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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): November 3, 2003
FTI CONSULTING, INC.
(Exact Name of Registrant as Specified in Charter)
Maryland 001-14875 52-1261113
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
900 Bestgate Road, Suite 1000, Annapolis, Maryland 21401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 224-8770
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 3, 2003, FTI Consulting, Inc. ("FTI") consummated its
previously announced acquisition of KPMG LLP's domestic Dispute Advisory
Services business (the "DAS Business") for $89,125,000 in cash. The purchase
price for the DAS Business was determined on the basis of arm's-length
negotiations between FTI and KPMG, and was financed by FTI out of available cash
on hand.
The acquired assets consist primarily of the client relationships and
books of business of 26 KPMG partners. FTI has assumed responsibility
for completing the engagements managed by the aforementioned KPMG partners and
professionals. In addition to the 26 KPMG partners, approximately 125 other
billable professionals plus support staff joined FTI, and each of the 26
partners, as well as two other members of the DAS Business leadership group,
entered into five-year employment agreements and have become senior managing
directors of FTI. FTI and KPMG have entered into a Transition Services Agreement
to provide for the orderly transfer of such employees from KPMG's offices to
those of DAS.
The Asset Purchase Agreement dated as of October 22, 2003, among KPMG, DAS
Business, LLC, a wholly-owned subsidiary of FTI, and FTI with respect to the
foregoing transactions (the "Asset Purchase Agreement"), contains a four-year
undertaking by KPMG, subject to certain exceptions, that it will not, directly
or indirectly, compete with FTI in the provision of certain services
historically performed by the DAS Business, or acquire any ownership interest in
any firm that engages in a competing business, or market consulting services
using the terms "DAS" or "DAS Services." The Asset Purchase Agreement further
provides that, subject to certain exceptions, (a) KPMG will not, for a period of
five years, hire or otherwise engage any employee of FTI that provides dispute
advisory, litigation support, forensic accounting or investigative services
(including the 26 former KPMG partners and other employees joining
FTI in the acquisition) and (b) FTI will not, for a period of five years, hire
or otherwise engage any partner or employee in KPMG's Investigative and
Integrity Advisory Services business.
A copy of the Asset Purchase Agreement, together with all exhibits thereto
is attached hereto as Exhibit 2.1 and is incorporated herein by reference in its
entirety.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The DAS Business was not a separate reporting unit of KPMG. Accordingly,
separate complete historical financial statements for the DAS Business are not
available and, in FTI's opinion, the preparation of complete separate financial
statements for the DAS Business would require arbitrary allocations of expenses
that would not be meaningful to investors. Accordingly, FTI requested that the
Commission's Staff not object to the presentation of an audited statement of
assets acquired and a statement of operating revenue and expenses directly
related to the DAS Business for the year ended September 30, 2003 in
satisfaction of Rule 3-05 of Regulation S-X,
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as required by Item 7(a) of Form 8-K. In a letter dated November 4, 2003 to
Theodore I. Pincus, Executive Vice President and Chief Financial Officer of FTI,
the Commission agreed not to object to this proposed financial statement
presentation of the DAS Business in satisfaction of Rule 3-05 of Regulation S-X.
At the time of the filing of this Current Report on Form 8-K, the
aforementioned financial statements required by Item 7(a) of Form 8-K were not
yet prepared or available. In accordance with Item 7(a)(4) of Form 8-K an
audited statement of assets acquired and a statement of operating revenue and
expenses directly related to the DAS Business for the year ended September 30,
2003 will be filed by an amendment to this Current Report on Form 8-K not later
than 60 days after the date hereof.
(b) Pro Forma Financial Information.
At the time of the filing of this Current Report on Form 8-K, the pro
forma financial information required by Article 11 of Regulation S-X and Item
7(b) of Form 8-K was not yet prepared or available. In accordance with Item
7(b)(2) of Form 8-K, such pro forma financial information will be filed by an
amendment to this Current Report on Form 8-K not later than 60 days after the
date hereof.
(c) Exhibits.
ExhibitNumber Description
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2.1 Asset Purchase Agreement dated October 22, 2003,
by and among KPMG LLP, DAS Business LLC and FTI
Consulting, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, FTI has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FTI CONSULTING, INC.
Dated: November 13, 2003 By: /s/ Theodore I. Pincus
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Theodore I. Pincus
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Asset Purchase Agreement dated as of October 22,
2003 by and among KPMG LLP, DAS Business LLC and
FTI Consulting, Inc. FTI Consulting, Inc. agrees
to furnish supplementally any omitted schedule
to the Commission upon request.
Exhibit 2.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
by and among
KPMG LLP
as Seller,
DAS BUSINESS, LLC
as Buyer
and
FTI CONSULTING, INC.
as Parent of Buyer
dated as of October 22, 2003
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TABLE OF CONTENTS
Page
1. Definitions...............................................................2
1.1 Defined Terms.......................................................2
1.2 Other Definitional and Interpretive Matters.........................8
2. Purchase and Sale of the Assets...........................................9
2.1 Purchase and Sale of Assets.........................................9
2.2 Assets Not Purchased................................................9
2.3 Purchase Price.....................................................10
2.4 Assumed Liabilities................................................10
2.5 No Offset..........................................................12
2.6 Further Assurances; Further Conveyances and Assumptions; Third Party
Consents...........................................................13
3. Representations and Warranties of Seller.................................14
3.1 Organization and Qualification.....................................14
3.2 Authorization; Binding Effect......................................15
3.3 Non-Contravention; Consents........................................15
3.4 Title to Purchased Assets; Sufficiency of Assets...................16
3.5 Permits............................................................16
3.6 Compliance With Laws; Litigation...................................16
3.7 Business Employees; Employee Benefits..............................16
3.8 Contracts..........................................................17
3.9 Financial Statements; Absence of Changes...........................18
3.10 Data Integrity.....................................................19
3.11 Taxes..............................................................19
3.12 Clients............................................................19
3.13 Insurance..........................................................19
3.14 Government Contracts...............................................19
3.15 Business Activity Restriction......................................20
3.16 Brokers............................................................20
3.17 No Other Representations...........................................20
4. Representations and Warranties of Buyer and Parent.......................20
4.1 Organization and Qualification.....................................20
4.2 Authorization; Binding Effect......................................21
4.3 Non-Contravention; Consents........................................21
4.4 Status of Buyer....................................................22
4.5 Brokers............................................................22
4.6 Sufficiency of Funds...............................................22
5. Certain Covenants........................................................23
5.1 Access to Information..............................................23
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5.2 Conduct of Business................................................24
5.3 Taxes..............................................................24
5.4 Business Employees.................................................26
5.5 Regulatory Compliance..............................................27
5.6 Permit Transfer....................................................27
5.7 Advice of Changes..................................................28
5.8 Non-Competition and Non-Solicitation by Seller.....................29
5.9 Non-Solicitation by Buyer and Parent...............................30
5.10 Confidentiality....................................................30
5.11 No Additional Representation.......................................31
5.12 Limited Use of KPMG Name...........................................32
5.13 Transfer of Payments; Delivery of Mail.............................32
5.14 Litigation Support.................................................32
5.15 Enforcement of Non-Competition Agreements..........................33
5.16 Collection Efforts.................................................33
5.17 Financing..........................................................33
5.18 Certain Payments...................................................33
6. Closing..................................................................34
6.1 Closing............................................................34
6.2 Deliveries by Seller...............................................34
6.3 Deliveries by Buyer................................................34
6.4 Contemporaneous Effectiveness......................................35
7. Conditions Precedent to Closing..........................................35
7.1 General Conditions.................................................35
7.2 Conditions Precedent to Buyer's and Parent's Obligations...........36
7.3 Conditions Precedent to Seller's Obligations.......................37
8. Survival and Indemnity...................................................37
8.1 Survival of Representations and Warranties.........................38
8.2 General Agreement to Indemnify.....................................38
8.3 General Procedures for Indemnification.............................40
9. Termination..............................................................42
9.1 Termination........................................................42
9.2 Effect of Termination..............................................42
10. Miscellaneous......................................................43
10.1 Notices............................................................43
10.2 Expenses...........................................................44
10.3 Entire Agreement...................................................44
10.4 Jurisdiction, Service of Process...................................44
10.5 Governing Law......................................................45
10.6 Waiver.............................................................45
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10.7 No Oral Modification...............................................45
10.8 Reasonable Commercial Efforts......................................45
10.9 Assignments, Successors............................................46
10.10 Severability.......................................................46
10.11 Captions...........................................................46
10.12 No Third Party Beneficiaries.......................................46
10.13 Counterparts.......................................................47
10.14 Public Announcement................................................47
10.15 Waiver of Compliance with Bulk Transfer Laws.......................47
Schedules
Schedule 1.1(a) Business Employees
Schedule 1.1(b)(i) DAS Principals
Schedule 1.1(b)(ii) DAS Professionals
Schedule 2.1(b) Personal Property
Schedule 2.1(c) Purchased Contracts
Schedule 3.3(b) Seller Required Consents
Schedule 3.4 Sufficiency of Assets
Schedule 3.5 Permits
Schedule 3.6(a) Seller Compliance with Law
Schedule 3.6(b) Seller Litigation
Schedule 3.7(a) Business Employee Information
Schedule 3.7(b) Benefit Plans
Schedule 3.7(d) Notice of Intent to Withdraw
Schedule 3.8(a) Material Contracts
Schedule 3.8(b) Unapplied Retainers
Schedule 3.9(a) September 30, 2003 Financial Statements
Schedule 3.9(c) Certain Changes Subsequent to September 30, 2003
Schedule 3.9(c)(viii) Transactions with Business Employees
Schedule 3.9(c)(ix) Changes in Employment Terms of Business Employees
Schedule 3.12 Material Clients
Schedule 3.14 Government Contracts
Schedule 3.15 Business Activity Restrictions
Schedule 4.3(b) Buyer Required Consents
Schedule 5.2 Seller's Conduct of Business Until Closing Date
Exhibits
Exhibit A Form of Client Consent
Exhibit B Description of DAS Services
Exhibit C Description of Permitted Services
Exhibit D Form of Bill of Sale
Exhibit E Form of Assumption Agreement
Exhibit F Form of Transition Services Agreement
Exhibit G Form of DAS Principal Certificate
Exhibit H Form of Principal Employment Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of October 22, 2003, by and among KPMG LLP, a Delaware limited liability
partnership ("Seller"), DAS BUSINESS, LLC, a Maryland limited liability company
("Buyer"), and FTI CONSULTING, INC., a Maryland corporation ("Parent").
RECITALS
A. WHEREAS, Seller, among other things, operates a business unit
known as KPMG Forensic which provides Dispute Advisory Services ("DAS"), as
described in the first paragraph of Exhibit B attached hereto, and Investigative
and Integrity Advisory Services and other services (collectively, "IIAS"), as
described on Exhibit C attached hereto;
B. WHEREAS, Buyer wishes to acquire a material portion of
Seller's DAS business but not Seller's IIAS business;
C. WHEREAS, Seller desires to sell, transfer and assign to Buyer,
and Buyer desires to purchase from Seller, the Purchased Assets and Buyer is
willing to assume the Assumed Liabilities, in each case as more fully described
and upon the terms and subject to the conditions set forth herein;
D. WHEREAS, Buyer is a wholly-owned subsidiary of Parent formed
for the purpose of acquiring, operating and holding the Purchased Assets and
assuming the Assumed Liabilities;
E. WHEREAS, Seller on the one hand, and Buyer on the other hand
desire to execute and deliver the Bill of Sale, the Assumption Agreement, the
Transition Services Agreement and the other certificates, documents and
instruments to be executed and delivered to effectuate the sale, transfer and
assignment of the Purchased Assets and the assumption of the Assumed
Liabilities, and the other transactions contemplated hereby (such agreements and
all other agreements, certificates, documents and instruments entered into at or
prior to the Closing pursuant to the provisions of this Agreement, or subsequent
to the Closing, pursuant to Section 2.6, collectively, the "Collateral
Agreements");
F. WHEREAS, as an inducement to Buyer and Parent to enter into
and perform this Agreement and the transactions contemplated hereby, without
which inducement neither Buyer nor Parent would have entered into this
Agreement, Seller has agreed, on the terms and subject to the conditions set
forth in Section 5.8 herein, to refrain from engaging in a Competing Business,
and Buyer and Parent have relied on such agreement; and
G. WHEREAS, the parties have obtained all requisite corporate,
limited liability company and partnership approvals, as the case may be,
necessary to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of and in reliance upon the mutual
premises, agreements, covenants, representations and warranties contained
herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions hereinafter set forth, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
AGREEMENT
1. Definitions
1.1 Defined Terms
For the purposes of this Agreement, the following words and phrases
have the following meanings whenever used in this Agreement (including the
Schedules and Exhibits hereto):
"Action" means any action, claim, suit, arbitration, inquiry,
investigation or other proceeding of any nature (whether criminal, civil,
legislative, administrative, regulatory, prosecutorial or otherwise) by or
before any arbitrator or Governmental Body or similar Person or body.
"Affiliate" of any Person means any Person that controls, is
controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
"Agreement" has the meaning assigned in the preamble hereof.
"Allocation" has the meaning assigned in Section 5.3(b).
"Assumed Liabilities" has the meaning assigned in Section 2.4(a).
"Assumption Agreement" has the meaning assigned in Section 6.2(c).
"Benefit Plan" means each "employee benefit plan," as defined in
Section 3(3) of ERISA (including any "multiemployer plan" as defined in Section
3(37) of ERISA) and each profit-sharing, bonus, stock option, stock purchase,
stock ownership, pension, retirement, severance, deferred compensation, excess
benefit, defined benefit, supplemental unemployment, post-retirement medical or
life insurance, welfare or incentive plan, or sick leave, long-term disability,
medical, hospitalization, life insurance, other insurance plan, or other
employee benefit plan, program or arrangement, whether written or unwritten,
qualified or non-qualified, funded or unfunded, maintained or contributed to by
Seller in which any Business Employee participates.
"Bill of Sale" has the meaning assigned in Section 6.2(a).
"Business Day" means a day that is not a Saturday, a Sunday or a day
on which money center commercial banks in the City of New York, Borough of
Manhattan, are authorized or required by law, regulation or executive order to
remain closed.
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"Business Employees" means only (i) the employees of Seller set
forth on Schedule 1.1(a) and who continue to be employees of Seller immediately
prior to the Closing, (ii) employees hired by Seller between the date of this
Agreement and the Closing Date who continue to be employees of Seller
immediately prior to the Closing Date and to whom Seller acknowledges that Buyer
intends to make offers of employment and who, therefore, shall be designated by
Buyer as Business Employees, (iii) the DAS Principals and (iv) the DAS
Professionals.
"Business Records" means all books, records, ledgers, files,
Business Employee work product, and other similar information and documents of
Seller (in any electronic, magnetic, paper or other form or medium) and all Tax
Returns, in all cases, solely related to the Engagement Agreements or the other
Purchased Assets or Assumed Liabilities (except litigation files related to
Excluded Assets).
"Buyer" has the meaning assigned in the preamble.
"Buyer Indemnified Party" has the meaning assigned in Section
8.2(a).
"Buyer Required Consents" has the meaning assigned in Section
4.3(b).
"Closing" has the meaning assigned in Section 6.1.
"Closing Date" has the meaning assigned in Section 6.1.
"COBRA Coverage" means health continuation coverage as required by
Section 4980 of the Code of Part 6 of Title I of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agreements" has the meaning assigned in Recital E.
"Competing Business" has the meaning assigned in Section 5.8(b).
"Computer Amount" has the meaning assigned in Section 5.18.
"Confidentiality Agreement" has the meaning assigned in Section
5.10(a).
"Confidential Information" has the meaning assigned in Section
5.10(b).
"Contracts" means all contracts, engagement and retention letters,
commitments, undertakings, arrangements, understandings and agreements of every
nature, including all engagement agreements, court-approved retentions, leases
and subleases, licenses and sublicenses, supply contracts, purchase orders and
sales orders or portions thereof, to which Seller is a party currently in effect
or entered into by Seller between the date hereof and the Closing Date and
outstanding as of such date, other than Employment Agreements and Benefit Plans
(it being understood that "Contracts" does not include any notes, mortgages,
indentures, letters of credit, guarantees and other obligations and agreements
for or relating to any lending or borrowing, any leases of real property, any
insurance policies and any agreements creating any
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guarantees or keep-well agreements or other agreements to be liable for the
obligations of another Person by Seller or any software, application or
technology license agreement).
"DAS" has the meaning assigned in Recital A.
"DAS Principals" means the individuals identified on Schedule
1.1(b)(i).
"DAS Professionals" means the individuals identified on Schedule
1.1(b)(ii).
"DAS Services" has the meaning assigned in Section 5.8(b).
"Employment Agreement" means a contract, offer letter or agreement
of Seller with or addressed to any Business Employee pursuant to which Seller
has any actual or contingent liability or obligation to provide compensation or
benefits in consideration for past, present or future services, or pursuant to
which any Business Employee undertakes confidentiality or non-competition
obligations.
"Encumbrance" means any mortgage, pledge, easement, hypothecation,
adverse claim, assignment, charge, imperfection, encumbrance, lien (statutory or
other), charge or other security interest or matter affecting title.
"Engagement Agreement" means a Contract which remains executory and
not fully performed on the Closing Date to which Seller is a party and which
relates to the engagements of the DAS Principals or DAS Professionals who become
Transferred Employees.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" has the meaning assigned in Section 2.2.
"Excluded Liabilities" has the meaning assigned in Section 2.4(b).
"FMLA" has the meaning assigned in Section 3.7(a).
"GAAP" means generally accepted accounting principles, as currently
in effect in the United States applied on a basis consistent with the
application of such principles in the preparation of the Financial Statements.
"Governmental Body" means any nation or government, any state or
other political subdivision thereof, any legislative, executive or judicial unit
or instrumentality of any governmental entity (foreign, federal, state or local)
or any department, commission, board, agency, bureau, official or other
regulatory, administrative or judicial authority thereof or any entity
(including a court or self-regulatory organization) exercising executive,
legislative, judicial, Tax, regulatory or administrative functions of or
pertaining to any public authority or government.
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"Grant Thornton" means Grant Thornton LLP.
"HCA Engagement Agreements" shall mean the following executory
Engagement Agreements currently in full force and effect: (1) that certain
agreement dated May 22, 2002, between Seller, as Independent Review
Organization, and HCA Inc. ("HCA"), (2) that certain agreement dated May 22,
2002 between Seller and Latham & Watkins regarding HCA litigation support, (3)
that certain agreement dated March 3, 2003 between Seller, Ober, Kaler, Grimes &
Shriver and Cedars Hospital and (4) that certain agreement dated March 15, 2003
between Kennedy, Covington, Lobdell & Hickman, L.L.P., Seller and Brunswick
Community Hospital.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IIAS" has the meaning assigned in Recital A.
"Income Taxes" has the meaning assigned in Section 5.3(e).
"Indemnified Party" means a Buyer Indemnified Party or a Seller
Indemnified Party.
"Indemnifying Party" has the meaning assigned in Section 8.3(a).
"IRS" means the U.S. Internal Revenue Service.
"Knowledge" means, in connection with any representation and
warranty contained in this Agreement that is expressly qualified by reference to
the Knowledge of Seller or Buyer, with respect to Knowledge of Seller, the
actual knowledge, after reasonable investigation, of any of the DAS Principals
(but only with respect to matters, facts or circumstances related to the
Purchased Assets, Assumed Liabilities or DAS Principals), Jack Taylor, Mark
Zuffante, Charles C. Wyand, Jim Buckley, or (Timothy Flynn, or, with respect to
Knowledge of Buyer, the actual knowledge, after reasonable investigation, of
Dominic DiNapoli, Jack B. Dunn, IV, Stewart J. Kahn, Theodore I. Pincus, Dianne
R. Sagner or Philip R. Jacoby, Jr.
"KPMG Name" has the meaning assigned in Section 2.2(a).
"Law" or "Laws" shall mean any law, statute, ordinance, rule,
regulation, writ, pronouncement, enactment, code, order, judgment, ruling,
decree, determination, Tax ruling, injunction or decree of any Governmental
Body.
"Losses" has the meaning assigned in Section 8.2(a).
"Material Adverse Effect" means a material adverse effect on the
business, operations, assets, condition (financial or other) or results of
operations of the Purchased Assets, the Assumed Liabilities or the Buyer or
Parent as the context requires, taken as a whole; provided, that none of the
following shall be deemed, either alone or in combination, to constitute a
Material Adverse Effect: (i) conditions generally affecting any of the
industries or markets in which the Seller or the Buyer or Parent, as the
context requires, operates, (ii) any disruption arising out of or relating to
actions contemplated by the parties in connection with, or
5
which is attributable to, the transactions contemplated hereby, (iii) subject to
the condition set forth in Section 7.2(f), the failure of which to occur shall
automatically be deemed to constitute a Material Adverse Effect, the failure of
any partner, principal or other employee of Seller to accept Buyer's offer of
employment, (iv) irrespective of any consent or approval required as a condition
to Closing (including any consent or approval required as a condition to Closing
pursuant to Section 7.2(e)(i), the failure to obtain which consent or approval
shall automatically be deemed to constitute a Material Adverse Effect) or of
Seller's obligations pursuant to Section 2.6, the failure to obtain any third
party consent or approval necessary or desirable in connection with the transfer
and assignment to Buyer of any Engagement Agreement or (v) loss or potential
loss of customers of Seller's DAS business, which are not registrants under the
Exchange Act, for which Seller provides audit services.
"Material Contracts" has the meaning assigned in Section 3.8.
"Non-Compete Period" has the meaning assigned in Section 5.8(b).
"Ongoing Engagements" has the meaning assigned in Section 3.12.
"Outside Date" has the meaning assigned in Section 9.1(e).
"Parent" has the meaning assigned in the preamble.
"Permits" means all permits, licenses, certificates, approvals,
qualifications, registrations, and similar authorizations issued to Seller by a
Governmental Body related solely to the Purchased Assets, the Assumed
Liabilities or the Transferred Employees, including any amendment, modification,
limitation, condition or renewal thereof.
"Permitted Encumbrances" means (i) Encumbrances for Taxes not yet
due and payable or that are being contested in good faith by appropriate
proceedings, (ii) any mechanics', carriers', workmen's, repairmen's or other
similar liens arising or incurred in the ordinary course of business, (iii) any
liens arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business, (iv) mortgages, liens, security interests and Encumbrances which
secure debt that is reflected as a liability on the Financial Statements and the
existence of which is indicated in the notes thereto, and (v) Encumbrances or
other imperfections of title which do not, individually or in the aggregate,
significantly interfere with Buyer's ability to use any Purchased Asset in the
ordinary course of business.
"Person" means any individual, corporation, partnership, limited
liability company, limited liability firm, association, joint venture, joint
stock company, trust, unincorporated organization or other entity, or any
Governmental Body.
"Personal Property" means all machinery, equipment, furniture,
furnishings and other tangible personal property owned or leased by Seller.
"Prepaid Expenses" means all credits, prepaid expenses, deferred
charges, advance payments, security deposits and other prepaid items of Seller.
6
"Principal Employment Agreements" has the meaning assigned in
Section 7.2(f).
"Purchase Price" has the meaning assigned in Section 2.3(a).
"Purchased Assets" has the meaning assigned in Section 2.1.
"Purchased Contracts" has the meaning assigned in Section 2.1(c)
"Referenced Litigation" means any Action brought or threatened to be
commenced against or otherwise involving Buyer or its Affiliates with respect
to: (i) the hiring or retention by Seller or its Affiliates of any former
partners (or their estates, representatives' trustees, or assignees) of Andersen
Worldwide, S.C., Arthur Andersen, LLP or their Affiliates and alleging
insufficient, or otherwise challenging the amount, timing or method of, payment
of consideration to Arthur Andersen, LLP or its Affiliates in connection with
the solicitation, hiring or treatment of any partners or employees thereof; or
(ii) travel-related billing practices of Seller or its Affiliates.
"Retainer Amount" has the meaning assigned in Section 5.18.
"SEC" means the Securities and Exchange Commission.
"Securities Act" has the meaning assigned in Section 10.2.
"Seller" has the meaning assigned in the preamble hereof.
"Seller Indemnified Party" has the meaning assigned in Section
8.2(a).
"Seller Required Consents" has the meaning assigned in Section
3.3(b).
"September 30, 2003 Financial Statements" has the meaning assigned
in Section 3.9(a).
"Tax Returns" means all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to or filed with a Tax authority of a Governmental Body
relating to Taxes.
"Taxes" mean all taxes of any kind, charges, fees, customs, levies,
duties, imposts, required deposits or other assessments, including all net
income, capital gains, gross income, gross receipt, property, franchise, sales,
use, excise, withholding, payroll, employment,, social security, worker's
compensation, unemployment, occupation, capital stock, ad valorem, value-added,
transfer, gains, profits, license, net worth, asset, transaction, and other
taxes, imposed upon any Person by any Law or Governmental Body, together with
any interest and any penalties, or additions to tax, with respect to such taxes.
"Third Party Claim" has the meaning assigned in Section 8.3(a).
"Transfer Date" has the meaning assigned in Section 5.4(b).
"Transferred Employees" has the meaning assigned in Section 5.4(a).
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"Transition Services Agreement" has the meaning assigned in Section
6.2(d).
"Unapplied Retainers" has the meaning assigned in Section 2.1(a).
"WARN Act" has the meaning assigned in Section 5.4(e).
1.2 Other Definitional and Interpretive Matters
Unless otherwise expressly provided, for purposes of this Agreement
and the Collateral Agreements, the following rules of interpretation shall
apply:
(a) Calculation of Time Period. When calculating the period of
time before which, within which or following which any act is to be done or step
taken, the date that is the reference date in calculating such period shall be
excluded. If the last day of such period is a non-Business Day, the period in
question shall end on the next succeeding Business Day.
(b) Gender and Number. Any reference to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.
(c) Headings. The provision of a Table of Contents, the division
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement and the Collateral Agreements. All
references in this Agreement to any "Section" are to the corresponding Section
of the agreement in which such reference occurs unless otherwise specified.
(d) Herein. The words such as "herein," "hereinafter," "hereof,"
and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
(e) Sale. Except where otherwise expressly stated, the word "sale"
or any variation thereof means, with reference to a thing or item, the sale,
transfer, delivery, assignment and conveyance of all right, title and interest
in, to under and in respect of such thing or item.
(f) Including. The word "including" or any variation thereof means
"including without limitation" and shall not be construed to limit any general
statement or description that it follows to the specific or similar items or
matters immediately following it.
(g) Schedules and Exhibits. The Schedules and Exhibits attached to
each of this Agreement and the Collateral Agreements shall be construed with and
as an integral part of this Agreement and the Collateral Agreements to the same
extent as if the same had been set forth verbatim herein and therein. Disclosure
in any of the schedules provided pursuant to Article 3 or Article 4 shall be
deemed to be disclosure on every other schedule in which it may be relevant;
provided that if the disclosure of any item in a schedule other than in the
relevant schedule includes an express cross-reference to each other such
schedule to which the disclosure is intended to relate.
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2. Purchase and Sale of the Assets
2.1 Purchase and Sale of Assets
Upon the terms and subject to the conditions of this Agreement and
in reliance on the accuracy and completeness of the representations and
warranties contained herein and in the Collateral Agreements, at the Closing,
Seller shall grant, sell, transfer, assign, convey and deliver to Buyer, and
Buyer shall purchase, acquire and accept from Seller, all of the right, title
and interest of Seller in, to under and in respect of, the following assets, as
the same shall exist on the Closing Date (collectively, the "Purchased Assets"):
(a) The advance billings and the unapplied monetary portion
heretofore paid to Seller in respect of retainers relating to the Engagement
Agreements to be assigned and transferred to Buyer hereunder (the "Unapplied
Retainers");
(b) the Personal Property listed on Schedule 2.1(b);
(c) all rights and entitlements of Seller under the Contracts
listed on Schedule 2.l(c), including the Engagement Agreements (the "Purchased
Contracts");
(d) all Business Records;
(e) all of Seller's rights, title and interests under or pursuant
to all warranties, refunds, rebates, indemnities, representations and guarantees
of or made by vendors or suppliers in connection with the Purchased Assets or
the Assumed Liabilities;
(f) all Permits;
(g) the going-concern value and other intangible assets of Seller
related to the Purchased Assets, other than trademarks and trade names,
including customer lists and related current and historical information; and
(h) all laptop, personal digital assistant, or PDA, and other
portable computers of Seller used primarily by the Transferred Employees.
2.2 Assets Not Purchased
Anything in this Agreement notwithstanding, Seller shall not grant,
bargain, sell, transfer, assign, convey or deliver, and Buyer shall not acquire,
accept assignment or transfer of or receive any interest in, any of the assets
of Seller or its Affiliates other than the Purchased Assets (the "Excluded
Assets"). The Excluded Assets include the following:
(a) (i) the name KPMG, any name used by any firm in the KPMG
global network or its predecessor(s), and any derivative of the foregoing
including "Peat Marwick", (ii) any logo, device, trade mark, trade dress, trade
name, service mark or any other words, symbol or style (whether registered or
not) from time to time used in association with or relating to the name "KPMG"
or any such predecessor name or derivative thereof including "Peat Marwick"
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and (iii) any goodwill symbolized by or associated with any of the foregoing
((i), (ii) and (iii) above, collectively, the "KPMG Name");
(b) any accounts receivable or work-in-process of Seller,
including any intercompany receivables and intercompany work in process;
(c) any Prepaid Expenses;
(d) any real property, or any leases, subleases and licenses in
respect of real property to which Seller or any of its Affiliates is a party;
(e) any Benefit Plans or interests in Benefit Plans;
(f) cash and cash equivalents;
(g) Tax refunds and Tax claims;
(h) any insurance policies and agreements;
(i) all rights accruing to Seller pursuant to this Agreement;
(j) all assets of Seller, the use of which or the access to which
may be provided to Buyer pursuant to the Transition Services Agreement,
including any information technology infrastructure or equipment, facilities,
furniture, fixtures and software licenses for software used on any computers
used by the Business Employees;
(k) all books and records of Seller not constituting Purchased
Assets or Business Records; and
(l) all Personal Property other than as provided in Section 2.1.
2.3 Purchase Price
(a) Buyer shall pay to Seller, in cash, at the Closing, in
consideration of the sale of the Purchased Assets and in addition to assuming
the Assumed Liabilities, the sum of Eighty Nine Million One Hundred Twenty Five
Thousand Dollars and No Cents ($89,125,000.00) (the "Purchase Price").
(b) All payments pursuant to this Section 2.3 shall be made by
wire transfer in immediately available funds to an account designated by Seller
in written instructions to be delivered to Buyer at least two (2) Business Days
prior to the payment date.
2.4 Assumed Liabilities
(a) In connection with the purchase and sale of the Purchased
Assets pursuant to this Agreement, at the Closing, Buyer shall assume and agree
to honor, pay and discharge when due the following liabilities and obligations
of Seller (the "Assumed Liabilities"):
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(i) the liabilities and obligations of Seller under the
Engagement Agreements or other Purchased Contracts assigned and
transferred to Buyer hereunder, to the extent the performance thereof by
Buyer is due from and after the Closing Date, including the obligation to
perform services with respect to the unapplied monetary portion heretofore
paid to Seller of all retainers in respect of such Engagement Agreements;
(ii) the liabilities and obligations of Seller under the
Permits included in the Purchased Assets to be performed on or after, and
in respect of periods following, the Closing Date; and
(iii) all other liabilities and obligations in respect of the
Purchased Assets to the extent arising out of or related to facts or
circumstances occurring after the Closing.
(b) Notwithstanding anything to the contrary in this Agreement,
the Assumed Liabilities shall not include any liabilities (collectively, the
"Excluded Liabilities") not expressly assumed pursuant to Section 2.4(a),
including:
(i) with respect to accounts payable, trade payables, notes
payable or any other payables or similar obligations of Seller existing on or
for periods prior to the Closing Date;
(ii) with respect to any indebtedness for borrowed money or
otherwise of Seller;
(iii) with respect to any liability of Seller for the payment
of Taxes with respect to periods ending on or prior to the Closing Date;
(iv) arising out of any Employment Agreement, or any contract,
plan commitment, arrangement, understanding or agreement, other than obligations
arising under the Purchased Contracts;
(v) arising from the breach or violation of any Contract or
Permit or other obligation or legal duty (including any tort committed or
alleged to have been committed by Seller) or any violation of any Law occurring
or in existence on or prior to the Closing Date, or arising from any breach or
violation of any Contract which results from the transactions contemplated by
this Agreement;
(vi) any statutory obligations with respect to the
continuation of benefits for Persons who cease to be Business Employees (other
than Transferred Employees who subsequently cease to be employees of Buyer) and
any obligations or liabilities of any kind under or in respect of the Benefit
Plans;
(vii) any liabilities under the Employment Agreements, arising
out of Seller's employee manuals or policies, or any severance or termination
costs incurred by Seller in connection with any of its partners or employees
under Benefit Plans, contracts, policies, unemployment or other applicable laws
or otherwise;
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(viii) arising from any environmental risk, contamination,
condition, discharge or disposal occurring or in existence on or prior to the
Closing Date, whenever and by whomever generated, whether or not in compliance
with applicable laws;
(ix) any liability of Seller which any Person seeks to impose
upon Buyer by virtue of any theory of successor liability (including liabilities
relating to the Referenced Litigation), environmental matters, employee benefit
plans, Taxes and labor and employment matters, or any indemnification
obligations either arising prior to the Closing Date or relating to periods
ending on or prior to the Closing Date;
(x) pertaining to the products and/or services of Seller sold
or performed in full on or prior to the Closing Date in the nature of express or
implied warranty, negligence, product liability, strict liability, personal
injury, property damage, economic loss or replacement cost or third party
liability, whether such obligations, liabilities or claims are in existence now
or on the Closing Date or arise hereafter or thereafter, and whether or not any
such obligations, liabilities or claims are presently known, foreseeable or
discoverable by Seller or Buyer;
(xi) with respect to any legal, accounting, professional,
advisory, broker's, finders', referral, appraisal or other fees, costs or
expenses of Seller in connection with the transactions contemplated by this
Agreement, or any other Taxes, expenses or liabilities which under the express
terms of this Agreement are not to be borne by Buyer;
(xii) with respect to any Actions or other contingent
liabilities of Seller, whether or not disclosed to Buyer, relating exclusively
to periods and occurrences ended on or before the Closing Date;
(xiii) relating in any way to Seller's ownership, use, control
or possession of any real property or personal property (except as expressly
provided in the Transition Services Agreement);
(xiv) with respect to hazards to health or safety arising
exclusively from the operation of the Purchased Assets on or prior to the
Closing Date, including hazards of occupational injury or disease;
(xv) for the payment for any outstanding drafts or checks
issued by Seller which are outstanding as of the Closing Date; or
(xvi) relating in any way to Seller's characterization for Tax
purposes of its use of the Purchase Price for the return of capital
contributions of any withdrawing DAS Principals or DAS Professionals.
2.5 No Offset
Buyer's obligations under Section 2.4 shall not be subject to offset
or reduction for any reason, including by reason of any actual or alleged breach
of any representation, warranty or covenant contained in this Agreement or any
of the Collateral Agreements or any right or alleged right to indemnification
hereunder.
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2.6 Further Assurances; Further Conveyances and Assumptions;
Third Party Consents
(a) Subject to the specific terms and conditions hereof, Seller
and Buyer each agrees to use its reasonable commercial efforts to take all
actions and to do all things necessary, proper or advisable to consummate, as
promptly as practicable, the transactions contemplated by this Agreement and the
Collateral Agreements and to satisfy all conditions precedent to Closing set
forth in Article 7. Seller will, from time to time, subsequent to the Closing
Date, at Buyer's request and assistance as necessary, execute and deliver such
other instruments of conveyance, assignment and transfer, execute and deliver
all such other documents and take all such other actions as Buyer may reasonably
request to more effectively convey, assign, transfer to and vest in Buyer all
right, title and interest in, to and under the Purchased Assets, including
taking actions, filing motions and notices with a Governmental Body to
effectuate the transfer or assignment of a Purchased Contract or the termination
of a Purchased Contract for the purpose of enabling the hiring and retention of
Buyer to perform the obligations and enjoy the benefits of the Purchased
Contracts. Buyer and Seller will work together in good faith from the date of
this Agreement to and following the Closing Date to (i) transfer to Buyer all
electronic data and records and accounting and personnel information related to
the Engagement Agreements and the Transferred Employees and similar information
that is included within the Purchased Assets and (ii) migrate all electronic
Business Records into a format compatible with software or technology owned or
licensed by Buyer. Buyer will, from time to time, subsequent to the Closing
Date, at Seller's request, execute and deliver such other instruments of
conveyance, assignment and transfer and take such other actions as Seller may
reasonably request in order to more effectively accomplish the assumption of,
and discharge Seller from responsibility for, the Assumed Liabilities.
(b) Nothing in this Agreement or the Collateral Agreements shall
be construed as an attempt or agreement to assign any Purchased Asset, including
any Purchased Contract, license, Permit, certificate, approval, authorization or
other right, which by its terms or by Law is not capable of being sold,
assigned, transferred, delivered, subleased or sublicensed without the consent,
action, approval or waiver of a third party or a Governmental Body or which is
cancelable by such Person in the event of any such sale, assignment, transfer,
delivery, sublease or sublicense or the sale, assignment, transfer, delivery,
sublease or sublicense of which would affect adversely the rights of any party
hereto, unless and until such consent or waiver shall be given. Seller shall use
its reasonable commercial efforts (including obtaining written consents in the
form of Exhibit A), and Buyer shall reasonably cooperate with Seller, to obtain
such consents, actions, approvals, authorizations, orders or waivers and to
resolve the impediments to the sale, assignment, transfer, delivery, sublease or
sublicense required by this Agreement or the Collateral Agreements; provided
that Seller shall not be required to pay any consent fees or make any other
monetary or materially burdensome concessions to any Person in order to obtain
any consents, actions, approvals, authorizations, orders or waivers.
In the event any such consents, actions, approvals, authorizations,
orders to or for the assignment or transfer of any Purchased Contract are not
obtained on or prior to the Closing Date (and, if any such consent, approval,
authorization, order or waiver relates to an HCA Engagement Agreement and Buyer
elects to proceed with the Closing irrespective of the provisions of Section
7.2(e)), then, without regard to the provisions of Section 9.1(e), for a
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period of one year after the Closing Date, Seller shall continue to use its
reasonable commercial efforts to obtain all such consents, actions, approvals,
authorizations, orders and waivers and Seller shall use its reasonable
commercial efforts to obtain for Buyer any lawful and economically feasible
arrangement requested by Buyer to provide and vest Buyer with the full right,
title and interest of Seller in the benefits under any such Purchased Contract,
including Buyer's right to perform all services to be performed by Seller
thereunder, as Seller's duly authorized subcontractor or agent, and arranging
for (and securing all necessary consents, actions, approvals, authorizations,
orders or waivers for) the direct billing and collection by Buyer of all
invoices with respect to work performed in connection with such Purchased
Contracts; provided that Buyer shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent Buyer
would have been responsible therefor hereunder if such consent, action,
approval, authorization, order or waiver had been obtained; and provided,
further that neither Seller nor Buyer shall be required to pay any consent fees
or make any other monetary or materially burdensome concessions to any Person in
order to obtain any such consents, actions, approvals, authorizations, orders or
waivers.
During such time as the parties are using commercially reasonable
efforts to obtain consents, approvals, authorizations or orders to or for the
assignment or transfer of any Purchased Contracts hereunder following the
Closing (including, any Purchased Contract that required approval, authorization
or an order of a Governmental Body for Seller to perform services or receive
compensation under the Purchased Contract), if and to the extent that Buyer is
unable to provide services under any such Purchased Contract (including, by
virtue of the fact that a Governmental Body does not authorize Seller to cease
performing services under the Purchased Contract or otherwise), Seller may,
notwithstanding anything to the contrary herein, continue to perform such
services, if it so elects, and receive its customary fees and expenses
thereunder, or if Seller is unable to perform such services for any reason (and
Buyer is not able for any reason to perform the work being performed by the
Seller), Seller may terminate or withdraw from the Purchased Contract.
3. Representations and Warranties of Seller
Seller hereby represents, warrants and covenants to Buyer and Parent
as follows:
3.1 Organization and Qualification
Seller is a limited liability partnership duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and
Seller has all requisite power and authority to carry on its DAS business in all
material respects as currently conducted and to own, lease or license and
operate the Purchased Assets owned, leased or licensed by it. Seller is duly
qualified to do business and is in good standing as a foreign limited liability
partnership in each jurisdiction where the ownership or operation of the
Purchased Assets or the conduct of its DAS business requires such qualification,
except for failures to be so qualified or in good standing, as the case may be,
that would not individually or in the aggregate have a Material Adverse Effect
with respect to the Purchased Assets.
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3.2 Authorization; Binding Effect
(a) Seller has all requisite partnership power and authority to
execute and deliver this Agreement and each Collateral Agreement to which it
will be a party and to consummate the transactions contemplated hereby and
thereby, and has duly authorized the execution, delivery and performance of this
Agreement and each Collateral Agreement to which it will be a party by all
requisite partnership action.
(b) This Agreement and each Collateral Agreement to which it will
be a party has been or, on or prior to the Closing will be duly executed and
delivered by Seller, and, assuming due execution by Buyer, this Agreement is,
and each Collateral Agreement to which Seller will be a party, when duly
executed and delivered by Seller, will be, valid and legally binding obligations
of Seller, enforceable against Seller in accordance with their respective terms,
except as such agreements may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws and equitable
principles relating to or affecting or qualifying the rights of creditors
generally and general principles of equity.
3.3 Non-Contravention; Consents
(a) The execution and delivery of this Agreement and the
Collateral Agreements by Seller and, assuming that all Seller Required Consents
listed in Schedule 3.3(b) have been obtained or made, the consummation of the
transactions contemplated hereby and thereby, do not and will not: (i) conflict
with or result in a breach or violation of any provision of any organizational
document of Seller; (ii) violate or result in a breach of or constitute an
occurrence of a default under any provision of, result in the acceleration or
cancellation of any obligation under, or give rise to a right by any party to
terminate or amend its obligations under, any Material Contract, or result in
the creation of any Encumbrance upon any of the Purchased Assets; or (iii)
violate any material Law of any Governmental Body having jurisdiction over
Seller, the Purchased Assets or the Assumed Liabilities, except, in the case of
clauses (ii) and (iii), as would not individually or in the aggregate have a
Material Adverse Effect with respect to the Purchased Assets or the Assumed
Liabilities.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person (including any Governmental
Body) is required to be obtained by Seller in connection with the execution and
delivery of this Agreement and any Collateral Agreement to which Seller will be
a party or for the sale of the Purchased Assets and the consummation by Seller
of the transactions contemplated hereby or thereby, except for (i) any filings
required to be made under the HSR Act, (ii) consents or approvals of Third
Parties required to transfer or assign to Buyer the Purchased Assets (including
in the case of a Purchased Contract where Seller is retained by order of a
court, any approvals, authorizations or orders of such court necessary to allow
the Buyer to perform the services under and enjoy the benefits of the Purchased
Contract), or assign the benefits of or delegate performance with regard
thereto, in each case as set forth in Schedule 3.3(b) (the "Seller Required
Consents"), and (iii) consents, approvals, orders, authorizations,
registrations, declarations or filings, the failure of which to be obtained or
made would not individually or in the aggregate have a Material Adverse Effect
with respect to the Purchased Assets or result in the failure to be satisfied of
the condition set forth in Section 7.2(e)(i).
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3.4 Title to Purchased Assets; Sufficiency of Assets
Seller has, and at the Closing will have, good and valid title to,
or a valid and binding leasehold interest or license in, the Purchased Assets,
free and clear of any Encumbrance except for Permitted Encumbrances. Except as
provided in Schedule 3.4, the rights in the Purchased Assets to be conveyed
hereby and by the Collateral Agreements (but excluding any Purchased Assets not
conveyed in accordance with the terms hereof), together with the rights afforded
to Buyer under the Transition Services Agreement are, taken as a whole,
sufficient to operate the Purchased Assets immediately after the Closing in
substantially the same manner as they are presently being operated by Seller.
3.5 Permits
Except as set forth on Schedule 3.5, there are no material Permits,
and all Permits identified on Schedule 3.5 have been duly obtained by Seller and
are currently in effect. Seller is in compliance in all material respects with
all such Permits identified on Schedule 3.5 in connection with the operation and
ownership of the Purchased Assets and the management of the Assumed Liabilities,
and no proceeding is pending or, to Seller's Knowledge, threatened to revoke or
limit any such Permit.
3.6 Compliance With Laws; Litigation
(a) Except as set forth on Schedule 3.6(a) and except as would not
individually or in the aggregate have a Material Adverse Effect with respect to
the Purchased Assets and Assumed Liabilities, Seller is in compliance with all
Laws and Permits of or from Governmental Bodies applicable to the Engagement
Agreements, the Purchased Assets and the Assumed Liabilities.
(b) Except as set forth on Schedule 3.6(b), no judgment, order,
writ, injunction, arbitral decision or decree of any Governmental Body that is
related to the Purchased Assets or the Assumed Liabilities is in effect nor is
any Action with respect to any of the Purchased Contracts, Permits, or any other
Purchased Assets, pending or, to Seller's Knowledge, threatened, in each case as
would individually or in the aggregate have a Material Adverse Effect with
respect to the Purchased Assets or the Assumed Liabilities.
3.7 Business Employees; Employee Benefits
(a) Schedule 3.7(a) contains a complete and accurate list, as of
the date of this Agreement, of the following data with respect to each Business
Employee (i) the position held, description of duties and aggregate annual base
salary and incentive compensation and perquisites for Seller's last fiscal year,
such Business Employee's eligible accrued and unused vacation and sick days as
of September 30, 2003 and date of hire, (ii) whether such Business Employee is
actively at work as of such date, and (iii) if such Business Employee is not
actively at work as of such date, the nature of his or her absence (e.g.,
vacation, illness, short-term disability or leave of absence under the Family
and Medical Leave Act (the "FMLA")) and his or her expected or required date of
return to active service.
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(b) Schedule 3.7(b) contains a complete and accurate list of all
Benefit Plans. With respect to each of the Benefit Plans identified on Schedule
3.7(b), Seller has made available to Buyer true and complete copies of all plan
documents and benefit schedules, or if none exist, a complete and accurate
summary of the material terms thereof.
(c) No Business Employee is a member of any collective bargaining
unit, and there is not presently pending or existing, and to Seller's Knowledge
there is not threatened by any Business Employee, (i) any strike, or material
slowdown, picketing, work stoppage or other material labor dispute, or (ii) any
application for certification of a collective bargaining agent. Seller is in
compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and occupational
safety and health with respect to the Business Employees, except for such
failures as would not individually or in the aggregate have a Material Adverse
Effect with respect to the Purchased Assets or the Assumed Liabilities.
(d) None of the DAS Principals or DAS Professionals (other than as
set forth on Schedule 3.7(d)) has given written notice to Seller of their
intention to resign or withdraw from Seller during the next 12 months.
(e) To Seller's Knowledge, each of the DAS Principals and DAS
Professionals who practice accounting or hold themselves out to be professional
accountants are duly licensed and in good standing as certified public
accountants with relevant Governmental Bodies. To Seller's Knowledge, no
Transferred Employee has been subject to a complaint or found to have violated
any applicable Law concerning workplace behavior.
3.8 Contracts
(a) Schedule 3.8(a) contains a complete and accurate list of
certain enumerated Engagement Agreements, as well as all Purchased Contracts (a)
with accrued revenues for the twelve-month period ended September 30, 2003 of
$250,000 or more, (b) described in subsection (a) that are terminable or
cancelable upon transfer or assignment other than retentions approved by a
Governmental Body, or (c) that would restrict Buyer, following the Closing from
competing with any other Person, to sell to or purchase from any Person or to
hire any Person (the "Material Contracts"). Each Material Contract is valid and
binding on Seller and, to Seller's Knowledge, on the other parties thereto in
accordance with its terms, is in full force and effect and has not been altered,
amended or modified between or among the parties thereto. As of the date hereof,
Seller has not received any written notice and has no Knowledge that it is in
default or breach of and is otherwise delinquent in performance in any material
respects under any Material Contract, and, to Seller's Knowledge, each of the
other parties thereto has performed in all material respects all obligations
required to be performed by it and is not in default in any material respect
thereunder. True and correct copies of all Material Contracts and any amendments
thereto have been delivered or made available to Buyer.
(b) Except as listed on Schedule 3.8(b), as of September 30, 2003,
Seller has no obligation to perform services with respect to Engagement
Agreements to be assigned or transferred to Buyer hereunder in respect of which
there remains an unapplied retainer amount.
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3.9 Financial Statements; Absence of Changes
(a) Schedule 3.9(a) contains a true and correct schedule of
revenue and direct costs related to the engagements of the DAS Principals and
the DAS Professionals, taken as a whole, for the 12 month period ended September
30, 2003 (the "September 30, 2003 Financial Statements"). The Business Records
are complete and accurate in all material respects.
(b) Except as set forth on Schedule 3.9(a) or such other
exceptions as would not individually or in the aggregate have a Material Adverse
Effect with respect to the Purchased Assets or the Assumed Liabilities, the
September 30, 2003 Financial Statements present fairly the line items set forth
on such schedule for the 12-month period then ended.
(c) Since September 30, 2003, Seller has operated the Purchased
Assets and managed the Assumed Liabilities in the ordinary course consistent
with past practice, and except as set forth in Schedule 3.9(c) or as would not
individually or in the aggregate have a Material Adverse Effect with respect to
the Purchased Assets or the Assumed Liabilities:
(i) there has been no material destruction, damage or other
loss to any material Purchased Assets;
(ii) there has been no sale, lease, or other disposition of
any material Purchased Assets;
(iii) there has been no purchase, lease or other acquisition
of any material properties or assets related to Seller's DAS business or
other capital expenditures related to Seller's DAS business or with
respect to the Purchased Assets or the Assumed Liabilities other than in
the ordinary course of business;
(iv) Seller has not entered into any Material Contract other
than in the ordinary course of business;
(v) no party (including Seller) has accelerated, terminated,
made material modifications to, or cancelled any Material Contract;
(vi) Seller has not imposed any Encumbrance (other than
Permitted Encumbrances) upon any Purchased Asset;
(vii) Seller has not made any loan, to, or entered into any
other transaction with, any of the Business Employees other than in the
ordinary course of business;
(viii) Except as set forth on Schedule 3.9(c)(viii), Seller
has not granted any increase in the base compensation of any of the
Business Employees other than in the ordinary course of business;
(ix) Except as set forth on Schedule 3.9(c)(ix), Seller has
not made any other material change to the employment terms for any of the
Business Employees; and
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(x) Seller has not legally committed to any of the foregoing
in the future.
3.10 Data Integrity
Seller has not knowingly altered the data included within the
Purchased Assets in any way which would reasonably be expected to damage the
integrity of any other data stored in electronic, optical or magnetic or other
form and, to the Knowledge of Seller, there are no "worms," "viruses," malicious
code or other disabling devices or mechanisms embedded, contained in, or
otherwise affecting such data. The parties acknowledge that the actions of any
party pursuant to Section 2.6(a) shall not constitute a breach of the
representations and warranties set forth in this Section 3.10.
3.11 Taxes
No liens for material Taxes have been filed and no material claims
for Taxes have been asserted in writing, with respect to the Purchased Assets or
the Assumed Liabilities. Seller has paid all material Taxes required to be paid
by it with respect to the Purchased Assets and the Assumed Liabilities that
could give rise to liens against the Purchased Assets.
3.12 Clients
Schedule 3.12 sets forth the names and addresses (subject to
applicable confidentiality restrictions) of the 15 largest clients of the DAS
Principals and the DAS Professionals, on a combined basis, by accrued revenues
for the twelve-month period ended September 30, 2003 (the "Material Clients")
and the amount of accrued revenues for each such Material Client in such
twelve-month period. Other than as related to independence issues where DAS
clients are also clients of the audit business of Seller, Seller has not
received any written notice that any Material Client (i) has ceased, or will
cease, to use Seller's DAS services or (ii) has substantially reduced or will
substantially reduce the use of Seller's DAS services (in either case, other
than as a result of the lapse of the term of the respective engagement letter in
accordance with its terms). Seller has not received written notice from any
client of its intention to take any action described in the preceding sentence
as a result of the consummation of the transactions contemplated by this
Agreement or the Collateral Agreements.
3.13 Insurance
All insurance policies that cover Seller's DAS business are in full
force and effect, all premiums with respect thereto have been paid to the extent
due, no notice of cancellation or termination has been received with respect to
any such policy and no claim or claims related to Seller's DAS business are
currently pending under any such policies involving an aggregate amount in
excess of $250,000.
3.14 Government Contracts
Except as set forth on Schedule 3.14, Seller is not a party as of
the date hereof to any Purchased Contract with a Governmental Body in the United
States under which the Seller is now providing or will provide services to such
Governmental Body. Seller has never been
19
suspended or debarred from bidding on contracts or subcontracts to provide DAS
services to any Governmental Body in the United States, nor, to the Seller's
Knowledge, has any suspension or debarment action been contemplated, threatened
or commenced, in each case relating to Seller's providing DAS services to any
Governmental Body in the United States.
3.15 Business Activity Restriction
Except as set forth on Schedule 3.15: (a) there is no
non-competition or other similar agreement or commitment to which Seller is a
party or subject to that would have a Material Adverse Effect with respect to
the Purchased Assets or the Assumed Liabilities; (b) Seller has not entered into
any agreement under which the Seller is restricted from providing DAS Services
to clients or potential clients, in the United States, during any period of
time; and (c) no Affiliate of Seller is a party to any agreement, which, by
virtue of such Person's relationship with Seller, restricts Seller from,
directly or indirectly, providing DAS Services in the United States.
3.16 Brokers
No broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller or any of its Affiliates.
3.17 No Other Representations
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT AND THE COLLATERAL AGREEMENTS, THE PURCHASED ASSETS ARE SOLD AND THE
ASSUMED LIABILITIES ARE TRANSFERRED HEREBY ON AN "AS IS, WHERE IS" BASIS, AND
SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL,
AND HEREBY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW DISCLAIMS ANY SUCH
REPRESENTATION OR WARRANTY (INCLUDING WITHOUT LIMITATION ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), WHETHER BY SELLER, ITS
AFFILIATES OR ANY OF ITS OR THEIR OFFICERS, DIRECTORS, PARTNERS, PRINCIPALS,
EMPLOYEES, AGENTS, MEMBERS OR REPRESENTATIVES OR ANY OTHER PERSON, WITH RESPECT
TO THE PURCHASED ASSETS, AND ASSUMED LIABILITIES OR THE EXECUTION AND DELIVERY
OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
4. Representations and Warranties of Buyer and Parent
Buyer and Parent hereby jointly and severally represent, warrant and
covenant to Seller as follows:
4.1 Organization and Qualification
Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Maryland, and Buyer
has all requisite power and authority
20
to carry on its business as currently conducted and to own or lease and operate
its properties. Buyer is duly qualified to do business and is in good standing
as a foreign limited liability company in each jurisdiction where the ownership
or operation of its properties or the conduct of its business requires such
qualification, except for failures to be so qualified or in good standing that
would not individually or in the aggregate have a Material Adverse Effect.
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland, and Parent has all requisite power and
authority to carry on its business as currently conducted and to own or lease
and operate its properties. Parent is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership
or operation of its properties or the conduct of its business requires such
qualification, except for failures to be so qualified or in good standing that
would not individually or in the aggregate have a Material Adverse Effect.
4.2 Authorization; Binding Effect
(a) Each of Buyer and Parent has all requisite power and authority
to execute and deliver this Agreement and each Collateral Agreement to which it
will be a party and to consummate the transactions contemplated hereby and
thereby, and has duly authorized the execution, delivery and performance of this
Agreement and each Collateral Agreement to which it will be a party by all
requisite action.
(b) This Agreement and each Collateral Agreement to which it will
be a party has been or, on or prior to the Closing will be, duly executed and
delivered by Buyer and, assuming due execution by Seller, this Agreement is, and
each Collateral Agreement to which Buyer will be a party, when duly executed and
delivered by Buyer, will be, valid and legally binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms, except as
such agreements may be subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws and equitable principles
relating to or affecting or qualifying the rights of creditors generally and
general principles of equity.. This Agreement has been duly executed and
delivered by Parent and, assuming due execution by Seller, this Agreement is a
valid and legally binding obligation of Parent, enforceable against Parent in
accordance with its terms, except as such agreement may be subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws and equitable principles relating to or affecting or
qualifying the rights of creditors generally and general principles of equity.
4.3 Non-Contravention; Consents
(a) The execution, delivery and performance of this Agreement by
Buyer and Parent and, assuming that all Buyer Required Consents listed in
Schedule 4.3(b) have been obtained or made, the consummation by Buyer of the
transactions contemplated hereby, and the execution, delivery and performance of
the Collateral Agreements by Buyer and the consummation by Buyer of the
transactions contemplated thereby, do not and will not: (i) conflict with or
result in a breach or violation of any provision of the Certificate of Formation
or Operating Agreement of Buyer or the Certificate of Incorporation or By-Laws
of Parent, as applicable; (ii) violate or result in a breach of or constitute an
occurrence of default under any provision of, result in the acceleration or
cancellation of any obligation under, or give rise to a
21
right by any party to terminate or amend its obligations under, any mortgage,
deed of trust, conveyance to secure debt, note, loan, indenture, lien, lease,
contract, agreement, instrument, order, judgment, decree or other arrangement or
commitment to which Buyer or Parent, as applicable, is a party or by which it or
its assets or properties are bound, or result in the creation of any Encumbrance
upon any of its assets or properties, which violation, breach, default or
Encumbrance would individually or in the aggregate be material, or (iii) violate
any material Law of any Governmental Body having jurisdiction over Buyer or
Parent or any of their respective properties, which violation would individually
or in the aggregate be material to Buyer or materially impair, delay or prevent
the consummation of the transactions contemplated hereby.
(b) Except as set forth on Schedule 4.3(b), no consent, approval,
order or authorization of, or registration, declaration or filing with, any
Person (including any Governmental Body) is required to be obtained by Buyer or
Parent in connection with the execution and delivery of this Agreement and the
Collateral Agreements to which Buyer will be a party or the consummation by
Buyer and Parent of the transactions contemplated hereby or thereby that has not
been obtained, other than any filings required to be made under the HSR Act
(such scheduled consents, approvals, orders, authorizations, registrations,
declarations and filings being referred to herein collectively as the "Buyer
Required Consents"), and other than such consents the failure to obtain which
would not materially impair, delay or prevent the consummation of the
transactions contemplated hereby.
4.4 Status of Buyer
Buyer is a wholly-owned subsidiary of Parent formed for the purpose
of acquiring, operating and holding the Purchased Assets and assuming the
Assumed Liabilities. Parent is Buyer's sole member and equity holder. Buyer is
not currently engaged in or operating any material business or business
activities and shall not, prior to the Closing Date, engage in or operate any
material business or business activities. Buyer has and, prior to the Closing
Date, shall have, no material obligations under any contracts, leases or other
agreements and no indebtedness for borrowed money, other than with respect to
the transactions contemplated herein.
4.5 Brokers
No broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based on arrangements made by or on behalf of Buyer, Parent or any of their
Affiliates.
4.6 Sufficiency of Funds
The funds available to Buyer, taken together with Buyer's available
borrowing capacity, cash on hand and the proceeds of any theretofore committed
financing will at Closing be sufficient to enable Buyer to pay in full the
Purchase Price and any expenses incurred by Buyer in connection with the
transactions contemplated by this Agreement.
22
5. Certain Covenants
5.1 Access to Information
(a) Seller will (i) provide Buyer and its officers, employees,
accountants, counsel and other representatives reasonable access, including for
inspection and copying, during normal business hours throughout the period prior
to the Closing, to its properties, personnel, contracts, commitments and reports
of examination reasonably requested by Buyer, (ii) furnish or shall cause to be
furnished any and all financial, technical and operating data and other
information pertaining to it as Buyer may reasonably request, and (iii) provide
or cause to be provided such copies or extracts of documents and records related
to its business as Buyer may reasonably request. Notwithstanding the foregoing,
Seller shall not be required by this Section 5.1(a) to disclose or provide
information that is not related to the Purchased Assets and Assumed Liabilities
and, to the extent any documents or information requested by Buyer pursuant to
this Section 5.1(a) contain any such unrelated information, Seller shall have
the right to redact such unrelated information (but only such unrelated
information) from the documents and other information provided to Buyer pursuant
to this Section 5.1(a).
(b) In order to facilitate the transfer and assignment to Buyer of
each of the Engagement Agreements, Seller will provide Buyer, Parent and their
respective officers and other representatives introductions to and contact
information for all appropriate representatives of Seller's clients under the
Engagement Agreements. Buyer, Parent and their respective officers and other
representatives will be permitted to meet with such client representatives
subsequent to the date hereof, under Seller's reasonable direction and subject
to Seller's reasonable supervision, in order to facilitate such transfer and
assignment to Buyer and to establish a business relationship between Parent,
Buyer and such clients following the Closing.
(c) For a period of five years after the Closing Date, upon
reasonable prior written notice, Buyer and Seller shall furnish or cause to be
furnished to each other and their employees, agents, auditors and
representatives access, during normal business hours, to such information, books
and records related to the Purchased Assets and Assumed Liabilities as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of Tax Returns, reports or forms for the defense of any
Tax claims, assessments, audits or disputes, or the prosecution or defense of
any Action, provided that with respect to any Tax Returns or other records
relating to Tax matters or any other Action, either party shall have reasonable
access to such information until the applicable statute of limitations shall
have expired. Except as otherwise agreed in writing, each party shall reimburse
the other for reasonable out-of-pocket costs and expenses incurred in assisting
the other pursuant to this Section 5.1(c). Each party shall have the right to
copy any of such records at its own expense. Neither party shall be required by
this Section 5.1(b) to (a) take any action that would unreasonably interfere
with the conduct of its business or unreasonably disrupt its normal operations
or (b) disclose or provide information that is not related to the Purchased
Assets and Assumed Liabilities and, to the extent any documents or information
requested by the other party pursuant to this Section 5.1(c) contain any such
unrelated information, it shall have the right to redact such unrelated
information (but only such unrelated information) from the documents and other
information provided to the other party pursuant to this Section 5.1(c).
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(d) Each of Buyer and Seller agrees to preserve all Business
Records in its possession for at least five (5) years after the Closing Date;
provided that each party will preserve all such records relating to Tax matters
until expiration of the applicable statute of limitations. After such five-year
period or expiration of the applicable statute of limitations and at least
thirty (30) days prior to the planned destruction of any Business Records or
Tax-related records, but in any event no longer than the later of seven (7)
years after the Closing Date or the expiration of the applicable statue of
limitations, the party planning to destroy such Business Records or Tax-related
records shall notify in writing and shall make available to the other, upon its
reasonable request, such Business Records or Tax-related records.
5.2 Conduct of Business
From and after the date of this Agreement and until the Closing
Date, except as set forth on Schedule 5.2 or as otherwise contemplated by this
Agreement or the Schedules and Exhibits hereto or as Buyer shall otherwise
consent to in writing, in each case to the extent related to the Purchased
Assets and Assumed Liabilities, Seller:
(a) will perform the Engagement Agreements and other Purchased
Contracts and operate the Purchased Assets and manage the Assumed Liabilities in
all material respects in the ordinary course consistent with past practice;
(b) will maintain its books and records and carry out its internal
time entry recordation and data processing, production of pre-bills, invoicing,
billing and collection activities, policies and procedures in the ordinary
course consistent with past practice;
(c) will not, other than in the ordinary course of business
consistent with past practice in arm's-length Third Party transactions or as may
be required by Law or a Governmental Body, permit any material Purchased Assets
to be sold, licensed, leased or subjected to any Encumbrance (other than a
Permitted Encumbrance);
(d) will not materially modify any Material Contract, and will
continue the performance in the ordinary course consistent with past practice of
its material obligations under any Material Contracts and other obligations to
be included as part of the Purchased Assets;
(e) will comply in all material respects with all Laws applicable
to the operation of the Purchased Assets and the management of the Assumed
Liabilities; and
(f) will keep its business and properties substantially intact,
including its present operations, working conditions and relationships with
clients, prospective clients and Business Employees.
5.3 Taxes
(a) Seller and Buyer acknowledge and agree that (i) Seller will be
responsible for and will perform all applicable Tax withholding, payment and
reporting duties with respect to any wages and other compensation and benefits
paid or provided by Seller to any Business Employee for a taxable period or
portion thereof ending on or prior to the Closing Date, and (ii) Buyer will be
responsible for and will perform all Tax withholding, payment and reporting
duties
24
with respect to any wages and other compensation and benefits paid or provided
by Buyer or any of its Affiliates to any Transferred Employee after the Closing
Date.
(b) Buyer and Seller shall use reasonable commercial efforts to
agree upon an allocation of the purchase price (including the amount of Assumed
Liabilities that are liabilities for federal income tax purposes) among the
Purchased Assets (the "Allocation"), consistent with Section 1060 of the Code
and the Treasury Regulations thereunder, within a reasonable amount of time
following the Closing Date. Buyer shall provide a proposed Allocation to Seller
within 120 days following the Closing Date. Seller shall propose any changes to
the Allocation within 30 days thereafter, together with a reasonably detailed
explanation of the reasons therefor. Buyer and Seller will negotiate in good
faith to resolve any disputed items, and if Buyer and Seller are unable to agree
on the Allocation within 30 days following delivery of Seller's proposed
changes, then the dispute will be arbitrated by an independent third party,
whose determination shall be conclusive and binding on the parties for all
purposes. The Allocation shall be adjusted to the extent necessary to reflect
any adjustments to the Purchase Price (including any adjustments pursuant to
Section 8.2 of this Agreement).
(c) Each of Seller and Buyer shall timely file IRS Form 8594 and
all other federal, state, local and foreign Tax Returns in accordance with the
Allocation, as adjusted pursuant to Section 5.3(b). Neither Seller nor Buyer nor
any of their respective Affiliates or representatives shall take any position on
any Tax Return that is inconsistent with the Allocation. Buyer and Seller each
agree to promptly provide the other party with any information necessary to
complete Form 8594.
(d Buyer and Seller shall cooperate fully with respect to all Tax
matters and shall keep each other promptly apprised of any Tax audit or other
controversy that may affect the other or could reasonably be expected to result
in an indemnification obligation hereunder.
(e) Buyer shall pay all sales, transfer, value added (to the
extent not creditable) or similar Taxes and all recording and filing fees and
other similar costs that may be imposed, assessed or payable by reason of the
sales, transfers, leases, rentals, licenses, assignments and assumption of
liabilities, if any, required for performance under this Agreement and the
Collateral Agreements. Buyer and Seller shall cooperate in timely making and
filing all filings, Tax Returns, reports and forms as may be required with
respect to any Taxes described in the preceding sentence. Buyer and Seller shall
use reasonable commercial efforts to avail themselves of any available
exemptions or other opportunities to reduce or eliminate any such Taxes or fees.
Notwithstanding any other provision hereof, Seller shall be responsible for
income and capital gains Taxes or franchise or other Taxes based on overall
gross or net income of Seller from the sale of the Purchased Assets ("Income
Taxes").
(f) Liability of Seller for real, personal and intangible property
Taxes for the taxable period including the Closing Date shall be equal to the
amount of such property Taxes for the entire taxable period multiplied by a
fraction, the numerator of which is the number of days in such taxable period
that precede the Closing Date and the denominator of which is the number of days
in the entire taxable period. Liability for the remainder of such Taxes shall be
borne by Buyer. The party paying such liability to the taxing authority shall
provide proof of such payment and a schedule setting out in reasonable detail
the amount of the other party's
25
liability. Such other party shall promptly pay the other the amount of such
liability following notice and demand therefor.
(g) Seller shall deliver to Buyer at Closing a certification of
non-foreign status as described in Section 1.1445-2(b)(2) of the Treasury
Regulations.
5.4 Business Employees
(a) Seller shall provide Buyer with an update to Schedule 3.7(a)
on the second Business Day next preceding the Closing Date. All offers of
employment made by Buyer to any Business Employee (other than DAS Principals and
DAS Professionals who are Business Employees) shall provide for compensation,
health, welfare and retirement benefits and severance benefits to the Business
Employee, that are, on an aggregate basis, substantially equivalent to those
enjoyed by similarly situated employees of Buyer and its Affiliates as of the
date of this Agreement. The terms of all offers of employment to DAS Principals
and DAS Professionals who are Business Employees shall be reflected in the
Principal Employment Agreements. All Business Employees who accept offers of
employment with Buyer are referred to herein as "Transferred Employees."
(b) Neither Buyer nor any of its Affiliates shall adopt, become a
sponsoring employer of, or have any obligations under or with respect to the
Benefit Plans, and Seller shall be responsible for any and all liabilities which
have arisen or may arise under or in connection with any Benefit Plan. Seller
shall be responsible for any and all liabilities relating to or arising out of
the employment of any Transferred Employee by Seller before the date he or she
actually becomes a Transferred Employee (the "Transfer Date").
(c) Seller agrees to release all Transferred Employees from any
covenants (pursuant to any Benefit Plan, Employment Agreement, or otherwise)
that would reasonably be expected to, at any time after the Closing Date, limit
the ability of such Transferred Employee to compete with Seller or to solicit
clients of Seller, or any other covenants (pursuant to any Benefit Plan or
otherwise) that would in any way restrict the business activities of a
Transferred Employee on behalf of the Buyer with respect to any business in
which Buyer is engaged as of the Closing Date.
(d) Nothing contained in this Agreement shall restrict the ability
of Buyer and its Affiliates to terminate the employment of any Transferred
Employee for any reason at any time after the effective date of his or her
employment with Buyer and its Affiliates. Moreover, provided Buyer otherwise is
in compliance with the terms hereof, nothing contained in this Agreement shall
require Buyer and its Affiliates to maintain any specific Benefit Plan or other
compensation or employee benefit plan, program, policy or practice following the
Closing Date.
(e) Seller shall be responsible for providing any notices required
by the Worker Adjustment and Retraining Notification Act ("WARN Act") or any
similar state, local or foreign law for any event that occurs before the Closing
Date with respect to a Business Employee (including a Transferred Employee), and
Buyer shall be responsible for providing any such notices for any event that
occurs on or after the Closing Date with respect to Business Employees. Seller
shall indemnify and hold harmless Buyer for any liability arising from
26
Seller's failure to comply with the preceding sentence, and Buyer shall
indemnify and hold harmless Seller for any liability arising from Buyer's
failure to comply with the preceding sentence.
5.5 Regulatory Compliance
(a) Prior to the date of this Agreement, Buyer and Seller prepared
and made their initial respective filings with the Federal Trade Commission and
the United States Department of Justice that are required to make the initial
filing under the HSR Act in respect of the transactions contemplated hereby, and
with any other Governmental Body the consent or approval of which is necessary
for the transactions contemplated hereby to be consummated. Seller and Buyer
will cooperate in responding promptly to any request for further information
from a Governmental Body, and will in good faith promptly furnish all materials
reasonably required in connection with such filings and any such requests.
Buyer, with Seller's reasonable cooperation, will in good faith use reasonable
commercial efforts to demonstrate that the transactions contemplated hereby
should not be opposed by the Federal Trade Commission, the United States
Department of Justice or such other Governmental Body, and shall use its
reasonable commercial efforts to eliminate as promptly as practicable any
objection that the Federal Trade Commission, United States Department of Justice
or any such other Governmental Body may have to the transactions contemplated
hereby. Seller and Buyer (a) will jointly approve the content and manner of
presentation of all information to be provided to such Governmental Bodies in
connection with such filings regarding markets and the relevant industry and (b)
will consult with each other from time to time regarding the status of such
filings and all strategies and action taken in connection therewith. Each party
shall bear its own expenses in connection with the filings and other actions
described in this Section 5.5(a).
(b) Seller will provide all reasonable cooperation to Buyer, and
will in good faith promptly furnish all materials reasonably required by Seller,
in connection with any disclosure or filing, and any amendments thereto or
modifications thereof, as Seller is required to make with the SEC pursuant to
the Exchange Act and the rules and regulations thereunder, or with the New York
Stock Exchange, pursuant to the rules and regulations thereof, in connection
with this Agreement and the transactions contemplated thereby. Buyer shall
provide Seller with copies of all such filings and disclosures prior to the
making thereof and, at Seller's request, shall consult with Seller regarding the
content and status of such filings and disclosure and all action taken in
connection therewith.
5.6 Permit Transfer
(a) Except for those Permits that are not transferable by Law or
are immaterial to the Engagement Agreements, Seller shall use its reasonable
efforts to transfer the Permits of Seller to Buyer upon the Closing Date in form
and substance the same as the Permits which were held by Seller. Seller shall
give and make all required notices and reports to the appropriate Governmental
Bodies in connection therewith.
(b) Seller shall assist and cooperate with Buyer for six months
following the Closing in obtaining the issuance in the name of Buyer of any
Permit that is not transferable, and Seller, at Buyer's expense, shall take all
actions reasonably requested by Buyer to facilitate that
27
issuance, including the preparation of any permit applications or necessary
documents, whether for signature by Seller or by Buyer.
5.7 Advice of Changes
(a) Seller will promptly advise Buyer in writing of (i) any event
known to Seller which has rendered or reasonably could be expected to render any
representation or warranty of Seller contained in this Agreement or any
Collateral Agreement, if made on or as of the date of such event or the date of
the Closing, untrue or inaccurate in any material respect, (ii) any change,
condition or event that has or could reasonably be expected to have a Material
Adverse Effect with respect to the Purchased Assets or the Assumed Liabilities
or (iii) any failure of Seller to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by Seller
hereunder.
(b) Buyer will promptly notify Seller in writing of (i) any event
known to Buyer which has rendered or reasonably could be expected to render any
representation or warranty of Buyer or Parent contained in this Agreement or any
Collateral Agreement, if made on or as of the date of such event or the date of
the Closing, untrue or inaccurate in any material respect, (ii) any change,
condition or event that has or could reasonably be expected to have a Material
Adverse Effect with respect to Buyer or the Parent or (iii) any failure of Buyer
or the Parent to comply with or satisfy in any material respects any covenant,
condition or agreement to be complied with or satisfied by Buyer hereunder.
(c) The parties acknowledge and agree that if the Buyer or the
Seller has received notice in accordance with Section 5.7(a) or (b) above or
otherwise has Knowledge of any of the foregoing or any other breach of any
representation, warranty or covenant contained in this Agreement or the
Collateral Agreements, and irrespective of the provisions of Section 7.2 and
7.3, as applicable, such party proceeds with the Closing, such party shall be
deemed to have waived such condition, event, breach or failure and such party
and its related Indemnified Parties shall not be entitled to be indemnified
pursuant to Section 8.2 hereof, to sue for damages or to assert any other right
or remedy relating to such condition, event, breach or failure, notwithstanding
anything to the contrary contained herein or in any certificate delivered
pursuant hereto.
(d) Seller, on the one hand, and Buyer, on the other hand, will
promptly give notice to the other upon becoming aware that any Action is pending
or threatened by or before any Governmental Authority, in each case with respect
to the transactions contemplated by this Agreement or any Collateral Agreement.
Seller, on the one hand, and Buyer, on the other hand, (i) will cooperate in
connection with the prosecution, investigation or defense of any such Action,
(ii) will supply promptly all information reasonably and legally requested by
the other, by any such Governmental Authority or by any party to any such Action
and (iii) will use reasonable commercial efforts to cause any such Action to be
determined as promptly as practicable and in a manner which does not impact
adversely on, and is consistent with, the transactions contemplated by this
Agreement and the Collateral Agreements.
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5.8 Non-Competition and Non-Solicitation by Seller
(a) Seller hereby acknowledge and agree that Seller's covenants
and agreements pursuant to this Section 5.8 are a material inducement to Buyer
and Parent to enter into this Agreement and perform the transactions
contemplated hereby and an essential part of the parties' bargain, in the
absence of which neither Buyer nor Parent would have elected to enter into this
Agreement, and that a breach by Seller of any of its agreements under this
Section 5.8 could adversely affect the value of the transaction. Seller hereby
further acknowledges and agrees that Seller's covenants and agreements pursuant
to this Section 5.8 are reasonable and necessary to ensure that Buyer receives
the expected benefits of the transaction and the Purchased Assets and that
violation of any of this Section 5.8 will cause Buyer irreparable harm for which
monetary damages alone would be an inadequate remedy. Accordingly, in the event
of any violation by the Seller of any provision is Section 5.8, Buyer shall be
entitled to seek an injunction or other equitable relief (in addition to any
other remedies it may have) enjoining Seller and, as applicable, its Affiliates,
officers, directors, partners or employees, from committing or continuing such
violation, and Seller shall not be required to post any bond or other security
in connection with any such Action.
(b) Seller agrees that, for a period of four (4) years following
the Closing Date (the "Non-Compete Period"), it will not, directly or
indirectly:
(i) engage in any business that offers or provides services
(the "DAS Services") described in Exhibit B hereto that the Seller has
engaged in during the 12-month period preceding the date hereof in the
United States (any such business, a "Competing Business"); provided, that
the term "DAS Services" does not include any services of the type
described in Exhibit C hereto and the term "Competing Business" does not
include any business that offers or provides the services of the type
described in Exhibit C;
(ii) have any ownership interest in any Person that engages in
a Competing Business; provided that Seller may own, directly or
indirectly, less than five percent (5%) of the total equity and voting
power of all classes of equity securities of any Person engaged in a
Competing Business that is subject to the periodic reporting requirements
of Section 12 or 15(d) of the Exchange Act at the time of such acquisition
of equity;
(iii) market any consulting services that it may offer using
the terms "DAS" or "DAS Services." For the avoidance of doubt, Buyer shall
be entitled to market any consulting services that it may offer in the
United States using the terms "DAS" or "DAS Services" from and after the
Closing Date; and
(iv) assist any other Person in taking any of the actions
specified in clauses (i), (ii) or (iii).
(c) Seller agrees that for a period of five years from the Closing
Date, it shall not hire as a partner, director, principal or employee or engage
as an agent or independent contractor (i) any DAS Principal or DAS Professional
that becomes a Transferred Employee or
29
(ii) any other officer, director, partner, manager, associate, member or other
employee of Buyer or Parent that is engaged in the performance of dispute
advisory, litigation support, forensic accounting or investigative services on
behalf of Buyer, Parent or their Affiliates; provided that nothing herein shall
prevent Seller from hiring an individual of the type described in clause (ii)
above if at any relevant measurement date during the aforementioned five-year
period, such individual ceased to be and was not an officer, director, partner,
manager, associate, member or employee of Buyer or Parent for the preceding,
consecutive six-month period.
(d) Following the Closing Date, Seller shall not directly or
indirectly use or refer to the credentials of, or citations with respect to, DAS
or Seller's DAS business, in the conduct or operation of its business, except
with the prior written consent of Buyer, which may be withheld in Buyer's sole
discretion.
(e) The parties agree that the covenants of Seller included in
this Section 5.8, taken as a whole, reasonable in their geographic scope and
their duration and no party shall raise any issue of the reasonableness of the
scope or duration of the covenants in any proceeding to enforce any such
covenants. If, in any judicial proceeding, a court shall refuse to enforce any
separate covenant, then the unenforceable covenant shall be modified in order to
make it acceptable to the court and enforced accordingly, or, if necessary,
deemed eliminated to the extent necessary to permit the remaining separate
covenants to be enforced.
5.9 Non-Solicitation by Buyer and Parent
Each of Buyer and Parent agrees that, from and after the Closing
Date until the date that is five years after the Closing Date, it shall not
solicit for hire or hire as a partner, director, principal or employee or engage
as an agent or independent contractor any officer, director, partner, manager,
associate, member or other employee employed by Seller in its IIAS business;
provided that nothing herein shall prevent Buyer or Parent from hiring any such
individual if at any relevant measurement date during the aforementioned period,
such individual ceased to be and was not an officer, director, partner, manager,
associate, member or employee of Seller for the preceding, consecutive six-month
period.
5.10 Confidentiality
(a) The parties acknowledge the execution by Seller and Parent of
the Agreement Regarding Mutual Disclosure of Information, dated as of July 1,
2003, as amended, by and between Seller and Parent, with respect to the
maintenance of the confidentiality of certain information described therein (the
"Confidentiality Agreement"). The parties acknowledge and agree that such
Confidentiality Agreement remains in full force and effect; provided that, in
the event of any conflict or inconsistency between the provisions of the
Confidentiality Agreement and the provisions of this Agreement, the applicable
provisions of this Agreement shall govern.
(b) For a period of four years after the Closing Date, Seller will
not, and will use reasonable commercial efforts to cause its Affiliates,
officers, directors, employees (including Persons other than Transferred
Employees who cease to be officers, directors or employees subsequent to the
Closing Date) not to use for its or their own benefit or divulge or
30
convey to any other Person, any Confidential Information (as hereinafter
defined) related to the Purchased Assets or the Assumed Liabilities. For
purposes of this Agreement, Seller shall not be deemed to have violated this
Section 5.10 if Seller or any of its Affiliates receives a request to disclose
all or any part of the Confidential Information under the terms of a subpoena,
civil investigative demand or order issued by a Governmental Body, and Seller or
such Affiliate, to the extent not inconsistent with such request and to the
extent time reasonably allows: (a) notifies Buyer of the existence, terms and
circumstances surrounding, such request; (b) consults with Buyer on the
advisability of taking legally available steps to resist or narrow such request;
and (c) if disclosure of any Confidential Information is advisable, to prevent
Seller or such Affiliate or any of its or their partners, principals or
employees from becoming subject to any penalty, to furnish only such portion of
the Confidential Information as it reasonably determines that Seller or such
Affiliate is legally obligated to disclose and to exercise reasonable efforts to
obtain an order or other reliable assurance that confidential treatment will be
accorded to the disclosed Confidential Information. Notwithstanding anything to
the contrary in this Section 5.10 or Section 10.14, Seller and Buyer (and each
employee, representative, other agent of Seller or Buyer) may disclose to any
and all Persons, without limitation of any kind, the Tax treatment and Tax
structure of the transactions contemplated by this Agreement and all materials
of any kind (including opinions or other Tax analyses) that are provided to
Seller or Buyer relating to such Tax treatment and Tax structure (provided,
however, that the names of all other identifying information of all entities and
persons have been properly redacted from such materials prior to the disclosure
thereof). For purposes of this Agreement and subject to the first sentence of
this Section 5.10, "Confidential Information" consists of all information,
knowledge or data related to the Purchased Assets and the Assumed Liabilities
not in the public domain or otherwise publicly available which are or was
treated as confidential by Seller, other than information, knowledge or data
that enters the public domain or is or becomes available from a source that was
not known to the recipient thereof to be prohibited from transmitting such
information, knowledge or data pursuant to a contractual, legal, fiduciary or
other obligation, so long as neither Seller nor any of its Affiliates, directly
or indirectly, improperly causes such information to enter the public domain.
(c) Seller hereby acknowledges and agrees that Seller's covenants
and agreements pursuant to this Section 5.10 are reasonable and necessary to
ensure that Buyer receives the expected benefits of the transactions
contemplated hereby and the Purchased Assets and that violation of any of this
Section 5.10 will cause Buyer irreparable harm for which monetary damages alone
would be an inadequate remedy. Accordingly, in the event of any violation by the
Seller of any provision is Section 5.10, Buyer shall be entitled to seek an
injunction or other equitable relief (in addition to any other remedies it may
have) enjoining Seller and, as applicable, its Affiliates, officers, directors,
partners or employees, from committing or continuing such violation, and Seller
shall not be required to post any bond or other security in connection with any
such Action.
5.11 No Additional Representation
Buyer acknowledges that it and its representatives have been
permitted full and complete access to the properties, personnel, books,
contracts, commitments, reports of examination and records related to the
Purchased Assets and Assumed Liabilities which it has requested or desired to
see and review, and that it and its representatives have had a full
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opportunity to discuss with Seller the Purchased Assets and Assumed Liabilities.
Buyer acknowledges that neither Seller nor any Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Purchased Assets and Assumed
Liabilities furnished or made available to Buyer and its representatives, except
as expressly set forth in this Agreement and in the Collateral Agreements, and
neither Seller nor any other Person shall have or be subject to liability to
Buyer or any other Person resulting from the disclosure to Buyer, or Buyer's use
of, any such information, except as expressly provided herein.
5.12 Limited Use of KPMG Name
For a period of one year after the Closing Date, Seller hereby
agrees, and shall cause its Affiliates, not to assert a claim of infringement,
tortious interference, misappropriation, unfair competition or intellectual
property dilution with respect to the use in the United States (other than
general website advertising use) by Buyer of the phrase "formerly members of
KPMG's dispute advisory services practice," or analogous phrases or expressions,
in connection with any statement or description of FTI's acquisitions, corporate
history or the employment history of the Business Employees or in other ways
that are informational; provided, that such phrase appears in a plain typeface
and without color or style. By way of clarification and not limitation, the
foregoing covenant of forbearance by Seller does not apply to any use as a
trademark of the KPMG Name by Buyer or its Affiliates and nothing herein shall
restrict Buyer from fully complying with its future reporting or disclosure
obligations under the Securities Act or Exchange Act, or, subject to Section
10.14, from making any public announcements (or so-called "tombstone"
statements) factually describing the consummation of the transactions
contemplated by this Agreement.
5.13 Transfer of Payments; Delivery of Mail
From and after the Closing Date, (a) Seller shall from time-to-time
promptly after receipt thereof, pay over to Buyer, in the same form of
consideration as received by Seller, all sums received under any of the
Purchased Contracts (including the Engagement Agreements) and (b) Buyer shall
from time-to-time promptly after receipt thereof, pay over to Seller, in the
same form of consideration as received by Seller, all sums received in respect
of the Excluded Assets, including any Contracts not included in the Purchased
Assets. From and after the Closing Date, each party may receive and open all
mail or other communications that it receives and which is addressed to the
other party and its Affiliates and deal with the contents thereof in its
discretion to the extent that such mail conspicuously relates to the Purchased
Assets or the Assumed Liabilities; provided that the receiving party shall
promptly notify the other party as to the receipt thereof and make appropriate
arrangements to deliver such materials promptly to the other party.
5.14 Litigation Support
(a) In the event and for so long as any party is actively
contesting or defending against any Third Party Claim (including with respect to
Tax matters relating to the operation of the Purchased Assets or the management
of the Assumed Liabilities arising out of or related to the operation of the
Purchased Assets or the management of the Assumed Liabilities
32
prior to the Closing) the other party shall cooperate with the contesting or
defending party and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records, in
each case, as shall be reasonably requested by the contesting or defending party
in connection with the contest or defense, all at the sole cost and expense of
the contesting or defending party (unless and to the extent that the contesting
or defending party is entitled to indemnification therefor under Article 8).
(b) Certain individuals who are Business Employees provide
services to Seller to assist Seller with its ongoing internal investigations,
litigation or other proceedings. Without limiting the generality of Section
5.14(a), following the Closing, Buyer agrees to cause such Business Employees
(to the extent they become Transferred Employees) to continue to provide such
services to Seller at 80% of Buyer's standard rates or such other rates as may
be mutually agreed to until the conclusion of such ongoing internal
investigations, litigation or other proceedings.
5.15 Enforcement of Non-Competition Agreements
Seller agrees that, for a period of four (4) years following the
Closing Date, it will use its best efforts to enforce, at its own expense, the
terms of all non-competition or non-solicitation agreements or arrangements
binding the DAS Principals and DAS Professionals who do not become Transferred
Employees, but only with respect to activities by such DAS Principals and DAS
Professionals that are prohibited to Seller pursuant to Section 5.8(b).
5.16 Collection Efforts
Buyer shall provide Seller with such assistance, at Buyer's internal
cost, as Seller may reasonably request in connection with Seller's efforts to
collect accounts receivable related to work performed on Seller's behalf in
connection with the Engagement Agreements by the Business Employees prior to
Closing, including causing the DAS Principals or DAS Professionals to provide
reasonable assistance to Seller during normal business hours in connection with
such efforts.
5.17 Financing
Buyer shall have prior to and at Closing sufficient cash, available
lines of credit or other sources of immediately available funds to enable it to
fulfill its obligations hereunder.
5.18 Certain Payments
Within fifteen (15) days after the Closing, Seller shall provide
Buyer with a statement which sets forth the amount equal to 50% of Seller's
original cost of the Purchased Assets set forth in Section 2.1(h) (the "Computer
Amount") and the amount of Unapplied Retainers as of the Closing Date (the
"Retainer Amount"), together with reasonable documentation therefor. Within five
(5) days following the delivery of such statement, (a) if the Computer Amount is
greater than the Retainer Amount, Buyer shall pay to Seller an amount equal to
the amount by which the Computer Amount exceeds the Retainer Amount and (b) if
the Retainer Amount is greater than the Computer Amount, Seller shall pay to
Buyer an amount equal to the amount by which the Retainer Amount exceeds the
Computer Amount.
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All payments pursuant to this Section 5.18 shall be made by wire transfer in
immediately available funds to an account designated by the payee in written
instructions to be delivered to the payor at least two (2) Business Days prior
to the payment date.
6. Closing
6.1 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Greenberg Traurig, LLP in New York
City, commencing at 10:00 a.m., Eastern time, on the third Business Day
following the date on which the last of the conditions specified in Article 7 to
be satisfied or waived has been satisfied or waived, or at such other place or
time or on such other date as Seller and Buyer may agree upon in writing (such
date and time being referred to herein as the "Closing Date").
6.2 Deliveries by Seller
At the Closing, Seller shall deliver to Buyer the following:
(a) a bill of sale for the Purchased Assets substantially in the
form of Exhibit D (the "Bill of Sale"), duly executed by Seller;
(b) certified resolutions of the Management Committee and Board of
Directors of Seller authorizing the transactions contemplated by this Agreement;
(c) a counterpart of the Assumption Agreement substantially in
`the form of Exhibit E (the "Assumption Agreement"), duly executed by Seller;
(d) a counterpart of the Transition Services Agreement
substantially in the form of Exhibit F (the "Transition Services Agreement"),
duly executed by Seller;
(e) the consents required pursuant to Section 7.2(e);
(f) a duly executed certificate of the chief executive officer or
chief financial officer of Seller, dated the Closing Date, certifying as to the
fulfillment of the conditions set forth in Sections 7.2(a) and (b);
(g) the duly executed certificate referred to in Section 5.3(g);
(h) all such other bills of sale, assignments and other
instruments of assignment, transfer or conveyance, as Buyer may reasonably
request or as may be otherwise necessary or desirable to evidence and effect the
sale, transfer, assignment, conveyance and delivery of the Purchased Assets to
Buyer and to put Buyer in actual possession or control of the Purchased Assets,
duly executed by Seller.
6.3 Deliveries by Buyer
At the Closing, Buyer shall deliver to Seller the following:
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(a) the Purchase Price to be paid as of the Closing Date as
provided in Section 2.3;
(b) certified resolutions of the Managing Member of Buyer and
the Board of Directors of Parent authorizing the transactions contemplated by
this Agreement;
(c) a counterpart of the Assumption Agreement, duly executed by
Buyer;
(d) a counterpart of the Transition Services Agreement, duly
executed by Buyer;
(e) a duly executed certificate of the chief executive officer or
chief financial officer of Buyer, dated the Closing Date, certifying the
fulfillment of the conditions set forth in Section 7.3 (a) and (b), as relates
to Buyer;
(f) a duly executed certificate of the chief executive officer or
chief financial officer of Parent, dated the Closing Date, certifying the
fulfillment of the conditions set forth in Section 7.3 (a) and (b), as relates
to Parent;
(g) all such other documents and instruments as Seller may
reasonably request or as may be otherwise necessary or desirable to evidence and
effect the assumption by Buyer of the Assumed Liabilities, duly executed by
Buyer.
6.4 Contemporaneous Effectiveness
All acts and deliveries prescribed by this Article 6, regardless of
chronological sequence, will be deemed to occur contemporaneously and
simultaneously on the occurrence of the last act or delivery, and none of such
acts or deliveries will be effective until the last of the same has occurred.
7. Conditions Precedent to Closing
7.1 General Conditions
The respective obligations of Buyer and Parent, on the one hand, and
Seller, on the other hand, to effect the Closing of the transactions
contemplated hereby are subject to the satisfaction in full, prior to or at the
Closing, of each of the following conditions, any of which may (to the extent of
applicable Law) be waived in writing by Buyer and Parent, on the one hand, and
Seller, on the other hand, in its sole discretion:
(a) No Law of any Governmental Body shall have been enacted,
entered, promulgated, deemed applicable, enforced or otherwise be in effect that
enjoins, restrains, conditions, makes illegal or otherwise prohibits or could
impose liabilities on Buyer or Seller with respect to the consummation of this
Agreement or any of the Collateral Agreements, and no Action of a Governmental
Body which, if adversely determined, may result in any such Law being enacted,
entered, promulgated, deemed applicable, enforced or otherwise being in effect,
shall be pending.
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(b) Any applicable waiting period under the HSR Act relating to
the transactions contemplated by this Agreement and the Collateral Agreements
shall have expired or been earlier terminated.
(c) Each DAS Principal shall have executed and delivered to Seller
a Certificate in the form attached hereto as Exhibit G.
7.2 Conditions Precedent to Buyer's and Parent's Obligations
The obligations of Buyer and Parent to effect the Closing of the
transactions contemplated hereby are subject to the satisfaction in full, prior
to or at the Closing, of each of the following conditions, any of which may (to
the extent of applicable Law) be waived in writing by Buyer in its sole
discretion:
(a) The representations and warranties of Seller contained in this
Agreement or any Collateral Agreement or in any schedule, certificate or
document delivered pursuant to the provisions hereof or thereof or in connection
with the transactions contemplated hereby or thereby shall be true and correct
in all material respects (other than representations and warranties that are
qualified as to materiality or Material Adverse Effect, which representations
shall be true in all respects) both when made and at and as of the Closing Date,
as though such representations and warranties were made at and as of the Closing
Date, and except to the extent that such representations and warranties are made
as of a specified date, in which case such representations and warranties shall
be true and correct (to the extent set forth above) as of such specified date.
(b) Seller shall have in all material respects performed all
obligations and agreements and complied with all covenants and conditions
required by this Agreement or any Collateral Agreement to be performed or
complied with by it prior to or at the Closing.
(c) Seller shall have executed and delivered all agreements,
documents and instruments required to be executed and delivered by it pursuant
to Section 6.2.
(d) All requisite Permits necessary for the consummation of the
transactions contemplated hereby shall have been duly issued, obtained and
granted.
(e) Seller shall have obtained written consents to (i) the
transfer and assignment to Buyer of each HCA Engagement Agreement and (ii) the
execution and delivery of, or the performance of Seller's obligations or the
exercise of Buyer's right title and interest in, to and under, the Transition
Services Agreement, in each case with respect to clauses (i) and (ii), where the
consent of any other party is required for such assignment or transfer, or
execution, delivery or performance, and (iii) the transfer or assignment to
Buyer of all material Permits of Seller with respect to the operation of the
Purchased Assets or the management of the Assumed Liabilities, if any, where the
consent of any Governmental Body is required for such assignment or transfer, in
each case, without any material limitations, restrictions or conditions.
(f) Principal Employment Agreements in substantially the form set
forth in Exhibit H (the "Principal Employment Agreements") shall have been duly
entered into, delivered and not rescinded by each of the DAS Principals and not
less than 22 of the DAS Professionals.
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(g) None of the HCA Engagement Agreements shall have been
terminated, and none of the parties thereto shall have threatened or stated an
intention to terminate any HCA Engagement Agreement.
(h) There shall not be or exist any change, effect, event,
circumstance, occurrence or state of facts that has had, has or which reasonably
could be expected to have, a Material Adverse Effect with respect to the
Purchased Assets or the Assumed Liabilities.
7.3 Conditions Precedent to Seller's Obligations
The obligations of Seller to effect the Closing of the transactions
contemplated hereby are subject to the satisfaction in full, prior to or at the
Closing, of each of the following conditions, any of which may (to the extent of
applicable Law) be waived in writing by Seller in its sole discretion:
(a) The representations and warranties of Buyer and Parent
contained in this Agreement or any Collateral Agreement or in any schedule,
certificate or document delivered pursuant to the provisions hereof or thereof
or in connection with the transactions contemplated hereby or thereby shall be
true and correct in all material respects (other than representations and
warranties that are qualified as to materiality or Material Adverse Effect,
which representations shall be true in all respects) both when made and at and
as of the Closing Date, as though such representations and warranties were made
at and as of the Closing Date, and except to the extent that such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true and correct (to the extent set
forth above) as of such specified date.
(b) Each of Buyer and Parent shall have in all material respects
performed all obligations and agreements and complied with all covenants and
conditions required by this Agreement or any Collateral Agreement to be
performed or complied with by it prior to or at the Closing.
(c) Each of Buyer and Parent shall have executed and delivered all
agreements, documents and instruments required to be executed and delivered by
it pursuant to Section 6.3.
(d) There shall not be or exist any change, effect, event,
circumstance, occurrence or state of facts that has had, has or which reasonably
could be expected to have, a Material Adverse Effect with respect to the Buyer
or the Parent which could reasonably be expected to prevent or materially
interfere with the ability of either of them to consummate the transactions
contemplated by this Agreement.
8. Survival and Indemnity
The rights and obligations of Buyer, Parent and Seller under this
Agreement shall be subject to the following terms and conditions:
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8.1 Survival of Representations and Warranties
The representations and warranties of Buyer and Seller contained in
this Agreement and in any Collateral Agreement shall survive the Closing for 24
months; provided that the representations and warranties of Seller pursuant to
the first sentence of Section 3.4 shall survive the Closing in perpetuity.
Neither Seller nor Buyer shall have any liability whatsoever with respect to any
such representations or warranties unless a claim is made hereunder prior to
expiration of the survival period for such representation or warranty.
8.2 General Agreement to Indemnify
(a) Subject to Section 5.7(c), Seller shall indemnify, defend and
hold harmless the Buyer and its Affiliates and any employee, representative,
agent, director, officer, partner or principal, as applicable, or assign of
Buyer and its Affiliates (each, a "Buyer Indemnified Party"), and Buyer shall
indemnify, defend and hold harmless the Seller and its Affiliates and any
employee, representative, agent, director, officer, partner or principal, as
applicable, or assign of Seller and its Affiliates (each a "Seller Indemnified
Party"), from and against any and all claims, liabilities, losses, damages,
costs and expenses (including reasonable attorneys' fees and costs)
(collectively, "Losses") incurred by any Buyer Indemnified Party or Seller
Indemnified Party, as applicable, as a result of, arising out of or relating to
(i) the failure of any representation or warranty of the Indemnifying Party (as
defined in Section 8.3(a)) contained in this Agreement or any Collateral
Agreement to have been true and correct when made or as of the Closing Date (or
as of such different date or period specified for such representation or
warranty) as though such representation or warranty were made at the Closing
Date (or at such different date or period specified for such representation or
warranty) or (ii) the breach by the Indemnifying Party of any covenant or
agreement of such party contained in this Agreement or any Collateral Agreement.
(b) Seller further agrees to indemnify and hold harmless Buyer and
any other Buyer Indemnified Party from and against any Losses incurred by such
party arising out of, resulting from, or relating to: (i) the Excluded
Liabilities; (ii) the Referenced Litigation; (iii) Seller's failure to comply
with the terms and conditions of any applicable bulk sales or bulk transfer or
similar Laws of any jurisdiction that may be applicable to the sale or transfer
of any or all of the Purchased Assets or the Assumed Liabilities to Buyer; (iv)
all other liabilities and obligations that are expressly made the obligation or
liability of the Seller under this Agreement or the Collateral Agreements; or
(v) the operation of the Purchased Assets and the management of the Assumed
Liabilities prior to the Closing Date or the acts or omissions of Seller, any
Business Employee or any Affiliate, employee or agent of Seller with respect to
the Purchased Assets and Assumed Liabilities at any time prior to the Closing
Date.
(c) Buyer and Parent further agree to jointly and severally
indemnify and hold harmless Seller and any other Seller Indemnified Party from
and against any Losses incurred by such party arising out of, resulting from, or
relating to: (i) any of the Assumed Liabilities; (ii) any claim, demand or
liability for the Taxes for which Buyer is responsible pursuant to Section 5.3;
(iii) any medical, health or disability claims of any Transferred Employee
relating to services rendered or benefits earned after the Closing Date other
than pursuant to any Benefit Plan; and (iv) any Loss arising out of or related
to Buyer's continued use and occupancy of
38
Seller's facilities, furniture, equipment, systems and networks under the
Transition Services Agreement.
(d) Amounts payable in respect of the parties' indemnification
obligations shall be treated as an adjustment to the Purchase Price.
(e) Whether or not the Indemnifying Party chooses to defend or
prosecute any Third Party Claim (as defined in Section 8.3(a)) both parties
hereto shall cooperate in the defense or prosecution thereof and shall furnish
such records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably requested in
connection therewith, except that nothing herein shall permit Seller, or require
Buyer as a condition to obtaining indemnification, to seek to collect back sales
or use Tax from clients or customers who are parties to the Engagement
Agreements. Notwithstanding the foregoing, Buyer shall, at the request of
Seller, make reasonable commercial efforts to reduce any indemnification
obligation of Seller with respect to sales Taxes by making appropriate inquiries
of clients who are parties to the Engagement Agreements to determine whether
they have been previously audited for use Taxes by the same jurisdiction for the
same period or periods.
(f) The indemnification obligations of each party hereto under
this Article 8 shall inure to the benefit of the Affiliates, employees,
representatives, agents, directors, officers, partners and principals, as
applicable, and assigns, of the other party hereto on the same terms as are
applicable to such other party.
(g) The Seller's liability for all claims made under this Section
8.2 shall be subject to the following limitations: (i) the Seller shall have no
liability for any such claim(s) until, individually or in the aggregate, the
amount of all Losses relating thereto for which the Seller would, but for this
provision, be liable exceeds $1,000,000, and then only to the extent of any such
excess; (ii) the Seller's aggregate liability for all such claims shall in no
event exceed $75,000,000; (iii) the Seller shall have no liability for any
breach if Buyer had Knowledge of such breach at the time of the Closing; and
(iv) the Seller's liability arising out of or with respect to the Transition
Services Agreement shall be limited as provided therein, in addition to the
further limitations herein; provided, however, that the foregoing limitations
shall not apply to any claims for Losses made pursuant to Sections 8.2(b)(i),
8.2(b)(ii) or 8.2(b)(v) and any such Losses shall not be included in the
calculation of the aggregate amount of Seller's liability under Article 8 set
forth in Section 8.2(g)(ii). No Indemnified Party may make a claim for
indemnification under Section 8.2(a)(i) for breach by the Indemnifying Party of
a particular representation or warranty after the expiration of the survival
period specified in Section 8.1. Buyer may not make a claim for indemnification
under Section 8.2 following the fifth anniversary of the Closing Date; provided,
however, that with regard to the indemnification obligations of Seller under
Section 8.2(b)(i), there shall be no termination or other limitation.
(h) The amount of any Loss for which indemnification is provided
under this Section 8 shall be net of any amounts recovered or recoverable by the
Indemnified Party under insurance policies with respect to such Loss.
(i) Notwithstanding anything herein or in the Collateral
Agreements to the contrary, neither of the parties hereto or thereto shall be
liable to the other, whether in contract,
39
tort or otherwise, for any special, indirect, incidental, consequential,
punitive or exemplary or other similar type of damages whatsoever, which in any
way arise out of, relate to, or are a consequence of, its performance or
nonperformance hereunder or the Collateral Agreements, misrepresentation (other
than through fraud), including loss of profits, business interruptions and
claims of customers.
(j) Each party further acknowledges and agrees that, from and
after the Closing, except in cases of proven fraud or other willful misconduct
or bad faith,, its sole and exclusive remedy with respect to any and all claims
relating to this Agreement, the Collateral Agreements, the transactions
contemplated hereby, the Purchased Assets and the Assumed Liabilities (other
than claims of, or causes of action arising from, fraud) shall be pursuant to
the indemnification provisions set forth in this Section 8. In furtherance of
the foregoing, from and after the Closing, except in cases of proven fraud or
other willful misconduct or bad faith, each party hereby waives and releases,
from and after the Closing, any and all rights, claims and causes of action
(other than claims of, or causes of action arising from, fraud) it may have
against the other party and its Affiliates arising under or based upon any
Federal, state, local or foreign statute, law, ordinance, rule or regulation or
otherwise (except pursuant to the indemnification provisions set forth in this
Section 8) arising out of or related to this Agreement and the Collateral
Agreements. Notwithstanding the foregoing, nothing in this Section 8.2(j) or
elsewhere in this Agreement shall be deemed to limit any party's right to seek
specific performance or other equitable relief in any court of competent
jurisdiction of its rights and remedies hereunder or in any Collateral
Agreement.
8.3 General Procedures for Indemnification
(a) Procedures Relating to Indemnification for Third Party Claims.
In order for the Indemnified Party to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim or demand made by any person other than a party to this Agreement against
the Indemnified Party (a "Third Party Claim"), such Indemnified Party must
notify the party against whom indemnity is sought (the "Indemnifying Party") in
writing, and in reasonable detail, of such claim or demand within ten (10)
Business Days after receipt by such Indemnified Party of written notice thereof;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure. Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, within five (5)
Business Days after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the indemnified
parties relating to such claim or demand.
(b) If a Third Party Claim is made against an Indemnified Party,
the Indemnifying Party shall be entitled by written notice provided to the
Indemnified Party within ten (10) days after the Indemnifying Party's receipt of
a notice pursuant to this Section 8.3(b), to participate in the defense thereof
and, if it so chooses and acknowledges its obligation to indemnify the
Indemnified Party therefor, to assume the defense thereof with counsel selected
by the Indemnifying Party. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party shall not be liable to
the Indemnified Party for legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. Notwithstanding the
foregoing, in the event (i) such Indemnifying Party fails to make the
40
election specified above within the time period so specified, (ii) such
Indemnified Party reasonably concludes (based on the advice of outside counsel)
that the assumption by such Indemnifying Party of the defense of such Third
Party Claim would be inappropriate due to actual or potential differing
interests between such Indemnified Party and such Indemnified Party or (iii)
such Indemnified Party reasonably concludes (based on the advice of outside
counsel) that that there may be legal defenses available to it that are
different from or in addition to those available to such Indemnifying Party,
such Indemnified Party shall be entitled to assume the defense of such Third
Party Claim through counsel of its own choosing; provided that only the fees and
expenses of one such counsel (and one additional local counsel for each state
jurisdiction in which local counsel shall reasonably be required) shall be
eligible for indemnification pursuant to Section 8.2. Subject to the previous
sentence, if the Indemnifying Party assumes the defense of a Third Party Claim
against an Indemnified Party, the Indemnified Party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense.
If the Indemnifying Party so elects to assume the defense of any
Third Party Claim, all of the Indemnified Parties shall cooperate with the
Indemnifying Party in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the Indemnifying Party's request) the provision
to the Indemnifying Party of records and information that are reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Except with respect to the settlement of a Third
Party Claim which involves the payment of money damages only and provides for a
full and unconditional release from or settlement of liability in respect of
such Third Party Claim, no Third Party Claim which an Indemnifying Party has
elected to defend pursuant to this Section 8.3(b) may be settled without the
prior written consent of the relevant Indemnified Party, which consent shall not
be unreasonably withheld or delayed.
Notwithstanding the foregoing provisions of this Section 8.3(b), the
parties hereby agree that the provisions of this Section 8.3(b) shall have no
application with respect to any claim or demand by an Indemnified Party with
respect to Losses which do not result from a Third Party Claim.
(c) Procedures Relating to Indemnification for Inter-Party Claims.
Any claim or demand by an Indemnified Party with respect to Losses which do not
result from a Third Party Claim shall be asserted in the same manner as
specified in Section 8.3(a). If the Indemnifying Party with respect to such
claim or demand does not acknowledge in writing its obligation to indemnify the
Indemnified Party with respect to such Losses within fifteen (15) days after its
receipt of written notice from the Indemnified Party with respect to such claim
or demand as specified in Section 8.3(a), the Indemnifying Party will be deemed
to have rejected such claim, in which event the Indemnified Party will be free
to pursue such remedies as may be available to it under and as limited by this
Agreement. Notwithstanding anything to the contrary in this Article 8, all
reasonable attorneys' fees and costs incurred by a party hereto prevailing in an
Action against another party hereto shall be borne by such non-prevailing party.
41
(d) Buyer and Seller shall cooperate with each other with respect
to resolving any claim or liability with respect to which one party is obligated
to indemnify the other party hereunder, including by making commercially
reasonably efforts to mitigate or resolve any such claim or liability. In the
event that Buyer or Seller shall fail to make such commercially reasonably
efforts to mitigate or resolve any claim or liability, then notwithstanding
anything else to the contrary contained herein, the other party shall not be
required to indemnify any person for any loss, liability, claim, damage or
expense that could reasonably be expected to have been avoided if Buyer or
Seller, as the case may be, had made such efforts.
9. Termination
9.1 Termination
This Agreement may be terminated at any time prior to the Closing
Date and the transactions contemplated hereby may be abandoned at any time prior
to the Closing:
(a) by the mutual written consent of Seller and Buyer;
(b) by Buyer, if Seller shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 7.1 or 7.2, and (ii) is either not capable of being cured to
the reasonable satisfaction of the non-breaching party on or prior to the
Outside Date or, if curable, is not cured within 15 days of receipt from Buyer
of written notice thereof;
(c) by Seller, if Buyer shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 7.1 or 7.3, and (ii) is either not capable of being cured to
the reasonable satisfaction of the non-breaching party on or prior to the
Outside Date or, if curable, is not cured within 15 days of receipt from Seller
of written notice thereof;
(d) Buyer or Seller, if there shall be in effect a non-appealable
injunction or order of a Governmental Body of competent jurisdiction prohibiting
the consummation of the transactions contemplated hereby.
(e) Buyer or Seller, if the Closing shall not have occurred on or
before 5:00 p.m., Eastern time, on December 31, 2003 (the "Outside Date");
provided that the failure of the Closing to occur on or before such date did not
result from the failure by the party seeking termination of this Agreement to
fulfill any undertaking or agreement provided for herein that is required to be
fulfilled by it prior to Closing.
9.2 Effect of Termination
In the event of the termination of this Agreement in accordance with
Section 9.1, this Agreement shall become void and have no effect, without any
liability on the part of any party or its directors, officers or stockholders,
except for the obligations of the parties hereto as provided in Sections 2.6(b),
5.10, 10.2, 10.4, 10.5, 10.12, 10.14 and this Section 9.2, and except that,
notwithstanding anything in this Agreement to the contrary, neither Seller nor
Buyer shall
42
be relieved or released from any liabilities or damages arising out of its
breach of any provision of this Agreement.
10. Miscellaneous
10.1 Notices
All notices and other communications hereunder and under the
Collateral Agreements shall be in writing and shall be deemed to have been duly
given upon receipt if (a) mailed by certified or registered mail, return receipt
requested, (b) sent by a nationally recognized overnight delivery service
(receipt requested), fee prepaid, (c) sent via facsimile with receipt confirmed,
or (iv) delivered personally, addressed as follows or to such other address or
addresses of which the respective party shall have notified the other.
(a) If to Seller, to:
KPMG LLP
345 Park Avenue
New York, New York 10154
Attention: Jack T. Taylor, Jr.
Facsimile: (212) 909-5049
E-mail: jtaylor@kpmg.com
and
KPMG LLP
Office of General Counsel
280 Park Avenue
New York, New York 10032
Attention: Mark Zuffante, Esq.
Facsimile: (212) 909-5687
E-mail: mzuffante@kpmg.com
With a copy (which shall not constitute notice pursuant to
this Section 10.1) to:
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, NY 10022
Attention: Stephen E. Older, Esq.
Facsimile: (212) 872-1002
E-Mail: solder@akingump.com
(b) If to Buyer or Parent, to:
FTI Consulting, Inc.
900 Bestgate Road, Suite 100
43
Annapolis, Maryland 21401
Attention: Theodore I. Pincus, Executive Vice President
and Chief Financial Officer
Facsimile: 410-224-2809
E-Mail: ted.pincus@fticonsulting.com
With a copy (which shall not constitute notice pursuant to
this Section 10.1) to;
Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, NY 10166
Attention: Clifford E. Neimeth, Esq.
Facsimile: 212-801-6400
E-Mail: neimethc@gtlaw.com
10.2 Expenses
Any sales, use or other transfer taxes arising out of or incurred in
connection with the transactions contemplated by this Agreement shall be paid by
Buyer. Except as provided in the preceding sentence or otherwise in this
Agreement or the Collateral Agreements, each party will pay its own costs and
expenses, including legal and accounting expenses, related to the transactions
contemplated by this Agreement, irrespective of when incurred and whether or not
the Closing occurs. For the avoidance of doubt, the parties hereby agree and
acknowledge that all fees and expenses of Grant Thornton in respect of services
performed by Grant Thornton for Buyer or Parent specifically in connection with
any filing, registration or report filed by Parent under the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act shall be borne
solely by Buyer and Parent.
10.3 Entire Agreement
The agreement of Seller and Buyer, which is comprised of this
Agreement, the Schedules and Exhibits hereto, the Collateral Agreements and the
Confidentiality Agreement, sets forth the entire agreement and understanding
between the parties and supersedes any prior agreement or understanding, written
or oral, relating to the subject matter of this Agreement.
10.4 Jurisdiction, Service of Process
Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the United States District
Court for the Southern District of New York (as well as all appropriate
appellate courts) or, if jurisdiction in such court is lacking, the courts of
the State of New York sitting in New York County (as well as all appropriate
appellate courts), for any actions, suits or proceedings arising out of or
relating to this Agreement and the Collateral Agreements (and agrees not to
commence any action, suit or proceeding relating thereto except in such courts),
and further agrees that service of any process, summons, notice or document by
U.S. registered mail to its respective address set forth in
44
Section 10.1 will be effective service of process for any action, suit or
proceeding brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
Collateral Agreements in the aforementioned courts and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each of the parties hereto hereby
further irrevocably and unconditionally waives all right to trial by jury in any
action, suit or proceeding arising out of this Agreement or the Collateral
Agreements.
10.5 Governing Law
This Agreement and the Collateral Agreements will be construed in
accordance with and governed by the internal procedural and substantive laws of
the State of New York applicable to agreements made and to be performed entirely
within such State and without regard to the conflicts of law principles thereof.
10.6 Waiver
The rights and remedies of the parties to this Agreement and the
Collateral Agreements are cumulative and not alternative. Neither the failure
nor any delay by any party in exercising any right, power or privilege under
this Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by Law, (a) no claim or right arising
out of this Agreement or the Collateral Agreements can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is given
and will not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure or noncompliance; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of such party or of the right of
the party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the Collateral Agreements.
10.7 No Oral Modification
Neither this Agreement nor the Collateral Agreement may not be
amended except by a written agreement executed by the party to be charged with
the amendment. Any attempted amendment in violation of this Section 10.7 will be
void ab initio.
10.8 Reasonable Commercial Efforts
In undertaking "reasonable commercial efforts" or "reasonable
efforts" to satisfy any of its obligations under this Agreement or the
Collateral Agreements, neither party to this Agreement or the Collateral
Agreements shall be required to alter the terms of this Agreement or the
Collateral Agreement, modify its normal business conduct, plans or strategies or
take any action that limits its freedom of action with respect to any of its
businesses or assets.
45
10.9 Assignments, Successors
No party may assign any of its rights under this Agreement or any
Collateral Agreements without the prior written consent of the other parties
hereto or thereto. Subject to the preceding sentence, this Agreement and the
Collateral Agreements will apply to, be binding in all respects upon, and inure
to the benefit of the successors and permitted assigns of the parties.
10.10 Severability
If any provision of this Agreement or the Collateral Agreements is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement and the Collateral Agreements will remain in full
force and effect. Any provision of this Agreement or the Collateral Agreements
held invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
10.11 Captions
The article, section and paragraph captions herein and the table of
contents hereto are for convenience of reference only, do not constitute part of
this Agreement and the Collateral Agreements and will not be deemed to limit or
otherwise affect any of the provisions hereof or thereof. Unless otherwise
specified, all references herein to numbered articles and sections are to
articles and sections of this Agreement, all references herein to schedules are
to schedules to this Agreement and all references herein to exhibits are to
exhibits to this Agreement.
10.12 No Third Party Beneficiaries
Nothing in this Agreement or the Collateral Agreements, express or
implied, is intended to or shall (a) confer on any Person other than the parties
hereto and their respective successors or assigns any rights (including third
party beneficiary rights), remedies, obligations or liabilities under or by
reason of this Agreement (except with respect to Indemnified Parties as provided
in Section 8.2) or the Collateral Agreements, or (b) constitute the parties
hereto as partners or as participants in a joint venture. Neither this Agreement
nor the Collateral Agreements shall provide Third Parties with any remedy,
claim, liability, reimbursement, cause of action or other right (except with
respect to Indemnified Parties as provided in Section 8.2). No third party shall
have any rights under Section 502, 503 or 504 of ERISA or any regulations
thereunder because of this Agreement or the Collateral Agreements that would not
otherwise exist without reference to this Agreement or the Collateral
Agreements. No third party shall have any right, independent of any right that
exists irrespective of this Agreement or the Collateral Agreements, under or
granted by this Agreement or the Collateral Agreements, to bring any suit at law
or equity for any matter governed by or subject to the provisions of this
Agreement (except with respect to Indemnified Parties as provided in Section
8.2) or the Collateral Agreements.
46
10.13 Counterparts
This Agreement and Collateral Agreements may be executed
simultaneously in one or more counterparts, each of which will be deemed to be
an original copy of this Agreement.
10.14 Public Announcement
Neither Seller nor Buyer shall, without the approval of the other,
make any press release or other public announcement concerning the existence of
this Agreement or the terms of the transactions contemplated by this Agreement,
except as and to the extent that any such party shall be so obligated by Law or
stock exchange disclosure requirements (subject to Section 5.10), in which case
the other party shall be advised and the parties shall use their reasonable
commercial efforts to cause a mutually agreeable release or announcement to be
issued.
10.15 Waiver of Compliance with Bulk Transfer Laws
Without limitation as to the provisions of Section 8.2(b)(iii),
Buyer hereby waives compliance by Seller with the provisions of any bulk
transfer Laws which may be applicable to the transactions contemplated hereby
and by the Collateral Agreements; provided that Seller shall remain solely
liable for any liabilities to any Person other than Buyer and its Affiliates
resulting from the failure to comply with such Laws.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
47
IN WITNESS WHEREOF, each party has caused this Agreement to be
duly executed on its behalf by its duly authorized officers as of the date first
written above.
KPMG LLP
By:/s/Jack T. Taylor
---------------------------------
Name: Jack T. Taylor
Title: Vice Chair
DAS BUSINESS, LLC
By: FTI Consulting, Inc., its sole member
By:/s/Theodore I. Pincus
---------------------------------
Name: Theodore I. Pincus
Title: EVP/CFO
FTI CONSULTING, INC.
By:/s/Theodore I. Pincus
---------------------------------
Name: Theodore I. Pincus
Title: EVP/CFO
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
Exhibit A
FORM OF CLIENT AUTHORIZATION LETTER - CLIENT LETTERHEAD
[CLIENT LETTERHEAD]
Client Code ______________(1)
This letter shall be deemed dated and effective
upon the date [DEPARTING PARTNER] joins
FTI Consulting, Inc. (REPLACE THIS SENTENCE WITH
ACTUAL DATE IF SENT AFTER THE DEAL CLOSES)
KPMG LLP
[OFFICE ADDRESS]
Re: Consent to Transfer Engagement Agreement and Working Papers and Files
Dear KPMG LLP:
Relating to KPMG LLP's work on [DESCRIBE NATURE OF ENGAGEMENT] (the
"Engagement") pursuant to that certain [ENGAGEMENT AGREEMENT] (the "Engagement
Agreement"), dated __________, between [NAME OF CLIENT] ("Client") and KPMG LLP
("KPMG"), Client consents to the transfer of the Engagement and the Engagement
Agreement from KPMG to FTI Consulting, Inc. or its subsidiary ("FTI"), requests
that KPMG transfer its related working papers to FTI, and that KPMG answer
questions related to these working papers as necessary. The purpose of this
transfer of the Engagement, the Engagement Agreement and the working papers and
files (collectively referred to as "Work Files") is to facilitate FTI's
completion of the Engagement.
Client acknowledges that it (and not KPMG) is solely responsible for determining
the applicability of any attorney-client privilege or other privilege or similar
rule (e.g., the work product rules) to the above-mentioned working papers and
for otherwise managing the establishment and maintenance of any such privilege
or protection and for considering possible waiver thereof (and for involving
legal counsel as necessary).
Client also agrees to pay KPMG upon invoicing (or immediately if already
invoiced) all fees and expenses incurred to date in connection with KPMG's
services provided to Client as of the date of this letter, in accordance with
such invoice(s).
Very truly yours,
(USE APPROPRIATE SIGNATURE BLOCK)
[NAME OF CLIENT] "Client"
By:
--------------------------------------------------
(Authorized Officer)
- -------------------------------------------------------
Title Date
OR
- --------
(1) This should be completed upon receiving the executed letter from the client
Signature Date
------------------------- ---------------------
Name (please print)
-----------------------------------------
cc: [DEPARTING PARTNER FAX AND ADDRESS]
Exhibit B
Description of DAS Services
DISPUTE ADVISORY SERVICES are services related to claims, adversarial
relationships, disputes and litigation. DAS engagements assist their clients in
addressing risks arising from such matters and involve support in all phases of
judicial, regulatory, and administrative disputes, from pre-trial discovery
through trial and appeal including expert witness services. Seller will agree
not to perform any of these services for a period of four years from the Closing
Date except for the specifically named services described in the following
paragraph and Exhibit C to this Agreement.
Seller will be allowed to complete all executory engagements involving DAS
Services in force and effect as of the Closing Date which are not included in
the Purchased Assets, provided that Seller had in good faith begun to provide
services under such engagements prior to the Closing Date. In addition, Seller
will be allowed to provide de minimis amounts of DAS Services not to exceed
$2,000,000 of Fee Revenue per year (as calculated in accordance with Seller's
customary billing rates) for two years after the Closing; provided, however,
that if such Fee Revenue exceeds $2,000,000 per year, Seller will pay Buyer an
amount equal to 40% of all such Fee Revenue in excess of $2,000,000.
Exhibit C
Description of Permitted Services
This Agreement is not intended to restrict Seller from providing services in the
following described areas:
o Investigative and Integrity Services
o Certain Carved Out Services
o Forensic Technology Services
Investigative and Integrity Advisory Services ("IIAS"). These are services
related to investigations of suspected fraud or misconduct as well as services
to mitigate the risk of such episodes. It also can include testimony if it is
limited to services as a direct result of an investigation or services to
mitigate the risk of such episode and is related to fact or expert testimony.
The IIAS Practice provides the following services:
o General Fraud and misconduct investigations;
o Financial Reporting and securities investigations;
o Fraud and misconduct diagnostic;
o Corporate integrity compliance;
o Corporate responsibility and governance;
o Corporate intelligence; and
o Channel Management Services including royalty and license
investigations/audits.
Certain Carved Out Services. Other practices of Seller are occasionally called
upon to provide professional services to entities on matters related to disputes
and contractual agreements that are based upon accounting standards (such as
GAAP or GAAS) and other regulatory or professional standards. These services,
which may include professionals from the Forensic Practice or other practices
within Seller, consist of the following:
o Accounting Malpractice Matters - including the defense of Seller (i.e.,
engagements with Seller's Office of General Counsel) and other large
accounting firms. However, when such matters involve defending other large
accounting firms, Seller will consult with buyer and seek approval to
perform such services. Buyer agrees to not unreasonably withhold such
approval.
o Post-Acquisition Disputes - when the party is an existing external audit
client of Seller or the Firm has been named in an agreement in effect
prior to the Closing Date and the issues are associated with the
determination of working capital and/or net assets or similar concepts
pursuant to a Stock or Asset Purchase Agreement or other such agreements
generally related to the sale or purchase of a business or a business
interest.
o Arbitrations, Mediations, Monitoring Engagements and other Neutral
Services - where the contract or judicial declaration suggests, requires,
or recommends that an accounting firm provide such services. However,
prior to providing such services, Seller will consult with buyer and seek
approval to perform such services. Buyer agrees to not unreasonably
withhold such approval.
Seller has other professional service practices other than DAS that have
historically become associated with issues that require consultations with
counsel and/or the provision of expert
testimony associated with the matters for which they were engaged. Seller will
continue to provide such services that result from these engagements. These
services include:
o Tax disputes related to tax positions taken by Seller tax clients;
o Core proceedings in U.S. Bankruptcy Court matters;
o Regulatory and Compliance Services in support of utility rate
applications; and
o Economic Consulting Tax Services related to Code Sec. 482 transfer
pricing;
provided, that such services will not include services historically performed
only by the DAS business.
Forensics Technology Services (FTS). FTS operates a facility which offers tools
for discovery, collaboration and document management to help reduce litigation
costs and risks. In addition, FTS assists in identifying, acquiring, and merging
data sets from multiple sources for the purpose of detecting fraudulent activity
and other forms of misconduct. These services as provided by FTS, including
digital evidence recovery, discovery management, document management and
forensic data analysis, will continue to be offered by Seller and are not part
of the transaction.
C-2
Exhibit D
BILL OF SALE AND ASSIGNMENT
DELIVERED PURSUANT TO SECTION 6.2(A) OF THE ASSET PURCHASE AGREEMENT, DATED
AS OF OCTOBER 21, 2003 (THE "PURCHASE AGREEMENT"), BY AND AMONG KPMG LLP, A
DELAWARE LIMITED LIABILITY PARTNERSHIP ("SELLER"), DAS BUSINESS, LLC, A MARYLAND
LIMITED LIABILITY COMPANY ("BUYER"), AND FTI CONSULTING, INC., A MARYLAND
CORPORATION,
FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, Seller hereby grants, sells, transfers, assigns, conveys and
delivers to Buyer, its successors and assigns, effective as of the Closing Date,
and Buyer purchases, acquires and accepts from Seller, all of Seller's right,
title and interest in, to under and in respect of, the following assets, as the
same shall exist on the Closing Date (collectively, the "Purchased Assets"):
Capitalized terms used but not defined herein shall have the meaning ascribed to
such terms in the Purchase Agreement and all references to schedules followed by
a number herein are to the schedules referred to in the Purchase Agreement as
delivered by Seller to Buyer and are incorporated herein by reference.
(a) The unapplied monetary portion heretofore paid to Seller in
respect of retainers relating to the Engagement Agreements to be assigned and
transferred to Buyer hereunder, as set forth on Schedule 2.1(a);
(b) the Personal Property listed on Schedule 2.1(b);
(c) all rights and entitlements of Seller under the Contracts listed
on Schedule 2.l(c), including the Engagement Agreements currently in effect;
(d) all Business Records;
(e) all of Seller's rights, title and interests under or pursuant to
all warranties, refunds, rebates, indemnities, representations and guarantees of
or made by vendors or suppliers in connection with the Purchased Assets or the
Assumed Liabilities;
(f) all Permits;
(g) the going-concern value and other intangible assets of Seller,
related to the Purchased Assets, other than trademarks and trade names,
including customer lists and related current and historical information; and
(h) all laptop, personal digital assistant, or PDA, and other
portable computers of Seller used primarily by the Transferred Employees.
Notwithstanding anything to the contrary contained in this Bill of Sale
and Assignment, the Purchased Assets do not include, and Seller does not hereby
grant, bargain, sell, transfer, assign, convey or deliver to Buyer, and Buyer
does not hereby acquire, accept assignment or transfer of or receive any of
Seller's right, title or interest in to, or under the Excluded Assets set forth
in Section 2.2 of the Purchase Agreement.
This Bill of Sale and Assignment shall inure to the benefit of Buyer, its
successors and assigns, and shall be binding on Seller and its successors and
representatives.
Notwithstanding the foregoing, no provision of this Bill of Sale and
Assignment shall in any way modify, replace, amend, change, rescind, waive or in
any way affect the express provisions (including the warranties, covenants,
agreements, conditions, representations, or any of the obligations and
indemnifications of Seller or Buyer) set forth in the Purchase Agreement, this
Bill of Sale and Assignment being intended solely to effect the transfer of the
Purchase Assets sold and purchased pursuant to the Purchase Agreement. If any of
the provisions of this Bill of Sale and Assignment is inconsistent with the
provisions of the Purchase Agreement, the terms of the Purchase Agreement shall
govern.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
D-2
IN WITNESS WHEREOF, Seller has caused this Bill of Sale and Assignment to be
executed as of this ____ day of ________________, 2003.
KPMG LLP, as Seller
By:
---------------------------------
Name:
Title:
D-3
Exhibit E
FORM OF ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT dated as of October 31, 2003 (this "Agreement")
is hereby entered into by and between KPMG LLP, a Delaware limited liability
partnership ("Seller"), and DAS BUSINESS, LLC, a Maryland limited liability
company ("Buyer").
RECITALS
A. WHEREAS, Seller, Buyer and FTI Consulting, Inc., a Maryland
corporation, have entered into that certain Asset Purchase Agreement dated as of
October 21, 2003 (the "Purchase Agreement"), pursuant to which the Buyer has
agreed to purchase certain assets as set forth in Section 2.1 of the Purchase
Agreement.
B. WHEREAS, Buyer has agreed to assume only and solely those specific
liabilities and obligations set forth in Section 2.4(a)(i)-2.4(a)(iii) of the
Purchase Agreement and no others of whatsoever nature, kind or description.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the receipt, adequacy and legal sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Capitalized Terms. Capitalized terms used but not defined herein shall
have the meaning ascribed to such terms in the Purchase Agreement and all
references to schedules followed by a number herein are to the schedules
referred to in the Purchase Agreement as delivered by Seller to Buyer and are
incorporated herein by reference.
2. Assumption of Assumed Liabilities. Effective on and as of the Closing
Date, Buyer hereby assumes and agrees to honor, pay and discharge when due the
following liabilities and obligations of Seller (the "Assumed Liabilities"):
(i) the liabilities and obligations of Seller under the
Engagement Agreements assigned and transferred to Buyer hereunder, to the
extent the performance thereof by Buyer is due from and after the Closing
Date, including the obligation to perform services with respect to the
unapplied monetary portion heretofore paid to Seller of all retainers in
respect of such Engagement Agreements;
(ii) the liabilities and obligations of Seller under the
Permits included in the Purchased Assets to be performed on or after, and
in respect of periods following, the Closing Date; and
(iii) all other liabilities and obligations in respect of the
Purchased Assets to the extent arising out of or related to facts or
circumstances occurring after the Closing.
3. Excluded Liabilities. Buyer assumes no Excluded Liabilities, and the
parties hereto agree that all such Excluded Liabilities as set forth in Section
2.4(b) of the Purchase Agreement shall remain the sole obligation and
responsibility of Seller.
4. Conflict of Terms. Notwithstanding anything to the contrary set forth
in this Agreement, no provision of this Agreement shall in any way modify,
replace, amend, change, rescind, waive or in any way affect the express
provisions (including the warranties, covenants, agreements, conditions,
representations or any of the obligations and indemnifications of Seller or
Buyer) set forth in the Purchase Agreement, this Agreement being intended
solely to effect the assumption of Assumed Liabilities assumed pursuant to the
Purchase Agreement. In the event of any conflict or inconsistency between the
terms of the Purchase Agreement and the terms hereof, the terms of the Purchase
Agreement shall govern.
5. Governing Law. This Agreement will be construed in accordance with and
governed by the internal procedural and substantive laws of the State of New
York applicable to agreements made and to be performed entirely within such
State and without regard to the conflicts of law principles thereof.
6. Assignments, Successors. Neither party may assign any of its rights
under this Agreement without the prior written consent of the other parties
hereto or thereto. Subject to the preceding sentence, this Agreement will apply
to, be binding in all respects upon, and inure to the benefit of the successors
and permitted assigns of the parties.
7. Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Assumption Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
KPMG LLP, as Seller
By:____________________________________
Name:
Title:
DAS BUSINESS, LLC, as Buyer
By: FTI Consulting, Inc, its sole
member
by:_______________________________
Name:
Title:
E-3
Exhibit F
FORM OF TRANSITION SERVICES AGREEMENT
AGREEMENT dated as of October 31, 2003 (this "AGREEMENT") by and
among KPMG LLP, a Delaware limited liability partnership ("SELLER"), DAS
Business, LLC, a Maryland limited liability company ("BUYER") and FTI
Consulting, Inc., a Maryland corporation ("PARENT").
W I T N E S S E T H:
WHEREAS, Seller, Buyer and Parent have entered into an Asset
Purchase Agreement dated as of October 22, 2003 (the "PURCHASE AGREEMENT"),
providing for, among other things, the purchase by Buyer of all the right, title
and interest of Seller in and to the Purchased Assets (as defined in the
Purchase Agreement), as more particularly described in the Purchase Agreement;
and
WHEREAS, Buyer desires that Seller, and Seller is willing to,
provide certain services to Buyer in accordance with the terms of this
Agreement.
NOW, THEREFORE, in consideration of the premises, and subject to the
terms and conditions herein contained, the parties hereto agree as follows:
1. DEFINITIONS. Any term capitalized herein and not otherwise
defined shall have the meaning assigned to it in the Purchase Agreement.
2. SERVICES.
(a) Provision of Services. Commencing on the Closing Date and
continuing throughout the Term (as defined below), unless earlier terminated
pursuant to the terms of this Agreement, in addition to all other obligations of
the parties contained herein, subject to Section 2(b), Seller shall provide to
Buyer the services described on Schedule A attached hereto (the "SERVICES").
(b) Quality of Seller Services. Seller hereby agrees that (i) the
Services provided hereunder shall be substantially similar in scope, timeliness
and quality as provided by the Seller immediately prior to the Closing Date and
(ii) it shall use commercially reasonable efforts to ensure that the personnel
who will provide such Services will have substantially similar levels of
experience regarding the Services as the personnel who provided such Services
immediately prior to the Closing Date.
3. FEES AND EXPENSES.
(a) In consideration for providing the Services, Buyer shall pay
to Seller for each calendar month: (x) a fee calculated based on the rates set
forth for each type of Service on Schedule A, attached hereto; and (y) all
reasonable out-of-pocket expenses incurred by Seller in providing such services
pursuant to this Agreement (including, but not limited to, airfare, lodging,
meals, mileage, parking and ground transportation).
(b) Seller shall deliver to Buyer an invoice at the end of each
calendar month during the Term hereof setting out: (i) the nature and scope of
the Services provided to Buyer for the month then ended, (ii) the rate charged
for each such Service, (iii) if applicable, the number of hours charged for each
such Service (which shall include travel time), (iv) a list of the out-of-pocket
expenses incurred by Seller in providing all Services for the month then ended
and (v) the total amount due for such Services. Upon receipt by Buyer of such
invoice, Buyer shall promptly pay to Seller in cash the total amount specified
therein on or before the later of (A) the last day of the month in which the
invoice is received or (B) 15 days after receipt of said invoice (such later
date, the "PAYMENT DATE").
(c) In the event Buyer disputes any charges invoiced by Seller
pursuant to this Agreement, Buyer shall deliver a written statement describing
the dispute to Seller on or before the Payment Date with respect to the disputed
invoice. The statement shall provide a sufficiently detailed description of the
disputed items. Fees not so disputed shall be deemed accepted and shall be paid
timely in accordance with this Section 3.
(d) Unless otherwise specified in Schedule A, in the event the
actual use of a service to be provided hereunder is less than the period
specified with respect to such service, then the charges shall be prorated on
the basis of the actual period of use of such service.
4. TERM OF AGREEMENT.
(a) Subject to Section 4(b), this Agreement shall commence on the
Closing Date and, unless sooner terminated pursuant to the terms hereof, shall
continue in effect for one (1) year thereafter.
(b) Any and all of the Services (including any portion of a
specific Service or the provision of any Service at a particular location) are
terminable by Buyer at any time upon giving Seller at least thirty (30) days
prior written notice which, for purposes of this Section 4(b) only, may be made
by electronic mail but otherwise in accordance with Section 11 hereof.
(c) Notwithstanding the foregoing, either party shall have the
right to terminate this Agreement in the event of a material breach hereunder by
the other party that is not remedied within fifteen (15) days following notice
thereof by the non-breaching party. Upon expiration or termination of this
Agreement, the parties shall have no further rights or obligations hereunder,
except for those arising under Sections 5 and 6, respectively, which shall
survive any such expiration or termination for the respective periods set forth
therein.
5. LIMITATION ON LIABILITY; INDEMNITY.
(a) Seller shall not be liable for any Losses (as defined in the
Purchase Agreement) arising out of or related to the Services furnished by
Seller under this Agreement, whether arising out of breach of warranty, strict
liability, tort, contract or otherwise, other than Losses which result directly
from Seller's gross negligence or willful misconduct in performing its
obligations hereunder.
(b) Seller's liability to Buyer for any Losses shall not exceed
the amount paid by Buyer for the Services under this Agreement.
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(c) Under no circumstances shall Seller or Buyer be liable for
any special, indirect, exemplary or consequential damages, including without
limitation, lost profits.
(d) Buyer and Parent agree to jointly and severally indemnify and
hold harmless Seller from and against any Losses incurred by Seller arising out
of, resulting from, or relating to the provision of the Services by Seller.
6. CONFIDENTIALITY.
(a) Each party agrees to refrain from using in any manner, and to
use all reasonable efforts to keep confidential, in accordance with this Section
6, any and all information and data ("CONFIDENTIAL INFORMATION"), which such
party has received or receives as a result of this Agreement except to the
extent that such party can demonstrate that the Confidential Information (i) is
generally available to the public as evidenced by prior written publication
through no act or failure to act of the receiving party, (ii) was received by
the receiving party on a non-confidential basis from the other party and was
already known to the receiving party on a non-confidential basis on the date of
receipt based on the written evidence of the receiving party, (iii) is
subsequently disclosed to the receiving party lawfully on a non-confidential
basis by a third party not bound by an obligation of confidentiality with
respect to such information, or (iv) is independently developed by it without
regard to such information and data. Notwithstanding the foregoing, each party
shall be free to disclose any Confidential Information to the extent (y)
required by applicable law, or (z) necessary to establish such party's position
during the course of or in connection with any litigation, governmental
investigation, arbitration or other proceeding based upon or in connection with
the subject matter of this Agreement. Prior to any such disclosure, the
disclosing party shall give reasonable prior notice to the affected party of
such intended disclosure (which notice shall include the proposed text of the
intended disclosure) and, if requested, by such affected party, shall use
reasonable efforts at such affected party's expense to obtain a protective order
or similar protection for such affected party.
(b) Each party shall hold all Confidential Information in
confidence and restrict its disclosure to only such of its affiliates,
directors, officers, employees and agents as have a reasonable need to know such
information. Each party shall make at least the same efforts as it makes with
respect to its own confidential and proprietary information to protect
confidentiality of all Confidential Information (including, without limitation,
obtaining the agreement of persons to whom the party properly discloses
Confidential Information that they agree to be bound by the provisions of this
Section 6).
(c) Notwithstanding anything herein to the contrary, any party
(and each employee, representative or other agent of any party) to this
Agreement may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to such party relating to such tax treatment and tax
structure.
(d) The provisions of this Section 6 shall remain in effect for a
period of one (1) year after the termination of this Agreement.
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7. GUARANTEE OF PARENT. Parent hereby guarantees any and all
obligations and liabilities of Buyer under this Agreement.
8. FURTHER ASSURANCES.
(a) Seller shall execute such documents and other papers and take
such further action, at Buyer's expense, as Buyer may reasonably request which
are necessary in order to carry out the provisions hereof and provide the
Services hereunder.
(b) Buyer shall execute such documents and other papers and take
such further action, at Seller's expense, as Seller may reasonably request which
are necessary in order to carry out the provisions hereof.
9. INDEPENDENT CONTRACTOR. Seller shall perform the Services as an
independent contractor and this Agreement is not intended to create, nor shall
it in any way be interpreted to create a joint venture, partnership or any other
similar relationship between Seller and Buyer. The employees of Buyer, who, from
time to time, may occupy a particular location, shall not be considered to be
employees of Seller for any purpose whatsoever. This Agreement shall not be
construed as constituting Seller as agent for Buyer or Buyer as agent for Seller
for any purpose whatsoever. Each party shall conduct its businesses at its own
risk and expense and for its own account and neither party is granted any right
or authority to create any obligation on behalf or in the name of the other or
to bind the other in any manner whatsoever.
10. AMENDMENT. To the extent any service provided by Seller to Buyer
on the Closing Date and not covered under this Agreement is necessary or
desirable in order for Buyer to operate the Business in substantially the same
manner as the Business was operated immediately prior to the Closing Date,
Seller and Buyer agree to negotiate in good faith an amendment of this Agreement
covering such service and the rates therefor.
11. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given upon receipt if (a)
mailed by certified or registered mail, return receipt requested, (b) sent by a
nationally recognized overnight delivery service (receipt requested), fee
prepaid, (c) sent via facsimile with receipt confirmed, or (iv) delivered
personally, addressed as follows or to such other address or addresses of which
the respective party shall have notified the other.
(a) If to Seller, to:
KPMG LLP
345 Park Avenue
New York, New York 10154
Attention: Jack T. Taylor, Jr.
Facsimile: (212) 909-5049
E-mail: jtaylor@kpmg.com
and
F-4
KPMG LLP
Office of the General Counsel
280 Park Avenue
New York, New York 10032
Attention: Mark Zuffante, Esq.
Facsimile: (212) 909-5687
E-mail: mzuffante@kpmg.com
With a copy (which shall not constitute notice pursuant to
this Section 11) to:
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, New York 10022
Attention: Stephen E. Older, Esq.
Facsimile: (212) 872-1002
E-Mail: solder@akingump.com
(b) If to Buyer or Parent, to:
FTI Consulting, Inc.
900 Bestgate Road, Suite 100
Annapolis, Maryland 21401
Attention: Theodore I. Pincus, Executive Vice President
and Chief Financial Officer
Facsimile: (410) 224-2809
E-Mail: ted.pincus@fticonsulting.com
With a copy (which shall not constitute notice pursuant to
this Section 11) to:
Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, NY 10166
Attention: Clifford E. Neimeth, Esq.
Facsimile: (212) 801-6400
E-Mail: neimethc@gtlaw.com
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the parties and supersedes any prior agreement or
understanding, written or oral, relating to the subject matter of this
Agreement.
13. JURISDICTION, SERVICE OF PROCESS, NO JURY TRIAL. Each of the
parties hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York (as well as all appropriate appellate courts) or, if
jurisdiction in such court is lacking, the courts of the State of New York
F-5
sitting in New York County (as well as all appropriate appellate courts), for
any actions, suits or proceedings arising out of or relating to this Agreement
(and agrees not to commence any action, suit or proceeding relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 11 will be effective service of process for any action, suit or
proceeding brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement in the
aforementioned courts and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
Each of the parties hereto hereby further irrevocably and unconditionally waives
all right to trial by jury in any action, suit or proceeding arising out of this
Agreement.
14. GOVERNING LAW. This Agreement will be construed in accordance
with and governed by the internal procedural and substantive laws of the State
of New York applicable to agreements made and to be performed entirely within
such State and without regard to the conflicts of law principles thereof.
15. WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by Law, (a) no claim or right arising out of this Agreement can
be discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given and will not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure or noncompliance; and (c) no notice
to or demand on one party will be deemed to be a waiver of any obligation of
such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement.
16. NO ORAL MODIFICATION. This Agreement may not be amended except
by a written agreement executed by the party to be charged with the amendment.
Any attempted amendment in violation of this Section 16 will be void ab initio.
17. ASSIGNMENTS, SUCCESSORS. No party may assign any of its rights
under this Agreement without the prior written consent of the other parties
hereto or thereto. Subject to the preceding sentence, this Agreement will apply
to, be binding in all respects upon, and inure to the benefit of the successors
and permitted assigns of the parties.
18. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
F-6
19. CAPTIONS. The article, section and paragraph captions herein and
the table of contents hereto are for convenience of reference only, do not
constitute part of this Agreement and will not be deemed to limit or otherwise
affect any of the provisions hereof or thereof. Unless otherwise specified, all
references herein to numbered articles and sections are to articles and sections
of this Agreement, all references herein to schedules are to schedules to this
Agreement and all references herein to exhibits are to exhibits to this
Agreement.
20. NO THIRD PARTY BENEFICIARIES. This Agreement is not intended,
and shall not be deemed, to confer upon or give any person or entity (including,
without limitation, any past or current employee who was or is employed in
connection with the Business) except the parties hereto and their respective
successors and permitted assigns any remedy, claim, liability, reimbursement,
cause of action or other right under or by reason of this Agreement.
21. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which will be deemed to be an original copy of
this Agreement.
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F-7
IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed on its behalf by its duly authorized officers as of the day first above
written.
KPMG LLP
By: ______________________________________
Name:
Title:
DAS BUSINESS, LLC
By: ______________________________________
Name:
Title:
FTI CONSULTING, INC.
By: ______________________________________
Name:
Title:
F-8
SCHEDULE A
SERVICES
Seller agrees to provide the services listed below at the following locations
(the "Locations") of Seller in existence as of the date hereof to the extent
that Seller remains a tenant at each such Location:
Atlanta Suite 2000, 303 Peachtree Street NE, Atlanta,
Georgia 30308-3210 (404-222-3000)
Charlotte Suite 2300, 401 South Tryon Street, Charlotte, North
Carolina 28202 (704-335-5300)
Chicago 303 East Wacker Drive, Chicago, Illinois 60601-5255
(312-665-1000)
Dallas 717 North Harwood, Dallas, Texas 75201-6585
(214-840-2000)
Houston 700 Louisiana Street, Houston, Texas 77002
(713-319-2000)
Indianapolis 2400 First Indiana Plaza, 135 North Pennsylvania
Street, Indianapolis, Indiana 46204-2454
(317-636-5592)
Los Angeles KPMG Tower, Suite 2000, 355 S. Grand Avenue, Los
Angeles, California 90071-1568 (213-972-4000)
Miami One Biscayne Tower, 2 South Biscayne Boulevard,
Miami, Florida 33131 (305-358-2300)
Nashville 1900 Nashville City Center, 511 Union Street,
Nashville, Tennessee 37219-1735 (615-244-1602)
New York City 1345 Avenue of the Americas, New York, New York 10154
(212-758-9700)
Phoenix Suite 1100, One Arizona Center, 400 E. Van Buren
Street, Phoenix, Arizona 85004-2207 (602-253-2000)
Seattle 801 Second Avenue, Suite 900, Seattle, Washington
98104 (206-913-4600)
Washington D.C. 2001 M Street NW, Washington DC 20036-3310
(202-533-3000)
Seller shall provide the services listed below to Buyer for the benefit of the
Transferred Employees and for no other employees or consultants of Buyer. As to
any Location, Seller reserves the right to cease to provide any of the services
listed below in the event substantially all of the Transferred Employees (as
defined in the Purchase Agreement) at any specific location have been relocated
by Buyer.
1. Information Technology Services consisting of:
o Use of telephones, facsimiles and related telecommunication equipment
o Access to the internet including log-on support
A-1
Buyer will comply with Seller's standards to support log-on activities
including compatibility with Seller's hardware and software.
Buyer will use its best efforts to prevent viruses, worms, malicious code
or other disabling devices from affecting Seller's computer network.
Information technology services will be provided at a monthly fixed price
of $167 per full time employee equivalent. These prices are based on usage
of the foregoing information technology services at historical levels for
the Transferred Employees by Location taken as a whole. The parties agree
to negotiate in good faith to establish new prices in the event that
actual usage is materially more or less than such historical levels.
Promptly following the Closing, Seller shall re-image each laptop,
personal digital assistant, or PDA, and other portable computers included
in the Purchased Assets at no additional cost to Buyer.
2. Support and Operations Services consisting of:
o Security
o Office maintenance and utilities
o Access to reception areas and common facilities including any cafeterias,
copiers and conference rooms
o Mail delivery services
Support and operations services will be provided at a monthly fixed cost
of $83 per full time employee equivalent.
3. Occupancy Services consisting of office space at each of the Locations.
Occupancy services will be provided at the following monthly fixed cost
per full time employee equivalent for each Location:
Location Monthly Cost
Atlanta $542
Charlotte $508
Chicago $708
Dallas $450
Houston $625
Indianapolis $317
Los Angeles $733
Miami $442
Nashville $367
New York City $608
Phoenix $342
A-2
Seattle $425
Washington D.C. $800
In addition, promptly following the Closing, to the extent Seller
determines it is necessary, Seller will relocate Seller's employees and
the Transferred Employees at each Location to physically separate the
Transferred Employees from Seller's employees. Buyer shall reimburse
Seller for its actual cost in connection with the foregoing.
Seller acknowledges that the prices or rates set forth in this Schedule A
constitute Seller's good faith estimate of Seller's actual costs in providing
the services hereunder.
A-3
Exhibit G
FORM OF
DAS PRINCIPAL CERTIFICATE
The undersigned, [__________________], a DAS Principal, as defined in
that certain Asset Purchase Agreement, dated as of October 22, 2003 (the
"Agreement"), by and among KPMG LLP, a Delaware limited liability partnership
("KPMG"), FTI Consulting, Inc., a Maryland corporation, and DAS Business, LLC, a
Maryland limited liability company ("Buyer") does hereby certify that:
1. To my actual knowledge and except as set froth on Annex A, the
representations and warranties of KPMG set forth in Article 3 of the Agreement,
together with the schedules thereto, attached hereto as Exhibit A, are true and
correct in all material respects as of the Closing Date (other than
representations and warranties that are qualified as to materiality or Material
Adverse Effect, which representations and warranties shall be true and correct
in all respects), except to the extent that such representations and warranties
are made as of a specified date, in which case such representations and
warranties shall be true and correct (to the extent set forth above) as of such
specified date.
2. To my actual knowledge, all Receivables and Work-In-Process (each
as defined below) as of the date hereof related to the client engagements of the
undersigned have arisen only from bona fide transactions in the ordinary course
of business. Except as set forth on Annex A, the undersigned has no knowledge of
any facts or circumstances (other than general economic conditions) that would
result in any material increase in the uncollectability of the Receivables or
Work-In-Process related to the client engagements of the undersigned. For the
purposes hereof, "Receivables" means all accounts receivable of KPMG related to
the engagement agreements of the undersigned and billed by the undersigned,
including accounts receivable generated from Work-In-Process, and
"Work-In-Process" means all work related to the engagement agreements of the
undersigned that has been performed and has not been billed by the undersigned
and which is reasonably expected to be ultimately billed by the udnersigned in
the ordinary course of business.
The undersigned understands that KPMG has agreed to indemnify Buyer
for certain breaches of KPMG's representations and warranties under the
Agreement and that KPMG is relying on the certifications, representations and
warranties of the undersigned in paragraph 1 above in connection with such
representations and warranties.
All capitalized terms used in this Certificate, unless otherwise
defined herein, shall be deemed to have the meaning ascribed to such terms in
the Agreement.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of [_________________], 2003.
By:
----------------------------
Name:
Title:
Exhibit H
FORM OF PRINCIPAL EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of October 31, 2003 (this "Agreement"), by
and between DAS Business, LLC, a Maryland limited liability company (the
"Company"), and the individual named on Schedule I ("Executive").
W I T N E S S E T H :
WHEREAS, the Company is a wholly owned limited liability company of FTI
Consulting, Inc. ("FTI"); and
WHEREAS, the Company is engaged in the business of providing litigation
and restructuring advisory services; and
WHEREAS, FTI and the Company and KPMG LLP ("KPMG") have entered into an
Agreement for the Purchase and Sale of Assets dated September ___, 2003 (the
"Asset Purchase Agreement") pursuant to which the Company will purchase KPMG's
Dispute Advisory Services ("DAS") business, as defined in the Asset Purchase
Agreement; and
WHEREAS, Executive is a partner or managing director of KPMG, engaged
primarily in KPMG's DAS business; and
WHEREAS, Executive will receive from KPMG proceeds from the sale of DAS
to the Company; and
WHEREAS, the Company desires to retain the services of Executive
following the closing ("Closing") of the transactions under the aforesaid Asset
Purchase Agreement; and
WHEREAS, Executive has entered into an agreement with KPMG pursuant to
which, concurrently with the Closing, Executive will withdraw as a partner of
KPMG or resign from his or her employment relationship with KPMG, and in
connection therewith will be compensated by KPMG in connection with the sale of
the DAS business to the Company; and
WHEREAS, the Company would not have entered into the Asset Purchase
Agreement and paid the consideration to KPMG, a portion of which KPMG will pay
to Executive, but for Executive entering into this Agreement and observing and
performing the provisions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Employment. Effective upon the Closing of the Asset Purchase
Agreement, the Company employs Executive and Executive accepts such employment
upon the terms and conditions set forth in this Agreement.
2. Term of Employment. Executive's employment under this Agreement will
begin immediately following the Closing, if such Closing occurs, and will
continue for a term of five years from the date of the Closing, unless such
employment is sooner terminated in accordance with the provisions of Section 9
hereof, but subject, however, to the provisions of Sections 12, 13, 14, 15, 16,
17, 18, 19, 20, 23, and 26 surviving such termination.
3. Position and Duties. Executive will (a) be employed in a senior
executive capacity in the Company's DAS business with duties and
responsibilities that are consistent with Executive's current position in KPMG's
DAS business, (b) perform such other duties and responsibilities relating to
Company's DAS business as may from time to time be reasonably assigned to
Executive by the Board of Directors of the Company (the "Board of Directors")
and senior management of the Company, comprised of the chairman of Company's
Board of Directors, the chief executive officer, chief operating officer, and
senior vice presidents or persons occupying comparable positions within the
Company ("Senior Management"), commensurate with Executive's position, (c) have
such authority consistent with and subject to Company policy and authority
contained in written directives of Senior Management of the Company as may be
reasonably necessary or appropriate in order to enable Executive to carry out
the duties and responsibilities of Executive's employment hereunder, (d) have
the title set forth on Schedule I, (e) have Executive's principal office located
at the Company's offices set forth on Schedule I, and (f) be entitled to office
services and support commensurate with Executive's position, duties and
responsibilities. Executive shall undertake such travel within or without the
United States as is or may be reasonably necessary to the performance of his
duties hereunder or which may be reasonably requested by Senior Management of
the Company. Executive will devote substantially all of Executive's business
time, attention, and energies to the performance of Executive's duties and
responsibilities hereunder, provided that Executive may engage in personal,
charitable, professional and investment activities to the extent such activities
do not conflict or materially interfere with the ability of Executive to perform
said duties and responsibilities. Subject to and in accordance with FTI policy
and procedures, Executive may serve as a member of the board of directors or
other governing body of other entities. Executive, in the performance of his
duties hereunder, shall observe and adhere to the Company's code(s) of conduct
and ethics, and other corporate governance codes and policies as now existing or
which may hereafter be adopted by the Company.
4. Annual Compensation. Executive will be entitled to the annual
compensation determined and payable in accordance with this Section 4.
(a) Target Salary. A target annual rate of salary ("Target Salary
Rate") will be established by Company and communicated in advance to Executive
for each calendar year (or portion of a calendar year) during the term of this
Agreement. Executive's Target Salary Rate for the partial year ending December
31, 2003 and the calendar year ending December 31, 2004 are set forth on
Schedule I. Executive's Target Salary Rate for each of calendar years 2005, 2006
and 2007 and partial year 2008 will be determined before the beginning of such
year by Senior Management of the Company. The Target Salary Rate for any year
will be divided into two portions, one equal to 85% of the Target Salary Rate
("Fixed Salary"), and the other equal to 15% of the Target Salary Rate
("Contingent Salary"). The Fixed Salary for each year will be payable in
accordance with Section 4(b) below, and the Contingent Salary for each year will
be payable, if at all, in accordance with Section 4(c) below.
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(b) Fixed Salary. The Company will pay Executive's Fixed Salary for
any year or partial year, in cash and in equal installments less all applicable
federal, state and local taxes and any other deductions required to be made by
the Company in accordance with FTI's normal payroll practices; provided,
however, that in no event shall such payments be made on less than a monthly
basis.
(c) Contingent Salary. Executive's Contingent Salary for any year
will be payable to Executive by the Company, if at all, to the extent and when
provided below.
(i) Portion Contingent on Company Performance. For each
calendar year of this Agreement commencing with calendar year 2004 (or partial
calendar year), an amount equal to 66 2/3% of Executive's Contingent Salary (the
"EBITDA Payment") will be payable to Executive if DAS EBITDA Percentage
(represented by the KPMG DAS business acquired under the Asset Purchase
Agreement and the Company's or FTI's DAS business) (defined below) for the year
(or partial year) is at least 100%. If DAS EBITDA Percentage for the year (or
partial year) is less than 100%, then Executive will be entitled to a percentage
of such EBITDA Payment determined under the following table:
DAS EBITDA Executive's
Percentage Percentage
Less than 80% 0%
80 to 89% 25%
90 to 95% 75%
96 to 99% 90%
For any calendar year (or partial calendar year), the DAS EBITDA Percentage will
be the percentage derived by dividing the DAS "actual EBITDA" for such year (or
partial year) by the "target EBITDA" for the year. For the partial year
beginning on the date of the Closing and ending December 31, 2003, the DAS
EBITDA Percentage will be deemed to be 100% if Executive is still employed by
the Company on December 31, 2003, or if Executive's employment is terminated
before that date for any reason other than by the Company for any of the events
set forth in Section 9(b)(i) through Section 9(b)(iv) ("Cause") or voluntarily
by Executive without good reason as set forth in Section 9(e)(i) through Section
9(e)(v) ("Good Reason"). The target DAS EBITDA for 2004 and each subsequent
calendar year will be equal to the EBITDA projected for the year on the DAS
operating budget, which target DAS EBITDA will be recommended by the DAS Leader
and approved by Senior Management of FTI in accordance with FTI policy and
procedures. FTI and/or the Company shall maintain appropriate accounting systems
and policies which will allow it to calculate DAS EBITDA for the relevant years
or partial years. The target EBITDA for the partial year ending in 2008 will be
equal to a pro rata portion of the target DAS EBITDA for the full year, based
upon the number of days in such partial year.
The EBITDA Payment, if any, payable to Executive under this subsection
(i) for a year (or partial year) will be paid by Company to Executive within 30
days after the audited consolidated financial statements of FTI for such year
become available but in no event later than 120 days from the end of such year
(including following the expiration of the term of this Agreement for the 2008
partial year).
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(ii) Portion Contingent on Individual Performance. For any
calendar year (or partial calendar year), an amount equal to the remaining 33
1/3% of Executive's Contingent Salary (the "Individual Performance Payment")
will be payable if and to the extent Executive satisfies the individual
performance target set forth on Schedule I. Any Individual Performance Payment
will be paid to Executive by Company within thirty days after the end of such
year or partial year (including following the expiration of the terms of this
Agreement for the 2008 partial year).
5. Employee Benefit Programs and Perquisites.
(a) General. Executive will be entitled to participate in such
qualified and nonqualified employee pension plans, group health, long-term
disability and group life insurance plans, and any other welfare and fringe
benefit plans, arrangements, programs and perquisites, including stock option
and stock purchase plans, generally maintained or provided by the Company or FTI
from time to time to or for the benefit of their executive employees or
employees generally ("Benefit Plans"), at a level commensurate with Executive's
position and FTI policy regarding other similarly situated FTI executives.
Executive's participation in any Benefit Plans will be subject to the terms of
the applicable plan documents and FTI's generally applied policies. FTI in its
discretion may from time to time adopt, modify, interpret, or discontinue such
plans or policies in a manner generally applicable to similarly situated FTI
executives. Executive will be given full credit for service with KPMG and its
predecessors prior to the Closing for purposes of determining Executive's
eligibility and vesting in any benefits (but not for purposes of determining
Executive's accrued benefits) under the Benefit Plans and for purposes of
determining Executive's period of employment under any vacation, sick pay or
other paid time off plan of Company and for determining other entitlements and
terms of employment affected by seniority under FTI's employment policies. Any
Benefit Plan which provides medical, dental or life insurance benefits shall
waive any waiting periods and any pre-existing conditions and actively-at-work
exclusions. Executive will be entitled to at least four weeks of paid vacation
for each calendar year (pro-rated for partial calendar years) subject to
Company's policies on use and retention of such vacation in effect from time to
time for FTI's similarly situated executives. The Company and FTI represent that
Executive, as an employee of the Company, shall receive and/or be eligible to
receive benefits consistent with benefits provided to other similarly situated
executives of FTI; provided, however the foregoing shall not be deemed or
construed to be a guarantee of the grant to Executive of any discretionary
benefit, bonus, incentive or other form of discretionary compensation.
(b) Reimbursement of Business Expenses. Executive is
authorized to incur reasonable expenses in carrying out Executive's duties and
responsibilities under this Agreement, and Company will promptly pay or
reimburse Executive for all such expenses that are so incurred upon presentation
of appropriate vouchers or receipts, subject to Company's expense reimbursement
policies in effect from time to time with respect to executives of FTI.
(c) Restricted Stock. As soon as practicable following the
Closing, and as part of Executive's compensation, in addition to Executive's
Fixed Salary and Contingent Salary, FTI shall allocate and award to Executive
restricted shares of FTI's common stock;
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the number of which is set forth in Schedule I hereto (the "Restricted Shares"),
in accordance with, and subject to, the terms and conditions set forth in, the
Restricted Share Award Agreement attached hereto as Exhibit A and made a part
hereof. The Restricted Shares shall become fully vested at the conclusion of
Executive's term of employment as provided in Section 2 hereof subject, however,
to the acceleration of the vesting of such Restricted Shares as provided in
Sections 10(b)(iv), 10(c)(iii), and 11 hereof. In all cases, all right, title,
interest or claim to all or any of the Restricted Shares by Executive,
Executive's personal representative or heirs shall cease and terminate in the
event of the termination of Executive's employment by Executive by reason of the
Executive's voluntary resignation as provided for in Section 9(a) hereof, or the
termination of Executive's employment by the Company for cause as provided in
Section 9(b) hereof. FTI shall issue the Restricted Shares in the name of
Executive as soon as practicable following the approval of an Additional Listing
Application filed by FTI with the New York Stock Exchange and furnish Executive,
within five business days after issuance, proof of issuance in the form of a
photocopy of the Restricted Share certificate issued in Executive's name. Such
Additional Listing Application shall be filed by FTI within 45 days after the
date of Closing. The Restricted Shares shall, however, be held by the Secretary
of the Company until such time as such Restricted Shares shall have vested upon
the conclusion of the term of Executive's employment, the occurrence of any
event accelerating vesting, or such Restricted Shares shall be forfeited as
provided for herein. In the event of the forfeiture of the Restricted Shares as
provided for herein, such Restricted Shares shall, without further act or
writing by or between the parties, be canceled and returned to the status of
authorized but unissued shares. Upon the vesting of the Restricted Shares, the
Secretary shall deliver such Restricted Shares to Executive within five business
days of such vesting (as to which an investment legend shall appear, which shall
be subject to removal upon the resale of the Restricted Shares by Executive
pursuant to a registration statement filed by FTI with the Securities and
Exchange commission on Form S-8 or other applicable form, to be filed by FTI
within 90 days from the date of Closing), and further subject to the payment by
Executive to the Company of all applicable withholding taxes associated with the
vesting of the Restricted Shares.
6. No Other Employment; No Restriction as to Use of Information.
Executive represents and warrants to Company that, subject to Executive's
withdrawal from KPMG pursuant to the above-referenced withdrawal agreement,
Executive is not subject to any agreement, commitment, or policy of any third
party that would prevent Executive from entering into or performing the duties
of Executive's employment under this Agreement. Executive will not enter into
any agreement or commitment or agree to any policy that would prevent or hinder
the performance of Executive's duties or obligations under this Agreement.
Executive further represents and warrants that Executive will not utilize any
secret, confidential or proprietary information belonging to any third party in
the performance of his duties hereunder in violation of such third party rights.
7. Professional Licenses. If Executive is a certified public
accountant, Executive represents and warrants to the Company that Executive is
duly licensed and in good standing in such states and jurisdictions in which
Executive practiced while a partner or managing director of KPMG, and that
Executive has not been subject to professional discipline in his capacity as an
accountant, nor to Executive's knowledge is there threatened or pending any
investigation or
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proceeding by any federal or state regulatory or licensing authority or
professional association relating to or arising out of any activity of Executive
as a certified public accountant.
8. No Payments to Governmental Officials. Executive will not knowingly
pay or authorize payment of any remuneration to, or on behalf of, any
governmental official which would constitute a violation of applicable law.
Company will neither request nor require Executive to offer to make or make a
payment of any remuneration to or on behalf of any governmental official other
than those required or expressly permitted by applicable law.
9. Termination of Employment.
(a) Resignation. Executive may voluntarily resign Executive's
employment under this Agreement at any time upon at least 90 days prior written
notice to Company. The Company may waive such notice or authorize a shorter
notice period.
(b) Termination by Company for Cause. The Company may terminate
Executive's employment for "Cause" if (and only if) Executive:
(i) is convicted of, or pleads nolo contendere to, a felony
involving moral turpitude; or
(ii) breaches any material provision of this Agreement or
willfully fails or refuses to carry out the material responsibilities of
Executive's employment with Company under this Agreement; or
(iii) engages in any other willful misconduct or a pattern of
behavior in violation of this Agreement or Company policy which has had, or is
reasonably likely to have, a significant adverse effect on FTI; or
(iv) while a partner, managing director or employee of KPMG, (a)
engaged in any act of willful misconduct, breach of fiduciary duty, or a pattern
of behavior in violation of a KPMG policy which has or is reasonably likely to
have a significant adverse effect on FTI or Executive's ability to perform his
obligations under this Agreement or (b) Executive was convicted of a felony
involving moral turpitude.
Executive's termination for Cause will be effective immediately upon Executive's
receipt of notice of such termination, provided such notice is given within 90
days after the discovery by Company of the event of conduct giving rise to
grounds to terminate Executive for Cause. Before terminating Executive for Cause
under clauses (ii) or (iii) above, Company Senior Management will specify in
writing to Executive the nature of this act, omission, refusal, failure or
breach that it deems to constitute Cause and if the action is curable, give
Executive at least 30 days from the receipt of such notice to correct the
situation (and thus avoid termination for Cause),
(c) Termination by Company Without Cause. Subject to the provisions
hereof, Company may terminate Executive's employment under this Agreement before
the end of the term, without Cause, upon 30 days' prior written notice;
provided, however, that
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Executive will be entitled to at least 90 days' notice of termination if the
termination is to be effective on or after the last day of the term set forth in
Section 2.
(d) Termination Due to Disability. If Executive becomes "Disabled"
(as defined below), the Company may terminate Executive's employment upon
written notice to the Executive. For the purposes hereof, Executive will be
deemed to be Disabled if Executive is unable to substantially perform the
customary duties and responsibilities of Executive's employment for 120 or more
days during any 180 day period by reason of a physical or mental incapacity
which is expected to result in death or last indefinitely.
(e) Termination by Executive for Good Reason. Executive may resign
for "Good Reason" if, without Executive's prior written consent, the Company or
FTI:
(i) materially reduces the scope or nature of Executive's duties
or responsibilities on client matters in a manner which is inconsistent with
Executive's then current client duties and responsibilities or with Executive's
position as described in this Agreement or which has or is reasonably likely to
have a material adverse effect on Executive's authority relating to client
matters; or
(ii) materially diminishes Executive's working conditions,
including, without limitation, relocation by more than 50 miles of Executive's
principal office specified in Section 3 hereof; or
(iii) fails to obtain and deliver to Executive a written
agreement from an assignee or successor to Company for the assumption of the
obligations of Company and FTI under this Agreement; or
(iv) instructs Executive to perform an unlawful or dishonest
act, or FTI or the Company materially breaches this Agreement following written
notice from Executive to each of FTI and the Company specifying the act alleged
to be unlawful or dishonest or the alleged material breach and giving FTI and/or
the Company 30 days within which to cure such breach or rectify such direction;
or
(v) if there occurs a one time or cumulative compensation
reduction which reduces the annual rate of Executive's Fixed Salary by more than
30% using 2004 as the base year.
(f) Death. If Executive dies during the term, then the term will end
as of the date of Executive's death.
10. Payments on Termination of Employment.
(a) Termination by Company for Cause or by Executive Without Good
Reason. If Company terminates Executive's employment for Cause or if Executive
resigns without Good Reason, Company will promptly, no later than 30 days from
the date of such termination of employment, pay to Executive:
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(i) the unpaid amount, if any, of Executive's Fixed Salary
through the date of termination;
(ii) the unpaid amount, if any, of Executive's previously
earned and unpaid Contingent Salary for any calendar year ended prior to the
termination of Executive's employment;
(iii) the unpaid amount, if any, of Executive's previously
earned and unpaid discretionary incentive compensation for any calendar year
ended prior to the termination of Executive's employment to the extent awarded.
(iv) the amount of any substantiated but previously
unreimbursed business expenses incurred through the date of termination; and
(v) any additional entitlements, (such as accrued and unused
vacation pay), if any, to which Executive is entitled under the terms of any
Company benefit plan or arrangement in which Executive was a participant.
The aggregate of the amounts described in Section 10(a)(i) through Section
10(a)(v) hereunder shall be referred to in this Agreement as the "Accrued
Compensation". For the avoidance of doubt, if Executive's employment terminates
for Cause or without Good Reason, Executive (a) will not be eligible to receive
the EBITDA Payment or Individual Performance Payment, if any, accruing for the
calendar year in which Executive's employment terminates, and (b) Executive will
be subject to the Restricted Period noted in item 6(a) on Schedule I.
(b) Termination by Company Without Cause or by Executive for Good
Reason. If Company terminates Executive's employment without Cause or if
Executive resigns for Good Reason, Executive will be entitled to receive the
following payments and benefits:
(i) any Accrued Compensation, which amount shall be paid in a
lump sum within 30 days of the date of termination;
(ii) pro rata Contingent Salary for the year of termination
(based upon the Contingent Salary target for the year) determined by multiplying
such amount by a fraction, the numerator of which is the number of days from the
beginning of the calendar year through the date of termination, and the
denominator of which is 365, which amount shall be paid in a lump sum within ten
days of the date of termination;
(iii) continued payment of salary for the salary continuation
period specified in Schedule I (the "Salary Continuation Period"), based upon
the greater of(1) Executive's Target Salary Rate for the year in which
Executive's employment is terminated, or (2) Executive's average Target Salary
Rate for the three years preceding the year in which such termination occurs (or
all of the preceding years if less than three);
(iv) full and immediate vesting of any outstanding restricted
stock and of any outstanding stock options or other equity-based awards and, in
the case of stock options (or other similar awards) the continued right to
exercise the options (or other awards) for at least
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three months following the date of termination, but in no event beyond the
expiration of the stated term of such option (or other award); and
(v) continuing group health and group life insurance
coverage for Executive and, where applicable, Executive's spouse and eligible
dependents ("Benefit Continuation Coverage") during the Salary Continuation
Period at the same benefit and contribution levels in effect from time to time
with respect to active similarly situated executives of Company or FTI. If and
to the extent such Benefit Continuation Coverage is not permitted by the
applicable plan or by applicable law, Executive will instead be entitled to cash
payments sufficient to reimburse Executive and/or Executive's spouse and
eligible dependents, on an after tax basis, for the actual cost of comparable
individual or other replacement coverage through the end of the Salary
Continuation Period. The group health portion of Benefit Continuation Coverage
will be in addition to and not in lieu of COBRA continuation coverage.
(c) Termination Due to Death or Disability. In the event of the
termination of Executive's employment due to death or Disability, Executive (or
Executive's estate or other beneficiary) will be entitled to receive the
following payments and benefits:
(i) any Accrued Compensation, which amount shall be paid in a
lump sum within 30 days of the date of termination in the case of disability or
10 days following the appointment of Executive's personal representative,
executor or administrator in the case of death;
(ii) pro rata Contingent Salary for the year of termination
(based upon the Contingent Salary target for the year or, if greater,
Executive's actual Contingent Salary payment for the preceding year) determined
by multiplying such amount by a fraction, the numerator of which is the number
of days from the beginning of the calendar year through the date of termination,
and the denominator of which is 365, which amount shall be paid in a lump sum
within ten days of the date of termination;
(iii) full and immediate vesting of any outstanding restricted
stock and of any outstanding stock options or other equity-based awards and, in
the case of stock options (or other similar awards) the continued right to
exercise the options (or other awards) for at least twelve months following the
date of termination, but in no event beyond the expiration of the stated term of
such option (or other award); and
(iv) Benefit Continuation Coverage, where applicable, for
Executive, Executive's spouse and Executive's eligible dependents for the one
year period following the date of termination. If and to the extent such Benefit
Continuation Coverage is not permitted by the applicable plan or by applicable
law. Executive (or Executive's estate) will instead be entitled to cash payments
sufficient to reimburse Executive and/or Executive's spouse and eligible
dependents, as the case may be, on an after tax basis, for the actual cost of
comparable individual or other replacement coverage through the end of the
Salary Continuation Period not to exceed 150% of the premium cost that would
have been paid by FTI or the company had Executive not died or become
permanently disabled. The group health portion of Benefit Continuation Coverage
will be in addition to and not in lieu of COBRA continuation coverage.
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11. Change in Control. In the event of a Change of Control (as defined
below) prior to the date on which Executive's employment terminates, any
outstanding restricted stock and any outstanding stock options or other
equity-based awards shall accelerate and shall immediately become fully vested.
For purposes hereof, a "Change of Control" means (a) the occurrence of (i) any
consolidation or merger of FTI or the Company in which such entity is not the
continuing or surviving entity or pursuant to which FTI's or the Company's
capital stock would be converted into cash, securities or other property, other
than a consolidation or merger of FTI or the Company in which the holders of the
common stock immediately prior to the consolidation or merger own not less than
50% of the total voting power of the surviving entity immediately after the
consolidation or merger, or (ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or substantially all
of FTI's or the Company's assets, or (b) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), other than FTI or the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of FTI or the
Company, or any company owned, directly or indirectly, by the shareholders of
FTI in substantially the same proportions as their ownership of the FTI common
stock, becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% or more of FTI's or the Company's
common stock; notwithstanding the forgoing, FTI may transfer the shares or
assets of the Company as part of an internal reorganization of FTI that would
not otherwise constitute a Change of Control.
12. Non-Competition Covenants. Recognizing that Executive was a
partner or managing director of KPMG with primary duties and responsibilities in
the KPMG DAS business entity acquired by the Company, and further acknowledging
that the Company obtained title to the business and acquired its goodwill from
KPMG, and that Executive received consideration in the form of a portion of sale
proceeds received by KPMG, and that the Company is continuing to carry on a like
business, Executive acknowledges and agrees that during the Restricted Period
(defined below), Executive will not, directly or indirectly, be employed by,
lend money to, invest in, or engage in a Competing Business (defined below) in
any Market Area (defined below). That prohibition includes, but is not limited
to, acting, either singly or jointly, or as agent for, or as an employee of or
consultant or independent contractor to, any one or more persons, firms,
entities, or corporations directly or indirectly (as a director, independent
contractor, representative, consultant, member, or otherwise) in such Competing
Business. Notwithstanding the foregoing, (a) Executive may own up to 5% of the
outstanding capital stock of any corporation or other entity that is publicly
traded, and (b) following the termination of Executive's employment hereunder,
Executive may provide services as an officer, consultant, employee, director,
partner or otherwise to an entity engaged in multiple business lines (including
a business line that is a Competing Business) provided that the business line(s)
for whom Executive provides services is not a Competing Business.
13. Non-Solicitation Covenants. During the Restricted Period (defined
below), Executive will not, directly or indirectly, whether for Executive or for
any other individual or entity (other than Company), intentionally:
(i) solicit business regarding any case or matter upon which
Executive worked on behalf of Company during the term of this Agreement in a
manner which could reduce the amount of business performed or engaged by the
Company with respect to such case matter; provided however that (i) no such
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solicitation may be made prior to the end of one half of the applicable
Restricted Period having elapsed and (ii) Executive shall no longer be engaged,
directly or indirectly, in a Competing Business;
(ii) solicit any person or entity who is a client of
Company's financial consulting or DAS business in which Executive was engaged to
provide any services at the time of or prior to the termination of Executive's
employment with Company in a manner which could reduce the amount of business
performed or engaged by the Company with respect to such case matter; provided
however that (i) no such solicitation may be made prior to the end of one half
of the applicable Restricted Period having elapsed and (ii) Executive shall no
longer be engaged, directly or indirectly, in a Competing Business; or
(iii) solicit, induce or otherwise attempt to influence any
person whom Company employs or otherwise engages to perform services (including,
but not limited to, any independent consultants, engineers or sales
representatives) or any contractor, subcontractor, supplier, or vendor of
Company, to leave the employ of or discontinue providing services to Company,
provided, however, that this restriction will not apply in the case of any
clerical employee of Company.
14. Confidential Information of Company. Executive's prior association
with KPMG and Executive's association with Company under this Agreement has
given and will give Executive access to Confidential Information (defined below)
not generally known outside of Company that may be of value to Company or that
have been given to Company in confidence by third parties. Executive
acknowledges and agrees that using, disclosing, or publishing any Confidential
Information in an unauthorized or improper manner could cause Company
substantial loss and damages that could not be readily calculated and for which
no remedy at law would be adequate. Accordingly, Executive will not at any time,
except in performing the duties of Executive's employment under this Agreement
(or with the prior written consent of the FTI Board of Directors or Senior
Management), directly or indirectly, use, disclose, or publish any Confidential
Information that Executive may learn or become aware of, or may have learned or
have become aware of because of Executive's association with Company or KPMG, or
use any such Confidential Information in a manner that is or may reasonably be
likely to be detrimental to the business of Company. For the purposes hereof,
the term "Confidential Information" includes, without limitation, information
not previously disclosed to the public or to the trade by Company or KPMG with
respect to its or their present or future business, operations, services,
products, research, inventions, discoveries, drawings, designs, plans,
processes, models, technical information, facilities, methods, trade secrets,
copyrights, software, source code, systems, patents, procedures, manuals,
specifications, any other intellectual property, confidential reports, price
lists, pricing formulas, customer lists, financial information, business plans,
lease structure, projections, prospects, or opportunities or strategies,
acquisitions or mergers, advertising or promotions, personnel matters, legal
matters, proposals, response to any request for proposal, any other confidential
and proprietary information, and any other information not generally known
outside Company that may be of value to Company, but excludes any information
already properly in the public domain. Confidential Information also includes
confidential and proprietary information and trade secrets that third parties
entrust to FTI or Company in confidence. Confidential Information shall not
include any information that (i) has been properly published in a form generally
available to the public prior to the date Executive proposes to disclose or use
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such information or otherwise is or becomes public knowledge through legal means
without fault by Executive, (ii) is already public knowledge prior to the
signing of this Agreement, (iii) was disclosed by the Executive in the proper
performance of the Executive's duties hereunder, or (iv) must be disclosed
pursuant to applicable law, court order or pursuant to the request of a
governmental authority. Information shall not be deemed to have been published
merely because individual portions of the information have been separately
published, but only if all material features comprising such information have
been published in combination. Executive understands and agrees that the rights
and obligations set forth in this Section will continue indefinitely and will
survive termination of this Agreement and of Executive's employment with
Company.
15. Confidential Information of Others. Executive will not use in
working for Company and will not disclose to Company any trade secrets or other
information Executive does not have the right to use or disclose and that
Company is not free to use without liability of any kind. Executive will
promptly inform Company in writing of any patents, copyrights, trademarks, or
other proprietary rights known to Executive that Company will violate because of
information provided to it by Executive.
16. Property Rights. Executive confirms that all Confidential
Information is and must remain the exclusive property of Company. All business
records, business papers, and business documents kept or created by Executive in
the course of Executive's employment by Company relating to the business of
Company must be and remain the property of Company. Notwithstanding the
foregoing, Executive may retain Executive's rolodex, palm pilot or similar
device, and solely the personal non-business information stored thereon, to the
extent such device does not contain Confidential Information or other property
belonging to Company (written or otherwise) not otherwise in the public domain.
Executive will not, without Company's consent, retain copies, excerpts,
summaries, or compilations of the foregoing information and materials following
the termination of this Agreement. The rights and obligations set forth in this
Section will continue indefinitely and will survive the termination of this
Agreement and Executive's employment with Company.
17. Intellectual Property.
(a) All records, in whatever media, documents, papers, inventions
and notebooks, drawings, designs, technical information, source code, object
code, processes, methods or other copyrightable or otherwise protected works
Executive conceives, creates, makes, invents or discovers or that otherwise
relate to any work Executive performs or performed for Company or that arise
from the use or assistance of Company's facilities, materials, personnel or
Confidential Information in the course of Executive's employment (whether or not
during usual working hours), whether conceived, created, discovered, made or
invented individually or jointly with others, will, together with all the
worldwide patent, copyright, trade secret, or other intellectual property rights
in all such works, be and remain the absolute property of Company. Executive
irrevocably and unconditionally waives all rights that may otherwise vest in
Executive's authorship (on or after the date of this Agreement) in connection
with Executive's authorship of any such copyrightable works in the course of
Executive's employment with Company, wherever in the world enforceable. Without
limitation, Executive waives the right to be identified as the author of any
such works and the right not to have any such works subjected to derogatory
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treatment. Executive recognizes any such works are "works for hire" of which
Company is the author.
(b) Subject to Section 17(d), Executive will promptly disclose,
grant and assign ownership to Company for its sole use and benefit any and all
ideas, processes, inventions, discoveries, improvements, technical information,
and copyrightable works (whether patentable or not) that Executive develops,
acquired, conceives or reduces to practice (whether or not during usual working
hours) while employed by Company. Subject to Section 17(d), Executive will
promptly disclose and hereby grants and assigns ownership to Company of all
patent applications, letters patent, utility and design patents, copyrights and
reissues thereof, or any foreign equivalents thereof, that may at any time be
filed or granted for or upon any such invention, improvement, or information. In
connection therewith:
(i) Executive will, without charge but at Company's expense,
promptly execute and deliver such applications, assignments, descriptions and
other instruments as Company may consider reasonable, necessary or proper to
vest title to any such inventions, discoveries, improvements, technical
information, patent applications, patents, copyrightable work or reissues
thereof in Company and to enable it to obtain and maintain the entire worldwide
right and title thereto; and
(ii) Executive will provide to Company at its expense all
such assistance as Company may reasonably require in the prosecution of
applications for such patents, copyrights or reissues thereof, in the
prosecution or defense of interferences that may be declared involving any such
applications, patents or copyrights and in any litigation in which Company may
be involved relating to any such patents, inventions, discoveries, improvements,
technical information or copyrightable works or reissues thereof. Company will
reimburse Executive for reasonable out-of-pocket expenses incurred and pay
Executive reasonable compensation (at a rate not less than the last prevailing
fixed compensation rate received by the Executive during Executive's employment
hereunder) for Executive's time if Company no longer employs Executive.
(c) To the extent, if any, that Executive owns rights to works,
inventions, discoveries, proprietary information, and copyrighted or
copyrightable works, or other forms of intellectual property that are
incorporated in the work product Executive creates for Company, Executive agrees
that Company will have an unrestricted, nonexclusive, royalty-free, perpetual,
transferable license to make, use, sell, offer for sale, and sublicense such
works and property in whatever form, and Executive hereby grants such license to
Company.
(d) Notwithstanding the foregoing, this Section 17 (relating to
records, documents, papers, inventions, notebooks, source code, object code,
processes, methods, patent applications, letters patent, processes, inventions,
discoveries, improvements, technical information, ideas, copyrightable works,
copyrights and reissues thereof, and other intellectual property described
above, together with any foreign equivalents thereof (each, an "IP Asset") shall
not apply to any IP Asset for which no equipment, supplies, facility or trade
secret information of Company (including any of its predecessors) was used and
that was developed entirely on Executive's own time, unless (a) the IP Asset
relates (i) directly to the business of Company, or (ii) Company's actual or
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anticipated research or development, or (b) the IP Asset results from any work
Executive performed as an employee of Company.
18. Definitions. For purposes of Sections 12 through 17, the following
terms shall have the meaning set forth below:
(a) Restricted Period. For the purposes hereof, the term
"Restricted Period" means the period beginning on the date of the Closing and
ending on whichever of the following dates is applicable: (1) if Executive's
employment is terminated by Executive for Good Reason or by Company without
Cause during the term of this Agreement or by reason of Disability, the
expiration of the applicable Salary Continuation Period on Schedule I, (2) if
Executive's employment is terminated by the Company for Cause or by the
Executive without Good Reason, the expiration of the Restricted Period set forth
in item 6(a) on Schedule I, (3) if upon the expiration of the term of this
Agreement, the Company in its sole discretion provides 90 days' notice to the
Executive and agrees in writing to continue to pay Executive his Target Salary
and benefits during the Restricted Period set forth in item 6(b) on Schedule I
in accordance with Company's normal payroll and benefits practices, the
Restricted Period set forth in item 6(b) on Schedule I (4) unless clause (1),
(2) or (3) applies, upon the expiration of the term of this Agreement.
Notwithstanding the foregoing, the Restricted Period will terminate upon the
breach by the Company of this Agreement. The duration of the Restricted Period
will be extended by the amount of any and all periods that Executive violates
the covenants of any of Sections 12 and 13.
(b) Competing Business. For the purposes hereof, the term
"Competing Business" means any litigation related line of business actively
conducted by Company in which Executive is substantially engaged during the
period of Executive's employment with Company and at the time Executive's
employment ends.
(c) Market Area. For purposes hereof, the term "Market Area"
means the area within a 25 mile radius of any location in which Company has an
office and in which Company offers or provides financial consulting or DAS
consulting services to clients in the ordinary course of its business.
19. Enforceability. If any of the provisions of Sections 12 through 19
are ever deemed to exceed the time, geographic area, or activity limitations the
law permits, the limitations will be reduced to the maximum permissible
limitation, and Executive and Company authorize a court or arbitrator having
jurisdiction to reform the provisions to the maximum time, geographic area, or
activity limitations the law permits; provided, however, that such reductions
apply only with respect to the operation of such provision in the particular
jurisdiction in which such adjudication is made.
20. Remedies. Without limiting the remedies available to the parties,
each party acknowledges that a breach of any of the covenants in Sections 12
through 18 may result in material irreparable injury to Company for which there
is no adequate remedy at law, and that it will not be possible to measure
damages for such injuries precisely. The parties agree that, if there is a
breach or threatened breach of such covenants, Company will be entitled to
obtain a temporary restraining order and/or a preliminary or permanent
injunction restraining Executive from engaging in prohibited activities or such
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other relief as may be required to specifically enforce any of said covenants.
Each party agrees that all remedies expressly provided for in this Agreement are
cumulative of any and all other remedies now existing at law or in equity. In
addition to the remedies provided in this Agreement, the parties will be
entitled to avail themselves of all such other remedies as may now or hereafter
exist at law or in equity for compensation, and for the specific enforcement of
the covenants contained in Sections 12 through 19, as contemplated in and
provided for in Section 26. Resort to any remedy provided for in this Section or
provided for by law will not prevent the concurrent or subsequent employment of
any other appropriate remedy or remedies, or preclude a recovery of monetary
damages and compensation. Each party agrees that no party hereto must post a
bond or other security to seek an injunction.
21. Benefit. This Agreement shall be for the benefit of the Executive,
the Company, FTI, their respective affiliates, successors and assigns. FTI shall
be deemed to be an express intended third party beneficiary of this Agreement.
22. Assignment. The Company may assign or otherwise transfer this
Agreement and any and all of its rights, duties, obligations, or interest under
it to:
(a) Any of FTI's other majority controlled affiliates or
subsidiaries; or
(b) Any successor to all or a material part of the business of
Company (directly or indirectly) as a result of a Change of Control, provided
such transferred business includes all or substantially all of the DAS business
and the transferee specifically assumes the Company's and FTI's obligations
hereunder.
Upon such permitted assignment or transfer, the assignee or transferee (as
applicable) shall be deemed to be substituted for Company for all purposes.
Notwithstanding any such assignment or transfer, Company shall remain jointly
and severally liable, with such assignee or transferee, for the performance of
its obligations hereunder. Except as herein provided, this Agreement may not
otherwise be assigned or transferred by Company. Without Company's prior written
consent, Executive may not assign or delegate the obligations of Executive under
this Agreement except that Executive's right to receive compensation and
benefits hereunder may be transferred or disposed of pursuant to testamentary
disposition or intestate succession.
23. Severability. If the final determination of an arbitrator or a
court of competent jurisdiction declares, after the expiration of the time
within which judicial review (if permitted) of such determination may be
perfected, that any term or provision of this agreement is invalid or
unenforceable, the remaining terms and provisions will be unimpaired, and the
invalid or unenforceable term or provision will be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. Any prohibition or
finding of unenforceability as to any provision of this Agreement in any one
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
24. Amendment; Waiver. Neither Executive nor Company may modify,
amend, or waive the terms of this Agreement other than by a written instrument
signed by Executive and Company. Any party's waiver of another party's
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compliance with any provision of this Agreement is not a waiver of any other
provision of this Agreement or of any subsequent breach by such party of a
provision of this Agreement. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
25. Withholding. The Company will reduce its compensatory payments to
Executive hereunder for withholding and FICA and Medicare taxes and any other
withholdings and contributions required by law.
26. Governing Law. This Agreement shall be governed by the internal
laws of the State of New York without regard to principles of conflicts of law.
Any action, proceeding or controversy arising out of or relating to the breach,
interpretation or application of Section s 12, 13, 14, 18, 20 and 21 of this
Agreement shall be brought in a court of competent jurisdiction located in the
State of New York, and the Company and Executive each herewith submits to the in
personam jurisdiction of such court.
27. Notices. Notices may be given in writing by personal delivery, by
certified mail, return receipt requested, by telecopy, or by overnight delivery.
Executive should send or deliver notices to the office of Secretary of FTI at
909 Commerce Road, Annapolis, Maryland 21401, fax number: (410) 224-2809, with a
copy to Company at 909 Commerce Road, Annapolis, Maryland 21401, fax number:
(410) 224-2809. The Company will send or deliver any notice given to Executive
at Executive's address as reflected on Company's personnel records. Executive,
FTI, and Company may change the address for notice by like notice to the others.
Executive, FTI, and Company agree that notice is deemed received on the date it
is personally delivered, the date it is received by certified mail, the date of
guaranteed delivery by overnight service, or the date the fax machine confirms
receipt.
28. Superseding Effect. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements, and writings between
Executive and Company with respect to the subject matter. All such other
negotiations, commitments, agreements, and writings will have no further force
or effect, and the parties to any such other negotiation, commitment, agreement,
or writing will have no further rights or obligations thereunder.
29. Arbitration.
(a) Any dispute or controversy arising under or in connection
with this Agreement or Executive's employment relationship with Company will be
settled exclusively by binding arbitration to be held in the metropolitan area
in which Executive is employed and conducted in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association ("AAA") then in effect.
(b) After either party submits a request for arbitration, AAA
will be requested to appoint a single, neutral arbitrator, within five business
days after such request, to preside over the arbitration and resolve the
dispute. The parties agree to raise any objections to such appointment within
five business days after it is made and to limit those objections to the
arbitrator's actual conflict of interest. The arbitrator will be directed to
render a decision within 60 days after being appointed to serve as arbitrator,
unless the parties otherwise agree in writing or the arbitrator makes a finding
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that a party has carried the burden of showing good cause for a longer period.
(c) The parties will 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 and agents as the arbitrator may
request. The parties direct the arbitrator to take into account their 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 arbitrator will not have the authority to add to, detract
from, or modify any provision of this Agreement nor to award punitive damages.
Each of the parties shall bear their respective counsel fees, costs and expenses
with respect to any arbitration proceeding under this Section 29; provided,
however, that the arbitrator may, in his or her discretion, direct that the
non-prevailing party pay all arbitration filing fees, arbitrator fees and fees
for obtaining the transcript of any arbitration proceeding. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
(e) Notwithstanding the foregoing, each party is entitled to seek
injunctive or other equitable relief, as contemplated by Section 20 above, from
any court of competent jurisdiction, without the need to resort to arbitration.
30. Indemnification and Liability Insurance. The Company shall
indemnify Executive to the fullest extent permitted by applicable law and
Company's by-laws with regard to Executive's authorized actions (or inactions)
on behalf of the Company, with advancement of legal fees and other expenses on a
current basis to the fullest extent permitted by law subject to Executive
entering into an agreement with the Company to repay all amounts which may have
been advanced to Executive if it is found that Executive was not entitled to
indemnification and containing such additional provisions as generally required
to be agreed to by other senior executives of FTI with respect to
indemnification. The Company shall cover Executive under FTI's or the Company's
liability insurance policies both during and, while any potential liability
exists, after the term of this Agreement, provided that the amount and extent of
such coverage shall be at least as great and extensive as such coverage on FTI's
similarly situated executives.
31. Guaranty by FTI of the Company's obligations. FTI shall guaranty
the obligations of the Company hereunder and shall cause the Company to perform
its obligations hereunder.
32. Survival. The provisions of Sections 10,12, 13, 14, 15, 16, 17,
18, 19, 20, 21, 22, 23, 26, 27, 29, 30, 31 and 32 of this Agreement shall
survive the termination or expiration of this Agreement.
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IN WITNESS WHEREOF, the undersigned have signed this Agreement on the
date first above written.
DAS Business, LLC
By: FTI Consulting, Inc., its sole member
By
--------------------------------------
Name:
Title:
FTI Consulting, Inc.
By:
--------------------------------------
Name:
Title:
-------------------------------------------
Executive
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SCHEDULE I - PARTNER A
1. Name and Address of Executive.
2. Title and Principal Office Location of Executive.
Title:
Office Location:
3. Target Salary Rate for annualized year 2003 and full year 2004.
(a) 2003
(b) 2004
4. Contingent Salary Based on Individual Performance Targets.
5. Salary Continuation Period.
6. Restricted Period.
(a) With regard to Section 18(a)(2) --
(b) With regard to Section 18(a)(3) --
7. Number of Shares Covered by Restricted Share Agreement
Exhibit A
RESTRICTED SHARE AWARD AGREEMENT
THIS RESTRICTED SHARE AWARD AGREEMENT (this "Agreement"), made
as of this ___ day of __________, 2003 (the "Date of Grant"), by and between FTI
Consulting, Inc., a Massachusetts corporation ("FTI") and __________________, an
individual residing at ____________________________________ (the "Executive").
RECITALS
A. Pursuant to a certain Employment Agreement (the "Employment
Agreement") dated October ___, 2003 by and between the Executive and [NEWCO LLC]
(including, for purposes of this Agreement, any successor or permitted
transferee of [NEWCO LLC] ("NEWCO"), FTI, the sole member of NEWCO, is to grant
to Executive a certain number of restricted shares of FTI's common stock.
B. This Restricted Share Award Agreement is in furtherance of
Paragraph 5(c) of the Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Capitalized Terms. Capitalized terms used but not
otherwise defined shall have the respective meanings ascribed thereto in the
Employment Agreement. All referenced sections and provisions of the Employment
Agreement are hereby incorporated in their entirety in this Agreement by this
reference thereto.
2. Grant of Restricted Shares. In addition to the Fixed
Salary and Contingent Salary to be paid by NEWCO to the Executive, FTI hereby
grants to the Executive [INSERT NUMBER OF RESTRICTED SHARES GRANTED] restricted
shares of FTI's common stock, par value $.01 per share (the "Restricted
Shares"), subject to all of the terms, conditions, vesting and forfeiture
provisions set forth in this Agreement and in the Employment Agreement.
3. Vesting Upon Conclusion of Term of Employment; Accelerated
Vesting. The Restricted Shares shall become fully vested upon the conclusion of
the Executive's term of employment as provided in Section 2 of the Employment
Agreement (provided that the Executive is an employee of NEWCO on that date)
subject, however, to the acceleration of the vesting of such Restricted Shares
as provided in Sections 10(b)(iv), 10(c)(iii) and 11 of the Employment
Agreement.
4. Lapse; Forfeiture. In all cases, all right, title,
interest or claim to all or any of the Restricted Shares by the Executive, the
Executive's personal representative, beneficiaries or heirs shall cease and
terminate in the event of (i) the termination of the Executive's employment with
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NEWCO by the Executive by reason of the Executive's voluntary resignation as
provided for in Section 9(a) of the Employment Agreement, or (ii) the
termination of the Executive's employment by NEWCO for Cause as provided in
Section 9(b) of the Employment Agreement, and the Restricted Shares shall
thereupon be forfeited, and such Restricted Shares shall, without further act or
writing between the parties, be cancelled and returned to the status of
authorized but unissued common shares of FTI.
5. Custody; Resale of Restricted Shares. The certificate
representing the Restricted Shares shall be held by the Secretary of FTI until
such time as such Restricted Shares shall have vested as provided in Section 3
of this Agreement and as provided in the Employment Agreement or the Restricted
Shares shall have been forfeited as provided in Section 4 of this Agreement and
as provided for in the Employment Agreement. Upon the vesting of the Restricted
Shares, the Secretary shall deliver the Restricted Shares certificate to the
Executive, within five business days of such vesting (as to which an investment
legend as set forth in Section 8(a) hereof shall appear, which shall be subject
to removal upon the resale of the Restricted Shares by the Executive pursuant to
a registration statement filed by FTI with the Securities and Exchange
Commission on Form S-8 or other applicable form) and further subject to the
payment by the Executive to FTI of all applicable withholding taxes associated
with the vesting of the Restricted Shares as set forth in Section 9.1 hereof.
Upon any forfeiture of the Restricted Shares, the Secretary of FTI shall be
authorized and empowered to return all certificates representing the Restricted
Shares to FTI's transfer agent for the purpose of cancellation and in connection
therewith shall be empowered to execute such stock powers in the name of
Executive as Executive's attorney in fact to effect such cancellation
6. Voting, Dividends and Distributions. At all times prior to
the vesting of the Restricted Shares or the forfeiture thereof, Executive shall
have the right to vote the Restricted Shares on all matters on which FTI's
common stock shareholders have the right to vote. All dividends and/or
distributions declared or paid upon the Restricted Shares shall be held by the
Secretary of FTI in trust for the benefit of Executive and delivered to
Executive upon the vesting of the Restricted Shares. In the event of the
forfeiture of the Restricted Shares, all dividends and distributions shall be
returned by the Secretary to FTI.
7. Non-Transferability of Restricted Share Grant. Except as
otherwise provided herein or in the Employment Agreement, the Restricted Shares
herein granted and the rights and privileges conferred hereby shall not, prior
to the vesting thereof, be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) and shall not be subject to sale
under execution, attachment or similar process until all restrictions upon such
Restricted Shares contained in this Agreement have lapsed. Upon any attempt to
so transfer, assign, pledge, hypothecate or otherwise dispose of such Restricted
Shares, contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, such Restricted Shares shall be void and of no effect and FTI
shall have the right to disregard the same on its books and records and impose
stop-transfer instructions with respect to such Restricted Shares.
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8. Certificate Legends.
(a) The Restricted Shares shall bear the following legend
before and after the vesting of the Restricted Shares:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES, AND NOT WITH A VIEW
TO RESALE OR DISTRIBUTION THEREOF AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS THEY HAVE FIRST BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNLESS, IN THE OPINION OF COUNSEL FOR THE COMPANY,
SUCH REGISTRATION IS NOT REQUIRED.
(b) In addition to the legend set forth in clause (a) above,
the Restricted Shares shall bear the following additional legend:
"The vesting, sale, assignment or other transfer of
the shares represented by this certificate, whether
voluntary, involuntary, or by operation of law, is
subject to certain forfeiture provisions and
restrictions on transfer as set forth in the
Restricted Shares Agreement dated ___________ ___, 2003 by
and between FTI Consulting, Inc. and [Name of
Employee]; a copy of which is on file with the
Secretary of FTI. A copy of the Restricted Shares
Agreement and relevant portions of the Employment
Agreement may be obtained from the Sole Member of
[NEWCO LLC], FTI Consulting, Inc."
(c) FTI agrees to promptly take such actions as are necessary
to have the legend (i) set forth in Section 8(b) above removed following the
vesting of the Restricted Shares and (ii) set forth in Section 8(a) removed
following the vesting of the Restricted Shares and following such time as the
legend set forth in Section 8(a) is no longer required under applicable law.
9. Certain Covenants.
9.1 Withholding Taxes Associated with Restricted Shares.
Executive shall be responsible for and shall pay to FTI all applicable federal
and state withholding and other taxes associated with the vesting of the
Restricted Shares. No certificates representing the Restricted Shares may be
released by the Secretary of FTI unless and until Executive shall have paid or
made provision for the payment of such taxes. At the option of Executive,
Executive may pay and satisfy all tax obligations associated with the vesting of
the Restricted shares (i) by paying to FTI the full amount of such withholding
or other taxes or (ii) by authorizing and directing FTI to pay all withholding
and other taxes on behalf of Executive and further authorizing FTI to cancel a
number of Restricted Shares otherwise deliverable to Executive equal to the
total amount of withholding and other taxes which Executive would otherwise have
to pay based on the fair market value of a share of FTI common stock as reported
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on the Composite Tape of the NYSE (or if the FTI common stock is not then traded
on the NYSE such other exchange or quotation system on which such stock may then
be traded or quoted) on the day of the vesting of Executive's Restricted Shares.
Alternatively, Executive may elect to be taxed on the Date of Grant rather than
the vesting date of the Restricted Shares by filing an election under Section
83(b) of the Internal Revenue Code of 1986 with the Internal Revenue Service
within 30 days from the Date of Grant, in which case, Executive shall be
responsible for and shall pay directly all withholding and other taxes
associated with the Restricted Shares and shall furnish FTI with reasonable
proof that such taxes have been paid. Any Restricted Shares authorized to be
cancelled by reason of the foregoing provision shall be returned to the status
of authorized but unissued shares and the Secretary of FTI shall be authorized
to execute a stock power or such other documents as may be necessary to
effectuate such cancellation.
9.2. Delivery of Restricted Shares Following Death of the
Executive. Any delivery of the Restricted Shares to be made to Executive under
this Agreement shall, if the Executive is then deceased, be made to the
executor, administrator, or personal representative of the estate of the
Executive ("Permitted Transferee"). Any Permitted Transferee shall furnish FTI
with (a) written notice of his status as Permitted Transferee, (b) evidence
satisfactory to FTI to establish the Permitted Transferee's authority and
validity of the transfer and compliance with any laws or regulations pertaining
to said transfer, and (c) such additional documents as counsel to FTI may
reasonably request.
9.3. Restricted Shares Subject to Same Adjustments
Applicable to All Other Common Shares. Anything to the contrary notwithstanding
in this Agreement, if after the date hereof and at any time prior to the date on
which the Restricted Shares covered by this Agreement vest (as provided herein),
the outstanding shares of FTI's common stock are changed into a different
number, class or series of shares by reason of any reclassification,
combination, recapitalization, forward or reverse split, share dividend or
rights issued in respect of FTI's common stock, or any similar event shall occur
(any such event, a "Capitalization Event"), the number of Restricted Shares
subject to the award thereof made to the Executive under this Agreement (to the
extent not theretofore forfeited as provided in this Agreement) shall be
adjusted correspondingly to provide the Executive the right to receive the same
economic effect as contemplated by the initial award of Restricted Shares made
to the Executive on the date hereof (and prior to any such Capitalization
Event). Upon any Capitalization Event, all references to the number of
Restricted Shares in this Agreement shall be deemed to be appropriately adjusted
to reflect such Capitalization Event.
9.4 Representations and Covenants of FTI. FTI represents
to the Executive that it has all corporate power and authority to execute this
Agreement, issue the Restricted Shares and perform its obligations with respect
to the Restricted Shares set forth in this Agreement and the Employment
Agreement. This Agreement has been duly authorized, executed and delivered by
FTI and no additional corporate approvals are required by FTI's Board of
Directors or shareholders in order for FTI to issue the Restricted Shares and
perform its obligations with respect to the Restricted Shares set forth in this
Agreement and the Employment Agreement. FTI has previously filed an Additional
Listing Application with the NYSE with respect to the issuance of the Restricted
Shares and FTI has received the approval of the NYSE with respect to such
Additional Listing Application. Furthermore, FTI has filed or shall file within
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90 days from the date of Closing a registration statement covering the issuance
of the Restricted Shares with the Securities and Exchange Commission on Form S-8
or other applicable form in order to permit the Executive to publicly sell the
Restricted Shares following the vesting thereof without any restrictions under
applicable securities laws. Other than the filing of such NYSE Additional
Listing Application and Form S-8, no other filing, consent or approval is
required on the part of FTI in order to issue the Restricted Shares and perform
its obligations with respect to the Restricted Shares set forth in this
Agreement and the Employment Agreement.
10. Miscellaneous.
10.1 Enforcement of Rights. No delay or omission by FTI or
the Executive in exercising any of the rights set forth under this Agreement
will operate as a waiver of that or any other right. A waiver or consent given
by FTI or the Executive on any one occasion is effective only in that instance
and will not be construed as a bar, to or waiver of, any right on any other
occasion.
10.2. Injunctive Relief. The restrictions set forth in
this Agreement are necessary for the protection of the business and goodwill of
FTI and are considered by the Executive to be reasonable for such purpose. The
Executive agrees that any breach by the Executive of any term set forth under
this Agreement is likely to cause FTI substantial and irrevocable damage and,
therefore, any such breach shall entitle FTI, in addition to any other legal
remedies available to it, to apply to any court of competent jurisdiction to
enjoin such breach or threatened breach or alleged breach or alleged threatened
breach. The parties hereto understand and intend that each restriction set forth
herein shall be construed as separable and divisible from every other
restriction, and that the unenforceability, in whole or in part, of any other
restriction, will not effect the enforceability of the remaining restrictions
and that one or more or all of such restrictions may be enforced in whole or in
part as the circumstances warrant. The Executive hereby acknowledges that he is
fully cognizant of the restrictions imposed upon him pursuant to the terms of
this Agreement.
10.3. Rule of Construction. The headings and subheadings
set forth in this Agreement are inserted for the convenience of reference only
and are to be ignored in any construction of the terms set forth herein.
10.4. Notices. All notices required or permitted to be
delivered hereunder shall be given in writing by personal delivery, by certified
mail, return receipt requested, by telecopy, or by overnight delivery. If to
FTI, all notices shall be sent or delivered to the office of Secretary of FTI at
909 Commerce Road, Annapolis, Maryland 21401, fax number: (410) 224-2809. If to
Executive, all notices shall be sent or delivered to Executive at the
Executive's address as reflected in FTI's and/or NEWCO's personnel records. The
Executive or FTI may change the address for notice by like notice to the other.
All notices shall be deemed received by the party to whom it is sent on the date
it is personally delivered, the date it is received by certified mail, the date
of guaranteed delivery by overnight service, or the date the fax machine
confirms receipt.
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10.5. Benefits of Agreement. This Agreement shall be for
the benefit of the Executive, FTI and their respective affiliates, successors
and permitted assigns.
10.6. Severability. If the final determination of an
arbitrator or a court of competent jurisdiction declares, after the expiration
of the time within which judicial review (if permitted) of such determination
may be perfected, that any term or provision of this agreement is invalid or
unenforceable, the remaining terms and provisions will be unimpaired, and the
invalid or unenforceable term or provision will be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. Any prohibition or
finding of unenforceability as to any provision of this Agreement in any one
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.7. Governing Law. This Agreement shall be governed by
the internal laws of the State of New York without regard to principles of
conflicts of law. Any action, proceeding or controversy arising out of or
relating to the breach, interpretation or application of this Agreement shall be
brought in a court of competent jurisdiction located in the State of New York,
and FTI and Employee each herewith submits to the in personam jurisdiction of
such court.
10.8. Gender and Number. Unless the context clearly
requires to the contrary, the masculine shall be deemed to refer to the feminine
and neutral, the singular shall be deemed to refer to the plural, and vice
versa.
10.9. Binding Agreement. This Agreement shall be binding
upon and issue to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
10.10. Conflict of Terms. If any provision of this
Agreement is in conflict with, or inconsistent with, any provision in the
Employment Agreement as it relates to the Restricted Shares, the provision
contained in this Agreement shall govern and control.
10.11. Amendment and Waiver. Neither Employee nor FTI may
modify, amend, or waive the terms of this Agreement other than by a written
instrument signed by Employee and FTI.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement,
in duplicate, the day and year first above written.
FTI CONSULTING, INC.
By:
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Name:
Title:
EXECUTIVE
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[Employee Name]
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