties that speak as of a particular date), except to the extent that such representations and warranties are qualified by the term “material,” or contain terms such as “material adverse effect” or “material adverse change,” in which case such representations and warranties (as so written, including the term “material”) will be true and correct in all respects at and as of the Closing Date; and Buyer will have delivered to Sellers a certificate dated as of the Closing and signed by a duly authorized officer of Buyer to all such effects. (b) Performance. Buyer will have performed and complied with all agreements, obligations and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date and Buyer will have delivered to Sellers and the Company a certificate dated as of the Closing Date and signed by a duly authorized officer of Buyer to all such effects. (c) Buyer’s Closing Deliveries. Buyer will deliver the following documents to Sellers and the Company (duly executed as appropriate): (i) the Escrow Agreement; and (ii) evidence that the RWI Policy is in full force and effect; and (iii) an assignment from the Acquired Companies to the Seller Representative of any and all claims of the Acquired Companies against accountants and/or accounting firms that relate to the events underlying the Seller Corrective Actions, including for the avoidance of doubt the matters set forth on Section 4.8 of the Disclosure Schedule, in a form reasonably acceptable to the Seller Representative. ARTICLE IX MISCELLANEOUS 9.1 Transaction Expenses. Subject to Section 2.4(c) and except as otherwise expressly provided in this Agreement, Buyer, Sellers, and the Acquired Companies will each bear such Person’s own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. 9.2 Amendments. Except as otherwise provided in Section 6.3, no amendment, modification or waiver of this Agreement will be effective unless specifically made in writing and
80 duly signed by the Party to be bound thereby. No other course of dealing between or among any of the Parties or any delay in exercising any rights pursuant to this Agreement will operate as a waiver of any rights of any Party. 9.3 Successors and Assigns. All covenants and agreements set forth in this Agreement will bind and inure to the benefit of the respective successors and permitted assigns of the Parties, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by a Party without the prior written consent of the other Party; provided, that Buyer and, following the Closing, the Company may assign their rights (but not their obligations) hereunder without the consent of the applicable non-assigning Party (a) to one or more of their respective Affiliates, (b) to any purchaser of a substantial portion of the assets of Buyer or any of its Affiliates, or (c) as a matter of law to the surviving entity in any merger, consolidation share exchange or reorganization involving Buyer or any of its Affiliates. 9.4 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict provision or rule (whether of such State or any other jurisdiction) that would cause the laws of any other jurisdiction to be applied. 9.5 Service of Process: Venue. (a) For purposes of this Agreement, each of the parties hereto hereby: (i) consents to service of process in any legal action, suit, or proceeding among the parties to this Agreement arising in whole or in part under or in connection with the negotiation, execution, and performance of this Agreement and the other Transactions Documents in any manner permitted by the laws of the State of Delaware; (ii) agrees that service of process made in accordance with this Section or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 9.8, will constitute good and valid service of process in any such legal action, suit, or proceeding, and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such legal action, suit, or proceeding any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process. (b) Each of the parties hereto: (i) consents to submit itself to the exclusive personal jurisdiction of the Delaware Court of Chancery in New Castle County, or if that court does not have jurisdiction, a federal court sitting in the State of Delaware in any action or proceeding arising out of or relating to this Agreement or the other Transaction Documents, or any of the transactions contemplated hereby or thereby; (ii) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (iii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; and (iv) agrees not to bring any action or proceeding arising out of or relating to this Agreement or the other Transaction Documents, or any of the transactions contemplated hereby or thereby in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto. 9.6 Specific Performance and Remedies. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not 81 performed by them in accordance with the terms hereof or were otherwise breached and that each party hereto shall be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the provisions of this Agreement (without any requirement to post any bond or other security in connection with seeking such relief), in addition to any other remedy at law or equity. The parties hereto agree not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches of this Agreement by the Company and Sellers, on the one hand, and to prevent or restrain breaches of this Agreement by Buyer, on the other hand, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the parties under this Agreement. 9.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THE RIGHT ANY SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY IN CONNECTION WITH SUCH AGREEMENTS. 9.8 Notices. All demands, notices, communications and reports provided for in this Agreement will be in writing and will be sent by facsimile with confirmation to the number specified below, sent by email to the address specified below, personally delivered or sent by reputable overnight courier service (delivery charges prepaid) to the address specified below, or at such number or address as the recipient party has specified by prior written notice to the sending party pursuant to the provisions of this Section. If to Buyer or, following Closing, the Company, addressed to: ScanSource, Inc. 6 Logue Court Greenville, South Carolina 29615 Attention: Steve Jones; Shana Smith Email: [email protected]; [email protected] with a copy (which will not constitute notice) to: O’Melveny & Myers LLP 1999 Avenue of the Stars, 8th Floor Los Angeles, CA 90067 Attention: David M. Smith Email: [email protected] If to Sellers or, prior to Closing, the Company, addressed to: MAAC Group, LLC c/o Alerion Capital Group Attention: Rick DeAvila 82 7702 East Doubletree Ranch Road, Suite 350 Scottsdale, AZ 85258 [email protected] with a copy (which will not constitute notice) to: Ballard Spahr LLP Attention: Laura C. Giles 1 East Washington Street, Suite 2300 Phoenix, AZ 85004 [email protected] Any such demand, notice, communication or report will be deemed to have been given pursuant to this Agreement when delivered personally, when confirmed if by facsimile, when sent if sent by email, or on the first day after deposit with a reputable overnight courier service, as the case may be. 9.9 Schedules and Exhibits. The exhibits and schedules to this Agreement constitute a part of this Agreement and are incorporated into this Agreement for all purposes as if fully set forth herein. The Disclosure Schedule includes references to the particular section of the Agreement that relates to each disclosure. Any disclosure which may be applicable to another section of this Agreement will be deemed to be made with respect to such other section if readily apparent from the face of such disclosure, regardless of whether or not a specific cross reference is made thereto. By listing matters on the Disclosure Schedule, no Party will be deemed to have established any materiality standard, admitted any liability, concluded that any one or more of such matters are material or expanded in any way the scope or effect of the representations or warranties pertaining to any Party or any of the Acquired Companies contained in this Agreement. 9.10 Counterparts. The Parties may execute this Agreement in two or more counterparts (no one of which need contain the signatures of all Parties), each of which will be an original and all of which together will constitute one and the same instrument. The Parties may deliver an executed copy of this Agreement (and an executed copy of any of the Transaction Documents contemplated by this Agreement) by facsimile or other electronic transmission (in PDF or similar format) to the other Parties, and such delivery will have the same force and effect as any other delivery of a manually signed copy of this Agreement (or such other Transaction Document). 9.11 No Third Party Beneficiaries. Except as expressly provided in this Agreement, no Person that is not a Party will have any right or obligation pursuant to this Agreement. 9.12 Headings. The headings used in this Agreement are for the purpose of reference only and will not affect the meaning or interpretation of any provision of this Agreement. 9.13 Entire Agreement. Except as otherwise provided in this Agreement, this Agreement, including the Exhibits and Disclosure Schedule delivered pursuant hereto, sets forth the entire understanding of the Parties relating to the subject matter hereof, and all prior understandings, whether written or oral, are superseded by this Agreement, and all prior understandings and all related agreements and understandings are hereby terminated. 83 9.14 Severability. In case any one or more of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, but this Agreement will be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein. 9.15 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Unless the context requires otherwise, all words used in this Agreement in the singular number will extend to and include the plural, all words in the plural number will extend to and include the singular and all words in any gender will extend to and include all genders. The word “including” or any variation thereof means “including, without limitation,” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. The term “ordinary course of business” means ordinary course of business consistent with past practice. 9.16 Public Announcements. Neither Sellers or the Company, on the one hand, nor Buyer, on the other hand, will make, or permit any agent or Affiliate to make, any public statements, including, without limitation, any press releases, with respect to this Agreement and the transactions contemplated hereby without the prior written consent of the other Party, except as may be required by applicable Legal Requirements; provided, that (a) the Company and its Subsidiaries, and Sellers and their equityholders, directors, managers, agents and their respective Affiliates will be entitled to disclose such information to their respective employees, direct or indirect equity owners, partners, prospective partners, investors, prospective investors, professional advisors and lenders who have a need to know the information or to whom there is an obligation to disclose such information and who agree to keep such information confidential or are otherwise bound to confidentiality, and (b) the respective financing sources and other professional advisors of Buyer or Sellers may publish “tombstones” or other customary announcements which do not contain pricing details that are not otherwise publicly available. For the avoidance of doubt, disclosures resulting from the Parties’ efforts to obtain governmental approvals or early termination under the HSR Act and to make any related filing will be deemed not to violate this Agreement. Buyer and the Seller Representative will jointly agree on the content and substance of all public announcements concerning the transactions contemplated hereby. Notwithstanding the foregoing, nothing herein shall prohibit or restrict Buyer or any of its Affiliates from making any public announcement, issuing any press release or making any disclosure as may be required by under applicable U.S. securities Legal Requirements or the rules and regulations of any national securities exchange. 9.17 Conflict of Interest. (a) Each of the Parties acknowledges and agrees that Ballard Spahr LLP (the “Firm”) has acted as counsel to the Acquired Companies and Sellers in connection with the negotiation of this Agreement and consummation of the transactions contemplated hereby.
84 (b) Buyer consents and agrees to, and agrees to cause the Acquired Companies to consent and agree to, the Firm representing Sellers and the Seller Representative after the Closing, including with respect to disputes in which the interests of Sellers or the Seller Representative may be directly adverse to Buyer and its Subsidiaries (including the Acquired Companies), and even though the Firm may have represented one or more of the Acquired Companies in a matter substantially related to any such dispute, or may be handling ongoing matters for one or more of the Acquired Companies. Buyer further consents and agrees to, and agrees to cause each of the Acquired Companies to consent and agree to, the communication by the Firm to Sellers and the Seller Representative in connection with any such representation of any fact known to either of the Firm arising by reason of the Firm’s prior representation of the Acquired Companies. (c) In connection with the foregoing, Buyer irrevocably waives and agrees not to assert, and agrees to cause each of the Acquired Companies to irrevocably waive and not to assert, any conflict of interest arising from or in connection with (i) the Firm’s prior representation of the Acquired Companies and (ii) the Firm’s representation of Sellers and the Seller Representative prior to and after the Closing. (d) Buyer further agrees, on behalf of itself and, after the Closing, on behalf of each of the Acquired Companies, that all communications in any form or format whatsoever between or among the Firm, the Acquired Companies, Sellers and/or the Seller Representative, or any of their respective directors, officers employees or other representatives that relate in any way to the negotiation, documentation and consummation of the transactions contemplated by this Agreement or any dispute arising under this Agreement (collectively, the “Deal Communications”) will be deemed to be retained and owned collectively by Sellers, will be controlled by Sellers and will not pass to or be claimed by Buyer or the Acquired Companies. All Deal Communications that are attorney-client privileged (the “Privileged Deal Communications”) will remain privileged after the Closing and the privilege and the expectation of client confidence relating thereto will belong solely to Sellers, will be controlled by Sellers and will not pass to or be claimed by Buyer, the Acquired Companies. (e) Notwithstanding the foregoing, in the event that a dispute arises between Buyer or the Acquired Companies, on the one hand, and a third party other than Sellers, on the other hand, Buyer or the Acquired Companies may assert the attorney-client privilege to prevent the disclosure of the Privileged Deal Communications to such third party; provided, however, that none of Buyer or the Acquired Companies may waive such privilege without the prior written consent of Sellers. In the event that Buyer or the Acquired Companies are legally required by governmental order or otherwise to access or obtain a copy of all or a portion of the Deal Communications, Buyer will immediately (and, in any event, within two business days) notify Seller in writing (including by making specific reference to this Section) so that Sellers can seek a protective order and Buyer will use all commercially reasonable efforts to assist therewith. (f) To the extent that files or other materials maintained by the Firm constitute property of its clients, only Sellers will hold such property rights, and the Firm will not have a duty to reveal or disclose any such files or other materials or any Deal Communications by reason of any attorney-client relationship between the Firm, on the one hand, and the Acquired Companies, on the other hand. 85 (g) Buyer will not, and will cause the Acquired Companies not to, (i) access or use the Deal Communications, including by way of review of any electronic data, communications or other information, or by seeking to have Sellers or the Seller Representative waive the attorney- client or other privilege, or by otherwise asserting that Buyer or the Acquired Companies have the right to waive the attorney-client or other privilege or (ii) seek to obtain the Deal Communications from the Firm. In furtherance of the foregoing, it will not be a breach of any provision of this Agreement if prior to the Closing the Acquired Companies or Sellers, or any of their respective directors, managers, officers employees or other representatives takes any action to protect from access or remove from the premises of the Acquired Companies (or any offsite back-up or other facilities) any Deal Communications, including without limitation by segregating, encrypting, copying, deleting, erasing, exporting or otherwise taking possession of any Deal Communications. 9.18 Seller Representative. (a) Each Seller hereby appoints MAAC Group, LLC, an Arizona limited liability company (the “Seller Representative”) as representative, agent, proxy and attorney in fact for and on behalf of the other Sellers. Without limiting the generality of the foregoing, the Seller Representative has full power and authority, on behalf of each Seller and such Seller’s successors and assigns, to (i) interpret the terms and provisions of this Agreement and the documents to be executed and delivered by Sellers in connection herewith, including the Escrow Agreement, (ii) execute and deliver and receive deliveries of all agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents required or permitted to be given in connection with the consummation of the transactions contemplated by this Agreement and the Escrow Agreement, (iii) receive service of process in connection with any claims under this Agreement or the Escrow Agreement, (iv) agree to negotiate, enter into settlements, assume the defense of claims, demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, and to take all actions necessary or appropriate in the judgment of the Seller Representative for the accomplishment of the foregoing, (v) give and receive notices and communications, (vi) authorize delivery to Buyer of the Post- Closing Adjustment Escrow Amount or any portion thereof in satisfaction of claims brought by Buyer for Losses, (vii) object to such deliveries, (viii) distribute the Post-Closing Adjustment Escrow Amount and any earnings and proceeds thereon, and (ix) take all actions necessary or appropriate in the judgment of the Seller Representative on behalf of Sellers in connection with this Agreement and the Escrow Agreement. The Seller Representative will provide written notice to Sellers prior to settling any claim on behalf of Sellers under this Section. Buyer will be entitled to conclusively rely on the acts of the Seller Representative as provided in this Section 9.18 as the acts of Sellers. (b) Each Seller agrees that such agency and proxy are coupled with an interest and are therefore irrevocable without the consent of the Seller Representative and will survive the death, incapacity, bankruptcy, dissolution or liquidation of any Seller. All decisions and actions by the Seller Representative will be binding upon all Sellers, and no Seller will have the right to object, dissent, protest or otherwise contest the same. The Seller Representative will have no duties or obligations hereunder except those specifically set forth herein and such duties and obligations will be determined solely by the express provisions of this Agreement. Each Seller will indemnify and hold harmless the Seller Representative against all Losses incurred by the Seller Representative in connection with the performance of its duties as the Seller Representative, 86 including, without limitation, Losses resulting from any action, suit or proceeding to which the Seller Representative is made a party by reason of the fact it is or was acting as the Seller Representative under this Agreement. Neither the Seller Representative nor any agent employed by it will incur any liability to any Seller relating to the performance of its duties hereunder except for actions or omissions constituting Fraud or bad faith. The Seller Representative will have no liability in respect of any action, claim or proceeding brought against the Seller Representative by any Seller if the Seller Representative took or omitted taking any action in good faith. 9.19 Termination. (a) Termination, Generally. This Agreement may be terminated prior to Closing: (i) By Mutual Consent. This Agreement may be terminated at any time prior to the Closing by the mutual written consent of Buyer and the Seller Representative (on behalf of Sellers). (ii) Outside Date. This Agreement may be terminated at the election of the Seller Representative (on behalf of Sellers) or Buyer after 5:00 p.m. Eastern Standard Time, on September 1, 2026 (the “Outside Date”), if (A) the Closing has not occurred by such time on such date and (B) the terminating Party has not materially breached any provision of this Agreement. (iii) By Order. This Agreement may be terminated by the Seller Representative (on behalf of Sellers) or Buyer if there is in effect a final nonappealable order of a Government Entity of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby, it being agreed that the parties will promptly appeal any adverse determination that is not nonappealable (and pursue such appeal with reasonable diligence); provided, that the right to terminate this Agreement under this Section 9.19(a)(iii) shall not be available to any Party whose action or failure to act has been a principal cause of, or resulted in the failure of, the Closing to occur for such reason and such action or failure to act constitutes a breach of this Agreement, including Section 6.1(d). (iv) By Buyer. By Buyer, if (A) (1) there has been a material violation or material breach by Sellers or the Company of any covenant, representation or warranty contained in this Agreement which if not cured, would cause a condition to the obligations of Buyer at the Closing not to be satisfied, and such violation or breach has not been waived by Buyer or cured in all material respects by Sellers or the Company, as applicable, within 30 days after receipt by Sellers and the Company of written notice thereof from Buyer and (2) Buyer has not materially breached any provision of this Agreement, or (B) (1) all of the conditions to Closing set forth in Section 8.1 and Section 8.3 have been satisfied (other than any condition the failure of which to be satisfied is attributable to a breach by Sellers or the Company of their respective representations, warranties, covenants or agreements contained herein and other than those conditions that, by their terms, cannot be satisfied until Closing but which are fully capable of being satisfied at Closing), (2) Buyer has confirmed in a written notice to the Seller Representative that Buyer is ready, willing and able to perform its obligations to effect the Closing, and (3) Sellers 87 and the Company fail to fulfill their obligations to effect the Closing within five business days after the written notice of Buyer pursuant to the immediately preceding clause (2). (v) By the Seller Representative on Behalf of Sellers. By the Seller Representative, if (A) (1) there has been a material violation or material breach by Buyer of any covenant, representation or warranty contained in this Agreement which if not cured, would cause a condition to the obligations of Sellers and the Company at the Closing not to be satisfied, and such violation or breach has not been waived by Sellers and the Company or cured in all material respects by Buyer within 30 days after receipt by Buyer of written notice thereof from the Seller Representative and (2) Sellers and the Company have not materially breached any provision of this Agreement, or (B) (1) all of the conditions to Closing set forth in Section 8.1 and Section 8.2 have been satisfied (other than any condition the failure of which to be satisfied is attributable to a breach by Buyer of its representations, warranties, covenants or agreements contained herein and other than those conditions that, by their terms, cannot be satisfied until Closing but which are fully capable of being satisfied at Closing), (2) the Seller Representative has confirmed in a written notice to Buyer that Sellers and the Company are ready, willing and able to perform their obligations to effect the Closing, and (3) Buyer fails to fulfill its obligation to effect the Closing within five business days after the written notice of the Seller Representative pursuant to the immediately preceding clause (2). (b) Procedure upon Termination; Effect of Termination. In the event of termination by Buyer or the Seller Representative, or both, pursuant to this Section 9.19, the terminating party will deliver notice thereof to the other party or parties in accordance with Section 9.5, and this Agreement will terminate and become void and of no effect and no party to this Agreement will have any further liability or obligation hereunder to any other party hereto, except that (i) the obligations of the parties set forth in Section 9.16 and this Section 9.19 will survive any such termination and will be enforceable hereunder, and the Confidentiality Agreement will survive the termination of this Agreement in accordance with its terms following the date of such termination, and (ii) no such termination of this Agreement will relieve any party from liability for an Intentional Breach prior to such termination. * * * * *
[Signature Page to Stock Purchase Agreement] IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. BUYER: ScanSource, Inc., a South Carolina corporation By: /s/ Michael L. Baur Name: Michael L. Baur Title: Chairman & Chief Executive Officer COMPANY: MicroAge Acquisition Corp., a Delaware corporation By: /s/ Ricardo DeAvila Name: Ricardo DeAvila Title: Vice President SELLER REPRESENTATIVE: MAAC Group, LLC, an Arizona limited liability company By: /s/ Ricardo DeAvila Name: Ricardo DeAvila Title: Vice President SELLERS: MAAC Group, LLC, an Arizona limited liability company By: /s/ Ricardo DeAvila Name: Ricardo DeAvila Title: Vice President [Signature Page to Stock Purchase Agreement] NewSpring Mezzanine Capital IV, L.P., By: NSM IV, L.P. By: NSM IV GP, LLC By: /s/ Steven D. Hobman Name: Steven D. Hobman Title: President High Frontier 3, LLC, an Arizona limited liability company By: /s/ Tahnia McKeever Name: Tahnia McKeever Title: Manager CSI-AZ Holdings Inc., an Arizona corporation By: /s/ Larry Gentry Name: Larry Genry Title: CEO /s/ Larry Fulop Larry Fulop /s/ Larry Gentry Larry Gentry /s/ Tracey Hayes Tracey Hayes /s/ Tim McCulloch Tim McCulloch /s/Alex Ryals Alex Ryals [Signature Page to Stock Purchase Agreement] /s/ Rob Zack Rob Zack /s/ Jordan Giannetti Jordan Giannetti /s/ Kevin Lane Kevin Lane /s/ Travis Richards Travis Richards /s/ Rick Trujillo Rick Trujillo
Exhibit 99.1
FOR IMMEDIATE RELEASE
| Contact: | ||||||||
| Steve Jones | Mary M. Gentry | |||||||
| Senior EVP, Chief Financial Officer | SVP, Finance and Treasurer | |||||||
| ScanSource, Inc. | ScanSource, Inc. | |||||||
| (864) 286-4302 | (864) 286-4892 | |||||||
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
Hardware Demand Drove 17% Net Sales Growth for Q4
Announces Agreement to Acquire MicroAge, a Leading IT Solutions Integrator
GREENVILLE, SC -- August 20, 2026 -- ScanSource, Inc. (NASDAQ: SCSC), a leading technology distributor uniquely positioned to address complex technologies, today announced financial results for the fourth quarter and fiscal year ended June 30, 2026.
| Fourth Quarter Summary | Fiscal Year Summary | ||||||||||||||||||||||||||||||||||
| Q4 FY26 | Q4 FY25 | Change | FY26 | FY25 | Change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages and per share data) | |||||||||||||||||||||||||||||||||||
Select reported measures: | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 953,109 | $ | 812,886 | 17.3% | $ | 3,226,062 | $ | 3,040,810 | 6.1% | |||||||||||||||||||||||||
| Gross profit | $ | 119,849 | $ | 105,102 | 14.0% | $ | 437,355 | $ | 408,646 | 7.0% | |||||||||||||||||||||||||
| Gross profit margin % | 12.6 | % | 12.9 | % | -35bp | 13.6 | % | 13.4 | % | 20bp | |||||||||||||||||||||||||
| Operating income | $ | 31,737 | $ | 26,787 | 18.5% | $ | 98,627 | $ | 85,200 | 15.8% | |||||||||||||||||||||||||
| GAAP net income | $ | 25,618 | $ | 20,089 | 27.5% | $ | 78,873 | $ | 71,548 | 10.2% | |||||||||||||||||||||||||
| GAAP diluted EPS | $ | 1.24 | $ | 0.88 | 40.9% | $ | 3.64 | $ | 3.00 | 21.3% | |||||||||||||||||||||||||
Select Non-GAAP measures*: | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 46,148 | $ | 38,639 | 19.4% | $ | 151,548 | $ | 144,660 | 4.8% | |||||||||||||||||||||||||
| Adjusted EBITDA margin % | 4.84 | % | 4.75 | % | 9bp | 4.70 | % | 4.76 | % | -6bp | |||||||||||||||||||||||||
| Non-GAAP net income | $ | 30,280 | $ | 23,322 | 29.8% | $ | 91,945 | $ | 85,144 | 8.0% | |||||||||||||||||||||||||
| Non-GAAP diluted EPS | $ | 1.46 | $ | 1.02 | 43.1% | $ | 4.24 | $ | 3.57 | 18.8% | |||||||||||||||||||||||||
| Note: Margin % reflects measure as a percentage of sales. | |||||||||||||||||||||||||||||||||||
* Represents non-GAAP financial measures. For more information and a reconciliation to the most directly comparable GAAP financial measure, see "Non-GAAP Financial Information" below as well as the accompanying Supplementary Information. | |||||||||||||||||||||||||||||||||||
“I’m proud of our team’s excellent fourth quarter performance, with 17% sales growth and even stronger EPS growth,” said Mike Baur, Chair and CEO, ScanSource, Inc. “We're also excited about our agreement to acquire MicroAge, which we believe will accelerate growth, expand margins, and adds new services capabilities.”
Quarterly Results
Net sales for the fourth quarter of fiscal year 2026 totaled $953.1 million, an increase of 17.3% year-over-year, or an increase of 16.2% on a non-GAAP basis. Net sales for products and services increased 17.4% year-over-year, and recurring revenue increased 13.5% year-over-year including acquisitions. For Specialty Technology Solutions, fourth quarter net sales of $927.2 million increased 17.6% year-over-year, driven by broad-based growth in North America. Intelisys & Advisory net sales for the fourth quarter increased 7.2% year-over-year to $25.9 million primarily from higher Resourcive sales.
Gross profit for the fourth quarter of fiscal year 2026 increased 14.0% year-over-year to $119.8 million, with a gross profit margin of 12.6% versus 12.9% in the prior-year quarter. For the fourth quarter of fiscal year 2026, the percentage of gross profit from recurring revenue totaled 31.5% comparable to 31.6% for the prior-year period.
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For the fourth quarter of fiscal year 2026, operating income increased to $31.7 million from $26.8 million in the prior-year quarter. Fourth quarter fiscal year 2026 non-GAAP operating income increased to $37.9 million from $31.3 million in the prior-year quarter.
On a GAAP basis, net income for the fourth quarter of fiscal year 2026 increased to $25.6 million, or $1.24 per diluted share, from net income of $20.1 million, or $0.88 per diluted share, for the prior-year quarter. Fourth quarter fiscal year 2026 non-GAAP net income increased to $30.3 million, or $1.46 per diluted share, from $23.3 million, or $1.02 per diluted share, for the prior-year quarter. On a non-GAAP basis, adjusted EBITDA for the fourth quarter of fiscal year 2026 increased to $46.1 million, or 4.84% of net sales, from $38.6 million, or 4.75% of net sales, for the prior-year quarter.
Full-Year Results
For fiscal year 2026, net sales increased 6.1% to $3.23 billion. Net sales for products and services increased 5.9% year-over-year, while recurring revenue increased 10.6% year-over-year including acquisitions. For Specialty Technology Solutions, fiscal year net sales of $3.12 billion increased 6.2% year-over-year, primarily due to growth across most technologies in North America. Intelisys & Advisory net sales for the fiscal year 2026 increased 3.1% year-over-year to $101.1 million reflecting higher Intelisys sales and full-year results for the Resourcive acquisition.
Gross profit for fiscal year 2026 increased 7.0% year-over-year to $437.4 million with a gross profit margin of 13.6%, up from 13.4% in the prior year. The higher gross profit margin reflects a higher contribution of recurring revenue, which is netted-down revenue, in our overall revenue mix and higher vendor program recognition. For fiscal year 2026, the percentage of gross profit from recurring revenue increased to 33.7% from 32.8% for the prior year.
For the fiscal year ended June 30, 2026, operating income increased to $98.6 million from $85.2 million in the prior year. Fiscal year 2026 non-GAAP operating income increased to $119.7 million from $111.3 million in the prior year.
On a GAAP basis, net income for the fiscal year 2026 increased to $78.9 million, or $3.64 per diluted share, compared to net income of $71.5 million, or $3.00 per diluted share, for the prior year. Fiscal year 2026 non-GAAP net income increased to $91.9 million, or $4.24 per diluted share, from $85.1 million, or $3.57 per diluted share, for the prior year. On a non-GAAP basis, adjusted EBITDA for the fiscal year 2026 increased 4.8% to $151.5 million, or 4.70% of net sales, from $144.7 million, or 4.76% of net sales, for the prior year.
Balance Sheet and Cash Flow
As of June 30, 2026, ScanSource had cash and cash equivalents of $88.4 million and total debt of $101.4 million.
For fiscal year 2026, ScanSource generated $123.1 million of operating cash flow and $113.8 million of free cash flow (non-GAAP). ScanSource also had share repurchases of $97.9 million for fiscal year 2026.
Agreement to Acquire MicroAge
In a separate press release issued today, ScanSource announced an agreement to acquire MicroAge, a leading IT solutions integrator, managed services provider (MSP), and digital transformation partner, helping businesses design, implement, secure, manage, and optimize their IT environments. The acquisition is expected to add higher-margin technology solutions capabilities and expand ScanSource’s reach in strategic growth technologies, including cloud, cybersecurity, data center and AI. MicroAge serves a diversified U.S. client base of approximately 2,400 clients and has more than 200 employees. Under the agreement, ScanSource will acquire MicroAge in an all-cash transaction for a purchase price of $220.5 million, payable at closing. The transaction is expected to close in the quarter ending September 30, 2026, subject to regulatory approval and other customary closing conditions.
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Annual Financial Outlook for Fiscal Year 2027
The following guidance is based on ScanSource’s current expectations for the full fiscal year ended June 30, 2027. Fiscal year 2027 guidance excludes the pending acquisition of MicroAge and related purchase accounting impacts.
| FY27 Annual Outlook | ||||||||
| Net sales growth, Y/Y | 6% to 10% | |||||||
| Adjusted EBITDA (non-GAAP) | $158 million to $165 million | |||||||
| Free cash flow (non-GAAP) | At least $85 million | |||||||
Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash shared-based compensation expense. Free cash flow is a non-GAAP measure, which excludes the effect of estimated capital expenditures from estimated operating cash flow. These measures are forward-looking, and actual results may differ materially.
ScanSource believes that a quantitative reconciliation of such forward-looking information to the most directly comparable GAAP financial measures cannot be made without unreasonable efforts, because a reconciliation of these non-GAAP financial measures would require an estimate of future non-operating items such as acquisitions and divestitures, restructuring costs, impairment charges and other unusual or non-recurring items. Neither the timing nor likelihood of these events, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of such forward-looking information to the most directly comparable GAAP financial measures is not provided.
Webcast Details and Earnings Infographic
At approximately 8:45 a.m. ET today, an Earnings Infographic, as a supplement to this press release and the earnings conference call, will be available on ScanSource's website, www.scansource.com (Investor Relations section). ScanSource will present additional information about its financial results and business in a conference call today, August 20, 2026, at 10:30 a.m. ET. A webcast of the call will be available for all interested parties and can be accessed at www.scansource.com (Investor Relations section). The webcast will be available for replay for 60 days.
Safe Harbor Statement
This press release contains “forward-looking” statements, including ScanSource's FY27 annual outlook, which involve risks and uncertainties, many of which are beyond ScanSource's control. No undue reliance should be placed on such statements, as any number of factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, the following factors, which are neither presented in order of importance nor weighted: macroeconomic conditions, including potential prolonged economic weakness, inflation, tariffs and changes in trade policy, the failure to manage and implement ScanSource's growth strategy, the ability for ScanSource to realize the synergies or other benefits from acquisitions, credit risks involving ScanSource's larger channel sales partners and suppliers, changes in interest and exchange rates and regulatory regimes impacting ScanSource's international operations, including new or increased tariffs, risk to the business from a cyberattack, a failure of IT systems, failure to hire and retain quality employees, loss of ScanSource's major channel sales partners, relationships with key suppliers and channel sales partners or a termination or a modification of the terms under which it operates with these key suppliers and channel sales partners, changes in ScanSource's operating strategy, and other factors set forth in the "Risk Factors" contained in ScanSource's annual report on Form 10-K for the year ended June 30, 2026. Except as may be required by law, ScanSource expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or otherwise.
Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles ("GAAP"), ScanSource also discloses certain non-GAAP financial measures, which are summarized below. Non-GAAP financial measures are used to understand and evaluate performance, including comparisons from period to period. Non-GAAP results exclude items such as amortization of intangible assets related to acquisitions, acquisition and divestiture costs, gain/loss on sale of business, and restructuring costs and include other non-GAAP adjustments.
Net sales on a constant currency basis excluding acquisitions and divestitures to calculate organic growth ("non-GAAP net sales"): ScanSource discloses the percentage change in net sales excluding the translation impact from changes in foreign
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currency exchange rates between reporting periods and excluding the net sales from acquisitions and divestitures prior to the first full year from the transaction date. This measure enhances the comparability between periods to help analyze underlying trends on an organic basis.
Adjusted earnings before interest expense, income taxes, depreciation, and amortization (“Adjusted EBITDA”): Adjusted EBITDA starts with net income and adds back interest expense, income tax expense, depreciation expense, amortization of intangible assets, change in fair value of contingent consideration, and other non-GAAP adjustments, including acquisition and divestiture costs, restructuring costs, cyberattack restoration costs, tax recovery, and non-cash share-based compensation expense. Since Adjusted EBITDA excludes some non-cash costs of investing in ScanSource’s business and people, management believes that Adjusted EBITDA shows the profitability from the business operations more clearly. The Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of net sales.
Adjusted return on invested capital ("Adjusted ROIC"): Adjusted ROIC assists management in comparing ScanSource's performance over various reporting periods on a consistent basis because it removes from operating results the impact of items that do not reflect core operating performance. Management believes the calculation of Adjusted ROIC provides useful information to investors and is an additional relevant comparison of its performance. Adjusted ROIC is calculated as Adjusted EBITDA over invested capital. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of Adjusted ROIC provides useful information to investors and is an additional relevant comparison of ScanSource's performance during the year.
Free cash flow: ScanSource presents free cash flow as it is a measure used by management to measure our business. ScanSource believes this measure provides more information regarding liquidity and capital resources. Free cash flow is defined as net cash provided by operating activities less capital expenditures.
Net debt: Net debt includes total balance sheet debt less cash and cash equivalents. ScanSource believes this measure is useful in assessing its borrowing capacity.
Additional Non-GAAP Metrics: To evaluate current period performance on a more consistent basis with prior periods, ScanSource discloses non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income, and non-GAAP diluted earnings per share (non-GAAP diluted EPS). These non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration, acquisition and divestiture costs, restructuring costs, and other non-GAAP adjustments. These metrics include the translation impact of changes in foreign currency exchange rates. Non-GAAP metrics are useful in assessing and understanding ScanSource's performance especially when comparing results with previous periods or forecasting performance for future periods.
These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that ScanSource reports may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP. A reconciliation of ScanSource's non-GAAP financial information to GAAP is set forth in the Supplementary Information (Unaudited) below.
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ: SCSC) is a leading technology distributor uniquely positioned to address complex technologies and to accelerate growth for channel sales partners across hardware, software as a service (SaaS), connectivity and cloud services. ScanSource enables channel sales partners to deliver converging solutions for their end users. ScanSource uses multiple sales models to offer technology solutions from leading suppliers of specialty technologies, connectivity and cloud services. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the 2025 Best Places to Work in South Carolina and on the Fortune World’s Most Admired Companies 2026 list. ScanSource ranks #923 on the Fortune 1000. For more information, visit www.scansource.com.
4
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | |||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | |||||||||||
| (in thousands, except share data) | |||||||||||
| June 30, 2026 * | June 30, 2025 * | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 88,374 | $ | 126,157 | |||||||
Accounts receivable, less allowance of $26,568 at June 30, 2026 and $27,821 at June 30, 2025 | 769,750 | 635,521 | |||||||||
| Inventories | 522,350 | 483,815 | |||||||||
| Prepaid income tax expense | 10,704 | 2,821 | |||||||||
| Prepaid expenses and other current assets | 116,816 | 122,138 | |||||||||
| Total current assets | 1,507,994 | 1,370,452 | |||||||||
| Property and equipment, net | 34,856 | 31,169 | |||||||||
| Goodwill | 244,902 | 230,820 | |||||||||
| Identifiable intangible assets, net | 64,391 | 62,909 | |||||||||
| Deferred income taxes | 10,590 | 18,769 | |||||||||
| Other non-current assets | 69,696 | 71,487 | |||||||||
| Total assets | $ | 1,932,429 | $ | 1,785,606 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 753,275 | $ | 598,595 | |||||||
| Accrued expenses and other current liabilities | 86,538 | 71,263 | |||||||||
| Current portion of contingent consideration | 15,988 | 1,318 | |||||||||
| Income taxes payable | 474 | 3,927 | |||||||||
| Current portion of long-term debt | 2,866 | 7,861 | |||||||||
| Total current liabilities | 859,141 | 682,964 | |||||||||
| Long-term debt, net of current portion | 98,547 | 128,288 | |||||||||
| Long-term portion of contingent consideration | 12,162 | 17,782 | |||||||||
| Other long-term liabilities | 51,787 | 50,163 | |||||||||
| Total liabilities | 1,021,637 | 879,197 | |||||||||
| Commitments and contingencies | |||||||||||
| Shareholders’ equity: | |||||||||||
Preferred stock, no par value; 3,000,000 shares authorized, none issued | — | — | |||||||||
Common stock, no par value; 45,000,000 shares authorized, 20,161,911 and 22,217,421 shares issued and outstanding at June 30, 2026 and June 30, 2025, respectively | — | — | |||||||||
| Retained earnings | 1,018,144 | 1,020,833 | |||||||||
| Accumulated other comprehensive loss | (107,352) | (114,424) | |||||||||
| Total shareholders’ equity | 910,792 | 906,409 | |||||||||
| Total liabilities and shareholders’ equity | $ | 1,932,429 | $ | 1,785,606 | |||||||
| *Derived from audited financial statements. | |||||||||||
5
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | |||||||||||||||||||||||
| Condensed Consolidated Income Statements (Unaudited) | |||||||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||||||
| Quarter ended June 30, | Fiscal Year Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 * | 2025 * | ||||||||||||||||||||
| Net sales | $ | 953,109 | $ | 812,886 | $ | 3,226,062 | $ | 3,040,810 | |||||||||||||||
| Cost of goods sold | 833,260 | 707,784 | 2,788,707 | 2,632,164 | |||||||||||||||||||
| Gross profit | 119,849 | 105,102 | 437,355 | 408,646 | |||||||||||||||||||
| Selling, general and administrative expenses | 81,722 | 71,610 | 313,176 | 286,934 | |||||||||||||||||||
| Depreciation expense | 1,483 | 1,925 | 5,992 | 10,004 | |||||||||||||||||||
| Intangible amortization expense | 4,031 | 4,927 | 16,721 | 19,227 | |||||||||||||||||||
| Restructuring and other charges | 1,766 | — | 1,766 | 5,381 | |||||||||||||||||||
| Change in fair value of contingent consideration | (890) | (147) | 1,073 | 1,900 | |||||||||||||||||||
| Operating income | 31,737 | 26,787 | 98,627 | 85,200 | |||||||||||||||||||
| Interest expense | 1,430 | 2,099 | 6,593 | 8,013 | |||||||||||||||||||
| Interest income | (3,270) | (3,054) | (12,264) | (11,247) | |||||||||||||||||||
| Other expense (income), net | 303 | 245 | 555 | (5,962) | |||||||||||||||||||
| Income before income taxes | 33,274 | 27,497 | 103,743 | 94,396 | |||||||||||||||||||
| Provision for income taxes | 7,656 | 7,408 | 24,870 | 22,848 | |||||||||||||||||||
| Net income | $ | 25,618 | $ | 20,089 | $ | 78,873 | $ | 71,548 | |||||||||||||||
| Per share data: | |||||||||||||||||||||||
| Net income per common share, basic | $ | 1.26 | $ | 0.89 | $ | 3.69 | $ | 3.05 | |||||||||||||||
| Weighted-average shares outstanding, basic | 20,334 | 22,526 | 21,384 | 23,442 | |||||||||||||||||||
| Net income per common share, diluted | $ | 1.24 | $ | 0.88 | $ | 3.64 | $ | 3.00 | |||||||||||||||
| Weighted-average shares outstanding, diluted | 20,710 | 22,858 | 21,692 | 23,839 | |||||||||||||||||||
| *Derived from audited financial statements. | |||||||||||||||||||||||
6
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | |||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||
| (in thousands) | |||||||||||
| Fiscal Year Ended June 30, | |||||||||||
| 2026 * | 2025 * | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 78,873 | $ | 71,548 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 23,633 | 30,195 | |||||||||
| Amortization of debt issue costs | 615 | 386 | |||||||||
| Provision for doubtful accounts | 5,956 | 8,351 | |||||||||
| Share-based compensation | 14,063 | 11,062 | |||||||||
| Deferred income taxes | 4,565 | 1,128 | |||||||||
| Change in fair value of contingent consideration | 1,073 | 1,900 | |||||||||
| Finance lease interest | 49 | 86 | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
| Accounts receivable | (133,226) | (55,011) | |||||||||
| Inventories | (36,659) | 28,874 | |||||||||
| Prepaid expenses and other assets | (1,884) | 7,303 | |||||||||
| Other non-current assets | 2,864 | 3,974 | |||||||||
| Accounts payable | 150,881 | 3,673 | |||||||||
| Accrued expenses and other liabilities | 15,749 | 2,846 | |||||||||
| Income taxes payable | (3,421) | (3,966) | |||||||||
| Net cash provided by operating activities | 123,131 | 112,349 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (9,286) | (8,286) | |||||||||
| Cash paid for business acquisitions, net of cash acquired | (18,220) | (56,673) | |||||||||
| Proceeds from sale of business, net of cash transferred | — | 2,569 | |||||||||
| Net cash used in investing activities | (27,506) | (62,390) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Borrowings on revolving credit | 293,264 | 51,954 | |||||||||
| Repayments on revolving credit | (293,266) | (52,004) | |||||||||
| Borrowings on long-term debt | 100,000 | — | |||||||||
| Repayments on long-term debt | (134,736) | (7,857) | |||||||||
| Repayments on finance lease obligation | (998) | (1,090) | |||||||||
| Debt issuance costs | (1,394) | — | |||||||||
| Contingent consideration payments | (1,375) | — | |||||||||
| Exercise of stock options | 4,959 | 9,511 | |||||||||
| Taxes paid on settlement of equity awards | (3,032) | (4,895) | |||||||||
| Common stock repurchased | (97,900) | (106,524) | |||||||||
| Net cash used in financing activities | (134,478) | (110,905) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,070 | 1,643 | |||||||||
| Decrease in cash and cash equivalents | (37,783) | (59,303) | |||||||||
| Cash and cash equivalents at beginning of period | 126,157 | 185,460 | |||||||||
| Cash and cash equivalents at period end | $ | 88,374 | $ | 126,157 | |||||||
| *Derived from audited financial statements. | |||||||||||
7
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | |||||||||||||||||||||||
| Supplementary Information (Unaudited) | |||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Non-GAAP Financial Information: | |||||||||||||||||||||||
| Quarter ended June 30, | Fiscal year ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Reconciliation of Net Income to Adjusted EBITDA: | |||||||||||||||||||||||
| Net income (GAAP) | $ | 25,618 | $ | 20,089 | $ | 78,873 | $ | 71,548 | |||||||||||||||
| Plus: Interest expense | 1,430 | 2,099 | 6,593 | 8,013 | |||||||||||||||||||
| Plus: Income taxes | 7,656 | 7,408 | 24,870 | 22,848 | |||||||||||||||||||
| Plus: Depreciation and amortization | 5,782 | 7,101 | 23,633 | 30,195 | |||||||||||||||||||
| EBITDA (non-GAAP) | 40,486 | 36,697 | 133,969 | 132,604 | |||||||||||||||||||
| Plus: Change in fair value of contingent consideration | (890) | (147) | 1,073 | 1,900 | |||||||||||||||||||
| Plus: Share-based compensation | 3,572 | 2,673 | 14,063 | 11,062 | |||||||||||||||||||
Plus: Acquisition costs (a) | 270 | 191 | 1,264 | 926 | |||||||||||||||||||
| Plus: Cyberattack restoration costs | 23 | — | 119 | 177 | |||||||||||||||||||
| Plus: Restructuring costs | 1,766 | — | 1,766 | 5,381 | |||||||||||||||||||
| Plus: Legal settlement | 921 | — | 921 | 1,579 | |||||||||||||||||||
| Plus: Tax recovery | — | (470) | (789) | (3,041) | |||||||||||||||||||
| Plus: Insurance recovery, net of payments | — | (305) | (838) | (5,928) | |||||||||||||||||||
| Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) | $ | 46,148 | $ | 38,639 | $ | 151,548 | $ | 144,660 | |||||||||||||||
| Invested Capital Calculations: | |||||||||||||||||||||||
| Equity – beginning of the period | $ | 906,261 | $ | 901,746 | $ | 906,409 | $ | 924,255 | |||||||||||||||
| Equity – end of the period | 910,792 | 906,393 | 910,792 | 906,409 | |||||||||||||||||||
| Plus: Change in fair value of contingent consideration, net | (668) | (110) | 806 | 1,432 | |||||||||||||||||||
| Plus: Share-based compensation, net | 2,674 | 2,007 | 10,530 | 8,310 | |||||||||||||||||||
Plus: Acquisition costs (a) | 270 | 191 | 1,265 | 926 | |||||||||||||||||||
| Plus: Cyberattack restoration costs, net | 17 | — | 89 | 133 | |||||||||||||||||||
| Plus: Restructuring costs, net | 1,326 | — | 1,326 | 4,054 | |||||||||||||||||||
| Plus: Insurance recovery, net | — | (229) | (629) | (4,466) | |||||||||||||||||||
| Plus: Legal settlement, net | 691 | — | 691 | 1,189 | |||||||||||||||||||
| Plus: Tax recovery, net | — | (310) | (2,991) | (4,072) | |||||||||||||||||||
| Average equity | 910,682 | 904,844 | 914,144 | 919,085 | |||||||||||||||||||
Average funded debt (b) | 106,622 | 138,270 | 119,729 | 141,173 | |||||||||||||||||||
| Invested capital (denominator for Adjusted ROIC) (non-GAAP) | $ | 1,017,304 | $ | 1,043,114 | $ | 1,033,873 | $ | 1,060,258 | |||||||||||||||
Adjusted return on invested capital ratio (Adjusted ROIC), annualized (c) | 18.2 | % | 14.9 | % | 14.7 | % | 13.6 | % | |||||||||||||||
| (a) Acquisition costs are generally non-deductible for tax purposes. | |||||||||||||||||||||||
(b) Average funded debt is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt. | |||||||||||||||||||||||
(c) The annualized adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year. There were 91 days each in the current quarter and prior-year quarter. | |||||||||||||||||||||||
8
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | |||||||||||||||||
| Supplementary Information (Unaudited) | |||||||||||||||||
| Net Sales by Segment: | |||||||||||||||||
| Quarter ended June 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| Specialty Technology Solutions: | (in thousands) | ||||||||||||||||
| Net sales, reported | $ | 927,179 | $ | 788,708 | 17.6 | % | |||||||||||
Foreign exchange impact (a) | (5,849) | — | |||||||||||||||
| Less: Acquisitions | (2,396) | — | |||||||||||||||
| Non-GAAP net sales | $ | 918,934 | $ | 788,708 | 16.5 | % | |||||||||||
| Intelisys & Advisory: | |||||||||||||||||
| Net sales, reported | $ | 25,930 | $ | 24,178 | 7.2 | % | |||||||||||
| Consolidated: | |||||||||||||||||
| Net sales, reported | $ | 953,109 | $ | 812,886 | 17.3 | % | |||||||||||
Foreign exchange impact (a) | (5,849) | — | |||||||||||||||
| Less: Acquisitions | (2,396) | — | |||||||||||||||
| Non-GAAP net sales | $ | 944,864 | $ | 812,886 | 16.2 | % | |||||||||||
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended June 30, 2026 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2025. | |||||||||||||||||
| Net Sales by Segment: | |||||||||||||||||
| Fiscal year ended June 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| Specialty Technology Solutions: | (in thousands) | ||||||||||||||||
| Net sales, reported | $ | 3,124,932 | $ | 2,942,717 | 6.2 | % | |||||||||||
Foreign exchange impact (a) | (17,025) | — | |||||||||||||||
| Less: Acquisitions | (14,119) | (3,512) | |||||||||||||||
| Non-GAAP net sales | $ | 3,093,788 | $ | 2,939,205 | 5.3 | % | |||||||||||
| Intelisys & Advisory: | |||||||||||||||||
| Net sales, reported | $ | 101,130 | $ | 98,093 | 3.1 | % | |||||||||||
| Less: Acquisitions | (1,336) | (577) | |||||||||||||||
| Non-GAAP net sales | $ | 99,794 | $ | 97,516 | 2.3 | % | |||||||||||
| Consolidated: | |||||||||||||||||
| Net sales, reported | $ | 3,226,062 | $ | 3,040,810 | 6.1 | % | |||||||||||
Foreign exchange impact (a) | (17,025) | — | |||||||||||||||
| Less: Acquisitions | (15,455) | (4,089) | |||||||||||||||
| Non-GAAP net sales | $ | 3,193,582 | $ | 3,036,721 | 5.2 | % | |||||||||||
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the twelve months ended June 30, 2026 into U.S. dollars using the average foreign exchange rates for the twelve months ended June 30, 2025. | |||||||||||||||||
9
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | |||||||||||||||||
| Supplementary Information (Unaudited) | |||||||||||||||||
| Net Sales by Geography: | |||||||||||||||||
| Quarter ended June 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| United States: | (in thousands) | ||||||||||||||||
Net sales, reported (a) | $ | 899,594 | $ | 744,644 | 20.8 | % | |||||||||||
| Less: Acquisitions | (2,396) | — | |||||||||||||||
| Non-GAAP net sales | $ | 897,198 | $ | 744,644 | 20.5 | % | |||||||||||
| Brazil: | |||||||||||||||||
Net sales, reported (b) | $ | 53,515 | $ | 68,242 | (21.6) | % | |||||||||||
Foreign exchange impact (c) | (5,849) | — | |||||||||||||||
| Non-GAAP net sales | $ | 47,666 | $ | 68,242 | (30.2) | % | |||||||||||
| Consolidated: | |||||||||||||||||
| Net sales, reported | $ | 953,109 | $ | 812,886 | 17.3 | % | |||||||||||
Foreign exchange impact (c) | (5,849) | — | |||||||||||||||
| Less: Acquisitions | (2,396) | — | |||||||||||||||
| Non-GAAP net sales | $ | 944,864 | $ | 812,886 | 16.2 | % | |||||||||||
(a) Includes net sales in Canada that are supported by U.S. operations and represent less than 5% of United States net sales for the quarters ended June 30, 2026 and 2025. | |||||||||||||||||
(b) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.1% of Brazil net sales for the quarters ended June 30, 2026 and 2025. | |||||||||||||||||
(c) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended June 30, 2026 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2025. | |||||||||||||||||
10
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | |||||||||||||||||
| Supplementary Information (Unaudited) | |||||||||||||||||
| Net Sales by Geography: | |||||||||||||||||
| Fiscal year ended June 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| United States: | (in thousands) | ||||||||||||||||
Net sales, reported (a) | $ | 2,999,458 | $ | 2,800,739 | 7.1 | % | |||||||||||
| Less: Acquisitions | (15,455) | (4,089) | |||||||||||||||
| Non-GAAP net sales, excluding acquisitions | $ | 2,984,003 | $ | 2,796,650 | 6.7 | % | |||||||||||
| Brazil: | |||||||||||||||||
Net sales, reported (b) | $ | 226,604 | $ | 240,071 | (5.6) | % | |||||||||||
Foreign exchange impact (b) | (17,025) | — | |||||||||||||||
| Non-GAAP net sales | $ | 209,579 | $ | 240,071 | (12.7) | % | |||||||||||
| Consolidated: | |||||||||||||||||
| Net sales, reported | $ | 3,226,062 | $ | 3,040,810 | 6.1 | % | |||||||||||
Foreign exchange impact (c) | (17,025) | — | |||||||||||||||
| Less: Acquisitions | (15,455) | (4,089) | |||||||||||||||
| Non-GAAP net sales | $ | 3,193,582 | $ | 3,036,721 | 5.2 | % | |||||||||||
(a) Includes net sales in Canada that are supported by U.S. operations and represent less than 5% of United Sates sales for the fiscal years ended June 30, 2026 and 2025. | |||||||||||||||||
(b) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.1% of Brazil net sales for the fiscal years ended June 30, 2026 and 2025. | |||||||||||||||||
(c) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the fiscal year ended June 30, 2026 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2025. | |||||||||||||||||
| Free Cash Flow: | |||||||||||||||||||||||
| Quarter ended June 30, | Fiscal year ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| GAAP operating cash flow | $ | (2,272) | $ | 7,644 | $ | 123,131 | $ | 112,349 | |||||||||||||||
| Less: Capital expenditures | (2,517) | (2,518) | (9,286) | (8,286) | |||||||||||||||||||
| Free cash flow (non-GAAP) | $ | (4,789) | $ | 5,126 | $ | 113,845 | $ | 104,063 | |||||||||||||||
11
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | ||||||||||||||||||||
| Supplementary Information (Unaudited) | ||||||||||||||||||||
| Net Sales by Revenue Type: | ||||||||||||||||||||
| Quarter ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Net sales by product/service: | ||||||||||||||||||||
| Products and services | $ | 911,640 | $ | 776,349 | 17.4 | % | ||||||||||||||
Recurring revenue(a) | 41,469 | 36,537 | 13.5 | % | ||||||||||||||||
| $ | 953,109 | $ | 812,886 | 17.3 | % | |||||||||||||||
| Fiscal year ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Net sales by product/service: | ||||||||||||||||||||
| Products and services | $ | 3,064,853 | $ | 2,895,110 | 5.9 | % | ||||||||||||||
Recurring revenue(a) | 161,209 | 145,700 | 10.6 | % | ||||||||||||||||
| $ | 3,226,062 | $ | 3,040,810 | 6.1 | % | |||||||||||||||
(a) Recurring revenue represents primarily agency commissions, managed connectivity, SaaS, subscriptions, and hardware rentals. | ||||||||||||||||||||
12
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplementary Information (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Other Non-GAAP Financial Information: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP Measure | Intangible amortization expense | Change in fair value of contingent consideration | Acquisition costs (a) | Restructuring costs | Tax recovery | Cyberattack restoration costs | Legal settlement | Insurance recovery | Non-GAAP measure | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SG&A expenses | $ | 81,722 | $ | — | $ | — | $ | (270) | $ | — | $ | — | $ | (23) | $ | (921) | $ | — | $ | 80,508 | ||||||||||||||||||||||||||||||||||||||||||
| Operating income | 31,737 | 4,031 | (890) | 270 | 1,766 | — | 23 | 921 | — | 37,858 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | 33,274 | 4,031 | (890) | 270 | 1,766 | — | 23 | 921 | — | 39,395 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 25,618 | 3,026 | (668) | 270 | 1,326 | — | 17 | 691 | — | 30,280 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 1.24 | $ | 0.15 | $ | (0.03) | $ | 0.01 | $ | 0.06 | $ | — | $ | — | $ | 0.03 | $ | — | $ | 1.46 | ||||||||||||||||||||||||||||||||||||||||||
| Quarter ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP Measure | Intangible amortization expense | Change in fair value of contingent consideration | Acquisition costs (a) | Restructuring costs | Tax recovery | Cyberattack restoration costs | Legal settlement | Insurance recovery | Non-GAAP measure | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SG&A expense | $ | 71,610 | $ | — | $ | — | $ | (191) | $ | — | $ | 470 | $ | — | $ | — | $ | — | $ | 71,889 | ||||||||||||||||||||||||||||||||||||||||||
| Operating income | 26,787 | 4,927 | (147) | 191 | — | (470) | — | — | — | 31,288 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | 27,497 | 4,927 | (147) | 191 | — | (470) | — | — | (305) | 31,693 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 20,089 | 3,691 | (110) | 191 | — | (310) | — | — | (229) | 23,322 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 0.88 | $ | 0.16 | $ | — | $ | 0.01 | $ | — | $ | (0.01) | $ | — | $ | — | $ | (0.01) | $ | 1.02 | ||||||||||||||||||||||||||||||||||||||||||
(a) Acquisition costs are generally nondeductible for tax purposes.
13
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
| ScanSource, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplementary Information (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Other Non-GAAP Financial Information: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP Measure | Intangible amortization expense | Change in fair value of contingent consideration | Acquisition costs (a) | Restructuring costs | Tax recovery | Cyberattack restoration costs | Legal Settlement | Insurance recovery | Non-GAAP measure | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SG&A expenses | $ | 313,176 | $ | — | $ | — | $ | (1,264) | $ | — | $ | 789 | $ | (119) | $ | (921) | $ | — | $ | 311,661 | ||||||||||||||||||||||||||||||||||||||||||
| Operating income | 98,627 | 16,721 | 1,073 | 1,264 | 1,766 | (789) | 119 | 921 | — | 119,702 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | 103,743 | 16,721 | 1,073 | 1,264 | 1,766 | (789) | 119 | 921 | (838) | 123,980 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 78,873 | 12,516 | 806 | 1,264 | 1,326 | (2,991) | 89 | 691 | (629) | 91,945 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 3.64 | $ | 0.58 | $ | 0.04 | $ | 0.06 | $ | 0.06 | $ | (0.14) | $ | — | $ | 0.03 | $ | (0.03) | $ | 4.24 | ||||||||||||||||||||||||||||||||||||||||||
| Year ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP Measure | Intangible amortization expense | Change in fair value of contingent consideration | Acquisition costs (a) | Restructuring costs | Tax recovery | Cyberattack restoration costs | Legal Settlement | Insurance recovery | Non-GAAP measure | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SG&A expense | $ | 286,934 | $ | — | $ | — | $ | (926) | $ | — | $ | 3,041 | $ | (177) | $ | (1,579) | $ | — | $ | 287,293 | ||||||||||||||||||||||||||||||||||||||||||
| Operating income | 85,200 | 19,227 | 1,900 | 926 | 5,381 | (3,041) | 177 | 1,579 | — | 111,349 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | 94,396 | 19,227 | 1,900 | 926 | 5,381 | (3,041) | 177 | 1,579 | (5,928) | 114,617 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 71,548 | 14,400 | 1,432 | 926 | 4,054 | (4,072) | 133 | 1,189 | (4,466) | 85,144 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 3.00 | $ | 0.60 | $ | 0.06 | $ | 0.04 | $ | 0.17 | $ | (0.17) | $ | 0.01 | $ | 0.05 | $ | (0.19) | $ | 3.57 | ||||||||||||||||||||||||||||||||||||||||||
(a) Acquisition costs are generally nondeductible for tax purposes.
14
Fiscal Fourth Quarter and Full Year 2026 Earnings Key Highlights © ScanSource 2026 Consolidated I’m proud of our team’s excellent fourth quarter performance, with 17% sales growth and even stronger EPS growth. We’re also excited about our agreement to acquire MicroAge, which we believe will accelerate growth, expand margins, and add new services capabilities.” Mike Baur Chair and CEO, ScanSource, Inc. Hardware Demand Drove 17% Sales Growth in Q4 Strong Cash Flow; Exceeded FY26 Outlook for All Measures Announces Agreement to Acquire IT Solutions Integrator, MicroAge Net Sales and Gross Profit Growth in Both Segments Specialty Technology Solutions Segment Intelisys & Advisory Segment Net Sales +17% Y/Y $953M Gross Profit +14% Y/Y $120M, 12.6% margin STS, Net Sales +18% Y/Y $927M STS, Gross Profit +16% Y/Y $94M, 10.1% margin I&A, Net Sales +7% Y/Y $26M I&A, Gross Profit +8% Y/Y $26M, 99.3% margin
* Non-GAAP measure For further financial data, non-GAAP financial disclosures and cautionary language regarding forward-looking statements, please refer to the following pages and ScanSource’s fourth quarter fiscal year 2026 news release issued on August 20, 2026, which accompanies this presentation and is available at www.scansource.com in the Investor Relations section [click here]. Fourth Quarter Metrics Reflect Operational Excellence 3-Year Strategic Goals Fiscal Year 2027 Annual Outlook As of August 20, 2026, and excludes the pending acquisition of MicroAge © ScanSource 2026 2 Net Sales Growth, Y/Y 6% to 10% Adjusted EBITDA* $158 million to $165 million Free Cash Flow* At least $85 million Gross Profit Growth CAGR Recurring Revenue GP as % Gross Profit Adjusted EBITDA Margin* Free Cash Flow Conversion as % Non-GAAP Net Income* Adjusted ROIC* 5%-7% Build to 50% ~6% Consistent 80%+ annual basis Mid-Teens $1.24 per share Q4, +41% Y/Y $3.64 per share FY26, +21% Y/Y GAAP Diluted EPS 4.84% Q4 4.70% FY26 Adjusted EBITDA Margin* $123M FY26 Operating Cash Flow $114M FY26 Free Cash Flow* $1.46 per share Q4, +43% Y/Y $4.24 per share FY26, +19% Y/Y Non-GAAP Diluted EPS* Q4 and FY all-time Company record $46.1M Q4, +19% Y/Y $151.5M FY26, +5% Y/Y Adjusted EBITDA* 18.2% Q4, 14.7% FY26 Adjusted ROIC* $98M share repurchases in FY26
Forward-Looking Statements This Earnings Infographic and supporting materials contain “forward-looking” statements, including ScanSource's FY27 annual outlook and mid-term goals, which involve risks and uncertainties, many of which are beyond ScanSource’s control. No undue reliance should be placed on such statements, as any number of factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, the following factors, which are neither presented in order of importance nor weighted: macroeconomic conditions, including potential prolonged economic weakness, inflation, tariffs and changes in trade policy, the failure to manage and implement ScanSource's growth strategy, the ability for ScanSource to realize the synergies or other benefits from acquisitions, credit risks involving ScanSource's larger channel sales partners and suppliers, changes in interest and exchange rates and regulatory regimes impacting ScanSource's international operations, including new or increased tariffs, risk to the business from a cyberattack, a failure of IT systems, failure to hire and retain quality employees, loss of ScanSource's major channel sales partners, relationships with key suppliers and channel sales partners or a termination or a modification of the terms under which it operates with these key suppliers and channel sales partners, changes in ScanSource's operating strategy, and other factors set forth in the "Risk Factors" contained in ScanSource's annual report on Form 10-K for the year ended June 30, 2026, and subsequent reports on Form 10-Q, filed with the Securities and Exchange Commission. Except as may be required by law, ScanSource expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this Earnings Infographic or otherwise. Non-GAAP Financial Information In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”), ScanSource also discloses certain non-GAAP measures, including non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP operating income margin, non-GAAP pre-tax income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, adjusted EBITDA margin, net debt, adjusted ROIC, free cash flow and net sales in constant currency excluding acquisitions (organic growth). A reconciliation of the Company's non-GAAP financial information to GAAP financial information is provided in the following supporting materials and in the Company’s Form 8-K, filed with the SEC, with the quarterly earnings press release for the period indicated. Please see the “Non-GAAP Financial Information” section in the quarterly earnings press release for additional description of ScanSource’s non-GAAP measures. ScanSource discloses forward-looking information that is not presented in accordance with GAAP with respect to adjusted EBITDA, adjusted EBITDA margin, adjusted ROIC, and free cash flow. ScanSource believes that a quantitative reconciliation of such forward-looking information to the most directly comparable GAAP financial measure cannot be made without unreasonable efforts, because a reconciliation of these non-GAAP financial measures would require an estimate of future non-operating items such as acquisitions and divestitures, restructuring costs, impairment charges and other unusual or non-recurring items. Neither the timing nor likelihood of these events, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of such forward- looking information to the most directly comparable GAAP financial measure is not provided. 3
Consolidated, 5-Quarter Financial Summary ($ in thousands, except per share data) Q4 FY26 Q3 FY26 Q2 FY26 Q1 FY26 Q4 FY25 Q/Q Y/Y Select reported GAAP measures: Net sales $ 953,109 $ 766,790 $ 766,512 $ 739,650 $ 812,886 24% 17% Gross profit $ 119,849 $ 107,124 $ 102,910 $ 107,473 $ 105,102 12% 14% Gross profit margin % 12.6 % 14.0 % 13.4 % 14.5 % 12.9 % (140) bp (35) bp SG&A expenses $ 81,722 $ 78,066 $ 78,114 $ 75,275 $ 71,610 5% 14% Operating income $ 31,737 $ 23,120 $ 17,868 $ 25,903 $ 26,787 37% 18% Operating income margin % 3.33 % 3.02 % 2.33 % 3.50 % 3.30 % 32 bp 4 bp Net income $ 25,618 $ 16,885 $ 16,493 $ 19,878 $ 20,089 52% 28% Diluted EPS $ 1.24 $ 0.78 $ 0.75 $ 0.89 $ 0.88 59% 41% Select reported non-GAAP measures: Non-GAAP operating income $ 37,858 $ 27,719 $ 23,219 $ 30,911 $ 31,288 37% 21% Non-GAAP operating income margin % 3.97 % 3.61 % 3.03 % 4.18 % 3.85 % 36 bp 12 bp Non-GAAP net income $ 30,280 $ 20,372 $ 17,611 $ 23,685 $ 23,322 49% 30% Non-GAAP diluted EPS $ 1.46 $ 0.94 $ 0.80 $ 1.06 $ 1.02 55% 43% Adjusted EBITDA (non-GAAP) $ 46,148 $ 35,621 $ 31,193 $ 38,590 $ 38,639 30% 19% Adjusted EBITDA margin % (non-GAAP) 4.84 % 4.65 % 4.07 % 5.22 % 4.75 % 20 bp 9 bp Adjusted ROIC (non-GAAP) 18.2 % 14.3 % 11.9 % 14.6 % 14.9 % 390 bp 330 bp Operating cash flow (QTR) $ (2,272) $ 71,353 $ 30,838 $ 23,211 $ 7,644 Less: Capital expenditures (QTR) $ (2,517) $ (2,399) $ (1,975) $ (2,395) $ (2,517) Free cash flow (QTR) (Non-GAAP) $ (4,789) $ 68,954 $ 28,863 $ 20,816 $ 5,127 Operating cash flow (TTM) $ 123,130 $ 133,046 $ 127,751 $ 90,723 $ 112,342 Less: Capital expenditures (TTM) $ (9,286) $ (9,286) $ (8,307) $ (8,306) $ (8,286) Free cash flow (TTM) (Non-GAAP) $ 113,844 $ 123,760 $ 119,444 $ 82,417 $ 104,056 Note: Margin % reflects measure as a percentage of net sales. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 4 August 20, 2026
Specialty Technology Solutions, 5-Quarter Financial Summary ($ in thousands) Q4 FY26 Q3 FY26 Q2 FY26 Q1 FY26 Q4 FY25 Q/Q Y/Y Net sales $ 927,179 $ 740,765 $ 741,540 $ 715,447 $ 788,708 25% 18% Gross profit $ 94,093 $ 81,421 $ 78,228 $ 83,903 $ 81,187 16% 16% Gross profit margin % 10.1 % 11.0 % 10.5 % 11.7 % 10.3 % (84) bp (15) bp GAAP operating income $ 27,604 $ 15,133 $ 11,001 $ 20,375 $ 20,937 82% 32% GAAP operating income margin % 2.98 % 2.04 % 1.48 % 2.85 % 2.65 % 93 bp 32 bp Add: Intangible amortization expense $ 1,843 $ 1,812 $ 2,097 $ 2,216 $ 2,739 Add: Change in fair value $ (440) $ 410 $ 1,128 $ 145 $ (1,407) Add: Tax recovery(a) $ — $ — $ (789) $ — $ (470) Non-GAAP operating income $ 29,007 $ 17,355 $ 13,437 $ 22,736 $ 21,799 67% 33% Non-GAAP operating income margin % 3.13 % 2.34 % 1.81 % 3.18 % 2.76 % 79 bp 37 bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 27,604 $ 15,133 $ 11,001 $ 20,375 $ 20,937 82% 32% Plus: Depreciation expense 1,695 1,658 1,606 1,753 2,134 Intangible amortization expense 1,843 1,812 2,097 2,216 2,739 Interest income 3,077 2,246 3,132 2,926 2,744 Other income/(expense), net (308) (223) (650) (186) (491) EBITDA (non-GAAP) 33,911 20,626 17,186 27,084 28,063 64% 21% Adjustments: Share-based compensation expense 3,240 3,641 3,347 2,551 2,419 (11)% 34% Change in fair value (440) 410 1,128 145 (1,407) Tax recovery(a) — — (789) — (470) Adjusted EBITDA (non-GAAP) $ 36,711 $ 24,677 $ 20,872 $ 29,780 $ 28,605 49% 28% Adjusted EBITDA margin % (non-GAAP) 3.96 % 3.33 % 2.81 % 4.16 % 3.63 % 63 bp 33 bp (a) Recovery of prior period indirect taxes in Brazil ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 5 August 20, 2026
Intelisys & Advisory, 5-Quarter Financial Summary ($ in thousands) Q4 FY26 Q3 FY26 Q2 FY26 Q1 FY26 Q4 FY25 Q/Q Y/Y Net sales $ 25,930 $ 26,025 $ 24,972 $ 24,203 $ 24,178 —% 7% Gross profit $ 25,756 $ 25,703 $ 24,682 $ 23,570 $ 23,915 —% 8% Gross profit margin % 99.3 % 98.8 % 98.8 % 97.4 % 98.9 % 50 bp 40 bp GAAP operating income $ 7,106 $ 8,145 $ 7,513 $ 5,818 $ 6,041 (13)% 18% GAAP operating income margin % 27.40 % 31.30 % 30.09 % 24.04 % 24.99 % (390) bp 241 bp Add: Intangible amortization expense $ 2,188 $ 2,188 $ 2,188 $ 2,188 $ 2,188 Add: Change in fair value $ (450) $ 30 $ 81 $ 169 $ 1,260 Non-GAAP operating income $ 8,844 $ 10,363 $ 9,782 $ 8,175 $ 9,489 (15)% (7)% Non-GAAP operating income margin % 34.11 % 39.82 % 39.17 % 33.78 % 39.25 % (571) bp (514) bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 7,106 $ 8,145 $ 7,513 $ 5,818 $ 6,041 (13)% 18% Plus: Depreciation expense 56 55 47 42 40 Intangible amortization expense 2,188 2,188 2,188 2,188 2,188 Interest income 193 206 231 255 310 Other income/(expense), net 12 6 (51) 13 (59) EBITDA (non-GAAP) 9,555 10,600 9,928 8,316 8,520 (10)% 12% Adjustments: Share-based compensation expense 332 314 312 325 254 Change in fair value (450) 30 81 169 1,260 Adjusted EBITDA (non-GAAP) $ 9,437 $ 10,944 $ 10,321 $ 8,810 $ 10,034 (14)% (6)% Adjusted EBITDA margin % (non-GAAP) 36.39 % 42.05 % 41.33 % 36.40 % 41.50 % (566) bp (511) bp ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 6 August 20, 2026
Net Sales, Constant Currency Excluding Acquisitions (Organic Growth) - QTR ($ in thousands) Net Sales by Segment: Q4 FY26 Q4 FY25 % Change Specialty Technology Solutions: Net sales, as reported $ 927,179 $ 788,708 17.6 % Foreign exchange impact (a) (5,849) — Less: Acquisitions (2,396) — Non-GAAP net sales $ 918,934 $ 788,708 16.5 % Intelisys & Advisory: Non-GAAP net sales $ 25,930 $ 24,178 7.2 % Consolidated: Net sales, as reported $ 953,109 $ 812,886 17.3 % Foreign exchange impact (a) (5,849) — Less: Acquisitions (2,396) — Non-GAAP net sales $ 944,864 $ 812,886 16.2 % Net Sales by Geography: Q4 FY26 Q4 FY25 % Change United States: Net sales, as reported (b) $ 899,594 $ 744,644 20.8 % Less: Acquisitions (2,396) — Non-GAAP net sales $ 897,198 $ 744,644 20.5 % Brazil: Net sales, as reported (c) $ 53,515 $ 68,242 (21.6) % Foreign exchange impact (a) (5,849) — Non-GAAP net sales $ 47,666 $ 68,242 (30.2) % Consolidated: Net sales, as reported $ 953,109 $ 812,886 17.3 % Foreign exchange impact (a) (5,849) — Less: Acquisitions (2,396) — Non-GAAP net sales $ 944,864 $ 812,886 16.2 % (a) Year-over-year sales growth excluding the translation impact of changes in foreign currency rates. Calculated by translating net sales for the quarter ended June 30, 2026 into U.S. dollars using the weighted-average foreign exchange rates for the quarter ended June 30, 2025. (b) Includes net sales in Canada that are supported by U.S. operations and represent less than 5% of United States net sales for the quarters ended June 30, 2026 and 2025. (c) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.1% of Brazil net sales for the quarters ended June 30, 2026 and 2025. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 7 August 20, 2026
Net Sales, Constant Currency Excluding Acquisitions and Divestitures (Organic Growth) - FY ($ in thousands) Net Sales by Segment: Fiscal year ended June 30, 2026 2025 % Change Specialty Technology Solutions: Net sales, as reported $ 3,124,932 $ 2,942,717 6.2 % Foreign exchange impact (a) (17,025) — Less: Acquisitions (14,119) (3,512) Non-GAAP net sales $ 3,093,788 $ 2,939,205 5.3 % Intelisys & Advisory Net sales, as reported $ 101,130 $ 98,093 3.1 % Less: Acquisitions (1,336) (577) Non-GAAP net sales $ 99,794 $ 97,516 2.3 % Consolidated: Net sales, as reported $ 3,226,062 $ 3,040,810 6.1 % Foreign exchange impact (a) (17,025) — Less: Acquisitions (15,455) (4,089) Non-GAAP net sales $ 3,193,582 $ 3,036,721 5.2 % Net Sales by Geography: Fiscal year ended June 30, 2026 2025 % Change United States: Net sales, as reported (b) $ 2,999,458 $ 2,800,739 7.1 % Less: Acquisitions (15,455) (4,089) Non-GAAP net sales $ 2,984,003 $ 2,796,650 6.7 % Brazil: Net sales, as reported $ 226,604 $ 240,071 (5.6) % Foreign exchange impact (a) (17,025) — Non-GAAP net sales $ 209,579 $ 240,071 (12.7) % Consolidated: Net sales, as reported (c) $ 3,226,062 $ 3,040,810 6.1 % Foreign exchange impact (a) (17,025) — Less: Acquisitions (15,455) (4,089) Non-GAAP net sales $ 3,193,582 $ 3,036,721 5.2 % (a) Year-over-year sales growth excluding the translation impact of changes in foreign currency rates. Calculated by translating net sales for the fiscal year ended June 30, 2026 into U.S. dollars using the weighted-average foreign exchange rates for the fiscal year ended June 30, 2025. (b) Includes net sales in Canada that are supported by U.S. operations and represent less than 5% of United States net sales for the quarters ended June 30, 2026 and 2025. (c) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.1% of Brazil net sales for the quarters ended June 30, 2026 and 2025. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 8 August 20, 2026
Recurring Revenue Gross Profit as a % of Gross Profit - QTR ($ in thousands) Q4 FY26 Q3 FY26 Q2 FY26 Q1 FY26 Q4 FY25 Q/Q Y/Y Net sales by product/services: Products and services $ 911,568 $ 725,739 $ 724,489 $ 702,984 $ 776,349 25.6 % 17.4 % Recurring revenue (a) 41,541 41,051 42,023 36,666 36,537 1.2 % 13.7 % Consolidated $ 953,109 $ 766,790 $ 766,512 $ 739,650 $ 812,886 24.3 % 17.3 % Recurring revenue by segment: Specialty Technology Solutions $ 16,600 $ 16,018 $ 18,152 $ 13,816 $ 12,341 3.6 % 34.5 % Intelisys & Advisory 24,941 25,033 23,871 22,850 24,196 (0.4) % 3.1 % Consolidated $ 41,541 $ 41,051 $ 42,023 $ 36,666 $ 36,537 1.2 % 13.7 % Recurring revenue gross profit by segment: Specialty Technology Solutions $ 12,753 $ 12,146 $ 14,373 $ 11,232 $ 8,979 5.0 % 42.0 % Intelisys & Advisory 24,941 25,033 23,871 22,850 24,196 (0.4) % 3.1 % Consolidated $ 37,694 $ 37,179 $ 38,244 $ 34,082 $ 33,175 1.4 % 13.6 % Gross profit by segment: Specialty Technology Solutions $ 94,093 $ 81,421 $ 78,228 $ 83,903 $ 81,187 15.6 % 15.9 % Intelisys & Advisory 25,756 25,703 24,682 23,570 23,915 0.2 % 7.7 % Consolidated $ 119,849 $ 107,124 $ 102,910 $ 107,473 $ 105,102 11.9 % 14.0 % Recurring revenue gross profit as % of gross profit: Specialty Technology Solutions 13.6 % 14.9 % 18.4 % 13.4 % 11.1 % Intelisys & Advisory 96.8 % 97.4 % 96.7 % 96.9 % 101.2 % Consolidated 31.5 % 34.7 % 37.2 % 31.7 % 31.6 % (a) Recurring revenue represents revenue primarily agency commissions, managed connectivity, SaaS, subscription, and hardware rentals. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 9 August 20, 2026
Recurring Revenue Gross Profit as a % of Gross Profit - FY ($ in thousands) FY 26 FY 25 $ Change % Change Net sales by product/services: Products and services $ 3,064,853 $ 2,895,110 $ 169,743 5.9 % Recurring revenue (a) 161,209 145,700 15,509 10.6 % Consolidated $ 3,226,062 $ 3,040,810 $ 185,252 6.1 % Recurring revenue by segment: Specialty Technology Solutions $ 64,515 $ 50,674 $ 13,841 27.3 % Intelisys & Advisory 96,694 95,026 1,668 1.8 % Consolidated $ 161,209 $ 145,700 $ 15,509 10.6 % Recurring revenue gross profit by segment: Specialty Technology Solutions $ 50,505 $ 39,037 $ 11,468 29.4 % Intelisys & Advisory 96,694 95,026 1,668 1.8 % Consolidated $ 147,199 $ 134,063 $ 13,136 9.8 % Gross profit by segment: Specialty Technology Solutions $ 337,644 $ 311,402 $ 26,242 8.4 % Intelisys & Advisory 99,711 97,244 2,467 2.5 % Consolidated $ 437,355 $ 408,646 $ 28,709 7.0 % Recurring revenue gross profit as % of gross profit: Specialty Technology Solutions 15.0 % 12.5 % Intelisys & Advisory 97.0 % 97.7 % Consolidated 33.7 % 32.8 % (a) Recurring revenue represents primarily agency commissions, managed connectivity, SaaS, subscription, and hardware rentals. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 10 August 20, 2026
Average Adjusted Return on Invested Capital - QTR ($ in thousands) Q4 FY26 Q3 FY26 Q2 FY26 Q1 FY26 Q4 FY25 Reconciliation of Net Income to Adjusted EBITDA Net income - GAAP $ 25,618 $ 16,885 $ 16,493 $ 19,878 $ 20,089 Plus: Interest expense 1,430 1,303 1,946 1,914 2,099 Income taxes 7,656 7,167 2,928 7,118 7,408 Depreciation and amortization 5,782 5,713 5,938 6,200 7,101 EBITDA (non-GAAP) 40,486 31,068 27,305 35,110 36,697 Adjustments: Change in fair value of contingent consideration (890) 440 1,209 314 (147) Share-based compensation 3,572 3,955 3,660 2,876 2,673 Tax recovery (a) — — (789) — (470) Acquisition costs 270 142 593 261 191 Restructuring costs 1,766 — — — — Cyberattack restoration costs 23 16 53 29 — Insurance recovery, net of payments — — (838) — (305) Legal settlement 921 — — — — Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) $ 46,148 $ 35,621 $ 31,193 $ 38,590 $ 38,639 Invested Capital Calculation Equity - beginning of quarter $ 906,261 $ 910,886 $ 914,032 $ 906,393 $ 901,746 Equity - end of quarter 910,792 906,261 910,886 914,032 906,393 Adjustments: Change in fair value of contingent consideration, net (668) 330 907 236 (110) Share-based compensation, net 2,674 2,963 2,741 2,152 2,007 Tax recovery, net — — (2,991) — (310) Acquisition costs 270 141 593 261 191 Restructuring costs, net 1,326 — — — — Cyberattack restoration costs, net 17 12 39 21 — Insurance recovery, net — — (629) — (229) Legal settlement, net 691 — — — — Average equity 910,682 910,297 912,789 911,548 904,844 Average funded debt (b) 106,622 103,210 131,470 137,113 138,270 Invested capital (denominator for Adjusted ROIC) (non-GAAP) $ 1,017,304 $ 1,013,507 $ 1,044,259 $ 1,048,661 $ 1,043,114 Adjusted return on invested capital (ROIC), annualized (c) 18.2 % 14.3 % 11.9 % 14.6 % 14.9 % (a) Recovery of prior period indirect taxes in Brazil. (b) Average funded debt is calculated as the daily average amounts outstanding on our short-term and long-term interest-bearing debt. (c) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA) with other non-GAAP adjustments (Adjusted EBITDA), annualized, divided by invested capital for the period. The annualized Adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for a leap year. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 11 August 20, 2026
Average Adjusted Return on Invested Capital - FY ($ in thousands) Fiscal Year Ended June 30, 2026 2025 Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations - GAAP $ 78,873 $ 71,548 Plus: Interest expense 6,593 8,013 Income taxes 24,870 22,848 Depreciation and amortization 23,633 30,195 EBITDA (non-GAAP) 133,969 132,604 Adjustments: Change in fair value of contingent consideration 1,073 1,900 Share-based compensation 14,063 11,062 Tax recovery (a) (789) (3,041) Acquisition and divestiture costs 1,264 926 Restructuring costs 1,766 5,381 Cyberattack restoration costs 119 177 Insurance recovery, net of payments (838) (5,928) Legal settlement 921 1,579 Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) $ 151,548 $ 144,660 Invested Capital Calculation Equity - beginning of year 906,409 924,255 Equity - end of year 910,792 906,409 Adjustments: Change in fair value of contingent consideration, net 806 1,432 Share-based compensation, net 10,530 8,310 Tax recovery, net (2,991) (4,072) Acquisition and divestiture costs 1,265 926 Restructuring costs, net 1,326 4,054 Cyberattack restoration costs, net 89 133 Insurance recovery, net (629) (4,466) Legal settlement, net 691 1,189 Average equity 914,144 919,085 Average funded debt (b) 119,729 141,173 Invested capital (denominator for Adjusted ROIC) (non-GAAP) $ 1,033,873 $ 1,060,258 Adjusted return on invested capital (ROIC), annualized (c) 14.7 % 13.6 % (a) Recovery of prior period indirect taxes in Brazil (b) Average funded debt is calculated as the daily average amounts outstanding on our short-term and long-term interest-bearing debt. (c) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA) with other non-GAAP adjustments (Adjusted EBITDA) divided by invested capital for the period. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 12 August 20, 2026
Net Debt and Adjusted EBITDA Metrics ($ in thousands) Q4 FY26 Q3 FY26 Q2 FY26 Q1 FY26 Q4 FY25 Consolidated debt (Q/E) $ 101,413 $ 102,038 $ 102,663 $ 133,913 $ 136,149 Less: Cash and cash equivalents of continuing operations (Q/E) (88,374) (120,295) (83,466) (124,924) (126,157) Net debt (Q/E) (non-GAAP) $ 13,039 $ (18,257) $ 19,197 $ 8,989 $ 9,992 Reconciliation of Net Income to Adjusted EBITDA Net income - GAAP $ 25,618 $ 16,885 $ 16,493 $ 19,878 $ 20,089 Plus: Interest expense 1,430 1,303 1,946 1,914 2,099 Income taxes 7,656 7,167 2,928 7,118 7,408 Depreciation and amortization 5,782 5,713 5,938 6,200 7,101 EBITDA (non-GAAP) 40,486 31,068 27,305 35,110 36,697 Adjustments: Change in fair value of contingent consideration (890) 440 1,209 314 (147) Share-based compensation 3,572 3,955 3,660 2,876 2,673 Tax recovery (a) — — (789) — (470) Acquisition costs 270 142 593 261 191 Restructuring costs 1,766 — — — — Cyberattack restoration costs 23 16 53 29 — Insurance recovery, net of payments — — (838) — (305) Legal settlement 921 — — — — Adjusted EBITDA (non-GAAP) $ 46,148 $ 35,621 $ 31,193 $ 38,590 $ 38,639 Adjusted EBITDA, TTM (non-GAAP) (b) $ 151,552 Net Debt / Adjusted EBITDA, TTM (non-GAAP) 0.1 x (a) Recovery of prior period indirect taxes in Brazil (b) Adjusted EBITDA for the trailing 12-month period ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 13 August 20, 2026
Working Capital, 5-Quarter Summary ($ in thousands) Q4 FY26 Q3 FY26 Q2 FY26 Q1 FY26 Q4 FY25 Accounts receivable (Q/E) $ 769,750 $ 628,442 $ 605,411 $ 557,071 $ 635,521 Days sales outstanding in receivables 73 74 71 68 70 Inventory (Q/E) $ 522,350 $ 486,628 $ 490,259 $ 505,339 $ 483,815 Inventory turns 6.6 5.4 5.3 5.1 5.9 Accounts payable (Q/E) $ 753,275 $ 646,650 $ 576,662 $ 529,578 $ 598,595 Paid for inventory days (a) (12.0) (6.6) 3.1 12.4 (1.1) Working capital (Q/E) (AR+INV-AP) $ 538,825 $ 468,420 $ 519,008 $ 532,832 $ 520,741 Cash conversion cycle 61 67 74 80 69 (a) Paid for inventory days represent Q/E inventory days less Q/E accounts payable days. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 14 August 20, 2026
Operating Income, Net Income, EPS & Other - QTR ($ in thousands, except for share data) Quarter ended June 30, 2026 Reported GAAP measure Intangible amortization expense Acquisition costs (a) Restructuring costs Change in fair value of contingent consideration Cyberattack restoration costs Legal settlement Non-GAAP measure SG&A expenses $ 81,722 $ — $ (270) $ — $ — $ (23) $ (921) $ 80,508 Operating income 31,737 4,031 270 1,766 (890) 23 921 37,858 Pre-tax income 33,274 4,031 270 1,766 (890) 23 921 39,395 Net income 25,618 3,026 270 1,326 (668) 17 691 30,280 Diluted EPS $ 1.24 $ 0.15 $ 0.01 $ 0.06 $ (0.03) $ — $ 0.03 $ 1.46 Quarter ended March 31, 2026 Reported GAAP measure Intangible amortization expense Acquisition costs (a) Restructuring costs Change in fair value of contingent consideration Cyberattack restoration costs Legal settlement Non-GAAP measure SG&A expenses $ 78,066 $ — $ (142) $ — $ — $ (16) $ — $ 77,908 Operating income 23,120 4,001 142 — 440 16 — 27,719 Pre-tax income 24,052 4,001 142 — 440 16 — 28,651 Net income 16,885 3,003 142 — 330 12 — 20,372 Diluted EPS $ 0.78 $ 0.14 $ 0.01 $ — $ 0.02 $ — $ — $ 0.94 (a) Acquisition costs are generally nondeductible for tax purposes. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 15 August 20, 2026
Operating Income, Net Income, EPS & Other - QTR, continued ($ in thousands, except for share data) Quarter ended December 31, 2025 Reported GAAP measure Intangible amortization expense Acquisition costs (a) Change in fair value of contingent consideration Tax recovery Cyberattack restoration costs Insurance recovery Non-GAAP measure SG&A expenses $ 78,114 $ — $ (593) $ — $ 789 $ (53) $ — $ 78,257 Operating income 17,868 4,285 593 1,209 (789) 53 — 23,219 Pre-tax income 19,421 4,285 593 1,209 (789) 53 (838) 23,934 Net income 16,493 3,199 593 907 (2,991) 39 (629) 17,611 Diluted EPS $ 0.75 $ 0.14 $ 0.03 $ 0.04 $ (0.14) $ — $ (0.03) $ 0.80 Quarter ended September 30, 2025 Reported GAAP measure Intangible amortization expense Acquisition costs (a) Change in fair value of contingent consideration Tax recovery Cyberattack restoration costs Insurance recovery Non-GAAP measure SG&A expenses $ 75,275 $ — $ (261) $ — $ — $ (29) $ — $ 74,985 Operating income 25,903 4,404 261 314 — 29 — 30,911 Pre-tax income 26,996 4,404 261 314 — 29 — 32,004 Net income 19,878 3,289 261 236 — 21 — 23,685 Diluted EPS $ 0.89 $ 0.15 $ 0.01 $ 0.01 $ — $ — $ — $ 1.06 (a) Acquisition costs are generally nondeductible for tax purposes. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 16 August 20, 2026
Operating Income, Net Income, EPS & Other - QTR, continued ($ in thousands, except for share data) Quarter ended June 30, 2025 Reported GAAP measure Intangible amortization expense Acquisition costs (a) Change in fair value of contingent consideration Tax recovery Cyberattack restoration costs Insurance recovery Non-GAAP measure SG&A expenses $ 71,610 $ — $ (191) $ — $ 470 $ — $ — $ 71,889 Operating income 26,787 4,927 191 (147) (470) — — 31,288 Pre-tax income 27,497 4,927 191 (147) (470) — (305) 31,693 Net income 20,089 3,691 191 (110) (310) — (229) 23,322 Diluted EPS $ 0.88 $ 0.16 $ 0.01 $ — $ (0.01) $ — $ (0.01) $ 1.02 (a) Acquisition costs are generally nondeductible for tax purposes. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 17 August 20, 2026
Operating Income, Net Income, EPS & Other - FY ($ in thousands, except for share data) Year ended June 30, 2026 Reported GAAP measure Intangible amortization expense Change in fair value of contingent consideration Acquisition costs (a) Restructuring costs Tax recovery Cyberattack restoration costs Legal Settlement Insurance Recovery Non-GAAP measure SG&A expenses $ 313,176 $ — $ — $ (1,264) $ — $ 789 $ (119) $ (921) $ — $ 311,661 Operating income 98,627 16,721 1,073 1,264 1,766 (789) 119 921 — 119,702 Pre-tax income 103,743 16,721 1,073 1,264 1,766 (789) 119 921 (838) 123,980 Net income 78,873 12,516 806 1,264 1,326 (2,991) 89 691 (629) 91,945 Diluted EPS $ 3.64 $ 0.58 $ 0.04 $ 0.06 $ 0.06 $ (0.14) $ — $ 0.03 $ (0.03) $ 4.24 Year ended June 30, 2025 Reported GAAP measure Intangible amortization expense Change in fair value of contingent consideration Acquisition costs (a) Restructuring costs Tax recovery Cyberattack restoration costs Legal Settlement Insurance Recovery Non-GAAP measure SG&A expenses $ 286,934 $ — $ — $ (926) $ — $ 3,041 $ (177) $ (1,579) $ — $ 287,293 Operating income 85,200 19,227 1,900 926 5,381 (3,041) 177 1,579 — 111,349 Pre-tax income 94,396 19,227 1,900 926 5,381 (3,041) 177 1,579 (5,928) 114,617 Net income 71,548 14,400 1,432 926 4,054 (4,072) 133 1,189 (4,466) 85,144 Diluted EPS $ 3.00 $ 0.60 $ 0.06 $ 0.04 $ 0.17 $ (0.17) $ 0.01 $ 0.05 $ (0.19) $ 3.57 (a) Acquisition costs are generally nondeductible for tax purposes. ScanSource, Inc. Earnings Infographic Q4 FY2026 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 18 August 20, 2026
 | Exhibit 99.3 | |||||||
For Release:
August 20, 2026
ScanSource to Acquire MicroAge, a Leading IT Solutions Integrator
Adds higher-margin capabilities and expands ScanSource’s reach in strategic growth technologies, including cloud, cybersecurity, data center, and AI
GREENVILLE, SC —ScanSource, Inc. (NASDAQ: SCSC), a leading technology distributor uniquely positioned to address complex technologies, today announced a definitive agreement to acquire MicroAge. MicroAge is a leading IT solutions integrator, managed services provider (MSP), and digital transformation partner, helping businesses design, implement, secure, manage, and optimize their IT environments. The acquisition strengthens ScanSource’s reach into strategic growth technologies. MicroAge is expected to accelerate ScanSource’s revenue growth and margin expansion opportunities.
MicroAge serves a diversified U.S. client base of approximately 2,400 clients and has more than 200 associates. MicroAge brings deep customer relationships, a highly certified team of specialized solutions architects, and established partnerships with leading suppliers including Microsoft, Dell, Sophos, HPE, CrowdStrike, and VMware. MicroAge’s professional services and MSP offerings are available to support channel partners in unlocking new growth opportunities.
“MicroAge is an amazing, legendary company that has had tremendous brand recognition for more than 50 years,” said Mike Baur, Chair and CEO, ScanSource, Inc. “The acquisition expands ScanSource’s total addressable market, adds new services capabilities, and provides greater visibility into end-user needs.”
“We are proud of what the MicroAge team has built, and we see ScanSource as the right partner for our next phase of growth,” said Larry Gentry, CEO of MicroAge. “With ScanSource’s greater reach, resources, and channel expertise, we will be better positioned to scale our services-led model in high-growth markets, while continuing to deliver the customer-first experience that has defined MicroAge.”
Under the agreement, ScanSource will acquire MicroAge in an all-cash transaction for a purchase price of $220.5 million, payable at closing. ScanSource expects to fund the acquisition through borrowings under its existing credit facility. The transaction is expected to be accretive to gross profit margin, adjusted EBITDA margin, and non-GAAP EPS in the first year following close, and is also expected to be free cash flow positive for ScanSource. The acquisition is
expected to close in the quarter ending September 30, 2026, subject to regulatory approval and other customary closing conditions.
The acquisition brings together two “best places to work” with similar values, strong cultural fit, and a shared commitment to long-term customer relationships and exceptional customer experience. MicroAge has been recognized as one of the industry’s top performers on multiple CRN lists, including the Solution Provider 500, MSP 500, Tech Elite 250, and Fast Growth 150 lists.
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ: SCSC) is a leading technology distributor uniquely positioned to address complex technologies and to accelerate growth for channel sales partners across hardware, software as a service (SaaS), connectivity and cloud services. ScanSource enables channel sales partners to deliver converging solutions for their end users. ScanSource uses multiple sales models to offer technology solutions from leading suppliers of specialty technologies, connectivity and cloud services. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the 2025 Best Places to Work in South Carolina and on the Fortune World’s Most Admired Companies 2026 List. ScanSource ranks #923 on the Fortune 1000. For more information, visit www.scansource.com.
About MicroAge
MicroAge is an award-winning full-service solutions integrator. For 50 years, MicroAge has empowered businesses to advance, secure, accelerate, and transform—moving quickly with technology changes across the channel to drive business forward. Our elite, highly certified team of specialized consultants brings unique expertise to our clients in cybersecurity, data intelligence, technology implementations, managed IT services, and more. Visit www.microage.com to learn more.
Forward-Looking Statements
This press release contains, or may be deemed to contain, “forward-looking statements” (as defined in the U.S. Private Securities Litigation Reform Act of 1995, as amended). These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include the risks and uncertainties inherent in the transactions contemplated by the MicroAge Purchase Agreement and in the Company’s business, including, without limitation: the occurrence of any event, change or other circumstances that could give rise to the termination of the MicroAge Purchase
Agreement; the risk that the conditions to the closing are not satisfied; and the risk that the Acquisition will not be consummated within the expected time period or at all. Other important factors that could cause actual results to differ materially from the Company’s expectations are set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026. In light of these risks, uncertainties, and other factors, the forward-looking statements might not prove to be accurate and you should not place undue reliance upon them. All forward-looking statements speak only as of the date made and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.