throbber
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`SOROC TECHNOLOGY HOLDINGS,
`LLC,
`
` Plaintiff,
`
`v.
`
`MAINONE TECHNOLOGY SOLUTIONS,
`LLC, SRCONE, LLC, OAK LANE
`PARTNERS, LLC, BHAVIN SHAH,
`MICHAEL P. HORNE, THOMAS
`DARLING, MARGARET HUGHES, and
`ABEL GONSALVES,
`
` Defendants.
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`C.A. No. 2024-____________
`
`PUBLIC VERSION FILED -
`FEBRUARY 15, 2024
`
`VERIFIED COMPLAINT
`Plaintiff Soroc Technology Holdings, LLC (“Soroc”), by and through its
`
`undersigned attorneys, files this Verified Complaint against MainOne Technology
`
`Solutions, LLC (“MainOne”), SrcOne, LLC (“SrcOne”), Oak Lane Partners, LLC
`
`(“OLP”), Bhavin Shah, Michael P. Horne, Thomas Darling, Margaret Hughes, and
`
`Abel Gonsalves.
`
`NATURE OF THE ACTION
`This case is about a brazen accounting fraud, perpetrated by Bhavin
`
`1.
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`Shah and a handful of senior finance and accounting managers who reported to him.
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`Relying on fake invoices for fake customers, they falsely inflated the revenues and
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`EBITDA of DecisionOne Corporation (“DecisionOne”), a portfolio company Shah
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`1
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`EFiled: Feb 15 2024 06:29PM EST
`Transaction ID 72057931
`Case No. 2024-0126-
`
`

`

`owned via his private equity firm, OLP. They sold DecisionOne to the plaintiff,
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`Soroc, for $115 million, on the basis of these fraudulent financial representations,
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`even though Shah and his team knew these numbers were false and misleading.
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`They did so in order for Shah to obtain a massive payout of $90 million for himself,
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`selling a company that they claimed was generating $14 million in profits a year
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`when, in reality, they knew it could barely afford to pay its electricity bill. Because
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`Soroc never would have purchased DecisionOne had it known the truth, it seeks
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`rescissory damages to hold Defendants accountable for their fraudulent conduct and
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`to properly restore Soroc to its position before the fraud occurred.
`
`2.
`
`In January 2022, following several months of diligence, Soroc bought
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`DecisionOne, a full-service information technology support company, from
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`MainOne and its affiliate SrcOne LLC, portfolio companies owned and managed by
`
`Shah and his investment firm, OLP. The sale was executed pursuant to a Securities
`
`Purchase Agreement (“SPA”). Under the SPA, MainOne represented that
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`DecisionOne’s financial statements from fiscal years 2019 through 2021 and the six-
`
`month period thereafter were accurate, complete, and compliant with U.S. Generally
`
`Accepted Accounting Principles (“GAAP”).
`
`3.
`
`These financials told a story of a fiscally healthy, profitable enterprise,
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`representing that DecisionOne had seen roughly $14 million in EBITDA for the
`
`twelve-month period ending in September 2021. DecisionOne’s consistently strong
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`2
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`financial results supported a valuation of $115 million, based on an approximately
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`8x multiple.
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`4.
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`But the rosy financial picture that Shah painted, through MainOne and
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`OLP, proved to be a house of cards that collapsed immediately following the close
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`of the transaction. Far from being a stable business, DecisionOne began reporting
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`negative EBITDA within a month of changing ownership.
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`5.
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`The truth was that Defendants had knowingly, improperly, and
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`fraudulently inflated DecisionOne’s revenue in the months preceding the
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`transaction, in service of improving DecisionOne’s prospects as a potential
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`acquisition target.
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`6.
`
`The principal architect of this scheme, Bhavin Shah, is the founder and
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`Managing Partner of Oak Lane Partners, a Florida-based private equity firm. Upon
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`information and belief, most of the capital that OLP manages is Shah’s own personal
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`investment capital. Shah, together with OLP employees Michael Horne, Thomas
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`Darling, Margaret Hughes, and Abel Gonsalves, even went as far as to manufacture
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`fictitious invoices for fake “customers” to falsely inflate the revenues and EBITDA
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`of DecisionOne. In reality, DecisionOne never performed the work that these
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`customers were supposedly charged for, nor did the customers ever actually pay for
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`that supposed work.
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`7.
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`To perpetrate this fraud, Defendants used a network of portfolio
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`companies that Shah and OLP owned and controlled. Atop Shah’s pyramid sat OLP,
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`which owned MainOne. MainOne in turn controlled DecisionOne and another
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`subsidiary, MainTech Inc. (“MainTech”). Beyond the entities within the MainOne
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`family, OLP also owned a fleet of other companies, including StorageTech Holdings
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`Inc. (“StorageTech”), which Defendants also used to perpetrate the fraud.
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`8.
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`Shah and OLP controlled the financial reporting process for these
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`portfolio companies. OLP housed an all-purpose finance and accounting team—
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`which performed the financial reporting function for all of OLP’s portfolio
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`companies, including DecisionOne. That finance team treated these portfolio
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`companies with porous boundaries: DecisionOne’s financials consisted of irregular,
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`circuitous and unexplained monetary transfers among the various OLP-owned
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`entities. Indeed, OLP personnel routinely directed wire transfers of funds among the
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`OLP entities.
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`9.
`
`In the case of DecisionOne, they used this comingled financial
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`reporting network to perpetrate a massive financial fraud. In the years preceding the
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`sale, Defendants fabricated invoices and recorded millions of dollars in false
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`“revenue.” These fake revenues stemmed from DecisionOne’s alleged licensing of
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`a product called “AMAAST” or “Asset Management as a Service and Technology”
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`to various putative customers.
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`4
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`10. But AMAAST never was a source of revenue for DecisionOne. No one
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`at DecisionOne—including those that have been at the company for decades—
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`recalls DecisionOne ever selling or licensing AMAAST to any customer. And
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`outside of mysterious journal entries and invoices that no one can explain, there is
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`no record of any actual work being done for these customers. Indeed, DecisionOne
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`is principally a service business, rather than one that licenses technology products
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`like AMAAST to customers.
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`11. And even if DecisionOne were somehow secretly providing a service
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`that none of its employees ever knew about, it still could not have earned revenue
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`for AMAAST, because it had no right to license or sell AMAAST in the first place.
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`That right, in fact, belonged to another entity—Industrialytics—according to the
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`terms of an agreement with DecisionOne. Under that agreement, Industrialytics
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`granted DecisionOne a license to use AMAAST to manage DecisionOne’s own
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`assets. That agreement prohibited DecisionOne from licensing AMAAST to anyone
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`else.
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`12.
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`If that were not enough, the paper trail for DecisionOne’s AMAAST
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`transactions demonstrates the hallmarks of fraud. Some of DecisionOne’s supposed
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`customers for AMAAST are, in fact, shadowy entities with no historical business
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`relationship to DecisionOne. In many cases, these entities are owned by OLP itself.
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`The supposed customers did not pay the invoices themselves; instead, a single OLP-
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`5
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`owned entity, StorageTech, paid all of the invoices for a wide array of customers.
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`Oddly, StorageTech made these payments before DecisionOne even invoiced the
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`alleged “customers” for the “services” it rendered, and in some cases, those
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`payments quickly cycled out of the company within days of being received.
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`13.
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`In some cases, DecisionOne’s system was not even used to generate the
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`invoices, which do not match its normal template. Instead, Shah and his finance
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`team from OLP provided the invoices to DecisionOne’s revenue management team,
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`with express instructions not to send the invoices out to the customers at all. The
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`sole purpose of the invoices was to serve as the fake documentary evidence needed
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`to deceive lower level DecisionOne staff into recording revenue into DecisionOne’s
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`general ledger, without raising suspicions.
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`14. The impact of these fraudulent invoices on DecisionOne’s value was
`
`devastating. Soroc valued DecisionOne based on an 8x multiple, which it applied
`
`to DecisionOne’s represented trailing twelve month (“TTM”) EBITDA of $14.3
`
`million for October 2020 through September 2021.
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` This alone inflated
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`DecisionOne’s enterprise value by 29.8%, from $88.6M to $115M.
`
`15. AMAAST is not the only means by which Defendants inflated
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`DecisionOne’s EBITDA. Defendants also improperly directed DecisionOne to
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`capitalize all IT labor costs, artificially inflating DecisionOne’s earnings by reducing
`
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`6
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`the costs it recorded. The overall effect of this improper capitalization during the
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`trailing twelve month period inflated the enterprise value by another $11,352,000.
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`16. DecisionOne’s overall erratic financial performance was far different
`
`from what Defendants represented to Soroc in diligence and in the SPA. While
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`Defendants advertised a stable business that had yielded consistent cash flows
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`throughout COVID, in fact, the Company’s financial results had been inflated for
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`years by booking fraudulent revenue. Indeed, the Company had struggled for years
`
`to even pay its bills—frequently choosing which of its invoices to pay as it faced
`
`cash flow shortfalls.
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`17. DecisionOne’s actual financial condition tells a wildly different story
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`from what Defendants represented to Soroc—slashing the Company’s value and
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`significantly changing the picture of its cash flows. Had the Defendants been honest
`
`about the true state of DecisionOne’s financials, Soroc would not have valued
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`DecisionOne at $115 million, would not have used an 8x EBITDA multiple, and
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`would never have bought DecisionOne at all.
`
`18.
`
`Indeed, those corrected financials would have foretold DecisionOne’s
`
`dismal financial fate. In the aftermath of the transaction, DecisionOne recorded
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`negative EBITDA within a month of being acquired. Because Soroc financed
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`DecisionOne’s acquisition with debt, DecisionOne was likely insolvent at the time
`
`of its acquisition, due to the Defendants’ fraud, which lead to its restructuring.
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`19. Accordingly, Plaintiff brings
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`this action for fraud, fraudulent
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`inducement, aiding and abetting fraud, civil conspiracy, and unjust enrichment.
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`Plaintiff’s claims are based on Defendants’ materially false and misleading
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`statements, omissions, representations and warranties that Plaintiffs relied upon
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`when they acquired DecisionOne Corporation for more than $115 million from
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`MainOne and OLP, pursuant to a Securities Purchase Agreement, dated as of
`
`January 18, 2022.
`
`PARTIES
`20. Plaintiff Soroc Technology Holdings, LLC is a Delaware limited
`
`liability company headquartered in Woodbridge, Canada. At all times relevant to
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`this complaint, Soroc was owned by CenterGate Capital, a private equity firm based
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`in Texas. Soroc provides “cradle-to-grave” IT infrastructure services including
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`strategy, procurement, deployment, and support for clients in financial services,
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`technology, and retail sectors throughout North America.
`
`21. Defendant MainOne Technology Solutions, LLC is a Delaware limited
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`liability company formed on December 2, 2020 and headquartered in Wayne,
`
`Pennsylvania. Prior to the challenged transaction, MainOne was the parent company
`
`of DecisionOne Corporation and, another IT service company, MainTech, Inc.
`
`DecisionOne Corporation, in turn, was comprised of both DecisionOne and
`
`
`
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`UrbanCrest. UrbanCrest was carved out of the sale of DecisionOne Corporation to
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`Soroc; MainOne and OLP own and operate UrbanCrest.
`
`22. Defendant Oak Lane Partners, LLC (“OLP”) is a Delaware limited
`
`liability company that is headquartered in Florida. OLP is a private equity
`
`investment firm founded and led by Defendant Bhavin Shah. Prior to Soroc’s
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`acquisition of DecisionOne, OLP counted among its portfolio companies
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`DecisionOne Corporation, MainTech, and their parent company MainOne
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`Technology Solutions, as well as non-party StorageTech, and non-party
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`ThomasTech.
`
`23. Defendant SrcOne is a Delaware limited liability company and special
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`purpose vehicle created in connection with the contemplated sale of DecisionOne.
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`SrcOne is an affiliate of MainOne. SrcOne has no assets, employees, customers,
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`suppliers, or operations.
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`24. On information and belief, Defendant Bhavin Shah is a resident of
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`Florida. At all relevant times before and after the closing of the acquisition, Shah
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`was the Managing Partner and Chairman of Defendant Oak Lane Partners. Shah is
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`also a principal and manager of Defendant MainOne. Prior to the transaction, Shah
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`was the sole director of DecisionOne and resigned from DecisionOne at closing.
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`25. On information and belief, Defendant Michael P. Horne is a resident of
`
`Michigan. Horne was at all relevant times the Senior Operating Partner at OLP and,
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`9
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`prior to the transaction, the President of DecisionOne. As part of the closing, Horne
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`resigned from DecisionOne.
`
`26. Defendant Thomas Darling is a resident of Wisconsin. At all relevant
`
`times preceding the transaction, Darling was the Chief Financial Officer and Vice
`
`President of Finance at DecisionOne and reported directly to Mike Horne.
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`Following the acquisition, Darling resigned from his position at DecisionOne and
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`began working at OLP.
`
`27. On information and belief, Defendant Margaret Hughes is a resident of
`
`Maryland. Prior to the transaction, Hughes worked at DecisionOne, as its Manager
`
`of Financial Planning and Analysis, as well as at OLP in its “shared services”
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`department. Following the acquisition, Hughes resigned from her position at
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`DecisionOne and has since continued as an employee at OLP only.
`
`28. On information and belief, Defendant Abel Gonsalves is a resident of
`
`Maryland. Until the transaction, Gonsalves was the Manager of Financial
`
`Operations at DecisionOne. After the transaction closed, Gonsalves resigned from
`
`his position at DecisionOne. Since then, he has been an employee of OLP.
`
`29. Non-party DecisionOne Corporation is a Delaware corporation.
`
`JURISDICTION AND VENUE
`30. MainOne is subject to this Court’s jurisdiction as a limited liability
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`company formed under the laws of the state of Delaware and pursuant to 10 Del. C.
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`§ 3104(c). MainOne consented to the exclusive jurisdiction of the Delaware courts
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`in Section 9.17 of the SPA. MainOne expressly waived any claim that it is not
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`subject to jurisdiction in Delaware and any claim of improper or inconvenient forum
`
`or venue. SPA § 9.17.
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`31. SrcOne is subject to this Court’s jurisdiction as a Delaware limited
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`partnership and pursuant to 10 Del. C. § 3104(c). SrcOne consented to the exclusive
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`jurisdiction of the Delaware courts in Section 9.17 of the SPA. And SrcOne
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`expressly waived any claim that it is not subject to jurisdiction in Delaware and any
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`claim of improper or inconvenient forum or venue. SPA § 9.17.
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`32. OLP is subject to this Court’s jurisdiction as a limited liability company
`
`formed under the laws of the state of Delaware. It is also subject to this Court’s
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`jurisdiction pursuant to 10 Del. C. § 3104(c) and due to its participation in the
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`conspiracy described herein. OLP is also subject to jurisdiction as an entity that
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`directly participated in the negotiation of and benefited from the SPA.
`
`33. Shah is subject to this Court’s jurisdiction pursuant to Delaware’s long-
`
`arm statute, 10 Del. C. § 3104, his participation in the conspiracy described herein,
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`Delaware’s director and officer consent statute, 6 Del. C. § 18-109, and the forum
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`selection clause of the SPA, which he both benefited from and signed.
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`34. Horne is subject to this Court’s jurisdiction pursuant to Delaware’s
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`long-arm statute, 10 Del. C. § 3104(c), his participation in the conspiracy described
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`herein, and the forum selection clause of the SPA, which he both benefited from and
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`signed.
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`35. Darling, Hughes, and Gonsalves are subject to this Court’s jurisdiction
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`pursuant to Delaware’s long-arm statute, 10 Del. C. § 3104(c), and their participation
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`in the conspiracy described herein. Darling is also subject to jurisdiction because he
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`directly benefited from the SPA as a result of the change of control bonus for which
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`he was eligible as a result of the SPA. Darling, Hughes, and Gonsalves also each
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`reaped the benefits of the SPA because they stood to gain professionally from
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`DecisionOne changing ownership under the SPA.
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`36. Pursuant to 10 Del. C. § 341, this Court has jurisdiction to hear all
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`matters and causes in equity, including over cases requesting an equitable remedy
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`when there is no adequate remedy at law.
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`37. The Court separately has subject matter jurisdiction under 8 Del. C.
`
`§ 111.
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`38. Venue is proper in this Court pursuant to 6 Del. C. § 2708.
`
`I.
`
`FACTUAL BACKGROUND
`OLP Purchases DecisionOne
`39.
`In 2016, Oak Lane Partners, Bhavin Shah’s private equity investment
`
`firm, through its subsidiary company, MainOne Technology Solutions, acquired
`
`
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`DecisionOne. Upon information and belief, Bhavin Shah owns Oak Lane Partners
`
`through trusts for which he and his family members are beneficiaries.
`
`40. DecisionOne is an information technology services company that
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`provides, among other things, on-site and remote technology support for businesses,
`
`such as data center support, data upgrades and migrations, and project management,
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`as well as asset management services. The bulk of DecisionOne’s business is its
`
`“field services”—which includes repairing, troubleshooting, and upgrading various
`
`IT systems for its customers, including those in the manufacturing, distribution,
`
`retail, healthcare, and transportation sectors. In addition to DecisionOne’s
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`headquarters in Pennsylvania, the company also operated facilities in Urbancrest,
`
`Ohio and Toronto, Canada. The Urbancrest facility primarily offers logistics and
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`asset management services.
`
`41. A year after acquiring DecisionOne, OLP purchased another IT
`
`services company, MainTech, and placed both under an umbrella entity, MainOne
`
`Technology Solutions.
`
`42. From 2017 to 2022, OLP operated DecisionOne and MainTech as a
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`functionally combined entity and blended the boundaries between these and other
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`OLP-controlled entities. OLP directed that DecisionOne’s finance and accounting
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`teams also handle the finances for MainTech. The financial information for several
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`of OLP’s portfolio companies were housed on the same general ledger platform,
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`which resided with DecisionOne. DecisionOne and MainTech shared a linked
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`corporate credit card for use by their respective technicians in the field.
`
`43. OLP routinely shifted funds among its portfolio companies to cover
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`short-term liquidity needs. For example, OLP staggered the payroll cycles for
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`MainTech and DecisionOne, then directed DecisionOne’s finance team to wire
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`funds to fill the resulting gaps in MainTech’s cash flow and vice versa.
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`44. The main source of these short-term cash infusions into DecisionOne
`
`was StorageTech, an entity wholly owned by Bhavin Shah.
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`45. On information and belief, Shah was prohibited by the terms of certain
`
`credit agreements from propping up OLP portfolio companies with his own money.
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`As a workaround, Shah formed certain shell entities, including StorageTech, to
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`bypass those restrictions and to supply short-term loans to OLP entities. Rather than
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`describing these infusions as loans, however, the Shah-controlled OLP team
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`disguised them as “revenue” that the Company “earned.”
`
`46. Between March 2021 and August 2021, StorageTech and DecisionOne
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`exchanged a flurry of wire transfers. Each of these transaction cycles followed a
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`similar pattern: one entity wired the other some amount. As soon as a day later, the
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`receiving entity would return some or all of the funds.
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`47. For example, on March 17, 2021, DecisionOne wired $1.5M to
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`StorageTech, only to have StorageTech wire that same amount back to DecisionOne
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`the next day.
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`48. On July 8, StorageTech wired $250,000 to DecisionOne to cover a
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`shortfall in DecisionOne’s payroll, while DecisionOne waited on a payment from a
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`customer. At the time, DecisionOne’s Vice President of Finance, Tom Darling,
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`noted that DecisionOne “should be able to return the money [to StorageTech]
`
`tomorrow after Xerox [a DecisionOne customer] comes in.”
`
`49. Less than a week later, StorageTech wired another $600,000 to
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`DecisionOne. An email sent around that time noted that a wire would be set up
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`“from D1 [DecisionOne] to MT [MainTech] to go tomorrow morning to cover the
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`payroll for whatever is needed.”
`
`50. A few weeks later, Darling wrote to Horne, the then-President of
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`DecisionOne and partner at OLP, on July 29, 2021 that he would “need to borrow
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`$400k from StorageTech in order to get through today.”
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`51. Horne routed some of these transfers through a bank account that
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`DecisionOne held at the Central Bank of Florida between 2020 and 2021.
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`DecisionOne’s account at the Central Bank of Florida did not exist prior to OLP’s
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`purchase of the portfolio company, nor was it disclosed in connection with the SPA.
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`Instead, OLP directed that the account be closed a few weeks prior to the sale to
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`Soroc. The account does not appear in the company’s general ledger, and few people
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`at DecisionOne even knew it existed. Those among the select few included Shah,
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`Horne, Darling, Hughes, and Gonsalves.
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`52. Shah and OLP intended these frequent transactions with StorageTech
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`to cover longstanding liquidity problems at DecisionOne.
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`53. Meanwhile, during this same period, Shah and OLP were preparing
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`financial statements to show Soroc that DecisionOne was a valuable and viable
`
`business to acquire with a steady revenue stream.
`
`54. As a result, rather than describing these capital infusions as what they
`
`were—OLP, through Shah, Horne, Hughes, Darling, and Gonsalves often masked
`
`these transactions with StorageTech as “revenue” coming from DecisionOne’s
`
`“customers,” to create the illusion of a more profitable enterprise.
`
`II. Soroc And MainOne Engage in Due Diligence in the Lead Up to the SPA
`55.
`In 2020, upon information and belief, Shah, OLP and MainOne began
`
`marketing DecisionOne for sale. Shah, OLP, and MainOne understood that the
`
`eventual purchase price for DecisionOne would depend on the company’s EBITDA
`
`and the trends in its historical revenue.
`
`56.
`
`In early 2021, Soroc’s owner, CenterGate Capital (“CenterGate”),
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`began discussions with Shah, OLP’s deal team lead, regarding a potential acquisition
`
`of DecisionOne. In June 2021, these talks culminated in Soroc’s delivery of an
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`initial letter of intent (“LOI”) to MainOne, pursuant to which Soroc proposed
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`acquiring a portion of DecisionOne on a cash-free and debt-free basis, following due
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`diligence and the negotiation of an appropriate transaction agreement.
`
`57. Following the submission of the LOI, Soroc undertook months of due
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`diligence in which it reviewed company-provided documents (through a dataroom)
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`and met with the DecisionOne financial team and certain of its executives—
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`including Shah, Horne, Darling, Hughes, and Gonsalves—to gain an understanding
`
`of the business. It was this team of individuals that provided finance-related
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`information regarding DecisionOne to CenterGate during the diligence process.
`
`58.
`
`In addition to performing its own leg work, Soroc also engaged a well-
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`known accounting firm, BDO, to conduct a buy-side Quality of Earnings analysis to
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`support the potential transaction. Following its efforts, BDO authored a
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`comprehensive buy-side Quality of Earnings report, based on the financial
`
`information provided by the sellers.
`
`59. However,
`
`throughout
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`the diligence process, Shah, OLP and
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`MainOne—with the assistance of Horne, Darling, Hughes, and Gonsalves—worked
`
`in concert to mask any liquidity issues that DecisionOne was facing, to induce
`
`CenterGate to complete the acquisition. In reality, during this very time period, the
`
`OLP-finance team routinely traded emails about their inability to pay for basic
`
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`utilities, such as electricity and internet-service—facts that were not disclosed to
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`their potential buyer.
`
`60. According to the financial statements provided during diligence,
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`DecisionOne’s adjusted EBITDA values for fiscal years 2020 and 2021 amounted
`
`to approximately $14M and $18M, respectively. Similarly, adjusted EBITDA for
`
`the TTM period was approximately $18M.
`
`61.
`
`In fact, the picture behind the scenes was starkly different. Neither
`
`Shah nor OLP disclosed that DecisionOne in fact operated pay cycle to pay cycle,
`
`pushing out payments to vendors as long as it could—including bills for essential,
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`relatively low cost services like electricity. And because a diligence process,
`
`including a quality of earnings analysis, is only as good as the backup documentation
`
`provided, Soroc was not able to uncover the fraudulent transactions—obscured by
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`fictitious invoices and fabricated back-up—that falsely inflated DecisionOne’s
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`earnings.
`
`III. The Parties Agree Upon The SPA’s Terms
`62. On or around January 18, 2022, following diligence, Soroc, MainOne
`
`and SrcOne entered into the SPA, which Shah signed. The SPA governed the terms
`
`by which Soroc would acquire DecisionOne from MainOne.1
`
`
`1 The SPA is attached as Ex. 1.
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`63. The parties agreed to exclude one portion of DecisionOne—the facility
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`located in Urbancrest, Ohio—from the sale. The parties also agreed that several
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`contracts that MainTech previously had that were primarily aligned with
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`DecisionOne’s field services would migrate with DecisionOne, constituting a
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`portion of the assets transferred in the sale. Meanwhile, MainOne and OLP retained
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`the remaining Urbancrest assets and MainTech.
`
`64.
`
`In the SPA, Shah, through MainOne and SrcOne, made several detailed
`
`representations and warranties concerning DecisionOne. Among other things,
`
`MainOne and SrcOne made express representations and warranties regarding the
`
`accuracy of each of the financial statements appended to the SPA. These included
`
`DecisionOne’s unaudited financial statements for fiscal years ending March 31,
`
`2020 and March 31, 2021 and the six-month period ending on September 30, 2021.
`
`The financial statements included consolidated balance sheets, statements of
`
`income, statements of stockholders’ equity, and statements of cash flow for each of
`
`the applicable periods. SPA § 3.7(a). MainOne and SrcOne represented that these
`
`financial statements “have been prepared in accordance with U.S. Generally
`
`Accepted Accounting Principles (‘GAAP’),” “consistently applied” and “are correct
`
`and complete and consistent with the books and records of the Company Group.”
`
`SPA § 3.7(b)(i).
`
`
`
`
`
`19
`
`

`

`65. MainOne and SrcOne further represented that the financial statements
`
`were “derived from the financial books and records of the Seller, which Seller
`
`financial books and records have been maintained in accordance with GAAP
`
`consistently applied.” SPA § 3.7(b)(ii). And they represented that the financial
`
`statements “present fairly in all material respects the financial condition, results of
`
`operation, changes in equity and cash flow of [DecisionOne and its subsidiaries] as
`
`of and for their respective dates and for the periods then ending.” SPA § 3.7(b)(iii).
`
`66. SrcOne and MainOne also represented that “[s]ince the Most Recent
`
`Fiscal Year End [i.e., since March 31, 2021], the business of the Company Group
`
`has been conducted in the Ordinary Course of Business,” including that the
`
`Company had not “instituted any material change in its accounting practices or
`
`methods or cash management practices.” Id. at § 3.7 (c). MainOne and SrcOne
`
`further represented that “all accounts receivable of the Company Group generated
`
`since the Most Recent Fiscal Quarter End (“the Receivables”), constitute bona fide
`
`receivables resulting from the sale of inventory, services or other obligations in favor
`
`of the Company Group as to which full performance has been fully rendered.” Id.
`
`at § 3.7(d).
`
`67. MainOne and SrcOne also represented that “[t]he Company Group has
`
`good and marketable title to, or a valid leasehold interest or license in, the properties,
`
`
`
`
`
`20
`
`

`

`Contracts, and assets (tangible and intangible) (the “Assets”) used by it, located on
`
`its premises, or shown on the Most Recent Balance Sheet . . .” Id. at § 3.6.
`
`68. MainOne and SrcOne also made several representations regarding
`
`DecisionOne’s rights to the Intellectual Property that it used to operate and generate
`
`revenue for its business. Specifically, MainOne and SrcOne represented that “[t]he
`
`Company Group owns and possesses or has the right to use pursuant to a valid and
`
`enforceable Contract all Intellectual Property necessary for the operation of its
`
`business as currently conducted by the Company Group.” SPA § 3.12(a). Similarly,
`
`MainOne and SrcOne further represented that “[t]he Company Group has not
`
`infringed upon, misappropriated or otherwise violated any Intellectual Property
`
`rights of third parties in any respect.” Id. at § 3.12(b).
`
`69. MainOne and SrcOne also made representations concerning their
`
`customer base in the SPA. Specifically, MainOne and SrcOne represented that
`
`Section 3.22 (a) of the Disclosure Schedule sets forth a correct and complete list of
`
`the . . . twenty (20) largest customers of the Company Group (by dollar value) (the
`
`“Material Customers”), each during the 2020 and 2021 fiscal years and the six (6)
`
`month period ended on September 30, 2021.” Id. at § 3.22.
`
`70. To further provide confidence in the customer base, MainOne and
`
`SrcOne further represented that except as disclosed in the SPA schedules, the Sellers,
`
`the directors or members of DecisionOne, and the affiliates, parents, siblings, or
`
`21
`
`
`
`

`

`spouses of the foregoing did not “own, directly or indirectly, any stock or other
`
`ownership interests in any Person that is . . . [a] customer.” Id. at § 3.22(a)(i).
`
`MainOne and SrcOne also represented that Sellers, the directors or members of
`
`DecisionOne, and the affiliates, parents, siblings, or spouses of the foregoing did not
`
`owe and were not owed funds to DecisionOne or its subsidiaries. Id. at § 3.22(a)(ii).
`
`71. MainOne and SrcOne also made representations regarding the bank
`
`accounts that DecisionOne maintained. Specifically, MainOne and SrcOne
`
`represented that “Section 3.24 of the Disclosure Schedule lists each bank account of
`
`the Company Group maintained for the operation of its business (the ‘Business Bank
`
`Accounts’).” The disclosure schedule listed five bank accounts with BNY Mellon
`
`Bank and two accounts with Scotia Bank in Canada.
`
`72. The SPA also included a remedial regime in the event that any of the
`
`representations proved to be false. Specifically, Section 6.1 provides that “the Seller
`
`Parties will jointly and severally indemnify and hold harmless Buyer, its
`
`Subsidiaries, the Company Group and each of their respective Affiliates…from and
`
`against any Adverse Consequences that any Buyer Indemnitee may suffer or
`
`incur…to the extent resulting from or arising out of any (a) breach or inaccuracy of
`
`any representation or warranty made in Section 2.1 or Article 3, (b) breach of any
`
`covenant or agreement of the Seller Parties or the Company Group in this
`
`Agreement, or (c) Designated Liabilities.” SPA § 6.1.
`
`22
`
`
`
`

`

`73.
`
`“Adverse Consequences” are defined within the SPA to encompass “all
`
`actions suits, proceedings, hearings, investigations, charges, complaints, demands,
`
`Orders, dues, penalties, fines, costs, amounts paid in settlement, liabilities,
`
`obligations, Taxes, Liens, losses, damages, deficiencies, costs of investigation, court
`
`costs and other expenses (including interest, penalties and reasonable attorneys’ fees
`
`and expenses, whether in connection with Third Party Claims or claims among the
`
`Parties related to the enforcement of the provisions of this Agreement).”
`
`74. Under the SPA, claims for indemnification for a breach of the
`
`representations and warranties, beyond those representations appearing in Sections
`
`2.2(a), (b), and (d), must be provided within twelve (12) m

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