STOCK AND ASSET PURCHASE AGREEMENT

Exhibit 2.1

 

STOCK AND ASSET

 

PURCHASE AGREEMENT

 

by and among

 

FTI CONSULTING, INC.,

 

FTI COMPASS, LLC,

 

FTI, LLC,

 

COMPETITION POLICY ASSOCIATES, INC., and

 

THE SELLERS LISTED ON

 

SCHEDULE I ATTACHED HERETO

TABLE OF CONTENTS

 

 

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STOCK AND ASSET PURCHASE AGREEMENT

 

This Stock and Asset Purchase Agreement (this “Agreement”) entered into as of November 19, 2005 by and among FTI Compass, LLC, a Maryland limited liability company and wholly-owned Subsidiary of FTI (the “Buyer”), FTI Consulting, Inc., a Maryland corporation (“FTI”), FTI, LLC, a Maryland limited liability company (“FTI LLC”), Competition Policy Associates, Inc., a District of Columbia corporation (the “Company”), and the stockholders of the Company listed on Schedule I (individually, a “Seller”, and collectively, the “Sellers”).

 

Preliminary Statement

 

1. Each Seller owns the number of issued and outstanding shares of Common Stock set forth opposite his, her or its name on Schedule I , which shares in the aggregate represent all of the issued and outstanding shares of capital stock of the Company (the “Shares”).

 

2. Each Seller owns certain assets which constitute all of the assets of such Seller relating to the Business.

 

3. The Buyer desires to purchase, and the Sellers desire to sell, the Shares and the Acquired Assets for the consideration set forth below, upon the terms and subject to the conditions of this Agreement.

 

4. As a condition to the Closing, FTI LLC and the Sellers wish to enter into the Employment and Consulting Agreements effective as of the Closing.

 

NOW, THEREFORE, in consideration of the representations, warranties and covenants herein contained, the Parties agree as follows:

 

ARTICLE I

PURCHASE AND SALE

 

1.1. Purchase of the Shares from the Sellers . Upon the terms and subject to the conditions of this Agreement, at the Closing, each Seller shall sell, transfer, convey, assign and deliver to the Buyer, and the Buyer shall purchase, acquire and accept from each Seller, all of the Shares owned by such Seller, free and clear of all Liens, as set forth opposite such Seller’s name on Schedule I . At the Closing each Seller shall deliver to the Buyer certificates evidencing the Shares owned by such Seller duly endorsed in blank or with stock powers duly executed by such Seller.

 

1.2. Purchase of the Acquired Assets from the Sellers .

 

(a) Upon the terms and subject to the conditions of this Agreement, at the Closing, each Seller shall sell, transfer, convey, assign and deliver to the Buyer, and the Buyer shall purchase, acquire and accept from each Seller, all of such Seller’s right, title and interest in, to and under the Acquired Assets. “Acquired Assets” shall mean all assets, properties, rights

(including contractual rights), privileges, claims and interests of every kind and description, real or personal, tangible or intangible, absolute or contingent, wherever situated, to the extent owned by, registered in the name of, or used or held for use by, such Seller relating to the Business, except for the Excluded Assets, free and clear of all Liens.

 

(b) Without limiting the foregoing, the Acquired Assets shall include all of each Seller’s right, title and interest in, to and under all of the following, to the extent owned by, registered in the name of, or used or held for use by, such Seller relating to the Business:

 

(i) Personal Goodwill;

 

(ii) current client engagements, including any amounts earned after the Closing under existing engagements;

 

(iii) Intellectual Property;

 

(iv) work papers and other documentation and data related to past engagements;

 

(v) equipment, furniture, furnishings, office equipment, computer hardware and software, machinery, vehicles, fixtures, promotional and advertising materials (including all catalogs, brochures, videos, plans, manuals, handbooks, and equipment), website content, leasehold and other improvements and all other tangible personal property and any leasehold interest therein; and

 

(vi) to the extent such items are included in Working Capital Assets, deposits, prepayments or prepaid expenses arising from or related to the Acquired Assets;

 

(vii) claims, causes of action, choses in action, rights of recovery and rights of set-off or recoupment of any kind, in each case, including any Liens , pledges, warranty claims or other rights to payment or to enforce payment in connection with services performed by or on behalf of such Seller or the Company.

 

(c) Notwithstanding any contrary provision herein, the Sellers shall retain, and the Acquired Assets shall not include, the following (the “Excluded Assets”):

 

(i) any rights of the Sellers under the Transaction Documents;

 

(ii) all Tax refunds or Tax credits or similar monetary payments or offsets relating to Taxes (including any interest paid or credited with respect thereto) of the Company or the Acquired Assets or the Business for any taxable period (or portion thereof) ending on or prior to the Closing Date, as determined under the principles of Section 8.7 of this Agreement taking into account the type of Taxes to which such refunds or credits or similar monetary payments or offsets relate, and all Tax refunds or Tax credits or similar monetary payments or offsets relating to Taxes (including any interest paid or credited with respect thereto) of the Sellers;

 

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(iii) those assets specifically identified in Schedule 1.2(c)(iii) attached hereto;

 

(iv) any personal assets of the Sellers other than assets related to the Business; and

 

(v) all cash and cash equivalents, securities, and negotiable instruments of the Sellers on hand, in financial institutions or elsewhere.

 

(d) Upon the terms and subject to the conditions of this Agreement, at the Closing, the Buyer shall assume and agree to pay, perform and discharge when due, any and all of the liabilities and obligations of the Sellers (i) arising under current client engagements constituting Acquired Assets after the Closing or (ii) constituting Working Capital Liabilities (the “Assumed Liabilities”); provided , however , notwithstanding the foregoing, the Buyer shall not assume, and shall not be responsible for, any such liabilities and obligations for breach or default under any client engagement which arise from, result out of, or are in connection with, acts, omissions, or circumstances that took place or existed on or prior to the Closing, including defaults or breaches caused by a failure of the Sellers to obtain requisite consent or to provide applicable notice.

 

(e) Notwithstanding any contrary provision herein, except for the Assumed Liabilities, the Buyer shall not assume, or otherwise be responsible for, any liabilities or obligations of the Sellers arising out of events or circumstances prior to the Closing, including, without limitation, any liabilities or obligations arising out of or related to the Excluded Assets (the “Excluded Liabilities”).

 

1.3. Allocation of Purchase Price; Election Pursuant to Section 338(h)(10) .

 

(a) The Parties agree to allocate the aggregate consideration received by the Sellers (and all other capitalizable costs) among the Acquired Assets (the “Asset Consideration”) and the Shares (the “Share Consideration”) for all purposes (including financial accounting and Tax purposes) in accordance with the allocation schedule attached hereto as Schedule 1.3(a) , as adjusted to take into account the determination of the Final Purchase Price.

 

(b) The Sellers will join with FTI in making an election pursuant to Section 338(h)(10) of the Code (and any corresponding provisions under state, local or foreign law) with respect to the acquisition of the Company pursuant to this Agreement (collectively, the “Section 338(h)(10) Election”). The Parties agree that (i) the Share Consideration plus the amount of the liabilities of the Company assumed by the Buyer (plus any other relevant items) will be allocated to the assets of the Company and (ii) the Asset Consideration allocable to each Seller, as set forth in Schedule 1.3(c), will be allocated among the Acquired Assets acquired from such Seller, in each case, for all purposes (including Tax and financial accounting purposes) in accordance with

 

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the allocation schedule attached hereto as Schedule 1.3(b) , as adjusted to take into account the determination of the Final Purchase Price. The Sellers and the Buyer Parties shall take all steps necessary in order to effectuate the Section 338(h)(10) Election in accordance with applicable laws. In particular, and not by way of limitation, in order to effect such Section 338(h)(10) Election FTI and the Sellers shall jointly execute on or prior to the Closing Date, fully completed Internal Revenue Service Forms 8023 and 8883 and all attachments required to be filed therewith pursuant to the applicable United States Treasury regulations. Such Forms 8023 and 8883 and all attachments shall be held by FTI and shall be filed by FTI on behalf of itself and the Sellers in accordance with, and within the time prescribed by, Section 338 of the Code and the Treasury regulations thereunder. FTI shall provide copies of such filings to the Sellers upon filing such Forms 8023 and 8883. The Parties agree to cooperate with each other in preparing Internal Revenue Service Forms 8594, and to furnish the other with a copy of such Form prepared in draft within a reasonable period before its filing due date. Notwithstanding anything to the contrary herein, for Tax purposes, which includes the filing of all Tax Returns (including amended returns and claims for refund), the Parties agree to report the transactions contemplated by this Agreement in a manner consistent with (i) the making of the Section 338(h)(10) Election and (ii) the allocations of Share Consideration and Asset Consideration under this Section 1.3(b), unless required otherwise by a change in law or a final determination within the meaning of Section 1313 of the Code. Any subsequent adjustments to the Share Consideration or the amount of the liabilities of the Company assumed by the Buyer (and any other relevant items) or the Asset Consideration shall be reflected in Schedules 1.3(a) and 1.3(b) in a manner consistent with Section 1060 of the Code and the Regulations thereunder and any other applicable law.

 

(c) Schedule 1.3(c) sets forth (i) each Seller’s respective percentage of the Share Consideration (the “Share Percentage”) and , (ii) each Seller’s respective percentage of the Asset Consideration (the “Asset Percentage”). The Sellers’ Representative shall deliver a statement setting forth each Seller’s respective percentage of the aggregate Share Consideration and Asset Consideration (the “Blended Percentage”), calculated in the manner set forth in Schedule 1.3(c) no later than five (5) Business Days prior to the Closing Date.

 

1.4. Further Assurances . At any time and from time to time after the Closing, at the Buyer’s or FTI’s request and without further consideration, each Seller shall promptly execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take all such other action as the Buyer or FTI may reasonably request, to transfer, convey and assign to the Buyer, and to confirm the Buyer’s title to, all of the Shares and the Acquired Assets, to put the Buyer in actual possession and operating control of the assets, properties and business of the Company and the Acquired Assets, to assist the Buyer and FTI in exercising all rights with respect thereto and to carry out the purpose and intent of the Transaction Documents.

 

1.5. Purchase Price . The purchase price to be paid by the Buyer to the Sellers for the Shares and the Acquired Assets shall be the aggregate of the Final Base Purchase Price, the aggregate of Earn-out Consideration, and the aggregate of all additional cash consideration payable pursuant to Section 1.8 (the “Final Purchase Price”). The “Final Base Purchase Price” shall be an amount equal to 6.25 times Final Base EBIT determined pursuant to Section 1.7,

 

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which shall be payable (a) in cash in an amount equal to 0.64 times the Final Base Purchase Price determined pursuant to Section 1.7, and (b) by the issuance of a number of FTI Shares obtained by dividing (x) the amount equal to 0.36 times the Final Base Purchase Price determined pursuant to Section 1.7, by (y) the Closing Market Value. No fraction of a share of FTI Common Stock shall be issued, and each fractional share thereof shall be rounded to the nearest whole number. Subject to the working capital adjustments in Sections 1.6(c), 1.7(d) and 1.7(j), each Seller shall be entitled to receive (i) his or her respective Share Percentage of that portion of the Final Base Purchase Price allocated to the Share Consideration and (ii) his or her Asset Percentage of that portion of the Final Base Purchase allocated to the Asset Consideration.

 

1.6. Sellers’ Estimated Base EBIT; Payment of Preliminary Base Purchase Price .

 

(a) No later than five (5) Business Days prior to the Closing Date, the Sellers’ Representative shall deliver to the Buyer and FTI a statement (the “Sellers’ Statement”) setting forth the Sellers’ estimated calculation of (i) Closing Base EBIT (“Sellers’ Estimated Base EBIT”), (ii) the Preliminary Base Purchase Price, (iii) the Estimated Closing Date Working Capital, and (iv) schedules that explain by line item in reasonable detail any material variations between the Financial Statements and the estimated calculations in clauses (i), (ii), and (iii). The “Preliminary Base Purchase Price” shall be an amount equal to 6.25 times Sellers’ Estimated Base EBIT. The Preliminary Base Purchase Price shall be payable (a) in cash in an amount equal to 0.64 times the Preliminary Base Purchase Price, and (b) by the issuance of a number of FTI Shares obtained by dividing (x) the amount equal to 0.36 times the Preliminary Base Purchase Price, by (y) the Closing Market Value. The cash portion of the Preliminary Base Purchase Price payable to the Sellers shall be adjusted pursuant to Section 1.6(c). No fraction of a share of FTI Common Stock shall be issued, and each fractional share thereof shall be rounded to the nearest whole number.

 

(b) At the Closing, the Buyer or FTI shall deliver to the Escrow Agent certificates representing each Seller’s Blended Percentage of the FTI Shares portion of the Preliminary Base Purchase Price (rounded to the nearest whole share), to be held pursuant to the terms of this Agreement and the Restricted Stock Agreements.

 

(c) In the event that:

 

(i) the Estimated Closing Date Working Capital exceeds the Reference Working Capital, then the cash portion of the Preliminary Base Purchase Price payable to the Sellers shall be increased by the amount of the excess, and the amount of such increase shall be allocated to the Share Consideration; or

 

(ii) the Reference Working Capital exceeds the Estimated Closing Date Working Capital, then the cash portion of the Preliminary Base Purchase Price payable to the Sellers shall be decreased by the amount of the excess and the amount of such decrease shall be allocated to the Share Consideration.

 

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(d) At the Closing, the Buyer or FTI shall pay (i) each Seller’s respective Asset Percentage of the cash portion of the Preliminary Base Purchase Price allocated to the Asset Consideration, and (ii) as adjusted pursuant to Section 1.6(c), each Sellers’ respective Share Percentage of the cash portion of the Preliminary Base Purchase Price allocated to the Share Consideration, in each case, by wire transfer of immediately available funds to the account(s) designated by such Seller at least three (3) Business Days prior to the Closing Date.

 

1.7. Post-Closing Purchase Price Adjustments . The Preliminary Base Purchase Price shall be subject to adjustment after the Closing Date as follows:

 

(a) Within ninety (90) days after the Closing Date, the Sellers’ Representative shall deliver to FTI and the Buyer:

 

(i) combined financial statements prepared in accordance with GAAP consistently applied and consisting of a balance sheet and statements of income, changes in stockholders’ equity and cash flows of the Business as of the end of the year ended December 31, 2005, which shall have been reviewed by the Company’s independent accountants (the “Final Financial Statements”); and

 

(ii) a statement (the “Closing Sellers’ Statement”) setting forth the Sellers’ calculation, based on the Final Financial Statements, of (A) Closing Base EBIT (“Sellers’ Base EBIT”), (B) the Sellers’ Base Purchase Price, (C) the Working Capital of the Company as of the Closing Date (the “Sellers’ Working Capital”), and (D) schedules that explain by line item in reasonable detail any material variations between the Final Financial Statements and the calculations in clauses (A), (B), and (C). “Sellers’ Base Purchase Price” shall be an amount equal to 6.25 times Sellers’ Base EBIT.

 

(b) If the Preliminary Base Purchase Price exceeds the Sellers’ Base Purchase Price, the amount of the excess (the “Negative Closing Adjustment Amount”) shall be paid by the Sellers to the Buyer, (i) in cash by each Seller in an amount equal to such Seller’s Blended Percentage multiplied by the product of (A) 0.64 and (B) the Negative Closing Adjustment Amount, such payment to be made by wire transfer of immediately available funds within five (5) Business Days of the delivery of the Closing Sellers’ Statement to an account designated by the Buyer; and (ii) in accordance with the Restricted Stock Agreements, by delivery by the Escrow Agent to the Buyer of certificates representing a number of FTI Shares (rounded to the nearest whole share) equal to such Seller’s Blended Percentage multiplied by a fraction, the numerator of which is the product of (A) 0.36 and (B) the Negative Closing Adjustment Amount, and the denominator of which is the Closing Market Value.

 

(c) If the Preliminary Base Purchase Price is less than the Sellers’ Base Purchase Price, the difference (the “Positive Closing Adjustment Amount”) shall be paid by the Buyer to the Sellers (i) in cash to each Seller in an amount equal to such Seller’s Blended Percentage multiplied by the product of (A) 0.64 and (B) the Positive Closing Adjustment Amount, such payment to be made by wire transfer of immediately available funds within five (5) Business Days of delivery of the Closing Sellers’ Statement to an account designated by the

 

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Sellers; and (ii) by delivery to the Escrow Agent in accordance with the Restricted Stock Agreements by FTI of certificates representing a number of FTI Shares (rounded to the nearest whole share) equal to such Seller’s Blended Percentage multiplied by a fraction, the numerator of which is the product of (A) 0.36 and (B) the Positive Closing Adjustment Amount, and the denominator of which is the Closing Market Value.

 

(d) In addition to any payments made by the Parties under subsections (b) or (c) of this Section 1.7:

 

(i) in the event that the Estimated Closing Date Working Capital exceeds the Sellers’ Working Capital, then each of the Sellers shall pay to the Buyer, within five (5) Business Days of the delivery of the Closing Sellers’ Statement, an amount equal to such Seller’s respective Share Percentage of the excess, such payment to be made by wire transfer of immediately available funds to an account designated by the Buyer; or

 

(ii) in the event that the Sellers’ Working Capital exceeds the Estimated Closing Date Working Capital, then the Buyer shall pay to each Seller, within five (5) Business Days of the delivery of the Closing Sellers’ Statement, an amount equal to each Seller’s respective Share Percentage of the excess, such payment to be made by wire transfer of immediately available funds to an account designated by such Seller.

 

(e) On or prior to July 14, 2006, FTI and the Buyer shall deliver to the Sellers’ Representative either a notice indicating that FTI and the Buyer accept the Closing Sellers’ Statement (the “Acceptance Notice”) or a detailed statement describing their objections thereto (the “Objection Notice). If FTI and the Buyer timely deliver the Acceptance Notice to the Sellers’ Representative, or if FTI and the Buyer do not deliver the Objection Notice or the Acceptance Notice on or prior to July 14, 2006, then, effective as of either the date of delivery of the Acceptance Notice or as of the close of business on July 14, 2006, whichever is earlier, FTI and the Buyer shall be deemed to have accepted (i) Sellers’ Base EBIT, in which event Sellers’ Base EBIT shall be deemed Final Base EBIT and the Sellers’ Base Purchase Price shall be deemed the Final Base Purchase Price, including for purposes of calculations under Sections 1.5 and 1.9, and (ii) Sellers’ Working Capital, which shall be deemed Final Closing Date Working Capital.

 

(f) If FTI and the Buyer timely deliver the Objection Notice, their objections shall be resolved as follows:

 

(i) FTI, the Buyer and the Sellers’ Representative shall first use reasonable efforts to resolve objections.

 

(ii) If FTI, the Buyer and the Sellers’ Representative do not reach a resolution of all objections set forth in the Objection Notice within 30 days after delivery thereof, FTI, the Buyer and the Sellers’ Representative shall, within 30 days following the expiration of such 30-day period, engage the Accountant to resolve the Unresolved Objections pursuant to an engagement agreement executed by FTI, the Buyer, the Sellers’ Representative and the Accountant.

 

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(iii) FTI, the Buyer and the Sellers’ Representative shall jointly submit to the Accountant, within five (5) Business Days after the date of the engagement of the Accountant (as evidenced by the date of the engagement agreement), a copy of the Closing Sellers’ Statement, a copy of the Objection Notice, and a statement setting forth the resolution of any objections agreed to by FTI, the Buyer and the Sellers’ Representative. Each of FTI (on behalf of the Buyer) and the Sellers’ Representative shall submit to the Accountant (with a copy delivered to the other party on the same day), within 45 days after the date of the engagement of the Accountant, a memorandum (which may include supporting exhibits) setting forth its positions on the Unresolved Objections. Each of FTI and the Sellers’ Representative may (but shall not be required to) submit to the Accountant (with a copy delivered to the other party on the same day), within 60 days after the date of the engagement of the Accountant, a memorandum responding to the initial memorandum submitted to the Accountant by the other party. Unless requested by the Accountant in writing, neither party may present any additional information or arguments to the Accountant, either orally or in writing.

 

(iv) Within 90 days after the date of its engagement hereunder, the Accountant shall determine whether the Unresolved Objections are appropriate (in whole or in part) and shall issue a ruling which shall include a statement substantially in the same form as the Closing Sellers’ Statement. Such statement shall reflect any resolutions to objections agreed upon by FTI, the Buyer and the Sellers’ Representative, and the Accountant’s resolution of the Unresolved Objections, which resolution shall be limited to the Unresolved Objections and shall not reflect adjustments to the Closing Sellers’ Statement in excess of the proposed adjustments set forth in the Objection Notice. The Accountant’s statement shall set forth a calculation of (x) Final Base EBIT, which result shall be deemed to be Final Base EBIT for purposes of calculations under Sections 1.5 and 1.9, and (y) Final Closing Date Working Capital.

 

(v) The resolution by the Accountant of the Unresolved Objections and the calculations of Final Base EBIT and Final Closing Date Working Capital shall be conclusive and binding upon FTI, the Buyer, the Sellers and the Sellers’ Representative. FTI, the Buyer, the Sellers and the Sellers’ Representative agree that the procedure set forth in this Section 1.7(f) for resolving disputes with respect to Final Base EBIT, Final Closing Date Working Capital and determining the Final Base Purchase Price shall be the sole and exclusive method for resolving any such disputes and making such determination; provided that this provision shall not prohibit FTI and the Buyer, on the one hand, and the Sellers’ Representative, on the other hand, from instituting litigation to enforce the ruling of the Accountant.

 

(vi) The Buyer, and the Sellers collectively, each shall pay 50% of the fees and expenses of the Accountant.

 

(g) Immediately (i) on July 17, 2006, if no Objection Notice or Acceptance Notice was timely delivered, (ii) upon delivery of the Acceptance Notice, or (iii) upon final resolution of any dispute in connection with the determination of Final Base EBIT and Final

 

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Closing Date Working Capital pursuant to this Section 1.7, the Final Base Purchase Price shall be calculated in accordance with Section 1.5 on the basis of Final Base EBIT as determined in accordance with Section 1.7.

 

(h) If the Sellers’ Base Purchase Price exceeds the Final Base Purchase Price, the amount of such difference (the “Final Negative Closing Adjustment Amount”) shall be paid by the Sellers to the Buyer, (i) in cash by each Seller in an amount equal to such Seller’s Blended Percentage multiplied by the product of (A) 0.64 and (B) the Final Negative Closing Adjustment Amount, such payment to be made by wire transfer of immediately available funds within five (5) Business Days of the determination of the Final Base Purchase Price to an account designated by the Buyer; and (ii) in accordance with the Restricted Stock Agreements, by delivery by the Escrow Agent to the Buyer of certificates representing a number of FTI Shares (rounded to the nearest whole share) equal to such Seller’s Blended Percentage multiplied by a fraction, the numerator of which is the product of (A) 0.36 and (B) the Final Negative Closing Adjustment Amount, and the denominator of which is the Closing Market Value.

 

(i) If the Sellers’ Base Purchase Price is less than the Final Base Purchase Price, the amount of such difference (the “Final Positive Closing Adjustment Amount”) shall be paid by the Buyer to the Sellers (i) in cash to each Seller in an amount equal to such Seller’s Blended Percentage multiplied by the product of (A) 0.64 and (B) the Final Positive Closing Adjustment Amount, such payment to be made by wire transfer of immediately available funds within five (5) Business Days of the determination of the Final Base Purchase Price to an account designated by the Sellers; and (ii) by delivery to the Escrow Agent in accordance with the Restricted Stock Agreements by FTI of certificates representing a number of FTI Shares (rounded to the nearest whole share) equal to such Seller’s Blended Percentage multiplied by a fraction, the numerator of which is the product of (A) 0.36 and (B) the Final Positive Closing Adjustment Amount and the denominator of which is the Closing Market Value.

 

(j) In addition to any payments made by the Parties under subsections (h) or (i) of this Section 1.7:

 

(i) in the event that the Sellers’ Working Capital exceeds the Final Closing Date Working Capital, then the Sellers shall pay to the Buyer, within five (5) Business Days of the determination of the Final Closing Date Working Capital under this Section 1.7, an amount equal to such Seller’s respective Share Percentage of the excess, such payment to be made by wire transfer of immediately available funds to an account designated by the Buyer; or

 

(ii) in the event that the Final Closing Date Working Capital exceeds the Sellers’ Working Capital, then the Buyer shall pay, within five (5) Business Days of the determination of the Final Closing Date Working Capital under this Section 1.7, an amount equal to each Seller’s respective Share Percentage of the excess, such payment to be made by wire transfer of immediately available funds to accounts designated by the Sellers.

 

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1.8. Additional Adjustments to Final Base Purchase Price .

 

(a) If, as of any Restriction Termination Date occurring on or prior to the five year anniversary of the Closing Date, the Adjustment Market Value is less than the Closing Market Value, then the Buyer shall, within five (5) Business Days of such applicable Restriction Termination Date, deliver to such Sellers whose FTI Shares become Unrestricted Shares on that Restriction Termination Date, cash consideration in an aggregate amount for each such Seller determined by multiplying the (A) the difference determined by subtracting (x) the Adjustment Market Value from (y) the Closing Market Value by (B) the aggregate number of FTI Shares owned by such Seller that became Unrestricted Shares on such Restriction Termination Date (the “Floor Price Adjustment”). Payment shall be made by wire transfer of immediately available funds within such five-day period.

 

(b) If, as of any such Restriction Termination Date, the Adjustment Market Value is greater than or equal to the Closing Market Value, no increase shall be made to the Final Purchase Price as a result of this Section 1.8 with respect to such Unrestricted Shares.

 

(c) The Final Purchase Price shall be deemed increased by the aggregate amount corresponding to the amount in cash paid by the Buyer pursuant to this Section 1.8.

 

(d) Each of the Closing Market Value and the Adjustment Market Value shall be equitably adjusted to reflect the effect of any stock split, stock dividend, subdivision, combination or other similar event with respect to the FTI Common Stock which became effective during the period between the Closing Date and any Restriction Termination Date for purposes of the calculations in this Section 1.8.

 

1.9. Earn-out Consideration . In addition to the Final Base Purchase Price, the Sellers shall be entitled to consideration as follows:

 

(a) If the EBIT of the Business Unit (as defined below) for any fiscal year ending December 31, 2006 to 2013 exceeds Combined Target EBIT for such fiscal year, then the Sellers shall be entitled to receive additional consideration equal to thirty seven and one-half percent (37.5%) of such excess, which amount shall in any such year constitute “Base Earn-out Consideration.”

 

(b) In addition to Base Earn-out Consideration, the Sellers shall be entitled to receive additional consideration in an amount equal to one-fifth (20%) of the EBIT of the Business Unit for each of the fiscal years ending December 31, 2011, 2012, and 2013 (each, an “Additional Earn-Out Year”), which amount shall constitute “Additional Earn-out Consideration,” provided that (i) the maximum amount of Additional Earn-out Consideration payable with respect to any Additional Earn-Out Year shall not exceed $4 million for such fiscal year and (ii) the aggregate amount of Additional Earn-out Consideration payable under this subsection (b) shall not exceed $10 million.

 

(c) With respect to each fiscal year ending December 31, 2006 to 2013, no later than 10 days after the filing of FTI’s annual report on Form 10-K with the SEC for such fiscal year or, if such report is not timely filed by FTI, no later than 90 days after the end of such

 

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fiscal year, FTI (on behalf of the Buyer) shall prepare (or cause to be prepared) and deliver to the Sellers’ Representative financial statements prepared in accordance with GAAP and consisting of a balance sheet and statements of income, changes in stockholders’ equity and cash flows of the Business as of the end of such fiscal year, together with a calculation of the EBIT of the Business Unit for such fiscal year then ended and a statement of the amount, if any, of Base Earn-out Consideration or Additional Earn-out Consideration (collectively, “Earn-out Consideration”). Unless the Sellers’ Representative disputes FTI’s determination of the EBIT of the Business Unit and Earn-out Consideration for such fiscal year in accordance with the provisions of subsection (d) below, FTI’s determination for such fiscal year shall be conclusive and binding upon the Sellers’ Representative and the Sellers.

 

(d) In the event that the Sellers’ Representative disputes the calculation of the EBIT of the Business Unit and Earn-out Consideration for any fiscal year, the Sellers’ Representative shall notify FTI and the Buyer in writing by delivery of a notice (an “Earn-out Dispute Notice”) within 30 days after delivery of FTI’s calculation of the EBIT of the Business Unit and Earn-out Consideration for such fiscal year, which Earn-out Dispute Notice shall set forth in reasonable detail the basis for such dispute. Any such dispute shall be resolved under the procedures set forth in Section 1.7(f) of this Agreement. If the Sellers’ Representative does not deliver an Earn-out Dispute Notice within 30 days after delivery of FTI’s calculations, within 10 days after expiration of such 30 day period, or, if such a notice is timely delivered, within 10 days of the resolution of any such dispute, the Buyer shall pay each Seller his or her Asset Percentage of any Earn-out Consideration. Subject to Sections 1.9(i) and 8.6, such Earn-out Consideration shall be delivered by the Buyer by wire transfers of immediately available funds to an account or accounts designated in writing by the Sellers’ Representative.

 

(e) For the purposes of this Agreement, the following terms shall have the respective meanings set forth below:

 

(i) “ Acquired Entity ” shall mean the portion of the business and operations of a Person that are substantially the same as, or complimentary to, the business and operations then conducted by the Company or historically conducted by FTI’s economic consulting practice, which the Buyer or its Affiliates acquires in any merger, asset purchase, stock purchase or similar transaction (an “Acquisition”) after the Closing, and which the Sellers who are then employees of FTI LLC and FTI agree will become a part of the Business Unit upon consummation of such Acquisition.

 

(ii) “ Acquired Entity EBIT ” shall mean, for any period, the EBIT generated by an Acquired Entity calculated in a manner consistent with the calculation of EBIT of the Business Unit.

 

(iii) “ Acquired Entity Base EBIT ” shall mean, for any Acquired Entity, EBIT generated by the Acquired Entity for the twelve consecutive months ending at the month end immediately prior to the date of consummation of the Acquisition of such Acquired Entity.

 

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(iv) “ Acquired Entity Target EBIT ” shall mean, for an Acquired Entity, (x) for the year in which the Acquisition of the Acquired Entity occurs, zero; (y) for the first full fiscal year after the year in which the Acquisition of the Acquired Entity occurred, Acquired Entity Base EBIT; and (z) for each succeeding full fiscal year, an amount equal to 1.125 ⁿ times Acquired Entity Base EBIT, where “n” shall equal the number of elapsed fiscal years following the first full fiscal year after consummation of an Acquisition as of the end of such fiscal year ( i.e. , if an Acquisition occurs in 2006, “n” shall be 1 for the fiscal year ended December 31, 2008).

 

(v) “ Business Unit ” shall mean that portion of the business and operations of the Buyer consisting of the former business and operations of the Company and the Acquired Assets, as it may develop after the Closing Date, together with the business and operations of any Acquired Entities.

 

(vi) “ Combined Target EBIT ” shall mean the Target EBIT plus Acquired Entity Target EBIT for each Acquired Entity.

 

(vii) “ EBIT of the Business Unit ” means the EBIT generated by the Business Unit for any period after the Closing, provided, that for purposes of the earn-out calculations in this Section 1.9, (x) directly allocable expenses and costs incurred or accrued by the Buyer Parties with respect to the business and operations of the Business Unit, to the extent not already reflected in the EBIT calculation in such applicable period, shall be included as expenses and costs of the Business Unit in such period, and (y) EBIT of the Business Unit for any fiscal year shall be (A) increased by an amount equal to five percent of any consolidated revenue of FTI that does not constitute revenue of the Business Unit in such fiscal year but that FTI management determines was attributable to referral efforts of the Business Unit and (B) decreased by an amount equal to five percent of any consolidated revenue of the Business Unit in such fiscal year that FTI management determines was attributable to referral efforts by businesses of FTI other than the Business Unit. In each case under clauses (y)(A) and (y)(B) FTI management’s determinations of whether revenue is attributable to referral efforts shall be reasonable and made in good faith on a consistent basis. For the avoidance of doubt, any expenses and costs related to any key man insurance with respect to the Sellers obtained at the request of, or for the benefit of, FTI or Buyer shall not be considered a directly allocable expense or cost under clause (x)(B) above and shall not reduce EBIT of the Business Unit.

 

(viii) “ Target EBIT ” shall mean, for any fiscal year, an amount equal to 1.125 ⁿ times Final Base EBIT, where “n” shall equal the number of elapsed fiscal years following the Closing Date as of the end of such fiscal year.

 

(f) Solely for purposes of calculating Base Earn-out Consideration under Section 1.9(a) but not Additional Earn-out Consideration under Section 1.9(b), with respect to each Acquired Entity, for the fiscal year in which the Acquisition of the Acquired Entity is consummated, (i) there shall be a charge against EBIT of the Business Unit for such fiscal year in an amount equal to 10.4% of the aggregate capitalized value for such Acquisition as determined in accordance with GAAP (the “Capital Charge”), and (ii) the EBIT of the Business

 

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Unit for such fiscal year and each succeeding fiscal year shall include Acquired Entity EBIT of the Acquired Entity that is generated after the date of such Acquisition in each such fiscal year. If an Acquisition is consummated during a fiscal year, the Capital Charge and Acquired Entity EBIT of the Acquired Entity shall be prorated based on the examples in Schedule 1.9(f), and the examples in Schedule 1.9(f) reflect the intent of the parties with respect to the application of Sections 1.9(e) and (f).

 

(g) From the Closing Date until December 31, 2013, the Buyer Parties shall:

 

(i) maintain the trade names “Competition Policy Associates” and “Compass” for the Business Unit through at least December 31, 2008, provided that the Buyer Parties shall not be obligated to maintain the trade name “Compass” if a third party alleges in writing that the Business Unit’s use of such trade name violates such third party’s rights in such name;

 

(ii) maintain separate accounting of the Business Unit for purposes of determining the Earn-Out Consideration;

 

(iii) with respect to Business Unit engagements for which he or she will perform services, permit each Seller in his or her sole discretion to refuse to accept any such client engagement, as provided in the Employment and Consulting Agreements;

 

(iv) with respect to Business Unit engagements for which he or she will perform services, permit each Seller in his or her sole discretion to determine the substantive position or opinions that such Seller will take or provide in connection with such engagements; and

 

(v) with respect to Business Unit engagements for which he or she will perform services, permit each Seller in his or her sole discretion to accept new client engagements, except where such engagements (including due to the nature of the engagement or the identity of the client) are inconsistent with any of FTI’s policies and procedures applicable to the Business Unit from time to time as determined, and subject to change, in FTI’s sole discretion.

 

(h) The Sellers agree and acknowledge that the Buyer Parties may make from time to time such business decisions as they deem appropriate in the conduct of the Business Unit’s business, including actions that may have an impact on EBIT of the Business Unit, Acquired Entity EBIT and all or any portion of Earn-out Consideration. The Sellers shall have no right to claim any lost earn-out or other damages as a result of such decisions so long as the actions were not taken by the Buyer Parties in bad faith for the sole purpose of frustrating provisions of this Section 1.9.

 

(i) If there are no longer any Escrow Shares held in escrow under the Restricted Stock Agreements, FTI and the Buyer may elect to set-off against all or a portion of any Earn-out Consideration payable to the Sellers any amount owed to the Buyer Parties under

 

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the Sellers’ indemnification obligations set forth in Article VIII, if and to the extent such obligations are (A) agreed to in writing by the Sellers or the Sellers’ Representative, or (B) the subject of a final order of a court of competent jurisdiction or an award of an arbitrator engaged by the Buyer Parties and the Sellers to resolve a dispute.

 

(j) Except as otherwise provided herein, each of the calculations in this Section 1.9 shall be made in accordance with GAAP applied consistently.

 

1.10. Sellers’ Representative .

 

(a) In order to efficiently administer the transactions contemplated hereby, including, without limitation (i) final determination of all matters under Sections 1.3(c), 1.6, 1.7, 1.8 and 1.9, including, without limitation, the Share Percentage, Asset Percentage, the Blended Percentage, Closing Base EBIT, Sellers’ Base EBIT, Final Base EBIT, Estimated Closing Date Working Capital, Sellers’ Working Capital, Final Closing Date Working Capital, the Preliminary Base Purchase Price, the Sellers’ Base Purchase Price, the Final Base Purchase Price, the Final Purchase Price, Base Earn-out Consideration, Additional Earn-out Consideration, Earn-out Consideration, EBIT of the Business Unit, Target EBIT, and Acquired Entity EBIT (collectively, the “Determined Matters”), (ii) the waiver of any condition to the obligations of the Sellers to consummate the transactions contemplated hereby, (iii) the defense and/or settlement of any claims for which the Sellers may be required to indemnify the Buyer Parties pursuant to Article VIII hereof, and (iv) give and receive all notices required to be given under this Agreement, the Sellers hereby designate the Sellers’ Representative as their representative.

 

(b) The Sellers hereby authorize the Sellers’ Representative (i) to make all decisions relating to the final determination of all matters under Sections 1.6, 1.7, 1.8 and 1.9, including, without limitation, the Determined Matters, including resolution of objections under Sections 1.7 and 1.9, (ii) to take all action necessary in connection with the waiver of any condition to the obligations of the Sellers to consummate the transactions contemplated hereby, (iii) to defend and/or settle or compromise claims for which the Sellers may be required to indemnify the Buyer Indemnified Parties pursuant to Article VIII hereof, (iv) to give and receive all notices required to be given under this Agreement, and (iv) to take any and all additional action as is contemplated to be taken by or on behalf of the Sellers by the terms of this Agreement.

 

(c) In the event that the Sellers’ Representative dies, becomes unable to perform his or her responsibilities hereunder or resigns from such position, the Sellers holding, prior to the Closing Date, a majority of the Shares shall select another representative to fill such vacancy and such substituted representative shall be deemed to be the Sellers’ Representative for all purposes of this Agreement and the documents delivered pursuant hereto.

 

(d) All decisions and actions by the Sellers’ Representative, including final determination of all matters under Sections 1.6, 1.7, 1.8 and 1.9, including, without limitation, the Determined Matters, including resolution of objections under Sections 1.7 and 1.9, or the defense or settlement of any claims for which the Sellers may be required to indemnify the Buyer

 

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Indemnified Parties pursuant to Article VIII hereof and any and all additional action as is contemplated to be taken by or on behalf of the Sellers, shall be binding upon all of the Sellers, and no Seller shall have the right to object, dissent, protest or otherwise contest the same.

 

(e) By his or her execution of this Agreement, each Seller agrees that:

 

(i) FTI and the Buyer shall be able to rely conclusively on the instructions and decisions of the Sellers’ Representative as to final determination of all matters under Sections 1.6, 1.7, 1.8 and 1.9, including, without limitation, the Determined Matters, including resolution of objections under Sections 1.7 and 1.9, or the defense or settlement of any claims for which the Sellers may be required to indemnify the Buyer Indemnified Parties pursuant to Article VIII hereof and any and all additional action as is contemplated to be taken by or on behalf of the Sellers, permitted to be taken by the Sellers’ Representative hereunder, and no party hereunder shall have any cause of action against the Buyer Parties for any action taken by the Buyer Parties in reliance upon the written instructions of the Sellers’ Representative;

 

(ii) all actions, decisions and instructions of the Sellers’ Representative shall be conclusive and binding upon all of the Sellers and no Seller shall have any cause of action against the Sellers’ Representative for any action taken, decision made or instruction given by the Sellers’ Representative under this Agreement, except for fraud or willful breach of this Agreement by the Sellers’ Representative;

 

(iii) the provisions of this Section 1.10 are independent and severable, are irrevocable and coupled with an interest and shall be enforceable notwithstanding any rights or remedies that any Sellers may have in connection with the transactions contemplated by the Transaction Documents;

 

(iv) the provisions of this Section 1.10 shall be binding upon the executors, heirs, legal representatives and successors of each Seller, and any references in this Agreement to a Seller or the Sellers shall mean and include the successors to the Sellers’ rights hereunder, whether pursuant to testamentary disposition, the laws of descent and distribution or otherwise; and

 

(v) to the extent permitted by law, the Sellers shall indemnify and hold harmless the Sellers’ Representative against any losses, claims, expense, cause of action, damages or liabilities (joint or several) to which the Sellers’ Representative may become subject in connection with fulfilling the role of Sellers’ Representative as contemplated by this Agreement, and shall reimburse the Sellers’ Representative for any legal or other expenses reasonably incurred in connection with investigating and defending any such loss, claim, damage, liability or action.

 

(f) All fees and expenses incurred by the Sellers’ Representative shall be paid by the Sellers.

 

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1.11. The Closing . The Closing shall take place at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 1899 Pennsylvania Avenue, NW, Washington, D.C. at 9:00 a.m., local time, on the Closing Date. The transfer of the Shares and the Acquired Assets by the Sellers to the Buyer shall be deemed to occur at 9:00 a.m., local time, on the Closing Date.

 

1.12. Tax Withholding . The Parties acknowledge and agree that no Taxes shall be deducted or withheld from any payments to be made hereunder, provided that any Internal Revenue Service Forms W-9 or certificate establishing an exemption from withholding under Section 1445 of the Code requested by the Buyer from the Company or the Sellers, as the case may be, are timely provided to the Buyer.

 

ARTICLE II

REPRESENTATIONS OF THE SELLERS REGARDING THE SHARES AND

ACQUIRED ASSETS

 

Each Seller severally represents and warrants to the Buyer Parties (as defined in Section 4.1) that the statements contained in this Article II are true and correct as of the date of this Agreement and will be true and correct as of the Closing as though made as of the Closing.

 

2.1. Title . Such Seller is the record and beneficial owner of the Shares, free and clear of Liens, set forth opposite such Seller’s name on Schedule I . Such Seller owns, leases or has the legal right to use the Acquired Assets which are to be purchased by the Buyer from such Seller pursuant hereto, free and clear of Liens. Each Seller has developed and owns his or her Personal Goodwill, free and clear of Liens.

 

2.2. Authority . Such Seller has the full right, power and capacity to enter into the Transaction Documents to which he or she is a party, perform his or her obligations thereunder, and consummate the transactions contemplated hereunder and thereunder, and to transfer, convey and sell to the Buyer at the Closing the Shares and the Acquired Assets to be sold by such Seller hereunder and thereunder and, upon consummation of the transactions contemplated hereby and thereby, and assuming the Buyer has no knowledge of any adverse claims, the Buyer will acquire from such Seller good and marketable title to such Shares and the Acquired Assets, free and clear of Liens. Each of the Transaction Documents to which such Seller shall be a party has been duly and validly executed and delivered by such Seller and constitutes a valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as may be limited by (a) bankruptcy, insolvency, reorganization or other similar laws now or hereafter in effect relating to creditors’ rights generally, and (b) general equitable principles (the “Enforceability Exceptions”)

 

2.3. Regulatory Approvals . Such Seller is not a party to, subject to or bound by any agreement or any judgment, order, writ, prohibition, injunction or decree of any court or other governmental body which would prevent the execution or delivery of this Agreement by such Seller or the transfer, conveyance and sale of the Shares and the Acquired Assets to be sold by such Seller to the Buyer pursuant to the terms hereof.

 

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2.4. Noncontravention . Subject to compliance with the applicable requirements of the Hart-Scott-Rodino Act, the execution, delivery and performance by such Seller of the Transaction Documents and the consummation by such Seller of the transactions contemplated hereby and thereby, will not (a) require on the part of such Seller any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (b) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract, agreement or instrument, to which such Seller is a party or by which such Seller is bound, or to which any of such Seller’s assets is subject, (c) result in the imposition of any Lien upon any of the Acquired Assets, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to such Seller or any of his or her assets. Such Seller is not a party to any employment, consulting, independent contractor, non-competition or non-solicitation agreement or any other contract or agreement (oral or written) that would restrict the sale or transfer of the Acquired Assets (including Personal Goodwill) or the Buyer’s acquisition or use thereof, or that could materially restrict such Seller from performing his or her obligations under his or her Employment or Consulting Agreement or any other Transaction Document on and after the Closing.

 

2.5. Litigation . There is no Legal Proceeding which is pending or has been threatened in writing, and there is no judgment, order or decree outstanding, against such Seller, in each case that arises from or relates to the Business or the Acquired Assets, or that would have an adverse effect on such Seller’s ability to consummate the transactions contemplated by the Transaction Documents to which such Seller is a party.

 

2.6. Brokers . Such Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by the Transaction Documents.

 

2.7. Disclosure . No representation or warranty by such Seller contained in this Agreement, and no statement contained in the Disclosure Schedule or any other document, certificate or other instrument delivered or to be delivered by or on behalf of such Seller pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. Such Seller has disclosed to the Buyer all material information relating to the Business.

 

2.8. Investment Intent . Such Seller is acquiring the FTI Shares for investment for his or her own account and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same in violation of U.S. federal or any applicable state securities laws. Such Seller acknowledges that the FTI Shares have not been registered under U.S. federal or any applicable state securities laws or the laws of any other jurisdiction and cannot be resold without registration under such laws or an exemption therefrom. Such Seller further acknowledges that (a) it has such knowledge and experience in financial and business matters, that he or she is capable of evaluating the merits and risks of an

 

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investment in the FTI Shares, (b) he or she can bear the economic risk of an investment in the Stock for an indefinite period of time and (c) he or she has had the opportunity to conduct an independent due diligence review of FTI.

 

2.9. Transfer of Acquired Assets . Each Seller has taken, or, prior to the Closing, will have taken, all steps required and advisable to properly transfer to the Buyer all right, title and interest in and to all assets of Sebago Associates, JAO, LLC, and Consultants in Industry Economics, LLC that are used in or relating to the Business.

 

ARTICLE III

REPRESENTATIONS OF THE SELLERS AND THE COMPANY REGARDING THE

COMPANY AND THE BUSINESS

 

Each Seller and the Company, jointly and severally, represents and warrants to the Buyer Parties (as defined in Section 4.1) that, except as set forth in the Disclosure Schedule, the statements contained in this Article III are true and correct as of the date of this Agreement and will be true and correct as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

 

3.1. Organization, Qualification and Corporate Power . The Company is a corporation duly organized, validly existing and in corporate good standing under the laws of the District of Columbia. The Company is duly qualified to conduct business and is in corporate good standing under the laws of each jurisdiction listed in Section 3.1 of the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of the Company’s businesses or the ownership or leasing of its properties requires such qualification, except to the extent that the failure to be so licensed, qualified or in good standing could not reasonably be expected to have a Company Material Adverse Effect. The Company has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Company has furnished to FTI complete and accurate copies of its Articles of Incorporation and By-laws. The Company is not in default under or in violation of any provision of its Articles of Incorporation or By-laws.

 

3.2. Capitalization .

 

(a) The authorized capital stock of the Company, as of the date of this Agreement, consists of 5,000 shares of Common Stock, of which 1,000 shares of Class A Common Stock and 1,000 shares of Class B Common Stock are issued and outstanding. All of the Company’s issued and outstanding shares of Common Stock are owned by the Sellers.

 

(b) All of the issued and outstanding shares of capital stock of the Company have been, and on the Closing Date will be, duly authorized, validly issued, fully paid, nonassessable and free of all preemptive rights. There are no outstanding or authorized options, warrants, rights, calls, convertible instruments, agreements or commitments to which the Company or any Seller is a party or which are binding upon the Company or any Seller

 

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providing for the issuance, disposition or acquisition of any of the Company’s capital stock. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company. There are no agreements, voting trusts, proxies or understandings with respect to the voting, or registration under the Securities Act, of any shares of capital stock of the Company. All of the issued and outstanding shares of capital stock of the Company were issued in compliance with all applicable federal and state securities laws.

 

3.3. Authorization of Transaction . The Company has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and to perform its obligations and consummate the transactions contemplated hereunder and thereunder. The execution and delivery by the Company of the Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated by the Transaction Documents have been duly and validly authorized by all necessary corporate action on the part of the Company. The Transaction Documents to which it is a party have been duly and validly executed and delivered by the Company and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as may be limited by the Enforceability Exceptions.

 

3.4. Noncontravention . Subject to compliance with the applicable requirements of the Hart-Scott-Rodino Act, neither the execution and delivery by the Company of this Agreement, nor the consummation by the Company of the transactions contemplated hereby, will (a) conflict with or violate any provision of the Articles of Incorporation or By-laws of the Company, (b) require on the part of the Company any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any material contract, instrument, or agreement (oral or written) to which the Company is a party or by which the Company is bound or to which any of its assets are subject, (d) result in the imposition of any Lien upon any properties or assets of the Company or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its properties or assets.

 

3.5. No Subsidiaries . The Company does not own any stock or other ownership interest in any corporation, partnership, limited liability company, joint venture, trust or other business association or entity.

 

3.6. Financial Statements .

 

(a) Attached as Section 3.6(a) of the Disclosure Schedule are correct and complete copies of the Financial Statements. The Financial Statements have been prepared in accordance with GAAP, fairly present in all material respects the financial condition, results of operations and cash flows of the Business as of the date thereof and for the period referred to therein and are consistent with the books and records of the Company. Section 3.6(a) of the Disclosure Schedule sets forth a pro forma calculation of EBIT for the nine months ended September 30, 2005.

 

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(b) Since June 30, 2005, there have been no material changes in the accounting policies of the Company.

 

(c) The Company maintains accurate books and records reflecting its assets and liabilities, financial condition and results of operations, and maintains controls which provide reasonable assurance that (i) transactions (including those arising in connection with the Acquired Assets) are recorded as necessary to permit preparation of the Financial Statements and to maintain accountability for the Company’s assets, (ii) access to assets of the Company is permitted only in accordance with management’s authorization, and (iii) accounts, note, and other receivables and payables (including those arising in connection with the Acquired Assets) are recorded adequately.

 

3.7. Absence of Certain Changes . Since June 30, 2005, (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have, a Company Material Adverse Effect, and (b) neither the Company, nor any of the Sellers with respect to the Business, has taken any of the actions set forth in paragraphs (a) through (n) of Section 5.3.

 

3.8. Undisclosed Liabilities . The Company has no material liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the Most Recent Balance Sheet, (b) liabilities which have arisen since the Most Recent Balance Sheet Date in the Ordinary Course of Business, (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet and that are not in the aggregate material, or (d) as of the Closing, Working Capital Liabilities reflected on the Sellers’ Statement as a component of Estimated Closing Working Capital.

 

3.9. Tax Matters .

 

(a) At all times since inception, for federal income tax purposes, the Company has validly been treated as an “S corporation” within the meaning of Section 1361(a) of the Code and the Company will be so treated as of the Closing Date (including in connection with the Section 338(h)(10) Election).

 

(b) The Company has never had any direct or indirect equity or similar interest in any other corporation, limited liability company, partnership, trust, or other business association or entity.

 

(c) The Company has filed on a timely basis all Tax Returns that it was required to file, and all such Tax Returns were complete and accurate in all material respects. The Company is not and never has been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns. The Company has paid on a timely basis all Taxes that were due and payable. The unpaid Taxes of the Company for tax periods through the Most Recent Balance Sheet Date do not exceed the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established

 

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to reflect timing differences between book and Tax income) set forth on the Most Recent Balance Sheet, and the unpaid Taxes of the Company for periods through the Closing Date will not exceed such accruals and reserves as adjusted through the Closing Date. All Taxes that the Company is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Entity.

 

(d) The Company has delivered to FTI complete and accurate copies of all federal income Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by the Company. The Company has delivered to FTI complete and accurate copies of all income, property and sales Tax Returns of the Company for the District of Columbia and the State of California together with all related examination reports and statements of deficiency for all periods for which the applicable statute of limitations has not yet expired. No examination or audit of any Tax Return of the Company by any Governmental Entity is currently in progress or, to the Sellers’ Knowledge, threatened or contemplated. The Company has not been informed in writing by any jurisdiction that the jurisdiction believes that the Company was required to file any Tax Return that was not filed. The Company has not waived any statute of limitations with respect to Taxes or agreed to an extension of time with respect to a Tax assessment or deficiency (other than as a result of a valid extension of time to file a Tax Return).

 

(e) The Company : (i) has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code; (ii) has no actual or potential liability for any Taxes of any Person (other than the Company) under Treasury Regulation Section 1.1502-6 (or any similar provision of federal, state, local, or foreign law), or as a transferee or successor, or by contract; and (iii) is not nor has it been required to make a basis reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b).

 

(f) None of the assets of the Company or the Acquired Assets: (i) is “tax-exempt use property” within the meaning of Section 168(h) of the Code; or (ii) directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the Code.

 

(g) The Company has not undergone a change in its method of accounting resulting in an adjustment to its taxable income pursuant to Section 481 of the Code.

 

(h) There are, and will be at the Closing, no Lien with respect to Taxes upon any of the assets of the Company or upon the Acquired Assets, other than Permitted Liens.

 

3.10. Assets . The Company is the true and lawful owner, and has good title to, all of the assets (tangible or intangible) purported to be owned by the Company, free and clear of all Liens, other than Permitted Liens. All of the assets owned by the Company together with the Acquired Assets constitute all assets used in the Business as currently conducted.

 

3.11. Owned Real Property . The Company does not own, nor has it ever owned, any real property or any option to acquire real property.

 

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3.12. Real Property Leases . Section 3.12 of the Disclosure Schedule lists all Leases and lists the term of each such Lease, any extension and expansion options, and the rent payable thereunder. The Company has delivered to FTI complete and accurate copies of the Leases. With respect to each Lease:

 

(a) such Lease is legal, valid, binding, enforceable and in full force and effect;

 

(b) neither the Company nor, to the Sellers’ Knowledge, any other party, is in breach or violation of, or default under, in any material respect, any such Lease, and no event has occurred, is pending or, to the Sellers’ Knowledge, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a material breach or default by the Company or, to the Sellers’ Knowledge, any other party under such Lease;

 

(c) to the Sellers’ Knowledge, there are no disputes, oral agreements or forbearance programs in effect as to such Lease;

 

(d) the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold; and

 

(e) to the Sellers’ Knowledge, all facilities leased or subleased thereunder are supplied with utilities and other services adequate for the operation of said facilities;.

 

3.13. Intellectual Property .

 

(a) Section 3.13(a) of the Disclosure Schedule lists each patent, patent application, copyright registration or application therefor, and trademark, service mark and domain name registration or application therefor owned by the Company.

 

(b) The Company Intellectual Property and the Intellectual Property included in the Acquired Assets includes all of the Intellectual Property (i) owned by, licensed to, or used by the Company or the Sellers and (ii) necessary to the operation of the Business as currently conducted. The Company Intellectual Property and the Intellectual Property included in the Acquired Assets will be available to the Company immediately following the Closing on substantially identical terms and conditions as it was available to the Company or the Sellers immediately prior to the Closing. The Company has taken commercially reasonable measures to protect the proprietary nature of each item of Company Intellectual Property, and to maintain in confidence all trade secrets and confidential information, that it owns or uses. Each of the Sellers has taken commercially reasonable measures to protect the proprietary nature of each item of Intellectual Property included in the Acquired Assets, and to maintain in confidence all trade secrets and confidential information, that such Seller owns or uses in the Business. No other Person has any rights to any of the Company Intellectual Property owned by the Company (except pursuant to agreements or licenses specified in Section 3.13(d) of the Disclosure Schedule) or the Intellectual Property included in the Acquired Assets, and, to the Sellers’ Knowledge, no Person is infringing, violating or misappropriating any of the Company Intellectual Property or the Intellectual Property included in the Acquired Assets.

 

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(c) To the Sellers’ Knowledge, the operation of the Business as currently conducted does not infringe or violate, or constitute a misappropriation of, any Intellectual Property rights of any Person. Section 3.13(c) of the Disclosure Schedule lists any written complaint, claim or notice received by the Company or any Seller alleging any such infringement, violation or misappropriation; and the Company has provided to FTI complete and accurate copies of all written documentation in the possession of the Company or any Seller relating to any such complaint, claim, notice or threat or any claims or disputes concerning any Company Intellectual Property or Intellectual Property included in the Acquired Assets.

 

(d) Section 3.13(d) of the Disclosure Schedule identifies (i) each license or other agreement pursuant to which the Company has licensed, distributed or otherwise granted any rights to any third party with respect to, any Company Intellectual Property or Intellectual Property included in the Acquired Assets and (ii) each license or other agreement concerning Intellectual Property by any other Person to the Company or the Sellers with respect to the Business (excluding off-the-shelf software programs licensed by the Company pursuant to “shrink wrap” or “click through” licenses). Other than in the Ordinary Course of Business, none of the Company, or the Sellers with respect to the Business, has agreed to indemnify any Person against any infringement, violation or misappropriation of any Intellectual Property rights.

 

(e) All of the copyrightable materials (including Software) owned by the Company or the Sellers and included in Company Intellectual Property or the Acquired Assets has been created by employees of the Company within the scope of their employment by the Company or by independent contractors of the Company who have executed agreements expressly assigning all right, title and interest in such copyrightable materials to the Company. No portion of such copyrightable materials was jointly developed with any third party.

 

(f) To the Sellers’ Knowledge, the Internal Systems are free from significant defects or programming errors and conform in all material respects to the written documentation and specifications therefor.

 

3.14. Contracts .

 

(a) Section 3.14 of the Disclosure Schedule lists the following written (and in the case of subsection (a)(xii), oral) agreements to which the Company is a party or bound as of the date of this Agreement or that constitute Acquired Assets:

 

(i) all agreements (or group of related agreements) for the lease of personal property from or to third parties(including affiliated parties) providing for lease payments in excess of $25,000 per annum or having a remaining term longer than 12 months;

 

(ii) all agreements (or group of related agreements) potentially providing for payments in excess of $25,000 per annum for the purchase, sale, lease or licensing of products or for the furnishing or receipt of services;

 

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(iii) all agreements concerning the establishment or operation of a partnership, joint venture or limited liability company;

 

(iv) all agreements (or group of related agreements) under which the Company, or any other party with respect to the Business, has created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) Indebtedness or under which the Company or any other Person has imposed (or may impose) a Lien on any of the Company assets or the Acquired Assets, tangible or intangible;

 

(v) all agreements for the disposition of any significant portion of the assets or business of the Company or the Sellers with respect to the Business (other than sales of products or provision of services in the Ordinary Course of Business) or any agreement for the acquisition of the assets or business of any other Person (other than purchases of supplies or inventory in the Ordinary Course of Business);

 

(vi) all agreements concerning nondisparagement, nonsolicitation or noncompetition;

 

(vii) all consulting and independent contractor agreements;

 

(viii) all agreements under which the consequences of a default or termination could reasonably be expected to have a Company Material Adverse Effect;

 

(ix) all agreements which contains any provisions requiring the Company, or any Seller with respect to the Business, to indemnify any other party (excluding indemnities contained in agreements for the purchase, sale or license of products or provision of services entered into in the Ordinary Course of Business);

 

(x) all agreements whereby revenue or profits are shared by or with another entity or individual (other than constituting salary); and

 

(xi) all other agreements (or group of related agreements) either involving more than $25,000 per annum or not entered into in the Ordinary Course of Business; and

 

(xii) all oral client and customer engagements and similar agreements of the Company or any Seller related to the Business for which, as of the time of engagement or any subsequent amendment, provided for services at non-standard rates or on non-customary terms and conditions.

 

(b) The Company has delivered to the Buyer a complete and accurate copy of each written agreement required to be listed in Sections 3.12, 3.13(d) or 3.14 of the Disclosure Schedule. With respect to each agreement required to be so listed: (i) the agreement is legal, valid, binding and enforceable on the Company and, to the Sellers’ Knowledge, the other parties thereto and in full force and effect; (ii) the agreement will remain in full force and effect

 

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immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing and consummation of the transactions contemplated by the Transaction Documents will not constitute a breach, default or violation hereunder and thereunder; and (iii) neither the Company nor, to the Sellers’ Knowledge, any other party, is in material breach or violation of, or default under, any such agreement, and no event has occurred, is pending or, to the Sellers’ Knowledge, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a material breach or default by the Company or, to the Sellers’ Knowledge, any other party under such agreement.

 

3.15. Accounts Receivable . All accounts receivable of the Company or relating to Acquired Assets reflected on the Most Recent Balance Sheet (other than those paid since such date) or that have arisen since such date arose from the bona fide sale of services in the Ordinary Course of Business. A complete and accurate list of the accounts receivable reflected on the Most Recent Balance Sheet, showing the aging thereof, is set forth in Section 3.15 of the Disclosure Schedule. Except as set forth in Section 3.15 of the Disclosure Schedule, neither the Company, nor the Sellers with respect to any Acquired Asset, has received any written notice from an account debtor stating that any account receivable is subject to any contest, claim or set-off by such account debtor.

 

3.16. Bank Accounts; Powers of Attorney . Section 3.16 of the Disclosure Schedule sets forth a true and complete list of all bank accounts, safe deposit boxes and lock boxes of the Company including, with respect to each such account and lock box, the names in which such accounts or boxes are held and identification of all Persons authorized to draw thereon or have access thereto. There are no outstanding powers of attorney executed on behalf of the Company.

 

3.17. Insurance . Section 3.17 of the Disclosure Schedule lists each insurance policy (including fire, theft, casualty, comprehensive general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which the Company is a party, all of which are in full force and effect. Such insurance policies are of the type and in amounts customarily carried by organizations conducting businesses or owning assets similar to those of the Company.

 

3.18. Litigation . There is no Legal Proceeding which is pending or, to the Sellers’ Knowledge, has been threatened in writing against or affecting the Company or the Acquired Assets.

 

3.19. Employees .

 

(a) Section 3.19(a) of the Disclosure Schedule contains a list of (i) all employees and individual service providing consultants of the Company who earned more than $100,000 in base salary or fees in 2004 or who are reasonably expected to earn more than $100,000 in base salary or fees in 2005, (ii) all officers and directors of the Company, which list with respect to clauses (i) and (ii) indicates whether any of the named individuals provides business services on a less than exclusive basis to the Business; and (iii) all employment agreements with any employees, officers, or directors. Section 3.19(a) of the Disclosure

 

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Schedule contains a list of all current and former employees of the Company who are a party to a non-competition and/or an assignment of intellectual property agreement, if any, with the Company; copies of such agreements have previously been delivered to FTI. To the Sellers’ Knowledge, no employee of or consultant to the Company who earned more than $100,000 in base salary or fees in 2004 or who are reasonably expected to earn more than $100,000 in base salary or fees in 2005 has any plans to terminate employment with or services to the Company.

 

(b) Except as could not reasonably be expected to have a Company Material Adverse Effect, the Company has complied in all material respects with all applicable domestic and foreign laws respecting employment and employment practices and with all employment agreements, and no claims, controversies, investigations, or suits are pending or, to the Sellers’ Knowledge, threatened, with respect to such laws or agreements, either by private individuals or by governmental agencies.

 

(c) The Company is not, nor has it been within the preceding three years, a party to or bound by any collective bargaining agreement, nor has it, within the preceding three years experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. To the Sellers’ Knowledge, there has not been any organizational effort made or threatened in writing, either currently or within the past two years, by or on behalf of any labor union with respect to employees of the Company.

 

(d) All Persons who have performed services for the Company and have been classified as independent contractors have satisfied in all material respects the requirements of law to be so classified, and each of the Sellers and the Company, as applicable, has reported in all material respects their compensation on IRS Forms 1099 or other applicable tax forms for independent contractors when required to do so.

 

(e) All employees of the Company are employed within the United States.

 

3.20. Employee Benefits .

 

(a) Section 3.20(a) of the Disclosure Schedule contains a complete and accurate list of all Company Plans. Complete and accurate copies of (i) all Company Plans which have been reduced to writing, (ii) written summaries of all unwritten Company Plans, (iii) all related trust agreements, insurance contracts and summary plan descriptions or summaries of material modifications, (iv) in the case of a plan intended to be qualified under Code Section 401(a), a copy of the most recent Internal Revenue Service determination or opinion letter for such plan, and (v) all annual reports filed on IRS Form 5500, 5500C or 5500R and (for all funded plans) all plan financial statements for the last three plan years for each Company Plan, have been delivered to the Buyer.

 

(b) Each Company Plan has been administered in accordance with its terms in all material respects and the Company has met its obligations with respect to each Company Plan and has made all required contributions and premium payments thereto. No Company Plan by its terms contractually defers salary, wages, commissions, or incentive compensation income

 

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more than two and a half months after the calendar year in which it is earned. Except as could not reasonably be expected to have a Company Material Adverse Effect, the Company and each Company Plan are in compliance with the currently applicable provisions of ERISA and the Code and the regulations thereunder (including Section 4980 B of the Code, Subtitle K, Chapter 100 of the Code and Sections 601 through 608 and Section 701 et seq. of ERISA). All filings and reports as to each Company Plan required to have been submitted to the Internal Revenue Service, to the United States Department of Labor, or to any other regulatory agency have been submitted in material compliance with applicable laws. No Company Plan has assets that include securities issued by the Company.

 

(c) There are no Legal Proceedings (except claims for benefits payable in the normal operation of the Company Plans and proceedings with respect to qualified domestic relations orders) against or involving any Company Plan or asserting any rights or claims to benefits under any Company Plan on behalf of or with respect to any employee of the Company or any beneficiaries.

 

(d) All the Company Plans that are intended to be qualified under Section 401(a) of the Code have received determination letters from the Internal Revenue Service to the effect that such Company Plans are qualified and the plans and the trusts related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, no such determination letter has been revoked and revocation has not been threatened in writing, and no such Company Plan has been amended since the date of its most recent determination letter or application therefore in any respect, and no act or omission has occurred, that would adversely affect its qualification. Except as could not reasonably be expected to have a Company Material Adverse Effect, to Sellers’ Knowledge, no transactions prohibited by Section 4975 of the Code or Section 406 of ERISA and no breaches by the Company of fiduciary duty described in Section 404 of ERISA have occurred with respect to any Company Plan.

 

(e) Neither the Company nor any Seller with respect to assets covered by this Agreement has ever maintained an Employee Benefit Plan subject to Title IV of ERISA.

 

(f) No Company Plan provides or promises any employee of the Company (or beneficiary) any medical or death benefits, beyond retirement or other termination of employment, other than as applicable law requires.

 

(g) No Company Plan is funded by, associated with or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code.

 

(h) Section 3.20(h) of the Disclosure Schedule lists each agreement with any director, executive officer or other key employee of the Company (A) the benefits of which are contingent, or the terms of which are altered, upon the occurrence of any of the transactions contemplated by the Transaction Documents, (B) providing any term of employment or compensation guarantee, or (C) providing severance benefits or other benefits after the termination of employment of such director, executive officer or key employee. Section 3.20(h) of the Disclosure Schedule lists each agreement or plan binding the Company, including any

 

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stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, severance benefit plan or Company Plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by the Transaction Documents or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by the Transaction Documents. No employee, officer, independent contractor or director of the Company has been promised or paid any bonus or incentive compensation related to the consummation of the transactions contemplated by the Transaction Documents.

 

(i) There are no loans or extension of credit from any Seller or the Company to any employee of the Company.

 

3.21. Environmental Matters . Except as could not reasonably be expected to have a Company Material Adverse Effect, (i) the Company has no liabilities or obligations arising from the release of any Materials of Environmental Concern into the environment or relating to any Environmental Law and (ii) the Company is not a party to or bound by any court order, administrative order, consent order or other agreement between the Company and any Governmental Entity entered into in connection with any legal obligation or liability arising under any Environmental Law.

 

3.22. Legal Compliance . The Company, and the Sellers with respect to the Business, are currently conducting, and have at all times conducted, the Business (including with respect to the Acquired Assets) in compliance with each applicable law (including rules and regulations thereunder) of any federal, state, local or foreign government, or any other Governmental Entity, except for any violations or defaults that, individually or in the aggregate, have not had and could not reasonably be expected to have a Company Material Adverse Effect. Neither the Company nor any Seller has received any notice or communication from any Governmental Entity alleging noncompliance in any material respect with any applicable law, rule or regulation.

 

3.23. Clients and Customers . Section 3.23 of the Disclosure Schedule sets forth a complete and correct list of the top ten clients and customers of the Company (including clients whose engagements constitute Acquired Assets or for which any Seller performed services during such twelve month period) based on revenue during the twelve months ended June 30, 2005. Section 3.23 also sets forth a complete and accurate list of all pending client engagements of the Company or constituting Acquired Assets, by client, as of a date no more than three (3) Business Days prior to the date hereof.

 

3.24. Permits . Section 3.24 of the Disclosure Schedule sets forth a list of all Permits issued to or held by the Company. Such listed Permits are the only Permits that are required for the Company to conduct the Business. Each such Permit is in full force and effect and the Company is in compliance in all material respects with the terms of each such Permit. Each such Permit will continue in full force and effect immediately following the Closing.

 

3.25. Certain Business Relationships with Affiliates . No Seller or Affiliate of any Seller or the Company (a) owns any property or right, tangible or intangible, which is used in the

 

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Business other than the Acquired Assets and the Excluded Assets, (b) has, or will have as a result of the transactions contemplated herein, any claim or cause of action against the Company other than as a party to the Transaction Documents, or (c) owes any money to, or is owed any money by, the Company or any Seller, other than payment of compensation and bonuses in the Ordinary Course of Business. Section 3.25 of the Disclosure Schedule describes in reasonable detail any transactions or relationships between the Company and any Seller or Affiliate of any Seller or the Company which occurred or have existed since the beginning of the time period covered by the Financial Statements. Copies of each document relating to such transactions or relationships required to be listed on Section 3.25 of the Disclosure Schedule have been provided to the Buyer.

 

3.26. Unlawful Payments . None of the Company, the Sellers, or to the Sellers’ Knowledge, any director, officer, employee, stockholder, agent, representative, or affiliate of the Company or any Seller, and any Person associated with or acting for or on behalf of the Company or any Seller, has directly or indirectly made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of what form, whether in money, property, or in violation of any provision of the Foreign Corrupt Practices Act of 1977.

 

3.27. Brokers’ Fees . The Company has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by the Transaction Documents.

 

3.28. Books and Records . The minute books and other similar records of the Company contain complete and accurate records of all actions taken at any meetings of the Company’s stockholders, Board of Directors or any committee thereof and of all written consents executed in lieu of the holding of any such meeting.

 

3.29. Disclosure . No representation or warranty by the Company or the Sellers contained in the Transaction Documents, and no statement contained in the Disclosure Schedule or any other document, certificate or other instrument delivered or to be delivered by or on behalf of the Company or the Sellers pursuant to this Agreement, contains or will contain any untrue statement of a ma