Exhibit 2.1
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ASSET PURCHASE AGREEMENT
by and among
FTI CONSULTING, INC.,
LI ACQUISITION COMPANY, LLC,
NEXTERA ENTERPRISES, INC.,
LEXECON INC.,
CE ACQUISITION CORP.
and
ERG ACQUISITION CORP.
Dated: September 25, 2003
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TABLE OF CONTENTS
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Article I ASSETS TO BE PURCHASED..........................................................1
Section 1.1. Description of Assets................................................1
Section 1.2. Excluded Assets......................................................3
Section 1.3. Consent to Assignment of Certain Assets..............................4
Article II ASSUMPTION OF OBLIGATIONS.......................................................5
Section 2.1. Assumption of Certain Obligations....................................5
Section 2.2. Excluded Liabilities; Buyer Not Successor............................5
Article III PURCHASE PRICE..................................................................6
Section 3.1. Consideration........................................................6
Section 3.2. Payment..............................................................6
Section 3.3. Purchase Price Allocation............................................7
Section 3.4. Transfer Taxes.......................................................7
Section 3.5. Closing Balance Sheet; Accounts Receivable; Escrow Amount............7
Section 3.6. Accounts Receivable and Prepaid Expenses............................11
Article IV CLOSING AND POST-CLOSING COOPERATION...........................................11
Section 4.1. Closing.............................................................11
Section 4.2. Actions of Sellers at Closing.......................................12
Section 4.3. Actions of Buyer at Closing.........................................12
Section 4.4. Additional Acts.....................................................12
Article V REPRESENTATIONS AND WARRANTIES OF NEXTERA AND SELLERS..........................12
Section 5.1. Corporate Organization..............................................12
Section 5.2. Authorization of Sellers............................................13
Section 5.3. Financial Statements................................................14
Section 5.4. Absence of Certain Changes or Events................................14
Section 5.5. Undisclosed Liabilities.............................................16
Section 5.6. Taxes...............................................................17
Section 5.7. Compliance With Law.................................................18
Section 5.8. Proprietary Rights..................................................18
Section 5.9. Insurance...........................................................19
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(continued)
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Section 5.10. Bank Accounts, Depositories, Powers of Attorney.....................19
Section 5.11. Title to Properties.................................................19
Section 5.12. Brokers, Finders....................................................20
Section 5.13. Legal Proceedings, etc..............................................20
Section 5.14. No Conflict or Default; Consents....................................20
Section 5.15. Labor Relations.....................................................21
Section 5.16. Employee Benefit Plans; ERISA.......................................22
Section 5.17. Contracts and Commitments...........................................23
Section 5.18. Receivables; Payables...............................................24
Section 5.19. Books of Account; Records...........................................24
Section 5.20. Officers, Employees and Compensation................................24
Section 5.21. Real Property Leases................................................25
Section 5.22. Personal Property Leases............................................25
Section 5.23. Environmental Matters...............................................25
Section 5.24. Complete Disclosure.................................................26
Section 5.25. Agreements and Transactions with Related Parties....................26
Section 5.26. Clients and Customers...............................................26
Section 5.27. Work-in-Process.....................................................27
Section 5.28. Solvency............................................................27
Section 5.29. No Other Representations............................................28
Article VI REPRESENTATIONS AND WARRANTIES OF BUYER AND FTI................................28
Section 6.1. Organization........................................................28
Section 6.2. Authorization of Buyer..............................................28
Section 6.3. Non-Contravention...................................................28
Section 6.4. Brokers.............................................................29
Section 6.5. Legal Proceedings, etc..............................................29
Article VII COVENANTS OF SELLERS AND NEXTERA...............................................29
Section 7.1. Change of Name; Use of Name.........................................29
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(continued)
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Section 7.2. Conduct of Business Prior to the Closing............................29
Section 7.3. Stockholder Meeting.................................................32
Section 7.4. Non-Solicitation....................................................32
Section 7.5. Payoff of Indebtedness..............................................34
Section 7.6. Employment Agreements...............................................35
Section 7.7. Covenant Against Hiring.............................................35
Section 7.8. Noncompetition......................................................35
Section 7.9. Legal Examination and Investigation.................................35
Section 7.10. Notice of Events....................................................36
Section 7.11. Tail Insurance......................................................36
Article VIII COVENANTS OF SELLERS AND BUYER.................................................36
Section 8.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and Other Filings.................................36
Section 8.2. Proxy Statement.....................................................37
Section 8.3. Public Announcements................................................37
Section 8.4. Employment Matters..................................................37
Section 8.5. Confidentiality Agreement...........................................39
Section 8.6. Effort to Satisfy Conditions........................................39
Section 8.7. Bulk Sales..........................................................39
Article IX CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND FTI...........................39
Section 9.1. Nextera Stockholder Approval........................................39
Section 9.2. HSR Act; Consents; Filings..........................................39
Section 9.3. Representations and Warranties......................................40
Section 9.4. Officers' Certificate...............................................40
Section 9.5. Closing Certificates................................................40
Section 9.6. Voting Agreement....................................................41
Section 9.7. Opinion of Counsel..................................................41
Section 9.8. Solvency Opinion/Fair Value.........................................41
Section 9.9. Fairness Opinion....................................................41
Section 9.10. Performance of Agreement............................................41
Section 9.11. No Adverse Change...................................................41
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Section 9.12. No Proceedings......................................................41
Section 9.13. Employment Agreements...............................................42
Section 9.14. Assignment of Leases................................................42
Section 9.15. ▇▇▇▇ of Sale........................................................42
Section 9.16. Transfer of Name and other Proprietary Rights.......................42
Section 9.17. Receipt.............................................................42
Section 9.18. Evidence of Payoff..................................................42
Section 9.19. Non-Compete Payments................................................42
Section 9.20. "FIRPTA" Affidavits.................................................43
Section 9.21. Other...............................................................43
Article X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS.................................43
Section 10.1. Nextera Stockholder Approval........................................43
Section 10.2. HSR Act; Consents; Filings..........................................43
Section 10.3. Representations and Warranties......................................43
Section 10.4. Officers' Certificate...............................................43
Section 10.5. Closing Certificates................................................44
Section 10.6. Solvency Opinion/Fair Value.........................................44
Section 10.7. Fairness Opinion....................................................44
Section 10.8. Assumption Agreement................................................44
Section 10.9. Opinion of Counsel..................................................44
Section 10.10. Payments at Closing.................................................44
Section 10.11. Performance of Agreement............................................45
Section 10.12. No Adverse Proceeding...............................................45
Article XI INDEMNIFICATION................................................................45
Section 11.1. Survival of Representations, Warranties and Agreements..............45
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Section 11.2. Indemnification by Sellers and Nextera..............................45
Section 11.3. Indemnification by Buyer and FTI....................................46
Section 11.4. Limitations on Indemnification......................................47
Section 11.5. Procedure for Indemnification with Respect to Third-Party Claims....48
Section 11.6. Insurance Proceeds; Recoveries under Section 3.5....................48
Article XII TERMINATION....................................................................49
Section 12.1. Termination.........................................................49
Section 12.2. Effect of Termination...............................................50
Section 12.3. Fees And Expenses...................................................52
Article XIII MISCELLANEOUS PROVISIONS.......................................................52
Section 13.1. Notices.............................................................52
Section 13.2. Entire Agreement....................................................53
Section 13.3. Binding Effect; Assignment..........................................53
Section 13.4. Captions............................................................53
Section 13.5. Waiver; Consent.....................................................53
Section 13.6. No Third Party Beneficiaries........................................53
Section 13.7. Counterparts........................................................53
Section 13.8. Gender..............................................................53
Section 13.9. Remedies of Buyer...................................................54
Section 13.10. No Personal Liability...............................................54
Section 13.11. Governing Law.......................................................54
Section 13.12. Definitions.........................................................54
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made as of September
25, 2003, by and among FTI Consulting, Inc., a Maryland corporation ("FTI"), LI
Acquisition Company, LLC, a Maryland limited liability company and a
wholly-owned subsidiary of FTI ("Buyer"), Nextera Enterprises, Inc., a Delaware
corporation ("Nextera"), Lexecon Inc., an Illinois corporation and a
wholly-owned subsidiary of Nextera ("Lexecon"), CE Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Lexecon ("CE"), and ERG Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of Lexecon ("ERG"
and, together with Lexecon and CE, collectively, the "Sellers"). FTI, Buyer,
Nextera and Sellers are hereinafter sometimes referred to herein as the
"Parties".
PRELIMINARY STATEMENTS
A. Sellers are in the business of providing economics consulting services,
including litigation support, public policy studies and business consulting (the
"Business").
▇. ▇▇▇▇▇▇▇ and Nextera desire to sell and Buyer desires to purchase
substantially all the assets of Sellers and Nextera used in the Business and
assume the Assumed Liabilities, on the terms and conditions set forth in this
Agreement.
C. Concurrently with the execution of this Agreement, certain stockholders
have executed and delivered to Buyer the voting agreement in the form attached
hereto as Exhibit A (the "Voting Agreement").
D. Certain defined terms used in this Agreement are defined in Section
13.12 below.
NOW, THEREFORE, in consideration of these premises, the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:
ARTICLE I
ASSETS TO BE PURCHASED
Section 1.1. Description of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Sellers shall convey,
sell, transfer, assign and deliver to Buyer, and Buyer shall purchase and assume
from Sellers, all right, title and interest of Sellers at the Closing in and to
all of the assets, properties, rights (contractual or otherwise) and business of
Sellers of every kind, nature and description, real, personal and mixed,
tangible and intangible, known or unknown, wherever located that are owned or
used by Sellers, including, without limitation Sellers' Cambridge, Massachusetts
(both Harvard Square and ▇▇▇▇▇▇▇ Square) and Chicago, Illinois operations,
related to or used by or in the Business, and including, without limiting the
generality of the foregoing, but excluding the Excluded Assets:
(a) All rights and claims under leases of real property used in the
Business, including those described on Schedule 1.1(a), along with all
improvements, appurtenant
rights, easements and privileges appertaining or relating thereto (the
"Real Property Leases");
(b) All equipment, furniture, supplies, including, to the extent
assignable by Sellers, off-the-shelf software and other tangible personal
property used in or by the Business and owned or used by Sellers (the
"Personal Property");
(c) All claims and rights, including refunds, under court approved
retentions, contracts, agreements, contract rights, license agreements,
franchise rights and agreements, purchase and sales orders, quotations and
executory commitments, instruments, guaranties, indemnifications, leases,
the existing "key man" insurance policies listed on Schedule 1.1(c),
arrangements, and understandings of Sellers or Nextera related to the
Business, whether oral or written, to which Sellers or Nextera is a party,
in each case, to the extent assignable by Sellers or Nextera (whether or
not legally bound thereby) (the "Contracts");
(d) All client work and client work product related to the Business
that has been performed or is in the process of being performed on the
Closing Date, which has not yet been completed or has not yet been billed
and which is reasonably expected to be ultimately billed in the ordinary
course of business (the "Work-in-Process");
(e) All automobiles and other vehicles used in or by the Business and
owned or used by Sellers;
(f) All franchises, licenses, permits, consents, authorizations,
approvals, and certificates of any regulatory, administrative or other
Governmental Authority or body related to the Business, including those
described on Schedule 1.1(f) (the "Permits");
(g) All (i) patents and patent applications (collectively, "Patents");
(ii) trademarks, service marks, logos, symbols, and trade names and all
goodwill associated therewith (collectively, "Marks"); (iii) copyrights and
registrations and applications therefor (collectively, "Copyrights"); (iv)
except as described on Schedule 1.1(g), trade secrets, processes,
proprietary knowledge (collectively, "Trade Secrets"); (v) except as
described on Schedule 1.1(g), computer programs and software,
(collectively, "Software"); and (vi) licenses, sublicenses or agreements in
respect thereof which Sellers own or have the right to use or to which
Sellers are a party and which are used by or in connection with the
Business (collectively "Licenses" and together with the Patents, Marks,
Copyrights, Trade Secrets and Software, the "Proprietary Rights"),
including, in each case, those described on Schedule 1.1(g);
(h) All claims and rights under leases of equipment, vehicles or other
tangible personal property used in or by the Business, including those
described on Schedule 1.1(h) (the "Personal Property Leases");
(i) Except for the Withheld Receivables, all accounts and notes
receivable, investments, deposits and prepaid expenses related to the
Business (the "Receivables");
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(j) All marketable and non-marketable securities and other
investments, all rights in any funds of any nature (including, without
limitation, funds relating to vacation pay, workers' compensation,
unemployment compensation and other employee benefits), utility deposits,
deposits under Real Property Leases owned by Sellers and related to the
Business, wherever maintained or held, but excluding any letters of credit
posted by Sellers or Nextera as deposits under such Real Property Leases;
(k) All rights of Sellers or Nextera under or pursuant to all
warranties, representations and guarantees made by suppliers, manufacturers
and contractors in connection with products sold, services provided, or
property leased to Sellers or Nextera related to the Business or made by
Sellers or Nextera in connection with services performed by Sellers related
to the Business, or affecting the property, machinery or equipment used in
or by the Business (the "Warranties");
(l) All causes of action, judgments and claims or demands against
others of whatever kind or description related to the Business (the
"Claims");
(m) All books of account, customer lists, price lists, correspondence,
data, sales literature, sales data, accounting information relating to the
Business, client files (for active and inactive matters), books and
records, files, personnel files of Sellers' employees who are employed by
Buyer from and after the Closing, data bases, manuals, e-mails, ledgers,
papers and records and tax returns, in whatever form or medium related to
the Business (the "Business Records");
(n) All goodwill related to the Business (the "Goodwill");
(o) All telephone numbers, e-mail addresses, websites, domain names,
servers and networks for any of Sellers' offices or facilities related to
the Business, including, without limitation, the telephone numbers, e-mail
addresses, domain names, websites, servers and networks listed on Schedule
1.1(o);
(p) All assets associated with the Assumed Employment Liabilities; and
(q) Except for the Excluded Assets (as defined in Section 1.2), all
other property owned or used by Sellers or Nextera, whether tangible or
intangible, used by or in the Business and located at any of the offices or
facilities described on Schedule 1.1(a), whether or not reflected on any
balance sheets of Sellers or Nextera.
The foregoing, which (except for the Excluded Assets) are hereinafter referred
to as the "Assets," comprise substantially all of the property and assets used
in the conduct and operation of the Business as of the date of this Agreement,
and shall include all assets acquired in the ordinary course of the Business
between the date of this Agreement and the Closing Date. At Closing, Sellers
shall convey to Buyer good and marketable title to the Assets that are owned by
Sellers and good title to the Assets that are not owned by Sellers, free and
clear of all Encumbrances, except as expressly provided herein to the contrary.
Section 1.2. Excluded Assets. There shall be excluded from the definition
of Assets, and there shall be no conveyance, sale, transfer, assignment or
delivery to Buyer of:
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(a) All corporate minutes books, stock records, corporate seals, and
treasury shares of Sellers (all of which shall be subject to Buyer's right
to inspect and copy);
(b) Items disposed of between signing and Closing in the ordinary
course of business consistent with this Agreement, and those items listed
on Schedule 1.2(b);
(c) All Withheld Receivables;
(d) All capital stock of CE and ERG;
(e) All consideration received by Sellers or Nextera in the
transactions contemplated by this Agreement;
(f) The Internet website found at the uniform resource locator
▇▇▇.▇▇▇▇▇▇▇.▇▇▇ and all related websites, but excluding any websites listed
on Schedule 1.1(o);
(g) Copies of all records that are transferred to Buyer; and
(h) All Seller Plans and Non-Compete Agreements and all assets
associated with the Seller Plans or the Non-Compete Agreements.
All of the assets excluded from the definition of Assets pursuant to this
Section 1.2 are hereinafter collectively referred to as the "Excluded Assets."
Section 1.3. Consent to Assignment of Certain Assets. Schedule 1.3 lists
and describes all Assets which are non-assignable or the assignment of which
pursuant hereto requires the consent of any other party as well as all consents
of any Governmental Authority required to be obtained in connection with the
transactions contemplated hereby. Notwithstanding anything to the contrary in
this Agreement, to the extent that the assignment hereunder of any of the Assets
shall require the consent of any other party (or in the event that any of the
same shall be non-assignable), neither this Agreement nor any action taken
pursuant to its provisions shall constitute an assignment or an agreement to
assign if such assignment or attempted assignment would constitute a breach
thereof or result in the loss or diminution thereof; provided, however, that in
each such case, Sellers and Nextera shall each use their commercially reasonable
efforts, and Buyer shall reasonably cooperate with Sellers and Nextera, to
obtain the consent of such other party to an assignment to Buyer; provided, that
neither Nextera nor any of Sellers will be required to pay any consent fees,
commence any litigation or make any other concessions to any person in order to
obtain any such consent. If such consent is not obtained, Sellers and Nextera
shall cooperate with Buyer, in all material respects, to provide for Buyer the
benefits of such Assets including, without limitation, enforcement for the
account and benefit of Buyer of any and all rights of Sellers or Nextera against
any other Person with respect to such Assets.
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ARTICLE II
ASSUMPTION OF OBLIGATIONS
Section 2.1. Assumption of Certain Obligations. Subject to the provisions
of this Agreement, from and after the Closing Date, Buyer shall assume the
following liabilities and obligations of Sellers, to the extent the same have
not been discharged or satisfied prior to the Closing Date (the "Assumed
Liabilities"):
(a) The ordinary operating liabilities of Sellers related to the
Business that are due and payable after the Closing;
(b) The future payment and performance of the obligations accruing and
arising after the Closing Date relating to the Assets, including, without
limitation, customer contracts, Real Property Leases, Personal Property
Leases, Permits and other Contracts assigned to Buyer at the Closing;
(c) The Assumed Employment Liabilities; and
(d) Liabilities and obligations arising out of the Assets or related
to the Business, but only to the extent such liabilities and obligations
arise or are first required to be performed after the Closing Date.
Section 2.2. Excluded Liabilities; Buyer Not Successor.
(a) Except as expressly provided to the contrary in Section 2.1 above,
Buyer shall not by the execution and performance of this Agreement, or
otherwise under any circumstance, assume or otherwise be responsible for
any Liability or obligation of any nature of Nextera or Sellers, or claims
of such Liability or obligation, including, without limitation, those
arising from: (i) all Taxes of any kind whatsoever arising from the Assets
or operation of the Business, but only to the extent attributable to any
Pre-closing Tax Period; (ii) any occurrence or circumstance (whether known
or unknown) which occurs or exists prior to the Closing Date and which
constitutes, or which by the lapse of time or delivery of notice (or both)
would constitute, a breach or default under any Real Property Leases,
Permits, Personal Property Leases or other Contracts of Sellers or Nextera
(whether written or oral); (iii) any occurrence or circumstance (whether
known or unknown) which occurs or exists prior to the Closing Date and
which constitutes, or which by the lapse of time or delivery of notice (or
both) would constitute, a violation of the requirements of any Governmental
Authority or of the rights of any third person, including, without
limitation, requirements relating to the reporting or payment (or both) of
federal, state, local or foreign income, property or other Taxes; (iv)
Indebtedness of Sellers or Nextera; (v) any environmental Liabilities
(including without limitation any environmental Liabilities related to the
disclosures contained on Schedule 5.23), Liabilities for death or
destruction of property or any Liabilities for breach of warranties of
Sellers or Nextera in the provision of services or any Liabilities or any
Liabilities for acts or omissions of Sellers or Nextera or their employees
prior to the Closing Date, in each case arising from events or occurrences
which occurred prior to the Closing Date;
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(vi) any Seller Plan Liabilities that are not Assumed Employment
Liabilities; (vii) any Liabilities, other than Assumed Employment
Liabilities, that arise under Sellers' non-compete and employment
agreements with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇ and any other employee of Sellers or Nextera, including, without
limitation, any and all non-compete payments payable thereunder and the
non-compete payments listed on Schedule 9.19 (including any and all
possible payments relating to all future extensions thereof except
extensions made by FTI or Buyer) (the "Non-Compete Agreements"); (viii) any
Liabilities accruing on or prior to the Closing relating to Sellers'
employment or termination of Sellers' employees that are not Assumed
Employment Liabilities; (ix) any liability arising out of any Litigation
pending on the Closing Date, whether or not disclosed to Buyer; and (x) any
other claims of any kind whatsoever or any other Liabilities of Sellers or
Nextera, direct or indirect (collectively, the "Excluded Liabilities").
(b) Except as expressly provided in Section 2.1 above, the Parties
agree that Buyer shall not be the successor to Sellers. Sellers shall
retain, pay, perform and discharge the Excluded Liabilities.
ARTICLE III
PURCHASE PRICE
Section 3.1. Consideration. In consideration for the Assets and in full
payment therefor: (a) Buyer shall assume the Assumed Liabilities as provided in
Section 2.1 of this Agreement, (b) Buyer shall pay or caused to be paid to
Sellers, in accordance with Section 3.2(a), an amount in cash equal to One
Hundred Thirty Million Dollars ($130,000,000) and (c) Buyer shall pay or caused
to be paid to Sellers, in accordance with Section 3.2(c), the amount of the
Medical Plan Payment (with the items referred to in clauses (a), (b) and (c)
being referred to collectively as the "Purchase Price").
Section 3.2. Payment. At the Closing:
(a) Buyer shall pay to Sellers the amount set forth in Section 3.1(b),
less the Escrow Amount and less any Estimated Working Capital Discrepancy
Amount required pursuant to the last phrase of Section 3.5(d) (such net
amount, the "Cash Closing Amount"), in immediately available cash funds by
wire transfer to an account designated by Sellers at least five (5) days
prior to the Closing; provided that the Cash Closing Amount shall be
reduced by the amount paid by Buyer, on behalf of Sellers and Nextera, to
repay and discharge in full the Indebtedness of Sellers referenced in
clauses (i), (ii), (iv) and (viii) of the definition of Indebtedness.
(b) Buyer shall deposit the Escrow Amount into a third party escrow
account with a third party escrow agent and the parties and such escrow
agent shall execute an escrow agreement in the form attached hereto as
Exhibit B (the "Escrow Agreement"). Sellers, on the one hand, and Buyer, on
the other hand, agree to each pay one-half of any fees or charges under the
Escrow Agreement.
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(c) Buyer shall pay to Sellers the Medical Plan Payment in immediately
available cash funds by wire transfer to an account designated by Sellers
at least five (5) days prior to the Closing.
Section 3.3. Purchase Price Allocation. The parties hereby agree that the
Purchase Price shall be allocated to the Assets and Assumed Liabilities in the
manner agreed to by the Parties in writing prior to the Closing Date. The
Parties covenant and agree to file all federal, state, local and foreign tax
returns in accordance with such allocations and to report the Closing as a
taxable transaction.
Section 3.4. Transfer Taxes. All transfer, gains, sales, bulk sales, use
and similar conveyance Taxes imposed by reason of the transactions contemplated
hereby and any deficiency, interest or penalty asserted with respect thereto
shall be paid in accordance with local law and custom.
Section 3.5. Closing Balance Sheet; Accounts Receivable; Escrow Amount.
(a) Sellers have delivered to FTI and Buyer a schedule of Sellers'
consolidated Working Capital for the fiscal quarters ended June 30, 2001
through June 30, 2003 (the "Working Capital Schedule"). The Working Capital
Schedule has been prepared by Sellers in good faith, in accordance with
GAAP on a pro forma basis from the books and records of Sellers, fairly
presents in all material respects the consolidated Working Capital of
Sellers for the time periods indicated and excludes the Excluded
Liabilities.
(b) No later than five (5) days prior to the Closing Date, Sellers
shall (i) prepare and deliver to Buyer an estimated consolidated balance
sheet of Sellers dated as of the estimated date of Closing (the "Estimated
Closing Balance Sheet") and a calculation of Sellers' estimated Working
Capital as of the Closing Date (the "Estimated Closing Working Capital"),
(ii) designate in writing the accounts receivable from one or more of the
customers listed on Schedule 13.12 that shall be "Withheld Receivables"
hereunder and (iii) designate in writing the amount of such Withheld
Receivables. Following delivery of the Estimated Closing Balance Sheet and
Sellers' Withheld Receivables designations, Buyer will have the right to
make reasonable inquiries regarding the Estimated Closing Balance Sheet and
the amount of Sellers' Withheld Receivables, and Sellers shall use
commercially reasonable efforts prior to the Closing Date to provide to
Buyer such additional information and answers to such inquiries. The
Estimated Closing Balance Sheet shall be prepared in good faith in
accordance with GAAP on a pro forma basis in a manner consistent with the
Working Capital Schedule and shall represent Sellers' good faith estimate
of the assets and liabilities of the Business to be transferred to Buyer at
the Closing and fairly present in all material respects the estimated
financial position of such Business as of the Closing Date. The calculation
of Estimated Closing Working Capital shall be made in good faith based on
the Estimated Closing Balance Sheet.
(c) Following the Closing, subject to Section 3.5(d) below, Buyer
shall notify each client with accounts receivable designated by Sellers as
Withheld Receivables and
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instruct such client to pay and deliver the Withheld Receivables to Nextera
or Sellers in the manner reasonably requested by Sellers and shall promptly
(and in any event within five (5) Business Days) forward to Nextera the
amount of any Withheld Receivables received by Buyer following such
instructions.
(d) If the Estimated Closing Working Capital is less than Six Million,
Five Hundred Twenty-Two Thousand, Eight Hundred Dollars ($6,522,800) (the
"Working Capital Target"), then accounts receivable equal to the amount by
which the Working Capital Target exceeds the Estimated Closing Working
Capital (the "Estimated Working Capital Discrepancy Amount") shall be
deducted from the Withheld Receivables (by transferring such Receivables to
Buyer at Closing) until exhausted and then from the Purchase Price, not to
exceed the Estimated Working Capital Discrepancy Amount in the aggregate.
Solely for the purpose of determining the Estimated Closing Working Capital
and the Closing Working Capital, the Parties agree that an amount equal to
one-half (1/2) of the Seller Plan Payments shall be deemed to be a Current
Liability and included in the calculation of Estimated Closing Working
Capital and the Closing Working Capital under this Section 3.5.
(e) During the one hundred twenty (120)-day period immediately
following the Closing Date (the "Collection Review Period"), FTI shall:
(i) (A) use its commercially reasonable efforts to collect all
accounts receivable represented on the Estimated Closing Balance Sheet as
accounts receivable or as revenues earned on the date of the Estimated
Closing Balance Sheet but not invoiced by Sellers on such date, provided,
however that neither FTI nor Buyer shall be required to pay any fees,
commence any litigation or make any other concessions to any person in
performing such activities, and (B) provide notice to Sellers of any
determination by FTI or Buyer that any accounts receivable represented on
the Estimated Closing Balance Sheet are uncollectible, any such
determination to be made by Buyer acting in good faith; and
(ii) during the first sixty (60) days of the Collection Review
Period, cause its employees or Ernst & Young LLP to prepare and deliver to
Nextera and Sellers (i) an actual consolidated balance sheet of Sellers as
of the Closing Date (the "Closing Date Balance Sheet") prepared in good
faith in accordance with GAAP on a pro forma basis in a manner consistent
with the Working Capital Schedule and the Estimated Closing Balance Sheet,
which shall represent FTI's and Buyer's good faith estimate of the assets
and liabilities of the Business as of the Closing Date and fairly present
in all material respects the financial position of such Business as of the
Closing Date, (ii) a calculation of Sellers' Working Capital as of the
Closing Date (the "Closing Working Capital"), which shall be determined in
good faith based on the Closing Date Balance Sheet and (iii) a calculation
of the Closing Working Capital Discrepancy Amount (if any) or the
Discrepancy Repayment (if any), each determined in good faith in accordance
with Section 3.5(f).
(f) If the sum of the Closing Working Capital plus the Estimated
Working Capital Discrepancy Amount (if any) is less than the Working
Capital Target, then Sellers
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and Buyer shall make a joint instruction to the Escrow Agent to deliver to
Buyer such portion of the Escrow Amount as is equal to the amount by which
the sum of the Closing Working Capital plus the Estimated Working Capital
Discrepancy Amount (if any) is less than the Working Capital Target (the
"Closing Working Capital Discrepancy Amount"). If the Closing Working
Capital exceeds the Working Capital Target, Buyer shall immediately repay
to Sellers any Estimated Working Capital Discrepancy Amount deducted
pursuant to Section 3.5(d) (the "Discrepancy Repayment") in immediately
available cash funds by wire transfer to the account designated by Sellers
under Section 3.2(a).
(g) At the end of the Collection Review Period, FTI and Buyer shall
make and deliver to Nextera and Sellers a determination of the amount of
the specific accounts receivable represented on the Estimated Closing
Balance Sheet (such accounts receivables represented on the Estimated
Closing Date Balance Sheet being the "Base Receivables") that remain
uncollected at the end of the Collection Review Period and that FTI and
Buyer determine, acting in good faith, to be still collectible (the
"Collectible Accounts Receivable Determination"). Thereafter:
(i) if (D + E) is less than (A - B - C) [with such factors as defined
below], then, unless Nextera or Sellers dispute any portion of such
Collectible Accounts Receivable Determination in accordance with
Section 3.5(h), Sellers and Buyer shall make a joint instruction to
the Escrow Agent (or either Party may submit the Accounting Referee
determination, as the case may be) to deliver to Buyer such portion of
the Escrow Amount as is equal to the dollar amount (not to exceed the
balance of the Escrow Account) by which (D + E) is less than (A - B -
C); and
(ii) if (D + E) is greater than or equal to (A - B - C), then Buyer
and FTI shall not be entitled to receive any amounts from the Escrow
Account with respect to the collectibility or uncollectibility of the
Base Receivables;
in each of (i) and (ii) above, where:
A = Aggregate amount of Base Receivables;
B = Specific reserves set forth on the Estimated Closing Balance Sheet
with respect to the Base Receivables;
C = General reserve for doubtful accounts set forth on the Estimated
Closing Balance Sheet;
D = Aggregate collections with respect to the Base Receivables during
the Collection Review Period; and
E = Aggregate amount of not yet collected Base Receivables for which
Buyer and FTI have made a Collectible Accounts Receivable
Determination.
By way of example only, if at the Closing, A = $21,000,000, B =
$2,000,000 and C = $1,000,000, and if at the end of the Collection Review
Period D = $15,000,000 and
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E = $4,000,000, then D + E = $19,000,000, and A - B - C = $18,000,000, then
Buyer and FTI shall not be entitled to receive any amounts from the Escrow
Account with respect to the collectibility or uncollectibility of the Base
Receivables.
(h) If Nextera or Sellers in good faith disagree with (i) the
Collectible Accounts Receivable Determination or (ii) any portion of the
Closing Date Balance Sheet, the Closing Working Capital, the Closing
Working Capital Discrepancy Amount (if any) or the Discrepancy Repayment
(if any), then Sellers may until ten (10) Business Days after receipt of
the Collectible Accounts Receivable Determination (in the case of a
disagreement related to the Collectible Accounts Receivable Determination)
or the Closing Date Balance Sheet (in the case of a disagreement related to
the Closing Date Balance Sheet, the Closing Working Capital, the Closing
Working Capital Discrepancy Amount (if any) or the Discrepancy Repayment
(if any)), deliver a written notice to FTI setting forth in reasonable
detail its disagreement and the basis of such a disagreement. If no such
notice of disagreement is timely delivered, then any Collectible Accounts
Receivable Determination, on the one hand, and/or the Closing Date Balance
Sheet, Closing Working Capital, the Closing Working Capital Discrepancy
Amount (if any) and the Discrepancy Repayment (if any), on the other hand,
shall be final and binding on the Parties hereto.
(i) If a notice of disagreement shall be timely delivered pursuant to
Section 3.5(h), then Nextera and FTI shall, during the ten (10) Business
Days following such delivery, use commercially reasonable efforts to seek
in good faith to reach agreement on the disputed items. If such an
agreement is reached during this period, the Parties' agreement regarding
any Collectible Accounts Receivable Determination, on the one hand, and/or
the Closing Date Balance Sheet, Closing Working Capital, the Closing
Working Capital Discrepancy Amount (if any) or the Discrepancy Repayment
(if any), on the other hand, shall be final and binding on the Parties. If
Nextera and FTI are unable to reach such agreement, the New York City
office of BDO ▇▇▇▇▇▇▇ (the "Accounting Referee") shall be retained to
review promptly this Agreement and the disputed items or amounts. In
connection therewith, the Accounting Referee shall promptly review this
Agreement and shall consider only those items or amounts in dispute. The
Accounting Referee shall deliver to Nextera and FTI as promptly as
practicable, and within thirty (30) days after being referred the matter, a
report setting forth its adjustments (if any) to any Collectible Accounts
Receivable Determination and/or the Closing Date Balance Sheet, Closing
Working Capital, the Closing Working Capital Discrepancy Amount (if any) or
the Discrepancy Repayment (if any), as applicable, and the calculations
supporting such determinations. The Collectible Accounts Receivable
Determination and/or the Closing Date Balance Sheet, Closing Working
Capital, the Closing Working Capital Discrepancy Amount (if any) or the
Discrepancy Repayment (if any), each as adjusted pursuant to such report
shall be final and binding on the Parties hereto and shall be submitted to
the Escrow Agent with specific instructions from the Accounting Referee to
release funds from the escrow account, the amount of such funds and the
Party to receive such funds. The non-prevailing Party shall pay the fees
and expenses of the Accounting Referee; provided, however, that in the
event of a compromise between the positions of the Parties, such fees and
expenses shall be prorated based on the relative success of the Parties in
prevailing on their respective positions.
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(j) Buyer agrees that it shall have no recourse for any amounts under
Sections 3.5(f), (g), (h), or (i) in excess of the Escrow Amount, and
Buyer's only source for any such recourse shall be against the Escrow
Amount in accordance with this Section 3.5. Notwithstanding the foregoing,
Nextera and Sellers acknowledge that nothing in this Section 3.5(j) shall
limit Buyer's rights under Article XI for breaches of Nextera's and
Sellers' representations and warranties contained in Article V.
(k) Upon the expiration of the Collection Review Period, all amounts
remaining in the escrow account that are not the subject of a formal
dispute initiated in accordance with this Section 3.5 shall be delivered by
the Escrow Agent to Nextera.
Section 3.6. Accounts Receivable and Prepaid Expenses.
(a) Set forth in Schedule 3.6 is a schedule of the accounts receivable
and prepaid expenses as of June 30, 2003, specifying the names of each
account, the dates of incurrence, the face amounts thereof and, in the case
of the accounts receivable, the amount of any reserve Sellers have allotted
for each such account, if any.
(b) Buyer shall use its commercially reasonable efforts to collect all
such accounts receivable set forth on Schedule 3.6 prior to Buyer's making
of any Collectible Accounts Receivable Determination; it being understood
that Buyer's commercially reasonable efforts shall not require Buyer to
initiate litigation to collect accounts receivable.
(c) All revenue and expenses relating to the Assets transferred and
assigned to Buyer on the Closing Date shall be prorated as of the Closing
Date, except as otherwise provided herein. Sellers shall take commercially
reasonable actions to notify third Persons who are obligated to make
payments with respect to the accounts receivable after the Closing Date to
make such payments to Buyer when due and, if Sellers receive any payment
with respect to the accounts receivable on and after the Closing Date,
including payments with respect to any Withheld Receivables that are
transferred to Buyer in accordance with Section 3.5(d), Sellers shall
promptly remit such amount to Buyer.
ARTICLE IV
CLOSING AND POST-CLOSING COOPERATION
Section 4.1. Closing. Subject to the satisfaction or waiver by the
appropriate Party of all of the conditions precedent to Closing specified in
Articles IX and X hereof, the consummation of the sale and purchase of the
Assets and the other transactions contemplated by and described in this
Agreement (the "Closing") shall take place at the offices of Paul, Hastings,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on or before
December 31, 2003, unless extended to a later date by agreement of FTI and
Nextera in writing, at 10:00 a.m. local time (the "Closing Date"). The Closing
shall be effective as of 11:59 p.m. on the Closing Date or at such other time as
the Parties hereto may mutually designate in writing.
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Section 4.2. Actions of Sellers at Closing.
(a) At the Closing, Sellers shall sell, convey, transfer, assign and
deliver to Buyer the Assets; and
(b) At the Closing, and unless otherwise waived in writing by Buyer,
Sellers shall deliver to Buyer the documents and instruments required by
Article IX hereof.
Section 4.3. Actions of Buyer at Closing.
(a) At the Closing, Buyer shall pay Sellers the Cash Closing Amount,
deposit the Escrow Amount in accordance with the Escrow Agreement and pay
Sellers the Medical Plan Payment, and Buyer shall assume the Assumed
Liabilities; and
(b) At the Closing and unless otherwise waived in writing by Nextera,
Buyer shall deliver the documents and instruments required by Article X
hereof.
Section 4.4. Additional Acts. From time to time after the Closing, Sellers
and Nextera shall execute and deliver such other instruments of conveyance and
transfer, and take such other actions as Buyer reasonably may request, to convey
and transfer more effectively full right, title and interest to, vest in, and
place Buyer in legal and actual possession of, any and all of the Assets, and
Buyer shall execute and deliver such other instruments, and take such other
actions as Sellers or Nextera reasonably may request, to assist Sellers and
Nextera in satisfaction of any Excluded Liabilities and repayment of any
Indebtedness. Sellers and Nextera shall furnish Buyer and Buyer shall furnish
Sellers and Nextera with such information and documents in their possession or
under their control, or which they can execute or cause to be executed, as will
enable Buyer to prosecute any and all petitions, applications, claims and
demands relating to or constituting a part of the Assets and Sellers and Nextera
to satisfy any Excluded Liabilities. Additionally, Sellers and Nextera shall
cooperate with and use their respective reasonable best efforts to cause their
respective former and present directors, managers, officers and employees to
cooperate with Buyer on and after the Closing in furnishing information,
evidence, testimony and other assistance in connection with any action,
proceeding, arrangement or dispute of any nature with respect to matters
pertaining to all periods prior to the Closing in respect of the items subject
to this Agreement as reasonably requested by Buyer. Buyer shall cooperate with
and use their respective reasonable best efforts to cause its directors,
managers, officers and employees to cooperate with Sellers and Nextera after the
Closing in furnishing information, evidence, testimony and other assistance in
connection with any action, proceeding, arrangement or dispute of any nature
with respect to Excluded Liabilities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEXTERA AND SELLERS
Each of the Sellers and Nextera hereby jointly and severally represent and
warrant to Buyer and FTI as follows:
Section 5.1. Corporate Organization. Lexecon is a corporation organized,
validly existing and in good standing under the laws of the State of Illinois.
Each of Nextera, CE and
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ERG is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. Nextera owns 100% of the issued and
outstanding capital stock of Lexecon. Lexecon owns 100% of the issued and
outstanding capital stock of each of CE and ERG. There are no outstanding
options, warrants, rights, commitments, preemptive rights or agreements of any
kind for the issuance and sale or rights convertible into additional equity of
any class or kind of Sellers. Each of the Sellers and Nextera has all requisite
corporate power and authority to own, lease and operate its properties and
conduct the Business as now being conducted. Each of the Sellers and Nextera are
duly qualified to do business and are in good standing in each jurisdiction
where the nature of the business conducted by them or the property they own,
lease or operate requires any of them to qualify to do business as a foreign
corporation except where the failure to so qualify would not have a Material
Adverse Effect. Set forth on Schedule 5.1 is a list of each jurisdiction in
which both Sellers and Nextera are qualified to do business. Except as set forth
on Schedule 5.1, none of Sellers nor Nextera has received any written notice or
assertion within the last three years from any governmental official of any
jurisdiction to the effect that any of Sellers or Nextera is required to be
qualified or otherwise authorized to do business therein, in which any of
Sellers or Nextera has not qualified or obtained such authorization. Each of the
Sellers and Nextera have previously delivered to FTI complete and correct copies
of Sellers' and Nextera's Certificates of Incorporation and all amendments
thereto as of the date hereof, and their By-laws, as in effect on the date
hereof (together, the "Formation Documents"), and none of Sellers nor Nextera
are in default in the performance, observation or fulfillment of any provision
of any such Formation Documents.
Section 5.2. Authorization of Sellers.
(a) Each of the Sellers and Nextera has the full legal right, power
and all authority to enter into, execute and deliver this Agreement, to
perform fully its obligations hereunder and to consummate the transactions
contemplated hereby. Except for Nextera Stockholder Approval, all necessary
and appropriate corporate action has been taken by Sellers and Nextera with
respect to the execution and delivery of this Agreement and the performance
of their respective obligations hereunder and no other proceedings on the
part of any of Sellers or Nextera is necessary to approve the Agreement or
the other Transaction Documents and the transactions contemplated hereby
and thereby.
(b) The only vote required of the holders of any class or series of
Nextera's capital stock or other equity interests necessary to adopt this
Agreement and to approve the transactions contemplated hereby is the
approval of the holders of a majority of the voting power of the
outstanding Nextera Stock (the "Nextera Stockholder Approval").
(c) This Agreement has been duly and validly executed and delivered by
each of the Sellers and Nextera and constitutes, and the documents to be
executed and delivered at the Closing, when executed and delivered by each
of the Sellers and Nextera, will constitute, valid and binding obligations
of Sellers and Nextera, enforceable against each of them in accordance with
their terms, subject to enforceability against Buyer and FTI and the effect
of applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of
general principles of equity, including, without limitation, the possible
unavailability of specific
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performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
Section 5.3. Financial Statements.
(a) The annual consolidated financial statements of Nextera set forth
in its most recent Form 10-K filing with the SEC and the interim
consolidated financial statements of Nextera set forth in filings with the
SEC since the filing of its most recent Form 10-K, along with the following
financial statements of the Business, which have been previously furnished
to Buyer by Nextera are true, correct and complete in all material
respects, have been prepared from and are in accordance with the books and
records of Sellers and Nextera and its subsidiaries and have been prepared
in conformity with GAAP applied using an accrual basis method, and fairly
present the financial condition of Sellers and the Business as of the dates
stated and the results of operations and cash flows of Sellers and the
Business for the periods then ended in accordance with such practices: (i)
the audited balance sheet of Lexecon as of December 31, 2002, and the
related consolidated statements of operations, cash flow and stockholders'
equity of Sellers for the year then ended, (ii) the audited balance sheet
of Nextera as of December 31, 2001, and 2002, and the related consolidated
statements of operations, cash flow and stockholders' equity of Nextera for
the years then ended (the "Annual Financial Statements"), and (iii) the
unaudited balance sheet of Sellers as of June 30, 2003 attached hereto as
Schedule 5.3 (the "June Balance Sheet"), and the related statement of
operations for the six-month period then ended. The June Balance Sheet for
the Business represents Sellers' and Nextera's best estimate of the assets
and liabilities of the Business to be transferred to Buyer pursuant to this
Agreement and fairly presents in all material respects the financial
position of such Business as of June 30, 2003, and was prepared in all
material respects from and is in accordance with the books and records of
Sellers, Nextera and its subsidiaries and was prepared in accordance with
GAAP using an accrual basis method other than footnotes required by GAAP
and year-end audit adjustments. There are no material liabilities or
obligations, whether contingent or absolute, direct or indirect, or matured
or unmatured, of the Business which are not shown or provided for in the
June Balance Sheet.
Section 5.4. Absence of Certain Changes or Events. Except as set forth on
Schedule 5.4, since the Balance Sheet Date, there has not been any material
adverse effect on the business, operations, results of operations, assets,
properties or financial condition of the Business; excluding (i) the failure of
any of the employees of Sellers other than those listed on Schedule 7.6 to
accept employment with the Buyer or FTI or (ii) the effect of any delisting of
the capital stock of Nextera from the Nasdaq SmallCap Stock Market ("Material
Adverse Effect"). Nextera has not declared, set aside or paid any dividend or
other distribution (whether in cash, securities or property or any combination
thereof) in respect of any class, redemption or series of its capital stock or
other equity interests. In addition to the foregoing, none of Sellers nor
Nextera have:
(a) authorized or issued capital stock of Sellers or Nextera; granted
any stock option or right to purchase shares of capital stock of Sellers or
Nextera; issued any security convertible into such capital stock; granted
of any registration rights; purchased,
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redeemed, retired, or otherwise acquired, by Sellers or Nextera, any shares
of any such capital stock; or declared or paid any dividend or other
distribution in respect of shares of such capital stock;
(b) (i) sold, leased, transferred or disposed of any material assets
or rights or (ii) acquired or leased any material assets or rights;
(c) paid, discharged or satisfied any material liability, obligation
or lien with respect to underlying obligations, other than payment,
discharge or satisfaction of (i) Indebtedness as it matured and became due
and payable; (ii) liabilities, obligations or liens in the ordinary course
of business consistent with past practice; or (iii) as otherwise
specifically contemplated by this Agreement;
(d) materially (i) changed any of the accounting or tax principles,
practices or methods or (ii) changed reserve policies or reserves;
(e) (i) made any change in the compensation payable to any of its
officers, directors, employees, consultants, agents or sales associates
(other than general increases in wages to employees and/or payments to
consultants, agents or sales associates in the ordinary course consistent
with past practice), (ii) entered into or amended any material employment,
severance, consulting, termination, other agreement or (iii) made any
material change in its existing borrowing or lending arrangements for or on
behalf of any of such Persons pursuant to an employee benefit plan or
otherwise;
(f) (i) paid or made any accrual or arrangement for payment of any
pension, retirement allowance, unused vacation days or other employee
benefit to any officer, director, employee, sales associate or affiliate,
except payments and accruals made in the ordinary course consistent with
past practice; (ii) adopted or paid, granted, issued, accelerated or
accrued salary or other payments or benefits which include any payment in
equity or cash payments pursuant to any pension, profit-sharing, bonus,
extra compensation, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay,
retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement except, in each case, in the ordinary
course; or (iii) amended in any material respect any such existing plan,
agreement or arrangement in a manner inconsistent with the foregoing;
(g) made any borrowing or agreement to borrow funds by Sellers or
incurred any other obligation or liability, contingent or otherwise, which
would remain as a liability of the Business following the Closing, except
liabilities reflected on the June Balance Sheet; or any endorsement,
assumption or guarantee of payment or performance of any loan or obligation
of any other individual, firm, corporation or other entity which would
remain as a liability of the Business following the Closing, except as
reflected on the June Balance Sheet;
(h) made any mortgage, pledge, lien, security interest, hypothecation,
charge or other encumbrance with respect to the Assets;
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(i) made any material write downs of the value of any Asset or any
material write downs as uncollectible of any accounts receivable or portion
thereof;
(j) made any payments (other than compensation in the ordinary course
consistent with past practice), loans, advances or other distributions to,
or entered into any transaction, agreement or arrangement with, any
affiliates, officers, directors, employees, sales associates, stockholders
or their respective affiliates;
(k) made or authorized any capital expenditures, except in the
ordinary course consistent with past practice or not in excess of
Twenty-Five Thousand Dollars ($25,000) individually or One Hundred Thousand
Dollars ($100,000) in the aggregate;
(l) settled or compromised any material Tax liability or agreed to any
adjustment of any material Tax attribute or made any election with respect
to Taxes;
(m) made any material change in its working capital practices
generally, including accelerating any collections of cash or accounts
receivable or deferring payments or accruals;
(n) incurred any material liability other than in the ordinary course
of business;
(o) had a judgment entered or settled any Litigation resulting in a
loss, payment or other cost, after receipt of insurance payments,
individually or in the aggregate, in excess of Twenty-Five Thousand Dollars
($25,000);
(p) amended Sellers' or Nextera's Formation Documents or altered
through merger, liquidation, reorganization, restructuring or in any other
fashion its respective corporate structure or ownership;
(q) made any modification, waiver, change, amendment, release,
rescission or termination of, or accord and satisfaction with respect to,
any material contract, agreement, license or other instrument to which
Sellers are a party, including all material customer/consulting agreements,
other than any satisfaction by performance in accordance with the terms
thereof in the ordinary course of business;
(r) entered into or amended in an adverse manner any agreement which
had non-competition, geographical restriction or similar covenants that
would be material; or
(s) agreed to take any of the foregoing actions other than as
permitted hereunder or any action which would reasonably be expected to
prevent or delay the consummation of the transactions contemplated by this
Agreement.
Section 5.5. Undisclosed Liabilities. Except for the Assumed Liabilities or
as set forth on Schedule 5.5, there is no Liability which will become a
Liability of Buyer following the Closing, except:
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(a) those set forth or reflected in the June Balance Sheet which have
not been paid or discharged since the date thereof;
(b) those arising under agreements or other commitments to be
expressly assumed by Buyer at the Closing; and
(c) those arising in the ordinary course of the Business since the
date of the June Balance Sheet.
Section 5.6. Taxes. Except as set forth on Schedule 5.6:
(a) Each of the Sellers and Nextera has duly filed all Tax Returns
required to be filed with respect to Sellers for all taxable periods or
portions thereof ending on or before the Closing Date with the appropriate
Governmental Authority. All such Tax Returns are true, correct and complete
in all material respects.
(b) All Taxes shown as due on such Tax Returns or otherwise due and
payable and all assessments received by Sellers or Nextera have been paid
or properly accrued to the extent such Taxes have become due and payable
except to the extent any such Taxes or assessments are being contested in
good faith by appropriate proceedings.
(c) On the June Balance Sheet, reserves and allowances have been
provided, and on the books and records of Sellers and Nextera reserves and
allowances will be provided, in each case adequate to satisfy all
liabilities for Taxes relating to Sellers for periods through the Closing
Date (without regard to deferred Taxes and without regard to the
materiality thereof).
(d) There are no waivers or agreements by Sellers or Nextera extending
the statute of limitations for any period with respect to any Tax to which
Sellers may be subject.
(e) None of the federal, state or local income Tax Returns filed by or
with respect to any of Sellers or Nextera during the prior three years has
been audited by any taxing authority. Schedule 5.6 sets forth the dates and
results of all such audits. Neither the IRS nor any other Governmental
Authority has asserted, or to the Knowledge of Sellers or Nextera,
threatened to assert any deficiency or claim for additional Taxes against,
or any adjustment of Taxes relating to, Sellers or Nextera.
(f) There are no material Tax liens on any assets of Sellers other
than liens for current Taxes not yet due and payable and liens for Taxes
that are being contested in good faith by appropriate proceedings.
(g) Each of the Sellers and Nextera has withheld or collected and paid
over to the appropriate Governmental Authorities or are properly holding
for such payment all material Taxes required by law to be withheld or
collected.
(h) There are no Tax sharing agreements or similar arrangements with
respect to or involving Sellers or Nextera.
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Section 5.7. Compliance With Law. Each of the Sellers and Nextera has
complied and is in compliance with all material applicable laws, statutes,
orders, rules, regulations, policies or guidelines promulgated, or material
judgments, decisions or orders entered, by any federal, state, local or foreign
court or Governmental Authority or instrumentality relating to the Business
(collectively, the "Applicable Laws"). Schedule 1.1(f) contains a complete and
accurate list of all Permits issued to or held by Sellers or Nextera which are
related to the Business. Each of the Permits is currently valid and in full
force and effect and the Permits constitute all franchises, licenses, permits,
consents, authorization, approvals, and certificates of any regulatory,
administrative or other agency or body necessary to conduct the Business as
presently conducted, except where any such failure would not result in a
Material Adverse Effect. None of Sellers nor Nextera is in material violation of
any of the Permits and there is no pending or threatened action or proceeding
which could result in the revocation, cancellation or inability of Sellers or
Nextera to renew or transfer any Permit, except where any such violation would
not result in a Material Adverse Effect. Except as set forth on Schedule 5.7,
none of Sellers nor Nextera, nor any of their affiliates, to the Knowledge of
Sellers and Nextera, is under investigation with respect to, or has been charged
with or given notice of any violation of, any of the Applicable Laws.
Section 5.8. Proprietary Rights.
(a) Schedule 1.1(g) sets forth: (i) all registered Marks and pending
applications for registration of any ▇▇▇▇ owned by Sellers; (ii) all
Patents and applications for Patents owned by Sellers; (iii) all registered
Copyrights and pending applications for registration of any Copyrights
owned by Sellers; and (iv) all proprietary Software owned by Sellers that
are material to the operation of the Business as presently conducted
(collectively, "Owned Intellectual Property"). Except as set forth on
Schedule 5.8, Sellers are the sole and exclusive owner of all right, title
and interest in the Owned Intellectual Property free and clear of all
Encumbrances whatsoever.
(b) Except as set forth on Schedule 5.8, to the Knowledge of Sellers
and Nextera, other than those Proprietary Rights listed on Schedule 1.1(g),
no Proprietary Right is used in or is necessary for the operation of the
Business as the same is currently conducted. To the Knowledge of Sellers
and Nextera, the Business, as conducted prior to the Closing, and the sale
by Sellers, and ownership by Buyer of any of the Assets, was not, is not
and will not be in contravention of any trade name, service ▇▇▇▇, patent,
trademark, copyright or other proprietary right of any third party.
(c) Except as set forth on Schedule 5.8, none of the Proprietary
Rights has been hypothecated, sold, assigned or licensed by any of Sellers
or Nextera. To the Knowledge of Sellers and Nextera, no Proprietary Right
of Sellers is subject to challenge, claims of infringement, unfair
competition or other claims, and no Proprietary Right of Sellers is being
infringed upon or violated by any person, firm, corporation or other legal
entity.
(d) Except in the ordinary course of business or as set forth on
Schedule 5.8; neither Sellers nor Nextera has given any indemnification
against patent, trademark or copyright infringement as to any equipment,
materials, products, services or supplies which either Sellers or Nextera
produces, uses, licenses or sells, which indemnification
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will be assumed by Buyer; to the Knowledge of Sellers or Nextera, no
product, process, method or operation presently sold, engaged in or
employed by Sellers or Nextera in connection with the Business infringes
upon any rights owned by any other person, firm, corporation or other legal
entity; to the Knowledge of Sellers or Nextera, there is not pending or
threatened any claim or Litigation against any of the Sellers or Nextera
contesting the right of any of the Sellers or Nextera to sell, engage in or
employ with respect to the Business any such product, process, method, or
operation; and there is not, to the Knowledge of Sellers and Nextera,
pending, proposed or threatened, any patent, copyright, trade name,
trademark, service ▇▇▇▇, invention, device, application or principle which,
if granted, reasonably could be expected to result in, or which has, a
Material Adverse Effect.
Section 5.9. Insurance. Schedule 5.9 is a true, correct and complete list
of all insurance policies and bonds in force that are related to the Business in
which any of Sellers or Nextera is named as an insured party, or for which any
of Sellers or Nextera has paid any premiums, and Schedule 5.9 correctly states
the name of the insurer, type and amount of coverage, deductible amounts, if
any, expiration date and amount of premium paid annually for each such policy or
bond. Except as disclosed on said Schedule, all such policies or bonds are
currently in full force and effect and none of Sellers nor Nextera has received
any notice from any such insurer with respect to the cancellation of any such
insurance. Sellers and Nextera will continue all of such insurance in full force
and effect up to the Closing. All premiums due and payable on such policies have
been paid. Except as disclosed on said Schedule, none of Sellers nor Nextera is
a co-insurer or self-insurer under any term of any insurance policy. The
policies listed on Schedule 5.9 as "occurrence" provide coverage on an
"occurrence basis" which includes any "occurrence" arising from Sellers'
operations up to and through the Closing. With respect to policies listed as
"claims made" Sellers or Nextera is provided coverage, and for the period of any
"tail coverage" purchased by Sellers or Nextera claims can be brought for
wrongful acts occurring during the period Sellers were subsidiaries of Nextera.
Section 5.10. Bank Accounts, Depositories, Powers of Attorney. Schedule
5.10 is a true, correct and complete list of the names and locations of all
banks or other depositories in which are located cash or cash equivalents of
Sellers, and the names of the persons authorized to draw on any accounts, borrow
therefrom or have access thereto. No person or entity holds a power of attorney
of Sellers.
Section 5.11. Title to Properties.
(a) Except as set forth on Schedule 5.11, Sellers have good, valid and
marketable title to the Assets owned by Sellers and good title to the
Assets not owned by Sellers, in each case, that are used in the Business or
reflected on the June Balance Sheet other than items of personal property
which in the aggregate had a book value not in excess of Twenty-Five
Thousand Dollars ($25,000) which have been disposed of in the ordinary
course of business since June 30, 2003.
(b) The Assets constitute all of the property now used in and
necessary for the conduct of the Business as presently conducted.
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(c) Except as set forth on Schedule 5.11, all such Assets are held
free and clear of all Encumbrances. Except as set forth on Schedule 5.11,
no financing statement covering any of the Assets as collateral under the
Uniform Commercial Code or similar law naming Sellers or Nextera as debtor
has been filed in any jurisdiction, and none of Sellers nor Nextera is a
party to or, to the Knowledge of Sellers and Nextera, bound under any
agreement or legal obligation authorizing any party to file any such
financing statement.
(d) Except as set forth on Schedule 5.11 or as would not result in a
Material Adverse Effect, each of Sellers and Nextera conducts the Business
in compliance with any Real Property Leases, leases or other Contracts, any
restrictions of record and all zoning, fire, safety, building, pollution,
environmental control and other laws, ordinances, regulations and
requirements of every Governmental Authority applicable to the ownership,
operation or other use of the Assets.
Section 5.12. Brokers, Finders. The transactions contemplated herein were
not submitted to Sellers or Nextera by any broker or other person entitled to a
commission or finder's fee thereon. None of Sellers nor Nextera nor any of their
officers, directors, managers, shareholders, or employees, has engaged any
broker or finder or incurred or taken any action which may give rise to any
liability against itself or the Assets for any brokerage fees, commissions,
finders' fees or similar fees or expenses and no broker or finder has acted
directly or indirectly for Sellers or Nextera in connection with this Agreement
or the transactions contemplated hereby. Except for payments to ▇▇▇▇▇▇▇▇
Valuation Advisors for its rendering of (i) an opinion as to the fairness of the
transaction contemplated hereby from a financial point of view and (ii) a
solvency/fair value opinion, and to Harch Capital Management for its investment
banking services, no investment banking, financial advisory or similar fees have
been incurred or are or will be payable by Sellers or Nextera in connection with
this Agreement or the transactions contemplated hereby.
Section 5.13. Legal Proceedings, etc. Except as set forth on Schedule 5.13,
there is no Litigation filed, pending or, to the Knowledge of Sellers and
Nextera, threatened against Sellers or Nextera and involving the Assets or the
Business, this Agreement or the transactions contemplated hereby, before any
Governmental Authority. Except as set forth on Schedule 5.13, none of Sellers
nor Nextera is subject to any judgment, order or decree, or, to the Knowledge of
Sellers and Nextera, any governmental restriction applicable to Sellers and
Nextera, which reasonably could be expected to result in, or which has, a
Material Adverse Effect.
Section 5.14. No Conflict or Default; Consents.
(a) Except as set forth on Schedule 5.14, neither the execution and
delivery of this Agreement by Sellers or Nextera, nor compliance by Sellers
or Nextera with the terms and provisions hereof, including, without
limitation, the consummation of the transactions contemplated hereby, will
violate any statute, regulation or ordinance of any Governmental Authority
applicable to Sellers and Nextera, or conflict with or result in the breach
of or the acceleration of any term, condition or provision of the Formation
Documents of any of Sellers or Nextera or of any material agreement, deed,
contract, mortgage, indenture, writ, order, decree, legal obligation or
instrument to which any of
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Sellers or Nextera is a party or by which Sellers or Nextera or any of the
Assets are bound, or constitute a default (or an event which, with the
lapse of time or the giving of notice, or both, would constitute a default)
thereunder, or result in the creation or imposition of any Encumbrance with
respect to any of the Assets, or give to others any interest or rights,
including, without limitation, rights of termination, acceleration or
cancellation in or with respect to the Assets or the Business.
(b) Except for the Nextera Shareholder Approval or as set forth on
Schedule 1.3, the execution and delivery of this Agreement by Sellers and
Nextera and the consummation of the transactions contemplated herein, do
not require Sellers or Nextera to obtain the consent, approval or action
of, or to make any filing with or provide any notice to, any Person or
Governmental Authority.
Section 5.15. Labor Relations.
(a) Schedule 5.15 contains a list of all individuals who on the date
hereof perform services in the Business operations of Sellers and Nextera
in the capacity of an employee or independent contractor as well as the job
classification and principal work location for each such individual. Except
as set forth on Schedule 5.15, no such individual has terminated his or her
employment or engagement, nor, to the Knowledge of Sellers or Nextera,
plans not to continue his or her employment or engagement with Sellers or
Nextera after the date hereof. Schedule 5.15 also contains a list as of the
date hereof of all individuals who formerly performed services in the
Business operations of Sellers and Nextera in the capacity of an employee
or independent contractor and whose employment or engagement terminated on
or after January 1, 2003.
(b) None of Sellers nor Nextera is a party to any collective
bargaining agreement or agreement of any kind with any union or labor
organization, no such agreement is currently being negotiated on behalf of
Sellers or Nextera, and, to the Knowledge of Sellers or Nextera, there is
no effort by or on behalf of any labor union to organize any employees of
the Business for purposes of collective bargaining. Solely to the extent
relating to the employees of the Business, (i) there is no strike, labor
dispute, work shutdown or work stoppage actually pending, or to the
Knowledge of Sellers or Nextera, threatened, against Sellers or Nextera
with respect to the Business, (ii) no collective bargaining grievance is
pending or, to the Knowledge of Sellers or Nextera, threatened against
Sellers or Nextera or any other entity with respect to the Business, and
(iii) none of Sellers nor Nextera is the subject of any Litigation which is
pending or, to the Knowledge of Sellers or Nextera, threatened, asserting
that Sellers or Nextera have committed an unfair labor practice (within the
meaning of the National Labor Relations Act or any applicable law) or
seeking to compel Sellers or Nextera to bargain with any labor organization
as to wages and conditions of employment.
(c) Sellers and Nextera have complied in all material respects with
all applicable federal, state and local laws, rules, regulations and
executive orders relating to employment, including, but not limited to, the
National Labor Relations Act, as amended; Title VII of the Civil Rights Act
of 1964, as amended; the Reconstruction Civil Rights Acts, as amended; the
Equal Pay Act of 1963, as amended; the Age Discrimination in
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Employment Act of 1967, as amended; the Rehabilitation Act of 1973, as
amended; the Selective Service Act of 1948, as amended; the Veterans'
Re-employment Rights Acts, as amended; the Vietnam Era Veterans
Readjustment Act of 1974, as amended; the Fair Labor Standards Act, as
amended; the Occupational Safety and Health Act of 1970, as amended; the
Immigration Reform and Control Act of 1986 and the regulations promulgated
pursuant thereto; the Worker Adjustment and Retraining Notification Act, as
amended ("WARN") and all applicable laws, rules and regulations governing
payment of minimum wages and overtime rates, the withholding and payment of
taxes from compensation of employees and the payment of premiums and/or
benefits under applicable worker compensation laws.
(d) Except as set forth on Schedule 5.15, there (i) is no outstanding,
pending, or to the Knowledge of Sellers or Nextera, threatened, claim in
excess of Ten Thousand Dollars ($10,000) individually or Twenty-Five
Thousand Dollars ($25,000) in the aggregate against Sellers, Nextera or the
Business by any individual who is a current or former employee or
independent contractor of the Business, (ii) is no dispute between Sellers
or Nextera and a number or class of any individuals who are current or
former employees or independent contractors of the Business which has had
or would reasonably be expected to have a Material Adverse Effect or
materially impair the ability of Buyer to carry on the Business as
currently conducted and (iii) there are no material payments of
compensation in excess of Fifty Thousand Dollars ($50,000) due but unpaid
to any individual who is a current or former employee or independent
contractor of the Business.
Section 5.16. Employee Benefit Plans; ERISA.
(a) Schedule 5.16 contains a true, current and complete list of all
Seller Plans for any of the current or former employees, officers,
non-employee directors or consultants of Sellers. For purposes of this
Agreement, "Seller Plans" shall mean (i) all employee benefit plans within
the meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), (ii) each supplemental retirement,
severance, sabbatical, medical, dental, vision care, disability, employee
relocation, cafeteria benefit (Section 125 of the Code) or dependent care
(Section 129 of the Code), life insurance or accident insurance plans,
programs or arrangements, (iii) each bonus, pension, profit sharing,
savings, deferred compensation or incentive plans programs or arrangements,
(iv) each other fringe or employee benefit plan, program or arrangement
that applies to senior management and that does not generally apply to all
employees and (v) each employment, retention or severance agreement that,
in any case of (i) through (v) above, written or otherwise, are sponsored
or maintained by Sellers, Nextera or any trade or business (whether or not
incorporated) which is treated as a single employer with Sellers within the
meaning of Section 414(b), (c), (m) or (o) of the Code (an "ERISA
Affiliate") for any of their current or former employees, officers,
non-employee directors or consultants.
(b) Sellers have provided to Buyer a true and complete copy of (i)
each Seller Plan listed on Schedule 5.16, including (without limitation)
all material amendments thereto and related trust documents, administrative
services agreements, group annuity
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contracts and group insurance contracts, (ii) with respect to any such
Seller Plan intended to qualify under Section 401(a) of the Code, the most
recent favorable determination or opinion letter from the Internal Revenue
Service with respect to such Seller Plan's qualified status under Code and
(iii) all current summary plan descriptions, summaries of material
modifications and material communications relating to each such Seller
Plan.
(c) None of the Seller Plans is (i) subject to Title IV or Section 302
of ERISA or Section 412 or 4971 of the Code, (ii) a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of ERISA or (iii) an employee
pension benefit plan, within the meaning of Section 3(2) of ERISA that has
two or more contributing sponsors at least two of whom are not under common
control, within the meaning of Section 4063 of ERISA (a "multiple employer
plan"). Sellers, Nextera and any ERISA Affiliate have not incurred any
liability under Title IV of ERISA that could become, after the Closing
Date, an obligation of Buyer. No liability to the Pension Benefit Guaranty
Corporation has been incurred by Sellers, Nextera or any ERISA Affiliate
since the effective date of ERISA. No event has occurred with respect to
any Seller Plan that has been established, maintained or contributed to at
any time during the five-year period immediately preceding the Closing Date
which could result in liability to Buyer under Section 4069 of ERISA.
Section 5.17. Contracts and Commitments.
(a) Except for Excluded Assets, Schedule 5.17 lists all material
Contracts used in or relating to the Business.
(b) Sellers have delivered true complete and correct copies of all
written Contracts listed on Schedule 5.17 to Buyer prior to the date
hereof.
(c) Except for Excluded Assets and the Real Property Leases and
Personal Property Leases listed on Schedules 1.1(a) and 1.1(h)
respectively, the Contracts constitute all of the contracts, agreements,
contract rights, leases, license agreements, franchise rights and
agreements, policies, purchase and sales orders, quotations and executory
commitments, instruments, guaranties, indemnifications, arrangements and
understandings (written or oral) necessary to conduct the Business as
presently conducted.
(d) To the Knowledge of Sellers and Nextera, all of the Contracts are
valid and binding, in full force and effect and enforceable in accordance
with their respective provisions, subject to enforceability against the
other party thereto and the effect of applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject to the effect of general principles of equity,
including, without limitation, the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
(e) Except as set forth on Schedule 5.17, none of Sellers nor Nextera
has assigned, mortgaged, pledged, Encumbered, or otherwise hypothecated any
of its right, title or interest under any Contract.
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(f) Except as set forth in Schedule 5.17, none of Sellers nor Nextera
(nor, to the Knowledge of Sellers and Nextera, any other party thereto) is
in violation of, in default in respect of nor has there occurred an event
or condition which, with the passage of time or giving or notice (or both)
would constitute a violation or default of any Contract, and, to the
Knowledge of Sellers and Nextera, there are no facts or circumstances which
would reasonably indicate that Sellers or Nextera (or any other party) will
be or may be in violation of or in default in respect of any Contract,
subsequent to the date hereof. Except as set forth in Schedule 5.17, no
notice has been received by Sellers or Nextera claiming any such default by
Sellers or Nextera or indicating the desire or intention of any other party
thereto to amend, modify, rescind or terminate the same.
Section 5.18. Receivables; Payables.
(a) All Receivables shown on the June Balance Sheet and all such
receivables held by Sellers on the date hereof were and are valid
obligations of the respective makers thereof arising from services actually
performed by Sellers in the ordinary course of business, and were not and
are not subject to any offset or counterclaim, except for amounts reserved
against on the June Balance Sheet (which reserves are adequate and
calculated consistent with past practice, and will not represent a material
adverse change in the composition of such receivables in terms of aging)
and, with respect to notes and accounts thereafter arising and outstanding
on the date hereof, except for a percentage thereof equal to the percentage
which said reserved amounts on the June Balance Sheet constituted of the
aggregate of notes and accounts receivable at the date of the June Balance
Sheet.
(b) Schedule 3.6 contains an accurate and complete list, as of a date
no earlier than June 30, 2003, of all of the Receivables, together with
detailed information as to each such Receivable which has been outstanding
for more than thirty (30) days. Except as set forth on Schedule 3.6, none
of Sellers nor Nextera have any Knowledge that any account debtors of
Sellers are unable to pay any accounts receivable owed to Sellers for any
reason whatsoever, except to the extent of any amounts reserved against on
the June Balance Sheet.
(c) Except as set forth on Schedule 5.18, as of a date no earlier than
June 30, 2003, Sellers have paid all accounts payable in the ordinary
course of business in accordance with the terms thereof, and has not
delayed the payment thereof in contemplation of the transactions provided
in the Agreement or otherwise.
Section 5.19. Books of Account; Records. The general ledgers, books of
account, stock record books, minute books and other records of Sellers and
Nextera related to the Business are complete and correct in all material
respects, have been maintained in accordance with good business practices and
the matters contained therein are appropriately and accurately reflected in the
Financial Statements.
Section 5.20. Officers, Employees and Compensation. Except as set forth on
Schedule 5.20, to the extent the following constitute Assumed Liabilities, the
provisions for
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wages and salaries accrued on the Annual Financial Statements and any
liabilities therefor reflected on the June Balance Sheet are adequate for
salaries and wages, including accrued vacation pay, for the period up through
the date thereof, and Sellers and Nextera have accrued on their books and
records all obligations for wages and salaries and other compensation to their
employees, including, but not limited to, vacation pay and sick pay, and all
commissions and other fees payable to independent contractors, agents, salesmen
and representatives. Except as set forth on Schedule 5.20 or under the Seller
Plans or the Non-Compete Agreements, none of Sellers nor Nextera has become
obligated, directly or indirectly, to any shareholder, director, officer, member
or manager of any of Sellers or any member of their families, except for current
liability for such compensation reflected on the June Balance Sheet. Except as
set forth on Schedule 5.20, no shareholder, director, officer, member, or
manager, agent or employee of Sellers holds any position or office with or has
any material financial interest, direct or indirect, in any supplier, customer
or account of, or other outside business which has material transactions with
Sellers or Nextera.
Section 5.21. Real Property Leases. Schedule 1.1(a) lists each real
property lease used by Sellers in the operation of the Business under which any
of Sellers or Nextera is a lessee. True copies of such Real Property Leases
(including all amendments thereof and modifications thereto) have been delivered
to Buyer prior to the date hereof. All such Real Property Leases are valid and
binding and in full force and effect, subject to enforceability against the
other party and the effect of applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and subject to
the effect of general principles of equity, including, without limitation, the
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law. Except as set forth
on Schedule 5.21, none of Sellers nor Nextera (nor, to the Knowledge of Sellers
or Nextera, any other party thereto) is in violation of, in default in respect
of nor has there occurred an event or condition which, with the passage of time
or giving of notice (or both) would constitute a default of any such Real
Property Lease. Sellers do not own any real property.
Section 5.22. Personal Property Leases. Schedule 1.1(h) is a complete and
accurate list of each Personal Property Lease used by Sellers in the operation
of the Business under which any of Sellers or Nextera is a lessee. To the
Knowledge of Sellers and Nextera, all of such Personal Property Leases are valid
and binding, in full force and effect and enforceable in accordance with their
respective provisions, subject to enforceability against the other party thereto
and the effect of applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors' rights generally and subject to the effect
of general principles of equity, including, without limitation, the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or at law. Except as set forth on
Schedule 5.22, none of Sellers nor Nextera (nor, to the best Knowledge of
Sellers or Nextera, any other party thereto) is in violation of, in default in
respect of nor has there occurred an event or condition which, with the passage
of time or giving of notice (or both) would constitute a default of any such
Personal Property Lease.
Section 5.23. Environmental Matters. Except as set forth on Schedule 5.23,
to the Knowledge of Sellers and Nextera, (i) there are no conditions at, in, on,
under or related to the real property leased under the Real Property Leases (the
"Leased Real Property") which pose a hazard to human health or the environment
other than such conditions which are in compliance
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with applicable Environmental Laws, (ii) Sellers and Nextera are in compliance
with all applicable Environmental Laws, and Sellers and Nextera are not engaged
in the production, use, treatment, storage, transportation, handling discharge,
disposal, arrangement for disposal or release or threatened release of any
Hazardous Substance or Solid Waste in violation of applicable Environmental Law
(a) at, in, on, under, from, or over the Leased Real Property, or (b) into or
upon or over soil, surface water or groundwater at, on, or under the Leased Real
Property, (iii) during Sellers' or the Nextera's lease thereof, Sellers and
Nextera have not been responsible for the creation of any underground tanks,
collection dumps or pits, land disposal facilities or surface impoundments at,
on or under the Leased Real Property and (iv) during Sellers' or Nextera's lease
thereof, Sellers and Nextera have not been responsible for the incorporation of
asbestos containing material, radon or PCB-containing electrical transformers or
other equipment or machinery which contains or has contained PCBs, at, on, or
under the Leased Real Property, in violation of applicable Environmental Laws.
Section 5.24. Complete Disclosure. No representation or warranty made by
Sellers or Nextera in this Agreement, and no exhibit, schedule, statement,
certificate, financial statement or projection or other writing furnished to
Buyer by or on behalf of Sellers or Nextera, pursuant to this Agreement or in
connection with the transactions contemplated hereby or thereby, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein and
therein not misleading. Sellers have furnished or caused to be furnished to
Buyer or its representatives for review complete and correct copies of all
agreements and documents set forth on the disclosure schedules attached hereto.
None of Sellers nor Nextera has Knowledge of any fact that has any specific
application to Sellers and/or Nextera that may have a Material Adverse Effect
which has not been set forth in this Agreement or in the schedules hereto.
Section 5.25. Agreements and Transactions with Related Parties. Except as
set forth on Schedule 5.25, neither Sellers nor Nextera is or has been a party
to any Contract related to the Assets with, or any other commitment to (i) any
party owning, beneficially or of record, directly or indirectly, any of the
capital stock of Sellers, (ii) any person related by blood, adoption or marriage
to any such party, (iii) any director or officer of any of Sellers or Nextera,
(iv) any corporation or other entity in which any of the foregoing parties has,
directly or indirectly, at least a five percent (5%) beneficial interest in the
capital stock or other type of equity interest in such corporation or (v) any
partnership in which any such party is a general partner (any or all of the
foregoing being herein referred to as "Related Persons"). Without limiting the
generality of the foregoing, except as set forth on Schedule 5.25, (A) no
Related Person directly or indirectly owns or controls any Assets or properties
which are or have been used in the Business and (B) no Related Person directly
or indirectly engages in or has any significant interest in or connection with
any business (x) which is or which within the last two years has been a
competitor, customer or supplier of Sellers or has done business with Sellers,
or (y) which provides services which are similar or related to Sellers'
services.
Section 5.26. Clients and Customers.
(a) Schedule 5.26 contains (A) a true and complete list of the clients
and customers of the Business for the year then ended December 31, 2002 and
for the five (5) month period ended May 31, 2003; provided that such
Schedule may list only one client
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in any joint-representation engagement and (B) the name of the employee
principally responsible for providing services to and, if different,
billing each such client and customer to whom the Business provided
services during 2002 and 2003.
(b) Schedule 5.26 contains (A) a true and complete list of all written
contracts, agreements, retainers and accepted proposal letters pursuant to
which the Business was actively rendering services to its clients and
customers as of July 31, 2003 (the "Client Contracts") in excess of Fifty
Thousand Dollars ($50,000) and (B) a true and correct description of (x)
any and all disputes or defaults arising under or with respect to the
Client Contracts in connection with which a client or customer has
threatened, or is expected to, terminate its contract with Sellers or claim
for Damages, and (y) all loans or advances made by Sellers to or on behalf
of clients and customers of the Business, which description includes the
date of such loan or advance and the principal balance of outstanding as of
the date of this Agreement under each such loan or advance. To the
Knowledge of Sellers and Nextera, no client or customer of the Business has
threatened to terminate, fail to renew or adversely modify any relationship
with the Business.
(c) There are no existing or, to the Knowledge of Sellers or Nextera,
threatened service liability, warranty or other similar claims, against
Sellers for services which are defective or fail to meet any service
warranties. Except as set forth on Schedule 5.26, since December 31, 2001,
Sellers have not recorded any renegotiation or price redetermination of any
Business transaction in an amount in excess One Hundred Thousand Dollars
($100,000).
Section 5.27. Work-In-Process. Schedule 5.27 contains a true aged list of
work-in-process related to the Business as of July 31, 2003, all of which are
appropriately valued and are billable and collectible in the ordinary course of
business.
Section 5.28. Solvency.
(a) None of Sellers nor Nextera is now insolvent and will not be
rendered insolvent by the transactions contemplated by this Agreement. As
used in this section, "insolvent" means that the sum of the Liabilities of
Sellers or Nextera, as the case may be, exceeds the present fair market
value of Sellers' or Nextera's assets, as the case may be.
(b) Immediately after giving effect to the consummation of the
transactions contemplated by this Agreement: (i) each of Sellers and
Nextera will be able to pay its Liabilities as they become due in the
ordinary course of its business; (ii) each of Sellers and Nextera will not
have unreasonably small capital with which to conduct its present or
proposed business; and (iii) taking into account all pending and threatened
Litigation, final judgments against Sellers or Nextera in actions for money
damages are not reasonably anticipated to be rendered at a time when, or in
amounts such that, Sellers or Nextera will be unable to satisfy any such
judgments in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as well as all
other obligations of Sellers or Nextera.
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Section 5.29. No Other Representations. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS ARTICLE V, SELLERS AND NEXTERA MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND FTI
Buyer and FTI hereby jointly and severally represent and warrant to Sellers
and Nextera that:
Section 6.1. Organization.
(a) FTI is a corporation duly formed and validly existing and in good
standing under the laws of the State of Maryland and has all requisite
corporate power and lawful authority to (i) enter into this Agreement and
to perform its obligations hereunder, (ii) own, lease and operate its
properties and assets as they are now owned, leased and operated, and (iii)
carry on its business as now conducted and presently proposed to be
conducted. Except as set forth on Schedule 6.1, FTI is not qualified to
conduct business in any jurisdiction outside of the State of Maryland.
(b) Buyer is a limited liability company duly formed and validly
existing and in good standing under the laws of the State of Maryland and
has all requisite limited liability company power and lawful authority to
(i) enter into this Agreement and to perform its obligations hereunder,
(ii) own, lease and operate its properties and assets as they are now
owned, leased and operated, and (iii) carry on its business as now
conducted and presently proposed to be conducted. Except as set forth on
Schedule 6.1, Buyer is not qualified to conduct business in any
jurisdiction outside of the State of Maryland.
Section 6.2. Authorization of Buyer. Each of Buyer and FTI has the full
legal right, power and all authority of a corporation or a limited liability
company, as applicable, to enter into, execute and deliver this Agreement, to
perform fully its obligations hereunder and consummate the transactions
contemplated hereby. All necessary and appropriate corporate or limited
liability company action, as applicable, has been taken by each of Buyer and FTI
with respect to the execution and delivery of this Agreement and the performance
of its obligations hereunder and this Agreement has been duly executed and
delivered by Buyer and FTI and constitutes the valid and binding obligation of
Buyer and FTI enforceable against Buyer and FTI in accordance with its terms
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally and subject to general principles of equity.
Section 6.3. Non-Contravention. Neither the execution and delivery of this
Agreement by Buyer or FTI nor the performance by Buyer or FTI of the
transactions contemplated hereby will: (a) violate or conflict with any of the
provisions of the Articles of Organization or operating agreement of Buyer or
the Articles of Incorporation or By-laws of FTI; (b) to Buyer or FTI's
knowledge, violate or conflict with any provisions of any law or order
applicable to Buyer
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or FTI; or (c) except as set forth on Schedule 6.3, to Buyer or FTI's knowledge,
require any consent or approval by or filing or notice with any governmental or
regulatory body or other Person except for: (i) filings under federal or state
securities or "blue sky" laws (which have been or will be made) and (ii) such as
would not have a material adverse effect on Buyer or FTI.
Section 6.4. Brokers. The transactions contemplated herein were not
submitted to Buyer or FTI by any broker or other person entitled to a commission
or finder's fee thereon, and were not with the consent of either Buyer or FTI
submitted to Sellers or Nextera by any such broker or other person. Neither
Buyer, FTI nor any of its officers, directors, managers or employees, has
engaged any broker or finder or incurred or taken any action which may give rise
to any liability against itself or the Assets for any brokerage fees,
commissions, finders' fees or similar fees or expenses and no broker or finder
has acted directly or indirectly for Buyer or FTI in connection with this
Agreement or the transactions contemplated hereby.
Section 6.5. Legal Proceedings, etc. There is no Litigation filed, pending
or, to the knowledge of FTI or Buyer, threatened against FTI or Buyer and
involving this Agreement or the transactions contemplated hereby before any
Governmental Authority. Neither FTI nor Buyer is subject to any judgment, order
or decree, or, to the knowledge of FTI or Buyer, any governmental restriction
applicable to FTI or Buyer, which reasonably could be expected to result in, or
which has, a material adverse effect on Buyer's ability to consummate the
transactions contemplated hereby.
ARTICLE VII
COVENANTS OF SELLERS AND NEXTERA
Section 7.1. Change of Name; Use of Name. Sellers and Nextera acknowledge
and agree that the names "Lexecon" and "Lexecon Consulting" or any combination
or derivation thereof are an Asset which shall be acquired by Buyer hereunder.
At or prior to the Closing Date, Lexecon shall change its corporate name to one
which is not the same as or similar to its present corporate name or any other
trademarks or service marks now used by Sellers. At Buyer's expense, Seller and
Nextera shall grant all reasonable consents and take any other and further
reasonable action requested by Buyer to enable Buyer to use, reserve or register
any such name for the exclusive use of Buyer; provided, that neither Nextera nor
any of Sellers will be required to pay any fees, commence any litigation or make
any other concessions to any person in connection with providing such
assistance. As soon as practicable and in any event no later than thirty (30)
days after the Closing, Sellers and Nextera shall discontinue use of the names
"Lexecon", "Lexecon Consulting" and any similar names. Sellers and Nextera shall
provide such assistance as Buyer may reasonably request at Buyer's cost and
expense in relation to any infringement, unfair competition, passing off or
similar claim which Buyer may bring in the future against any third party based
on the use of the "Lexecon" name.
Section 7.2. Conduct of Business Prior to the Closing. Sellers and Nextera
covenant that on and after the date hereof and prior to the Closing, and except
with respect to the Non-Compete Agreements or as otherwise consented to or
approved by an authorized officer of Buyer in writing, the Business shall be
conducted only in the ordinary course, including:
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(a) Nextera shall not declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock or other
equity interests;
(b) Sellers and Nextera shall not authorize or issue any capital stock
of Sellers or Nextera other than any issuance of capital stock of Nextera
upon exercise of any outstanding stock option agreements; grant any stock
option or right to purchase shares of capital stock of Sellers or Nextera;
issue any security convertible into such capital stock; grant any
registration rights; purchase, redeem, retire, or otherwise acquire by
Sellers or Nextera, any shares of any such capital stock;
(c) Sellers shall not, other than in the ordinary course of business,
(i) sell, lease, transfer or dispose of any material assets or rights or
(ii) acquire or lease any material assets or rights;
(d) Sellers shall not pay, discharge or satisfy any material
liability, obligation or lien with respect to underlying obligations, other
than payment, discharge or satisfaction of (i) material Indebtedness as it
matures and becomes due and payable; (ii) liabilities, obligations or liens
in the ordinary course of business; or (iii) as otherwise contemplated by
this Agreement;
(e) Sellers shall not materially (i) change any of the accounting or
tax principles, practices or methods or (ii) change reserve policies or
reserves;
(f) Except as set forth on Schedule 7.2, Sellers shall not (other than
in the ordinary course consistent with past practice) (i) make any material
change in the compensation payable to any of its officers, directors,
employees, agents, consultants or sales associates, (ii) enter into or
amend any material employment, severance, consulting, termination or other
agreement or any employee benefit plan or (iii) make any material change,
in any Seller Plan listed on Schedule 5.16;
(g) Except as set forth on Schedule 7.2, Sellers shall not (other than
in the ordinary course consistent with past practice) make any material
payments, loans, advances or other distributions to, or enter into any
material transaction, agreement or arrangement with, any officers,
directors, employees, sales associates, stockholders or their respective
affiliates;
(h) Sellers shall not make or authorize any capital expenditures,
except in the ordinary course consistent with past practice or not in
excess of Twenty-Five Thousand Dollars ($25,000) individually or One
Hundred Thousand Dollars ($100,000) in the aggregate;
(i) None of Sellers nor Nextera shall, with respect to the Business
prior to Closing and without the express written consent of Buyer, (i)
grant any compensation increases (other than any increase required by law)
to any Business employee, other than normal merit and cost of living
increases in the ordinary course of business consistent with past practice,
or grant any severance or termination pay to any officer, director or
Business employee or enter into any employment or consulting agreement with
any such
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person, (ii) except as set forth on Schedule 7.2, enter into any new, or
materially amend or alter any Seller Plan or make any payments to any
Business employees other than as contemplated by Seller Plans existing as
of the date of this Agreement.
(j) Sellers shall not settle or compromise any Tax liability or agree
to any adjustment of any Tax attribute or made any election with respect to
Taxes;
(k) Sellers shall not make any change in its working capital practices
generally, including accelerating any collections of cash or accounts
receivable or deferring payments or accruals;
(l) Sellers shall not incur any material liability other than in the
ordinary course of business consistent with past practice and other than as
permitted under this Section 7.2;
(m) Sellers shall not have a judgment entered or settle any Litigation
resulting in a loss, payment or other cost, after receipt of insurance
payments, individually or in the aggregate, in excess of Twenty-Five
Thousand Dollars ($25,000);
(n) Sellers shall not amend its respective Formation Documents or
alter through merger, liquidation, reorganization, restructuring or in any
other fashion its respective corporate structure or ownership;
(o) Sellers shall not modify, waive, change, amend, release, or
terminate any material Contract, agreement, license or other instrument to
which any of Sellers is a party, including all material customer/consulting
agreements, other than any satisfaction by performance in accordance with
the terms thereof in the ordinary course of business;
(p) Seller shall not enter into or amend in an adverse manner any
agreement which had non-competition, geographical restriction or similar
covenants that would be material;
(q) Sellers shall use commercially reasonable efforts to maintain,
preserve and protect all of its assets and properties necessary to operate
the Business, whether real or personal, tangible or intangible, in good
condition, ordinary wear and tear and damage by fire or other casualty
excepted;
(r) The books, records and accounts of Sellers shall be maintained in
the ordinary course of business and in accordance with generally accepted
accounting principles; and
(s) Sellers and Nextera shall use commercially reasonable efforts to
preserve Sellers' business organization, to keep available the services of
Sellers' present employees, to preserve the good will of Sellers'
suppliers, clients and others having business relations with Sellers, and
to use commercially reasonable efforts to assist Sellers in retaining the
services of key employees and agents of Sellers for Buyer after the Closing
Date on terms reasonably satisfactory to Buyer; provided, that, other than
payments under the Non-Compete Agreements, neither Nextera nor any of
Sellers will be
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required to pay any fees, commence any litigation or make any other
concessions to any person in performing such activities.
Section 7.3. Stockholder Meeting. Subject to Section 7.4, Nextera shall
cause a meeting of the Nextera Stockholders (the "Nextera Stockholder Meeting")
to be duly called and held as promptly as reasonably practicable after the date
hereof for the purpose of obtaining Nextera Stockholder Approval. Subject to
Section 7.4, Nextera's Board of Directors shall recommend approval and adoption
by the Nextera Stockholders of this Agreement and the transactions contemplated
hereby (the "Nextera Recommendation"), and Nextera shall take all other
reasonable lawful action to solicit and secure the Nextera Stockholder Approval.
Subject to Section 7.4, the Nextera Recommendation, together with a copy of the
opinion referred to in Section 5.12, shall be included in the Proxy Statement.
Section 7.4. Non-Solicitation.
(a) Acquisition Proposal.
(i) Nextera agrees that it shall not, nor shall it permit Sellers
to, nor shall it authorize or knowingly permit any officer, director,
employee, affiliate, investment banker, attorney, accountant, agent or
other advisor or representative of Nextera or Sellers, directly or
indirectly, to (i) solicit, initiate or otherwise encourage the submission
of any Acquisition Proposal, (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any information with
respect to, or take any other action knowingly to facilitate any inquiries
or the making of any proposal that constitutes, or that would reasonably be
expected to lead to, an Acquisition Proposal, (iii) grant any waiver or
release under any standstill or similar agreement with respect to any class
or series of Nextera or Sellers' equity securities to the extent such
waiver or release would permit the other party or parties to such agreement
to actually acquire such securities or approve any matter for purposes of
Section 203 of the DGCL with respect to any Person (for the avoidance of
doubt, a waiver or release under such agreement that solely permits a
proposal or offer, including, without limitation, an Acquisition Proposal,
would not violate this clause (iii)), or (iv) enter into any agreement with
respect to any Acquisition Proposal.
(ii) Nextera shall notify Buyer promptly (but in no event later
than the third Business Day) after receipt by Nextera or Sellers of any
Acquisition Proposal or any request for information relating to Nextera or
Sellers in connection with an Acquisition Proposal or for access to the
properties, books or records of Nextera or Sellers or any request for a
waiver or release under any standstill or similar agreement by any Person
that has made, or informs the Board of Directors of Nextera or Sellers that
it is considering making, an Acquisition Proposal. The notice shall
indicate the material terms and conditions of the proposal or request and
the identity of the Person making it, and Sellers will promptly notify
Buyer of any material modification of or material amendment to any
Acquisition Proposal (and the terms of such modification or amendment);
provided, however, that, without limiting what changes may be material, any
change in the form, amount, timing or other aspects of the consideration to
be paid
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with respect to the Acquisition Proposal shall be deemed to be a material
modification or a material amendment.
(iii) (A) Except as permitted by Section 7.4(b), neither the
Board of Directors of Nextera nor or any other committee thereof shall
amend, withdraw, modify, change, condition or qualify in any manner adverse
to Buyer, the Nextera Recommendation (it being understood and agreed that a
communication by the Board of Directors of Nextera to Nextera Stockholders
pursuant to Rule 14d-9(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any similar communication to the Nextera
Stockholders in connection with the making or amendment of a tender offer
or exchange offer by any Person, shall not be deemed to constitute a
withdrawal, modification, amendment, condition or qualification of the
Nextera Recommendation for purposes of this Section 7.4) and (B) unless
Nextera's Board of Directors has previously withdrawn, or is concurrently
therewith withdrawing, the Nextera Recommendation in accordance with this
Section 7.4, Nextera's Board of Directors shall not recommend any
Acquisition Proposal to the Nextera Stockholders. Nothing contained in this
Section 7.4 or elsewhere in this Agreement shall (i) prevent Nextera's
Board of Directors from complying with Rule 14e-2 under the Exchange Act
with respect to any Acquisition Proposal or making any disclosure required
by applicable law or (ii) prohibit accurate disclosure of factual
information regarding the business, financial condition or results of
operations of Nextera or Sellers, or the fact that an Acquisition Proposal
has been made, the identity of the party making such Acquisition Proposal
or the material terms of such Acquisition Proposal to the extent such
information, facts, identity or terms are required to be disclosed under
applicable law.
(b) Superior Proposal.
(i) Notwithstanding Section 7.4(a), if Nextera or any Seller
receives an unsolicited Acquisition Proposal that the Nextera's Board of
Directors determines in good faith is or could reasonably be expected to
lead to the delivery of a Superior Proposal from the Person which made such
unsolicited Acquisition Proposal, Nextera may, subject to compliance with
all the other provisions of this Section 7.4, furnish information to and
engage in discussions and negotiations with the Person making such offer
with respect to its Acquisition Proposal ("Permitted Actions"); provided
that prior to engaging in any Permitted Actions (A) Nextera's Board of
Directors concludes in good faith, after consultation with outside legal
counsel and outside financial advisors, that, as a result of such
Acquisition Proposal, such Permitted Action is necessary for Nextera's
Board of Directors to act in a manner consistent with its fiduciary duties
under applicable law, (B) Nextera shall receive from such Person an
executed confidentiality agreement on terms that are not materially less
favorable to Nextera and Sellers than the Confidentiality Agreement, (C)
the Board of Directors of Nextera shall provide Buyer with prompt notice
(but in no event later than the third Business Day) of its engaging in any
Permitted Actions. Nextera shall keep Buyer informed, on a current basis,
of the status of any material negotiations, discussions and documents with
respect to such Acquisition Proposal or request.
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(ii) Notwithstanding the foregoing Section 7.4(a), as a result of
a Superior Proposal, the Board of Directors of Nextera may withdraw or
modify the Nextera Recommendation in a manner adverse to Buyer if (i)
Nextera has complied in all material respects with this Section 7.4 and
(ii) Nextera shall have notified Buyer at least two (2) Business Days in
advance of its intention to effect such withdrawal or modification of the
Nextera Recommendation.
(iii) Notwithstanding anything in this Section 7.4 to the
contrary, at any time prior to obtaining Nextera Stockholder Approval, the
Board of Directors of Nextera may, in response to a Superior Proposal that
was unsolicited and that did not otherwise result from a breach of this
Section 7.4, cause Sellers to terminate this Agreement pursuant to Section
12.1(c)(ii) and concurrently enter into an agreement regarding such
Superior Proposal; provided, however, that neither Nextera nor Sellers
shall terminate this Agreement pursuant to Section 12.1(c)(ii), and any
purported termination pursuant to Section 12.1(c)(ii) shall be void and of
no force or effect (and Nextera or Sellers may not enter into such
agreement regarding such Superior Proposal), unless Sellers and Nextera
shall have complied in all material respects with all the provisions of
this Section 7.4, including the notification provisions in this Section
7.4, and with all applicable requirements of Section 12.2(c) prior to or
concurrently with such termination) in connection with such Superior
Proposal; and provided further, that Nextera shall not exercise its right
to terminate this Agreement pursuant to Section 12.1(c)(ii) until after the
second Business Day following the date notice is given to Buyer in
accordance with Section 13.1 (a "Notice of Superior Proposal") from Nextera
advising Buyer that the Board of Directors of Nextera has received a
Superior Proposal, (i) specifying the material terms and conditions of the
Superior Proposal, (ii) identifying the Person making such Superior
Proposal and (iii) stating that the Board of Directors of Nextera intends
to exercise its right to terminate this Agreement pursuant to Section
12.1(c)(ii) (it being understood and agreed that, prior to any such
termination taking effect, any amendment to the price or any other material
term of a Superior Proposal (such amended Superior Proposal, a "Modified
Superior Proposal") shall require a new Notice of Superior Proposal and a
new two Business Day period with respect to such Modified Superior
Proposal).
(iv) Immediately upon the execution of this Agreement, Nextera
shall cease, and shall cause any Person acting on its behalf to cease, and
cause to be terminated any existing discussions or negotiations with any
Person conducted heretofore with respect to any of the foregoing and shall
request any such parties in possession of confidential information about
Nextera or Sellers that was furnished by or on behalf of Nextera or Sellers
to return or destroy all such information in the possession of any such
party or the agent or advisor of any such party.
Section 7.5. Payoff of Indebtedness. At the Closing, Buyer and Sellers
agree that a portion of the Cash Closing Amount shall be applied to repay and
discharge in full the Indebtedness as contemplated by Section 3.2(a), and as
evidenced by a funds flow memorandum delivered by Sellers to Buyer at least five
(5) business days prior to the Closing in form and substance satisfactory to
Buyer.
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Section 7.6. Employment Agreements. Sellers and Nextera agree to cooperate
and use commercially reasonable efforts to cause each of the individuals listed
on Schedule 7.6 to enter into Employment and Non-Competition Agreements with
Buyer in the form mutually agreed between Buyer and such individuals (each, an
"Employment Agreement"); provided, that, other than payments under the
Non-Compete Agreements, neither Nextera nor any of Sellers will be required to
pay any fees, commence any litigation or make any other concessions to any
person in order to provide such cooperation.
Section 7.7. Covenant Against Hiring. Sellers and Nextera agree that they
shall not take any action to induce any employee or representative of Sellers
not to become or continue as an employee or representative of Buyer and Sellers
and Nextera shall assist Buyer in its efforts to hire employees of Sellers who
Buyer desires to hire. Without limiting the generality of the foregoing, Sellers
and Nextera shall not, whether directly or indirectly through any subsidiary or
affiliate, employ or retain, whether an employee, officer, director, agent,
consultant or independent contractor, or in any other capacity whatsoever, or
enter into any partnership, joint venture or other business association with,
any person who was at any time an employee, representative, officer, director or
manager of Sellers, for a period of 12 months after such person ceases or has
ceased, for any reason, to be an employee, representative, officer or director
of Sellers.
Section 7.8. Noncompetition. For a period of five years after the Closing
Date, Sellers and Nextera shall not directly or indirectly through any
subsidiary or affiliated organization or through any director, officer, agent,
employee or other individual, in any capacity, in the United States and Canada:
(a) Enter into or engage in or own any interest in any business which
directly or indirectly manages or otherwise competes with the Business as
it is conducted on the Closing Date;
(b) Solicit customers, business, patronage or orders for any business
which directly or indirectly competes with the Business as it is conducted
on the Closing Date; and
(c) Loan money or credit to or promote or provide financial assistance
to any person, firm, association, corporation or other entity engaged in
any of the services or activities described above or which directly or
indirectly competes with the Business as it is conducted on the Closing
Date.
Section 7.9. Legal Examination and Investigation. Subject to its
confidentiality policies regarding the Excluded Assets and any employees that
are not hired by Buyer, on and prior to the Closing Date, Sellers and Nextera
shall permit Buyer, FTI and its legal counsel to conduct a legal review,
examination or investigation of the Contracts, Permits, books, records, tax
returns, and operations of Sellers and Nextera that are related to the Business
as Buyer, FTI or its legal counsel may wish. Any such investigation and
examination shall be conducted at reasonable times following reasonable notice
and under reasonable circumstances and Sellers and Nextera shall cooperate fully
therein. In the event that, as a result of any such investigation, Buyer or FTI
has Knowledge of any fact that makes untrue any representation or warranty of
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Sellers or Nextera hereunder, Buyer shall promptly (but in no event later than
the third Business Day) provide Sellers and Nextera with written notice of such
fact. Sellers and Nextera shall furnish the Buyer and FTI during such period
with all such information and copies of such documents concerning the Business
that Buyer, FTI or its legal counsel may reasonably request and cause its
officers, employees, consultants, agents, accountants and attorneys to
reasonably cooperate with such representatives in connection with such review
and examination and to make full disclosure to Buyer and FTI of all material
facts affecting the Business.
Section 7.10. Notice of Events. Sellers and Nextera shall promptly notify
Buyer of (a) any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of this
Agreement, (b) any event, occurrence, transaction or other item which would have
been required to have been disclosed on any schedule or statement delivered
hereunder had such event, occurrence, transaction or item existed on the date
hereof, other than items arising in the ordinary course of business which would
not render any representation or warranty of Sellers or Nextera materially
misleading.
Section 7.11. Tail Insurance. At Buyer's sole cost and expense, at or prior
to Closing, Sellers shall obtain "occurrence based" professional liability
insurance coverage or "tail" insurance from a carrier reasonably acceptable to
Buyer, naming Buyer as an additional insured, in the amount of at least $5
million of primary coverage and $10 million of excess coverage, for acts or
omissions arising in the operation or conduct of the Business prior to the
Closing.
ARTICLE VIII
COVENANTS OF SELLERS AND BUYER
Section 8.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and Other Filings.
(a) As promptly as practicable, and in any event within five (5)
Business Days following the execution and delivery of this Agreement by the
Parties, Sellers, Nextera, Buyer and FTI shall each prepare and file any
required notification and report form under the HSR Act, in connection with
the transactions contemplated hereby. Buyer and Nextera shall each bear
one-half of any filing fees in connection with such filing. Sellers,
Nextera, Buyer and FTI shall take or cause to be taken all commercially
reasonable actions and do or cause to be done all things reasonably
necessary, proper or advisable in the sole judgment of such Party, as the
case may be, to obtain prompt termination of the waiting period under the
HSR Act.
(b) Sellers, Nextera, Buyer and FTI shall cooperate, (i) in
determining whether, in addition to the filings required by the HSR Act,
any action by or in respect of, or filing with, any Governmental Authority
in connection with the consummation of the transactions contemplated by
this Agreement is required and (ii) in taking such commercially reasonable
actions or making any such filings, furnishing information required in
connection therewith. As promptly as practicable, following the execution
and delivery of this Agreement by the Parties, Sellers, Nextera, Buyer and
FTI shall prepare and file any other application, report, or other filing
required to be submitted to any other Governmental Authority in connection
with the transactions contemplated
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hereby, the filing fees of which (except as provided in clause (a) above)
shall be borne by the party required to make such filing.
Section 8.2. Proxy Statement. As soon as practicable and in any event no
later than thirty (30) days after execution of this Agreement, Nextera shall
prepare and file the Proxy Statement with the SEC under the Exchange Act.
Nextera will use commercially reasonable efforts to have the Proxy Statement
cleared by the SEC. Buyer and Nextera shall cooperate with each other in the
preparation of the Proxy Statement, and Nextera shall notify Buyer of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Buyer promptly copies of all
correspondence between Nextera or any representative of Nextera or Sellers and
the SEC. Nextera shall give Buyer and its counsel the opportunity to review and
comment on the Proxy Statement and any other documents filed with the SEC or
mailed to the Nextera Stockholders prior to their being filed with, or sent to,
the SEC or mailed to such Nextera Stockholders and shall give Buyer and its
counsel the opportunity to review and comment on all amendments and supplements
to the Proxy Statement and any other documents filed with, or sent to, the SEC
or mailed to the Nextera Stockholders and all responses to requests for
additional information and replies to comments prior to their being filed with,
or sent to, the SEC or mailed to the Nextera Stockholders. Each of Sellers,
Nextera and Buyer agrees to use its commercially reasonable efforts, after
consultation with the other Parties hereto, to respond promptly to all such
comments of and requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, Nextera shall mail the Proxy Statement to
the Nextera Stockholders. Each of Sellers, Nextera and Buyer promptly shall
correct any information provided by it and used in the Proxy Statement that
shall have become false or misleading in any material respect, and Nextera shall
take all steps necessary to file with the SEC and have cleared by the SEC any
amendment or supplement to the Proxy Statement so as to correct the same and to
cause the Proxy Statement as so corrected to be disseminated to the Nextera
Stockholders, in each case to the extent required by applicable law.
Section 8.3. Public Announcements. The Parties shall cooperate with each
other in the development and distribution of, and consult with each other before
issuing, any press release or making any public statement with respect to this
Agreement and the transactions contemplated hereby and shall not issue any such
press release or make any such public statement without the prior consent of the
other Parties (which shall not be unreasonably withheld or delayed), except as
may be required by applicable law or any listing agreement with any securities
exchange or the National Association of Securities Dealers.
Section 8.4. Employment Matters. Except for the employees of the Sellers
listed on Schedule 8.4, Buyer may offer employment as of the Closing to
employees of Sellers employed in the Business in its sole discretion and Buyer
shall not be obligated to hire any particular employee. Employees of Sellers
employed in the Business who accept Buyer's offer of employment and commence
employment with Buyer as of the Closing are hereinafter referred to as "Hired
Employees." No later than 30 days prior to the Closing Date, Buyer shall
disclose in writing to Sellers the employees of Sellers employed in the Business
as of the date of this Agreement who will not be offered employment with Buyer.
Schedule 5.15 sets forth (a) the individuals who perform services in the
Business operations of Sellers and Nextera in the capacity of an employee or
independent contractor as well as the job classification and principal
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work location for each such individual, (b) any individual who has terminated
his or her employment or engagement, or, to the Knowledge of Sellers or Nextera,
plans not to continue his or her employment or engagement with Sellers or
Nextera after the date hereof and (c) all individuals who formerly performed
services in the Business operations of Sellers and Nextera in the capacity of an
employee or independent contractor and whose employment or engagement terminated
on or after January 1, 2003. Sellers shall provide Buyer with an updated copy of
Schedule 5.15 on the Closing if any information called for by the preceding
sentence shall have changed between the date hereof and the Closing Date. Buyer
shall assume, satisfy and discharge the following employment-related obligations
of Sellers (the "Assumed Employment Liabilities"): (i) any WARN compliance
obligations to the employees of Sellers employed in the Business who are
employees immediately before the Closing and who are not offered employment with
the Buyer (subject to reduction for any benefits paid under the Seller Plans);
(ii) continuation health coverage as required under Treasury Regulation Section
54.4980B-9, Q&A-8(c)(1) following the later of the Closing Date and the date
Sellers cease to maintain any group health plan; (iii) any Liabilities Sellers
have to Hired Employees for wages, salary, bonus (including Sellers' Liability
to make the payments that are due and payable to Messrs. Carlton and ▇▇▇▇▇▇▇ set
forth on Schedule 8.4, but not including any Liabilities of Sellers for the
non-compete payments set forth on Schedule 9.19), commissions and vacation pay
that have accrued as of the Closing Date, have not been paid by Sellers on or
before the Closing Date and are finally due and payable in accordance with
Sellers' past practice on or after the Closing Date; and (iv) any other
Liabilities set forth on Schedule 8.4 under the caption "Assumed Employment
Liabilities." Sellers agree that an amount equal to the Assumed Employment
Liabilities described in clauses (iii) and (iv) above, shall be (A) treated as a
Current Liability in the calculation of Working Capital pursuant to Section 3.5,
(B) disclosed to Buyer in reasonable detail no later than five (5) days before
the Closing Date on an updated Schedule 8.4 (under the caption "Assumed
Employment Liabilities") and (C) updated by Sellers on a final version of
Schedule 8.4 as of the Closing Date. Immediately before the Closing, Sellers
shall pay to the employees of Sellers employed in the Business (whether or not
they are Hired Employees) any and all Liabilities relating to or arising out of
their employment with Sellers or termination of employment, including any
payments and benefits due such employees pursuant to accrued wages, salary,
bonus, commission, Non-Compete Agreements or other forms of compensation and any
benefits and severance payments or similar benefits, except for (i) benefits
that are not immediately payable under the terms of Seller Plans as set forth on
Schedule 8.4, which Sellers shall pay after the Closing Date in accordance with
the terms of the Seller Plans, and (ii) the Assumed Employment Liabilities. From
and after the Closing, Sellers shall retain all liabilities of Sellers, other
than the Assumed Employment Liabilities, arising under, resulting from or
relating to the Seller Plans or Sellers' employment of or termination of the
employees of the Business, accruing on or prior to the Closing, including,
without limitation, all severance obligations and any liabilities relating to
the Non-Compete Agreements. Nextera shall use commercially reasonable efforts to
maintain a health plan until it liquidates and ceases operations. Nextera shall
notify Buyer in writing no later than 30 days prior to the date Nextera will
cease to maintain any group health plan and shall provide to Buyer any
information Buyer may reasonably request to enable Buyer to provide COBRA
continuation coverage in accordance with this paragraph. Pursuant to the
"Alternative Procedure" provided in Section 5 of Revenue Procedure 96-60, 1996-2
C.B. 399, (i) Buyer and Sellers shall report on a predecessor/successor basis as
set forth therein, (ii) Sellers will be relieved from filing a Form W-2 with
respect to any
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Hired Employee and (iii) Buyer will file (or cause to be filed) a Form W-2 for
each Hired Employee for the year that includes the Closing Date (including the
portion of such year that such employee was employed by Sellers).
Section 8.5. Confidentiality Agreement. The Parties acknowledge that
Nextera, Sellers and FTI entered into that certain Amended and Restated
Confidentiality Agreement, dated as of July 14, 2003 (the "Confidentiality
Agreement"), which agreement shall continue in full force and effect in
accordance with its terms until the expiration of the agreement according to its
terms. Notwithstanding anything in the Confidentiality Agreement or herein to
the contrary, or in any other written or oral understanding or agreement to
which the Parties hereto are parties or by which they are bound, the Parties
acknowledge and agree that any obligations of confidentiality contained therein
and herein shall not apply to the tax treatment and tax structure of the
transactions contemplated by this Agreement upon the earlier to occur of (a) the
date of the public announcement of discussions relating to such transactions,
(b) the date of the public announcement of such transactions, or (c) the date of
the execution of this Agreement, all within the meaning of Treasury Regulations
Section 1.6011-4.
Section 8.6. Efforts to Satisfy Conditions. Sellers, Nextera, Buyer and FTI
shall use their commercially reasonable efforts to cause the conditions
contained herein to be satisfied.
Section 8.7. Bulk Sales. Seller shall comply with any applicable "bulk
sales" law or regulation relating to transfers governed by Article 6 of the
Uniform Commercial Code or any other applicable laws or regulations relating to
bulk transfers (other than tax laws) in connection with the consummation of the
transactions contemplated hereby.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND FTI
The obligations of Buyer and FTI to be performed at the Closing shall be
subject to the satisfaction as of or before the Closing Date of the following
conditions (unless waived in writing by Buyer and FTI):
Section 9.1. Nextera Stockholder Approval. The Nextera Stockholder Approval
shall have been obtained.
Section 9.2. HSR Act; Consents; Filings.
(a) any applicable waiting period or required approval under the HSR
Act, or any other similar applicable law required prior to the completion
of the transactions contemplated hereby, shall have expired or been earlier
terminated or received;
(b) no Governmental Authority shall have issued any law or decision or
taken any other action then in effect, which restrains, enjoins or
otherwise prohibits or makes illegal the consummation of the transactions
contemplated hereby; provided, however, that the Parties hereto shall use
their commercially reasonable efforts to have any such restraint,
injunction or prohibition removed or vacated;
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(c) Sellers and Nextera shall have obtained and delivered to Buyer
those consents listed on Schedule 5.14; and
(d) the Parties shall have received from any and all Governmental
Authorities having jurisdiction over the transactions contemplated by this
Agreement or any part hereof, such consents, authorizations and approvals
as are necessary for the consummation thereof which are contemplated by
Section 8.1.
Section 9.3. Representations and Warranties. Sellers' and Nextera's
representations and warranties set forth in this Agreement or any schedule
hereto shall have been true and correct in all material respects when made and
shall be true and correct in all material respects at and as of the Closing Date
as if such representations and warranties were made as of the Closing Date,
except (i) for such representations and warranties qualified by materiality,
which shall be true and correct in all respects (as so qualified), and (ii) to
the extent that any such representation or warranty expressly relates to an
earlier date and except for changes therein permitted or contemplated by this
Agreement.
Section 9.4. Officers' Certificate. Buyer shall have received a certificate
from Sellers and Nextera, executed by the Chief Executive Officer and secretary
of Sellers and Nextera, to the effect that (1) Sellers' and Nextera's
representations and warranties set forth in Article V of this Agreement are true
and correct in all material respects as of the date of Closing, except (i) for
such representations and warranties qualified by materiality, which shall be
true and correct in all respects (as so qualified), and (ii) to the extent that
any such representation or warranty expressly relates to an earlier date and
except for changes therein permitted or contemplated by this Agreement, (2)
Sellers and Nextera have obtained all material consents of third parties and
governmental officials necessary or appropriate in order to consummate the
transfer of the Assets to Buyer, (3) Sellers and Nextera have performed and
complied in all material respects with all covenants required to be performed or
complied with by them prior to the Closing, (4) all conditions to Buyer's
obligations to be satisfied by Sellers and/or Nextera set forth in this Article
IX have been satisfied, (5) to their knowledge there exists no pending or
threatened claim, action, arbitration, grievance, Litigation or proceeding,
judicial or administrative, or governmental investigation against Sellers or
Nextera or the Assets for the purpose of enjoining or preventing the
consummation of the transactions contemplated by this Agreement, or claiming
that this Agreement or the transactions contemplated hereby are illegal.
Section 9.5. Closing Certificates. Buyer shall have received:
(a) a duly executed certificate from an authorized officer of (x)
Sellers and (y) Nextera certifying in such detail as Buyer may reasonably
request to (i) (x) Sellers' and (y) Nextera's and Formation Documents, (ii)
resolutions or minutes of the members of the Board of Directors of (x)
Sellers and (y) Nextera pertaining to the authorization of this Agreement
on behalf of itself and as the sole shareholder of Lexecon, CE and/or ERG,
as the case may be, and all other instruments, documents, transactions and
agreements contemplated hereby, and (iii) the incumbency of the executing
officers of (x) Sellers and (y) Nextera; and
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(b) a copy of the Certificate of Incorporation of each of Sellers and
Nextera, certified as of a recent date by the Secretaries of State of the
states of their incorporation, along with certificates of existence and
good standing of Sellers and Nextera as of a recent date from the
Secretaries of State of the states of their incorporation.
Section 9.6. Voting Agreement. The Voting Agreement shall have been
executed and delivered to Buyer and shall be binding and enforceable is
accordance with its terms.
Section 9.7. Opinion of Counsel. Buyer shall have received the legal
opinions of Maron & Sandler and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP in substantially the forms
attached hereto as Exhibit C and Exhibit D, respectively.
Section 9.8. Solvency Opinion/Fair Value. Sellers shall have received the
solvency/fair value opinion from ▇▇▇▇▇▇▇▇ Valuation Advisors, Nextera's
financial advisor in form and substance reasonably satisfactory to Buyer, which
includes an opinion that the Purchase Price constitutes an amount of
consideration that is "reasonably equivalent value" (as such phrase is defined
in the United States Bankruptcy Code, 11 U.S.C. 101 et seq., and cases
thereunder) and "fair consideration" (as such phrase is defined in the Uniform
Fraudulent Conveyance Act as now enacted in the States of New York and Delaware
and cases thereunder) to Sellers in exchange for the Assets.
Section 9.9. Fairness Opinion. Nextera shall have received a written
opinion of ▇▇▇▇▇▇▇▇ Valuation Advisors dated the date hereof, to the effect
that, as of the date hereof, the Purchase Price is fair to Sellers, Nextera and
Nextera's Stockholders from a financial point of view.
Section 9.10. Performance of Agreement. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
Sellers or Nextera shall have been fully performed and complied with in all
material respects on or prior to the Closing Date.
Section 9.11. No Adverse Change. Since the Balance Sheet Date, there shall
have been no change, loss or damage to the Assets or the Business, except for
(i) changes in the ordinary course of business, (ii) changes contemplated hereby
or relating to the transactions contemplated hereby or (iii) changes which could
not reasonably be expected to result in, or which have not had, a Material
Adverse Effect; provided that notwithstanding the foregoing, if Buyer can
demonstrate, acting in good faith, that customers representing more than five
percent (5%) of Sellers' revenues reflected on the statement of operations for
the twelve (12) month period immediately preceding the Closing Date intend to
terminate their business relationship with Sellers as a direct result of Buyer
acquiring the Assets and the Parties consummating the transactions contemplated
by this Agreement (excluding from such calculation any such customers that
terminate their relationship with Sellers due to actual or perceived conflicts
with FTI or Buyer and/or any of FTI's customers or clients), such circumstance
shall be deemed to be a Material Adverse Effect.
Section 9.12. No Proceedings. There is no pending or threatened claim,
action, litigation or proceeding, judicial or administrative, or governmental
investigation against Buyer,
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FTI, Sellers, Nextera or the Assets for the purpose of enjoining or preventing
the consummation of the transactions contemplated by this Agreement, any of the
other Transaction Documents or the Voting Agreement or otherwise claiming that
the consummation this Agreement, any of the other Transaction Documents or the
Voting Agreement is illegal or invalid.
Section 9.13. Employment Agreements. Buyer shall have received an
Employment Agreement dated as of the date hereof duly executed and delivered by
each employee of Sellers listed on Schedule 7.6.
Section 9.14. Assignment of Leases. Buyer shall have received an Assignment
of each of the Real Property Leases from Sellers or Nextera in the form attached
hereto as Exhibit E ("Lease Assignment"), duly executed by Sellers (or Nextera)
as assignor, and the landlord under such Real Property Lease, conveying all of
Sellers' or Nextera's right, title and interest in and to the Real Property
Leases, accompanied by (a) a written consent of the landlord to each such
assignment and (b) an estoppel certificate from the landlord under each of the
Real Property Leases.
Section 9.15. ▇▇▇▇ of Sale. Buyer shall have received from Sellers a
General Conveyance, Assignment and ▇▇▇▇ of Sale in the form attached hereto as
Exhibit F, conveying, selling, transferring and assigning to Buyer all right,
title and interest in and to the Assets free and clear of all security
interests, liens, charges, encumbrances or equities whatsoever, except those
matters approved in writing by Buyer prior to the Closing Date.
Section 9.16. Transfer of Name and other Proprietary Rights. Sellers and
Nextera shall have delivered to Buyer, in form suitable for filing, such
certificates, consents and other documents as are necessary or desirable to (i)
effect the transfer of the registration of any name conveyed to Buyer pursuant
to this Agreement in the states of Sellers' incorporation and organization and
in each other state where Sellers are qualified to do business or has registered
any such name under a "trade name" or "fictitious name" statute or similar law
or has taken any other action in order to obtain or protect rights in such name
and (ii) effect the transfer of any other Proprietary Rights being transferred
to Buyer.
Section 9.17. Receipt. A receipt of Sellers with respect to amounts paid to
Sellers in Purchase Price pursuant to Section 3.2.
Section 9.18. Evidence of Payoff. At the Closing, Sellers shall have
delivered to Buyer documents in form and substance reasonably satisfactory to
Buyer evidencing (i) the repayment and discharge in full (without any continuing
adverse effect upon Sellers or Nextera) of the Indebtedness (including the
termination of any commitments to extend credit thereunder), (ii) the
termination and release of any liens granted in connection with the Indebtedness
and (iii) evidence of termination of all Encumbrances listed on Schedule 5.11
reasonably satisfactory to Buyer, in each case subject to Sellers' receipt of
the Purchase Price.
Section 9.19. Non-Compete Payments. Sellers and Nextera shall have made all
non-compete payments listed on Schedule 9.19, in each case subject to Sellers'
receipt of the Purchase Price.
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Section 9.20. "FIRPTA" affidavits. Buyer shall receive FIRPTA affidavits
from Sellers and Nextera substantially in the form of Exhibit G attached hereto.
Section 9.21. Other. Such other separate instruments of sale, assignment or
transfer that Buyer may reasonably deem necessary or appropriate in order to
perfect, confirm or evidence title to all or any part of the Assets.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers and Nextera to be performed at the Closing shall
be subject to the satisfaction as of or before the Closing Date of the following
conditions (unless waived in writing by Sellers and Nextera):
Section 10.1. Nextera Stockholder Approval. Nextera Stockholder Approval
shall have been obtained.
Section 10.2. HSR Act; Consents; Filings.
(a) any applicable waiting period or required approval under the HSR
Act, or any other similar applicable law required prior to the completion
of the transaction contemplated hereby shall have expired or been earlier
terminated or received;
(b) no Governmental Authority shall have issued any law or decision or
taken any other action then in effect, which restrains, enjoins or
otherwise prohibits or makes illegal the consummation of the transaction
contemplated hereby; provided, however, that the Parties hereto shall use
their commercially reasonable efforts to have any such restraint,
injunction or prohibition removed or vacated; and
(c) the Parties shall have received from any and all Governmental
Authorities having jurisdiction over the transactions contemplated by this
Agreement or any part hereof, such consents, authorizations and approvals
as are necessary for the consummation thereof which are contemplated by
Section 8.1.
Section 10.3. Representations and Warranties. Buyer and FTI's
representations and warranties set forth in this Agreement and in any schedule
hereto shall have been true and correct in all material respects when made and
shall be true and correct in all material respects at and as of the Closing Date
as if such representations and warranties were made as of the Closing Date
except for such representations and warranties qualified by materiality, which
shall be true and correct in all respects (as so qualified).
Section 10.4. Officers' Certificate. Sellers shall have received a
certificate from Buyer and FTI, executed a duly authorized officer of Buyer and
FTI, to the effect that (1) each of Buyer's and FTI's representations and
warranties set forth in Article VI of the Agreement are true and correct in all
material respects as of the date of Closing, except (i) for such representations
and warranties qualified by materiality, which shall be true and correct in all
respects (as so qualified), and (ii) to the extent that any such representation
or warranty expressly
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relates to an earlier date and except for changes therein permitted or
contemplated by this Agreement, (2) each of Buyer and FTI have performed and
complied in all material respects with all covenants required to be performed or
complied with by it prior to the Closing and (3) all conditions to Nextera's and
Sellers' obligations to be satisfied by Buyer and FTI set forth in this Article
X have been satisfied.
Section 10.5. Closing Certificates. Sellers and Nextera shall have
received:
(a) a duly executed certificate from an authorized officer of Buyer
and FTI certifying in such detail as Nextera may reasonably request to (i)
Buyer and FTI's respective articles of organization, articles of
incorporation, operating agreement and by-laws, (ii) resolutions or minutes
of the members of the Board of Directors of FTI and pertaining to the
authorization of this Agreement on behalf of itself and as parent of Buyer
and all other instruments, documents, transactions and agreements
contemplated hereby, and (iii) the incumbency of the executing officers of
FTI; and
(b) a copy of the Articles of Incorporation of FTI and articles of
organization of Buyer, certified as of a recent date by the Secretary of
State of the State of Maryland, along with a certificate of existence or
good standing of Buyer and FTI from the Secretary of State of the State of
Maryland.
Section 10.6. Solvency Opinion/Fair Value. Sellers shall have received the
solvency/fair value opinion from ▇▇▇▇▇▇▇▇ Valuation Advisors, Nextera's
financial advisor in form and substance reasonably satisfactory to Buyer, which
includes an opinion that the Purchase Price constitutes an amount of
consideration that is "reasonably equivalent value" (as such phrase is defined
in the United States Bankruptcy Code, 11 U.S.C. 101 et seq., and cases
thereunder) and "fair consideration" (as such phrase is defined in the Uniform
Fraudulent Conveyance Act as now enacted in the States of New York and Delaware
and cases thereunder) to Sellers in exchange for the Assets.
Section 10.7. Fairness Opinion. Nextera shall have received a written
opinion of ▇▇▇▇▇▇▇▇ Valuation Advisors dated the date hereof, to the effect
that, as of the date hereof, the Purchase Price is fair to Seller, Nextera and
Nextera's Stockholders from a financial point of view.
Section 10.8. Assumption Agreement. Sellers shall have received from Buyer
such instruments of assumption, which shall be in form and substance
satisfactory to Nextera that are necessary or appropriate in order to evidence
the assignment to and the assumption by Buyer of the Assets and the Assumed
Liabilities.
Section 10.9. Opinion of Counsel. Sellers shall have received an opinion of
the Vice President, Secretary and General Counsel of FTI and Paul, Hastings,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP in substantially the forms attached hereto as Exhibit H
and Exhibit I, respectively.
Section 10.10. Payments at Closing. Sellers shall have received by wire
transfer of immediately available funds amounts equal to the Cash Closing Amount
and the Medical Plan Payment, and Buyer shall have deposited the Escrow Amount
in a third party escrow account into accordance with Section 3.2(b).
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Section 10.11. Performance of Agreement. All covenants, conditions and
other obligations under this Agreement which are to be performed or complied
with by Buyer and FTI shall have been fully performed and complied with in all
respects on or prior to the Closing Date.
Section 10.12. No Adverse Proceeding. There is no pending or threatened
claim, action, litigation or proceeding, judicial or administrative, or
governmental investigation against Buyer, FTI, Sellers, Nextera or the Assets
for the purpose of enjoining or preventing the consummation of the transactions
contemplated by this Agreement, or otherwise claiming that this Agreement or the
consummation hereof is illegal.
ARTICLE XI
INDEMNIFICATION
Section 11.1. Survival of Representations, Warranties and Agreements.
(a) Subject to the limitations set forth in Section 11.4 of this
Agreement and notwithstanding any investigation conducted at any time with
regard thereto by or on behalf of Buyer or FTI, all representations,
warranties, covenants and agreements of Sellers and Nextera in this
Agreement and in the Transaction Documents shall survive execution and
delivery of this Agreement for a period of twenty-four (24) months,
provided, however that (i) the representations and warranties set forth in
Sections 5.6, 5.12, 5.16, 5.23 and 6.4 shall survive until the expiration
of their applicable statutes of limitations and (ii) the representations
and warranties contained in Sections 5.1, 5.2, 5.8, 5.11, 5.14, 6.1, 6.2
and 6.3 shall survive indefinitely. All representations and warranties of
Sellers and Nextera and Buyer and FTI set forth in this Agreement and in
the Transaction Documents shall be deemed to have been made again by
Sellers and Nextera as of the Closing Date. In the event any claim for
indemnification under Section 11.2 hereof shall have been given within the
applicable survival period, the representations and warranties that are the
subject of such indemnification claim shall survive until such time as such
claim is finally resolved.
(b) As used in this Article, any reference to a representation,
warranty or covenant contained in any Section of this Agreement shall
include the schedule relating to such Section.
(c) Unless a specified period is set forth in this Agreement (in which
event such specified period will control) the covenants contained herein
will survive the Closing and remain in effect indefinitely.
Section 11.2. Indemnification by Sellers and Nextera.
(a) Subject to the limitations set forth in Section 11.4 of this
Agreement, Sellers and Nextera, jointly and severally, shall indemnify and
hold harmless the Buyer, FTI and their respective affiliates, officers,
directors, stockholders, agents and each of their respective heirs,
successors, assigns and executors ("Buyer Indemnified Parties"), from and
against any and all losses, liabilities, damages, demands, claims, suits,
actions, diminution in value, judgments or causes of action, assessments,
costs and expenses,
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including, without limitation, interest, penalties, attorneys' fees, any
and all expenses incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any
and all amounts paid in settlement of any claim or litigation
(collectively, "Damages"), asserted against, resulting to, imposed upon, or
incurred or suffered by any Buyer Indemnified Party, directly or
indirectly, as a result of or arising from the following (collectively,
"Seller Indemnifiable Claims"):
(A) Any inaccuracy in or breach or nonfulfillment of any of the
representations, warranties, covenants or agreements made by Sellers
or Nextera in this Agreement;
(B) Any Excluded Liabilities;
(C) Any Litigation relating to the Business; or
(D) Any liability or obligation incurred by Sellers or Nextera
following the Closing not related to the Business.
(b) Damages shall be determined without regard to whether or not,
apart from the Seller Indemnifiable Claim with respect to such Damages, the
transactions provided for in this Agreement prove generally to be favorable
to Buyer and without regard to whether or not the facts and circumstances
covered by any representation, warranty or covenant prove to be more
favorable to Buyer than so represented, warranted or covenanted.
Notwithstanding anything in this Agreement to the contrary, it is hereby
agreed that solely for the purposes of the calculation of Damages pursuant
to this Article XI, all materiality and Material Adverse Effect exceptions
and qualifications set forth in any representation or warranty contained in
this Agreement shall be disregarded.
Section 11.3. Indemnification by Buyer and FTI.
(a) Subject to the limitations set forth in Section 11.4 of this
Agreement, Buyer and FTI shall indemnify and hold harmless Sellers, Nextera
and their respective affiliates, officers, directors, stockholders, agents
and each of their respective heirs, successors, assigns and executors
("Seller Indemnified Parties") from and against any and all Damages
asserted against, resulting to, imposed upon, or incurred or suffered by
any Seller Indemnified Party, directly or indirectly, as a result of or
arising from the following (collectively, "Buyer Indemnifiable Claims"):
(A) Any inaccuracy in or breach or nonfulfillment of any of the
representations, warrants, covenants, or agreements made by Buyer or
FTI in this Agreement;
(B) Any Assumed Liabilities; or
(C) Any liability or obligation incurred by Buyer or FTI prior to
the Closing not related to the Business.
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(b) Damages shall be determined without regard to whether or not,
apart from the Buyer Indemnifiable Claim with respect to such Damages, the
transactions provided for in this Agreement prove generally to be favorable
to Seller and without regard to whether or not the facts and circumstances
covered by any representation, warranty or covenant prove to be more
favorable to Seller than so represented, warranted or covenanted.
Notwithstanding anything in this Agreement to the contrary, it is hereby
agreed that solely for the purposes of the calculation of Damages pursuant
to this Article X, all materiality and Material Adverse Effect exceptions
and qualifications set forth in any representation or warranty contained in
this Agreement shall be disregarded.
Section 11.4. Limitations on Indemnification. Rights to indemnification
hereunder are subject to the following limitations:
(a) The Parties shall not be entitled to indemnification hereunder
with respect to a Seller Indemnifiable Claim or Buyer Indemnifiable Claim,
as the case may be (either of a Seller Indemnifiable Claim or Buyer
Indemnifiable Claim, as the case may be, an "Indemnifiable Claim") (or, if
more than one Indemnifiable Claim is asserted, with respect to all
Indemnifiable Claims) unless the aggregate amount of Damages with respect
to such Indemnifiable Claim or Claims exceeds One Million Dollars
($1,000,000), in which event the indemnity provided for in Section 11.2 or
11.3 hereof shall be effective with respect to Indemnifiable Claims in
excess of such Two Hundred Fifty Thousand Dollars ($250,000) amount (the
"Floor"). Additionally, a claim shall not be considered an Indemnifiable
Claim unless it individually (along with related claims) exceeds
Twenty-Five Thousand Dollars ($25,000). The foregoing One Million Dollars
($1,000,000) aggregate deductible amount and the Twenty-Five Thousand
Dollars ($25,000) individual claim amount shall not be applicable and shall
not limit any indemnification sought with respect to claims asserted by
third parties. In no event shall the indemnification obligation of Sellers
or Nextera arising under this Article XI exceed an amount equal to
Sixty-Five Million Dollars ($65,000,000) in the aggregate. In no event
shall the indemnification obligation of Buyer arising under this Article XI
exceed Thirteen Million Dollars ($13,000,000) in the aggregate.
Notwithstanding the foregoing, none of the limitations on indemnification
set forth in this Section 11.4(a) will apply to (i) Sellers' or Nextera's
breach of representations made in Section 5.1, 5.2, 5.6, 5.11, 5.12, 5.14,
5.16, 6.1, 6.2, 6.3, 6.4 and 8.7 (ii) any Seller Indemnifiable Claims by
Buyer pursuant to Section 11.2(a)(B), 11.2(a)(C) or 11.2(a)(D) or (iii) any
Buyer Indemnifiable Claims by Seller pursuant to Section 11.3(a)(B) or
11.3(a)(C).
(b) All indemnity payments payable hereunder shall be paid in
immediately available funds within five (5) Business Days after the later
of (i) the receipt of a written request from the party entitled to such
indemnification payment and (ii) the day of payment of the amount that is
the subject of the indemnification payment by the Party entitled to receive
the indemnification payment. All such indemnification payments shall be
made to the accounts and in the manner specified in writing by the Party
entitled to receive such indemnification payments.
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Section 11.5. Procedure for Indemnification with Respect to Third-Party
Claims.
(a) If either Party (the "Indemnified Party") determines to seek
indemnification under this Article with respect to Indemnifiable Claims
resulting from the assertion of liability by third parties, it shall give
notice to the other party (the "Indemnifying Party") within ten (10) days
of the Indemnified Party's becoming aware of any such Indemnifiable Claim
or of facts upon which any such Indemnifiable Claim will be based; the
notice shall set forth such information with respect thereto as is then
reasonably available to the Indemnified Party. If any such liability is
asserted against the Indemnified Party, and the Indemnified Party notifies
the Indemnifying Party thereof, the Indemnifying Party will be entitled, if
it so elects by written notice delivered to the Indemnified Party within
twenty (20) days after receiving the Indemnified Party's notice, to assume
the defense thereof with counsel satisfactory to the Indemnified Party.
Notwithstanding the foregoing, (i) the Indemnified Party shall also have
the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party;
and (ii) the rights of the Indemnified Party to be indemnified hereunder in
respect of Indemnifiable Claims resulting from the assertion of liability
by third parties shall not be adversely affected by its failure to give
notice pursuant to the foregoing unless, and, if so, only to the extent
that, the Indemnifying Party is materially prejudiced thereby. With respect
to any assertion of liability by a third party that results in an
Indemnifiable Claim, the Parties hereto shall make available to each other
all relevant information in their possession material to any such
assertion.
(b) In the event that the Indemnifying Party, within twenty (20) days
after receipt of the aforesaid notice of an Indemnifiable Claim, fails to
assume the defense of the Indemnified Party against such Indemnifiable
Claim, the Indemnified Party shall have the right to undertake the defense,
compromise or settlement of such action on behalf of and for the account
and risk of the Indemnifying Party with the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.
(c) Notwithstanding anything in this Section to the contrary, (i) if
there is a reasonable probability that an Indemnifiable Claim may
materially and adversely affect Buyer or FTI, other than as a result of
money damages or other money payments, Buyer and FTI shall have the right
to defend, compromise or settle such Indemnifiable Claim; and (ii) Sellers
and Nextera shall not, without Buyer's written consent, settle or
compromise any Indemnifiable Claim or consent to entry of any judgment in
respect thereof unless such settlement, compromise or consent includes as
an unconditional term thereof providing for the giving by the claimant or
the plaintiff to Buyer and FTI a release from all liability in respect of
such Indemnifiable Claim.
Section 11.6. Insurance Proceeds; Recoveries under Section 3.5. To the
extent that any Indemnifiable Claim is covered by insurance held by the
Indemnified Party, such Indemnified Party shall be entitled to indemnification
pursuant to this Article XI only with respect to the amount of Damages that are
in excess of the cash proceeds received by such Indemnified Party pursuant to
such insurance. If such Indemnified Party receives such cash insurance proceeds
prior to the time such Indemnifiable Claim is paid, then the amount payable by
the Indemnifying Party pursuant to such Indemnifiable Claim shall be reduced by
the amount of such insurance
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proceeds. If such Indemnified Party receives such cash insurance proceeds after
such Indemnifiable Claim is paid, then upon receipt by the Indemnified Party of
any cash proceeds pursuant to such insurance up to the amount of the Damages
incurred by such Indemnified Party with respect to such Indemnifiable Claim,
such Indemnified Party shall repay any portion of such amount which was
previously paid by the Indemnifying Party to the Indemnified Party in
satisfaction of such Indemnifiable Claim. In addition to the foregoing, the
Parties acknowledge and agree that, if FTI and Buyer have received a recovery or
compensation under Section 3.5 for uncollectible Receivables or any Estimated
Working Capital Discrepancy Amount, FTI and Buyer shall have no right to make
any additional claim under Article XI to the extent of the amount of such claim
that has been recovered or compensated under Section 3.5.
ARTICLE XII
TERMINATION
Section 12.1. Termination. This Agreement may be terminated at any time
prior to the Closing by written notice:
(a) by mutual written agreement of FTI and Nextera in each case duly
authorized by their respective Boards of Directors or a duly authorized
committee thereof;
(b) by either FTI or Nextera, if
(i) the transactions contemplated by this Agreement have not been
consummated by December 31, 2003; provided, however, that such date shall
be extended to February 29, 2004 if the transactions contemplated by this
Agreement have not been consummated by December 31, 2003 as a result of
delays in connection with comments, questions or documentary or
informational requests from the SEC in connection with the Proxy Statement
or from the Department of Justice or the Federal Trade Commission in
connection with the Parties' filings under the HSR Act (as such date may be
extended, the "End Date"); provided, however, that the right to terminate
this Agreement under this Section 12.1(b)(i) shall not be available to any
Party whose breach of any provision of this Agreement has resulted in the
failure of the transactions contemplated by this Agreement to occur on or
before the date this Agreement is sought to be terminated pursuant to this
clause (i);
(ii) there shall be any law that makes consummation of the
transactions contemplated by this Agreement illegal or otherwise prohibited
or any judgment, injunction, order or decree of any Governmental Authority
having competent jurisdiction enjoining Nextera, Sellers, FTI or Buyer from
consummating such transactions is entered and the injunction, judgment,
order or decree shall have become final and nonappealable and, prior to
that termination, the Parties shall have used reasonable best efforts to
resist, resolve or lift, as applicable, the law, judgment, injunction,
order or decree; or (A) the Nextera Stockholder Meeting has been convened
and concluded and (B) the Nextera Stockholder Approval shall not have been
obtained; or
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(iii) if the Nextera Stockholder Meeting (including any
postponements and adjournments thereof) shall have been held and completed
and the Nextera Stockholders shall have taken a final vote on the Nextera
Recommendation and the Nextera Stockholder Approval shall not have been
obtained;
(c) by Nextera:
(i) if a breach of or failure to perform in any material respect
any representation, warranty, covenant or agreement on the part of Buyer or
FTI set forth in this Agreement shall have occurred which would cause any
of the conditions set forth in Article X not to be satisfied, and such
condition shall be incapable of being satisfied by the End Date; or
(ii) as contemplated by Section 7.4(b)(iii); provided, however,
that no such termination shall relieve Nextera or Sellers from their
obligations under Section 12.2(c) below; or
(d) by FTI, if:
(i) a breach of or failure to perform in any material respect any
representation, warranty, covenant or agreement on the part of Nextera or
Sellers set forth in this Agreement shall have occurred which would cause
any of the conditions set forth in Article IX not to be satisfied, and such
condition is incapable of being satisfied by the End Date;
(ii) (A) the Board of Directors of Nextera (1) amends, withdraws,
modifies, changes, conditions or qualifies the Nextera Recommendation in a
manner adverse to Buyer and the transactions contemplated by this
Agreement; (2) approves or recommends to the Nextera Stockholders an
Acquisition Proposal (other than by Buyer as contemplated by this
Agreement); or (3) approves a resolution or agrees to do any of the matters
set forth in the immediately foregoing clauses (1) and (2); or (B) after
the third Business Day following Buyer's receipt of a Notice of Superior
Proposal, unless prior to such termination (x) a new Notice of Superior
Proposal has been delivered with respect to an Acquisition Proposal by a
different Person than the prior Notice of Superior Proposal (in which
event, such new Notice of Superior Proposal shall then be subject to this
Section 12.1(d)(ii)(B)), (y) a new Notice of Superior Proposal has been
delivered with respect to a Modified Superior Proposal (in which event,
such new Notice of Superior Proposal shall then be subject to this Section
12.1(d)(ii)(B)) or (z) Nextera shall have irrevocably withdrawn such Notice
of Superior Proposal and terminated all discussions and negotiations with
such Person regarding any Acquisition Proposal; or
(iii) any Person or group (other than Buyer or its affiliates)
acquires beneficial ownership of a majority of the outstanding capital
stock of Sellers or Nextera.
Section 12.2. Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 12.1 (except
as provided in Section 12.2(b) below), there shall be no liability or
obligation on the part of
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Buyer, FTI, Sellers, Nextera, or any of their respective officers,
directors, stockholders, agents or affiliates, except no such termination
shall relieve any Party hereto of any liability or damages resulting from
any willful breach of this Agreement; provided that the provisions of
Sections 8.3, 8.5, 12.2, 12.3 and Article XI of this Agreement shall remain
in full force and effect and survive any termination of this Agreement.
(b) In the event that this Agreement is terminated by any Party
pursuant to Section 12.1(b)(i) (provided that at the time of such
termination, the condition precedent in Section 9.2(a) and Section 10.2(a)
shall have been satisfied), Nextera shall pay to FTI up to One Million Five
Hundred Thousand Dollars ($1,500,000) of Buyer's and FTI's reasonable
actual out-of-pocket legal, investment banking and accounting expenses
through the date of such termination.
(c) In the event that:
(A) this Agreement is terminated by FTI pursuant to Section
12.1(d)(ii) or Section 12.1(d)(iii);
(B) this Agreement is terminated by Nextera pursuant to Section
12.1(c)(ii);
(C) this Agreement is terminated pursuant to Section
12.1(b)(iii); or
(D) this Agreement is terminated pursuant to Section 12.1(b)(i)
(provided that at the time of such termination, the condition
precedent in Section 9.2(a) and Section 10.2(a) shall have been
satisfied) or Section 12.1(d)(i) and, in each case, Sellers and
Nextera shall have disclosed, announced or accepted an Acquisition
Proposal;
then Nextera shall pay to FTI (in immediately available funds to an
account designated by FTI) (the "Termination Fee"):
(1) within five (5) Business Days following Nextera's receipt of
documentation describing in reasonable detail Buyer's reasonable
actual out-of-pocket legal, investment banking and accounting
expenses, a cash amount equal to (x) up to One Million Five Hundred
Thousand Dollars ($1,500,000) of such reasonable actual out-of-pocket
legal, investment banking and accounting expenses through the date of
such termination and (y) an additional One Million Dollars
($1,000,000); and
(2) if a Superior Proposal is consummated by Sellers or Nextera
within twelve (12) months after the occurrence of the event giving
rise to such termination, within five (5) Business Days following the
consummation of such Superior Proposal a cash amount equal to Three
Million Five Hundred Thousand Dollars ($3,500,000); and
Sellers and Nextera agree to use reasonable commercial efforts to
consummate any Superior Proposal that causes any termination of this Agreement
under Section 12.1(c)(ii).
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The Parties acknowledge and agree that Nextera will in no event be required to
pay more than One Million Five Hundred Thousand Dollars ($1,500,000) of Buyer's
reasonable actual out-of-pocket legal, investment banking and accounting
expenses, and that such amount shall be required to be paid by Nextera only
once.
Section 12.3. Fees And Expenses. Except as otherwise specifically provided
herein, all fees and expenses incurred in connection herewith and the
transactions contemplated hereby shall be paid by the Party incurring expenses,
whether or not the transactions contemplated hereby are consummated.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1. Notices. All notices and other communications required or
permitted under this Agreement shall be deemed to have been duly given and made
if in writing (a) at the time it is served either by personal delivery to the
Party for whom intended (b) five (5) days after the date it is deposited,
postage prepaid, certified or registered mail, return receipt requested, in the
United States mail bearing the address shown in this Agreement for, or such
other address as may be designated in writing hereafter by, such Party or (c) if
given by facsimile, when the facsimile is transmitted to the facsimile number
specified in this Section and the appropriate facsimile confirmation is
received:
If to Buyer or FTI: FTI Consulting, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Sellers or Nextera: Nextera Enterprises, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Maron & Sandler
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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Section 13.2. Entire Agreement. This Agreement, the exhibits and schedules
hereto, and the documents referred to herein, along with the Confidentiality
Agreement, embody the entire agreement and understanding of the Parties hereto
with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings, oral or written, relative to said
subject matter.
Section 13.3. Binding Effect; Assignment. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon Sellers and Nextera, their successors and permitted assigns, and
Buyer and FTI, their successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be transferred
or assigned (by operation of law or otherwise) by any of the Parties hereto
without the prior written consent of the other Party or Parties; provided,
however, that the Buyer may assign at any time after the date hereof any of its
rights under this Agreement, in whole or in part, to any affiliate of Buyer
without obtaining the consent of Sellers or Nextera. Any transfer or assignment
of any of the rights, interests or obligations hereunder in violation of the
terms hereof shall be void and of no force or effect.
Section 13.4. Captions. The Article and Section headings of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement in construing or interpreting any provision hereof.
Section 13.5. Waiver; Consent. This Agreement may not be changed, amended,
terminated, augmented, rescinded or discharged (other than by performance), in
whole or in part, except by a writing executed by all of the Parties hereto, and
no waiver of any of the provisions or conditions of this Agreement or any of the
rights of a Party hereto shall be effective or binding unless such waiver shall
be in writing and signed by the Party claimed to have given or consented
thereto. Except to the extent that a Party hereto may have otherwise agreed in
writing, no waiver by that Party of any condition of this Agreement or breach by
the other Party of any of its obligations or representations hereunder or
thereunder shall be deemed to be a waiver of any other condition or subsequent
or prior breach of the same or any other obligation or representation by the
other Party, nor shall any forbearance by the first Party to seek a remedy for
any noncompliance or breach by the other Party be deemed to be a waiver by the
first Party of its rights and remedies with respect to such noncompliance or
breach.
Section 13.6. No Third Party Beneficiaries. Subject to Section 13.3 hereof,
nothing herein, expressed or implied, is intended or shall be construed to
confer upon or give to any person, firm, corporation or legal entity, other than
the Parties hereto, any rights, remedies or other benefits under or by reason of
this Agreement.
Section 13.7. Counterparts. This Agreement may be executed simultaneously
in multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
Section 13.8. Gender. Whenever the context requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be deemed to include and designate the masculine,
feminine or neuter gender.
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Section 13.9. Remedies of Buyer. The Assets are unique and not readily
available. Accordingly, Sellers and Nextera acknowledge that, in addition to all
other remedies to which Buyer and FTI are entitled, Buyer and FTI shall have the
right to enforce the terms of this Agreement by a decree of specific
performance, provided Buyer and FTI are not in material default hereunder. The
rights and remedies conferred upon Buyer and FTI under this Agreement or by any
instrument or law shall be cumulative and may be exercised singularly or
concurrently.
Section 13.10. No Personal Liability. FTI and Buyer acknowledge that the
individuals executing the Transaction Agreements or any exhibit, schedule or
agreement delivered by Sellers or Nextera in connection with this Agreement and
the individuals included in the definition of Knowledge with respect to Sellers
and Nextera are acting in their respect capacities as officers of Sellers and/or
Nextera and such individuals shall have no personal liability to FTI or Buyer
for any matter set forth herein or in such other exhibit, schedule or agreement.
Section 13.11. Governing Law. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of New York.
It is the intention of the Parties that this Agreement shall be deemed to have
been entered into in New York County, New York and that the laws of the State of
New York should govern the validity of this Agreement, the construction of its
terms and the interpretation of the rights and duties of the Parties. The
Parties agree to non-exclusive jurisdiction in any federal, state or local
courts located in, or otherwise, having jurisdiction over ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ as well as non-exclusive jurisdiction in any federal, state
or local courts located in, or otherwise, having jurisdiction over Los Angeles
County or the City of Los Angeles, California and the Parties hereby consent to
personal jurisdiction in such courts and waive any objection based on Forum Non
Coveniens and any objection to jurisdiction or venue of any action instituted
hereunder.
Section 13.12. Definitions. The following terms, whenever used in this
Agreement, shall have the respective meanings set forth below:
"Accounting Referee" shall have the meaning set forth in Section 3.5(i).
"Acquisition Proposal" means any offer or proposal (whether or not in
writing) from any Person, other than as contemplated by this Agreement,
regarding any of the following: (a) a transaction pursuant to which any Person
or "group" (as such term is defined in Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) acquires or would acquire
beneficial ownership of more than twenty percent (20%) of the total outstanding
shares voting securities of Sellers or Nextera, whether from the stockholders of
Sellers or Nextera (in the case of Seller) pursuant to a tender offer or
exchange offer or otherwise, (b) a merger, consolidation, business combination,
reorganization, sale of all or substantially all assets, recapitalization,
liquidation, dissolution or similar transaction involving Sellers or Nextera, or
(c) any transaction which would result in a Person or group acquiring more than
20% of the fair market value on a consolidated basis of the assets (including,
without limitation, the capital stock of subsidiaries) of Sellers or Nextera's
other subsidiaries immediately prior to such transaction (whether by purchase of
assets, acquisition of stock of a subsidiary or otherwise).
"Affiliate" shall have the meaning set forth in Section 5.16(a).
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"Agreement" shall have the meaning set forth in the Preamble.
"Annual Financial Statements" shall have the meaning set forth in Section
5.3(a).
"Applicable Laws" shall have the meaning set forth in Section 5.7.
"Assets" shall have the meaning set forth in Section 1.1.
"Assumed Employment Liabilities" shall have the meaning set forth in
Section 8.4.
"Assumed Liabilities" shall have the meaning set forth in Section 2.1.
"Balance Sheet Date" means the date of the audit of the financial
statements of Lexecon.
"Base Receivables" shall have the meaning set forth in Section 3.5(g).
"Business" shall have the meaning set forth in the Preliminary Statements.
"Business Day" means any day, other than a Saturday, Sunday or one on which
banks are authorized by Law to be closed in New York, New York.
"Business Records" shall have the meaning set forth in Section 1.1(m).
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Indemnified Parties" shall have the meaning set forth in Section
11.2(a).
"Buyer Indemnifiable Claims" shall have the meaning set forth in Section
11.3(a).
"Cash Closing Amount" shall have the meaning set forth in Section 3.2.
"Claims" shall have the meaning set forth in Section 1.1(l).
"Closing" shall have the meaning set forth in Section 4.1.
"Closing Date" shall have the meaning set forth in Section 4.1.
"Closing Date Balance Sheet" shall have the meaning set forth in Section
3.5(e)(ii).
"Closing Working Capital" shall have the meaning set forth in Section
3.5(e)(ii).
"Closing Working Capital Discrepancy Amount" shall have the meaning set
forth in Section 3.5(f).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collectible Accounts Receivable Determination" shall have the meaning set
forth in Section 3.5(g).
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"Collection Review Period" shall have the meaning set forth in Section
3.5(e).
"Confidentiality Agreement" shall have the meaning set forth in Section
8.5.
"Contracts" shall have the meaning set forth in Section 1.1(c).
"Copyrights" shall have the meaning set forth in Section 1.1(g).
"Current Assets" shall mean, without duplication, the sum of the following
line items set forth on the applicable balance sheet, in each case accounted for
in accordance with GAAP: (i) Accounts and Notes Receivable and (ii) Prepaids and
Other Current Assets, including, without limitation, the IPO Case Receivables.
"Current Liabilities" shall mean, without duplication, the sum of the
following line items set forth on the applicable balance sheet, in each case
accounted for in accordance with GAAP: (i) Accounts Payable and Accrued
Liabilities and (ii) Capital Lease Obligations - Current, including, without
limitation, Sellers' payment obligations relating to the IPO Case Receivables.
Any liability that would be classified as a Current Liability for purposes of
this definition but which is also classified as "Indebtedness" under the
definition thereof in this Section 13.12 shall be treated as Indebtedness and
shall not be treated as a Current Liability for purposes of the calculations in
Section 3.5 hereof.
"Damages" shall have the meaning set forth in Section 11.2(a).
"Discrepancy Repayment" shall have the meaning set forth in Section 3.5(f).
"DGCL" means the Delaware General Corporate Law, as amended.
"Employment Agreement" shall have the meaning set forth in Section 7.6.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
security interest, encumbrance or other right of third parties; provided,
however, that Encumbrances shall not include any: (a) Encumbrances for Taxes or
other governmental charges not yet due and payable by a Person or the amount or
validity of which is being contested by such Person in good faith by appropriate
proceedings; (b) zoning, entitlement, building and other land use regulations
imposed by governmental agencies having jurisdiction over the real property
which are not violated by the current use and operation of the real property by
Sellers or Nextera; (c) covenants, conditions, restrictions, easements and other
matters of record affecting title to the real property which do not unreasonably
interfere with the current use, occupancy, or value, or the marketability of
title, of real property; and (d) Encumbrances arising under original purchase
price conditional sales contracts and equipment leases with third parties in the
ordinary course of business, including without limitation, the Personal Property
Leases.
"End Date" shall have the meaning set forth in Section 12.1(b)(i).
"Environmental Laws" means all applicable laws in effect as of the Closing
Date which deal with Solid Waste, hazardous waste, wastewater discharges, water
quality, drinking water, air emissions, air quality (indoor or outdoor),
Hazardous Substances, asbestos, toxic substances,
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radioactive materials or waste, petroleum or its derivatives, wetlands,
lead-based paint, radon, employee health and safety or community right-to-know.
"ERISA" shall have the meaning set forth in Section 5.16(a).
"ERISA Affiliate" shall have the meaning set forth in Section 5.16(a).
"Escrow Agreement" shall have the meaning set forth in Section 3.2(b).
"Escrow Amount" means One Million, Five Hundred Thousand Dollars
($1,500,000).
"Estimated Closing Balance Sheet" shall have the meaning set forth in
Section 3.5(b).
"Estimated Closing Working Capital" shall have the meaning set forth in
Section 3.5(b).
"Estimated Working Capital Discrepancy Amount" shall have the meaning set
forth in Section 3.5(d).
"Exchange Act" shall have the meaning set forth in Section 7.4(a)(iii).
"Excluded Assets" shall have the meaning set forth in Section 1.2.
"fictitious name" shall have the meaning set forth in Section 9.16.
"Floor" shall have the meaning set forth in Section 11.4.
"Formation Documents" shall have the meaning set forth in Section 5.1.
"FTI" shall have the meaning set forth in the Preamble.
"GAAP" means United States generally accepted accounting principles and
practices, consistently applied.
"Goodwill" shall have the meaning set forth in Section 1.1(n).
"Governmental Authority" means any federal, state, or local governmental
authority or instrumentality, including any court, tribunal or administrative
agency, department, bureau, commission or board.
"Hazardous Substances" means asbestos, radioactive substances, radon, PCBs,
petroleum and any substance deemed under federal or applicable state law or
regulation a hazardous or toxic substance, material, chemical substance,
pollutant, waste, pesticide or fungicide.
"Hired Employees" shall have the meaning set forth in Section 8.4.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
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"Indebtedness" of each of Sellers and Nextera shall include, without
duplication: (i) all indebtedness of Sellers and Nextera for borrowed money or
for the deferred purchase price of property or services (other than current
liabilities for trade payables incurred and payable in the ordinary course of
business); (ii) any other indebtedness of Sellers or Nextera which is evidenced
by a note, mortgage, bond, debenture or similar instrument; (iii) all long-term
obligations of Sellers or Nextera under capitalized leases; (iv) all loans to
Sellers or Nextera from officers or stockholders; (v) all liabilities of Sellers
or Nextera related to lease obligations for closed offices; (vi) all liabilities
of Sellers or Nextera for the payment of money related to acquisitions of or by
Sellers or Nextera; (vii) net liabilities associated with intercompany balances
and (viii) the portion calculable and non-contingent as of the Closing Date,
whether or not then payable, of amounts required to be paid by Sellers or
Nextera resulting from or triggered by the Closing pursuant to a non-compete
payment obligation or change of control payment obligation, in each case
including all accrued and unpaid interest (including, without limitation, the
non-complete payments set forth on Schedule 9.19), but excluding any non-compete
payments listed on Schedule 8.4.
"Indemnifiable Claims" shall have the meaning set forth in Section 11.4(a).
"Indemnified Party" shall have the meaning set forth in Section 11.5(a).
"Indemnifying Party" shall have the meaning set forth in Section 11.5(a).
"IPO Case Receivables" means Receivables in an amount not to exceed One
Million, Five Hundred Fifty Thousand Dollars ($1,550,000) that are related to
the matters set forth as Items 112 and 123 on Schedule 5.26 under the caption
"Other Contracts."
"June Balance Sheet" shall have the meaning set forth in Section 5.3(a).
"Knowledge" means (a) with respect to the Sellers or Nextera, the actual
knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ and (b) with
respect to Buyer or FTI, the actual knowledge of ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Lease Assignment" shall have the meaning set forth in Section 9.13.
"Leased Real Property" shall have the meaning set forth in Section 5.23.
"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
"Litigation" means any litigation, legal action, arbitration, proceeding,
demand, claim or investigation, whether or not pending or threatened on the
Closing Date, affecting or brought by or against Sellers or the Assets, with
respect to events, circumstances, actions or inactions occurring or existing
prior to the Closing.
"Marks" shall have the meaning set forth in Section 1.1(g).
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"Material Adverse Effect" shall have the meaning set forth in Section 5.4.
"Medical Plan Payment" means the amount designated by Sellers in a writing
delivered to Buyer five (5) days prior to the Closing Date, which represents
Sellers' good faith estimate of the Liabilities under Sellers' self-insured
medical plan that have been incurred in accordance with past practice as of the
Closing Date.
"Modified Superior Proposal" shall have the meaning set forth in Section
7.4(b)(iii).
"multiemployer plan" shall have the meaning set forth in Section 5.16(c).
"multiple employer plan" shall have the meaning set forth in Section
5.16(c).
"Nextera" shall have the meaning set forth in the Preamble.
"Nextera Class A Common Stock" means the class A common stock, par value
$0.001 per share of Nextera.
"Nextera Class B Common Stock" means the class B common stock, par value
$0.001 per share of Nextera.
"Nextera Common Stock" means Nextera Class B Common Stock and Nextera Class
A Common Stock.
"Nextera Preferred Stock" means the series A cumulative convertible
preferred stock, par value $0.001 per share of Nextera.
"Nextera Recommendation" shall have the meaning set forth in Section 7.3.
"Nextera Stock" means Nextera Class A Common Stock, Nextera Class B Common
Stock and Nextera Preferred Stock.
"Nextera Stockholder Approval" shall have the meaning set forth in Section
5.2(b).
"Nextera Stockholder Meeting" shall have the meaning set forth in Section
7.3.
"Nextera Stockholders" means all of the holders of the outstanding Nextera
Stock.
"Non-Compete Agreements" shall have the meaning set forth in Section 2.2.
"Notice of Superior Proposal" shall have the meaning set forth in Section
7.4(b)(iii).
"Owned Intellectual Property" shall have the meaning set forth in Section
5.8(a).
"Patents" shall have the meaning set forth in Section 1.1(g).
"Parties" shall have the meaning set forth in the Preamble.
"Permits" shall have the meaning set forth in Section 1.1(f).
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"Permitted Actions" shall have the meaning set forth in Section 7.4(b)(i).
"Person" means an individual, partnership, corporation, association, joint
stock company, limited liability company, trust, joint venture, or
unincorporated organization, however described.
"Personal Property Leases" shall have the meaning set forth in Section
1.1(h).
"Personal Property" shall have the meaning set forth in Section 1.1(b).
"Pre-Closing Tax Period" means any taxable period beginning and ending
before the Closing Date.
"Profit Sharing Plan Payment" means the amount designated by Sellers in
writing and delivered to Buyer five (5) days prior to the Closing Date, which
represents Sellers' good faith estimate of the contributions required to be made
in accordance with past practice with respect to the time period ended on the
Closing Date under Sellers' Lexecon Retirement & Savings Plan, which is intended
to qualify under Section 401 of the Code.
"Proprietary Rights" shall have the meaning set forth in Section 1.1(g).
"Proxy Statement" means the proxy statement to be mailed to the Nextera
Stockholders in connection with the Nextera Stockholder Approval, together with
any amendments or supplements thereto, which shall, among other things, set
forth the Nextera Recommendation.
"Purchase Price" shall have the meaning set forth in Section 3.1.
"Real Property Leases" shall have the meaning set forth in Section 1.1(a).
"Related Persons" shall have the meaning set forth in Section 5.25.
"Receivables" shall have the meaning set forth in Section 1.1(i).
"SEC" means the Securities and Exchange Commission.
"Seller" shall have the meaning set forth in the Preamble.
"Seller Indemnified Parties" shall have the meaning set forth in Section
11.3.
"Seller Indemnifiable Claims" shall have the meaning set forth in Section
11.2(a).
"Seller Plans" shall have the meaning set forth in Section 5.16(a).
"Seller Plan Liabilities" means any Liability attributable to a Seller
Plan, including the Seller Plan Payments.
"Seller Plan Payments" means the aggregate of the Profit Sharing Plan
Payment and the Medical Plan Payment.
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"Software" shall have the meaning set forth in Section 1.1(g).
"Solid Waste" means any substance deemed a waste under any applicable
federal, state, county or local laws, ordinances, rules or regulations and also
infectious waste, residual waste, hazardous waste or nuclear/radioactive waste
regardless of the level of radioactivity.
"Straddle Period" means any taxable period beginning before and ending
after the Closing Date.
"Superior Proposal" means any written, bona fide Acquisition Proposal that
a majority of the disinterested members of the Nextera's Board of Directors
determines in good faith, after considering the advice of outside legal counsel
and financial advisors, would result in a transaction, if consummated, that
would be more favorable to Nextera Stockholders (taking into account all facts
and circumstances, including all legal, financial, regulatory and other aspects
of the proposal and the identity of the offeror) than the transactions
contemplated hereby and is reasonably capable of being consummated (including,
without limitation, the availability of committed financing, to the extent
needed to complete the transaction).
"Tax Return" means any tax return, declaration of estimated tax, tax report
or other tax statement, or any other similar filing, including any schedule or
attachment thereto, and including any amendment thereof, required to be
submitted to any Governmental Authority with respect to any Tax.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation:
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs duties, tariffs, and similar charges.
"Termination Fee" shall have the meaning set forth in Section 12.2(b).
"trade name" shall have the meaning set forth in Section 9.17.
"Trade Secrets" shall have the meaning set forth in Section 1.1(g).
"Transaction Documents" means this Agreement, and the Escrow Agreement.
"Voting Agreement" shall have the meaning set forth in the Preliminary
Statements.
"WARN" shall have the meaning set forth in Section 5.15(c).
"Withheld Receivables" means such client accounts receivable that are
designated by Sellers and Nextera from the list of clients set forth on Schedule
13.12 pursuant to Section 3.5 and are equal to the sum of (a) the outstanding
principal balance at Closing under that portion of
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the loan made by Knowledge Universe, Inc. on July 17, 2003 plus (b) the amount
by which one-half (1/2) of the Seller Plan Payments exceeds the Medical Plan
Payment.
"Warranties" shall have the meaning set forth in Section 1.1(k).
"Work-in-Process" shall have the meaning set forth in Section 1.1(d).
"Working Capital" shall mean Current Assets minus Current Liabilities.
"Working Capital Schedule" shall have the meaning set forth in Section
3.5(a).
"Working Capital Target" shall have the meaning set forth in Section
3.5(d).
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
FTI CONSULTING, INC. LEXECON INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------- ------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President Title: Assistant Secretary
and Chief Financial
Officer
LI ACQUISITION COMPANY, LLC CE ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------- ------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President Title: Vice President
and Chief Financial
Officer
ERG ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
NEXTERA ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Operating Officer
and Chief Financial
Officer