IN THE SUPERIOR COURT FOR THE STATE OF DELAWARE

P&TI Acquisition Company, Inc.,

Plaintiff,

v.

Morgenthaler Partners VII, LP; and Morgenthaler Management Partners VII, LLC,

Defendants.

:::::::::::::

C.A. No. ______________ [CCLD]

COMPLAINT

Plaintiff P&TI Acquisition Company, Inc. (“P&TI”), by its undersigned

counsel, files this Complaint against Defendants Morgenthaler Partners VII, LP

(“MP VII”) and Morgenthaler Management Partners VII, LLC (“MMP VII”)

(collectively “Morgenthaler”), and avers as follows:

1. This is an action brought by P&TI against Morgenthaler for their

unlawful breach of a February 2012 Share Purchase Agreement (“2012 SPA”) that,

among other things, restricted Morgenthaler’s right and ability to employ, hire,

engage, recruit or solicit for employment or engagement any employee of P&TI’s

subsidiary, Phillips & Temro Industries, Inc. (“Phillips”), for a period of five years,

or until February 2017. Morgenthaler breached this restrictive covenant and its

obligation to engage in good faith and fair dealing by, among other things, either

EFiled: Aug 06 2018 04:39PM EDT Transaction ID 62314255

Case No. N18C-08-059 AML CCLD

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directly or through its Affiliates, employing, hiring, engaging, recruiting or

soliciting for employment or engagement Phillips’ Chief Executive Officer and the

Chief Financial Officer prior to February 2017.

PARTIES

2. Plaintiff P&TI is a corporation organized and existing under the laws

of the State of Delaware. P&TI’s principal place of business is 7733 Forsyth

Boulevard, 23rd Floor, St. Louis, Missouri 63105.

3. Defendant MP VII is a limited partnership organized and existing

under the laws of the State of Delaware with its principal place of business at 50

Public Square, Suite 2700, Cleveland, Ohio 44113. Its registered agent is the

Corporation Trust Company, 1209 Orange St., Wilmington, Delaware 19801.

4. Defendant MMP VII is a limited liability company organized and

existing under the laws of the State of Ohio with its principal place of business at

50 Public Square, Suite 2700, Cleveland, Ohio 44113. Its registered agent is

Theodore A. Laufik, 50 Public Sq., Suite 2700, Cleveland, Ohio 44113.

5. Non-party MPE Partners, LP (“MPE”) is a limited partnership formed

on or around April 27, 2012 by Peter Taft, Karen Tuleta, Joseph Machado, Matt

Yohe and others, all of whom previously held positions of control at MP VII and

MMP VII, including at the time of the 2012 SPA. In MPE’s press releases,

including those issued on December 23, 2014 and July 14, 2015, MPE identified

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itself as the “private equity group of Morgenthaler” and cited the $3 billion in

assets under Morgenthaler’s control, as well as Morgenthaler’s investments in

more than 300 companies over its 46-year history, citations which included the

investments of MP VII. According to its website, MPE is a private equity firm

focusing on “lower middle market leveraged buyout, recapitalizations, and build

up investments.” MPE has offices in Boston, Massachusetts and Cleveland, Ohio.

6. Non-party dlhBOWLES is the merger of two prior MPE acquisitions:

Bowles Fluidics Corporation and DLH Industries. dlhBOWLES is an MPE

portfolio company, merged in 2015 and legally formed in January 2016, with

offices in Canton, Ohio, Columbia, Maryland and Southfield, Michigan.

According to its website, dlhBOWLES is an engineering and manufacturing

company specializing in engineered plastics and fluid management systems.

dlhBOWLES is owned and controlled by MPE, Taft, Tuleta, Machado, Yohe and

others.

7. Non-party PTI Enterprises, Inc. (“PTI”) owns P&TI. It is a

corporation organized and existing under the laws of the State of Delaware. PTI’s

principal place of business is 7733 Forsyth Boulevard, 23rd Floor, St. Louis,

Missouri 63105.

8. Non-party Phillips is a North Dakota corporation with its principal

place of business at 9700 West 74th Street, Eden Prairie, Minnesota 55344.

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Phillips specializes in t h e m a n u f a c t u r e a n d s a l e o f thermal management

and accessory products primarily for on- and off-road vehicles.

9. Non-party PhilTem Holdings, Inc. (“PhilTem”) is the record and

beneficial owner of all of the issued and outstanding capital stock of Phillips. MP

VII purchased Phillips through PhilTem and, as a result, Phillips became a wholly-

owned subsidiary of PhilTem in 2005. From 2005 through the present, Phillips has

been a wholly owned subsidiary of PhilTem. MP VII owned PhilTem until 2012,

at which time PhilTem was sold to P&TI pursuant to the 2012 SPA, the contract on

which this action is based. As a result of the 2012 SPA, PhilTem became a

wholly-owned subsidiary of P&TI and Phillips became a wholly-owned, indirect

subsidiary of P&TI.

JURISDICTION AND VENUE

10. This Court has personal jurisdiction over both MP VII and MMP VII

and venue is proper in this Court because each has consented to the jurisdiction of

this Court pursuant to Section 8.10 of the 2012 SPA. Section 8.10 provides, in

relevant part:

ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT … MAY BE INSTITUTED IN … THE COURTS OF THE STATE OF DELAWARE … LOCATED IN THE COUNTY OF NEW CASTLE, AND EACH IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING.

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11. This Court further has personal jurisdiction over MP VII pursuant to

6 Del. C. § 17-105 because it is organized under Delaware law and is subject to

service of process by service on its registered agent in Delaware.

12. On or around February 5, 2018, Morgenthaler, through its counsel,

executed a Tolling Agreement pursuant to which, among other things,

Morgenthaler agreed to toll any and all statutes of limitations that may apply to any

claims arising out of an alleged breach of the restrictive covenant set forth in

Section 5.19(d) of the 2012 SPA (“Section 5.19(d)”) until at least August 6, 2018.

BACKGROUND

A. P&TI Procures Phillips In The 2012 SPA

13. In 2005, MP VII, through PhilTem, purchased Phillips and, as a result,

Phillips became a wholly-owned subsidiary of PhilTem. From 2005 through the

present, Phillips has been a wholly-owned subsidiary of PhilTem.

14. On February 9, 2012, MP VII and others sold their shares of PhilTem

to P&TI pursuant to the 2012 SPA. As a result of the sale, PhilTem became a

wholly-owned subsidiary of P&TI and Phillips because a wholly-owned, indirect

subsidiary of P&TI.

15. MMP VII acted as Seller’s Representative in the 2012 SPA

acquisition on behalf of MP VII and others.

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16. As Seller’s Representative, MMP VII was appointed MP VII’s true

and lawful attorney-in-fact and agent to do any and all things in MP VII’s name

and on its behalf which MMP VII deemed necessary or advisable pursuant to the

2012 SPA.

17. At the time of the 2012 SPA, Harry Sumpter was employed as the

Chief Executive Officer of Phillips.

18. At the time of the 2012 SPA, Michael Ramsay was employed as the

Chief Financial Officer of Phillips.

19. In connection with the 2012 SPA, both Sumpter and Ramsay executed

employment contracts that bound Sumpter and Ramsay to remain employed with

Phillips for specified periods of time.

B. The 2012 SPA Prohibits Morgenthaler and Its Affiliates from Soliciting Certain Phillips Executives for Employment

20. Pursuant to Section 5.19(d), Morgenthaler and its Affiliates were

barred, for a period of five years, or until February 2017, from employing, hiring,

engaging, recruiting or soliciting for employment or engagement, directly or

indirectly, any Phillips employee without P&TI’s consent.

21. Specifically, Section 5.19(d) provides:

During the Restricted Period, each Seller will not, and will cause each of his, her, or its Affiliates not to, directly or indirectly, as employee, agent, consultant, director, equityholder, manager, copartner or in any other capacity without the prior written consent of Buyer, employ, hire,

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engage, recruit or solicit for employment or engagement … any Person who is … employed or engaged by [PhilTem] or the PTI Group Subsidiaries with respect to Holding’s and the PTI Group Subsidiaries’ businesses or otherwise seek to interfere with, influence or alter any such Person’s relationship with any of the foregoing.

22. The term “Restricted Period” is defined as the period “from and after

the Closing Date and continuing for five years from the Closing Date.” 2012 SPA,

§ 5.19(b). The “Closing Date” was February 9, 2012. As such, the Restricted

Period ran until no earlier than February 9, 2017.

23. The term “Seller” includes “‘Stockholders of Holdings’ listed on

Schedule A” of the 2012 SPA, including MP VII.

24. The term “Affiliate” is defined in Article I of the 2012 SPA to include

“any other Person that directly or indirectly, through one or more intermediaries,

controls, is controlled by, or is under common control with such person.”

25. “Control,” in turn, is defined under Article I of the 2012 SPA as “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, by contract or otherwise.”

26. Morgenthaler, MPE and dlhBOWLES are all Affiliates for the

purposes of the restrictions in Section 5.19(d).

27. Phillips is among the companies included in the definition of “PTI

Group Subsidiaries.”

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28. Sumpter and Ramsay were among the individuals that Morgenthaler

and its Affiliates were restricted from employing, hiring, engaging, recruiting or

soliciting for employment or engagement during the Restricted Period.

29. At all relevant times, both Sumpter and Ramsay had binding and

enforceable employment contracts obligating them to remain employed by Phillips

for a specified period of time.

30. P&TI is included as a “Buyer” under the terms of the 2012 SPA.

31. At no time did P&TI or any other “Buyer” under the terms of the 2012

SPA provide prior written consent pursuant to Section 5.19(d) for the recruitment

or solicitation of Sumpter or Ramsay, either by Morgenthaler of one of its

Affiliates, including MPE or dlhBOWLES.

C. PTI Purchases P&TI

32. On February 20, 2015, PTI purchased P&TI, taking beneficial

ownership of the latter’s shares of Phillips.

33. In conjunction with this acquisition, Sumpter and Ramsay each

executed amended employment agreements, extending their obligation to remain

employed by Phillips for a definite period of time into the future.

D. Morgenthaler and its Affiliates Violate the Non-Solicitation Restriction in the 2012 SPA

34. Beginning no later than 2014, Morgenthaler, its Affiliates and Taft,

Tuleta, Machado, Yohe and others, in their capacity as officers, members,

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employees or associates of Morgenthaler and its Affiliates, including MPE,

actively sought to employ, hire, engage, recruit and/or solicit for employment or

engagement both Sumpter and Ramsay before the expiration of the Restricted

Period in violation of Section 5.19(d).

35. Beginning no later than December 2014, Morgenthaler, directly or

indirectly, including through its Affiliates and those who control them, began

actively recruiting Ramsay to take the job of CFO for a new company it was

acquiring.

36. Ramsay responded to Morgenthaler’s efforts (directly or indirectly,

including through its Affiliates and those who control them) to employ, hire,

engage, recruit and/or solicit for employment or engagement him in December

2014 by saying that he “[w]ould be very interested in working with … the

Morgenthaler team again.” Ramsay’s reference to the Morgenthaler team was a

reference to the individuals who controlled and acted on behalf of Morgenthaler at

and prior to the time Morgenthaler sold its shares of PhilTem (along with

ownership of Phillips) to P&TI pursuant to the 2012 SPA.

37. Beginning no later than May 2014, Morgenthaler, directly or

indirectly, including through its Affiliates and those who control them, began

actively engaging Sumpter, starting with their request for Sumpter to act as an

acquisition consultant for Morgenthaler or its Affiliates.

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38. Also during this time, Morgenthaler, directly or indirectly, including

through its Affiliates and those who control them, began soliciting and recruiting

Sumpter to serve as member of the board of dlhBOWLES and as a senior advisor

to Morgenthaler or one of its Affiliates.

39. In March 2015, after efforts by Morgenthaler, directly or indirectly,

including through its Affiliates and those who control them, to employ, hire,

engage, recruit or solicit for employment or engagement, Sumpter agreed to sit on

the Board of Bowles Fluidics Corp. and in December 2015, Sumpter began

working as a Senior Advisor for Morgenthaler or one of its Affiliates.

40. In July 2015, after efforts by Morgenthaler, directly or indirectly,

including through its Affiliates and those who control them to employ, hire,

engage, recruit or solicit for employment or engagement, Ramsay began to work as

CFO of dlhBOWLES, a Morgenthaler-affiliated portfolio company.

41. P&TI was unaware of Morgenthaler’s actual or attempted efforts,

directly or indirectly, including through its Affiliates and those who control them,

to employ, hire, engage, recruit or solicit for employment or engagement Sumpter

or Ramsay until, at the earliest, May 2015. These efforts were concealed by

Morgenthaler and its Affiliates and those who control them, as well as Sumpter

and Ramsay.

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42. Morgenthaler’s unlawful employment, hiring, engagement,

recruitment and/or solicitation for employment or engagement of both Sumpter and

Ramsay before the expiration of the Restricted Period was a breach of the 2012

SPA, causing damage to P&TI.

E. Morgenthaler, MPE and dlhBOWLES Are Affiliates

43. MMP VII, MP VII, MPE, and dlhBOWLES are Affiliates under the

definition set forth in the 2012 SPA.

44. MMP VII, MP VII, MPE and dlhBOWLES are under the common

control of Taft, Tuleta, Machado, Yohe and others who have and exercise actual,

constructive or legal control to direct or cause the direction of the management and

policies of each of these companies, through either their ownership of voting

securities, by contract or otherwise, directly, indirectly or in combination with

others.

F. Taft, Tuleta and Others Control MMP VII and MP VII

45. Taft, Tuleta and others possess the power to direct or cause the

direction of the management and policies of MP VII.

46. Taft, Tuleta and others had and exercised actual, constructive or legal

control over MP VII directly or indirectly, or in combination with others.

47. MP VII is a limited partnership.

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48. MP VII’s general partners are “the Members of MMP VII, which

includes … Peter G. Taft,” and others including, upon information and belief,

Tuleta. Agreement of Limited Partnership of Morgenthaler Partners VII, L.P.

dated June 1, 2001, as amended by Amendment to Agreement of Limited

Partnership dated November 7, 2014 (the “MP VII Agreement”), Preamble.

49. Pursuant to the Delaware Limited Partnership Act, 6 Del. C. § 17-

403(c), a general partner in a limited partnership has the power and authority to

delegate to one or more persons any or all of the general partner’s rights, powers

and duties to manage and control the business and affairs of the limited

partnership.

50. As general partner in MP VII, Peter Taft and the others identified

above had and exercised the power and authority to delegate to one or more

persons any or all of the general partner’s rights, powers and duties to manage and

control the business and affairs of MP VII.

51. Taft, Tuleta and these same others also had and exercised actual,

constructive or legal control over the management and policies of MMP VII

directly or indirectly, or in combination with others.

52. MP VII delegates management authority to MMP VII, which “shall

have the power to conduct, manage, control and make all decisions affecting the

business, assets and affairs of the Partnership.” MP VII Agreement, § 5.1.

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53. The management and operation of MMP VII is “exclusively vested in

the Class A Members who shall have the power to carry out any and all of the

objects and purposes of the Company set forth in Section 1.5 and to perform all

acts and enter into and perform all contracts and other understandings that they

may deem necessary or advisable or incidental thereto in accordance with the

policies established by a Majority of the Members.” Amended and Restated

Operating Agreement of MMP VII (the “MMP VII Agreement”), § 5.1.

54. The MMP VII Agreement further provides:

Each Class A Member shall have the power and authority to execute any and all agreements, certificates or other documents he reasonably considers necessary or appropriate on behalf of [MMP VII], in its capacity as the general partner of MP VII, to enable MP VII (i) to buy, sell, exchange, transfer or otherwise acquire or dispose of investments in Securities; (ii) to provide the guarantee of MP VII in support of any business enterprise whose Securities are owned or are simultaneously being acquired by MP VII or otherwise to provide the financial support of MP VII to such an enterprise; or (iii) to exercise, or terminate, or amend, waive or otherwise change any rights of MP VII relating to any of the foregoing. MMP VII Agreement, § 5.2.

55. At all relevant times, Taft was a Class A Member of MMP VII.

56. As a Class A Member of MMP VII, Taft had the power to control and

actually did exert control over (either directly or indirectly, or in combination with

others) the management and policies of MMP VII, including to carry out its objects

and purposes and had the authority to perform all acts and enter into and perform

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all contracts and other understandings that he deemed necessary, advisable or

incidental thereto in accordance with the policies of MMP VII.

57. Taft also had the authority to execute agreements, certificates and

other documents on behalf of MP VII, to buy, sell, exchange, transfer, or otherwise

acquire or dispose of investments in securities, to provide guarantees on behalf of

MP VII, and to exercise, terminate, amend, waive or otherwise change any rights

of MP VII relating to the foregoing.

58. At all relevant times, Taft sat on the Board of Managers of MMP VII.

59. At all relevant times, Taft served as Managing Member of MMP VII.

60. The Board of Managers of MMP VII was responsible for, among other

things, appointing “Designated Agents,” admitting additional or substitute

members, valuations of investments, determination of certain distributions, the

appointment of officers (other than the initial officers), and winding up the

Company. In addition, the Board of Managers had power of attorney of each

Member for a variety of administrative purposes in managing the Company. See

MMP VII Agreement, §§ 3.4(a), 4.1, 4.4, 5.1(c), 6.2(b), 7.1, 9.2 and 10.5.

61. At all relevant times, Taft also sat on the Board of Managers of MMP

VII, and served as an officer of MMP VII. Taft had “the authority, responsibilities

and duties as are customary for officers holding similar positions.”

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62. At all relevant times, Taft served as an officer of MMP VII. In that

capacity, Taft had “the authority, responsibilities and duties as are customary for

officers holding similar positions with respect to businesses conducted in corporate

form and with such additional authority, responsibilities and duties as the Members

may delegate from time to time.” MMP VII Agreement, §7.1.

63. Taft executed the 2012 SPA on behalf of MMP VII, as Seller’s

Representative for MP VII. See 2012 SPA, Signature Page.

64. At all relevant times, Tuleta was a Class B Member of MMP VII.

65. At all relevant times until at least 2012, Tuleta served as Vice

President of PhilTem, the “record and beneficial owner of all of the issued and

outstanding capital stock of Phillips.” 2012 SPA, Recital B.

66. Tuleta executed the 2012 SPA on behalf of PhilTem.

67. At all relevant times, Taft, Tuleta, Machado, Yohe and these same

others identified above were employed by, were agents of, or otherwise had and

exercised actual, constructive or legal control over the management and policies of

MMP VII and MP VII, either directly, indirectly or in combination with others.

68. MMP VII and MP VII are Affiliates under the definition set forth in the

2012 SPA.

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G. Taft, Tuleta, Machado and Yohe Control MPE

69. Taft, Tuleta, Machado, Yohe and others had and exercised actual,

constructive or legal control to direct or cause the direction of the management and

policies of MPE, directly, indirectly or in combination with others.

70. MPE was formed on or around April 27, 2012 by Taft, Tuleta,

Machado and Yohe.

71. According to Section 2.1 of the Second Amended and Restated

Limited Partnership Agreement of MPE (the “MPE Partnership Agreement”),

“[t]he management, control and operation of and the determination of policy with

respect to [MPE] and its affairs shall be vested exclusively in the General Partner

(acting directly or through its duly appointed agents, including the Manager)… .”

72. MPE GP, LLC is the General Partner of MPE.

73. According to Section 3.1 of the MPE Partnership Agreement, MPE

GP, LLC delegated to the “Manager” of MPE “the power to manage the operations

of the Partnership ... .”

74. Section 6.2 of the MPE Partnership Agreement further provides,

“[t]he Manager has all power and authority to manage and direct the management

of, the business and affairs of the [General Partner]….”

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75. Pursuant to Section 6.1 of the MPE Partnership Agreement, “The

Management Company” was named as “the initial manager of the [General

Partner].”

76. Section 6.8 of the MPE Partnership Agreement states:

[t]he [General Partner] may have any officers designated by the Manager. The Manager hereby appoints each of Peter Taft [and others] … as Officers each with the title of Managing Director … . The Officers shall have the authority, responsibilities and duties as the Manager may from time to time delegate. Each of the Officers, acting alone or together, shall have such general powers and duties of management usually vested in such office or as may be prescribed by the Manager, subject at all times to the supervision, direction and control of the Manager. No person dealing with the Company shall be required to inquire as to the authority of any Officer to do any act, and any contract, assignment, mortgage or conveyance executed by any elected officer shall bind the Company.

77. Pursuant to Section 6.1 of the MPE Partnership Agreement, “[a]ll

power and authority to manage, and direct the management of the business and

affairs of the Company and all Company consents, decisions, determinations and

interpretations shall be made by a board of Managers …. and acting on a

unanimous basis.”

78. According to Section 6.5 of the MPE Partnership Agreement, Peter

Taft was one of the initial Managers of MPE. That section states Taft, Tuleta and

Machado, among others, were “each hereby appointed ‘Managing Directors’ of the

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Company … and each such Person shall have, in such capacity, the powers and

duties granted to such Person pursuant to consent by the Board.”

79. At all relevant times, Taft, Machado and Tuleta each served on the

Board of Managers of MPE Mgt. Co., LLC, the Manager of MPE GP, LLC, which

was the General Partner of MPE. In this role, these individuals had and exercised

actual, constructive or legal control over the management and policies of MPE,

directly, indirectly, or in combination with others.

80. At all relevant times, Taft, Machado and Tuleta each served as

officers of MPE GP, LLC, the General Partner of MPE. In this role, these

individuals had and exercised actual, constructive or legal control over the

management and policies of MPE, directly, indirectly, or in combination with

others.

81. At all relevant times, Taft, Tuleta, Machado and Yohe were each

employed by MPE. In their role as employees, each of these individuals had and

exercised actual, constructive or legal control over the management and policies of

MPE, directly, indirectly, or in combination with others.

82. MMP VII, MPE VII and MPE are Affiliates under the definition set

forth in the 2012 SPA.

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H. Taft, Tuleta, Machado and Yohe Control dlhBOWLES

83. Taft, Tuleta, Machado and Yohe had and exercised actual,

constructive or legal control over the management and policies of dlhBOWLES,

directly, indirectly, or in combination with others.

84. As of the date of this filing, MPE’s website listed dlhBOWLES as one

of its “active” investments.

85. The dlhBOWLES website notes that MPE acquired Bowles Fluidics

in December 2014 and MPE acquired DLH Industries in 2015, which were then

merged to form dlhBOWLES in January 2016.

86. On its website, MPE lists three of its partners – Taft, Tuleta and Yohe

– as “contacts” for dlhBOWLES.

87. MPE also currently lists former Phillips CEO Butch Sumpter as

“Chairman of the Executive Council,” and a “Senior Advisor and Consultant, as

well as a director of dlhBOWLES and Plastic Components, Inc.”

88. Taft sits as Chairman of the Board of dlhBOWLES.

89. In his position as Chairman of the Board, Taft has and exercises

actual, constructive or legal control over the management and policies of

dlhBOWLES, directly or indirectly, or in combination with others.

90. dlhBOWLES is an Affiliate of MPE, MP VII and MMP VII under the

definition set forth in the 2012 SPA.

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I. Other Evidence of Affiliation and Control

91. At all times relevant to this Complaint, MPE represented itself as being

affiliated with and under the common control of, or controlled by, Morgenthaler, and

MPE advised potential investors and others that it had undertaken or was otherwise

responsible for conduct undertaken by MP VII.

92. For example, in a May 29, 2014 Letter of Intent Approval package,

MPE adopted MP VII’s acquisition and ownership history as its own, boasting that

MPE, not MP VII or MMP VII, has a relationship with Sumpter, who “currently

serves as President and CEO of Phillips & Temro Industries, a former MPE

portfolio company, and outside director of RotoMetrics, a current MPE portfolio

company.”

93. On its website, MPE highlights its acquisition and sale of Phillips as

an important achievement, even though this acquisition and sale was accomplished

by MP VII and MMP VII. As of the date of this filing, MPE’s website continues to

state that Phillips is “a realized portfolio company investment from a Morgenthaler

fund,” in reference to MP VII.

94. As of the date of this filing, Phillips was listed currently on the MPE

website as part of its “legacy portfolio.”

95. In a case study found on MPE’s website, MPE highlighted its

acquisition of Phillips as a case study of one of its successful past investments,

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stating that MPE, not MP VII or MMP VII, invested in Phillips in 2004 and “exited

in February 2012.” The case study also notes that MPE recruited both the Phillips

CEO (Sumpter) and CFO (Ramsay).

96. In MPE’s press releases, MPE has acknowledged that it “is the private

equity group of Morgenthaler,” an entity which it describes as being responsible

for acquisitions of more 300 companies over a 46-year period, and with more than

$3 billion of such companies under its control, information which includes assets

owned and controlled by MP VII and MMP VII.

97. At times relevant to this Complaint, MP VII, MMP VII, MPE,

dlhBOWLES and their Affiliate companies employed many of the same

individuals who were in a position to exercise control, and who exercised actual

control, over these entities, directly, indirectly or in combination with others.

including Peter Taft, Karen Tuleta, Matt Yohe, Joseph Machado, and others.

COUNT I – BREACH OF CONTRACT

98. P&TI hereby incorporates by reference all preceding paragraphs of

this Complaint as though the same were set forth at length herein.

99. P&TI and Morgenthaler are parties to the 2012 SPA, which provides,

in relevant part, that Morgenthaler and its Affiliates are restricted from employing,

hiring, engaging, recruiting or soliciting for employment or engagement any

Phillips employee until at least February 9, 2017.

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100. The 2012 SPA is a valid contract entered into by P&TI and

Morgenthaler.

101. MPE, dlhBOWLES and Morgenthaler are Affiliates, in part because

of Taft, Tuleta, Machado and Yohe’s actual, constructive or legal control over the

management and policies of each of these entities, directly, indirectly or in

combination with others.

102. P&TI has substantially performed all of its material obligations under

the 2012 SPA.

103. Morgenthaler, through its affiliation with MPE and dlhBOWLES,

breached the 2012 SPA by, among other breaches, employing, hiring, engaging,

recruiting or soliciting for employment or engagement Ramsay and Sumpter for

employment during the Restricted Period.

104. As a direct and proximate result of Morgenthaler’s breach, P&TI has

suffered actual damage.

COUNT II – BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING

105. P&TI hereby incorporates by reference all preceding paragraphs of

this Complaint as though the same were set forth at length herein.

106. The 2012 SPA Morgenthaler included an implied covenant of good

faith and fair dealing requiring Morgenthaler, among other things, to refrain from

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engaging in arbitrary or unreasonable conduct that had the effect of preventing

P&TI from receiving the fruits of its bargain under that contract.

107. Morgenthaler breached this obligation by engaging in the above-

described conduct, including but not limited to, either directly or through its

Affiliates, including those who control these entities, employing, hiring, engaging,

recruiting and/or soliciting for employment or engagement both Sumpter and

Ramsay before the expiration of the Restricted Period.

108. As a result of this breach, P&TI suffered damage.

WHEREFORE, Plaintiff P&TI respectfully requests that this Honorable Court

enter judgment in its favor and against Defendants MP VII and MMP VII in an

amount to be determined, but not less than $25,000,000, plus costs, interest,

attorneys’ fees and for such further relief as may be just and appropriate.

BLANK ROME LLP Dated: August 6, 2018 BY: /s/ David. A. Dorey

David A. Dorey (No. 5283) Craig N. Haring (No. 6231) 1201 N. Market Street, Suite 800 Wilmington, Delaware 19801 Telephone: (302) 425-6400 Facsimile: (302) 425-6464 Dorey@BlankRome.com CHaring@BlankRome.com

Attorneys for Plaintiff P&TI Acquisition Company, Inc.

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OF COUNSEL:

BLANK ROME LLP Steven J. Roman, Esq. Adrien C. Pickard, Esq. 1825 Eye St., N.W. Washington, DC 20006 Telephone: (202) 772-5845 Facsimile: (202) 572-1430 SRoman@blankrome.com APickard@blankrome.com