Exhibit 2.1
EXECUTION COPY
LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT
BY AND AMONG
FTI CONSULTING, INC.
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
DATED AS OF JANUARY 31, 2000
TABLE OF CONTENTS
1. PURCHASE OF INTERESTS AND RELATED MATTERS........................... 7
1.1 TRANSFER OF INTERESTS......................................... 7
1.2 PURCHASE PRICE................................................ 7
1.3 CLOSING BALANCE SHEET......................................... 8
1.4 LIABILITIES OF THE COMPANY.................................... 9
1.5 ACCOUNTING TERMS.............................................. 9
1.6 EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES............... 9
2. CLOSING............................................................. 10
2.1 LOCATION AND DATE............................................. 10
2.2 DELIVERIES.................................................... 10
3. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS....................... 10
3.1 DUE ORGANIZATION.............................................. 11
3.2 AUTHORIZATION; VALIDITY....................................... 11
3.3 NO CONFLICTS.................................................. 11
3.4 MEMBERSHIP INTERESTS IN THE COMPANY........................... 12
3.5 TRANSACTIONS IN MEMBERSHIP INTERESTS.......................... 12
3.6 ABSENCE OF CLAIMS AGAINST COMPANY............................. 13
3.7 SUBSIDIARIES AND STOCK........................................ 13
3.8 COMPLETE COPIES OF DOCUMENTS.................................. 13
3.9 COMPANY'S FINANCIAL CONDITION................................. 13
3.10 FINANCIAL STATEMENTS.......................................... 13
3.11 LIABILITIES AND OBLIGATIONS................................... 14
3.12 BOOKS AND RECORDS............................................. 14
3.13 BANK ACCOUNTS; POWERS OF ATTORNEY............................. 14
3.14 ACCOUNTS AND NOTES RECEIVABLE................................. 15
3.15 PERMITS....................................................... 15
3.16 LEASED REAL PROPERTY.......................................... 15
3.17 PERSONAL PROPERTY............................................. 16
3.18 INTELLECTUAL PROPERTY......................................... 17
3.19 MATERIAL CONTRACTS AND COMMITMENTS............................ 18
3.20 GOVERNMENT CONTRACTS.......................................... 19
3.21 INSURANCE..................................................... 20
3.22 ENVIRONMENTAL MATTERS......................................... 20
3.23 LABOR AND EMPLOYMENT MATTERS.................................. 21
3.24 EMPLOYEE BENEFIT PLANS........................................ 22
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3.25 TAXES......................................................... 27
3.26 CONFORMITY WITH LAW; LITIGATION............................... 29
3.27 RELATIONS WITH GOVERNMENTS.................................... 30
3.28 ABSENCE OF CHANGES............................................ 30
3.29 KEY MAN LIFE INSURANCE........................................ 32
3.30 EMPLOYMENT AGREEMENT.......................................... 32
4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 32
4.1 DUE ORGANIZATION.............................................. 32
4.2 AUTHORIZATION; VALIDITY OF OBLIGATIONS........................ 33
4.3 NO CONFLICTS.................................................. 33
4.4 FINANCING..................................................... 33
4.5 SEC DOCUMENTS; FINANCIAL STATEMENTS........................... 34
4.6 CAPITAL STOCK OF BUYER........................................ 34
4.7 TRANSACTIONS IN CAPITAL STOCK................................. 34
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER........................ 35
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.... 35
5.2 NO LITIGATION................................................. 35
5.3 OPINION OF COUNSEL............................................ 35
5.4 CONSENTS AND APPROVALS........................................ 35
5.5 CHARTER DOCUMENTS............................................. 36
5.6 EMPLOYMENT AGREEMENTS......................................... 36
5.7 CLOSING DELIVERIES............................................ 36
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MEMBERS.................. 36
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.... 36
6.2 NO LITIGATION................................................. 36
6.3 CONSENTS AND APPROVALS........................................ 37
6.4 OPINION OF COUNSEL............................................ 37
6.5 EMPLOYMENT AGREEMENTS......................................... 37
6.6 REGISTRATION RIGHTS AGREEMENT................................. 37
6.7 CLOSING DELIVERIES............................................ 37
7. CERTAIN COVENANTS................................................... 37
7.1 NOTIFICATION OF CERTAIN MATTERS............................... 37
7.2 UNPAID TAXES.................................................. 38
7.3 CERTAIN TAX MATTERS........................................... 38
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8. INDEMNIFICATION..................................................... 40
8.1 GENERAL INDEMNIFICATION BY THE MEMBERS........................ 40
8.1A SPECIAL INDEMNIFICATION BY THE MEMBERS........................ 41
8.2 LIMITATION AND EXPIRATION..................................... 41
8.3 GENERAL INDEMNIFICATION BY BUYER.............................. 42
8.4 LIMITATION AND EXPIRATION..................................... 43
8.5 INDEMNIFICATION PROCEDURES.................................... 44
8.6 SURVIVAL OF REPRESENTATIONS WARRANTIES AND COVENANTS.......... 47
8.7 ARBITRATION................................................... 47
8.8 SATISFACTION OF INDEMNIFICATION LIABILITIES................... 48
9. GENERAL............................................................. 48
9.1 SUCCESSORS AND ASSIGNS........................................ 48
9.2 ENTIRE AGREEMENT.............................................. 48
9.3 COUNTERPARTS.................................................. 49
9.4 BROKERS AND AGENTS............................................ 49
9.5 EXPENSES...................................................... 49
9.6 SPECIFIC PERFORMANCE; REMEDIES................................ 49
9.7 NOTICES....................................................... 49
9.8 GOVERNING LAW................................................. 51
9.9 SEVERABILITY.................................................. 51
9.10 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS..................... 51
9.11 AMENDMENT; WAIVER............................................. 51
9.12 COVENANTS REGARDING EMPLOYMENT AGREEMENTS..................... 51
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SCHEDULES:
1.2(a) Working Capital
1.4(i) Current Liabilities included in Working Capital
1.4(iii) Equipment Leases to be Assumed
3.1(a) Jurisdictions Authorized or Qualified to do Business in
3.1(b) List of Managers and Officers
3.3 No Conflicts
3.4 List of Members
3.7 Subsidiaries and Stock
3.10 Financial Statements
3.11 Liabilities and Obligations
3.13 Bank Accounts; Powers of Attorney
3.14 Accounts and Notes Receivable
3.15 Permits
3.16(b) Real Property
3.16(c) Real Property Supplement
3.17(a) Personal Property
3.19(a) Current Clients
3.19(b) Material Contracts
3.19(c) Canceled Contracts
3.19(d) Third Party Consents
3.20 Government Contracts
3.21 Insurance
3.22(a) Hazardous Materials
3.24(b) Company Plans and Company Benefit Arrangements
3.24(d) Worker's Compensation Claims
3.24(e) Key Employees
3.24(f) Bonus Payments
3.26(b) Conformity with Law; Litigation
3.28 Absence of Changes
4.7 Transactions in Capital Stock
7.3(a) Allocation of Purchase Price
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EXHIBITS
Exhibit A Members' Interests and Allocation of Purchase Price
Exhibit B Form of Restricted Stock Agreement
Exhibit 5.6A Form of ▇▇▇▇▇▇▇▇ Employment Agreement
Exhibit 5.6B Form of ▇▇▇▇▇ Employment Agreement
Exhibit 6.6 Registration Rights Agreement
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LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT
THIS LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of January 31, 2000, by and among FTI Consulting, Inc., a
Maryland corporation ("Buyer"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") and ▇▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇," and together with ▇▇▇▇▇▇▇▇, the "Members"), who are the sole
members of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.C., a New Jersey limited liability company (the
"Company").
RECITALS
A. The Members are the owners of all of the outstanding membership
interests (the "Interests") in the Company.
B. The Members desire to sell to Buyer and Buyer desires to purchase from
the Members the Interests, pursuant to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. PURCHASE OF INTERESTS AND RELATED MATTERS.
1.1 TRANSFER OF INTERESTS.
Upon the terms and subject to the conditions hereof, at the Closing (as
defined in Section 2.1), Buyer will purchase from the Members, and the Members
will sell, transfer and deliver to Buyer, all of the Interests, free and clear
of all Liens (as defined below), in consideration of payment of the Purchase
Price specified in Section 1.2. For the purposes of this Agreement, "Lien" means
any security interest, pledge, encumbrance, lien (statutory or otherwise),
charge, security agreement, option, right of first refusal, preemptive right,
restriction on transfer or other preferential arrangement of any kind or nature
whatsoever.
1.2 PURCHASE PRICE.
(a) Closing Payment. For purposes of this Agreement, the "Purchase
Price" shall be as follows: (i) Buyer shall pay $47,500,000 in
cash (the "Closing Payment") to the Members via wire transfer of
immediately available funds to an account or accounts designated
by the Members at Closing, subject to the Working Capital
Adjustment (as defined in this Paragraph (a) below) and in the
respective amounts set forth opposite ▇▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇'▇
names on Exhibit A; (ii) Buyer shall issue and deliver 565,000
shares of Buyer's Common Stock to the Members in the respective
amounts set forth opposite ▇▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇'▇ names on
Exhibit A;
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and (iii) Buyer shall issue and deliver the Restricted
Stock (as defined in Paragraph (b) below). For purposes of this
Section 1.2(a), "Working Capital Adjustment" shall mean the
amount by which the Company's working capital as of the Closing
("Working Capital"), as fully set forth on Schedule 1.2(a)
hereto, is more or less than $1,500,000.
(b) Restricted Stock. As additional Purchase Price, the Buyer shall
issue at the Closing 250,000 shares of Buyer's Common Stock (the
"Restricted Stock") to the Members in the respective amounts set
forth opposite ▇▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇'▇ names on Exhibit A. The
Restricted Stock shall be issued in accordance with the
Restricted Stock Agreement (the "Restricted Stock Agreement") in
the form attached as Exhibit B, which shall provide that none of
the Restricted Stock may be sold, gifted, endorsed, assigned,
pledged, encumbered or otherwise disposed of by the holder before
the earlier of (i) January 31, 2004 or (ii) the date upon which
there is a Change in Control of Buyer (as defined in the
Restricted Stock Agreement).
1.3 CLOSING BALANCE SHEET.
(a) As promptly as practical (but no later than 20 business days
after the Closing Date), the Members shall deliver to Buyer an
unaudited balance sheet of the Company as of the opening of
business on the Closing Date (the "Closing Balance Sheet")
prepared on an accrual basis in accordance with GAAP consistently
applied.
(b) (i) Buyer may dispute the Closing Balance Sheet by notifying
the Members in writing setting forth, in reasonable detail to the
extent possible, the amount(s) in dispute and the basis for such
dispute, within 20 business days of Buyer's receipt of the
Closing Balance Sheet. In the event of such a dispute, Buyer and
the Members shall attempt in good faith to resolve such dispute,
and any resolution by them as to any disputed amount(s) shall be
final, binding and conclusive on Buyer and the Members.
(ii) If the Members and Buyer do not resolve any such
dispute within 10 business days of the date of receipt by the
Members of Buyer's written notice of dispute, Buyer and the
Members shall, within 3 additional business days, submit any such
unresolved dispute to an independent accounting firm of national
reputation appointed jointly by Buyer and the Members (neither of
which may unreasonably withhold or delay such appointment) (the
"Independent Accounting Firm"), which firm shall, within 30
business days of each such submission, resolve such remaining
dispute, and such resolution shall be binding and conclusive on
Buyer and the Members. The fees and disbursements of the
Independent Accounting
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Firm shall be borne by the Members and Buyer in the proportion
that the aggregate amount of disputed item submitted to the
Independent Accounting Firm that is unsuccessfully disputed by
each such party (as finally determined by the Independent
Accounting Firm) bears to the total amount of such remaining
disputed item so submitted.
(iii) The Working Capital, adjusted for the resolution
of any and all disputes pursuant to subparagraph (i) or (ii)
above, will be deemed to be the Working Capital for purposes of
Paragraph (a) above upon the later of (A) the lapse of the 20 day
period referred to in subsection (b)(i) above, (B) to the extent
any amount is still in dispute, the lapse of the 10 day period
referred to in subsection (b)(ii) above or (C) such later date
upon which all disputes submitted to the Independent Accounting
Firm pursuant to subsection (b)(ii) above have been resolved.
(iv) The Working Capital Adjustment shall be paid by Buyer to the
Members or by the Members to Buyer, as the case may be, in
immediately available funds within three business days after the
final determination of the Working Capital in accordance with
this Section 1.3.
1.4 LIABILITIES OF THE COMPANY.
At or before the Closing, the Members shall cause the Company to repay
all of its liabilities, except: (i) those current liabilities in the categories
set forth on Schedule 1.4(i) attached hereto and included within the Company's
Working Capital; (ii) the Company's office leases at Park ▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and HQ Loop-Suite 1400, 70 ▇. ▇▇▇▇▇▇▇, Chicago,
Illinois, and (iii) those equipment leases set forth on Schedule 1.4(iii)
attached hereto.
1.5 ACCOUNTING TERMS.
Except as otherwise expressly provided herein or in the schedules to this
Agreement (the "Schedules"), all accounting terms used in this Agreement shall
be interpreted, and all financial statements, Exhibits, Schedules, certificates
and reports as to financial matters required to be delivered hereunder shall be
prepared, in accordance with generally accepted accounting principles ("GAAP")
consistently applied.
1.6 EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the parties set forth in Articles 3
and 4 hereof shall be effective as of the Closing Date unless they specifically
refer to an earlier date.
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2. CLOSING.
2.1 LOCATION AND DATE.
The consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place at 10:00 a.m. at the offices of ▇▇▇▇▇ &
Samson, P.A., 280 Corporate Center, ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, on or before January 31, 2000, provided, that, all
conditions to Closing have been satisfied or waived, or at such other time,
place and date as Buyer and the Members may mutually agree upon, which date
is referred to herein as the "Closing Date."
2.2 DELIVERIES.
(a) The Members shall deliver to Buyer the following at the Closing:
(i) duly executed Assignments of Membership Interest in Limited
Liability Company, together with other instruments of transfer
and any other documents that are necessary to transfer to Buyer
good and marketable title to the Interests, free and clear of all
Liens; (ii) resignations of the Members as Managers of the
Company; (iii) duly executed Restricted Stock Agreement and
Registration Rights Agreement; (iv) a properly executed statement
in a form reasonably acceptable to Buyer for purposes of
satisfying Buyer's obligations under Treas. Reg. Section 1.1445-
2(b)(2); and (v) all other documents, certificates, instruments
or writings required to be delivered by the Members or the
Company at or prior to the Closing pursuant to Article 5 of this
Agreement.
(b) Buyer shall deliver to the Members at the Closing: (i) the
Closing Payment in immediately available funds; (ii) duly
executed Restricted Stock Agreement and Registration Rights
Agreement; (iii) stock certificates representing the shares
transferred hereunder; and (iv) all other documents,
certificates, instruments or writings required to be delivered by
Buyer at or prior to the Closing pursuant to Article 6 of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS.
To induce Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, each of the Members, jointly and severally,
represents and warrants to Buyer, except as required to be disclosed on a
specific Schedule provided in connection herewith, as follows:
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3.1 DUE ORGANIZATION.
The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, and is duly authorized and qualified to do business and to own,
operate and lease its properties and to carry on its business in the places and
in the manner as now conducted under all applicable material laws, regulations,
ordinances and orders of public authorities. Schedule 3.1(a) hereto contains a
list of all jurisdictions in which the Company is authorized or qualified to do
business. Except as set forth on Schedule 3.1(a), the Company is in good
standing as a foreign entity in each jurisdiction in which the conduct of its
business requires it to be so qualified or otherwise authorized to transact
business, other than such jurisdictions where the failure to be so qualified or
otherwise authorized to transact business would not have a Material Adverse
Effect on the Company. For purposes of this Agreement, "Material Adverse Effect"
means any effect that is or reasonably could be materially adverse to the
financial condition, assets, liabilities, current business, business prospects
or results of operations or property of a person or entity; provided, however,
that the following shall not be taken into account in determining whether there
has been a Material Adverse Effect: (i) any adverse effect directly arising from
or directly relating to general business or economic conditions; (ii) any
adverse effect directly arising from or directly relating to conditions
affecting the national or regional litigation, fraud investigation, government
contract, strategic advisory or turnaround consulting business; and (iii) any
adverse effect directly arising from or directly relating to the announcement or
pendency of any of the transactions contemplated hereby or any of the other
transaction documents executed in connection herewith. The Company has made
available to Buyer true, complete and correct copies of its Certificate of
Formation and Operating Agreement (collectively, the "Charter Documents"). The
Company is not in violation of any provision of its Charter Documents. The
minute books of the Company has been made available to Buyer and are complete
and accurate in all material respects. Schedule 3.1(b) contains a complete and
accurate list of the managers and officers of the Company.
3.2 AUTHORIZATION; VALIDITY.
Each of the Members has the full legal right and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. This
Agreement is a legal, valid and binding obligation of each of the Members,
enforceable against each of them in accordance with its terms, subject only to
applicable bankruptcy, reorganization, insolvency, moratorium, and other rights
affecting creditors' rights generally from time to time in effect and as to
enforceability, general equitable principles.
3.3 NO CONFLICTS.
Except as set forth on Schedule 3.3, the execution, delivery and
performance of this Agreement, the consummation of the transactions contemplated
hereby, and the fulfillment of the terms hereof will not:
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(a) conflict with, or result in a breach or violation of, any of the
Charter Documents;
(b) conflict with, or result in a default (or would constitute a
default but for any requirement of notice or lapse of time or
both) under, any document, agreement or other instrument to which
any of the Company or the Members is a party or by which any of
the Company or the Members is bound, or result in the creation or
imposition of any Lien, charge or encumbrance on any of the
Company's properties or the Interests pursuant to: (i) any law or
regulation to which the Company or the Members or any of the
Company's properties is subject, or (ii) any judgment, order or
decree to which any of the Company or the Members is bound or any
of the Company's properties is subject, except where such
conflicts or defaults would not, individually or in the
aggregate, have a Material Adverse Effect;
(c) result in termination or any impairment of any permit, license,
franchise, contractual right or other authorization of the
Company or either of the Members, except where such terminations
or impairments would not, individually or in the aggregate, have
a Material Adverse Effect; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which any of the Company or the Members is subject
or by which any of the Company or the Members is bound, except
where such violations would not, individually or in the
aggregate, have a Material Adverse Effect.
3.4 MEMBERSHIP INTERESTS IN THE COMPANY.
The Interests are the only membership interests in the Company. The
Interests have been duly issued in accordance with the Charter Documents and are
owned of record and beneficially by the Members, free and clear of all Liens.
The Interests were offered, issued, sold and delivered by the Company in
compliance with all applicable state and federal laws concerning the issuance of
securities. Further, none of the Interests was issued in violation of any
preemptive rights. There are no voting agreements or voting trusts with respect
to any of the Interests, except as set forth in the Charter Documents. Schedule
3.4 sets forth the percentage ownership of the Company represented by ▇▇▇▇▇▇▇▇'▇
and ▇▇▇▇▇'▇ respective ownership of the Interests.
3.5 TRANSACTIONS IN MEMBERSHIP INTERESTS.
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 the Company to issue or sell any membership interests, or by
which any membership interests may otherwise become outstanding. The Company
has no obligation (contingent or otherwise) to
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purchase, redeem or otherwise acquire any of the Interests or any portion
thereof or to make any distribution in respect thereof. As a result of the
transactions contemplated by this Agreement, Buyer will become the record and
beneficial owner of all outstanding membership interests of the Company.
3.6 ABSENCE OF CLAIMS AGAINST COMPANY.
None of the Members has any claims of any kind against the Company other
than claims for expenses reimbursement and the like incurred in the ordinary
course of business. The Members have not assigned any such claims to any third
party.
3.7 SUBSIDIARIES AND STOCK.
The Company has no subsidiaries. Except as set forth in Schedule 3.7, the
Company does not now own, of record or beneficially, or control, directly or
indirectly, any capital stock, securities convertible into capital stock or any
other equity interest in any corporation or other business entity, and except as
set forth on Schedule 3.7, the Company is not participating, directly or
indirectly, in any joint venture, partnership or similar entity.
3.8 COMPLETE COPIES OF DOCUMENTS.
The Company has made available to Buyer true and complete copies of each
agreement, contract, commitment or other document (or summaries thereof) that is
disclosed to in the Schedules or that has been requested in writing by Buyer.
3.9 COMPANY'S FINANCIAL CONDITION.
The Company had revenues of at least $21,000,000 and earnings before the
Members' compensation of at least $13,700,000 for the twelve months ended
December 31, 1999, each in accordance with GAAP, consistently applied.
3.10 FINANCIAL STATEMENTS.
Schedule 3.10 includes (a) true, complete and correct copies of the
Company's audited balance sheets as of December 31, 1997 and 1998 (the end of
its most recent completed fiscal year), and income statements for the years
ended December 31, 1997 and 1998 (collectively, the "Audited Financials"), and
(b) true, complete and correct copies of the Company's unaudited balance sheet
(the "Interim Balance Sheet") as of September 30, 1999 (the "Balance Sheet
Date") and unaudited income statement, for the nine months then ended
(collectively, the "Interim Financials," and together with the Audited
Financials, the "Company Financial Statements"). The Audited Financials and the
Interim Financials have been prepared from the books and records of the Company,
and except as set forth in the notes thereto or in Schedule 3.10, in accordance
with GAAP consistently applied and present fairly the financial condition and
results of operations of the Company as of and for the periods presented.
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Since the date of the Audited Financials, there have been no material changes in
the Company's accounting policies.
3.11 LIABILITIES AND OBLIGATIONS.
(a) Except as set forth on Schedule 3.11, the Company is not liable
for, nor subject, to any liabilities except for: (i) those
liabilities reflected on the Interim Balance Sheet and not
previously paid or discharged; (ii) those liabilities arising in
the ordinary course of its business consistent with past practice
under any contract, commitment or agreement specifically required
to be disclosed on one of the Schedules to this Agreement or not
required to be disclosed thereon because of the term or amount
involved or otherwise; and (iii) those liabilities incurred since
the Balance Sheet Date in the ordinary course of business
consistent with past practice, which liabilities individually or
in the aggregate, have not had, or are not likely to have, a
Material Adverse Effect.
(b) For purposes of this Section 3.11, the term "liabilities" shall
include, without limitation, any direct or indirect liability,
advance retainers from clients, indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense or
obligation, either accrued, absolute, contingent, mature or
unmature, and whether fixed or unfixed, known or unknown, ▇▇▇▇▇▇
or inchoate, liquidated or unliquidated, secured or unsecured.
3.12 BOOKS AND RECORDS.
The Company has made and kept books and records and accounts, which
fairly reflect its activities. The Company has not engaged in any transaction,
maintained any bank account or used any of its funds except for transactions,
bank accounts and funds which have been and are reflected in its normally
maintained books and records.
3.13 BANK ACCOUNTS; POWERS OF ATTORNEY.
Schedule 3.13 sets forth a complete and accurate list as of the date of
this Agreement of:
(a) the name of each financial institution in which the Company has
any account or safe deposit box;
(b) the names in which such accounts or boxes are held;
(c) a brief description of the type of account;
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(d) the name of each person authorized to draw thereon or have access
thereto; and
(e) the name of each person, corporation, firm or other entity, if
any, holding a general or special power of attorney from the
Company and a brief description of the terms of such power of
attorney.
3.14 ACCOUNTS AND NOTES RECEIVABLE.
The Company has delivered to Buyer a complete and accurate list, as of
December 31, 1999, of its accounts and notes receivable (including without
limitation billed and unbilled accounts receivable from and advances to
employees and the Members), which includes an aging of all accounts and notes
receivable and shows amounts due in 30-day aging categories (collectively, the
"Accounts Receivable"). All Accounts Receivable represent valid obligations
arising from services actually performed in the ordinary course of business. The
Accounts Receivable, (i) are reflected in the Interim Balance Sheets and (ii)
have been accounted for in the Audited Financials in accordance with GAAP
consistently applied. Except as set forth on Schedule 3.14, to the Members'
Knowledge (as defined below in this Section 3.14) there is no contest, claim, or
right of set-off under any contract with any obligor of an Account Receivable
relating to the amount or validity of such Account Receivable. For purposes of
this Agreement, the term "Knowledge" shall mean the actual knowledge of the
Members following reasonable inquiry.
3.15 PERMITS.
Except as set forth on Schedule 3.15, the Company owns or holds all
material licenses, franchises, permits and other governmental authorizations
necessary for the continued operation of its business as it is currently being
conducted (the "Permits"). The Permits are valid and in full force and effect,
and the Company has not received any written notice that any governmental
authority intends to modify, cancel, terminate or fail to renew any Permit. No
present or former member, officer, manager or employee of the Company or any
affiliate thereof, or any other person, firm, corporation or other entity, owns
or has any proprietary, financial or other interest (direct or indirect) in any
Permits. The Company has conducted and is conducting its business in compliance
with the material requirements, standards, criteria and conditions set forth in
the Permits and other applicable material orders, approvals, variances, rules
and regulations and is not in violation of any of the foregoing. The
transactions contemplated by this Agreement will not result in a default under,
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company, by any Permit, except where such violations would not,
individually or in the aggregate, have a Material Adverse Effect.
3.16 LEASED REAL PROPERTY.
(a) For purposes of this Agreement, "Real Property" means all
interests in real property, including, without limitation, fee
estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and
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rights of way, and all buildings and other improvements thereon,
leased, used or enjoyed by the Company, together with any
additions thereto or replacements thereof. The Company owns no
Real Property.
(b) Schedule 3.16(b) contains a complete and accurate description of
all real properties leased by the Company (including street
address, owner, landlord and the Company's use thereof) (the
"Leased Real Property").
(c) Except as set forth in Schedule 3.16(c):
(i) The Company has a valid leasehold interest in all Leased
Real Property.
(ii) The Company has obtained all material approvals of
governmental authorities (including certificates of use
and occupancy, licenses and permits) required in
connection with the use, occupation and operation of the
Leased Real Property.
(iii) All oral or written leases, subleases, licenses,
concession agreements or other use or occupancy agreements
pursuant to which the Company leases any Real Property,
including all amendments, renewals, extensions,
modifications or supplements to any of the foregoing or
substitutions for any of the foregoing (collectively, the
"Leases") are valid and in full force and effect. The
Company has provided Buyer with true and complete copies
of all of the Leases. The Company's interests under the
Leases are free of all Liens.
(iv) Except as set forth on Schedule 3.16, none of the Leases
requires the consent or approval of any party thereto in
connection with consummation of the transactions
contemplated hereby.
3.17 PERSONAL PROPERTY.
(a) Schedule 3.17(a) sets forth a complete and accurate list of all
tangible personal property included on the Interim Balance Sheet
and owned or leased by the Company with an individual current
book value in excess of $10,000 both (i) as of the Balance Sheet
Date and (ii) acquired since the Balance Sheet Date, including in
each case true, complete and correct copies of leases for
material equipment and an indication as to whether any assets are
currently owned by the Members and leased to the Company.
(b) Except for restrictions or limitations contained in financing
statements with respect to tangible personal property, the
Company currently owns or has a valid lease or license all
tangible personal property necessary to conduct its business and
operations as currently being conducted.
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(c) All of the material equipment of the Company, including that
listed on Schedule 3.17(a), is in reasonably good working order
and condition, ordinary wear and tear excepted. All leases set
forth on Schedule 3.17(a) are in full force and effect and
constitute valid and binding agreements of the Company and, to
the Knowledge of the Members, all other parties thereto, and the
Company is not in material breach of any of their terms. All
fixed assets used by the Company that are material to the
operation of its business are either owned by the Company or
leased under the Leases or an agreement listed on Schedule
3.17(a).
3.18 INTELLECTUAL PROPERTY.
(a) The Company is the true and lawful owner of its name and has duly
registered its name with its jurisdiction of organization. Other
than the Company's name, the Company does not own, use, license
or otherwise possess legally enforceable rights to use, any
registered or unregistered Marks. For purposes of this Section
3.18, the term "▇▇▇▇" shall mean all right, title and interest in
and to any United States or foreign trademarks, service marks and
trade names now held by the Company, including any registration
or application for registration of any trademarks and service
marks in the United States Patent and Trademark Office ("PTO") or
the equivalent thereof in any state of the United States or in
any foreign country, as well as any unregistered marks used by
the Company, and any trade dress (including logos, designs,
company names, business names, fictitious names and other
business identifiers) used by the Company in the United States or
any foreign country.
(b) Except as set forth on Schedule 3.18(b) and with respect to
commercial royalty-free software licenses issued to the Company
in the ordinary course of business, the Company does not own,
use, license or otherwise possess legally enforceable rights to
use, any Patents or Copyrights. For purposes of this Section
3.18, the term "Patent" shall mean any United States or foreign
patent as well as any application for a United States or foreign
patent made by the Company; the term "Copyright" shall mean any
United States or foreign copyright, including any registration of
copyrights, in the United States Copyright Office or the
equivalent thereof in any foreign county as well as any
application for a United States or foreign copyright registration
made by the Company.
(c) Except as set forth on Schedule 3.18(c), the Company does not own
or use, and is not licensed to operate under or use, any trade
names, trade secrets, franchises, technology, proprietary rights,
know-how, or similar rights (collectively, "Other Rights") in
connection with the operation of its business.
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(d) Marks, Patents, Copyrights and Other Rights are referred to
collectively herein as the "Intellectual Property." Intellectual
Property not owned by the Company is referred to herein
collectively as "Third Party Intellectual Property." Except as
set forth on Schedule 3.18(d), the Company has no obligation to
compensate any person for the use of any Intellectual Property.
(e) Neither of the Members nor the Company is, nor will any of them
be as a result of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, in
violation of any Third Party Intellectual Property license,
sublicense or agreement. No claims with respect to any Third
Party Intellectual Property are currently pending or, to the
knowledge of the Members, threatened by any person, nor, to the
Members' knowledge, do any grounds for any claims exist: (i) to
the effect that the services provided by the Company, or the
sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by the Company
infringes on any copyright, patent, trademark, service ▇▇▇▇ or
trade secret; or (ii) against the use by the Company of any
trademarks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and
applications used in the Company's business as currently
conducted. The Company has not been sued or charged in writing
as a defendant in any claim, suit, action or proceeding which
involves a claim or infringement of trade secrets, patents,
trademarks, service marks, or copyrights and which has not been
finally terminated, or been informed or notified in writing by
any third party that the Company may be engaged in such
infringement, and the Members have no knowledge of any
infringement liability with respect to, or infringement by, the
Company of any trade secret, patent, trademark, service ▇▇▇▇, or
copyright of another.
3.19 MATERIAL CONTRACTS AND COMMITMENTS.
(a) Schedule 3.19(a) sets forth a complete and accurate list of all
clients of the Company ("Current Clients") who have executed
engagement letters ("Engagement Letters") with the Company as of
December 31, 1999, indicating, where applicable, the referral
source therefor.
(b) Schedule 3.19(b) contains a complete and accurate list of all
Material Contracts (as defined in this Paragraph (b)) not
disclosed in any other Schedule to this Agreement. The term
"Material Contract" means any contract, commitments, instruments,
or agreements written or oral, to which the Company is a party or
by which it or its properties are bound (including without
limitation contracts with customers, joint venture or partnership
agreements, contracts with any labor organizations, employment
agreements, consulting agreements, loan agreements,
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indemnity or guaranty agreements, bonds, mortgages, options to
purchase land, liens, pledges or other security agreements) (i)
to which the Company, the Members or any affiliate of the Company
or either of the Members, or any officer or manager of the
Company is a party ("Related Party Agreements"); (ii) that may
give rise to obligations or liabilities exceeding, during the
current term thereof, $10,000, or (iii) that may generate
revenues or income exceeding, during the current term thereof,
$10,000 (collectively with the Related Party Agreements, the
"Material Contracts"). The Company has delivered to Buyer true,
complete and correct copies of each of the Material Contracts.
(c) Except to the extent set forth on Schedule 3.19(c), (i) no
Current Client has canceled or reduced or, to the knowledge of
the Members, is currently attempting or threatening to cancel or
reduce, any services to be provided by the Company under an
Engagement Letter, except in the ordinary course of business,
(ii) the Company has complied in all material respects with all
of its commitments and obligations and is not in default under
any of the Material Contracts, and no notice of default has been
received with respect to any thereof, and (iii) there are no
Material Contracts that were not negotiated at arm's length.
Except as described on Schedule 3.19(c), the Company has not
received any material written customer complaints concerning its
products and/or services.
(d) Each Material Contract is valid and binding on the Company and is
in full force and effect and, to the Members' Knowledge, is not
subject to any default thereunder by any party obligated to the
Company pursuant thereto. The Company has obtained, or prior to
the Closing Date will obtain, all necessary consents, waivers and
approvals of parties to any Material Contracts that are required
in connection with any of the transactions contemplated hereby,
or are required by any governmental agency or other third party
or are advisable in order that any such Material Contract remain
in effect without modification after the Closing and without
giving rise to any right to termination, cancellation or
acceleration or loss of any right or benefit ("Third Party
Consents"). All Third Party Consents are listed on Schedule
3.19(d).
3.20 GOVERNMENT CONTRACTS.
(a) Except as set forth on Schedule 3.20, the Company is not a party
to any government contracts.
(b) The Company has never been suspended or debarred from bidding on
contracts or subcontracts for any agency or instrumentality of
the United States Government or any state or local government,
nor, to the
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knowledge of the Members, has any suspension or debarment action
been threatened or commenced.
3.21 INSURANCE.
Schedule 3.21 sets forth a complete and accurate list, as of the Balance
Sheet Date, of all insurance policies carried by the Company and all insurance
loss runs or workers' compensation claims received for the past two policy
years. The Company has made available to Buyer true, complete and correct
copies of all current insurance policies, all of which are in full force and
effect. All premiums payable under all such policies have been paid, and the
Company is in full compliance with the material terms of such policies. To the
Members' Knowledge, such policies of insurance are of the type and in amounts
customarily carried by persons conducting businesses similar to that of the
Company. To the Knowledge of the Members, there have been no threatened
terminations of, or material premium increases with respect to, any of such
policies.
3.22 ENVIRONMENTAL MATTERS.
(a) Hazardous Material. Other than as set forth on Schedule 3.22(a),
no underground or aboveground storage tanks and no amount of any
substance that has been designated by any governmental entity or
by applicable federal, state, local or other applicable law to be
radioactive, toxic, hazardous or otherwise a danger to health or
the environment, including, without limitation, PCBs, friable
asbestos, petroleum, urea-formaldehyde and all substances listed
as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended, or defined as hazardous wastes pursuant to the
Resource Conservation and Recovery Act of 1976, as amended, and
the regulations promulgated pursuant to said laws, but excluding
office, maintenance, janitorial and other supplies customarily
used in the operation of offices and properly and safely
maintained (a "Hazardous Material"), are present on the Leased
Real Property.
(b) Hazardous Materials Activities. (i) The Company has not
transported, stored, used, manufactured, disposed of or released,
or exposed their employees or others to, Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor
(ii) has the Company disposed of, transported, sold, or
manufactured any product containing a Hazardous Material
(collectively, "Company Hazardous Materials Activities") in
violation of any rule, regulation, treaty or statute promulgated
by any governmental entity in effect prior to or as of the date
hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
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(c) Permits and Compliance. The Company currently is not required to
hold any environmental approvals, permits, licenses, clearances
or consents (the "Environmental Permits") to conduct its
business.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Knowledge of the Members, threatened
concerning any Environmental Permit, Hazardous Material or any
Company Hazardous Materials Activity. To the Members' Knowledge,
there are no past or present actions, activities, circumstances,
conditions, events, or incidents that could involve the Company
(or any person or entity whose liability the Company has retained
or assumed, either by contract or operation of law) in any
environmental litigation, give rise to any environmental claim
against the Company, or impose upon the Company (or any person or
entity whose liability the Company has retained or assumed,
either by contract or operation of law) any environmental
liability including, without limitation, common law tort
liability.
3.23 LABOR AND EMPLOYMENT MATTERS.
With respect to employees of and service providers to the Company:
(a) The Company is and at all times has been in material compliance
with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and
hours, including without limitation any such laws respecting
employment discrimination, workers' compensation, family and
medical leave, the Immigration Reform and Control Act, and
occupational safety and health requirements, and has not and is
not engaged in any unfair labor practice;
(b) there is not now, nor within the past three years has there been,
any unfair labor practice complaint against the Company or, to
the Members' knowledge, threatened, before the National Labor
Relations Board or any other comparable authority; and
(c) all persons classified by the Company as independent contractors
satisfy and have satisfied the requirements of law to be so
classified, and the Company has fully and accurately reported
their compensation on IRS Forms 1099 when required to do so.
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3.24 EMPLOYEE BENEFIT PLANS.
(a) Definitions:
(i) "Benefit Arrangement" means any benefit arrangement,
obligation, custom, or practice to provide benefits, other
than salary, as compensation for services rendered, to
present or former managers, employees, agents, or
independent contractors, other than any obligation,
arrangement, custom or practice that is an Employee
Benefit Plan, including, without limitation, employment
agreements, severance agreements, executive compensation
arrangements, incentive programs or arrangements, sick
leave, vacation pay, severance pay policies, plant closing
benefits, salary continuation for disability, consulting,
or other compensation arrangements, workers' compensation,
retirement, deferred compensation, bonus, stock option or
purchase, hospitalization, medical insurance, life
insurance, tuition reimbursement or scholarship programs,
any plans subject to Section 125 of the Code, and any
plans providing benefits or payments in the event of a
change of control, change in ownership, or sale of a
substantial portion (including all or substantially all)
of the assets of any business or portion thereof, in each
case with respect to any present or former employees,
managers, or agents.
(ii) "Company Benefit Arrangement" means any Benefit
Arrangement sponsored or maintained by the Company or with
respect to which the Company has or may have any liability
(whether actual, contingent, with respect to any of its
assets or otherwise) as of the Closing Date, in each case
with respect to any present or former managers, employees,
or agents of the Company.
(iii) "Company Plan" means, as of the Closing Date, any Employee
Benefit Plan for which the Company is the "plan sponsor"
(as defined in Section 3(16)(B) of ERISA) or any Employee
Benefit Plan maintained by the Company or to which the
Company is or might be obligated to make payments, in each
case with respect to any present or former employees of
the Company. Company Plan includes any Qualified Plans
that covered employees of the Company and that were
terminated on or after January 1, 1989.
(iv) "Employee Benefit Plan" has the meaning given in Section
3(3) of ERISA.
(v) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and all regulations and rules issued
thereunder, or any successor law.
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(vi) "ERISA Affiliate" means any person that, together with the
Company, would be or was at any time treated as a single
employer under Section 414 of the Code or Section 4001 of
ERISA and any general partnership of which the Company is
or has been a general partner.
(vii) "Multiemployer Plan" means any Employee Benefit Plan
described in Section 3(37) of ERISA.
(viii) "Qualified Plan" means any Company Plan that meets,
purports to meet, or is intended to meet, the requirements
of Section 401(a) or Section 408(k) of the Code.
(ix) "Welfare Plan" means any Employee Benefit Plan described
in Section 3(1) of ERISA.
(b) Schedule 3.24(b) contains a complete and accurate list of all
Company Plans and Company Benefit Arrangements. Schedule 3.24(b)
specifically identifies all Company Plans (if any) that are
Qualified Plans.
(c) With respect to each Employee Benefit Plan and Benefit
Arrangement:
(i) true, correct, and complete copies of all the following
documents with respect to each Company Plan and Company
Benefit Arrangement, to the extent applicable, have been
delivered to Buyer: (A) all documents constituting the
Company Plans and Company Benefit Arrangements, including
but not limited to, trust agreements, insurance policies,
service agreements, and formal and informal amendments
thereto; (B) the most recent Forms 5500 or 5500C/R and any
financial statements attached thereto and those for the
prior three years; (C) the last Internal Revenue Service
determination letter, the last IRS determination letter
that covered the qualification of the entire plan (if
different), and the materials submitted by the Company to
obtain those letters; (D) the most recent summary plan
description; all summaries of material modifications
thereto, and the most recent actuarial reports and
Statement of Financial Accounting Standards Nos. 87, 106,
and 112 reports; (E) the most recent written descriptions
of all non-written agreements relating to any such plan or
arrangement; (F) all material reports and test results
received within the four years preceding the date of this
Agreement by third-party administrators, actuaries,
investment managers, consultants, or other independent
contractors (other than individual account records) or
prepared by employees of the Company or its ERISA
Affiliates; (G) all notices that were given within the
three years preceding the date of this Agreement by the
IRS, Department of Labor, or any other governmental agency
or entity with respect to any plan or
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arrangement; (H) employee manuals or handbooks containing
personnel or employee relations policies; and (I) Form
5305-SEP;
(ii) the Company's Simplified Employee Plan ("SEP") is the
Company's only Qualified Plan. The Company has not
maintained or contributed to another Qualified Plan. The
Company's SEP was set up by using IRS Form 5305-SEP and
complies with all requirements and instructions to such
form, including the requirement of establishing IRAs
underlying the SEP with a bank, insurance company or other
qualified financial institution, as defined in Section 408
of the Code. The IRAs underlying the SEP are model IRAs
established on an IRS form or a master or prototype ▇▇▇
for which the IRS has issued a favorable opinion letter.
Nothing has occurred with respect to the design or
operation of any Qualified Plans that could adversely
affect its status or cause the imposition of any material
liability, lien, penalty, or tax under ERISA or the Code;
(iii) the Company has not sponsored or maintained, had any
obligation to sponsor or maintain, or had any liability
(whether actual or contingent, with respect to any of
their assets or otherwise) with respect to any Employee
Benefit Plan subject to Section 302 of ERISA or Section
412 of the Code or Title IV of ERISA (including any
Multiemployer Plan);
(iv) each Company Plan and each Company Benefit Arrangement has
been maintained materially in accordance with its
constituent documents and with all applicable provisions
of the Code, ERISA and other laws, including federal and
state securities laws;
(v) there are no pending claims or lawsuits by, against, or
relating to any Employee Benefit Plans or Benefit
Arrangements that is not a Company Plan or Company Benefit
Arrangement that would, if successful, result in liability
of the Company or the Members, and no claims or lawsuits
have been asserted, instituted or, to the Knowledge of the
Members, threatened by, against, or relating to any
Company Plan or Company Benefit Arrangement, against the
assets of any trust or other funding arrangement under any
such Company Plan, by or against the Company with respect
to any Company Plan or Company Benefit Arrangement, or, to
the Members' Knowledge, by or against the plan
administrator or any fiduciary of any Company Plan or
Company Benefit Arrangement, and the Company does not have
knowledge of any fact that could form the basis for any
such claim or lawsuit. No Company Plan and Company Benefit
Arrangement is now under audit or examination (nor has
notice been received of a potential audit or examination)
by
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the IRS, the Department of Labor, or any other
governmental agency or entity, and no matters are pending
with respect to the Company's Simplified Employee Plan
under the IRS's Voluntary Compliance Resolution program,
its Closing Agreement Program, or other similar programs;
(vi) no Company Plan or Company Benefit Arrangement contains
any provision or is subject to any law that would prohibit
the transactions contemplated by this Agreement or that
would give rise to any vesting of benefits, severance,
termination, or other payments or liabilities that would
not occur without the transactions contemplated by this
Agreement;
(vii) with respect to each Company Plan, there has been no non-
exempt "prohibited transaction" (within the meaning of
Section 4975 of the Code) or transaction prohibited by
Section 406 of ERISA or, to the Knowledge of the Members,
breach of any fiduciary duty described in Section 404 of
ERISA that would, if successful, result in any material
liability for the Company or any Member, officer, or
employee of the Company;
(viii) all material reporting, disclosure, and notice
requirements of ERISA and the Code have been satisfied
with respect to each Company Plan and each Company Benefit
Arrangement;
(ix) payment has been made of all amounts that the Company is
required to pay as contributions to the Company Benefit
Plans as of the last day of the most recent fiscal year of
each of the plans ended before the date of this Agreement;
all benefits accrued under any unfunded Company Plan or
Company Benefit Arrangement will have been paid, accrued,
or otherwise adequately reserved in accordance with GAAP
as of the Balance Sheet Date; and all monies withheld from
employee paychecks with respect to Company Plans have been
transferred to the appropriate plan within the time
required by law for such withholding;
(x) the Company has not prepaid or prefunded any Welfare Plan
through a trust, reserve, premium stabilization, or
similar account, nor does it provide benefits through a
voluntary employee beneficiary association as defined in
Section 501(c)(9);
(xi) to the Knowledge of the Members, no statement, either
written or oral, has been made by the Company to any
person with regard to any Company Plan or Company Benefit
Arrangement that was not in accordance with the Company
Plan or Company Benefit
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Arrangement and that could have an adverse economic
consequence to the Company;
(xii) the Company has no liability (whether actual or
contingent, with respect to any of its assets or
otherwise) with respect to any Employee Benefit Plan or
Benefit Arrangement that is not a Company Plan or Company
Benefit Arrangement or with respect to any Employee
Benefit Plan sponsored or maintained (or which has been
sponsored or maintained) by any ERISA Affiliate;
(xiii) all of the Company's group health plans have been operated
in material compliance with the requirements of Sections
4980B (and its predecessor) and 5000 of the Code, and the
Company has provided, or will have provided before the
Closing Date, to individuals entitled thereto all required
notices and coverage pursuant to Section 4980B with
respect to any "qualifying event" (as defined therein)
occurring before or on the Closing Date;
(xiv) no employee or former employee of the Company or
beneficiary of any such employee or former employee is, by
reason of such employee's or former employee's employment,
entitled to receive any benefits, including, without
limitation, death or medical benefits (whether or not
insured) beyond retirement or other termination of
employment as described in Statement of Financial
Accounting Standards No. 106, other than (i) death or
retirement benefits under a Qualified Plan, (ii) deferred
compensation benefits accrued as liabilities on the
Closing Statement or (iii) continuation coverage mandated
under Section 4980B of the Code or other applicable law.
(d) Schedule 3.24(d) hereto contains the most recent quarterly
listing of workers' compensation claims and a schedule of
workers' compensation claims against the Company for the last
three fiscal years.
(e) Schedule 3.24(e) hereto sets forth an accurate list, as of the
date hereof, of all employees of the Company and the compensation
that they reasonably can be expected to earn in 1999, and lists
all employment agreements with such persons and the rate of
compensation (and the portions thereof attributable to salary,
bonus, and other compensation respectively) of each such person
as of (a) the Balance Sheet Date and (b) the date hereof.
(f) Except as set forth on Schedule 3.24(f), the Company has not
declared or paid any bonus or other incentive compensation in
contemplation of the transactions contemplated by this Agreement.
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3.25 TAXES.
(a) For purposes of this Agreement:
(i) "Tax" (including with correlative meaning the terms
"Taxes" and "Taxable") means (a) all foreign, federal,
state, local and other income, gross receipts, sales, use,
ad valorem, value-added, intangible, unitary, transfer,
franchise, license, payroll, employment, estimated,
excise, environmental, stamp, occupation, premium,
property, prohibited transactions, windfall or excess
profits, customs, duties or other taxes, levies, fees,
assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or
additional amounts with respect thereto, (b) any liability
for payment of amounts described in clause (a) as a result
of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for
any period, or otherwise through operation of law, and (c)
any liability for payment of amounts described in clause
(a) or (b) as a result of any tax sharing, tax indemnity
or tax allocation agreement or any other express or
implied agreement to indemnify any other person for Taxes.
(ii) The term "Tax Return" shall mean any return (including any
information return), report, statement, schedule, notice,
form, estimate, or declaration of estimated tax relating
to or required to be filed with any governmental authority
in connection with the determination, assessment,
collection or payment of any Tax.
(b)
(i) All Tax Returns required to be filed on or before the date
hereof by or on behalf of the Company have been filed, and
such Tax Returns are true, correct, and complete in all
material respects.
(ii) The Company has paid in full on a timely basis all Taxes
owed by it, whether or not shown on any Tax Return.
(iii) The amount of the Company's liability for unpaid Taxes as
of the Balance Sheet Date did not exceed the amount of the
current liability accruals for Taxes (excluding reserves
for deferred Taxes) shown on the Interim Balance Sheets,
and the amount of the Company's liability for unpaid Taxes
for all periods or portions thereof ending on or before
the Closing Date will not exceed the amount of the current
liability accruals for Taxes (excluding reserves for
deferred Taxes) as such accruals are reflected on the
books and records of the Company on the Closing Date.
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(iv) There is no action, suit, proceeding, investigation, audit
or claim now proposed or pending against or with respect
to the Company in respect of any Tax.
(v) The Company and the Members have a taxable year ending on
December 31 in each year.
(vi) The Company has not agreed to, and will not be required
to, make any tax adjustments as a result of a change in
accounting methods.
(vii) The Company has withheld and paid over to the proper
governmental authorities all Taxes required to have been
withheld and paid over, and complied with all information
reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in
connection with amounts paid to any employee, independent
contractor, creditor, or other third party. Neither the
Company nor either Member has any knowledge of a challenge
by the Internal Revenue Service or other governmental
authority as to the Company's treatment of any person as
an independent contractor rather than an employee.
(viii) The Company has not requested an extension of time within
which to file any Tax Return or been granted any extension
or waiver of the statute of limitations period applicable
to any Tax Return, and all Tax Returns of the Company for
the preceding three years have been made available to and
delivered to Buyer.
(ix) There are (and as of immediately following the Closing,
there will be) no Liens on the assets of the Company
relating or attributable to Taxes, other than liens for
Taxes not yet due and payable.
(x) There is no basis for the assertion of any claim relating
or attributable to Taxes which, if adversely determined,
would result in any Lien on the assets of the Company or
otherwise have an adverse effect on the Company or its
businesses.
(xi) None of the Company's assets is treated as "tax exempt use
property" within the meaning of Section 168(h) of the
Code.
(xii) There are no contracts, agreements, plans or arrangements
covering any employee or former employee of the Company
that, individually or collectively, could give rise to the
payment of any amount (or portion thereof) that would not
be deductible pursuant to Sections 280G, 404 or 162 of the
Code.
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(xiii) Neither the Company nor either Member has filed a consent
under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(xiv) The Company has never been a "United States real property
holding corporation" within the meaning of Section
897(c)(2) of the Code.
(xv) Neither the Company nor either Member is, nor have any of
them ever been, a party to a tax sharing, tax indemnity or
tax allocation agreement, and neither Company has assumed
the tax liability of any other person under contract.
(xvi) The Company is not, and never has been, a member of an
affiliated group filing a consolidated federal income Tax
Return. The Company has no interest in any corporation
with respect to which the Company owns a majority of the
common stock or has the power to vote or direct the voting
of sufficient securities to elect a majority of the
managers.
(xvii) The Company has no liability for the Taxes of any
individual or entity other than itself under Section
1.1502-6 of the Treasury regulations (or any similar
provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(xviii) The Company is not a party to any joint venture,
partnership or other arrangement that is treated as a
partnership for federal income tax purposes.
(xix) The Company has validly elected to be treated as a
partnership for tax purposes at all times since its
formation in March 5, 1990, and such election will remain
effective up to and including the Closing Date, except as
affected by consummation of the transactions contemplated
herein.
(xx) Each of the Members has filed all Tax Returns he is
required to file, has duly reported thereon all items of
income and loss applicable to his Interest in the Company
and has duly paid all Taxes on account of such income and
loss.
3.26 CONFORMITY WITH LAW; LITIGATION.
(a) The Company has conducted its business in material compliance
with applicable laws and regulations and with any order of any
court or federal,
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state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over
it.
(b) Except as set forth on Schedule 3.26(b), there are no claims,
actions, suits or proceedings, pending or, to the Knowledge of
the Members, threatened against or affecting the Company at law
or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency
or instrumentality having jurisdiction over it and no written
notice of any claim, action, suit or proceeding, whether pending
or threatened, has been received. There are no judgments, orders,
injunctions, decrees, stipulations or awards (whether rendered by
a court or administrative agency or by arbitration) against the
Company or against any of its properties or business.
3.27 RELATIONS WITH GOVERNMENTS.
The Company has not made, offered or agreed to offer anything of value to
any governmental official, political party or candidate for government office,
nor has it otherwise taken any action that would cause the Company to be in
violation of the Foreign Corrupt Practices Act of 1977, as amended, or any law
of similar effect.
3.28 ABSENCE OF CHANGES.
Except as set forth on Schedule 3.28, since December 31, 1998, the
Company has conducted its business in the ordinary course and there has not
been:
(a) any change, by itself or together with other changes, that has
affected adversely, or is likely to have a Material Adverse
Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the Company's properties or
business;
(c) any change in the Company's membership interests or any change in
the ownership of the Interests or any grant of any options,
warrants, calls, conversion rights or commitments with respect to
membership interests in the Company;
(d) any declaration or payment of any distribution in respect of the
Interests, or any direct or indirect redemption, purchase or
other acquisition of any of the membership interests in the
Company;
(e) any increase in the compensation, bonus, sales commissions or fee
arrangements payable or to become payable by the Company to any
of its officers, managers, members, employees, consultants or
agents, except for ordinary and customary bonuses and salary
increases for employees in
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accordance with past practice, nor has the Company entered into
or amended any Company Benefit Arrangement, Company Plan,
employment, severance or other agreement relating to compensation
or fringe benefits;
(f) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, which has had, or
reasonably could be expected to have, a Material Adverse Effect
on the Company;
(g) any sale or transfer, or any agreement to sell or transfer, any
material assets property or rights of the Company to any person,
including without limitation the Members or their affiliates;
(h) any cancellation, or agreement to cancel, forgive or release any
indebtedness or other obligation owing to the Company, including
without limitation, any indebtedness or obligation of the Members
or their affiliates except in the ordinary course of business,
none of which has affected adversely, or is likely to have a
Material Adverse Effect;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of
the Company's ordinary course of business;
(k) any waiver of any material rights or claims of the Company;
(l) any breach, amendment or termination of any Material Contract,
Permit or other right to which the Company is a party;
(m) any transaction by the Company outside the ordinary course of
business;
(n) any capital commitment by the Company, either individually or in
the aggregate, exceeding $50,000;
(o) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the
Company or the revaluation by the Company of any of its assets;
(p) any creation or assumption by the Company of any mortgage,
pledge, security interest or lien or other encumbrance on any
asset (other than liens arising under existing lease financing
arrangements which are not material and liens for Taxes not yet
due and payable);
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(q) any entry into, amendment of, relinquishment, termination or non-
renewal by the Company of any contract, lease transaction,
commitment or other right or obligation requiring aggregate
payments by the Company in excess of $50,000;
(r) any loan by the Company to any person or entity, incurring by the
Company of any indebtedness, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the
Company or guaranteeing of any debt securities of others;
(s) the commencement or notice or, to the knowledge of the Members,
any threat of commencement, of any lawsuit or proceeding against,
or investigation of, the Company or its business or affairs; or
(t) negotiation or agreement by the Company or any officer, manager
or employee thereof to do any of the things described in the
preceding clauses (a) through (s) (other than negotiations with
Buyer and its representatives regarding the transactions
contemplated by this Agreement).
3.29 KEY MAN LIFE INSURANCE.
Each Member, severally and not jointly, represents that to his Knowledge,
he is insurable for key man life insurance purposes at regular, non-smoker
rates.
3.30 EMPLOYMENT AGREEMENT.
Each Member, severally and not jointly, represents that he will enter
into his Employment Agreement with the Company in good faith with the full
intention of devoting his full time and efforts to Buyer's business for the
entire term of such agreement and is not aware of any circumstance or reason
that would preclude him from the foregoing.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
To induce the Members to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer represents and warrants to the Members
as follows:
4.1 DUE ORGANIZATION.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland, and is duly authorized and
qualified to do business under all applicable material laws, regulations,
ordinances and orders of public authorities to carry on its respective
businesses in the places and in the manner as now conducted except for where the
failure to be so authorized or qualified would not have a Material Adverse
Effect on Buyer.
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4.2 AUTHORIZATION; VALIDITY OF OBLIGATIONS.
The representatives of Buyer executing this Agreement have all requisite
corporate power and authority to enter into and bind Buyer to the terms of this
Agreement. Buyer has the full legal right, power and corporate authority to
enter into this Agreement and the transactions contemplated hereby. As of the
date hereof and as of the Closing Date, the execution and delivery of this
Agreement by Buyer and the performance by Buyer of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of Buyer,
and this Agreement has been duly and validly authorized by all necessary
corporate action. This Agreement is a legal, valid and binding obligation of
Buyer enforceable in accordance with its terms.
4.3 NO CONFLICTS.
The execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of the
terms hereof will not:
(a) conflict with, or result in a breach or violation of the Charter
or Bylaws of Buyer;
(b) conflict with, or result in a default (or would constitute a
default but for any requirement of notice or lapse of time or
both) under any document, agreement or other instrument to which
Buyer is a party or by which Buyer is bound, or result in the
creation or imposition of any lien, charge or encumbrance on any
of Buyer's properties pursuant to (i) any law or regulation to
which Buyer or any of its property is subject, or (ii) any
judgment, order or decree to which Buyer is bound or any of its
property is subject, except where such conflicts or defaults
would not, individually or in the aggregate, have a Material
Adverse Effect;
(c) result in termination or impairment of any permit, license,
franchise, contractual right or other authorization of Buyer,
except where such terminations or impairments would not,
individually or in the aggregate, have a Material Adverse Effect;
or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which Buyer is subject, or by which Buyer is bound,
except where such violations would not, individually or in the
aggregate, have a Material Adverse Effect.
4.4 FINANCING.
Buyer shall have at Closing sufficient cash, available lines of credit or
other sources of immediately available funds to enable it to make payment of the
Closing Payment.
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4.5 SEC DOCUMENTS; FINANCIAL STATEMENTS.
(a) Buyer has made available to the Members copies of each
registration statement, report, proxy statement, information
statement or schedule filed with the SEC by Buyer since its
initial public offering (the "Buyer SEC Documents"). As of their
respective dates, the Buyer SEC Documents complied in all
material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable. Except to the extent that information
contained in the Buyer SEC Documents have been revised or
superseded by a later-filed Buyer SEC Document filed and publicly
available before the date of the Agreement, none of the Buyer SEC
Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(b) As of their respective dates, the consolidated financial
statements included in the Buyer SEC Documents complied as to
form in all material respects with then applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except
as indicated therein or in the notes thereto) and fairly
presented Buyer's consolidated financial position and that of its
consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and statements of cash
flows for the periods then ended (subject, in the case of
unaudited statements, to the lack of footnotes thereto, to normal
year-end audit adjustments and to any other adjustments described
therein).
4.6 CAPITAL STOCK OF BUYER.
The authorized capital stock of Buyer consists of 16,000,000 shares of
common stock, par value $.01 per share, of which 4,965,097 shares were issued
and outstanding as of January 24, 2000, and 4,000,000 shares of preferred stock,
par value $.01 per share, of which none are issued and outstanding. All
outstanding shares were offered, issued, sold and delivered by Buyer in
compliance with all applicable state and federal laws concerning the issuance of
securities.
4.7 TRANSACTIONS IN CAPITAL STOCK.
Except as set forth on Schedule 4.7, 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 issue or
sell, or by which any shares of capital stock may otherwise become outstanding.
Buyer has no obligation (contingent or otherwise) to purchase,
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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.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
The obligation of Buyer to effect the transactions contemplated by this
Agreement is subject to the satisfaction or waiver, at or before the Closing
Date, of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All of the representations and warranties of the Members contained in
this Agreement shall be true, correct and complete on and as of the Closing Date
except for changes arising from the conduct of the Company's business in the
ordinary course, none of which changes individually or in the aggregate has had
or is reasonably likely to have a Material Adverse Effect; all of the terms,
covenants, agreements and conditions of this Agreement to be complied with,
performed or satisfied by the Members on or before the Closing Date shall have
been duly complied with, performed or satisfied; and certificates to the
foregoing effects dated the Closing Date and signed by the Members shall have
been delivered to Buyer.
5.2 NO LITIGATION.
No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or provision challenging Buyer's proposed acquisition of
the Interests or limiting or restricting Buyer's conduct or operation of the
business of the Company (or its own business) following the Closing shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending. There shall be no action,
suit, claim or proceeding of any nature pending or threatened against the
Company, the Members or the Company's properties or any of its officers or
managers that has had or is likely to have a Material Adverse Effect on the
Company.
5.3 OPINION OF COUNSEL.
Buyer shall have received an opinion from ▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., counsel
to the Members and the Company, dated the Closing Date, in a form reasonably
satisfactory to counsel for Buyer.
5.4 CONSENTS AND APPROVALS.
All necessary consents of and filings with any governmental authority or
agency or third party, relating to the consummation by the Members of the
transactions contemplated hereby shall have been obtained and made.
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5.5 CHARTER DOCUMENTS.
The Members shall have delivered to Buyer copies of the Company's Charter
Documents, certified in the case of its Certificate of Formation by an
appropriate authority in the state of its organization and dated a date no
earlier than five business days before the Closing Date.
5.6 EMPLOYMENT AGREEMENTS.
The Members shall each have executed and delivered an employment
agreement (each an "Employment Agreement" and collectively, the "Employment
Agreements") substantially in the form attached hereto as Exhibits 5.6A and
5.6B.
5.7 CLOSING DELIVERIES.
The Members shall have made the deliveries to Buyer as are called for by
Section 2.2 of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MEMBERS.
The obligations of the Members to effect the transactions contemplated
hereby are subject to the satisfaction or waiver, at or before the Closing Date,
of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All of the representations and warranties of Buyer contained in this
Agreement shall be true, correct and complete on and as of the Closing Date,
except for changes arising from the conduct of the Buyer's business in the
ordinary course, none of which changes individually or in the aggregate has had
or is likely to have a Material Adverse Effect; all of the terms, covenants,
agreements and conditions of this Agreement to be complied with, performed or
satisfied by Buyer on or before the Closing Date shall have been duly complied
with, performed or satisfied; and a certificate to the foregoing effects dated
the Closing Date and signed by the President or a Vice President of Buyer shall
have been delivered to the Members.
6.2 NO LITIGATION.
No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or provision challenging Buyer's proposed acquisition of
the Company, or limiting or restricting Buyer's conduct or operation of the
business of the Company (or its own business) following the Closing shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending. There shall be no action,
suit, claim or proceeding of any nature pending or threatened, against Buyer,
its properties or any of its officers, that has had or is likely to have a
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Material Adverse Effect on the Buyer and its subsidiaries (including the
Company) taken as a whole.
6.3 CONSENTS AND APPROVALS.
All necessary consents of and filings with any governmental authority or
agency or third party relating to the consummation by Buyer of the transactions
contemplated herein shall have been obtained and made.
6.4 OPINION OF COUNSEL.
The Members and the Company shall have received an opinion from ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to Buyer, dated the Closing Date, in a form
reasonably satisfactory to counsel for the Members.
6.5 EMPLOYMENT AGREEMENTS.
Buyer shall have executed and delivered the Employment Agreements
substantially in the forms attached hereto as Exhibit 5.6A and 5.6B.
6.6 REGISTRATION RIGHTS AGREEMENT.
Buyer shall have executed and delivered the Registration Rights Agreement
substantially in the form attached hereto as Exhibit 6.6.
6.7 CLOSING DELIVERIES.
Buyer shall have made the deliveries to the Members as are called for by
Section 2.2 of this Agreement.
7. CERTAIN COVENANTS.
7.1 NOTIFICATION OF CERTAIN MATTERS.
Each party hereto shall give prompt notice to the other parties hereto of
(a) the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would be likely to cause any of its representations or
warranties contained herein to be untrue or inaccurate in any material respect
at or prior to the Closing, and (b) any material failure of such party to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by such party hereunder. The delivery of any notice pursuant to this
Section 7.1 shall not, without the express written consent of the other parties
be deemed to (i) modify the representations or warranties hereunder of the party
delivering such notice, (ii) modify the conditions set forth in
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Articles 5 and 6, or (iii) limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
7.2 UNPAID TAXES.
The Members jointly and severally covenant and agree promptly to reimburse
Buyer on demand for any amount by which the Company's liabilities for unpaid
Taxes for all periods or portions thereof ending on or before the Closing Date
exceed the amount of the current liability accruals for Taxes (excluding
reserves for deferred Taxes) as such accruals are reflected on the Company's
books and records on the Closing Date, provided, however, that the Members shall
have the right, in their sole and absolute discretion and at their own expense,
to control the contest of any audit litigation or other proceeding associated
therewith; provided further that Buyer and counsel of its own choosing shall
have the right, at its own expense, to participate fully in all aspects of such
audit, litigation or other proceeding; and provided further that the Members
shall not settle any such audit, litigation or other proceeding without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld.
7.3 CERTAIN TAX MATTERS.
(a) Allocation of Purchase Price. Buyer and the Members agree that
the Purchase Price and the liabilities of Company (plus other
relevant items) will be allocated to the assets of the Company
for all purposes (including Tax and financial accounting) as
shown on Schedule 7.3(a) attached hereto. Buyer and the Members
will file all Tax Returns (including amended returns and claims
for refund) and information reports in a manner consistent with
such allocation.
(b) Tax Periods Ending on or Before the Closing Date. The Members
shall prepare or cause to be prepared and Buyer shall file or
cause to be filed all Tax Returns for the Company for all periods
ending on or prior to the Closing Date which are required to be
filed after the Closing Date. The Members shall include any
income, gain, loss, deduction or other tax items for such periods
on their Tax Returns in a manner consistent with the Schedule K-
1s furnished by the Company to them for such periods. Buyer shall
cooperate with the Members, at their expense, in prosecuting any
refund claim that may be made by them after the Closing Date due
to a tax loss by the Company for any period (or portion thereof)
ending on or prior to the Closing Date, and the amount of any
refund claim shall be paid to the Members if received by Buyer.
(c) Cooperation on Tax Matters.
(i) Buyer and the Members will cooperate fully, as and to the
extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this
Section and any audit,
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litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the
other party's request) the provision of records and
information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide
additional information and explanation of any material
provided hereunder. Buyer and the Members agree (A) to
retain all books and records with respect to Tax matters
pertinent to the Company relating to any taxable period
beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by
Buyer or the Members, any extensions thereof) of the
respective taxable periods, and to abide by all record
retention agreements entered into with any taxing
authority, and (B) to give the other party reasonable
written notice prior to transferring, destroying or
discarding any such books and records and, if the other
party so requests, the Buyer or the Members, as the case
may be, shall allow the other party to take possession of
such books and records. Notwithstanding the foregoing, the
Members shall have the right, at their sole and absolute
discretion and at their own expense, to control the
contest of any audit, litigation or other proceeding which
applies, in whole or in part, to a taxable period for
which the Members are providing indemnification pursuant
to this Agreement; provided, that, Buyer and counsel of
its own choosing shall have the right, at its own expense,
to participate fully in all aspects of such audit,
litigation or other proceeding; and provided further that
the Members shall not settle any such audit, litigation or
other proceeding without the prior written consent of
Buyer, which consent shall not be unreasonably withheld.
(ii) Buyer and the Members further agree, upon request, to use
their best efforts to obtain any certificate or other
document from any governmental authority or any other
Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions
contemplated hereby).
(d) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with this
Agreement (including any state or municipal transfer tax), shall
be paid by the Members when due, and the Members will, at their
own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if
required by
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applicable law, Buyer will, and will cause its affiliates to,
join in the execution of any such Tax Returns and other
documentation.
8. INDEMNIFICATION.
8.1 GENERAL INDEMNIFICATION BY THE MEMBERS.
The Members, jointly and severally, covenant and agree to indemnify,
defend, protect and hold harmless Buyer and its officers, directors, employees,
successors and affiliates, including without limitation, the Company
(individually, an "FTI Indemnified Party" and collectively, the "FTI Indemnified
Parties") from, against and in respect of all liabilities, losses, claims,
damages, punitive damages, causes of action, lawsuits, administrative
proceedings (including informal proceedings), investigations, audits, demands,
assessments, adjustments, judgments, settlement payments, deficiencies,
penalties, fines, interest (including interest from the date of such damages)
and costs and expenses (including without limitation reasonable attorneys' fees
and disbursements of every kind, nature and description) (collectively,
"Damages") suffered, sustained, incurred or paid by the FTI Indemnified Parties
in connection with, resulting from or arising out of, directly or indirectly:
(i) any breach of any representation or warranty of the
Members set forth in this Agreement (except under Section
3.30) or any Schedule or certificate delivered by or on
behalf of any of the Members in connection herewith; or
(ii) any material breach or nonfulfillment of any covenant or
agreement on the part of the Members in this Agreement
(except under Section 9.12) or in any other agreement
which either of the Members executed and delivered to FTI
or the Company in connection with the transactions
described in this Agreement, including, without
limitation, the Employment Agreements; or
(iii) the business, operations or assets of the Company prior to
the Closing Date or the actions or omissions of the
Company's officers, managers, members, employees or agents
prior to the Closing Date, except as otherwise disclosed
in the Company Financial Statements, this Agreement or the
Schedules to this Agreement; or
(iv) any liability of the Company for Taxes in excess of the
amount of the current liability accruals for such Taxes
(excluding reserves for deferred Taxes) for any Taxable
period or portion thereof ending on or before the Closing
Date; or
(v) any litigation or other claims of any kind brought against
the Company arising out of acts or omissions of the
Company or the
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Members prior to Closing, including, without limitation,
those matters set forth on Schedule 3.26(b); or
(vi) any and all Damages incident to any of the foregoing or to
the enforcement of this Section 8.1.
8.1A SPECIAL INDEMNIFICATION BY THE MEMBERS.
The Members, severally and not jointly, covenant and agree to indemnify,
defend, protect and hold harmless the FTI Indemnified Parties from, against and
in respect of all Damages suffered, sustained, incurred or paid by the FTI
Indemnified Parties in connection with, resulting from or arising out of,
directly or indirectly, a breach of Section 3.30 or Section 9.12 or the failure
of any Member to remain an employee of the Company from the Closing Date through
and including the fourth anniversary date of this Agreement; provided, however,
no Member shall be required to indemnify the FTI Indemnified Parties if the
Member resigns from the Company for good reason (as defined in the Employment
Agreement), if the Company terminates a Member's employment without cause (as
defined in the Employment Agreement) or if the Member's employment terminates as
a result of the Member's death or disability (as defined in the Employment
Agreement).
8.2 LIMITATION AND EXPIRATION.
Notwithstanding the above:
(a) there shall be no liability for indemnification under Section 8.1
unless, and solely to the extent that, the aggregate amount of
Damages exceeds $100,000 (the "Indemnification Deductible");
provided, however, that the Indemnification Deductible shall not
apply to (i) Damages arising out of any breaches of the covenants
of the Members set forth in this Agreement or representations
made in Sections 3.4 (membership interests in the Company), 3.5
(transactions in membership interests), 3.24 (employee benefit
plans) or 3.25 (taxes), or (ii) Damages described in Section 8.1
(iii) or (iv); and further provided that if the aggregate amount
of Damages exceeds the Indemnification Deductible, then the
Members shall indemnify the FTI Indemnified Parties for the
amount of Damages above the Indemnification Deductible, but in no
event greater than the "Indemnification Limit" (as defined
herein). For purposes of this Section 8.2, "Indemnification
Limit" shall initially be $9,000,000, which amount shall be
reduced by $3,000,000 on each anniversary of the Closing Date;
provided, however, for the purposes of Section 8.1A only, the
term "Indemnification Limit" shall mean $4,500,000 with regard to
each Member and shall not be subject to reduction.
(b) the aggregate amount of the Members' liability under this Article
8 shall not exceed $9,000,000;
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(c) the indemnification obligations under this Article 8 shall
terminate as applicable in accordance with clause (i), (ii) or
(iii) of this Section 8.2(c):
(i)(1) except as otherwise specified in this Section 8.2(c), the
third anniversary of the Closing Date; (2) with respect to
representations, warranties and covenants contained in
Sections 3.24 (employee benefit plans) and 3.25 (taxes)
and the indemnifications set forth in Section 8.1(iv) or
(v), on (A) the date that is sixty days after the
expiration of the longest applicable federal or state
statute of limitation (including extensions thereof) with
respect thereto, or (B) if there is no applicable statute
of limitation, (x) three years after the Closing Date; (3)
with respect to representations and warranties contained
in Section 3.22 (environmental matters), ten years after
the Closing Date; (4) with respect to representations and
warranties contained in Section 3.30 (employment
agreement) or any breach or nonfulfillment of any covenant
or agreement described in Section 8.1(ii), four years
after the Closing Date; and (5) with respect to the
indemnity provided for in Section 8.1A, four years after
the Closing Date;
(ii) the final resolution of claims or demands (a "Claim")
pending as of the relevant dates described in clause (i)
of this Section 8.2(c) (such claims referred to as
"Pending Claims"); and
(iii) with respect to representations and warranties contained
in Section 3.4 (membership interests in the Company) and
Section 3.5 (transactions in membership interests), there
shall be no limitation.
8.3 GENERAL INDEMNIFICATION BY BUYER.
Buyer and the Company covenant and agree to indemnify, defend, protect and
hold harmless the Members and their respective successors and assigns
(individually, a "P&M Indemnified Party" and collectively, the "P&M Indemnified
Parties") from, against and in respect of all Damages suffered, sustained,
incurred or paid by the P&M Indemnified Parties in connection with, resulting
from or arising out of, directly or indirectly:
(i) any breach of any representation or warranty of Buyer set
forth in this Agreement or any schedule or certificate
delivered by or on behalf of any of Buyer in connection
herewith; or
(ii) any nonfulfillment of any covenant or agreement on the
part of Buyer or, after the Closing Date, the Company, in
this Agreement; or
(iii) the business, operations or assets of Buyer, or the acts
or omissions of Buyer's managers, officers, employees or
agents in the
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performance of their duties for or on behalf of Buyer,
prior to the Closing Date, and the business, operations or
assets of the Company after the Closing Date; or
(iv) except as provided in Section 7.2, any liability for Taxes
on account of the Company's business and operations for
any Taxable period or portion thereof ending after the
Closing Date; or
(v) any litigation or other claims of any kind brought against
the Company and/or the Members arising out of acts or
omissions of the Company or Buyer after the Closing.
(vi) any and all Damages incident to any of the foregoing or to
the enforcement of this Section 8.3. Notwithstanding any
other provision in this Agreement to the contrary, Buyer
shall not be liable to the Members for any Damages arising
out of the actions or omissions of any Member, except as
otherwise provided for under Buyer's or the Company's
Charter Documents or applicable state law with respect to
the Members' conduct for or on behalf of the Company or
Buyer after the Closing Date.
8.4 LIMITATION AND EXPIRATION.
Notwithstanding the foregoing:
(a) there shall be no liability for indemnification under Section 8.3
unless, and solely to the extent that, the aggregate amount of
Damages exceeds the Indemnification Deductible; provided,
however, that the Indemnification Deductible shall not apply to
(i) Damages arising out of any breaches of the covenants of the
Buyer set forth in this Agreement or representations made in
Sections 4.6 (capital stock of Buyer) or 4.7 (transactions in
capital stock), or (ii) Damages described in Section 8.3(iii),
(iv) or (v); and further provided that if the aggregate amount of
Damages exceeds the Indemnification Deductible, then Buyer shall
indemnify the Members for the amount of Damages above the
Indemnification Deductible, but in no event greater than the
Indemnification Limit;
(b) the aggregate amount of Buyer's liability under this Article 8
shall not exceed the Indemnification Limit;
(c) the indemnification obligations under this Article 8 shall
terminate, as applicable, in accordance with clause (i), (ii) or
(iii) of this Section 8.4(c):
(i)(1) except as to matters set forth in clause (i)(2) of this
Section 8.4(c), the third anniversary of the Closing Date;
(2) with respect to the indemnifications set forth in
Section 8.3.(iv) or (v), on (A) the date
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that is sixty (60) days after the expiration of the
longest applicable federal or state statute of limitation
(including extensions thereof with respect thereto), or
(B) if there is no applicable statute of limitation, (x)
three (3) years after the Closing Date;
(ii) the final resolution of Pending Claims as of the relevant
dates described in clause (i) of this 8.4(c); and
(iii) with respect to representations and warranties contained
in Section 4.6 (capital stock of Buyer), there shall be no
limitation.
(d) with respect to Damages arising from the actions or omissions of
the Members on or prior to the Closing Date, the Members shall
have no right to claim indemnification from the Company after the
Closing Date, except to the extent such Damages exceed the
Indemnification Limit.
8.5 INDEMNIFICATION PROCEDURES.
All Claims for indemnification under this Article 8 shall be asserted as
follows:
(a) In the event that any FTI Indemnified Party or P&M Indemnified
Party (whether a P&M Indemnified Party or FTI Indemnified Party,
an "Indemnified Party") has a Claim against any party obligated
to provide indemnification pursuant to Article 8 (the
"Indemnifying Party") which does not involve a Claim being
asserted against or sought to be collected by a third party, the
Indemnified Party shall with reasonable promptness send a Claim
Notice with respect to such Claim to the Indemnifying Party. If
the Indemnifying Party does not notify the Indemnified Party
within the Notice Period (as defined below) that the Indemnifying
Party disputes such Claim, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party
hereunder to the extent of any damages caused directly by any
delay in such notification. In case an objection is made in
writing in accordance with this Section 8.5(a), the Indemnified
Party shall have thirty days to respond in a written statement to
the objection. If after such thirty day period there remains a
dispute as to any Claims, the parties shall attempt in good faith
for sixty days to agree upon the rights of the respective parties
with respect to each of such Claims. If the parties should so
agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties.
(b) In the event that any Claim for which the Indemnifying Party
would be liable to an Indemnified Party hereunder is asserted
against an Indemnified Party by a third party, the Indemnified
Party shall with reasonable promptness notify the Indemnifying
Party of such Claim, specifying the nature of such claim and the
amount or the estimated amount thereof to
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the extent then feasible (which estimate shall not be conclusive
of the final amount of such Claim) (the "Claim Notice"). The
Indemnifying Party shall have thirty days from the receipt of the
Claim Notice (the "Notice Period") to notify the Indemnified
Party (i) whether or not such party disputes the liability to the
Indemnified Party hereunder with respect to such Claim and (ii)
if such party does not dispute such liability, whether or not the
Indemnifying Party desires, at the sole cost and expense of the
Indemnifying Party, to defend against such Claim, provided that
the Indemnifying Party is hereby authorized (but not obligated)
prior to and during the Notice Period to file any motion, answer
or other pleading and to take any other action which the
Indemnifying Party shall deem necessary or appropriate to protect
the Indemnifying Party's interests. In the event that
Indemnifying Party notifies the Indemnified Party within the
Notice Period that the Indemnifying Party does not dispute the
Indemnifying Party's obligation to indemnify hereunder and
desires to defend the Indemnified Party against such Claim the
Indemnifying Party shall have the right to defend by appropriate
proceedings, which proceedings shall be promptly settled or
prosecuted by the Indemnifying Party to a final conclusion,
provided, that, unless the Indemnified Party otherwise agrees in
writing, such party may not settle any matter (in whole or in
part) unless such settlement includes a complete and
unconditional release of the Indemnified Party and, provided
further, that, in the event the settlement includes provision for
non-monetary relief by an Indemnified Party, such settlement is
reasonably satisfactory to such Indemnified Party. If the
Indemnified Party desires to participate in, but not control, any
such defense or settlement the Indemnified Party may do so at its
sole cost and expense. If the Indemnifying Party elects not to
defend the Indemnified Party against such Claim, whether by
failure of such party to give the Indemnified Party timely notice
as provided above or otherwise, then the Indemnified Party,
without waiving any rights against such party, may settle or
defend against any such Claim in the Indemnified Party's sole
discretion and the Indemnified Party shall be entitled to recover
from the Indemnifying Party the amount of any settlement or
judgment and, on an ongoing basis, all indemnifiable costs and
expenses of the Indemnified Party with respect thereto, including
interest from the date such costs and expenses were incurred.
(c) Nothing herein shall be deemed to prevent the Indemnified Party
from making a claim, and an Indemnified Party may make a claim
hereunder, for potential or contingent claims or demands provided
the Claim Notice sets forth the specific basis for any such
potential or contingent claim or demand to the extent then
feasible and the Indemnified Party has reasonable grounds to
believe that such a claim or demand may be made and provided,
further, however, that the Notice Period shall not be deemed
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to commence until such potential or contingent claim or demand
becomes an actual or noncontingent claim or demand.
(d) The Indemnified Party's failure to give reasonably prompt notice
as required by this Section 8.5 of any actual, threatened or
possible claim or demand which may give rise to a right of
indemnification hereunder shall not relieve the Indemnifying
Party of any liability which the Indemnifying Party may have to
the Indemnified Party except to the extent, but only to the
extent, that failure to give such notice materially prejudices
the Indemnifying Party.
(e) The amount of any indemnifiable losses or other liability for
which indemnification is provided under this Agreement shall be
net of any amounts actually recovered by the Indemnified Party
from third parties (including, without limitation, amounts
actually recovered under insurance policies) with respect to such
indemnifiable losses or other liability. Any Indemnifying Party
hereunder shall be subrogated to the rights of the Indemnified
Party upon payment in full of the amount of the relevant
indemnifiable loss. An insurer who would otherwise be obligated
to pay any claim shall not be relieved of the responsibility with
respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect
thereto. If any Indemnified Party recovers an amount from a third
party in respect of an indemnifiable loss for which
indemnification is provided in this Agreement after the full
amount of such indemnifiable loss has been paid by an
Indemnifying Party or after an Indemnifying Party has made a
partial payment of such indemnifiable loss and the amount
received from the third party exceeds the remaining unpaid
balance of such indemnifiable loss, then the Indemnified Party
shall promptly remit to the Indemnifying Party the excess (if
any) of (A) the sum of the amount theretofore paid by such
Indemnifying Party in respect of such indemnifiable loss plus the
amount received from the third party in respect thereof, less (B)
the full amount of such indemnifiable loss or other liability.
(f) The amount of any loss or other liability for which
indemnification is provided under this Agreement shall be (i)
increased to take account of any net tax cost incurred by the
Indemnified Party arising from the receipt or accrual of an
indemnification payment hereunder (grossed up for such increase)
and (ii) reduced to take account of any net tax benefit realized
by the Indemnified Party arising from incurring or paying such
loss or other liability. In computing the amount of any such tax
cost or tax benefit, the Indemnified Party shall be deemed to
recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt or
accrual of any indemnification payment hereunder or incurring or
paying any indemnified loss. Any indemnification payment
hereunder
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shall initially be made without regard to this Section 8.5(f) and
shall be increased or reduced to reflect any such net tax cost
(including gross-up) or net tax benefit only after the
Indemnified Party has actually realized such cost or benefit. For
purposes of this Agreement, an Indemnified Party shall be deemed
to have "actually realized" a net tax cost or a net tax benefit
to the extent that, and at such time as, the amount of taxes
payable by such Indemnified Party is increased above or reduced
below, as the case may be, the amount of taxes that such
Indemnified Party would be required to pay but for the receipt or
accrual of the indemnification payment or the incurrence or
payment of such loss, as the case may be.
8.6 SURVIVAL OF REPRESENTATIONS WARRANTIES AND COVENANTS.
All representations, warranties and covenants made by the Members and Buyer
in or pursuant to this Agreement or in any Schedule or other agreement delivered
pursuant hereto shall be deemed to have been made on the date of this Agreement
(except as otherwise provided herein or therein). The representations of the
Members will survive the Closing and will remain in effect until, and will
expire upon, the termination of the relevant indemnification obligation as
provided in Section 8.2. The representations of Buyer will survive the Closing
and will remain in effect until, and will expire upon the termination of the
relevant indemnification obligation as provided in Section 8.4. The covenants of
the parties will survive the Closing and expire in accordance with their
respective terms.
8.7 ARBITRATION.
(a) Disputes as to Claims under this Agreement ("Disputes") shall be
resolved by binding arbitration which shall be administered by
the American Arbitration Association ("AAA") in Wilmington,
Delaware, and, except as expressly provided in this Agreement,
shall be conducted in accordance with the Expedited Procedures
under the Commercial Arbitration Rules of the AAA, as such rules
may be amended from time to time. The hearing locale shall be
Wilmington, Delaware. A single, neutral Arbitrator shall be
appointed by the AAA, within five (5) business days after a
Dispute is submitted for arbitration under this Section 8.7, to
preside over the arbitration and resolve the Dispute. The
Arbitrator shall be selected from the AAA's Commercial Panel, and
shall be qualified to practice law in at least one jurisdiction
in the United States and have expertise in the interpretation of
commercial contracts. The parties shall have five business days
to object in writing to the appointment of the Arbitrator, the
sole basis for such objection being an actual conflict of
interest. The AAA, in its sole discretion, shall determine within
five business days the validity of any objection to the
appointment of the Arbitrator based on an actual conflict of
interest.
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(b) The Arbitrator's decision (the "Decision") shall be binding, and
the prevailing party may enforce the Decision under the Agreement
or in any court of competent jurisdiction.
(c) The parties shall use their best efforts to cooperate with each
other in causing the arbitration to be held in as efficient and
expeditious a manner as practicable, including but not limited
to, providing such documents and making available such of their
personnel as the Arbitrator may request, so that the Decision may
be reached timely. The Arbitrator shall take into account the
parties' stated goal of expedited proceedings in determining
whether to authorize discovery and, if so, the scope of
permissible discovery and other hearing and pre-hearing
procedures.
(d) The authority of the Arbitrator shall be limited to deciding
liability for, and the proper amount of, a Claim, and shall have
no authority to award punitive damages. The Arbitrator shall
render a Decision within sixty days after being appointed to
serve as Arbitrator, unless the parties otherwise agree in
writing or the Arbitrator makes a finding that a party has
carried the burden of showing good cause for a longer period.
8.8 SATISFACTION OF INDEMNIFICATION LIABILITIES.
The parties shall promptly satisfy any indemnification liability which
is not contested or is finally determined to be due in accordance with this
Article 8.
9. GENERAL.
9.1 SUCCESSORS AND ASSIGNS.
This Agreement and the rights of the parties hereunder may not be assigned
(except by operation of law) and shall be binding upon and shall inure to the
benefit of the parties hereto, the successors of Buyer, and the heirs, personnel
representatives and successors of the Members.
9.2 ENTIRE AGREEMENT.
This Agreement (which includes the Schedules hereto) sets forth the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby. It shall not be amended or modified except by a written
instrument duly executed by each of the parties hereto. Any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement. Each
of the Schedules to this Agreement is incorporated herein by this reference and
expressly made a part hereof.
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9.3 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and any party
hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.
9.4 BROKERS AND AGENTS.
Buyer and the Members (for themselves and on behalf of the Company) each
represents and warrants to the other that it has not employed any broker or
agent in connection with the transactions contemplated by this Agreement.
9.5 EXPENSES.
Buyer has and will pay the fees, expenses and disbursements of Buyer and
its agents, affiliates, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement. The Members will cause
the Company to pay the fees, expenses and disbursements of the Members, the
Company, and their agents, affiliates, representatives, financial advisers,
accountants and counsel incurred in connection with the subject matter of this
Agreement; provided, that, any such payments are made on or prior to the Closing
Date from the Company's available funds and before calculating the Company's
Working Capital for purposes of determining the Closing Payment. After the
Closing, the Members shall be responsible for the payment of any fees, expenses
or disbursements incurred by or on behalf of the Company on or before the
Closing Date.
9.6 SPECIFIC PERFORMANCE; REMEDIES.
Each party hereto acknowledges that the other parties will be irreparably
harmed and that there will be no adequate remedy at law for any violation by any
of them of any of the covenants or agreements contained in this Agreement,
including without limitation, the noncompetition and confidentiality covenants
referenced in Section 9.12. It is accordingly agreed that, in addition to any
other remedies which may be available upon the breach of any such covenants or
agreements, each party hereto shall have the right to obtain injunctive relief
to restrain a breach or threatened breach of, or otherwise to obtain specific
performance of, the other parties', covenants and agreements contained in this
Agreement.
9.7 NOTICES.
Any notice, request, claim, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given if delivered personally or sent by telefax (with
confirmation of receipt), by registered or certified mail, postage prepaid, or
by recognized courier service, as follows:
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If to Buyer to:
FTI Consulting, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
If to the Members to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.C.
Park ▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telefax:
with a required copy to:
▇▇▇▇▇ & Samson, P.A.
280 Corporate Center
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
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9.8 GOVERNING LAW.
This Agreement shall be governed by and construed, interpreted and enforced
in accordance with the laws of the State of Maryland, without giving effect to
conflicts of law principles.
9.9 SEVERABILITY.
If any provision of this Agreement or the application thereof to any person
or circumstances is held invalid or unenforceable in any jurisdiction, the
remainder hereof, and the application of such provision to such person or
circumstances in any other jurisdiction, shall not be affected thereby, and to
this end the provisions of this Agreement shall be severable.
9.10 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS.
Except as provided in Article 8, no provision of this Agreement is
intended, nor will be interpreted, to provide or to create any third party
beneficiary rights or any other rights of any kind in any client, customer,
affiliate, shareholder, employee, partner of any party hereto or any other
person or entity.
9.11 AMENDMENT; WAIVER.
This Agreement may be amended by the parties hereto at any time prior to
the Closing by execution of an instrument in writing signed on behalf of each of
the parties hereto. Any extension or waiver by any party of any provision hereto
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
9.12 COVENANTS REGARDING EMPLOYMENT AGREEMENTS.
Each of the Members acknowledges that each provision of the Employment
Agreements (including, without limitation, the noncompetition and
confidentiality covenants contained therein) constitutes a material part of the
purchase and sale transaction contemplated by this Agreement, and is supported
by adequate consideration. Further, the Members hereby acknowledge that each of
their efforts has been critical to the success of the Company's business to
date, and their further efforts on behalf of the Company will be critical to the
continued success of the business of the Company. The Members hereby
acknowledge that they possess unique professional skills and knowledge and that
their failure to perform under the Employment Agreements will result in
substantial damage to FTI.
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[Signature page for the LLC Membership Interests Purchase Agreement.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FTI CONSULTING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
MEMBERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
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