Exhibit 2.1
================================================================================
AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
by and between
PricewaterhouseCoopers LLP
as Seller
and
FTI Consulting, Inc.
as Buyer
dated as of July 24, 2002
================================================================================
TABLE OF CONTENTS
1. Definitions .......................................................................... 2
1.1 Defined Terms ............................................................... 2
1.2 Other Definitional and Interpretive Matters ................................. 8
2. Purchase and Sale of the Assets ...................................................... 8
2.1 Purchase and Sale of Assets; License of Certain Intellectual Property ....... 8
2.2 Assets Not Purchased ........................................................ 9
2.3 Purchase Price .............................................................. 10
2.4 Assumed Liabilities ......................................................... 11
2.5 No Offset ................................................................... 12
2.6 Further Assurances; Further Conveyances and Assumptions;
Consent of Third Parties .................................................... 12
2.7 Closing Statement ........................................................... 13
3. Representations and Warranties of Seller ............................................. 14
3.1 Organization and Qualification .............................................. 14
3.2 Authorization; Binding Effect ............................................... 14
3.3 Non-Contravention; Consents ................................................. 14
3.4 Title to Purchased Assets ................................................... 15
3.5 Permits ..................................................................... 15
3.6 Compliance With Laws; Litigation ............................................ 15
3.7 Business Employees; Employee Benefits ....................................... 16
3.8 Contracts ................................................................... 16
3.9 Financial Statements; Absence of Changes .................................... 17
3.10 Intellectual Property ....................................................... 18
3.11 Taxes ....................................................................... 19
3.12 Clients ..................................................................... 19
3.13 Insurance ................................................................... 19
3.14 Receivables; Work-In-Process ................................................ 19
3.15 Government Contracts ........................................................ 20
3.16 Business Activity Restriction ............................................... 20
3.17 Brokers ..................................................................... 20
3.18 Investment .................................................................. 20
3.19 No Other Representations .................................................... 21
4. Representations and Warranties of Buyer .............................................. 21
4.1 Organization and Qualification .............................................. 21
4.2 Authorization; Binding Effect ............................................... 21
4.3 No Violations ............................................................... 22
4.4 Capital Stock of Buyer ...................................................... 22
-i-
4.5 SEC Documents and Other Reports ........................................... 23
4.6 Absence of Certain Changes or Events ...................................... 23
4.7 Brokers ................................................................... 23
4.8 [Intentionally Omitted] ................................................... 23
4.9 Compliance with Laws, Litigation .......................................... 23
4.10 Compensation and Benefits ................................................. 24
5. Certain Covenants .................................................................. 24
5.1 Access to Information ..................................................... 24
5.2 Conduct of Business ....................................................... 25
5.3 Taxes ..................................................................... 25
5.4 Business Employees ........................................................ 27
5.5 Regulatory Compliance ..................................................... 29
5.6 Permit Transfer ........................................................... 30
5.7 Advice of Changes ......................................................... 30
5.8 Non-Competition and Non-Solicitation ...................................... 31
5.9 Confidentiality ........................................................... 36
5.10 No Additional Representation .............................................. 36
5.11 Use of Certain Marks ...................................................... 36
5.12 Transfer of Business Records .............................................. 37
5.13 Litigation Support. ....................................................... 37
5.14 Third Party Referrals ..................................................... 37
5.15 Enforcement of Non-Competition Agreements ................................. 37
5.16 Exclusivity ............................................................... 38
5.17 Financial Statements ...................................................... 38
5.18 Use of Firms in ABC Global Network ........................................ 38
5.19 Retention Arrangements .................................................... 38
5.20 Restrictive Legends; Access to Senior Executives .......................... 39
5.21 Financing ................................................................. 39
6. Closing ............................................................................ 39
6.1 Closing ................................................................... 39
6.2 Deliveries by Seller ...................................................... 40
6.3 Deliveries by Buyer ....................................................... 40
6.4 Contemporaneous Effectiveness ............................................. 41
7. Conditions Precedent to Closing .................................................... 41
7.1 General Conditions ........................................................ 41
7.2 Conditions Precedent to Buyer's Obligations ............................... 42
7.3 Conditions Precedent to Seller's Obligations .............................. 43
8. Survival and Indemnity ............................................................. 44
8.1 Survival of Representations and Warranties ................................ 44
8.2 General Agreement to Indemnify ............................................ 44
-ii-
8.3 General Procedures for Indemnification .................................. 46
9. Termination ...................................................................... 48
9.1 Termination ............................................................. 48
9.2 Effect of Termination ................................................... 48
10. Miscellaneous Provisions ......................................................... 49
10.1 Notices ................................................................. 49
10.2 Expenses ................................................................ 50
10.3 Entire Agreement ........................................................ 50
10.4 Jurisdiction, Service of Process ........................................ 50
10.5 Governing Law ........................................................... 51
10.6 Waiver .................................................................. 51
10.7 Reasonable Commercial Efforts ........................................... 51
10.8 No Oral Modification .................................................... 51
10.9 Assignments, Successors ................................................. 51
10.10 Severability ............................................................ 52
10.11 Captions ................................................................ 52
10.12 No Third Party Beneficiaries ............................................ 52
10.13 Time of the Essence ..................................................... 52
10.14 Counterparts ............................................................ 52
10.15 Confidentiality; Public Announcement .................................... 53
10.16 Waiver of Compliance with Bulk Transfer Laws ............................ 53
-iii-
Exhibits
Exhibit A Description of Business
Exhibit B Registration Rights Agreement
Exhibit C Protocol for Client Consents and Transfer of Client Files
Exhibit D Form of ▇▇▇▇ of Sale
Exhibit E Form of Assumption Agreement
Exhibit F Form of Transition Services Agreement
Exhibit G Form of License Agreement
Exhibit H Form of Principal Employment Agreement
Exhibit I Form of Opinion of Seller's Counsel
Exhibit J Form of Opinion of Buyer's Counsel
-iv-
Schedules
Schedule 1.1(a)(1) BRS Partners and Principals
Schedule 1.1(a)(2) Business Employees
Schedule 2.1(a)(iv) Intellectual Property
Schedule 2.1(c) Shared IP
Schedule 3.3(b) Seller Required Consents
Schedule 3.5 Permits
Schedule 3.6(a) Seller Compliance with Law
Schedule 3.6(b) Seller Litigation
Schedule 3.7(a) Business Employee Information
Schedule 3.7(b) Benefit Plans
Schedule 3.7(d) Notice of Intent to Withdraw
Schedule 3.8 Material Contracts
Schedule 3.9(a) Financial Statements
Schedule 3.9(b) Exceptions to Financial Statements
Schedule 3.9(c) Ordinary Course Exceptions
Schedule 3.12 Fifteen Largest Business Clients
Schedule 3.14 Receivables in Excess of $500,000
Schedule 3.15 Government Contracts
Schedule 3.16 Business Activity Restrictions
Schedule 4.3(b) Buyer Required Consents
Schedule 4.4(b) Buyer Options
Schedule 4.9(a) Buyer Compliance with Law
Schedule 4.9(b) Buyer Litigation
Schedule 5.2 Seller's Conduct of Business Until Closing Date
Schedule 5.3(b) Purchase Price Allocation
Schedule 5.4(d) Severance Pay
Schedule 5.17(b)(ii) EBITDA Calculation Methodologies
Schedule 7.2(e) Excluded Engagements
-v-
AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS (this "Agreement")
is made as of July 24, 2002 by and between PricewaterhouseCoopers LLP, a
Delaware limited liability partnership, having an office at 1301 Avenue of the
Americas, New York, New York ("Seller") and FTI Consulting, Inc., a Maryland
corporation, having an office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
("Buyer").
RECITALS
A. WHEREAS, Seller is, among other things, engaged through a business
unit referred to as Business Recovery Services ("BRS") in the business of
providing a range of services to underperforming and troubled businesses in the
United States (such business of BRS as conducted by Seller as of the date
hereof, as more particularly described in Exhibit A, which will not include the
broker/dealer activities of BRS, with such additions or changes to the business
as occur after the date hereof and prior to the Closing in accordance with this
Agreement, is referred to herein collectively as the "Business");
B. WHEREAS, Seller desires to sell, transfer and assign to Buyer, and
Buyer desires to purchase from Seller the Purchased Assets (as defined herein),
and Buyer is willing to assume the Assumed Liabilities (as defined herein), in
each case as more fully described and upon the terms and subject to the
conditions set forth herein;
C. WHEREAS, Seller on the one side and Buyer on the other side desire,
and shall cause the other parties, as applicable, to enter into the ▇▇▇▇ of
Sale, the Assumption Agreement, the Principal Employment Agreements, the
Transition Services Agreement, the License Agreement, the Registration Rights
Agreement (as such terms are defined herein) and the other documents and
instruments to be executed and delivered to effectuate the transfer of the
Purchased Assets, the grant of the licenses pursuant to the License Agreement
and the assumption of the Assumed Liabilities and the other transactions
contemplated hereby (such agreements and any other agreement or instrument
entered into at or prior to the Closing pursuant to the provisions of this
Agreement, collectively the "Collateral Agreements"); and
D. WHEREAS, the parties have obtained all requisite corporate or
partnership approvals necessary for the consummation of the transactions herein
contemplated, including, in the case of Seller, approval of the board of
PricewaterhouseCoopers International Limited.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions hereinafter set forth, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
-1-
AGREEMENT
1. Definitions
1.1 Defined Terms
For the purposes of this Agreement, the following words and phrases
shall have the following meanings whenever used in this Agreement (including the
Schedules and Exhibits hereto):
"Action" means any action, claim, suit, arbitration, inquiry,
investigation or other proceeding of any nature (whether criminal, civil,
legislative, administrative, regulatory, prosecutorial or otherwise) by or
before any arbitrator or Governmental Body or similar Person or body.
"Affiliate" of any Person means any Person that controls, is controlled
by, or is under common control with such Person. As used herein, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or other interests, by contract or otherwise.
"Agreement" has the meaning assigned in the preamble hereof.
"Allocation" has the meaning assigned in Section 5.3(b).
"Assumed Liabilities" has the meaning assigned in Section 2.4(a).
"Assumption Agreement" has the meaning assigned in Section 6.2(d).
"Average Price" has the meaning assigned in Section 2.3(c).
"Balance Sheet" means the most recent statement of Assets and
Liabilities included in the Financial Statements.
"Benefit Plan" means each "employee benefit plan," as defined in
Section 3(3) of ERISA (including any "multiemployer plan" as defined in Section
3(37) of ERISA) and each profit-sharing, bonus, stock option, stock purchase,
stock ownership, pension, retirement, severance, deferred compensation, excess
benefit, supplemental unemployment, post-retirement medical or life insurance,
welfare or incentive plan, or sick leave, long-term disability, medical,
hospitalization, life insurance, other insurance plan, or other employee benefit
plan, program or arrangement, whether written or unwritten, qualified or
non-qualified, funded or unfunded, maintained or contributed to by Seller in
which any Business Employee participates.
"▇▇▇▇ of Sale" has the meaning assigned in Section 6.2(a).
"BRS" has the meaning assigned in Recital A.
-2-
"BRS Partners and Principals" means the individuals identified on
Schedule 1.1(a)(1).
"BRS Services" has the meaning assigned in Section 5.8(b).
"Business" has the meaning assigned in Recital A.
"Business Day" means a day that is not a Saturday, a Sunday or a day on
which banks in The City of New York are authorized or required by law,
regulation or executive order to remain closed.
"Business Employees" means (i) the employees of Seller who work
exclusively in the Business as set forth on Schedule 1.1(a)(2) and who continue
to be employees of Seller until and as of the Closing, (ii) employees hired by
the Business between the date of this Agreement and the Closing Date who
continue to be employees of Seller until and as of the Closing and (iii) the BRS
Partners and Principals.
"Business Records" means all books, records, ledgers and files or other
similar information of Seller (in any form or medium) and Tax Returns Related to
the Business (except litigation files).
"Buyer" has the meaning assigned in the preamble.
"Buyer Required Consents" has the meaning assigned in Section 4.3(b).
"Buyer SEC Documents" has the meaning assigned in Section 4.5.
"Canadian Cap" has the meaning assigned in Section 5.8(c)(iv).
"Cash Consideration" has the meaning assigned in Section 2.3(a).
"Closing" has the meaning assigned in Section 6.1.
"Closing Date" has the meaning assigned in Section 6.1.
"Closing Statement" has the meaning assigned in Section 2.7.
"COBRA Coverage" means health continuation coverage as required by
Section 4980 of the Code of Part 6 of Title I of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agreements" has the meaning assigned in Recital C.
"Competing Business" has the meaning assigned in Section 5.8(b).
"Confidential Information" has the meaning assigned in Section 5.9.
-3-
"Contracts" means all court approved retentions, contracts, agreements,
engagement letters, leases and subleases, licenses and sublicenses, supply
contracts, purchase orders and sales orders or portions thereof Related to the
Business to which Seller is a party currently in effect or entered into by
Seller between the date hereof and the Closing Date and outstanding as of such
date, other than Employment Agreements and Benefit Plans (it being understood
that "Contracts" does not include any notes, mortgages, indentures, letters of
credit, guarantees and other obligations and agreements for or relating to any
lending or borrowing, any leases of real property, any insurance policies and
any agreements creating any guarantees or keep-well agreements or other
agreements to be liable for the obligations of another Person by Seller).
"Employment Agreement" means a contract, offer letter or agreement of
Seller with or addressed to any Business Employee pursuant to which Seller has
any actual or contingent liability or obligation to provide compensation or
benefits in consideration for past, present or future services, or pursuant to
which any Business Employee undertakes confidentiality or non-competition
obligations.
"Encumbrance" means any mortgage, pledge, easement, hypothecation,
assignment, encumbrance, lien (statutory or other), charge or other security
interest or matter affecting title.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning assigned in Section 2.2.
"Excluded Liabilities" has the meaning assigned in Section 2.4(b).
"Financial Statements" has the meaning assigned in Section 3.9(a).
"FMLA" has the meaning assigned in Section 3.7(a).
"GAAP Exceptions" means the exceptions described on Schedule 3.9(a).
"Generally Accepted Accounting Principles" means United States
generally accepted accounting principles applied on a basis consistent with the
application of such principles in the preparation of the Financial Statements,
but subject to the GAAP Exceptions.
"Governmental Body" means any nation or government, any state or other
political subdivision thereof, any legislative, executive or judicial unit or
instrumentality of any governmental entity (foreign, federal, state or local) or
any department, commission, board, agency, bureau, official or other regulatory,
administrative or judicial authority thereof or any entity (including a court or
self-regulatory organization) exercising executive, legislative, judicial, Tax,
regulatory or administrative functions of or pertaining to government.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
-4-
"Income Taxes" has the meaning assigned in Section 5.3(e).
"Indemnified Party" has the meaning assigned in Section 8.2(a).
"Indemnifying Party" has the meaning assigned in Section 8.3(a).
"Intellectual Property" means all U.S. intellectual property rights of
Seller Related to the Business, including all registered trademarks and service
marks (including any applications therefor), trade names, domain names, designs,
together with all goodwill related to the foregoing; patents (including any
continuations, continuations in part, divisionals, certificates of inventorship,
reissues or reexaminations thereof, applications for any of the foregoing and
patents issuing therefrom); copyrights (including any applications therefor);
trade secrets; and know-how; provided, that "Intellectual Property" shall not
include any Excluded Asset.
"IRS" means the U.S. Internal Revenue Service.
"Knowledge" means, in connection with any representation and warranty
contained in this Agreement that is expressly qualified by reference to the
Knowledge of Seller or Buyer, with respect to Knowledge of Seller, the actual
knowledge, after reasonable investigation, of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or, with respect to Knowledge of
Buyer, the actual knowledge, after reasonable investigation, of ▇▇▇▇ ▇. ▇▇▇▇,
▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Law" or "Laws" shall mean any law, statute, ordinance, rule,
regulation, code, order, judgment, Tax ruling, injunction or decree of any
Governmental Body.
"Letter Agreement" has the meaning assigned in Section 10.15.
"License Agreement" has the meaning assigned in Section 6.2(f).
"Losses" has the meaning assigned in Section 8.2(a).
"Material Adverse Effect" means a material adverse effect on the
business, operations, assets, condition (financial or other) or results of
operations of the Business or the Buyer as the context requires, taken as a
whole; provided, that none of the following shall be deemed, either alone or in
combination, to constitute a Material Adverse Effect: (i) conditions generally
affecting any of the industries or markets in which the Seller or the Buyer, as
the context requires, operates, (ii) any disruption arising out of or relating
to actions contemplated by the parties in connection with, or which is
attributable to, the transactions contemplated hereby, (iii) subject to the
provisions of Section 7.2(f), the failure of any partner, principal or other
employee of Seller to accept Buyer's offer of employment, (iv) without
limitation of any consent or approval required as a condition to Closing, the
failure to obtain any third party consent or approval necessary or desirable in
connection with the transactions contemplated by this Agreement, or (v) loss or
potential loss of customers of the Business for whom Seller provides audit
services.
"Material Clients" has the meaning assigned in Section 3.12.
-5-
"Material Contracts" has the meaning assigned in Section 3.8.
"Net Profits" has the meaning assigned in Section 5.8(c)(ii).
"Non-Compete Period" has the meaning assigned in Section 5.8(b).
"Ongoing Engagements" has the meaning assigned in Section 3.12.
"Permits" means all permits, licenses, certificates, approvals,
qualifications, registrations, and similar authorizations issued to Seller by a
Governmental Body Related to the Business as currently conducted, including any
amendment, modification, limitation, condition or renewal thereof.
"Permitted Encumbrances" means (i) Encumbrances for Taxes not yet due
and payable or that are being contested in good faith by appropriate
proceedings, (ii) any mechanics', carriers', workmen's, repairmen's or other
similar liens arising or incurred in the ordinary course of business, (iii) any
liens arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business, (iv) mortgages, liens, security interests and Encumbrances which
secure debt that is reflected as a liability on the Financial Statements and the
existence of which is indicated in the notes thereto, and (v) Encumbrances or
other imperfections of title which do not, individually or in the aggregate,
significantly interfere with Buyer's ability to use any Purchased Asset in the
ordinary course of business.
"Person" means any individual, corporation, partnership, limited
liability company, limited liability firm, association, joint venture, joint
stock company, trust, unincorporated organization or other entity, or any
Governmental Body.
"Personal Property" means all machinery, equipment, furniture,
furnishings and other tangible personal property owned or leased by Seller
Related to the Business.
"Prepaid Expenses" means all credits, prepaid expenses, deferred
charges, advance payments, security deposits and other prepaid items of Seller
Related to the Business.
"Principal Employment Agreements" has the meaning assigned in Section
7.2(f).
"Profit" has the meaning assigned in Section 5.8(c)(ii).
"Purchase Price" has the meaning assigned in Section 2.3(a).
"Purchased Assets" has the meaning assigned in Section 2.1(a).
"PwC Name" has the meaning assigned in Section 2.2(a).
"Receivables" means all accounts receivable of Seller Related to the
Business and billed by Business Employees.
-6-
"Related to the Business" means exclusively used or held for exclusive
use in the Business; provided that such term shall not include assets or
properties of Seller, the use of which or the access to which is being provided
by Seller to Buyer pursuant to the Transition Services Agreement, including (i)
any personal property located at any real property owned or leased by Seller
other than Business Records and (ii) software on any personal computers used by
the Business.
"Registration Rights Agreement" means the registration rights agreement
to be entered into by Buyer and Seller in substantially the form of Exhibit B.
"SEC" means the Securities and Exchange Commission.
"Seller" has the meaning assigned in the preamble hereof.
"Seller Required Consents" has the meaning assigned in Section 3.3(b).
"Severance Pay" has the meaning assigned in Section 5.4(d).
"Shared IP" has the meaning assigned in Section 2.1(c).
"Statements" has the meaning assigned in Section 3.9(a).
"Stock Consideration" has the meaning assigned in Section 2.3(a).
"Tax Returns" means all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to Tax authority relating to Taxes.
"Taxes" mean all taxes of any kind, charges, fees, customs, levies,
duties, imposts, required deposits or other assessments, including all net
income, capital gains, gross income, gross receipt, property, franchise, sales,
use, excise, withholding, payroll, employment, social security, worker's
compensation, unemployment, occupation, capital stock, ad valorem, value added,
transfer, gains, profits, license, net worth, asset, transaction, and other
taxes, imposed upon any Person by any Law or Governmental Body, together with
any interest and any penalties, or additions to tax, with respect to such taxes.
"Third Party" means any Person other than, and not an Affiliate of, the
other referenced Person or Persons.
"Third Party Claim" has the meaning assigned in Section 8.3(a).
"Transfer Date" has the meaning assigned in Section 5.4(c).
"Transferred Employees" has the meaning assigned in Section 5.4(a).
"Transition Services Agreement" has the meaning assigned in Section
6.2(e).
"WARN Act" has the meaning assigned in Section 5.4(i).
-7-
"Work-In-Process" means all work Related to the Business that has been
performed and has not been billed by the Business Employees and which is
reasonably expected to be ultimately billed by Business Employees in the
ordinary course of business.
1.2 Other Definitional and Interpretive Matters
Unless otherwise expressly provided, for purposes of this Agreement and
the Collateral Agreements, the following rules of interpretation shall apply:
(a) Calculation of Time Period. When calculating the period of time
before which, within which or following which any act is to be done or step
taken, the date that is the reference date in calculating such period shall be
excluded. If the last day of such period is a non-Business Day, the period in
question shall end on the next succeeding Business Day.
(b) Gender and Number. Any reference to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.
(c) Headings. The provision of a Table of Contents, the division into
Articles, Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing
or interpreting this Agreement and the Collateral Agreements. All references in
this Agreement to any "Section" are to the corresponding Section of the
agreement in which such reference occurs unless otherwise specified.
(d) Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to the agreement in which such reference occurs as a whole and
not merely to a subdivision in which such words appear unless the context
otherwise requires.
(e) Including. The word "including" or any variation thereof means
"including without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(f) Schedules and Exhibits. The Schedules and Exhibits attached to
each of this Agreement and the Collateral Agreements shall be construed with and
as an integral part of this Agreement and the Collateral Agreements to the same
extent as if the same had been set forth verbatim herein and therein. Disclosure
in any of the schedules provided pursuant to Article 3 or Article 4 shall be
deemed to be disclosure on every other schedule in which it may be relevant, if
the disclosure of any matter in a schedule other than in the relevant schedule
provides the other party with sufficiently full disclosure such that the party
should reasonably be expected to know that the matter disclosed was applicable
to the disclosure contained in the relevant schedule.
2. Purchase and Sale of the Assets
2.1 Purchase and Sale of Assets; License of Certain Intellectual
Property
(a) Upon the terms and subject to the conditions of this Agreement and
in reliance on the representations and warranties contained herein and in the
Collateral Agreements,
-8-
at the Closing, Seller shall grant, bargain, sell, transfer, assign, convey and
deliver to Buyer and Buyer shall purchase, acquire and accept from Seller all of
the right, title and interest in, to and under, the following specific assets
Related to the Business, as the same shall exist on the Closing Date, but only
to the extent such assets have any value for accounting purposes or are carried
or reflected on or specifically referred to in Seller's Financial Statements
(collectively, the "Purchased Assets"):
(i) the Contracts (subject to Exhibit C);
(ii) the Receivables;
(iii) the Work-In-Process;
(iv) the Intellectual Property set forth on Schedule 2.1(a)(iv)
in existence at the Closing;
(v) the Prepaid Expenses;
(vi) the Business Records (subject to Exhibit C);
(vii) the Permits; and
(viii) the goodwill Related to the Business.
(b) Upon the terms and conditions of the License Agreement, at the
Closing, Seller shall grant and Buyer shall accept the licenses to the
Intellectual Property described in the License Agreement.
(c) Buyer, effective as of the Closing Date, grants to Seller and its
Affiliates, and Seller accepts, a non-exclusive, perpetual, irrevocable and
royalty-free right and license to continue to sublicense (directly or by way of
its Affiliates), implement, use, apply, reproduce, modify, enhance, and
otherwise exploit the Intellectual Property included in the Purchased Assets in
the United States (except for the Intellectual Property listed on Schedule
2.1(c)) (the "Shared IP"). Seller acknowledges and agrees that Buyer does not
make any representation or warranties whatsoever, and does not covenant in any
fashion, with respect to any of the Shared IP.
2.2 Assets Not Purchased
Notwithstanding Section 2.1, Seller shall not grant, bargain, sell,
transfer, assign, convey or deliver, and Buyer shall not acquire any interest
in, any assets not specifically enumerated in Section 2.1(a) above or the
following assets of Seller or its Affiliates (the "Excluded Assets"):
(a) the name (a) PricewaterhouseCoopers, any name used by any firm in
the PricewaterhouseCoopers global network or its predecessor(s), and any
derivative of the foregoing, (b) any logo, device, trade ▇▇▇▇, trade dress,
trade name, service ▇▇▇▇ or any other words, symbol or style (whether registered
or not) from time to time used in association with the
-9-
name "PricewaterhouseCoopers" or any such predecessor name or derivative thereof
and (c) any goodwill symbolized by or associated with any of the foregoing ((a)
and (b) above, collectively, the "PwC Name"), except as specifically provided in
Section 5.11(b);
(b) all leases, subleases and licenses in respect of real property to
which Seller is a party;
(c) any Benefit Plans or interests in Benefit Plans;
(d) any receivables due to Seller from Business Employees;
(e) cash and cash equivalents;
(f) any intercompany receivables and intercompany work-in-process;
(g) any insurance policies and agreements;
(h) the Intellectual Property identified in the License Agreement,
including any software licenses for software used on any personal computers used
by the Business;
(i) all assets of Seller, the use of which or the access to which is
being provided to Buyer pursuant to the Transition Services Agreement, including
any personal computers and software licenses for software used on any personal
computers used by the Business;
(j) all books and records of Seller not constituting Purchased Assets;
(k) all tangible Personal Property other than the Business Records; and
(l) all assets related to the broker/dealer activities conducted by
BRS.
2.3 Purchase Price
(a) In consideration of the sale, transfer, assignment, conveyance and
delivery by Seller of the Purchased Assets and the grant of the licenses
pursuant to the License Agreement to Buyer, and in addition to assuming the
Assumed Liabilities, Buyer shall (A) pay One Hundred Forty Million U.S. Dollars
($140,000,000) in cash to Seller at the Closing, as such amount may be adjusted
pursuant to Section 2.3(c) below (the "Cash Consideration") and (B) issue and
deliver to Seller 3,000,000 shares of common stock, par value $0.01 per share,
of Buyer, free and clear of any Encumbrances (the "Stock Consideration" and,
together with the Cash Consideration, the "Purchase Price").
(b) All payments of the Cash Consideration shall be made by wire
transfer in immediately available funds to an account designated by Seller in
written instructions to be delivered to Buyer at least two (2) Business Days
prior to the payment date.
-10-
(c) If the average closing price of Buyer's common stock on the New
York Stock Exchange for the five (5) days prior to the Closing Date (the
"Average Price") is less than $28.334, then Buyer shall increase the Cash
Consideration by an amount in US$ derived by the following: (28.334-Average
Price) x 3,000,000; provided, that should such product exceed $10,000,000, such
excess shall be disregarded and the Cash Consideration shall be increased by
$10,000,000.
2.4 Assumed Liabilities
(a) In connection with the purchase and sale of the Purchased Assets
pursuant to this Agreement, at the Closing, Buyer shall assume and agree to
honor, pay and discharge when due, the following liabilities and obligations of
Seller (the "Assumed Liabilities"):
(i) the liabilities and obligations of Seller under the Contracts
included in the Purchased Assets to be performed on or after, and in
respect of periods following, the Closing Date;
(ii) the non-cash liabilities and obligations (that is, a
Transferred Employees' taking of paid vacation leave) of Seller with
respect to any accrued vacation due to the Transferred Employees, not
including any BRS Partners and Principals, in accordance with Seller's
normal policies;
(iii) the cash liabilities and obligations (that is, cash in lieu
of paid vacation leave) of Seller up to but not in excess of $200,000 with
respect to any accrued vacation due to (A) the Business Employees with
respect to whom Buyer has not extended an offer, (B) the Business Employees
with respect to whom Buyer has not extended an offer in accordance with the
terms hereof, and (C) the Transferred Employees who are still employed by
Buyer after the earlier of the date that is four (4) months after the
Closing Date and December 31, 2002;
(iv) the liabilities and obligations of Seller under the Permits
included in the Purchased Assets to be performed on or after, and in
respect of periods following, the Closing Date;
(v) all liabilities reserved or reflected on the Closing
Statement, disclosed in Article 3 or the Schedules to this Agreement or
disclosed pursuant to Section 5.7; and
(vi) all other liabilities and obligations arising out of or
related to the Business, the Purchased Assets and the Transferred
Employees, in respect of periods following the Closing.
(b) Notwithstanding the provisions of Section 2.4(a), the Assumed
Liabilities shall not include (i) any liabilities or obligations of Seller with
respect to any Benefit Plan; (ii) except as provided in Section 2.4(a)(ii), any
liabilities for obligations with respect to wages, salaries, benefits or other
compensation of Business Employees for services performed through the close of
business on the Closing Date; (iii) any Taxes except to the extent provided in
Section 5.3(e) and 5.3(f); (iv) any obligation of Seller to indemnify any person
by reason of the fact that
-11-
such person was a partner, principal, director, officer, employee, or agent of
Seller or was serving at the request of Seller as a partner, principal, trustee,
director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such indemnification
is pursuant to any statute, charter document, bylaw, agreement, or otherwise);
(v) any liability of Seller for costs and expenses incurred in connection with
this Agreement, the Collateral Agreements or the transactions contemplated
hereby; or (vi) the litigation matter described on Schedule 3.6(b) (the
"Excluded Liabilities").
2.5 No Offset
Buyer's obligations under Sections 2.3 and 2.4 shall not be subject to
offset or reduction for any reason, including by reason of any actual or alleged
breach of any representation, warranty or covenant contained in this Agreement
or any of the Collateral Agreements or any right or alleged right to
indemnification hereunder.
2.6 Further Assurances; Further Conveyances and Assumptions; Consent of
Third Parties
(a) Subject to the specific terms and conditions hereof, Seller and
Buyer each agrees to use reasonable commercial efforts to take all actions and
to do all things necessary, proper or advisable to consummate the transactions
contemplated hereby. Seller will from time to time subsequent to the Closing
Date, at Buyer's request and assistance as necessary, execute and deliver such
other instruments of conveyance, assignment and transfer and take such other
actions as Buyer may reasonably request in order more effectively to convey,
assign, transfer to and vest in Buyer the Purchased Assets, including without
limitation, taking actions, filing motions and notices with a Governmental Body
to effectuate the transfer or assignment of a Contract or the termination of a
Contract for the purpose of enabling the retention of Buyer to perform the
obligations and enjoy the benefits of the Contracts. Buyer and Seller will work
together from the date of this Agreement to and following the Closing Date to
transfer electronic data and records and accounting and personnel information
Related to the Business and similar information that are being transferred in
connection with the Purchased Assets. Buyer will from time to time subsequent to
the Closing Date, at Seller's request, execute and deliver such other
instruments of conveyance, assignment and transfer and take such other actions
as Seller may reasonably request in order more effectively to accomplish the
assumption of, and discharge Seller from responsibility for, the Assumed
Liabilities.
(b) Nothing in this Agreement or the Collateral Agreements shall be
construed as an attempt or agreement to assign any Purchased Asset, including
any Contract, license, Business Record, Permit, certificate, approval,
authorization or other right, which by its terms or by Law is not capable of
being sold, assigned, transferred, delivered, subleased or sublicensed without
the consent, action, approval or waiver of a Third Party or a Governmental Body
or is cancelable by such Person in the event of any such sale, assignment,
transfer, delivery, sublease or sublicense or the sale, assignment, transfer,
delivery, sublease or sublicense of which would affect adversely the rights of
any party hereto unless and until such consent or waiver shall be given. Seller
shall use reasonable commercial efforts, and Buyer shall reasonably cooperate
with Seller, to obtain such consents, actions, approvals, authorizations, orders
or waivers and to
-12-
resolve the impediments to the sale, assignment, transfer, delivery, sublease or
sublicense required by this Agreement or the Collateral Agreements; provided,
that Seller shall not be required to pay any consent fees or make any other
concessions to any person in order to obtain any consents, actions, approvals,
authorizations, orders or waivers. In the event any such consents, actions,
approvals, authorizations, orders or waivers are not obtained on or prior to the
Closing Date, Seller shall continue to use reasonable commercial efforts to
obtain any such consents, actions, approvals, authorizations, orders or waivers
for a period of six months after the Closing Date, and Seller shall cooperate
with Buyer (at Buyer's request) in any lawful and economically feasible
arrangement to provide that Buyer shall receive the interest of Seller in the
benefits under any such consents, actions, approvals, authorizations, orders or
waivers, including performance by Seller, as agent, if economically feasible;
provided, that Buyer shall undertake to pay or satisfy the corresponding
liabilities for the enjoyment of such benefit to the extent Buyer would have
been responsible therefor hereunder if such consent, action, approval,
authorization, order or waiver had been obtained; provided, further that Seller
shall not be required to pay any consent fees or make any other concessions to
any person in order to obtain any consents, actions, approvals, authorizations,
orders or waivers. During such time as the parties are attempting to obtain
consents, approvals, authorizations or orders to assignment or transfer of any
Contracts hereunder following the Closing (including, any Contract that required
approval, authorization or an order of a court for Seller to perform services or
receive compensation under the Contract), if, and to the extent that, Buyer is
unable to provide services under any such Contract (including, by virtue of the
fact that a court does not authorize Seller to cease performing services under
the Contract or otherwise), Seller may, notwithstanding anything to the contrary
herein, continue to do so, if it so elects, and receive its customary fees and
expenses thereunder, or if Seller is unable to do so for any reason (and Buyer
is not able for any reason to perform the work being performed by the Seller),
Seller may terminate or withdraw from the Contract. Transfers of Contracts shall
be pursuant to the Protocol attached hereto as Exhibit C. Without limiting the
generality of the foregoing, Seller and Buyer specifically agree that each party
will use reasonable commercial efforts to obtain the consents necessary to
enable Buyer and Seller to execute the desk sharing license to be entered into
in connection with the Transition Services Agreement, and, subject to Section
3.9 of the Transition Services Agreement, any costs incurred in obtaining such
consents shall be divided equally between Buyer and Seller; provided, that the
failure to obtain any such consents shall not be deemed a breach by Seller of
any of its obligations or agreements hereunder or under the Transition Services
Agreement and any office spaces for which such consents have not been obtained
shall not be considered Locations as defined in and under the Transition
Services Agreement.
2.7 Closing Statement
Seller shall deliver to Buyer no later than ten (10) Business Days
prior to the Closing Date an unaudited statement of Receivables and
Work-In-Process setting forth its good faith non-binding estimate of Receivables
and Work-In-Process of the Business with reserves related thereto, net of
retainers and prepayments, as of the Closing Date, together with a bring down to
the Closing Date of the information with respect to such Receivables described
in the last sentence of Section 3.14 (the "Closing Statement").
-13-
3. Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows:
3.1 Organization and Qualification
Seller is a limited liability partnership duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and
Seller has all requisite partnership power and authority to carry on the
Business in all material respects as currently conducted and to own, lease or
license and operate the Purchased Assets owned, leased or licensed by it. Seller
is duly qualified to do business and is in good standing as a foreign limited
liability partnership in each jurisdiction where the ownership or operation of
the Purchased Assets or the conduct of the Business requires such qualification,
except for failures to be so qualified or in good standing, as the case may be,
that would not individually or in the aggregate have a Material Adverse Effect
with respect to the Business.
3.2 Authorization; Binding Effect
(a) Seller has all requisite partnership power and authority to
execute and deliver this Agreement and each Collateral Agreement to which it
will be a party and to effect the transactions contemplated hereby and thereby,
and has duly authorized the execution, delivery and performance of this
Agreement and each Collateral Agreement to which it will be a party by all
requisite partnership action.
(b) This Agreement and each Collateral Agreement to which it will be a
party has been or, on or prior to the Closing will be duly executed and
delivered by Seller, and, assuming due execution by Buyer, this Agreement is,
and each Collateral Agreement to which Seller will be a party, when duly
executed and delivered by Seller, will be, valid and legally binding obligations
of Seller, enforceable against Seller in accordance with their respective terms,
except as such agreements may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws and equitable
principles relating to or affecting or qualifying the rights of creditors
generally and general principles of equity.
3.3 Non-Contravention; Consents
(a) Assuming that all Seller Required Consents listed in Schedule
3.3(b) have been obtained or made, the execution and delivery of this Agreement
and the Collateral Agreements by Seller, and the consummation of the
transactions contemplated hereby and thereby, do not and will not: (i) conflict
with or result in a breach or violation of any provision of any organizational
document of Seller; (ii) violate or result in a breach of or constitute an
occurrence of default under any provision of, result in the acceleration or
cancellation of any obligation under, or give rise to a right by any party to
terminate or amend its obligations under, any Material Contract, or result in
the creation of any Encumbrance upon any of the Purchased Assets; or (iii)
violate any material Law of any Governmental Body having jurisdiction over
Seller or the Purchased Assets, except, in the case of clauses (ii) and (iii),
as would not individually or in the aggregate have a Material Adverse Effect
with respect to the Business.
-14-
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Person (including any Governmental Body) is
required to be obtained by Seller in connection with the execution and delivery
of this Agreement and any Collateral Agreement to which Seller will be a party
or for the sale of the Purchased Assets or the grant of the licenses under the
License Agreement and the consummation by Seller of the transactions
contemplated hereby or thereby, except for (i) any filings required to be made
under the HSR Act, (ii) consents or approvals of Third Parties required to
transfer or assign to Buyer the Purchased Assets (including, without limitation,
in the case of a Contract where Seller is retained by order of a court, any
approvals, authorizations or orders of such court necessary to allow the Buyer
to perform the services under and enjoy the benefits of the Contract), grant the
licenses in accordance with the License Agreement, or assign the benefits of or
delegate performance with regard thereto, in each case as set forth in Schedule
3.3(b) (the "Seller Required Consents"), and (iii) consents, approvals, orders,
authorizations, registrations, declarations or filings the failure of which to
be obtained or made would not individually or in the aggregate have a Material
Adverse Effect with respect to the Business.
3.4 Title to Purchased Assets; Sufficiency of Assets
Seller has, and at the Closing will have, good and valid title to, or
a valid and binding leasehold interest or license in, the Purchased Assets, free
and clear of any Encumbrance except for Permitted Encumbrances. Except for (1)
Excluded Assets referred to in Sections 2.2(a), (b), (c), (e), (g), (h), (i),
(j) and (k) and (2) services excluded from the scope of services to be provided
to Buyer under the Transition Services Agreement and assets related thereto,
including any billing, financial and other accounting services, the rights in
the Purchased Assets to be conveyed hereby and by the Collateral Agreements (but
excluding any Purchased Assets not conveyed in accordance with the terms
hereof), together with the rights afforded to Buyer under the Transition
Services Agreement and License Agreement are, taken as a whole, sufficient to
operate the Business immediately after the Closing in substantially the same
manner as it is presently being operated by Seller.
3.5 Permits
Except as set forth on Schedule 3.5, there are no material Permits,
and all Permits identified on Schedule 3.5 have been duly obtained by Seller and
are currently in effect. Seller is in compliance in all material respects with
all such Permits identified on Schedule 3.5 in connection with the operation of
the Business and ownership of the Purchased Assets, and no proceeding is pending
or, to Seller's Knowledge, threatened to revoke or limit any such Permit.
3.6 Compliance With Laws; Litigation
(a) Except as set forth on Schedule 3.6(a) and except as would not
individually or in the aggregate have a Material Adverse Effect with respect to
the Business, Seller is in compliance with all Laws and Permits of or from
Governmental Bodies applicable to the Business or the Purchased Assets.
(b) Except as set forth on Schedule 3.6(b), no judgment, order, writ,
injunction or decree of any Governmental Body that is Related to the Business is
in effect nor is
-15-
any Action with respect to any of the Intellectual Property, Contracts, Permits,
or any other Purchased Assets, or Seller's operation of the Business pending or,
to Seller's Knowledge, threatened, in each case as would individually or in the
aggregate have a Material Adverse Effect with respect to the Business. Schedule
3.6(b) sets forth a description of all Actions referred to in the immediately
preceding sentence which were filed, begun, commenced or occurred any time after
June 30, 2001.
3.7 Business Employees; Employee Benefits
(a) Schedule 3.7(a) contains a complete and accurate list, as of the
date of this Agreement, of the following data with respect to each Business
Employee (i) the position held and aggregate annual compensation for Seller's
last fiscal year, such Business Employee's eligible vacation as of June 30, 2002
and date of hire, (ii) whether such Business Employee is actively at work as of
such date, and (iii) if such Business Employee is not actively at work as of
such date, the nature of his or her absence (e.g., vacation, illness, short-term
disability or leave of absence under the Family and Medical Leave Act (the
"FMLA")) and his or her expected or required date of return to active service.
Seller has delivered to Buyer a true, correct and complete copy of Seller's
standard-form employment agreement.
(b) Schedule 3.7(b) contains a complete and accurate list of all
Benefit Plans. With respect to each of the Benefit Plans identified on Schedule
3.7(b), Seller has made available to the Buyer true and complete copies of all
plan documents and benefit schedules, or if none exist, a summary of the
material terms thereof.
(c) No Business Employee is a member of any collective bargaining unit,
and there is not presently pending or existing, and to Seller's Knowledge there
is not threatened Related to the Business, (i) any strike, or material slowdown,
picketing, work stoppage or other material labor dispute, or (ii) any
application for certification of a collective bargaining agent. Seller is in
compliance and with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and occupational
safety and health with respect to the Business Employees, except for such
failures as would not individually or in the aggregate have a Material Adverse
Effect with respect to the Business.
(d) None of the BRS Partners and Principals (other than as set forth on
Schedule 3.7(d)) has given written notice to Seller of their intention to
withdraw from Seller during the next 12 months.
3.8 Contracts
Schedule 3.8 contains a complete and accurate list of all Contracts to
which Seller is a party as of the date hereof and that are Related to the
Business (a) involving total payments by or to Seller from and after the date
hereof expected by Seller to be at or in excess of $1,000,000, (b) Contracts
described in subsection (a) that are terminable or cancelable upon transfer or
assignment other than retentions approved by a Governmental Body, or (c) that
would restrict Buyer, following the Closing from competing with any other
Person, to sell to or purchase from any Person or to hire any Person (the
"Material Contracts"). Each Material Contract is valid and binding on Seller
and, to Seller's Knowledge, on the other parties thereto in
-16-
accordance with its terms and is in full force and effect. As of the date
hereof, Seller has not received any written notice and has no Knowledge that it
is in default or breach of and is otherwise delinquent in performance in any
material respects under any Material Contract, and, to Seller's Knowledge, each
of the other parties thereto has performed in all material respects all
obligations required to be performed by it and is not in default in any material
respect thereunder. True and correct copies of all Material Contracts and any
amendments thereto have been delivered or made available to Buyer.
3.9 Financial Statements; Absence of Changes
(a) Schedule 3.9(a) contains correct and complete copies of the audited
statements Related to the Business of (1) Assets and Liabilities, (2) Income
Statement before Partner Distributions and Benefits, (3) Changes in PwC
Investment and (4) Cash Flows of the Business (the "Statements"), in each case
for the fiscal years ended June 30, 2001 and 2000 and the unaudited Statements
for the nine-months ended March 31, 2002 (collectively, together with the
Statement delivered pursuant to Section 5.17, the "Financial Statements"). The
unaudited Statements for the nine-months ended March 31, 2002 include
information with respect to the broker/dealer activities conducted by Seller
which is not being transferred hereby, and as to which Seller makes no
representation or warranty of any kind. Seller estimates but does not represent
or warrant that the information set forth on Schedule 3.9(a) under the heading
"Broker/Dealer Information" is as set forth therein. The Financial Statements
were (and, in the case of the fiscal year 2002 Statement, shall be) prepared in
conformity in all material respects with Generally Accepted Accounting
Principles, except as set forth on Schedule 3.9(a) and subject, in the case of
the unaudited Statements for the nine-months ended March 31, 2002, to year-end
adjustments, that are not expected to be material. The Business Records are
complete and accurate in all material respects.
(b) Except as set forth therein or on Schedule 3.9(b) or such other
exceptions as would not individually or in the aggregate have a Material Adverse
Effect with respect to the Business, the Financial Statements (and in the case
of the fiscal year 2002 Statement, shall) present fairly the financial condition
and results of operations of the Business as of and for the periods then ended.
(c) Since December 31, 2001, Seller has conducted and operated the
Business in the ordinary course consistent with past practice, and except as set
forth in Schedule 3.9(c) or as would not individually or in the aggregate have a
Material Adverse Effect:
(i) there has been no material destruction, damage or other loss
to any material Purchased Assets;
(ii) there has been no sale, lease, or other disposition of any
material Purchased Assets;
(iii) there has been no purchase, lease or other acquisition of any
material properties or assets Related to the Business or other capital
expenditures Related to the Business or with respect to the Purchased
Assets other than in the ordinary course of business;
-17-
(iv) Seller has not entered into any Material Contract other than
in the ordinary course of business;
(v) no party (including Seller) has accelerated, terminated,
made material modifications to, or cancelled any Material Contract;
(vi) Seller has not imposed any Encumbrance (other than Permitted
Encumbrances) upon any Purchased Asset;
(vii) Seller has not granted any license or sublicense of any
material rights under or with respect to any Intellectual Property Related
to the Business other than in the ordinary course of business;
(viii) Seller has not made any loan to, or entered into any other
transaction with, any of the Business Employees other than in the ordinary
course of business;
(ix) Seller has not granted any increase in the base compensation
of any of the Business Employees other than in the ordinary course of
business;
(x) Seller has not made any other material change to the
employment terms for any of the Business Employees other than in the
ordinary course of business; and
(xi) Seller has not legally committed to any of the foregoing in
the future.
3.10 Intellectual Property
(a) Seller owns or possesses the right to use all Intellectual Property,
free and clear of all Encumbrances, other than Permitted Encumbrances and except
as would not individually or in the aggregate have a Material Adverse Effect
with respect to the Business. Seller does not own or license any patent with
respect to the Business.
(b) Neither Seller nor the Business has granted any license to any
Person to use any of the Intellectual Property other than in the ordinary course
of business. Seller has not received any written notice of any claim of trade
name, domain name, trademark, patent or copyright infringement Related to the
Business and, to its Knowledge, no such claim is threatened.
(c) The Intellectual Property contained in the Purchased Assets, set
forth in the License Agreement and provided in the Transition Services Agreement
comprise all of the material Intellectual Property sufficient to conduct and
operate the Business in all material respects as it is currently conducted.
-18-
3.11 Taxes
(a) None of the Purchased Assets is "tax exempt use property" within
the meaning of Section 168(h) of the Code; (b) no liens for material Taxes have
been filed and no material claims for Taxes have been asserted in writing, with
respect to the Purchased Assets, the Assumed Liabilities or the Business; and
(c) Seller has paid all material Taxes required to be paid by it with respect to
the Business, the Purchased Assets and the Assumed Liabilities that could become
liens against the Business or the Purchased Assets or could otherwise affect the
Buyer.
3.12 Clients
Schedule 3.12 sets forth (a) the names and addresses (subject to
applicable confidentiality restrictions) of the fifteen (15) largest clients of
the Business (including Seller and its Affiliates) by accrued revenues as set
forth in the Financial Statements for the nine-month period ended March 31, 2002
(the "Material Clients") and the amount of accrued revenues for each such
Material Client in such nine-month period and (b) the names and addresses
(subject to applicable confidentiality restrictions) of the fifteen (15) largest
engagements (the "Ongoing Engagements") of the Business (including Seller and
its Affiliates) by accrued revenues as set forth in the Financial Statements
during the nine-month period ended March 31, 2002 and the amount of accrued
revenues as set forth in the Financial Statements for each such engagement in
such nine-month period. Other than as related to independence issues where
clients of the Business are also clients of the audit business of Seller, Seller
has not received any written notice that any client under any Ongoing Engagement
(i) has ceased, or will cease, to use the services of the Business or (ii) has
substantially reduced or will substantially reduce the use of services of the
Business (in either case, other than as a result of the lapse of the term of the
respective engagement letter in accordance with its terms). Seller has not
received written notice from any client of its intention to take any action
described in the preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement or the Collateral Agreements.
3.13 Insurance
All insurance policies that cover the Business are in full force and
effect, all premiums with respect thereto have been paid to the extent due, no
notice of cancellation or termination has been received with respect to any such
policy and no claim or claims Related to the Business are currently pending
under any such policy involving an aggregate amount in excess of $500,000.
3.14 Receivables; Work-In-Process
All Receivables and Work-In-Process reflected in the Financial
Statements and all Receivables and Work-In-Process that have arisen after
January 1, 2002 or will arise after the date hereof, through the Closing Date,
have or shall have arisen only from bona fide transactions in the ordinary
course of business and are reflected properly on Seller's books and records, in
each case, after taking into account applicable reserves. Seller has no
knowledge of any facts or circumstances (other than general economic conditions)
that would result in any material increase in the uncollectability of the
Receivables or Work-In-Process in excess of the reserves
-19-
therefor set forth in the Financial Statements and the Closing Statement. The
Closing Statement will have been prepared in a manner consistent with the
preparation of the Financial Statements and shall fairly present the assets
described therein. Schedule 3.14 sets forth all Receivables in excess of
$500,000 as of July 23, 2002, the amount owing and the aging of each such
Receivable; the name and address of the party from whom such Receivable is
owing; and any security in favor of Seller for the payment of such Receivable.
3.15 Government Contracts
Except as set forth on Schedule 3.15, Seller is not a party as of the
date hereof to any contract with a Governmental Body in the United States under
which the Seller is now providing or will provide services Related to the
Business to such Governmental Body. Seller has never been suspended or debarred
from bidding on contracts or subcontracts to provide services Related to the
Business to any Governmental Body in the United States, nor, to the Seller's
Knowledge, has any suspension or debarment action been contemplated, threatened
or commenced, in each case relating to Seller's providing services Related to
the Business to any Governmental Body in the United States.
3.16 Business Activity Restriction
Except as set forth on Schedule 3.16: (a) there is no non-competition
or other similar agreement or commitment to which Seller is a party or subject
to that would have a Material Adverse Effect on the Business; (b) Seller has not
entered into any agreement under which the Seller is restricted from providing
BRS Services to clients or potential clients, in the United States, during any
period of time; and (c) no Affiliate of Seller is a party to any agreement,
which, by virtue of such person's relationship with Seller, restricts Seller
from, directly or indirectly, providing BRS Services in the United States.
3.17 Brokers
No broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller or any of its Affiliates.
3.18 Investment
Seller (a) understands that the shares representing the Stock
Consideration have not been, and will not be, registered under the Securities
Act, or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering, (b) is acquiring such shares solely for its own account for
investment purposes, and not with a view to the distribution thereof, other than
pursuant to the Registration Rights Agreement and the withdrawal agreements
contemplated by Section 7.3(e), (c) is a sophisticated investor with knowledge
and experience in business and financial matters, (d) has received information
concerning the Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding such shares, (e) is able to bear the economic risk inherent in holding
such shares, and (f) is an
-20-
"Accredited Investor" as such term is defined in Regulation D under the
Securities Act of 1933, as amended.
3.19 No Other Representations
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
SECTION 3, THE PURCHASED ASSETS ARE SOLD AND THE ASSUMED LIABILITIES ARE
TRANSFERRED HEREBY ON AN "AS IS, WHERE IS" BASIS, AND SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AND HEREBY TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW DISCLAIMS ANY SUCH REPRESENTATION
OR WARRANTY (INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE), WHETHER BY SELLER, ITS AFFILIATES OR ANY OF
ITS OR THEIR OFFICERS, DIRECTORS, PARTNERS, PRINCIPALS, EMPLOYEES, AGENTS,
MEMBERS OR REPRESENTATIVES OR ANY OTHER PERSON, WITH RESPECT TO THE PURCHASED
ASSETS, ASSUMED LIABILITIES AND THE BUSINESS OR THE EXECUTION AND DELIVERY OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
4. Representations and Warranties of Buyer
Buyer represents and warrants to Seller that:
4.1 Organization and Qualification
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland, and Buyer has all requisite
corporate power and authority to carry on its business as currently conducted
and to own or lease and operate its properties. Buyer is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
where the ownership or operation of its assets or the conduct of its business
requires such qualification, except for failures to be so qualified or in good
standing, as the case may be, that would not individually or in the aggregate be
materially adverse.
4.2 Authorization; Binding Effect
(a) Buyer has all requisite corporate power and authority to execute
and deliver this Agreement and the Collateral Agreements and to effect the
transactions contemplated hereby and thereby and has duly authorized the
execution, delivery and performance of this Agreement and the Collateral
Agreements by all requisite corporate action.
(b) This Agreement has been duly executed and delivered by Buyer and
this Agreement is, and each of the Collateral Agreements when duly executed and
delivered by Buyer will be, valid and legally binding obligations of Buyer
enforceable against it in accordance with its terms, except as such agreements
may be subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws and equitable principles relating to or
affecting or qualifying the rights of creditors generally and general principles
of equity.
-21-
4.3 No Violations
(a) Assuming that all Buyer Required Consents listed in Schedule
4.3(b) have been obtained or made, the execution, delivery and performance of
this Agreement and the Collateral Agreements by Buyer and the consummation of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or result in a breach or violation of any provision of the
Certificate of Incorporation or By-Laws of Buyer, (ii) violate or result in a
breach of or constitute an occurrence of default under any provision of, result
in the acceleration or cancellation of any obligation under, or give rise to a
right by any party to terminate or amend its obligations under, any mortgage,
deed of trust, conveyance to secure debt, note, loan, indenture, lien, lease,
contract, agreement, instrument, order, judgment, decree or other arrangement or
commitment to which Buyer is a party or by which it or its assets or properties
are bound, or result in the creation of any Encumbrance upon any of its assets
or properties, which violation, breach, default or Encumbrance would
individually or in the aggregate be material, or (iii) violate any Law of any
Governmental Body having jurisdiction over Buyer or any of its properties, which
violation would individually or in the aggregate be material to Buyer or
materially impair, delay or prevent the consummation of the transactions
contemplated hereby.
(b) Except as set forth on Schedule 4.3(b), no consent, approval,
order or authorization of, or registration, declaration or filing with, any
Person (including any Governmental Body) is required to be obtained by Buyer in
connection with the execution and delivery of this Agreement and the Collateral
Agreements or the consummation by Buyer of the transactions contemplated hereby
or thereby that has not been obtained, other than any filings required to be
made under the HSR Act (such scheduled consents, approvals, orders,
authorizations, registrations, declarations and filings being referred to herein
collectively as the "Buyer Required Consents"), and other than such consents the
failure to obtain which would not materially impair, delay or prevent the
consummation of the transactions contemplated hereby.
4.4 Capital Stock of Buyer
(a) The authorized capital stock of Buyer consists of 45,000,000
shares of common stock, par value $0.01 per share, of which 20,540,202 shares
were issued and outstanding as of July 19, 2002, and 5,000,000 shares of
preferred stock, par value $0.01 per share, of which no shares are issued and
outstanding. The authorized and outstanding shares of Buyer's capital stock will
not materially change prior to Closing. All of such outstanding shares are or
have been, and all of the shares of Buyer's common stock to be issued to Seller
on the Closing Date, when so issued, will be, duly authorized, validly issued,
fully paid and nonassessable, free of preemptive rights and Encumbrances created
by statute, Buyer's Certificate of Incorporation or By-laws or any agreement to
which Buyer is a party or by which Buyer is bound, and issued in compliance with
all applicable state and federal laws concerning the issuance of securities. No
shareholder approval or any other approvals are required for the issuance of the
shares of Buyer's common stock to be issued to Seller at the Closing, and Buyer
has reserved such shares for issuance to Seller.
(b) Except as disclosed in the Buyer SEC documents or as set forth on
Schedule 4.4(b), (i) no option, warrant, call, subscription right, conversion
right or other contract or commitment of any kind exists of any character,
written or oral, which may obligate Buyer to
-22-
issue or sell, or by which any shares of capital stock may otherwise become
outstanding and (ii) Buyer has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof.
4.5 SEC Documents and Other Reports
Buyer has filed all required documents with the SEC since December 31,
2000 (the "Buyer SEC Documents"). As of their respective dates, the Buyer SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as
amended, as the case may be, and, at the respective times they were filed, none
of the Buyer SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of Buyer included in the Buyer SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented in all material respects the consolidated
financial position of Buyer and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Buyer SEC Documents
or as required by generally accepted accounting principles, Buyer has not, since
December 31, 2001, made any change in the accounting practices or policies
applied in the preparation of financial statements.
4.6 Absence of Certain Changes or Events
Except as disclosed in the Buyer SEC Documents filed with the SEC
prior to the date of this Agreement, since December 31, 2001, there has been no
event or development that would, individually or in the aggregate, have a
Material Adverse Effect on the Buyer.
4.7 Brokers
No broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based on arrangements made by or on behalf of Buyer or an Affiliate of Buyer.
4.8 [Intentionally Omitted]
4.9 Compliance with Laws, Litigation
(a) Except as set forth on Schedule 4.9(a) and except as would not
individually or in the aggregate have a Material Adverse Effect with respect to
the Buyer, Buyer
-23-
is in compliance with all Laws and Permits of or from Governmental Bodies
applicable to its business.
(b) Except as set forth on Schedule 4.9(b), no judgment, order, writ,
injunction or decree of any Governmental Body that is related to the Buyer is in
effect nor is any Action with respect to Buyer's operations pending or, to
Buyer's Knowledge, threatened, in each case as would individually or in the
aggregate have a Material Adverse Effect with respect to the Buyer. Schedule
4.9(b) sets forth a description of all Actions referred to in the immediately
preceding sentence which were filed, begun, commenced or occurred any time after
June 30, 2001.
4.10 Compensation and Benefits
To the Knowledge of Buyer, based on such materials as have been
provided to it by Seller, the compensation, health, welfare and retirement
benefits and severance benefits enjoyed by and provided to employees of Buyer
and its Affiliates are substantially comparable, in the aggregate, to those
enjoyed by and provided to similarly situated Business Employees, other than BRS
Partners and Principals.
5. Certain Covenants
5.1 Access to Information
(a) Each of Seller and Buyer will (i) give to the other party and its
officers, employees, accountants, counsel and other representatives reasonable
access, including for inspection and copying, during normal business hours
throughout the period prior to the Closing, to its properties, personnel, books,
contracts, commitments, reports of examination and records reasonably requested
by Buyer or Seller, as the case may be, (ii) furnish or shall cause to be
furnished any and all financial, technical and operating data and other
information pertaining to it as Buyer or Seller may reasonably request, and
(iii) provide or cause to be provided such copies or extracts of documents and
records related to its business as Buyer or Seller may reasonably request;
provided, that Seller shall not be obligated to disclose or provide hereunder
information other than Related to the Business.
(b) For a period of five (5) years after the Closing Date, upon
reasonable prior written notice, Buyer and Seller shall furnish or cause to be
furnished to each other and their employees, agents, auditors and
representatives access, during normal business hours, to such information, books
and records Relating to the Business as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of Tax Returns,
reports or forms for the defense of any Tax claims, assessments, audits or
disputes, or the prosecution or defense of any Action, provided that with
respect to any Tax Returns or other records relating to Tax matters or any other
Action, either party shall have reasonable access to such information until the
applicable statute of limitations shall have expired. Except as otherwise agreed
in writing, each party shall reimburse the other for reasonable out-of-pocket
costs and expenses incurred in assisting the other pursuant to this Section
5.1(b). Each party shall have the right to copy any of such records at its own
expense. Neither party shall be required by this Section 5.1(b) to take
-24-
any action that would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations.
(c) Each of Buyer and Seller agrees to preserve all Business Records
in its possession for at least five (5) years after the Closing Date; provided
that each party will preserve all such records relating to Tax matters until
expiration of the applicable statute of limitations. After such five-year period
or expiration of the applicable statute of limitations and at least thirty (30)
days prior to the planned destruction of any Business Records or Tax-related
records, but in any event no longer than the later of seven (7) years after the
Closing Date or the expiration of the applicable statue of limitations, the
party planning to destroy such Business Records or Tax-related records shall
notify in writing and shall make available to the other, upon its reasonable
request, such Business Records or Tax-related records.
5.2 Conduct of Business
From and after the date of this Agreement and until the Closing Date,
except as set forth on Schedule 5.2 or as otherwise contemplated by this
Agreement or the Schedules and Exhibits hereto or as Buyer shall otherwise
consent to in writing, in each case to the extent Related to the Business,
Seller:
(a) will carry on the Business and operate all properties in all
material respects in the ordinary course consistent with past practice including
using commercially reasonable efforts to obtain new engagements to perform BRS
Services at rates consistent with Seller's past practice;
(b) will not, other than in the ordinary course of business consistent
with past practice in arm's-length Third Party transactions or as may be
required by Law or a Governmental Body, permit any material Purchased Assets to
be sold, licensed, leased or subjected to any Encumbrance (other than a
Permitted Encumbrance);
(c) will not materially modify any Material Contract, and will
continue the performance in the ordinary course consistent with past practice of
its material obligations under any Material Contracts and other obligations to
be included as part of the Purchased Assets or Related to the Business;
(d) will comply in all material respects with all Laws applicable to
the Business; and
(e) will keep its business and properties Related to the Business
substantially intact, including its present operations, working conditions and
relationships with clients, prospective clients and Business Employees to the
extent Related to the Business.
5.3 Taxes
(a) Seller and Buyer acknowledge and agree that (i) Seller will be
responsible for and will perform all applicable Tax withholding, payment and
reporting duties with respect to any wages and other compensation and benefits
paid or provided by Seller to any Business Employee for a taxable period or
portion thereof ending on or prior to the Closing Date, and (ii)
-25-
Buyer will be responsible for and will perform all Tax withholding, payment and
reporting duties with respect to any wages and other compensation and benefits
paid or provided by Buyer or any of its Affiliates to any Transferred Employee
after the Closing Date.
(b) Buyer and Seller shall use reasonable commercial efforts to agree
upon an allocation of the purchase price (including the amount of Assumed
Liabilities that are liabilities for federal income tax purposes) among the
Purchased Assets (the "Allocation"), consistent with the principles set forth in
Schedule 5.3(b) and Section 1060 of the Code and the Treasury Regulations
thereunder, within a reasonable amount of time following the Closing Date. Buyer
shall provide a proposed Allocation to Seller within 120 days following the
Closing Date. Seller shall propose any changes to the Allocation within 30 days
thereafter, together with a reasonably detailed explanation of the reasons
therefor. Buyer and Seller will negotiate in good faith to resolve any disputed
items, and if Buyer and Seller are unable to agree on the Allocation within 30
days following delivery of Seller's proposed changes, then the dispute will be
arbitrated by an independent third party, whose determination shall be
conclusive and binding on the parties for all purposes. The Allocation shall be
prepared using the Closing Date value of the Stock Consideration and shall be
adjusted to take into account any adjustments to the Purchase Price.
(c) Each of Seller and Buyer shall timely file IRS Form 8594 and all
other federal, state, local and foreign Tax Returns in accordance with the
Allocation, as adjusted pursuant to Section 5.3(b). Neither Seller nor Buyer nor
any of their respective Affiliates or representatives shall take any position on
any Tax Return that is inconsistent with the Allocation. Buyer and Seller each
agree to promptly provide the other party with any additional information as so
adjusted required to complete Form 8594.
(d) Buyer and Seller shall cooperate fully with respect to all Tax
matters and shall keep each other promptly apprised of any Tax audit or other
controversy that may affect the other or reasonably could be expected to result
in an indemnification obligation hereunder.
(e) Buyer shall pay all sales, transfer, value added (to the extent
not creditable) or similar Taxes and all recording and filing fees and other
similar costs that may be imposed, assessed or payable by reason of the sales,
transfers, leases, rentals, licenses, assignments and assumption of liabilities,
if any, required for performance under this Agreement and the Collateral
Agreements. Buyer and Seller shall cooperate in timely making and filing all
filings, Tax Returns, reports and forms as may be required with respect to any
Taxes described in the preceding sentence. Buyer and Seller shall use reasonable
commercial efforts to avail themselves of any available exemptions or other
opportunities to reduce or eliminate any such Taxes or fees. Notwithstanding any
other provision hereof, Seller shall be responsible for income and capital gains
Taxes or franchise or other Taxes based on overall gross or net income of Seller
from the sale of the Purchased Assets ("Income Taxes").
(f) Liability of Seller for real, personal and intangible property
Taxes for the period including the Closing Date shall be equal to the amount of
such property Taxes for the entire period multiplied by a fraction, the
numerator of which is the number of days in such period that precede the Closing
Date and the denominator of which is the number of days in the entire period.
Liability for the remainder of such Taxes shall be borne by Buyer. The party
paying such liability to the taxing authority shall provide proof of such
payment and a schedule
-26-
setting out in reasonable detail the amount of the other party's liability. Such
other party shall promptly pay the other the amount of such liability following
notice and demand therefor.
(g) Seller shall deliver to Buyer at Closing a certification of
non-foreign status as described in Section 1.1445-2(b)(2) of the Treasury
Regulations.
5.4 Business Employees
(a) Seller shall provide Buyer with an update to Schedule 3.7(a)
immediately prior to the Closing Date. Unless otherwise agreed in writing prior
to the Closing, Buyer shall make offers of employment to substantially all
Business Employees (other than BRS Partners and Principals who are separately
covered hereby) who are, as of the Closing Date, actively at work or on vacation
or jury duty. Business Employees who accept such offer of employment, as of the
effective date of their employment with Buyer or one of its Affiliates, shall be
referred to as "Transferred Employees." In addition, Buyer shall make offers of
employment to any Business Employee who is, as of the Closing Date, absent due
to illness or short-term disability or other approved leave of absence
(including under the FMLA) at such time (if any) as such Business Employee
demonstrates to Buyer's reasonable satisfaction that he or she is able and
willing to return to work. Each such Business Employee who accepts an offer from
Buyer shall also be referred to as a "Transferred Employee" from and after the
date of such acceptance. Each offer of employment shall provide for
compensation, health, welfare and retirement benefits and severance benefits to
the Business Employee, other than BRS Partners and Principals who are Business
Employees, that are, on an aggregate basis, substantially equivalent to those
enjoyed by similarly situated employees of Buyer and its Affiliates as of the
date of this Agreement. All offers of employment to BRS Partners and Principals
who are Business Employees shall be made together with a Principal Employment
Agreement.
(b) To the extent permitted by law, Buyer's benefit plans and
policies, including vacation, floating holidays, retirement, severance and
welfare plans, shall recognize, (i) for purposes of satisfying any deductibles
and co-payment limits during the coverage period that includes the Closing Date,
any payment made by any Transferred Employee towards deductibles and co-payment
limits in any health, dental or other insurance plan of Seller, and (ii) for
purposes of determining eligibility to participate, vesting and for any schedule
of benefits based on service (including early retirement benefits) (other than
for accrual of benefits under any defined benefit pension plan), all service
with Seller, including service with predecessor employers that was recognized by
Seller and any prior unbridged service with Seller. In addition, for purposes of
plans providing medical benefits to any Transferred Employee after his or her
Transfer Date, Buyer shall cause all pre-existing condition exclusions and
actively-at-work requirements of such plans to be waived for such employee and
his or her covered dependents.
(c) Except as specifically provided in this Section 5.4: (i) neither
Buyer nor any of its Affiliates shall adopt, become a sponsoring employer of, or
have any obligations under or with respect to the Benefit Plans, and Seller
shall be responsible for any and all liabilities which have arisen or may arise
under or in connection with any Benefit Plan; and (ii) Seller shall be
responsible for any and all liabilities relating to or arising out of the
employment of any
-27-
Transferred Employee by Seller before the date he or she actually becomes a
Transferred Employee (the "Transfer Date").
(d) Buyer and its Affiliates shall be responsible for all liabilities,
costs, claims and Actions related to (i) the Transferred Employees, (ii) the
Business Employees with respect to whom Buyer has not extended an offer and
whose employment with Seller terminates within three (3) months after the
Closing Date and (iii) the Business Employees with respect to whom Buyer has not
extended an offer in accordance with the terms hereof and whose employment with
Seller terminates within three (3) months after the Closing, with respect to
whom Seller shall provide a written reconciliation of any amount owed within six
(6) months after the Closing Date, from and after the Closing Date, including
without limitation: (A) claims for the type of benefits described in Section
3(1) of ERISA (whether or not covered by ERISA but in no event to include such
claims with respect to Business Employees to whom offers have not been extended,
in accordance with the terms hereof, who are on long term disability) and for
workers compensation, in each case that are incurred by or with respect to any
Transferred Employee on or after his or her Transfer Date, and (B) claims
relating to severance, redundancy and similar pay, salary continuation, and
similar obligations (collectively, "Severance Pay") relating to the termination
or alleged termination of any Business Employee's employment with Seller,
whether arising under a Benefit Plan, an Employment Agreement or other agreement
with an individual Business Employee, or applicable law, except to the extent
that such liability arises as a result of Seller's failure to comply with its
obligations under this Section 5.4 or, with respect to those Business Employees
(other than BRS Partners and Principals) with respect to whom Buyer, in
compliance with the terms hereof, does not extend an offer, to the extent
Severance Pay is in excess of Seller's normal policies regarding Severance Pay.
Schedule 5.4(d) shall set forth a list of Seller's normal policies regarding
Severance Pay. Buyer and its Affiliates shall indemnify and hold harmless Seller
from all COBRA Coverage and related Losses attributable to "qualifying events"
with respect to any Business Employees described in this Section 5.4(d) and his
or her beneficiaries and dependents that occur on or after the Closing Date. For
purposes of the foregoing, a medical/dental claim shall be considered incurred
when the services are rendered or the supplies are provided, and not when the
condition arose. A disability or workers' compensation claim shall be considered
incurred on or before the relevant Transferred Employee's Transfer Date if the
injury or condition giving rise to the claim occurs on or before such Transfer
Date, but only if such claim is actually filed on or before the Transfer Date.
So long as Buyer has made offers of employment in accordance with the terms of
Section 5.4(a), Buyer and its Affiliates shall not be responsible for any
liabilities, costs, claims and Actions related to those Business Employees who
have declined to accept any such offer from Buyer.
(e) Buyer shall provide Seller with information concerning the
employment status of Transferred Employees, including any date of termination
from Buyer and its Affiliates, so as to enable Seller to administer its Benefit
Plans with respect to such Transferred Employees. Such information shall be
provided from time to time in such form (including any electronic media) as
reasonably requested by Seller.
(f) Buyer shall credit each Transferred Employee, other than BRS
Partners and Principals, with vacation accrued but not used through his or her
Transfer Date. Subject to the specific agreements between Seller and the
Transferred Employee, Seller shall pay to each Transferred Employee, other than
BRS Partners and Principals, who was eligible to earn any
-28-
incentive pay, bonus or similar compensation for any period beginning before and
ending on or after such Transferred Employee's Transfer Date, a pro rata portion
of such compensation that would have been earned had the Transferred Employee
remained employed by Seller, based upon the percentage of such period that
precedes such Transfer Date. Within five (5) days after the Closing Date, Seller
shall provide Buyer with a schedule setting forth the name of each such
Transferred Employee, together with the amount of such compensation. Buyer shall
be exclusively liable for any obligations under any new compensation, benefit or
similar arrangements not part of the transactions contemplated by this Agreement
that Buyer and any Transferred Employee may enter into on or after the Transfer
Date.
(g) Seller agrees to release all Transferred Employees from any
covenants (pursuant to any Benefit Plan, Employment Agreement, or otherwise)
that might at any time after the Closing Date limit the ability of such
Transferred Employee to compete with Seller or to solicit clients of Seller, or
any other covenants (pursuant to any Benefit Plan or otherwise) that would in
any way restrict the business activities of a Transferred Employee with respect
to any business in which the Buyer is engaged as of the Closing Date.
(h) Nothing contained in this Agreement shall restrict the ability of
Buyer and its Affiliates to terminate the employment of any Transferred Employee
for any reason at any time after the effective date of his or her employment
with Buyer and its Affiliates. Moreover, provided Buyer otherwise is in
compliance with the terms hereof, nothing contained in this Agreement shall
require Buyer and its Affiliates to maintain any specific Benefit Plan or other
compensation or employee benefit plan, program, policy or practice following the
Closing Date.
(i) Seller shall be responsible for providing any notices required by
the Worker Adjustment and Retraining Notification Act ("WARN Act") or any
similar state, local or foreign law for any event that occurs before the Closing
Date with respect to a Business Employee (including a Transferred Employee), and
Buyer shall be responsible for providing any such notices for any event that
occurs on or after the Closing Date with respect to Business Employees. Seller
shall indemnify and hold harmless Buyer for any liability arising from Seller's
failure to comply with the preceding sentence, and Buyer shall indemnify and
hold harmless Seller for any liability arising from Buyer's failure to comply
with the preceding sentence.
5.5 Regulatory Compliance
Within seven (7) Business Days after the date of this Agreement, Buyer
and Seller will prepare and make their initial filings with the Federal Trade
Commission and the United States Department of Justice (the filing fees for
which shall be paid by Buyer) that are required to make the initial filing under
the HSR Act in respect of the transactions contemplated hereby, and with any
other Governmental Body (including the SEC) the acquiescence or consent of which
is necessary in order for the transactions contemplated hereby to be
consummated. Seller and Buyer will cooperate in responding promptly to any
request for further information from a Governmental Body, and will in good faith
promptly furnish all materials reasonably required in connection with such
filings and any such requests. Buyer, with Seller's reasonable cooperation, will
in good faith use reasonable commercial efforts to demonstrate that the
transactions contemplated hereby should not be opposed by the Federal Trade
Commission, the United States
-29-
Department of Justice or such other Governmental Body, and shall use its
reasonable commercial efforts to eliminate as promptly as practicable any
objection that the Federal Trade Commission, United States Department of Justice
or any such other Governmental Body may have to the transactions contemplated
hereby. Seller and Buyer (i) will jointly approve the content and manner of
presentation of all information to be provided to such Governmental Bodies in
connection with such filings regarding markets and the relevant industry and
(ii) will consult with each other from time to time regarding the status of such
filings and all strategies and action taken in connection therewith.
5.6 Permit Transfer
(a) Except for those Permits that are not transferable by Law or are
immaterial to the Business, Seller shall use its reasonable efforts to transfer
the Permits of Seller to Buyer upon the Closing Date in form and substance the
same as the Permits which were held by Seller. Seller shall give and make all
required notices and reports to the appropriate Governmental Bodies.
(b) Seller shall assist and cooperate with Buyer for six months
following the Closing in obtaining the issuance in the name of Buyer of any
Permit that is not transferable, and Seller, at Buyer's expense, shall take all
actions reasonably requested by Buyer to facilitate that issuance, including the
preparation of any permit applications or necessary documents, whether for
signature by Seller or by Buyer.
5.7 Advice of Changes
(a) Seller will promptly advise Buyer in writing of (i) any event
known to Seller which has rendered or reasonably could be expected to render any
representation or warranty of Seller contained in this Agreement or any
Collateral Agreement, if made on or as of the date of such event or the date of
the Closing, untrue or inaccurate in any material respect, (ii) any change,
condition or event that has or could reasonably be expected to have a Material
Adverse Effect with respect to the Business or (iii) any failure of Seller to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by Seller hereunder.
(b) Buyer will promptly notify Seller in writing of (i) any event
known to Buyer which has rendered or reasonably could be expected to render any
representation or warranty of Buyer contained in this Agreement or any
Collateral Agreement, if made on or as of the date of such event or the date of
the Closing, untrue or inaccurate in any material respect, (ii) any change,
condition or event that has or could reasonably be expected to have a Material
Adverse Effect with respect to the Buyer or (iii) any failure of Buyer to comply
with or satisfy in any material respects any covenant, condition or agreement to
be complied with or satisfied by Buyer hereunder.
(c) The parties acknowledge and agree that if the Buyer or the Seller
has been given notice in accordance with Section 5.7(a) or (b) above or
otherwise has Knowledge of any of the foregoing or any other breach of any
representation, warranty or covenant contained in this Agreement or the
Collateral Agreements, and such party proceeds with the Closing, such party
-30-
shall be deemed to have waived such condition, event, breach or failure and such
party and its related Indemnified Parties shall not be entitled to be
indemnified pursuant to Section 8.2 hereof, to ▇▇▇ for damages or to assert any
other right or remedy relating to such condition, event, breach or failure,
notwithstanding anything to the contrary contained herein or in any certificate
delivered pursuant hereto.
(d) Seller, on the one hand, and Buyer, on the other hand, will
promptly give notice to the other upon becoming aware that any Action is pending
or threatened by or before any Governmental Authority, in each case with respect
to the transactions contemplated by this Agreement or any Collateral Agreement.
Seller, on the one hand, and Buyer, on the other hand, (i) will cooperate in
connection with the prosecution, investigation or defense of any such Action,
(ii) will supply promptly all information reasonably and legally requested by
the other, by any such Governmental Authority or by any party to any such Action
and (iii) will use reasonable commercial efforts to cause any such Action to be
determined as promptly as practicable and in a manner which does not impact
adversely on, and is consistent with, the transactions contemplated by this
Agreement and the Collateral Agreements.
5.8 Non-Competition and Non-Solicitation
(a) Buyer and Seller acknowledge and agree that (i) Seller's agreement
not to compete with the Business or solicit the Transferred Employees, as set
forth below, is an essential part of the parties' bargain and that a breach by
Seller of any of its agreements under this Section 5.8 could adversely affect
both the value of the transaction and the goodwill of the Business, and (ii)
Buyer's agreements set forth in Section 5.8(e), (f) and (g) are an essential
part of the parties' bargain and that a breach by Buyer of any of its agreements
under this Section 5.8 could adversely affect the value of the transaction for
Seller.
(b) Seller agrees that, for a period of three (3) years following the
Closing Date (the "Non-Compete Period"), it will not, directly or indirectly,
anywhere in the United States:
(i) engage in any business that offers or provides services of
the type presently offered by BRS and described in Exhibit A hereto (the
"BRS Services")(any such business, a "Competing Business"); provided, that
the term "Competing Business" does not include the corporate finance,
investment banking and related services provided by PricewaterhouseCoopers
Securities LLC ("PwC Securities"). During the Non-compete Period, the scale
and scope of the BRS-type activities of PwC Securities in the United States
shall not materially change from current levels. To the extent any
activities of PwC Securities in the United States during such period do not
require a broker-dealer license or registration, the fees attributable to
such activities shall count against the limitation on fees for activities
under Section 5.8(iii)(i)(ii) and (iii) below;
(ii) have any ownership interest in any Person that engages in a
Competing Business; or
(iii) market any consulting services that it may offer using the
terms "BRS" or "BRS Services." For the avoidance of doubt, Buyer shall be
entitled to market
-31-
any consulting services that it may offer in the United States using the
terms "BRS" or "BRS Services" from and after the Closing Date.
(c) The restrictions of this Section 5.8 shall not prohibit the
following:
(i) Seller may own, directly or indirectly, (1) less than 5% of
the total equity and voting power of all classes of equity securities of
any Person engaged in a Competing Business and (2) an equity interest in
Monday Ltd., so long as, in each such case, no partner, principal or
employee of Seller is actively engaged in the management of such entity and
none is a member of its board of directors or other governing or advisory
board; and
(ii) In addition to subsection (i) above, Seller or its
Affiliates may, directly or indirectly, engage in a purchase or business
combination with any Person that derives less than 35% of its revenue from
a Competing Business (based upon such Person's most recent annual financial
statements) so long as Seller shall, or shall cause such Person to, use its
reasonable commercial efforts to enter into a definitive agreement to
divest the portion of such Person that engages in the Competing Business
within six (6) months after the date of such purchase or business
combination and shall, or shall cause such Person to, use its reasonable
commercial efforts to complete such divestiture promptly thereafter but in
no event later than one (1) year following such purchase or business
combination. In the case of the first such purchase or business combination
effected during the Non-Compete Period, if Seller fails to complete such
divestiture within one (1) year following such purchase or business
combination Seller shall pay to Buyer the Profit (as defined below) of such
Competing Business from the date that is one year following such purchase
or business combination. In the case of any additional such purchases or
business combinations effected during the Non-Compete Period, Seller shall
pay to Buyer the Profit of such Competing Business from the date of such
purchase or business combination, until Seller divests, or causes such
Person to divest, the portion of such Person that engages in the Competing
Business or winds down, or causes such Person to wind down, such Competing
Business. Seller shall remit such Profit on a calendar quarterly basis to
Buyer within seventy five (75) days after the end of each such quarter.
"Profit" shall mean the greater of (i) 30% of revenues and (ii) Net
Profits, in each case attributable to the portion of such Person that
engages in the Competing Business and determined in accordance with
Seller's accounting policies and practices in effect from time to time.
"Net Profits" shall mean contributions to profit, less Partner compensation
and pension costs. Seller's obligation either to divest such Competing
Business or to pay the liquidated damages specified above shall survive the
Non-Compete Period and apply to such purchases or business combinations
effected during the Non-Compete Period, whether or not the timeframe for
divestiture or commencement or continuing obligation to pay liquidated
damages with respect thereto occurs during or after the Non-Compete Period.
(iii) Subject to the limitations below, Seller may provide
services to audit clients of Seller that relate to restructuring of their
business (commonly known as "debtor-side" services). Seller may not during
the Non-Compete Period provide "creditor-side" and "crisis-management" BRS
Services; and Seller shall not receive fees
-32-
for such debtor-side Competing Business in excess of (i) an aggregate of
$12,000,000 for the twelve (12) month period beginning on the Closing Date,
(ii) an aggregate of $15,000,000 for the twelve (12) month period beginning
on the first anniversary of the Closing Date and ending on the second
anniversary thereof and (iii) an aggregate of $17,000,000 for the twelve
(12) month period beginning on the second anniversary of the Closing Date
and ending on the third anniversary thereof. Promptly after each of the
first three (3) anniversaries of the Closing Date, Seller shall deliver to
Buyer a certificate signed by its chief financial officer certifying (A)
that Seller has not exceeded the applicable cap for the preceding twelve
(12) month period and (B) that Seller has complied with the provisions of
Sections 5.8(b) and (c) during the immediately preceding twelve (12) month
period.
(iv) The Canadian member firm of the worldwide
PricewaterhouseCoopers ("PwC") organization may perform up to $3.8 million
of Competing Business in the United States (the "Canadian Cap"). Seller
will not assist in the marketing of such Competing Business other than
providing the use of facilities as permitted by Section 5.8(d)(ii)(x).
(d) Notwithstanding the foregoing, nothing contained herein is
intended to or shall:
(i) interfere with or otherwise impede the non-U.S. members of
the PwC worldwide organization from using the PwC Name; provided that
Seller shall use its reasonable commercial efforts to cause such non-U.S.
members of the PwC worldwide organization during the Non-Compete Period not
to (A) open an office, offices or a principal place of business in the
United States for use primarily for the conduct of a Competing Business
other than to service work of a type described in (d)(I) and (d)(II) of
this subsection, (B) use the PwC Name to solicit business of a type that
would constitute a Competing Business to be performed primarily within the
United States or (C) undertake engagements for work of a type that would
constitute a Competing Business within the United States; it being
understood that such non-U.S. members of the PwC worldwide organization may
during the Non-Compete Period use the PwC Name to solicit in the United
States or directly undertake engagements for work of a type that would
constitute a Competing Business in the United States so long as such
solicitations relate to, and such engagements involve, (I) the provision of
work of a type that would constitute a Competing Business primarily outside
the United States, or (II) the provision of work required by statutory or
fiduciary obligations applicable to such non-U.S. members;
As part of Seller's reasonable commercial efforts above, Seller,
at a minimum, shall during the Non-Compete Period (a) request (and forward
to Buyer), quarterly, a certificate from the leaders of the BRS practices
of the member firms of the PwC worldwide organization in the United
Kingdom, Canada, France, Germany, Italy and Japan to the effect that each
such member firm has not engaged in a Competing Business in the United
States not in compliance with Section 5.8(d)(i) hereof and (b) notify in
writing any such member firm not so in compliance immediately to cease the
provision of any services that would constitute a Competing Business not in
compliance
-33-
with the terms of Section 5.8(d)(i) hereof; further, Seller shall in each
such case use its reasonable commercial efforts to have its worldwide
governing body enforce discontinuation of any such non-complying (i) work
by any such member firm and (ii) use of the PwC Name in the context of the
provision of such BRS Services in the United States.
If such efforts are unsuccessful and the member firms of the PwC
worldwide organization in the United Kingdom, France, Germany, Italy and
Japan engage in Competing Business in the United States not in compliance
with Section 5.8(d)(i) hereof, Seller will pay to Buyer an amount equal to
the Profits from any and all such noncomplying Competing Business performed
by such member firms during the Non-Compete Period. If such efforts are
unsuccessful with regard to any other of the member firms of the PwC
worldwide organization, including Canada, and such member firm or firms
engage in Competing Business in the United States not in compliance with
Section 5.8(d)(i) hereof, then Seller shall pay to Buyer an amount equal to
the Profits from any and all such noncomplying Competing Business performed
by said member firms during the Non-Compete Period to the extent said work
exceeds, in the aggregate for such member firms, $2,000,000 per year plus
the actual work performed by the Canadian member firm in compliance with
Section 5.8(c)(iv), above. Seller shall remit an amount equal to such
Profit required to be paid above on a calendar quarterly basis to Buyer
within seventy five (75) days after the end of each such quarter, together,
subject to confidentiality obligations, with a list of the clients and fees
earned, broken down by client, comprising such Profits.
(ii) subject to subsection (i) above, limit the non-U.S. members
of the PwC worldwide organization from engaging in or expanding a Competing
Business on a worldwide basis outside the United States (it being
understood that Seller shall be permitted to (x) make available its
facilities and non-professional personnel to such non-U.S. members to
provide assistance with respect to work performed in the United States
related to engagements permitted to be performed by such non-U.S. members
under subsection (i) above, and (y) provide only non-BRS Services to
clients in connection with engagements involving such non-U.S. members,
whether Seller's services are provided on a subcontract basis or
otherwise).
(e) Seller agrees that for a period of six (6) years from the Closing
Date, it shall not hire as a partner, principal or employee or engage as an
independent contractor any BRS Partner or Principal agreed in writing prior to
the date hereof pursuant to Section 7.2(f) and for a period of three (3) years
from the Closing Date, it shall not hire as a partner, principal or employee or
engage as an independent contractor any other Transferred Employee. Buyer agrees
that for a period of six (6) years from the Closing Date, it shall not hire as
an employee or engage as an independent contractor any partner or principal of
Seller who is engaged in BRS Services or any non-U.S. member of the worldwide
PwC organization who is engaged in BRS Services and for a period of three (3)
years from the Closing Date, it shall not hire as an employee or engage as an
independent contractor any employee of Seller who is engaged in BRS Services or
any non-U.S. member of the worldwide PwC organization who is engaged in BRS
Services.
-34-
(f) Nothing in this Agreement is intended to or shall limit Buyer
from engaging in or expanding a Competing Business on a worldwide basis, except
that Buyer agrees that, for a period of three (3) years from the Closing Date,
it will limit the fees from matters involving Competing Business performed
outside of the United States with respect to which BRS Partners who accept
offers of employment from Buyer in the future have involvement up to an
aggregate amount per year not exceeding the Canadian Cap, except to the extent
such engagements relate to and involve the provision of BRS Services primarily
in the United States.
For any violation of the foregoing by the Buyer during the
Non-Compete Period, Buyer shall pay to the Seller an amount equal to the greater
of (x) 30% of revenues and (y) net profits, in each case attributable to each
such violation, determined in accordance with Buyer's accounting policies and
practices in effect from time to time, which payment shall be made within
seventy-five (75) days after the end of each calendar quarter until 75 days
after the third anniversary hereof. At the end of each quarter during the
Non-Compete Period, Buyer shall deliver to Seller a certificate within
forty-five (45) days after each quarter until the third anniversary of the
Closing Date to the effect that (a) the Buyer is not aware of any such
violations by Buyer, or (b) that Buyer is aware of a violation of the Buyer
Prohibited Conduct by Buyer and the amount of fees payable therefor.
(g) Following the Closing Date, Seller shall not directly or
indirectly use or refer to the credentials of, or citations with respect to, BRS
or the Business, in the conduct or operation of its business, except with the
prior written consent of Buyer. Following the Closing Date, Buyer shall not
directly or indirectly use or refer to the credentials of, or citations with
respect to, Seller, other than (i) with respect to credentials or citations of
the Business Employees hired by Buyer on the Closing Date who are directly
involved in the solicitation or performance of the prospective engagement with
respect to which the credentials are offered or citation made and, provided
further, that such credentials or citation accurately reflect the services
provided by such persons, or (ii) during the Non-Compete Period Buyer may use
the credentials of the BRS Partners or Principals who accept offers of
employment from the Buyer for engagements outside of the United States, to the
extent such engagements relate to and involve the provision of BRS Services
primarily in the United States.
(h) The parties agree that the covenants deemed included in this
Section 5.8 are, taken as a whole, reasonable in their geographic scope and
their duration and no party shall raise any issue of the reasonableness of the
scope or duration of the covenants in any proceeding to enforce any such
covenants. If, in any judicial proceeding, a court shall refuse to enforce any
separate covenant, then the unenforceable covenant shall be modified in order to
make it acceptable to the court and enforced accordingly, or, if necessary,
deemed eliminated to the extent necessary to permit the remaining separate
covenants to be enforced.
(i) All payments under this Section 5.8 shall be treated as
liquidated damages and shall be the exclusive monetary remedy and monetary
damages with respect to the breach or breaches to which such payments relate but
shall not limit any party's right to seek injunctive relief to enforce any
obligation of the other party under this Section 5.8.
-35-
5.9 Confidentiality
Except for confidential information related to or otherwise
contained in the Intellectual Property Related to the Business, for a period of
three (3) years after the Closing Date, Seller will not, and Seller will use
reasonable commercial efforts to cause its Affiliates not to, use for its or
their own benefit or divulge or convey to any Third Party, any Confidential
Information (as hereinafter defined) Relating to the Business. For purposes of
this Agreement, Seller shall not be deemed to have violated this Section 5.9 if
Seller or any of its Affiliates receives a request to disclose all or any part
of the Confidential Information under the terms of a subpoena, civil
investigative demand or order issued by a Governmental Body, and Seller or such
Affiliate, to the extent not inconsistent with such request and to the extent
time reasonably allows: (a) notifies Buyer of the existence, terms and
circumstances surrounding such request; (b) consults with Buyer on the
advisability of taking legally available steps to resist or narrow such request;
and (c) if disclosure of any Confidential Information is advisable, to prevent
Seller or such Affiliate or any of its or their partners, principals or
employees from becoming subject to any penalty, to furnish only such portion of
the Confidential Information as it reasonably determines that Seller or such
Affiliate is legally obligated to disclose and to exercise reasonable efforts to
obtain an order or other reliable assurance that confidential treatment will be
accorded to the disclosed Confidential Information. For purposes of this
Agreement and subject to the first sentence of this Section 5.9, "Confidential
Information" consists of all information, knowledge or data Related to the
Business not in the public domain or otherwise publicly available which are or
were treated as confidential by the Business. Information that enters the public
domain or is or becomes publicly available loses its confidential status
hereunder so long as neither Seller nor any of its Affiliates, directly or
indirectly, improperly causes such information to enter the public domain.
5.10 No Additional Representation
Buyer acknowledges that it and its representatives have been
permitted full and complete access to the properties, personnel, books,
contracts, commitments, reports of examination and records of the Business which
it has requested or desired to see and review, and that it and its
representatives have had a full opportunity to discuss with Seller the Business
and the Purchased Assets. Buyer acknowledges that neither Seller nor any Person
has made any representation or warranty, express or implied, as to the accuracy
or completeness of any information regarding the Business or the Purchased
Assets furnished or made available to Buyer and its representatives, except as
expressly set forth in this Agreement and in the Collateral Agreements, and
neither Seller nor any other Person shall have or be subject to liability to
Buyer or any other Person resulting from the disclosure to Buyer, or Buyer's use
of, any such information, except as expressly provided herein.
5.11 Use of Certain Marks
(a) Subject to Section 5.11(b), Buyer agrees that neither it nor
its Affiliates will use the PwC Name to identify their goods or services, and
each of them hereby expressly waives the right to assert a defense of fair use
with respect to any such uses.
-36-
(b) For a period of one (1) year after the Closing Date, Seller
hereby agrees, and shall cause its Affiliates over which it has control, not to
assert (and shall use its reasonable commercial efforts to cause its other
Affiliates not to assert) a claim of infringement, unfair competition or
dilution with respect to the use in the United States by Buyer of precisely the
following phrase in connection with the goods and services (including in
promotional, advertising and marketing materials) of the Business: "formerly a
U.S. PricewaterhouseCoopers business"; provided, that such phrase appears in a
typeface and style dissimilar from that used by Seller and its Affiliates. By
way of example and not limitation, the foregoing covenant of forbearance by
Seller does not apply to the use by Buyer or its Affiliates of any logo, symbol,
typeface or style of Seller or its Affiliates or of any other phrase or ▇▇▇▇.
Buyer acknowledges that it has been informed by Seller that control of use of
the above phrase is vested in a trust over which Seller has no control, that
Seller makes no representations or warranties as to the actions of said trust
with respect to the use above specified and that Buyer assumes the risks
attendant to such use vis a vis such trust.
5.12 Transfer of Business Records
Seller and Buyer shall comply in all respects with the Protocol for
Client Consents and Transfer of Client Files attached as Exhibit C.
5.13 Litigation Support
In the event and for so long as any party actively is contesting or
defending against any Third Party Claim (including with respect to Tax matters
relating to the operation of the Business) arising out of or related to the
operations of the Business prior to the Closing, the other party shall cooperate
with the contesting or defending party and its counsel in the contest or
defense, make available its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless and to the extent that the contesting or defending party is entitled to
indemnification therefor under Article 8); provided, however, that with respect
to the matter set forth on Schedule 3.6(b), Buyer shall provide Seller up to
five hundred (500) hours of time of the Transferred Employees at no cost, as
requested by Seller.
5.14 Third Party Referrals
Seller agrees that, for a period of three (3) years following the
Closing Date it will not enter into any definitive agreement with any Third
Party for ongoing referrals of BRS Services in the United States to such Third
Party.
5.15 Enforcement of Non-Competition Agreements
Seller agrees that, for a period of three (3) years following the
Closing Date, it will use reasonable commercial efforts to enforce in the United
States, at Buyer's request and expense, the terms of any non-competition or
non-solicitation agreements or arrangements binding the BRS Partners and
Principals who do not accept offers of employment made in accordance with the
terms hereof from Buyer as of the Closing, but only those BRS Partners and
Principals who are employed by or have become partners or principals with
Persons that engage in a Competing Business, other than, with the consent of
Buyer, not to be unreasonably withheld,
-37-
Persons with respect to which Seller has a commercial relationship; provided,
however, that Buyer shall indemnify and hold harmless Seller from any and all
Losses incurred by Seller arising out of or relating to Seller's attempt to
enforce such non-competition agreements or arrangements pursuant to this Section
5.15.
5.16 Exclusivity
From and after the date hereof, unless and until this Agreement shall
have been terminated in accordance with its terms, Seller shall not (a) solicit,
initiate or encourage the submission of any proposal or offer from any Person
relating to the acquisition of all or any substantial portion of the assets or
business of the Business or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. Seller shall notify Buyer promptly if any unsolicited
proposal or offer, or any inquiry or contact with any person with respect
thereto, is made, such notice to include the identity of the Person making such
proposal, offer, inquiry or contact, and the terms of such offer.
5.17 Financial Statements
(a) Promptly following the Closing, Seller shall instruct Deloitte &
Touche LLP to provide to Buyer, not less than fifteen (15) Business Days prior
to the date on which Buyer is required to file the financial statements required
to be filed by amendment to Buyer's initial report on the SEC's Form 8-K in
connection with the transactions contemplated hereby, Statements in compliance
with SEC's Regulation S-X as needed by Buyer to satisfy its SEC reporting
obligations in connection with the transactions contemplated hereby.
(b) Seller shall instruct Deloitte & Touche LLP to provide to Buyer
(i) within thirty (30) Business Days after the date hereof, but in no event
later than ten (10) Business Days prior to the Closing Date, an audited
Statement for the fiscal year ended June 30, 2002, and (ii) simultaneously with
the delivery of the Statement referred to in (i) above, a calculation of the
EBITDA of the Business, based on the information contained in the Statements
provided pursuant to (i) above, calculated in accordance with the methodologies
set forth on Schedule 5.17(b)(ii). Such Statement shall be treated thereafter as
part of the "Financial Statements" for the purposes of this Agreement, including
for the purposes of the representations and warranties contained in Section 3.9.
5.18 Use of Firms in PwC Global Network
Buyer shall continue to use firms in the PwC global network on
projects or jobs commenced prior to the Closing Date by the Business for which
those firms were providing services prior to the Closing Date. Seller shall
continue to use Transferred Employees on projects or jobs commenced prior to the
Closing Date by Seller for which those Transferred Employees were providing
services prior to the Closing Date.
5.19 Retention Arrangements
Buyer shall promptly establish any retention, set-aside, escrow or
similar arrangements as may be required pursuant to the Contracts and shall
immediately reimburse
-38-
Seller for any such amounts that Seller may be required by Law to transfer to
Buyer in connection hereof.
5.20 Restrictive Legends; Access to Senior Executives
(a) The share certificates delivered to Seller and to the BRS
Partners and Principals who accept offers of employment from Buyer pursuant to
Section 6.3(b) shall contain a legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND LAWS COVERING
THE TRANSFER OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
The legend set forth above shall be removed from share certificates
being transferred (by delivery of a substitute certificate without such legend)
and Buyer shall so instruct its transfer agent, if (i) such transfer is being
made pursuant to an effective registration statement under the Securities Act of
1933, as amended, (ii) the holder desiring to effect the transfer delivers to
Buyer an opinion of counsel, in form and substance reasonably satisfactory to
Buyer, to the effect that the legend is no longer required or (iii) Buyer
otherwise determines that such legend may be removed in connection with any such
transfer.
(b) Buyer agrees to make senior executives of Buyer available to the
BRS Partners and Principals at reasonable times prior to Closing for the
purposes of answering any questions about Buyer and shall provide BRS Partners
and Principals all necessary information about Buyer which taken together with
the Financial Statements will allow such BRS Partners and Principals to make an
investment decision concerning the transactions contemplated hereby.
5.21 Financing
Buyer shall have prior to and at Closing sufficient cash, available
lines of credit or other sources of immediately available funds to enable it to
fulfill its obligations hereunder.
6. Closing
6.1 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP in New
York City, commencing at 9:00 a.m. local time within five (5) Business Days
following the date on which the last of the conditions specified in Article 7 to
be satisfied or waived has been satisfied or waived, or at such other place or
time or on such other date as Seller and Buyer may agree upon in writing (such
date and time being referred to herein as the "Closing Date").
-39-
6.2 Deliveries by Seller
At the Closing, Seller shall deliver to Buyer the following:
(a) a ▇▇▇▇ of sale for the Purchased Assets substantially in the form
of Exhibit D (the "▇▇▇▇ of Sale"), duly executed by Seller;
(b) instruments of assignment of Intellectual Property included in the
Purchased Assets in form suitable for filing, in form and substance reasonably
satisfactory to Buyer and Seller, duly executed by Seller;
(c) certified resolutions of the Board of Partners and Principals of
Seller authorizing the transactions contemplated by this Agreement;
(d) a counterpart of the Assumption Agreement substantially in the
form of Exhibit E (the "Assumption Agreement"), duly executed by Seller;
(e) a counterpart of the Transition Services Agreement substantially
in the form of Exhibit F (the "Transition Services Agreement"), duly executed by
Seller;
(f) a counterpart of the License Agreement substantially in the form
of Exhibit G (the "License Agreement"), duly executed by Seller;
(g) the consents required by Section 7.2(e);
(h) a counterpart of the Registration Rights Agreement;
(i) a duly executed certificate of an executive officer of Seller,
dated the Closing Date, certifying the fulfillment of the conditions set forth
in Sections 7.2(a) and (b);
(j) the duly executed certificate referred to in Section 5.3(g);
(k) an opinion of inside or outside counsel to Seller, substantially
in the form attached hereto as Exhibit I; and
(l) all such other bills of sale, assignments and other instruments of
assignment, transfer or conveyance, as Buyer may reasonably request or as may be
otherwise necessary or desirable to evidence and effect the sale, transfer,
assignment, conveyance and delivery of the Purchased Assets to Buyer and to put
Buyer in actual possession or control of the Purchased Assets, duly executed by
Seller.
6.3 Deliveries by Buyer
At the Closing, Buyer shall deliver, or shall cause a subsidiary of
Buyer, as applicable, to deliver, to Seller or its designee(s) the following:
(a) the Cash Consideration to be made as of the Closing Date as
provided in Section 2.3;
-40-
(b) share certificates in denominations reasonably requested by Seller
representing the Stock Consideration;
(c) certified resolutions of the Board of Directors of Buyer
authorizing the transactions contemplated by this Agreement;
(d) the Buyer Required Consents;
(e) the Registration Rights Agreement, duly executed by Buyer;
(f) a counterpart of the Assumption Agreement, duly executed by Buyer;
(g) a counterpart of the Transition Services Agreement, duly executed
by Buyer;
(h) a counterpart of the License Agreement, duly executed by Buyer;
(i) a duly executed certificate of an executive officer of Buyer,
dated the Closing Date, certifying the fulfillment of the conditions set forth
in Section 7.3 (a) and (b);
(j) an opinion of inside or outside counsel to Buyer, substantially in
the form attached hereto as Exhibit J; and
(k) all such other documents and instruments as Seller may reasonably
request or as may be otherwise necessary or desirable to evidence and effect the
assumption by Buyer of the Assumed Liabilities duly, executed by Buyer.
6.4 Contemporaneous Effectiveness
All acts and deliveries prescribed by this Article 6, regardless of
chronological sequence, will be deemed to occur contemporaneously and
simultaneously on the occurrence of the last act or delivery, and none of such
acts or deliveries will be effective until the last of the same has occurred.
7. Conditions Precedent to Closing
7.1 General Conditions
The respective obligations of Buyer and Seller to effect the Closing
of the transactions contemplated hereby are subject to the fulfillment, prior to
or at the Closing, of each of the following conditions:
(a) No Law of any Governmental Body shall have been enacted, entered,
promulgated, deemed applicable, enforced or otherwise be in effect that enjoins,
restrains, conditions, makes illegal or otherwise prohibits or could impose
liabilities on either party with respect to the consummation of this Agreement
or any of the Collateral Agreements, and no legal action or governmental
investigation or proceeding which, if adversely determined, may result in
-41-
any such Law being enacted, entered, promulgated, deemed applicable, enforced or
otherwise being in effect, shall be pending.
(b) Any applicable waiting period under the HSR Act relating to the
transactions contemplated by this Agreement and the Collateral Agreements shall
have expired or been terminated.
7.2 Conditions Precedent to Buyer's Obligations
The obligations of Buyer to effect the Closing of the transactions
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions, any of which may be waived in writing by
Buyer in its sole discretion:
(a) The representations and warranties of Seller contained in this
Agreement or any Collateral Agreement or in any schedule, certificate or
document delivered pursuant to the provisions hereof or thereof or in connection
with the transactions contemplated hereby or thereby shall be true and correct
in all material respects (other than representations and warranties that are
qualified as to materiality or Material Adverse Effect, which representations
shall be true in all respects) both when made and at and as of the Closing Date,
as though such representations and warranties were made at and as of the Closing
Date, except to the extent that such representations and warranties are made as
of a specified date, in which case such representations and warranties shall be
true and correct (to the extent set forth above) as of such specified date.
(b) Seller shall have in all material respects performed all
obligations and agreements and complied with all covenants and conditions
required by this Agreement or any Collateral Agreement to be performed or
complied with by it prior to or at the Closing.
(c) Seller shall have executed and delivered, and have caused the
other parties thereto (other than Buyer) to execute and deliver, if applicable,
the ▇▇▇▇ of Sale, the Assumption Agreement, the License Agreement, the
Transition Services Agreement and the other Collateral Agreements.
(d) All requisite governmental approvals, authorizations and permits
necessary for the consummation of the transactions contemplated hereby shall
have been duly issued or granted.
(e) Subject to Exhibit C, Seller shall have obtained written consents
to (i) the transfer or assignment to Buyer of all Material Contracts in
accordance with Exhibit C, except as set forth or described on Schedule 7.2(e)
and (ii) the execution and delivery of, or the performance of Seller's
obligations or the exercise of Buyer's rights under, the Transition Services
Agreement and the License Agreement, in each case with respect to clauses (i)
and (ii), where the consent of any other party is required for such assignment
or transfer, or execution, delivery or performance, and (iii) the transfer or
assignment to Buyer of all material Permits of Seller where the consent of any
Governmental Body is required for such assignment or transfer, in each case,
without material limitations, restrictions or conditions, and Seller shall be
deemed to have fulfilled the conditions set forth in clause (ii) above, if
Seller is unable to identify or obtain, prior to the Closing, despite its use of
reasonable commercial efforts, any consent of any
-42-
licensor of Intellectual Property to Seller required so that Seller can convey
the Purchased Assets to Buyer or enter into or perform the License Agreement.
(f) (i) 90% (rounding down) of all BRS Partners and Principals other
than those designated on Schedule 1.1(a)(1) as "Admitted July 1, 2002" and (ii)
100% of the BRS Partners and Principals agreed in writing prior to the date
hereof shall have entered into and delivered, and shall not have rescinded,
Principal Employment Agreements in substantially the form set forth in Exhibit H
(the "Principal Employment Agreements").
7.3 Conditions Precedent to Seller's Obligations
The obligations of Seller to effect the Closing of the transactions
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions, any of which may be waived in writing by
Seller in its sole discretion:
(a) The representations and warranties of Buyer contained in this
Agreement or any Collateral Agreement or in any certificate or document
delivered pursuant to the provisions hereof or thereof or in connection with the
transactions contemplated hereby or thereby shall be true and correct in all
material respect (other than representations and warranties that are qualified
as to materiality or material adverse effect, which representations and
warranties shall be true in all respects) both when made and at and as of the
Closing Date as though such representations and warranties were made at and as
of the Closing Date, except to the extent that such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true and correct (to the extent set forth above) as of
such specified date.
(b) Buyer shall have in all material respects performed all
obligations and agreements and complied with all covenants and conditions
required by this Agreement or any Collateral Agreement to be performed or
complied with by it prior to or at the Closing.
(c) Buyer shall have executed and delivered the ▇▇▇▇ of Sale, the
Assumption Agreement, the License Agreement, the Registration Rights Agreement,
the Transition Services Agreement and the other Collateral Agreements.
(d) Seller shall have been furnished with evidence reasonably
satisfactory to it that the activities of the Business immediately following
Closing (after giving effect to the transactions contemplated hereby and by the
Collateral Agreements) will not be attributed to Seller for purposes of the
rules and regulations governing the independence of auditors and that, in
connection therewith, no adverse restriction or condition shall be applicable to
Seller or its Affiliates.
(e) Seller shall have been furnished with evidence reasonably
satisfactory to it that all of the BRS Partners and Principals referenced in
Section 7.2(f) shall have entered into and delivered, and shall not have
rescinded, Principal Employment Agreements and agreements to withdraw from
Seller in a form and in substance satisfactory to Seller.
-43-
8. Survival and Indemnity
The rights and obligations of Buyer and Seller under this
Agreement shall be subject to the following terms and conditions:
8.1 Survival of Representations and Warranties
The representations and warranties of Buyer and Seller contained
in this Agreement and in any Collateral Agreement shall survive the Closing for
twenty-four (24) months. Neither Seller nor Buyer shall have any liability
whatsoever with respect to any such representations or warranties unless a claim
is made hereunder prior to expiration of the survival period for such
representation or warranty.
8.2 General Agreement to Indemnify
(a) Seller and Buyer shall indemnify, defend and hold harmless
the other party hereto and their Affiliates and any employee, representative,
agent, director, officer, partner or principal, as applicable, or assign of such
party and their Affiliates (each, an "Indemnified Party") from and against any
and all claims, liabilities, losses, damages, costs and expenses (including
reasonable attorneys' fees and costs ) (collectively, "Losses") incurred by any
Indemnified Party as a result of, arising out of or relating to (i) the failure
of any representation or warranty of the Indemnifying Party (as defined in
Section 8.3(a)) contained in this Agreement or any Collateral Agreement to have
been true and correct when made or as of the Closing Date (or as of such
different date or period specified for such representation or warranty) as
though such representation or warranty were made at the Closing Date (or at such
different date or period specified for such representation or warranty) or (ii)
the breach by the Indemnifying Party of any covenant or agreement of such party
contained in this Agreement or any Collateral Agreement.
(b) Seller further agrees to indemnify and hold harmless Buyer
and any other Indemnified Party of Buyer from and against any Losses incurred by
such party arising out of, resulting from, or relating to: (i) any of the
Excluded Liabilities; (ii) Seller's failure to comply with the terms and
conditions of any applicable bulk sales or bulk transfer or similar Laws of any
jurisdiction that may be applicable to the sale or transfer of any or all of the
Purchased Assets to Buyer; (iii) any other liability or obligation that is
expressly made the obligation or liability of the Seller under this Agreement or
the Collateral Agreements; and (iv) the operation of the Business prior to the
Closing Date or the acts or omissions of Seller, any Business Employee or any
Affiliate, employee or agent of Seller with respect to the Business at any time
prior to the Closing Date other than as reserved or reflected on the most recent
Balance Sheet, as disclosed in Article 3 or the Schedules to this Agreement or
as disclosed pursuant to Section 5.7.
(c) Buyer further agrees to indemnify and hold harmless Seller
and any other Indemnified Party of Seller from and against any Losses incurred
by such party arising out of, resulting from, or relating to: (i) any of the
Assumed Liabilities; (ii) any claim, demand or liability for the Taxes for which
Buyer is responsible pursuant to Section 5.3; (iii) any medical, health or
disability claims of any Transferred Employee relating to services rendered or
benefits earned after the Closing Date; (iv) any Loss arising out of or related
to Buyer's continued use and
-44-
occupancy of Seller's facilities, furniture, equipment, systems and networks
under the Transition Services Agreement; and (v) any other liability or
obligation of the Business, its assets, liabilities and personnel, from and
after the Closing other than as specifically stated to be retained by Seller
hereunder or under the Collateral Agreements.
(d) Amounts payable in respect of the parties' indemnification
obligations shall be treated as an adjustment to the Purchase Price.
(e) Whether or not the Indemnifying Party chooses to defend or
prosecute any Third Party Claim (as defined in Section 8.3(a)) both parties
hereto shall cooperate in the defense or prosecution thereof and shall furnish
such records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably requested in
connection therewith, except that nothing herein shall permit Seller, or require
Buyer as a condition to obtaining indemnification, to seek to collect back sales
or use Tax from clients or customers of the Business. Notwithstanding the
foregoing, Buyer shall, at the request of Seller, make reasonable commercial
efforts to reduce any indemnification obligation of Seller with respect to sales
Taxes by making appropriate inquiries of clients of the Business to determine
whether they have been previously audited for use Taxes by the same jurisdiction
for the same period or periods.
(f) The indemnification obligations of each party hereto under
this Article 8 shall inure to the benefit of the employees, representatives,
agents, directors, officers, partners and principals, as applicable, of the
other party hereto and their Affiliates on the same terms as are applicable to
such other party.
(g) The Seller's liability for all claims made under this
Section 8.2 shall be subject to the following limitations: (i) the Seller shall
have no liability for any such claim unless the aggregate of all Losses relating
thereto for which the Seller would, but for this provision, be liable exceeds on
a cumulative basis an amount equal to $2,000,000, and then only to the extent of
any such excess; (ii) the Seller's aggregate liability for all such claims shall
in no event exceed $112,500,000; (iii) the Seller shall have no liability for
any breach if Buyer had Knowledge of such breach at the time of the Closing; and
(iv) the Seller's liability arising out of or with respect to the Transition
Services Agreement shall be limited as provided therein, in addition to the
further limitations herein; provided, however, that the foregoing limitations
shall not apply to any claims for Losses made pursuant to Sections 8.2(b)(i) or
Section 8.2(b)(iv) and any such Losses shall not be included in the calculation
of the aggregate amount of Seller's liability under Article 8 set forth in
Section 8.2(g)(ii). No Indemnified Party may make a claim for indemnification
under Section 8.2(a)(i) for breach by the Indemnifying Party of a particular
representation or warranty after the expiration of the survival period specified
in Section 8.1. Buyer may not make a claim for indemnification under Section 8.2
following the fifth anniversary of the Closing Date; provided, however, that
with regard to the indemnification obligations of Seller under Section
8.2(b)(i), there shall be no termination or other limitation.
(h) The amount of any Loss for which indemnification is
provided under this Section 8 shall be net of any amounts recovered or
recoverable by the Indemnified Party under insurance policies with respect to
such Loss.
-45-
(i) Notwithstanding anything herein to the contrary, Seller
shall be liable to Buyer for only 60% of the first $11,500,000 of any Losses
arising out of or related to breaches of Section 3.14 for which Buyer may claim
indemnity hereunder.
(j) Notwithstanding anything herein or in the Collateral
Agreements to the contrary, neither of the parties hereto or thereto shall be
liable to the other, whether in contract, tort or otherwise, for any special,
indirect, incidental, consequential, punitive or exemplary or other similar type
of damages whatsoever, which in any way arise out of, relate to, or are a
consequence of, its performance or nonperformance hereunder or the Collateral
Agreements, misrepresentation (other than through fraud), including loss of
profits, business interruptions and claims of customers.
(k) Each party further acknowledges and agrees that, should the
Closing occur, its sole and exclusive remedy with respect to any and all claims
relating to this Agreement, the Collateral Agreements, the transactions
contemplated hereby, the Business and its assets, liabilities and business
(other than claims of, or causes of action arising from, fraud) shall be
pursuant to the indemnification provisions set forth in this Section 8. In
furtherance of the foregoing, each party hereby waives and releases, from and
after the Closing, any and all rights, claims and causes of action (other than
claims of, or causes of action arising from, fraud) it may have against the
other party and its Affiliates arising under or based upon any Federal, state,
local or foreign statute, law, ordinance, rule or regulation or otherwise
(except pursuant to the indemnification provisions set forth in this Section 8)
arising out of or related to this Agreement and the Collateral Agreements.
Notwithstanding the foregoing, nothing in this Section 8.2(k) or elsewhere in
this Agreement shall be deemed to limit any party's right to seek specific
performance or other equitable relief in any court of competent jurisdiction of
its rights and remedies hereunder or in any Collateral Agreement.
8.3 General Procedures for Indemnification
(a) Procedures Relating to Indemnification. In order for the
Indemnified Party to be entitled to any indemnification provided for under this
Agreement in respect of, arising out of or involving a claim or demand made by
any person against the Indemnified Party (a "Third Party Claim"), such
Indemnified Party must notify the party against whom indemnity is sought (the
"Indemnifying Party") in writing, and in reasonable detail, of the Third Party
Claim within five (5) Business Days after receipt by such Indemnified Party of
written notice of the Third Party Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure (except that the Indemnifying Party shall not be liable
for any expenses incurred during the period in which the Indemnified Party
failed to give such notice). Thereafter, the Indemnified Party shall deliver to
the Indemnifying Party, within five (5) Business Days after the Indemnified
Party's receipt thereof, copies of all notices and documents (including court
papers) received by the indemnified parties relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges its obligation to indemnify the Indemnified
Party therefor, to assume the defense thereof with
-46-
counsel selected by the Indemnifying Party. Should the Indemnifying Party so
elect to assume the defense of a Third Party Claim, the Indemnifying Party shall
not be liable to the Indemnified Party for legal expenses subsequently incurred
by the Indemnified Party in connection with the defense thereof. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel employed
by the Indemnified Party for any period during which the Indemnifying Party has
failed to assume the defense thereof (other than during the period prior to the
time the Indemnified Party shall have given notice of the Third Party Claim as
provided above).
If the Indemnifying Party so elects to assume the defense of any
Third Party Claim, all of the Indemnified Parties shall cooperate with the
Indemnifying Party in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the Indemnifying Party's request) the provision
to the Indemnifying Party of records and information that are reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the Indemnifying Party shall have
assumed the defense of a Third Party Claim, the Indemnified Party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the Indemnified Party's prior written consent (which
consent shall not be unreasonably withheld). If the Indemnifying Party shall
have assumed the defense of a Third Party Claim, the Indemnified Party shall
agree to any settlement, compromise or discharge of a Third Party Claim which
the Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim, and which releases the Indemnifying Party completely in
connection with such Third Party Claim.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party under Section 8.2 hereof that does not involve a
Third Party Claim being asserted against or sought to be collected from such
Indemnified Party, the Indemnified Party shall deliver notice of such claim with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability which it may have to such Indemnified Party under
Section 8.2 hereof, except to the extent that the Indemnifying Party
demonstrates that it has been materially prejudiced by such failure. If the
Indemnifying Party does not notify the Indemnified Party within 10 calendar days
following its receipt of such notice that the Indemnifying Party disputes its
liability to the Indemnified Party under Section 8.2 hereof, such claim
specified by the Indemnified Party in such notice shall be conclusively deemed a
liability of the Indemnifying Party under Section 8.2 hereof and the
Indemnifying Party shall pay the amount of such liability to the Indemnified
Party on demand or, in the case of any notice in which the amount of the claim
(or any portion thereof) is estimated, on such later date when the amount of
such claim (or such portion thereof) becomes finally determined. If the
Indemnifying Party has timely disputed its liability with respect to such claim,
as provided above, the Indemnifying Party and the Indemnified Party shall
proceed in good faith to negotiate a resolution of such dispute and, if not
resolved through negotiations, such dispute shall be resolved at law in
accordance with the terms hereof.
-47-
(c) Buyer and Seller shall cooperate with each other with
respect to resolving any claim or liability with respect to which one party is
obligated to indemnify the other party hereunder, including by making
commercially reasonably efforts to mitigate or resolve any such claim or
liability. In the event that Buyer or Seller shall fail to make such
commercially reasonably efforts to mitigate or resolve any claim or liability,
then notwithstanding anything else to the contrary contained herein, the other
party shall not be required to indemnify any person for any loss, liability,
claim, damage or expense that could reasonably be expected to have been avoided
if Buyer or Seller, as the case may be, had made such efforts.
9. Termination
9.1 Termination
This Agreement may be terminated at any time prior to the Closing
Date by:
(a) The mutual written consent of Buyer and Seller.
(b) Buyer or Seller, if there shall be in effect a
non-appealable injunction or order of a Governmental Body of competent
jurisdiction prohibiting the consummation of the transactions contemplated
hereby.
(c) Buyer, if the condition set forth in Section 7.2(a) is not
capable of being satisfied due to notification by Seller of an event that would
render a representation or warranty of Seller contained in this Agreement untrue
or inaccurate in any material respect, or Seller, if the condition set forth in
Section 7.3(a) is not capable of being satisfied due to notification by Buyer of
an event that would render a representation or warranty of Buyer contained in
this Agreement untrue or inaccurate in any material respect; provided that
notification of any such failure of any representation or warranty to be true
and accurate shall not entitle the party so terminating this Agreement to any
recovery for breach of such representation or warranty;
(d) Buyer or Seller, if the Closing shall not have occurred by
the date that is six (6) months following the date hereof; provided that the
failure of the Closing to occur on or before such date did not result from the
failure by the party seeking termination of this Agreement to fulfill any
undertaking or agreement provided for herein that is required to be fulfilled by
it prior to Closing.
9.2 Effect of Termination
In the event of the termination of this Agreement in accordance
with Section 9.1, this Agreement shall become void and have no effect, without
any liability on the part of any party or its directors, officers or
stockholders, except for the obligations of the parties hereto as provided in
Sections 10.1, 10.2, 10.4, 10.5, 10.12, 10.15 and this Section 9.2, and except
that, notwithstanding anything in this Agreement to the contrary, neither Seller
nor Buyer shall be relieved or released from any liabilities or damages arising
out of its breach of any provision of this Agreement.
-48-
10. Miscellaneous Provisions
10.1 Notices
All notices and other communications hereunder and under the
Collateral Agreements shall be in writing and shall be deemed to have been duly
given upon receipt if (i) mailed by certified or registered mail, return receipt
requested, (ii) sent by a nationally recognized overnight delivery service
(receipt requested), fee prepaid, (iii) sent via facsimile with receipt
confirmed, or (iv) delivered personally, addressed as follows or to such other
address or addresses of which the respective party shall have notified the
other.
(a) If to Seller, to:
PricewaterhouseCoopers LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
PricewaterhouseCoopers LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
With an additional copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
(b) If to Buyer, to:
FTI Consulting, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
-49-
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
10.2 Expenses
Any sales, use or other transfer taxes arising out of or incurred
in connection with the transactions contemplated by this Agreement shall be paid
by Buyer. Except as provided in the preceding sentence or otherwise in this
Agreement or the Collateral Agreements, each party will pay its own costs and
expenses, including legal and accounting expenses, related to the transactions
contemplated by this Agreement, irrespective of when incurred and whether or not
the Closing occurs; provided, that Buyer shall bear (i) the fees and expenses of
the filings under the HSR Act and (ii) all costs described in clause (ii) of
Section 3.1 of the form of Transition Services Agreement attached hereto, in
each case, irrespective of the occurrence of Closing hereunder.
10.3 Entire Agreement
The agreement of Seller and Buyer, which is comprised of this
Agreement, the Schedules and Exhibits hereto and the documents referred to
herein, including the Collateral Agreements, sets forth the entire agreement and
understanding between the parties and supersedes any prior agreement or
understanding, written or oral, relating to the subject matter of this
Agreement.
10.4 Jurisdiction, Service of Process
Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the (a) Supreme Court of the
State of New York, New York County and (b) United States District Court for the
Southern District of New York, for any actions, suits or proceedings arising out
of or relating to this Agreement and the Collateral Agreements (and agrees not
to commence any action, suit or proceeding relating thereto except in such
courts), and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in Section
10.1 will be effective service of process for any action, suit or proceeding
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the Collateral
Agreements in the courts of the State of New York or the United States of
America located in the City of New York and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
-50-
10.5 Governing Law
This Agreement and the Collateral Agreements will be construed in
accordance with and governed by the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State
without regard to conflicts of laws principles thereof.
10.6 Waiver
The rights and remedies of the parties to this Agreement and the
Collateral Agreements are cumulative and not alternative. Neither the failure
nor any delay by any party in exercising any right, power or privilege under
this Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by Law, (a) no claim or right arising
out of this Agreement or the Collateral Agreements can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is given
and will not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure or noncompliance; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of such party or of the right of
the party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the Collateral Agreements.
10.7 Reasonable Commercial Efforts
In undertaking "reasonable commercial efforts" or "reasonable
efforts" to satisfy any of its obligations under this Agreement or the
Collateral Agreements, neither party to this Agreement or the Collateral
Agreements shall be required to alter the terms of this Agreement or the
Collateral Agreement or to expend money, modify its normal business conduct,
plans or strategies or take any action that limits its freedom of action with
respect to any of its businesses or assets.
10.8 No Oral Modification
Neither this Agreement nor the Collateral Agreement may not be
amended except by a written agreement executed by the party to be charged with
the amendment. Any attempted amendment in violation of this Section 10.8 will be
void ab initio.
10.9 Assignments, Successors
No party may assign any of its rights under this Agreement or any
Collateral Agreements without the prior written consent of the other parties
hereto or thereto. Subject to the preceding sentence, this Agreement and the
Collateral Agreements will apply to, be binding in all respects upon, and inure
to the benefit of the successors and permitted assigns of the parties.
-51-
10.10 Severability
If any provision of this Agreement or the Collateral Agreements is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement and the Collateral Agreements will remain in full
force and effect. Any provision of this Agreement or the Collateral Agreements
held invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
10.11 Captions
The article, section and paragraph captions herein and the table
of contents hereto are for convenience of reference only, do not constitute part
of this Agreement and the Collateral Agreements and will not be deemed to limit
or otherwise affect any of the provisions hereof or thereof. Unless otherwise
specified, all references herein to numbered articles and sections are to
articles and sections of this Agreement, all references herein to schedules are
to schedules to this Agreement and all references herein to exhibits are to
exhibits to this Agreement.
10.12 No Third Party Beneficiaries
Nothing in this Agreement or the Collateral Agreements, express or
implied, is intended to or shall (a) confer on any Person other than the parties
hereto and their respective successors or assigns any rights (including Third
Party beneficiary rights), remedies, obligations or liabilities under or by
reason of this Agreement (except for Indemnified Parties as provided in Section
8.2) or the Collateral Agreements, or (b) constitute the parties hereto as
partners or as participants in a joint venture. Neither this Agreement nor the
Collateral Agreements shall provide Third Parties with any remedy, claim,
liability, reimbursement, cause of action or other right (except for Indemnified
Parties as provided in Section 8.2). Nothing in this Agreement or the Collateral
Agreements shall be construed as giving to any Business Employee, or any other
individual, any right or entitlement under any Benefit Plan, policy or procedure
maintained by Seller. No Third Party shall have any rights under Section 502,
503 or 504 of ERISA or any regulations thereunder because of this Agreement or
the Collateral Agreements that would not otherwise exist without reference to
this Agreement or the Collateral Agreements. No Third Party shall have any
right, independent of any right that exists irrespective of this Agreement or
the Collateral Agreements, under or granted by this Agreement or the Collateral
Agreements, to bring any suit at law or equity for any matter governed by or
subject to the provisions of this Agreement (except for Indemnified Parties as
provided in Section 8.2) or the Collateral Agreements.
10.13 Time of the Essence
With regard to all dates and time periods set forth or referred to
in this Agreement and the Collateral Agreements, time is of the essence.
10.14 Counterparts
This Agreement and Collateral Agreements may be executed
simultaneously in two or more counterparts, each of which will be deemed to be
an original copy of this Agreement
-52-
and the Collateral Agreements and all of which together will be deemed,
respectively, to constitute one and the same agreement.
10.15 Confidentiality; Public Announcement
Each of Seller and Buyer will continue to hold, and will cause its
representatives to continue to hold, in confidence all documents and information
furnished to it by or on behalf of the other party in connection with the
transactions contemplated by this Agreement pursuant to the terms of that
certain letter agreement (the "Letter Agreement") entered into between the
Seller and the Buyer dated November 26, 2001; provided that with respect to
Buyer the Letter Agreement shall be deemed terminated and shall have no force
and effect following the Closing Date with regard to any documents and
information provided Related to the Business. Neither Seller nor Buyer shall,
without the approval of the other, make any press release or other public
announcement concerning the existence of this Agreement or the terms of the
transactions contemplated by this Agreement, except as and to the extent that
any such party shall be so obligated by Law or stock exchange disclosure
requirements (subject to Section 5.9), in which case the other party shall be
advised and the parties shall use their reasonable commercial efforts to cause a
mutually agreeable release or announcement to be issued.
10.16 Waiver of Compliance with Bulk Transfer Laws
Buyer hereby waives compliance by Seller with the provisions of
any bulk transfer laws which may be applicable to the transactions contemplated
hereby and by the Collateral Agreements.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-53-
IN WITNESS WHEREOF, each party has caused this Agreement to be
duly executed on its behalf by its duly authorized officers as of the date first
written above.
PRICEWATERHOUSECOOPERS LLP
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Partner
FTI CONSULTING, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇
Title: Chairman of the Board and
Chief Executive Officer
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
-54-