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Exhibit 2.1
Execution
Copy
ASSET PURCHASE
AGREEMENT
Dated as of February 16,
2005,
By and Among
FTI CONSULTING,
INC.,
FTI, LLC,
FTI REPOSITORY SERVICES,
LLC,
FTI CONSULTING
LTD.,
FTI AUSTRALIA PTY
LTD,
ACN 112 944 439
EDWARD J.
O’BRIEN,
CHRISTOPHER R.
PRIESTLEY,
RINGTAIL SOLUTIONS PTY
LTD,
ACN 078 393 683
RINGTAIL SOLUTIONS,
INC.,
AND
RINGTAIL SOLUTIONS
LIMITED
TABLE OF
CONTENTS
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ARTICLE I DEFINITIONS
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2 |
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| ARTICLE II PURCHASE AND ASSUMPTION |
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10 |
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Section 2.1
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Purchase and Sale of Assets |
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10 |
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Section 2.2
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Excluded Assets |
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12 |
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Section 2.3
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Assumption of Liabilities |
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12 |
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Section 2.4
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Purchase Price |
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13 |
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Section 2.5
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Closing Statement; Working Capital
Adjustment |
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14 |
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Section 2.6
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The
Closing |
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16 |
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Section 2.7
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Deliveries at the Closing |
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16 |
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ARTICLE III REPRESENTATIONS AND
WARRANTIES RELATED TO SELLERS AND PRINCIPALS
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16 |
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Section 3.1
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Organization; Qualification |
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16 |
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Section 3.2
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Authorization; Validity of Obligations |
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17 |
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Section 3.3
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Noncontravention |
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17 |
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Section 3.4
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Title
to Assets; Tangible Assets |
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17 |
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Section 3.5
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Financial Statements |
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18 |
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Section 3.6
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Events
Subsequent to Most Recent Fiscal Year End |
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18 |
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Section 3.7
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Undisclosed Liabilities |
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19 |
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Section 3.8
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Legal
Compliance |
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19 |
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Section 3.9
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Tax
Matters |
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19 |
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Section 3.10
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Intellectual Property |
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20 |
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Section 3.11
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Material Contracts and Commitments |
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25 |
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Section 3.12
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Government Contracts |
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27 |
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Section 3.13
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Accounts Receivable; Work-in-Process |
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27 |
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Section 3.14
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Insurance |
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27 |
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Section 3.15
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Litigation |
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28 |
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Section 3.16
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Ringtail Employees; Employee Benefits |
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28 |
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Section 3.17
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Permits |
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29 |
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Section 3.18
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Brokers' Fees |
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29 |
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Section 3.19
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Business Activity Restriction |
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30 |
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Section 3.20
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Required Filings and Consent |
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30 |
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Section 3.21
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Real
Property Leases |
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30 |
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Section 3.22
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Business Records |
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30 |
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Section 3.23
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Product Defects; Product Warranties |
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31 |
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Section 3.24
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Authority Relative To This Agreement |
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31 |
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Section 3.25
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No
Conflict |
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31 |
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Section 3.26
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Consents |
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31 |
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Section 3.27
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Disclosure |
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32 |
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ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF FTI AND BUYERS
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32 |
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Section 4.1
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Organization; Qualification |
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32 |
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Section 4.2
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Authorization; Validity of Obligations |
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32 |
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Section 4.3
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Noncontravention |
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33 |
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Section 4.4
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SEC
Documents; Financial Statements |
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33 |
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| Asset
Purchase Agreement |
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i |
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Section 4.5
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Capital Stock of FTI |
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34 |
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Section 4.6
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Transactions In Capital Stock |
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34 |
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Section 4.7
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Brokers' Fees |
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34 |
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Section 4.8
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Disclosure |
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34 |
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ARTICLE V COVENANTS
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34 |
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Section 5.1
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Access
to Information |
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34 |
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Section 5.2
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Consents, Filings and Authorizations |
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34 |
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Section 5.3
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Operation of Business |
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35 |
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Section 5.4
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Notice
of Developments |
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35 |
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Section 5.5
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Exclusivity |
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37 |
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Section 5.6
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Further Assurances |
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37 |
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Section 5.7
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Litigation Support |
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38 |
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Section 5.8
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Confidentiality |
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38 |
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Section 5.9
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Certain Transitional Matters |
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38 |
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Section 5.10
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Employee Matters |
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39 |
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Section 5.11
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Taxes |
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41 |
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Section 5.12
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Change
of Name |
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42 |
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Section 5.13
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Tail
Coverage |
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42 |
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Section 5.14
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Accounts Payable |
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42 |
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Section 5.15
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Deferred Maintenance Schedule Payment |
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43 |
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ARTICLE VI CONDITIONS TO
CLOSING
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43 |
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Section 6.1
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Conditions to Obligation of FTI and Buyers |
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43 |
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Section 6.2
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Conditions to Obligation of Sellers and
Principals |
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44 |
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ARTICLE VII
INDEMNIFICATION
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45 |
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Section 7.1
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General Indemnification by Sellers and
Principals |
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45 |
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Section 7.2
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Sellers and Principals Limitation and
Expiration |
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46 |
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Section 7.3
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General Indemnification by FTI and Buyers |
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47 |
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Section 7.4
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FTI
and Buyers Limitation and Expiration |
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48 |
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Section 7.5
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Indemnification Procedures |
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48 |
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Section 7.6
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Survival of Representations, Warranties and
Covenants |
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49 |
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Section 7.7
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Satisfaction of Indemnification Liabilities |
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49 |
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Section 7.8
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Exclusive Remedy |
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50 |
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Section 7.9
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Offset |
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50 |
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ARTICLE VIII
TERMINATION
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50 |
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Section 8.1
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Termination of Agreement |
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50 |
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Section 8.2
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Effect
of Termination |
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51 |
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ARTICLE IX
MISCELLANEOUS
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51 |
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Section 9.1
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Press
Releases and Public Announcements |
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51 |
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Section 9.2
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Successors and Assigns |
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51 |
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Section 9.3
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Entire
Agreement |
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51 |
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Section 9.4
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Counterparts |
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52 |
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Section 9.5
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Expenses |
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52 |
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| Asset
Purchase Agreement |
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ii |
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Section 9.6
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Specific Performance; Remedies |
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52 |
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Section 9.7
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Notices |
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52 |
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Section 9.8
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Governing Law |
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53 |
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Section 9.9
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Severability |
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53 |
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Section 9.10
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Absence of Third Party Beneficiary Rights |
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54 |
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Section 9.11
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Amendment; Waiver |
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54 |
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Section 9.12
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Stamp
Duty |
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54 |
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Section 9.13
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Rules
of Construction |
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54 |
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| Asset
Purchase Agreement |
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iii |
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Exhibits:
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Exhibit A
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— |
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Earnout
Payment |
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Exhibit B
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— |
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Form of
General Assignment and Bill of Sale |
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Exhibit C
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— |
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Form of
Assignment and Assumption Agreement |
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Exhibit D-1, D-2
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— |
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Employment Agreements |
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Exhibit E
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— |
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Form of
Estoppel Certificate |
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Exhibit F
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— |
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XML
Software Letter |
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Exhibit G
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— |
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RAP
Letter |
Schedules:
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2.2
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Excluded
Assets |
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2.4(a)
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Sellers’ Allocation |
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3.1
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State of
Formation |
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3.5
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Financial
Statements |
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3.6
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Events
Subsequent |
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3.9
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Tax
Matters |
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3.10(b)
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Owned or
Licensed Intellectual Property; Intellectual Property
Registrations |
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3.10(c)
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Intellectual Property Agreements; Government or University
Funding |
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3.10(e)
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Regarding
Owned Intellectual Property; Nondisclosure Agreements |
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3.10(g)
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Source
Code |
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3.10(k)
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Security
Breaches |
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3.11(a)
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Material
Contracts |
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3.11(b)
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Certain
Material Contracts |
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3.11(c)
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Third
Party Consents |
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3.11(d)
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Major
Customers; Major Suppliers |
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3.13
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Accounts
Receivable; Work-in-Process |
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3.15
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Litigation |
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3.16(a)
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Ringtail
Employees |
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3.16(c)
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List of
Employee Benefit Plans |
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3.17
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Permits |
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3.19
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Activity
Restriction |
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3.20
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Required
Filings and Consent |
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3.22
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Business
Records |
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3.23
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Product
Defects; Product Warranties; Standard Terms |
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5.11
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Allocation of Purchase Price |
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6.1(c)
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Certain
Third Party Consents |
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6.1(g)
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Certain
Ringtail Employee Agreements |
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6.1(j)
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Certain
Estoppel Certificates |
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6.2(f)
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Ringtail
Employee Options |
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| Asset
Purchase Agreement |
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iv |
This A SSET P
URCHASE A GREEMENT (this
“Agreement” ) is entered into as of
February 16, 2005, by and among FTI C ONSULTING , I
NC ., a Maryland corporation (
“FTI” ), FTI, LLC, a Maryland limited
liability company and a wholly-owned subsidiary of FTI (
“FTI LLC” ), FTI R
EPOSITORY S ERVICES , LLC, a Maryland
limited liability company and a wholly-owned subsidiary of FTI (
“FTIRS” ), FTI C ONSULTING
L TD ., a corporation incorporated in England and
Wales and a wholly-owned subsidiary of FTI (
“FTIC” ), FTI A USTRALIA P
TY L TD , an Australian corporation
and a wholly-owned subsidiary of FTI (
“FTIAU” ; collectively, FTI LLC, FTIRS,
FTIC and FTIAU are referred to herein as the
“Buyers” ), E DWARD J.
O’B RIEN and C HRISTOPHER R. P
RIESTLEY (in their individual capacity,
collectively, Messrs. O’Brien and Priestley are referred to
herein as the “Principals” ), Messrs.
Edward J. O’Brien and Christopher R. Priestley trading as the
R INGTAIL S UITE P
ARTNERSHIP , an Australian partnership (
“RSP” ), R INGTAIL S
OLUTIONS P TY L TD ,
an Australian corporation ( “RSPL” ), on
its behalf and as trustee for RINGTAIL UNIT TRUST, an Australian
unit trust ( “RUT” ), R
INGTAIL S OLUTIONS , I
NC ., a Delaware corporation (
“RSI” ), and R INGTAIL S
OLUTIONS L IMITED , a corporation
incorporated in England and Wales (
“RSL;” collectively, RSP, RUT, RSPL, RSI
and RSL are referred to herein as the
“Sellers” ).
RECITALS
WHEREAS, the Sellers
collectively provide products and services related to litigation
support and knowledge management technologies (together with all
other business that is being conducted by the Sellers as of the
date hereof, the “Ringtail Business”
);
WHEREAS, the Principals and
their family entities own or control all of the outstanding equity,
ownership and beneficial interests of each of the
Sellers;
WHEREAS, FTI and its
Affiliates desire to acquire substantially all of the assets and
assume specified liabilities of the Sellers for the consideration
specified in this Agreement; and
WHEREAS, FTIRS acknowledges
and agrees that it is acquiring (and the Sellers acknowledge and
agree (where appropriate) that they are supplying) the FTIRS
Acquired Assets and assuming the FTIRS Assumed Liabilities for the
purposes of operating the Ringtail Business as a going concern and
that it will register under Australian law for purposes of GST.
Further, the Sellers acknowledge that, on the Closing Date, they
must supply to FTIRS and FTIAU all of the things that are necessary
for the continued operation of the enterprise(s) and that they must
carry on the enterprise(s) until the day of the supply.
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| Asset
Purchase Agreement |
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1 |
PROVISIONS
NOW, THEREFORE, in
consideration of the premises and the mutual promises herein made,
and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as
follows:
ARTICLE I
DEFINITIONS
“Accountants” means the firm of
independent public accountants of national reputation in the U.S.
or Australia or of international reputation (other than Ernst &
Young LLP) selected by FTI and the Buyers and approved by the
Sellers’ Representative (which approval shall not be
unreasonably withheld).
“Accounts
Receivable” means accounts receivable of the
Sellers.
“Acquired
Assets” means the FTIRS Acquired Assets and the FTIC
Acquired Assets.
“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” as to a specified person,
means any person which directly or indirectly through one or more
intermediaries, controls ( id est , possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of a person whether through ownership of
voting securities, by contract, through membership or otherwise),
is controlled by, or is under common control with, the specified
person.
“Agreement” has the meaning set forth
in the preface above.
“Allocation” has the meaning set
forth in Section 5.11(b).
“Applicable
Rate” means the floating and fluctuating rate of
interest per annum announced by Bank of America, N.A. from time to
time as its prime rate.
“Asset
Acquisition Statement” has the meaning set forth in
Section 5.11(c).
“Assumed
Liabilities” means the FTIRS Assumed Liabilities,
FTIAU Assumed Liabilities, FTIC Assumed Liabilities and FTI LLC
Assumed Liabilities.
“Business
Day” means any day other than a Saturday, Sunday or a
day on which banks in Maryland or the State of Victoria are
authorized or obligated by applicable law or executive order to
close or are otherwise generally closed.
“Business
Records” means all books, records, ledgers and files
or other similar information of the Sellers (in any form or medium)
related to the Ringtail Business and Tax Returns.
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| Asset
Purchase Agreement |
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2 |
“Buyer Breach
Notice” has the meaning set forth in Section
5.4(b).
“Buyers” has the meaning set forth in
the preface above.
“Buyer
Indemnified Party” has the meaning set forth in
Section 7.1.
“Cash” means cash and cash
equivalents (including marketable securities and short-term
investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial
Statements.
“Cash
Payment” has the meaning set forth in Section
2.4(a)(1).
“CCH Purchase
Agreement” means the Agreement for Purchase of
Business dated August 7, 2001, by and among RAP, RSPL, and the
other parties named therein.
“CCH Regional
Rights” means the express license rights to the
Ringtail Intellectual Property and the Ringtail Software Programs
granted to RAP with respect to the Asia Pacific Region pursuant to
the provisions of the CCH Purchase Agreement. The term
“Asia Pacific Region” shall have the
meaning set forth in the CCH Purchase Agreement.
“Closing” has the meaning set forth
in Section 2.6.
“Closing
Date” has the meaning set forth in Section
2.6.
“Closing
Statement” has the meaning set forth in Section
2.5(a).
“Closing Working
Capital Statement” has the meaning set forth in
Section 2.5(c).
“Code” means the Internal Revenue
Code of 1986, as amended.
“Confidential
Information” means any information concerning the
businesses and affairs of the Ringtail Business or the Acquired
Assets that is not already generally available to the public,
including any trade secrets and non-public confidential
information, knowledge, data and similar information relating to
any Seller’s Intellectual Property and the confidential
information included therein.
“Damages” has the meaning set forth
in Section 7.1.
“Deferred
Maintenance Schedule” means a schedule listing, as of
the Closing Date, the unexpired portion of all maintenance
contracts between any of the Sellers and any customer setting out
the customer name, date of agreement, date of expiry, original
maintenance fee paid, number of months between the Closing Date and
the date of expiry and calculation of the unexpired
portion.
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| Asset
Purchase Agreement |
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3 |
“Deferred
Maintenance Schedule Payment” has the meaning set
forth in Section 5.15.
“Deficit
Amount” has the meaning set forth in Section
2.5(e).
“Earnout
Payment” means the amount, if any, paid in accordance
with Exhibit A .
“Earnout
Shares” means the FTI Stock, if any, issued in
accordance with Exhibit A .
“Employee Benefit
Plan” means any “employee benefit plan,”
as such term is defined in Section 3(3) of ERISA, and any other
employee benefit plan, program or arrangement of any kind,
maintained by a Seller in which any Ringtail Employee participates
(including any bonus or incentive plans).
“Employer” has the meaning set forth
in Section 5.10(a).
“Employment
Agreement” means the employment agreements set forth
as a form of agreement in Exhibits D-1 and D-2.
“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended.
“Excess
Amount” has the meaning set forth in Section
2.5(e).
“Excluded
Assets” has the meaning set forth in Section
2.2.
“Excluded
Contracts” has the meaning set forth in Section
2.2(1). All pre-Closing employment agreements between any Seller
and a Ringtail Employee shall be deemed an Excluded
Contract.
“Final Working
Capital” has the meaning set forth in Section
2.5(e).
“Financial
Statements” has the meaning set forth in Section
3.5.
“Fiscal Year End
Financial Statements” has the meaning set forth in
Section 3.5.
“FMLA” means the Family and Medical
Leave Act.
“FTI” has the meaning set forth in
the preface above.
“FTI SEC
Document” has the meaning set forth in Section
4.4(a).
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| Asset
Purchase Agreement |
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4 |
“FTIAU” has the meaning set forth in
the preface above.
“FTIAU Assumed
Liabilities” has the meaning set forth in Section
2.3(b).
“FTIC” has the meaning set forth in
the preface above.
“FTIC Acquired
Assets” has the meaning set forth in Section
2.1(b).
“FTIC Assumed
Liabilities” has the meaning set forth in Section
2.3(c).
“FTI
LLC” has the meaning set forth in the preface
above.
“FTI LLC Assumed
Liabilities” has the meaning set forth in Section
2.3(d).
“FTIRS” has the meaning set forth in
the preface above.
“FTIRS Acquired
Assets” has the meaning set forth in Section
2.1(a).
“FTIRS Assumed
Liabilities” has the meaning set forth in Section
2.3(a).
“GAAP” means generally accepted
accounting principles as in effect from time to time, in the United
States except as otherwise noted.
“Governmental
Body” means any nation or government, any state or
other political subdivision thereof, any legislative, executive or
judicial unit or instrumentality of any governmental entity
(foreign, federal, state or local) or any department, commission,
board, agency, bureau, official or other regulatory, administrative
or judicial authority thereof or any entity (including a court or
self-regulatory organization) exercising executive, legislative,
judicial, Tax, regulatory or administrative functions of or
pertaining to government.
“GST” has the meaning set forth under
the A New Tax System (Goods and Services Tax) Act 1999.
“Income
Tax” means any federal, state, local, or foreign
income tax, including any interest, penalty, or addition thereto,
whether disputed or not.
“Indemnification
Deductible” has the meaning set forth in Section
7.2(a).
“Indemnified
Party” has the meaning set forth in Section
7.5(a).
“Indemnifying
Party” has the meaning set forth in Section
7.5(a).
“Intellectual
Property” has the meaning set forth in Section
3.10(a).
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| Asset
Purchase Agreement |
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5 |
“Intellectual
Property Registrations” has the meaning set forth in
Section 3.10(b).
“Intellectual
Property Rights” means collectively, rights under
patent, trademark, copyright, and trade secret laws, and any other
intellectual property, industrial, or proprietary rights worldwide,
however designated, including moral rights, rights of attribution,
integrity, paternity, and similar rights ( “Moral
Rights” ).
“Knowledge” means, in connection with
any representation and warranty contained in this Agreement that is
expressly qualified by reference to the Knowledge of a party: (1)
in the case of any Seller, the actual knowledge of each of the
Principals after reasonable investigation, (2) in the case of any
Principal, the actual knowledge of such Principal after reasonable
investigation or (3) in the case of FTI or the Buyers, the actual
knowledge after reasonable investigation of one or more of the
executive officers of FTI named as such in FTI’s most recent
proxy statement filed with the SEC.
“Legal
Claims” has the meaning set forth in Section
2.3(e).
“Licensed
Intellectual Property” has the meaning set forth in
Section 3.10(b).
“Major
Customers” has the meaning set forth in Section
3.11(d).
“Major
Suppliers” has the meaning set forth in Section
3.11(d).
“Market
Value” means the closing price per share of FTI
common stock on the New York Stock Exchange (or if FTI common stock
is not listed on the New York Stock Exchange, then such other
exchange or quotation system upon which FTI common stock is then
listed or quoted) one trading day prior to the date of
determination thereof; provided, however, with regard to the
Share Payment Date specified in Section 2.4(b), it means the
average closing price per share of FTI common stock on the New York
Stock Exchange (or if FTI common stock is not listed on the New
York Stock Exchange, then such other exchange or quotation system
upon which FTI common stock is then listed or quoted) for the five
day trading period ending one day prior to the date of
determination thereof.
“Material Adverse
Effect” means an effect that is, or is reasonably
likely to be, materially adverse to the Ringtail Business or the
financial condition, assets, liabilities, business, results of
operations or property of the Sellers or FTI and the Buyers, as
applicable, taken as a whole, or on the ability of a Seller or
Buyer to perform its obligations hereunder.
“Material
Contract” has the meaning set forth in Section
3.11(a).
“Most Recent
Financial Statements” has the meaning set forth in
Section 3.5.
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“Most Recent
Fiscal Month End” has the meaning set forth in
Section 3.5.
“Most Recent
Fiscal Year End” has the meaning set forth in Section
3.5.
“Ordinary Course
of Business” means the ordinary course of business
consistent with past custom and practice.
“Owned
Intellectual Property” has the meaning set forth in
Section 3.10(b).
“Permit” has the meaning set forth in
Section 3.17.
“Principals” has the meaning set
forth in the preface above.
“Purchase
Price” has the meaning set forth in Section
2.4(a).
“RAP” means Ringtail Asia Pacific Pty
Limited (ACN 097 593 630).
“Real Property
Leases” has the meaning set forth in Section
3.21(a).
“Related
Agreements” means the Bill of Sale and Assignment
Agreement, the Assumption Agreement, the Employment Agreements and
such other documents and instruments to be executed and delivered
to effect the transfer of the Acquired Assets, the assumption of
the Assumed Liabilities and the other transactions contemplated
herein.
“Representatives” means, with respect
to any party to this Agreement, such party’s principals,
partners, directors, officers, Affiliates, employees, lawyers,
accountants, lenders, consultants, independent contractors and
other similar agents.
“Required Working
Capital Amount” has the meaning set forth in Section
2.5(b).
“Ringtail
Business” has the meaning set forth in the preface
above.
“Ringtail
Employees” means the employees of any Seller who
continue to be employees of such Seller before the Closing and
employees hired by any Seller between the date of this Agreement
and the Closing Date.
“Ringtail
Intellectual Property” has the meaning set forth in
Section 2.1(a)(1).
“Ringtail
Software Programs” has the meaning set forth in
Section 2.1(a)(2).
“RSI” has the meaning set forth in
the preface above.
“RSL” has the meaning set forth in
the preface above.
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“RSP” has the meaning set forth in
the preface above.
“RSPL” has the meaning set forth in
the preface above.
“RUT” has the meaning set forth in
the preface above.
“SEC” means the Securities and
Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as
amended.
“Securities
Exchange Act” means the Securities Exchange Act of
1934, as amended.
“Security
Interest” means any mortgage, pledge, lien,
encumbrance, charge, security interest, claim, community property
interest, condition, equitable interest, right-of-way, easement,
encroachment, security interest, preemptive right, right of first
refusal or similar restriction or right, option, judgment, title
defect or encumbrance of any kind, other than (a) mechanic’s,
materialmen’s, and similar liens, (b) liens for Taxes not yet
due and payable or for Taxes that the taxpayer is contesting in
good faith through appropriate proceedings, (c) purchase money
liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of
Business and not incurred in connection with the borrowing of
money.
“Seller Breach
Notice” has the meaning set forth in Section
5.4(a).
“Seller
Indemnified Party” has the meaning set forth in
Section 7.3.
“Sellers” has the meaning set forth
in the preface above.
“Sellers’
Book Debts” has the meaning set forth in Section
5.9(f).
“Sellers’
Representative” means Edward J.
O’Brien.
“Share Payment
Date” has the meaning set forth in Section
2.4(b).
“Share Payment
Deficiency” has the meaning set forth in Section
2.4(b).
“Share Sale
Deficiency” has the meaning set forth in Section
2.4(b).
“Shares” has the meaning set forth in
Section 2.4(a)(2).
“Tax” means (a) all Australia, United
States, foreign, federal, state, local and other taxes, fees,
levies, duties, tariffs, imposts and other charges of any kind
(whether or not imposed on a
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Seller) imposed by any Governmental
Body, including, without limitation, taxes or other charges on,
measured by, or with respect to income, gross receipts, sales, use,
ad valorem, value-added, intangible, unitary, transfer, franchise,
license, payroll, employment, social security, workers’
compensation, unemployed compensation, net worth, estimated,
excise, environmental, stamp, occupation, premium, property,
prohibited transactions, windfall or excess profits, customs,
duties, capital gains, withholding, value added or other taxes,
levies, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, (b) any liability for
payment of amounts described in clause (a) as a result of
transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or
otherwise through operation of law, (c) any liability for payment
of amounts described in clause (a) as a result of being a person
required by law to withhold or collect taxes imposed on another
person, or (d) any liability for payment of amounts described in
clause (a), (b) or (c) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other person for any of the
foregoing.
“Tax
Return” means any return (including any information
return), report, statement, schedule, notice, form, estimate,
declaration of estimated or other documentation of (including any
additional or supporting material and any amendments or
supplements) Tax relating to or required to be filed with any
Governmental Body in connection with the calculation,
determination, assessment, collection or payment of any
Tax.
“Third Party
Consents” has the meaning set forth in Section
3.11(c).
“Transfer
Date” has the meaning set forth in Section
5.10(f).
“Transferred
Ringtail Employees” means all Ringtail Employees who
at the Closing accept an offer of employment from the Buyers or any
of their Affiliates.
“UK
Assets” means all of the assets related to the
Ringtail Business and directly connected to the Sellers’
operations in the United Kingdom.
“Work-In-Process” means all work
related to the Ringtail Business that has been performed and has
not been billed by the Sellers and which is reasonably expected to
be ultimately billed by Sellers in the Ordinary Course of
Business.
“Working
Capital” has the meaning set forth in Section
2.5(d).
“XML Software
Programs” means all computer software programs or
applications, in both source and object code form, related to XML
technologies.
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ARTICLE II
PURCHASE AND
ASSUMPTION
Section 2.1 Purchase and
Sale of Assets.
(a) Subject to the terms and
conditions of this Agreement, at the Closing, FTIRS (or its
permitted assigns) hereby agrees to purchase from the Sellers, and
the Sellers hereby agree to sell, assign, transfer, convey and
deliver to FTIRS (or its permitted assigns), free and clear of all
Security Interests, all their respective rights, titles, and
interests in and to all of the assets constituting the Ringtail
Business (except for the Excluded Assets and the UK Assets),
including all of the following assets (the “FTIRS
Acquired Assets” ):
(1) all Intellectual
Property, goodwill associated therewith, licenses and sublicenses
granted or obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions
(collectively, the “Ringtail Intellectual
Property” ), subject to the CCH Regional Rights; the
Ringtail Intellectual Property does not include the Ringtail
Software Programs;
(2) all computer software
programs or applications, in both source and object code form, used
in the Ringtail Business, the goodwill associated therewith,
licenses and sublicenses granted or obtained with respect thereto,
and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions (the “Ringtail Software
Programs” ), subject to the CCH Regional
Rights;
(3) all agreements,
contracts, indentures, mortgages, instruments, other similar
arrangements, and rights thereunder, excluding the Excluded
Contracts;
(4) leases, subleases and
licenses with respect to real property located in Melbourne,
Australia and Williamsburg, Virginia;
(5) all tangible personal
property;
(6) Accounts Receivable
(which may include accounts receivable related to FTI and a
reasonable estimate of commissions receivable from FTI consulting
income), notes, and other rights to receive money, Work-In-Process,
retainers, deposits, prepayments, refunds and similar claims and
Cash sufficient for the Required Working Capital Amount
requirements in Section 2.5(b);
(7) all causes of action,
choses in action, rights of recovery, rights of set off, and rights
of recoupment (excluding any such item relating to the payment of
Taxes);
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(8) all Permits and similar
rights obtained from any Governmental Body that are
transferable;
(9) all advertising and
promotional materials, studies, reports, and other printed or
written materials;
(10) any insurance policies
or insurance agreements that are transferable; and
(11) all goodwill incident to
the Ringtail Business (excluding the United Kingdom), including the
value of the names associated with the Ringtail Business (excluding
the United Kingdom) that are transferred to FTIRS hereunder and the
value of good customer relations.
(b) Subject to the terms and
conditions of this Agreement, at the Closing, FTIC (or its
permitted assigns) hereby agrees to purchase from the Sellers, and
the Sellers hereby agree to sell, assign, transfer, convey and
deliver to FTIC (or its permitted assigns), free and clear of all
Security Interests, all their respective rights, titles, and
interests in and to the UK Assets (except for the Excluded Assets),
including all of the following related assets (the
“FTIC Acquired Assets” ):
(1) all agreements,
contracts, indentures, mortgages, instruments, other similar
arrangements, and rights thereunder, excluding the Excluded
Contracts;
(2) all tangible personal
property;
(3) all causes of action,
choses in action, rights of recovery, rights of set off, and rights
of recoupment (excluding any such item relating to the payment of
Taxes);
(4) all Permits and similar
rights obtained from any Governmental Body that are
transferable;
(5) all advertising and
promotional materials, studies, reports, and other printed or
written materials;
(6) any insurance policies or
insurance agreements that are transferable; and
(7) all goodwill incident to
the Ringtail Business in the United Kingdom, including the value of
the names associated with the Ringtail Business in the United
Kingdom that are transferred to FTIC hereunder and the value of
good customer relations.
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Section 2.2 Excluded
Assets. The Sellers shall not sell and deliver to the Buyers
their respective rights, titles, and interests in and to the
following assets (the “Excluded Assets”
):
(1) any agreements,
contracts, indentures, mortgages, instruments, other similar
arrangements, and rights thereunder, listed on Schedule 2.2
(the “Excluded Contracts” );
(2) any of the rights of the
Sellers under this Agreement or any document or instrument related
to the transactions contemplated herein;
(3) all Business Records,
charter documents, qualifications to conduct business as a foreign
entity, arrangements with registered agents, taxpayer and other
identification numbers, minute books, stock or similar records, and
corporate seals of the Sellers, and all other documents relating to
the organization, maintenance and existence of the Sellers
provided, however, that the Buyers and their Representatives
shall have access to such books and records as is reasonably
necessary after the Closing during regular business hours and upon
reasonable notice and be entitled to take or make reasonable
request for copies to be provided; and
(4) the tax attributes of the
Sellers and all claims or entitlements of the Sellers to any Tax
refunds (including any related interest, penalties or additions to
Tax) or deposits.
Section 2.3 Assumption of
Liabilities.
(a) Subject to the terms and
conditions of this Agreement, at the Closing, FTIRS agrees to
assume and become responsible for all obligations of the Sellers
under the agreements, contracts, mortgages, instruments, licenses,
and other arrangements that are FTIRS Acquired Assets (1) to
provide goods or furnish services to another party after the
Closing or (2) to pay for goods or services that another party will
furnish to FTIRS in connection with the Ringtail Business after the
Closing and no other liabilities (the “FTIRS Assumed
Liabilities” ).
(b) Subject to the terms and
conditions of this Agreement, at the Closing, FTIAU agrees to
assume and become responsible for all liabilities and obligations
of RSPL with respect to any accrued vacation or leave (including
accrued annual leave or long service leave) due to Transferred
Ringtail Employees employed by RSPL in Australia in accordance with
RSPL’s normal policies regarding such accrual (the
“FTIAU Assumed Liabilities” ). FTIAU
shall not assume any other liabilities.
(c) Subject to the terms and
conditions of this Agreement, at the Closing, FTIC agrees to assume
and become responsible for all obligations of the Sellers under the
agreements, contracts, mortgages, instruments, licenses, and other
arrangements that are FTIC Acquired Assets (1) to provide goods or
furnish services to another party after the Closing or (2) to pay
for goods or services that another party will furnish to FTIC in
connection with the Ringtail Business after the Closing (the
“FTIC Assumed Liabilities” ). FTIC shall
not assume any other liabilities.
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(d) Subject to the terms and
conditions of this Agreement, at the Closing, FTI LLC agrees to
assume and become responsible for all liabilities and obligations
of RSI with respect to any accrued vacation or leave due to
Transferred Ringtail Employees employed by RSI in the United States
in accordance with RSI’s normal policies regarding such
accrual (the “FTI LLC Assumed
Liabilities” ). FTI LLC shall not assume any other
liabilities.
(e) The Assumed Liabilities
shall not include (a) any liability of the Sellers for Taxes (with
respect to the Ringtail Business or otherwise), (b) any liability
of the Sellers for Taxes arising in connection with the
consummation of the transactions contemplated hereby (including any
Income Taxes, GST or other Taxes arising because the Sellers are
transferring the Acquired Assets), (c) any liability of the Sellers
for the unpaid Taxes of any person other than the Sellers under
Treasury Reg. §1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract,
or otherwise, (d) any obligation of the Sellers to indemnify any
person by reason of the fact that such person was a partner,
principal, trustee, director, officer, employee, agent or
beneficiary of any of the Sellers or was serving at the request of
any of the Sellers as a partner, principal, trustee, director,
officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses, or otherwise and
whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement, or otherwise), (e) any liability of the
Sellers for costs and expenses incurred in connection with this
Agreement, any Related Agreement or the transactions contemplated
hereby, (f) any liability or contingency of the Sellers arising out
of, or in any way related to, any actual or alleged breach of
contract or warranty, tort, infringement, violation of law or
regulation, employee-related claim or obligation to defend in any
civil, criminal or other legal proceeding ( “Legal
Claims” ) or (g) any liability or obligation of the
Sellers under this Agreement, any Related Agreement or other
document or instrument related to the transactions contemplated
herein. FTI and the Buyers shall not assume or have any
responsibility with respect to any obligation or liability of the
Sellers or the Principals not specifically included within the
definition of Assumed Liabilities.
Section 2.4 Purchase
Price.
(a) Subject to the terms and
conditions of this Agreement, the Buyers agree to pay to the
Sellers the following aggregate consideration (the
“Purchase Price” ):
(1) $20 million in cash
(subject to adjustment pursuant to Section 2.5 and Section 5.15)
(the “Cash Payment” ) by wire transfer of
immediately available funds, allocated among the Sellers as set
forth on Schedule 2.4(a) ;
(2) that number of shares of
FTI’s common stock having a Market Value on the date hereof
of $15 million (the “Shares” ), allocated
among the Sellers as set forth on Schedule 2.4(a)
;
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(3) the Earnout Payments, if
any; and
(4) the assumption of the
Assumed Liabilities.
(b) If on the date all or any
portion of the Shares first become eligible for sale under Rule 144
under the Securities Act (the “Share Payment
Date” ), the aggregate Market Value of the Shares is
less than $16.5 million (any such deficiency, the
“Share Payment Deficiency” ), then FTI
shall pay such Share Payment Deficiency to the Sellers with regard
to the Shares owned by the Sellers, which shall be paid in a lump
sum in cash upon the expiration of the four-week period specified
in the next sentence. With regard to any Shares sold by the Sellers
during the four-week period immediately following the Share Payment
Date, if the aggregate gross proceeds from such sales are less than
an amount equal to 110% of the Market Value of such Shares on the
date hereof (excluding any currency exchange issues) (any such
deficiency, a “Share Sale Deficiency” ),
then FTI shall pay such Share Sale Deficiency to the Sellers, which
shall be paid in a lump sum in cash promptly following the
Sellers’ Representative’s written request to FTI (which
shall include information regarding the sales transaction);
provided, however, that FTI shall only be required to pay
the Share Sale Deficiency with respect to sales of 25% or less of
the total Shares during each week of such four-week period
following the Share Payment Date. The Share Payment Deficiency
payable by FTI, if any, shall be reduced by the amount of any Share
Sale Deficiency paid to the Sellers pursuant this Section
2.4(b).
(c) The Earnout Payments
shall be calculated and paid to the Sellers in accordance with the
provisions set forth in Exhibit A .
Section 2.5 Closing
Statement; Working Capital Adjustment.
(a) The Sellers shall deliver
to FTI and the Buyers at least three, but no more than seven,
Business Days, prior to the Closing Date combined unaudited
statements of assets and liabilities setting forth their good faith
estimate of the combined assets and liabilities of the Sellers as
of the Closing Date (the “Closing
Statement” ). The Closing Statement shall be prepared
in accordance with GAAP, determined on the same basis as the Most
Recent Financial Statements, and shall present fairly the combined
financial condition of the Sellers at the date
presented.
(b) FTI, the Buyers and the
Sellers have agreed that the Sellers’ combined Working
Capital as of the Closing Date shall be $450,000 (the
“Required Working Capital Amount” ). If
the amount of such Working Capital as shown on the Closing
Statement is more or less than the Required Working Capital Amount,
the Cash Payment shall be increased or decreased, as the case may
be, by the amount by which such Working Capital is more or less
than the Required Working Capital Amount.
(c) Within 30 days after
Closing, the Sellers shall prepare and deliver to FTI and the
Buyers an actual unaudited statement of Acquired Assets and Assumed
Liabilities (the “Closing
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Working Capital
Statement” ), prepared as of the Closing Date on the
same basis as the Closing Statement. FTI and the Buyers shall have
14 days thereafter to dispute the Closing Working Capital Statement
by FTI or a Buyer providing written notice to the Sellers’
Representative, which shall indicate in reasonable detail the basis
for FTI’s and the Buyers’ belief that the Closing
Working Capital Statement is incorrect. FTI, the Buyers and the
Sellers’ Representative shall attempt in good faith to
resolve any disputes regarding the Closing Working Capital
Statement, and any disputes not resolved by the parties within 14
days after FTI’s or a Buyer’s notice shall be submitted
to the Accountants for resolution. The parties shall instruct the
Accountants promptly to review the Closing Working Capital
Statement and to determine solely with respect to the disputed
items and amounts so submitted whether and to what extent, if any,
the Closing Working Capital Statement requires adjustment. The
Accountants shall base their determination solely on written
submissions by FTI, the Buyers and the Sellers’
Representative and not on an independent review. FTI, the Buyers
and the Sellers’ Representative shall make available to the
Accountants all relevant books and records and other items
reasonably requested by the Accountants. As promptly as practicable
but in no event later than 30 days after their retention, the
Accountants shall deliver to FTI, the Buyers and the Sellers’
Representative a report which sets forth their resolution of the
disputed items and amounts and their calculation of the Closing
Working Capital Statement and Working Capital as of the Closing
Date. The decision of the Accountants shall be final, conclusive
and binding on all parties. The costs and expenses of the
Accountants shall be allocated between FTI and the Buyers, on the
one hand, and the Sellers and Principals, on the other hand, based
upon the percentage which the portion of the contested amount not
awarded to each party bears to the amount actually contested by
such party.
(d) For purposes of this
Section 2.5, the Sellers’ combined “Working
Capital” is the difference, positive or negative,
between the Acquired Assets that are current assets and the Assumed
Liabilities that are current liabilities.
(e) “Final
Working Capital” means the Working Capital (i) as
shown in the Closing Working Capital Statement delivered pursuant
to Section 2.5(c), if no notice of objection with respect thereto
is timely delivered by FTI or the Buyers; or (ii) if a notice of
objection is so delivered, (A) as agreed by FTI, the Buyers and the
Sellers’ Representative pursuant to Section 2.5(c) or (B) in
the absence of such agreement, as shown in the Accountants’
calculation delivered pursuant to Section 2.5(c). If Final Working
Capital is less that the Required Working Capital Amount, the
Sellers and the Principals shall pay to the Buyers, as an
adjustment to the Purchase Price, in the manner as provided in
Section 2.5(f), an amount of cash equal to the difference between
the Required Working Capital and Final Working Capital (the
“Deficit Amount” ). If Final Working
Capital exceeds the Required Working Capital Amount, the Buyers
shall pay to the Sellers, as an adjustment to the Purchase Price,
in the manner as provided in Section 2.5(f), an amount of cash
equal to the difference between Final Working Capital and the
Required Working Capital Amount (the “Excess
Amount” ).
(f) Within three Business
Days after the Final Working Capital has been determined pursuant
to Section 2.5(c), if there is an Excess Amount the Buyers shall
pay to the Sellers the
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Excess Amount and if there is a Deficit
Amount the Sellers and the Principals shall pay to the Buyers the
Deficit Amount. Any such payment shall be made by wire transfer of
immediately available funds to one or more accounts designated in
writing by FTI or the Sellers’ Representative, as applicable,
at least one Business Day prior to such transfer. If payment is not
made within the three Business Days referred to above, such payment
shall bear interest from its due date to but excluding the date of
payment at the Applicable Rate in effect on such due date. Such
interest shall be calculated daily on the basis of a year of 365
days and the actual number of days elapsed, without
compounding.
Section 2.6 The
Closing. The closing of the transactions contemplated by this
Agreement (the “Closing” ) shall take
place at the offices of DLA Piper Rudnick Gray Cary US LLP in
Baltimore, Maryland, commencing at 9:00 a.m. local time on February
28, 2005 (assuming the satisfaction or waiver of all conditions to
the obligations of the parties to consummate the transactions
contemplated hereby has occurred, other than conditions with
respect to actions the respective parties shall take at the Closing
itself) or such other date as the parties may mutually determine
(the “Closing Date” ).
Section 2.7 Deliveries at
the Closing. At the Closing, (a) the Sellers and Principals
shall deliver to FTI and the Buyers each of the various
certificates, instruments, and documents referred to in Section
6.1; (b) FTI and the Buyers shall deliver to the Sellers each of
the various certificates, instruments, and documents referred to in
Section 6.2; (c) the Sellers shall execute, acknowledge and deliver
to FTI and the Buyers (1) general assignments and bills of sale in
the form attached hereto as Exhibit B , (2) the Deferred
Maintenance Schedule and (3) such other instruments of sale,
transfer, conveyance, and assignment as FTI or the Buyers
reasonably may request; (d) the Buyers shall execute, acknowledge,
and deliver to the Sellers (1) agreements of assignment and
assumption in the form attached hereto as Exhibit C and (2)
such other instruments of assumption as the Sellers reasonably may
request; and (e) the Buyers shall deliver to the Sellers the Cash
Payment and certificates representing the Shares.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES RELATED TO SELLERS AND PRINCIPALS
Each of the Sellers and the
Principals hereby jointly and severally represents and warrants to
FTI and the Buyers that the statements contained in this Article
III are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date
of this Agreement throughout this Article III), except as set forth
in the disclosure schedule accompanying this Agreement.
Section 3.1 Organization;
Qualification. The state of formation of each of the Sellers is
set forth on Schedule 3.1 . Each of the Sellers has been
duly formed and is validly existing and in good standing under the
laws of its respective state of formation. The
Principals
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are all of the partners trading as RSP.
None of the Sellers owns a Subsidiary. Each of the Sellers has all
requisite power and authority, corporate or otherwise, to own,
lease and operate its properties and to carry on the Ringtail
Business as it is now being conducted. Each of the Sellers is duly
authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities and to
carry on the Ringtail Business in the places and in the manner as
now conducted, except for where the failure to be so authorized and
qualified would not have a Material Adverse Effect on the Ringtail
Business.
Section 3.2 Authorization;
Validity of Obligations. Each of the Sellers has full power and
authority to execute and deliver this Agreement and the Related
Agreements and to perform its obligations hereunder and thereunder.
This Agreement and the Related Agreements have been duly authorized
by all necessary action under each of the Seller’s charter or
formation documents and constitute the valid and legally binding
obligations of each of the Sellers, enforceable against each of the
Sellers in accordance with their respective terms and conditions,
subject only to applicable bankruptcy, reorganization, insolvency,
moratorium, and other rights affecting creditors’ rights
generally from time to time in effect and as to enforceability,
general equitable principles.
Section 3.3
Noncontravention. The execution and delivery by the Sellers of
this Agreement and the Related Agreements, and the consummation of
the transactions contemplated herein, will not (a) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
Governmental Body to which any Seller is subject, or any provision
of the charter or formation documents of any Seller or (b) conflict
with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
Material Contract or result in the imposition of any Security
Interest upon any of the Acquired Assets, except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect on the Acquired
Assets or the Ringtail Business or on the ability of the parties to
consummate the transactions contemplated by this
Agreement.
Section 3.4 Title to
Assets; Tangible Assets. Each of the Sellers has good and
marketable title to, or a valid leasehold interest or license in,
the Acquired Assets owned by such Seller, free and clear of all
Security Interests or restrictions on transfer. The Acquired Assets
that are tangible assets are free from material defects (patent and
latent), have been maintained in accordance with normal industry
practice, and are in good operating condition and repair (subject
to normal wear and tear). The Sellers currently own, or have a
valid leasehold interest or license in, all assets necessary to
conduct the business and operations of the Ringtail Business as
currently being conducted (and as to be conducted in connection
with currently contemplated upgrades or new versions of any of the
Ringtail Intellectual Property or the Ringtail Software Programs).
The Acquired Assets constitute all the assets necessary to operate
the Ringtail Business in the same manner as it has been operated by
the Sellers (and as it would be operated by the Sellers in
connection with currently contemplated upgrades or new versions of
any of the Ringtail Intellectual Property or the Ringtail Software
Programs). The Sellers do not own any interest in real
property.
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Section 3.5 Financial
Statements. Attached to Schedule 3.5 are (a) true,
complete and correct copies of RUT’s unaudited financial
statements (collectively, the “Fiscal Year End
Financial Statements” ) for and as of the fiscal year
ended June 30, 2004 (the “Most Recent Fiscal Year
End” ) and (b) true, complete and correct copies of
RUT’s unaudited financial statements for the six month period
ended and as of December 31, 2004 (the “Most Recent
Fiscal Month End” ) (collectively, the
“Most Recent Financial Statements,” and
together with the Fiscal Year End Financial Statements, the
“Financial Statements” ). The Financial
Statements have been prepared from the books and records of RUT,
and except as set forth in the notes thereto or as set forth on
Schedule 3.5 , in accordance with GAAP consistently applied
and present fairly the financial condition and results of
operations of RUT as of and for the periods presented. Since the
Most Recent Fiscal Year End, there have been no material changes in
the accounting policies for any Seller. The Most Recent Financial
Statements are subject to normal fiscal year-end adjustments (which
will not be material in the aggregate). The Financial Statements
lack certain footnotes and other presentation items.
Section 3.6 Events
Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, the Sellers have operated the Ringtail
Business only in the Ordinary Course of Business and neither the
Sellers nor the Ringtail Business has suffered a Material Adverse
Effect. In addition to and without limiting the generality of the
foregoing, since that date, except as set forth on Schedule
3.6 :
(a) none of the Sellers has
sold, leased, transferred, or assigned any material asset that
would be included within the definition of Acquired Assets, other
than assets disposed of in the Ordinary Course of
Business;
(b) none of the Sellers has
entered into any Material Contract relating to the Ringtail
Business outside the Ordinary Course of Business;
(c) no Seller, and to each
Seller’s Knowledge no other party thereto, has accelerated,
terminated, made material modifications to, or cancelled any
Material Contract relating to the Ringtail Business;
(d) none of the Sellers has
imposed any Security Interest upon any of the Acquired
Assets;
(e) none of the Sellers has
made any capital expenditures in excess of $50,000 relating to the
Ringtail Business outside the Ordinary Course of
Business;
(f) none of the Sellers has
granted any license or sublicense of any material rights under or
with respect to any Intellectual Property outside the Ordinary
Course of Business;
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(g) none of the Sellers has
experienced any material damage, destruction, or loss (whether or
not covered by insurance) to the Acquired Assets;
(h) none of the Sellers has
made any loan to, or entered into any other transaction with, any
of the Ringtail Employees outside the Ordinary Course of
Business;
(i) none of the Sellers has
granted any material increase in the compensation of any of the
Ringtail Employees outside the Ordinary Course of
Business;
(j) none of the Sellers has
made any other material change in employment terms for any of the
Ringtail Employees outside the Ordinary Course of Business;
and
(k) none of the Sellers has
committed to any of the foregoing in the future.
Section 3.7 Undisclosed
Liabilities. None of the Sellers has any known material
liability (whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any
liability for Taxes), except for (a) liabilities set forth on the
face of the Most Recent Financial Statements (rather than solely in
any note thereto); (b) liabilities of the same type set forth on
the Most Recent Financial Statements (rather than solely in any
note thereto) that have arisen after the Most Recent Fiscal Month
End in the Ordinary Course of Business, other than Legal Claims;
and (c) the Assumed Liabilities and liabilities under the Excluded
Contracts.
Section 3.8 Legal
Compliance. Each of the Sellers has complied with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of all Governmental Bodies, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been threatened, filed or commenced against
any of the Sellers alleging any failure so to comply, except where
the failure to comply would not have a Material Adverse Effect on
the Ringtail Business.
Section 3.9 Tax
Matters.
(a) Each Seller, and any
consolidated, combined, unitary or aggregate group for Tax purposes
of which any Seller is or has been a member, has timely (taking
into account extensions of time to file) filed Tax Returns required
to be filed by it, and all such Tax Returns were true, correct and
complete. Each Seller and each such group has paid all Taxes shown
on such Tax Returns or otherwise due. Each Seller has provided
adequate accruals (without taking into account any reserve for
deferred taxes) in the Most Recent Financial Statements for any
Taxes that have not been paid, whether or not shown as being due on
any Tax Returns. Other than Taxes incurred in the Ordinary Course
of Business, no Seller has any liability for unpaid Taxes accruing
after the date of the Most Recent Financial Statements.
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(b) None of the Acquired
Assets is subject to any liens for Taxes, other than liens for
Taxes not yet due and payable.
(c) Except as set forth in
Schedule 3.9 , no audit of any Tax Returns of any Seller is
being conducted or, to the Knowledge of any Seller, threatened by a
Governmental Body.
(d) Except as set forth on
Schedule 3.9 , no extensions of the statute of limitations
on the assessment of any Taxes has been granted by any Seller and
is currently in effect.
(e) No agreement, contract or
arrangement to which RSI is a party may result in the payment of
any amount that would not be deductible by reason of Section 280G
or Section 407 of the Code.
(f) No Seller is or has ever
been a party to any tax sharing or tax allocation agreement, nor
does any Seller have any liability or potential liability to
another person under such agreement.
(g) Except as set forth on
Schedule 3.9 , no Governmental Body has raised in writing
any issue with respect to Taxes which, by application of similar
principles, could result in the issuance of a notice of deficiency
or similar notice of intention to assess Taxes by any Governmental
Body or other taxing authority.
(h) All transactions between
two or more Sellers, or between any Seller and any person related
to, or under common control with, such Seller, have complied with
all applicable rules of law with respect to transfer pricing,
except where the failure to comply would not have a Material
Adverse Effect.
Section 3.10 Intellectual
Property.
(a) The term
“Intellectual Property” means,
collectively, the following and all worldwide rights, title and
interests in and to the following:
(1) inventions, invention
disclosures, designs, algorithms, mask works, and other industrial
property, and all enhancements and improvements thereto, whether
patentable or unpatentable and whether or not reduced to practice,
and all patent rights in connection therewith (including all U.S.
and foreign patents, patent applications, patent disclosures, mask
works, and all divisions, continuations, continuations-in-part,
reissues, re-examinations, and extensions thereof), whether or not
any of the foregoing are registered;
(2) trademarks, trade names
and service marks, trade dress, logos, Internet domain names, and
other commercial product or service designations, together with all
translations, adaptations, derivations and combinations thereof,
and all goodwill and similar value associated with any of the
foregoing, and all applications, registrations, and renewals in
connection therewith;
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(3) copyrights (whether or
not registered), copyrightable works (including but not limited to
computer software, software compilations, databases and similar
materials), Moral Rights, and all registrations and applications
for registration thereof, as well as rights to renew
copyrights;
(4) trade secrets (as such
are determined under applicable law), know-how and other
confidential business information, including technical information,
marketing plans, research, designs, plans, methods, techniques, and
processes, any and all technology, supplier lists, computer
software programs or applications, in both source and object code
form, technical documentation of such software programs,
statistical models, supplier lists, e-mail lists, inventions, sui
generis database rights, databases, compilations, and data, whether
in tangible or intangible form and whether or not stored, compiled
or memorialized physically, electronically, graphically,
photographically or in writing;
(5) any and all assets
similar to those described in this definition, and any other rights
to existing and future registrations and applications for any of
the foregoing and all other Intellectual Property Rights in, or
relating to, any of the foregoing, including remedies against and
rights to sue for past infringements, and rights to damages and
profits due or accrued in or relating to any of the
foregoing;
(6) all web sites, internet
addresses, web site domain names and related content and underlying
technologies;
(7) any and all versions,
derivatives, enhancements and improvements of any of the assets
described in this definition; and
(8) any and all other
tangible or intangible proprietary property, information and
materials that are or have been used in (including in the
development of) the Ringtail Business and/or in any product,
technology or process (i) currently being or formerly manufactured,
published, marketed or used by any Seller, or (ii) previously or
currently under development for possible future manufacturing,
publication, marketing or other use by any Seller.
(b) Schedule 3.10(b)
contains a true and complete list of the Intellectual Property
owned (the “Owned Intellectual Property”
) that comprises the Ringtail Intellectual Property and the
Ringtail Software Programs or that is licensed by each Seller (the
“Licensed Intellectual Property” ), and
includes (specifying by Seller and by region) details regarding the
ownership of such Owned Intellectual Property and all known due
dates for further filings, maintenance and other payments or other
actions falling due in respect of the Owned Intellectual Property
within 12 months following the Closing Date, and the current status
of all corresponding registrations, filings, applications and
payments, and all inventions for which a patent application has not
been
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filed. All of the registrations,
applications and similar filings arising from or relating to the
Owned Intellectual Property included in the Acquired Assets (the
“ Intellectual Property Registrations ”)
are listed in Schedule 3.10(b) ; all Intellectual Property
Registrations are and remain valid and subsisting, in good
standing, with all fees, payments and filings due as of the Closing
Date duly made, and the due dates specified on Schedule
3.10(b) are accurate and complete in all material respects. To
the Knowledge of each Seller, all of the Intellectual Property
Registrations are enforceable. The Sellers have delivered to FTI
and/or the Buyers correct and complete copies of all of the
Intellectual Property Registrations, and have made available for
review by FTI and the Buyers correct and complete copies of all
other written documentation evidencing ownership and prosecution
(if applicable) of each of the foregoing. The Sellers have made all
other registrations relating to the Ringtail Business which were
required to have been made and are in good standing with respect to
such registrations with all fees due as of the Closing duly
made.
(c) Each of the Ringtail
Intellectual Property and the Ringtail Software Programs consists
solely of items and rights which are: (i) owned exclusively by the
Sellers, free and clear of any Security Interest; (ii) in the
public domain; or (iii) rightfully used by the Sellers pursuant to
a valid license, sublicense, consent or other similar written
agreement. The parties and date of each such agreement are set
forth on Schedule 3.10(c) . The Ringtail Intellectual
Property and the Ringtail Software Programs constitute all of the
material Intellectual Property used in or necessary to conduct the
Ringtail Business (and as to be used in or conducted in connection
with currently contemplated upgrades or new versions of any of the
Ringtail Intellectual Property or the Ringtail Software Programs).
The Sellers have all rights in the Ringtail Intellectual Property
and the Ringtail Software Programs necessary and sufficient to
carry out each Seller’s current activities and proposed
activities (and had all rights necessary to carry out its former
activities at the time such activities were being conducted),
including and to the extent required to carry out such activities,
rights to make, use, reproduce, modify, adapt, create derivative
works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent and lease
and, as applicable, assign and sell, the Intellectual Property. The
Sellers have delivered correct and complete copies of all material
agreements related to the Ringtail Intellectual Property and the
Ringtail Software Programs to FTI and/or the Buyers, including with
respect to any Licensed Intellectual Property, and, as applicable,
have made available for review correct and complete copies of all
other written documentation evidencing that the Sellers have the
necessary and sufficient rights in each of the
foregoing.
The Sellers also have
identified in Schedule 3.10(c) all material agreements under
which the Sellers have licensed or otherwise granted rights in or
to any Ringtail Intellectual Property and/or any Ringtail Software
Program to any third party, and has separately identified: (1) any
exclusive rights granted by or agreed to by the Sellers, and (2)
agreements to which the Sellers grant another party the right to
use, market or otherwise exploit or commercialize any of the Owned
Intellectual Property or related products or services. The Sellers
have not breached any of the agreements referenced in this Section,
and to none of the Seller’s Knowledge, no other party to
those agreements has breached any of those agreements.
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Except as set forth on
Schedule 3.10(c) , no Ringtail Intellectual Property or
Ringtail Software Program was developed using government or
university funding or facilities; neither was it obtained from any
government or university. Except as set forth on Schedule
3.10(c) , no Ringtail Intellectual Property or Ringtail
Software Program includes any software of the type commonly
referred to as “open source” (including without
limitation, software licensed or distributed under any of the
following or similar licenses or distribution models: GNU’s
General Public License (GPL) or Lesser/Library GPL (LGPL); The
Artistic License ( e.g. PERL); the Mozilla Public License;
the Netscape Public License; the Sun Community Source License
(SCSL); the Sun Industry Standards License; and any other licenses
approved by the Open Source Initiative).
(d) None of the Sellers has
infringed upon or misappropriated any Intellectual Property Rights
or personal right of any person anywhere in the world, and to each
Seller’s Knowledge, there is no basis for such a claim to be
made. No claims or written notice (i) challenging the validity,
effectiveness or ownership by the Sellers of any of the Ringtail
Intellectual Property or the Ringtail Software Programs, or (ii) to
the effect that the use, distribution, licensing, sublicensing,
sale or any other exercise of rights in any product, service, work,
technology or process as now used or offered or proposed for use,
licensing, sublicensing, sale or other manner of commercial
exploitation by the Sellers infringes or will infringe on any
Intellectual Property Rights or personal right of any person have
been asserted or, to any Seller’s Knowledge, are threatened
by any person, nor are there, to any Seller’s Knowledge, any
valid grounds for any bona fide claim of any such kind. To any
Seller’s Knowledge, there is and has been no unauthorized
use, infringement or
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