SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) September 29, 2000
Navigant Consulting, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-28830 36-4094854
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
615 North Wabash, Chicago, IL 60611
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone number, including area code (312) 573-5600
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 29, 2000, the Registrant completed the divestiture of substantially
all of the assets of its wholly-owned subsidiary, LECG, Inc., a California based
consulting practice specializing in economic and financial analysis, expert
testimony and litigation support. The buyers of the business unit were
entities formed by the professional staff of LECG led by David Teece and David
Kaplan.
The Registrant sold substantially all of the assets of LECG, Inc., which
consisted primarily of client contracts and relationships. The Registrant
received a total consideration of approximately $50 million, which included $37
million in cash at the closing plus a promissory note for $8 million which will
be either repaid by the buyer within 60 days after the closing or the Registrant
will have the option to convert the note into equity of the buyer. The remaining
$5 million payment is subordinated to the buyer's bank debt and will be reduced
if and to the extent that senior employees of LECG leave employment with the
buyer within one year after the closing. In addition under certain circumstances
(which the Registrant does not currently expect to occur) the buyer will be
obligated to make a further subordinated payment to the Registrant of up to $5
million on or after the third anniversary of the closing.
The Asset Purchase Agreement among the Registrant, LECG, Inc., and the buyers is
included as an exhibit hereto and is hereby incorporated by reference. The
description contained herein is not complete and is qualified in its entirety by
reference to the full text of such agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
--------------------------------------------
Not applicable.
(b) Pro forma financial information:
--------------------------------
Not applicable.
(c) Exhibits:
---------
2 Asset Purchase Agreement dated as of September 29, 2000 among Navigant
Consulting, Inc., LECG, Inc., LECG Holding Company, LLC and LECG, LLC.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has fully caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NAVIGANT CONSULTING, INC.
Date: October __, 2000 By:
---------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith:
Exhibit No. Description
2 Asset Purchase Agreement dated as of September 29, 2000 among Navigant
Consulting, Inc., LECG, Inc., LECG Holding Company, LLC and LECG, LLC.
<PAGE>
ASSET PURCHASE AGREEMENT
Dated as of September 29, 2000
Among
NAVIGANT CONSULTING, INC.
LECG, INC.
LECG HOLDING COMPANY, LLC
and
LECG, LLC
<PAGE>
iii
ARTICLE I
DEFINITIONS
1.1. Definitions....................................................1
ARTICLE II
PURCHASE AND SALE
2.1. Purchased Assets...............................................6
2.2. Excluded Assets................................................7
2.3. Assumed Liabilities............................................8
2.4. Excluded Liabilities...........................................8
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price.................................................9
3.2. Allocation of Purchase Price...................................9
3.3. Deferred Purchase Price Payments...............................
ARTICLE IV
CLOSING
4.1. Closing Date...................................................10
4.2. Payment on the Closing Date....................................10
4.3. Buyer Additional Deliveries....................................10
4.4. Parent and Seller Deliveries...................................11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
5.1. Organization of Parent and Seller..............................12
5.2. Authority......................................................12
5.3. Subsidiaries...................................................13
5.4. Financial Statements...........................................13
5.5. Absence of Certain Changes or Events...........................14
5.6. Title to Purchased Assets......................................14
5.7. No Finder......................................................14
5.8. No Proceedings.................................................14
5.9. Employee Benefit Plans; Employee Matters.......................15
5.10. Intellectual Property..........................................15
5.11. Intellectual Property..........................................14
5.12. NO OTHER REPRESENTATIONS; LIMITATIONS..........................15
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER
6.1. Organization of Buyer and Buyer Parent.........................16
6.2. Authority of Buyer Parent, Buyer and the Members...............16
6.3. No Finder......................................................17
6.4. No Proceedings.................................................17
6.5. Compliance with WARN Act.......................................17
6.6. Antitrust Compliance...........................................17
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Additional Payments............................................17
7.2. Taxes..........................................................18
7.3. Employees and Consultants......................................19
7.4. New Members....................................................19
7.5. Change of Name.................................................19
7.6. Delivery of Funds..............................................19
7.7. Directors and Officers Insurance...............................19
7.8. Assigned Claims; Cooperation...................................19
7.9. Payment of Excluded Expert Fees................................19
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER PARENT AND BUYER
8.1. No Misrepresentation or Breach of Covenants and Warranties.....22
8.2. No Restraint or Litigation.....................................22
8.3. Necessary Governmental Approvals...............................22
8.4. Necessary Consents.............................................22
8.5. Delivery of Documents..........................................23
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND SELLER
9.1. No Misrepresentation or Breach of Covenants and Warranties.....23
9.2. No Restraint or Litigation.....................................23
9.3. Necessary Governmental Approvals...............................23
9.4. Delivery of Documents..........................................23
ARTICLE X
INDEMNIFICATION
10.1. Indemnification by Parent and Seller...........................23
10.2. Indemnification by Buyer Parent and Buyer......................24
10.3. Notice of Claims...............................................24
10.4. Third Person Claims............................................25
ARTICLE XI
GENERAL PROVISIONS
11.1. Survival of Obligations........................................27
11.2. Confidential Nature of Information.............................27
11.3. No Public Announcement.........................................28
11.4. Notices........................................................28
11.5. Successors and Assigns.........................................29
11.6. Access to Records after Closing................................29
11.7. Entire Agreement; Amendments...................................29
11.8. Interpretation.................................................30
11.9. Waivers........................................................30
11.10. Expenses.......................................................30
11.11. Partial Invalidity.............................................30
11.12. Execution in Counterparts......................................30
11.13. Governing Law..................................................30
11.14. Dispute Resolution.............................................30
SCHEDULES:
1.1 Agreed Accounting Principles
2.1( c) Real Esate Leases
2.1 (d) NCI Assets Being Purchased
2.1(k) Employees
2.3 Excluded Employees
3.1 Purchase Price Adjustments
3.2 Allocation Schedule
3.3 Certain Persons
5.3 Subsidiaries
5.4 Financial Statements
5.9 Employee Benefit Plans
5.11 Personal Property
8.4 Consents
10.1 Shareholder Litigation
EXHIBITS:
A Instrument of Assignment
B Instrument of Assumption
C Opinion of Counsel to Buyer
D Transition Services Agreement
E Termination Agreement
F Subleases
G Opinion of Counsel to Parent
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 29, 2000,
among Navigant Consulting, Inc, a Delaware corporation ("Parent"), LECG, Inc., a
California corporation ("Seller"), LECG Holding Company, LLC, a California
limited liability company ("Buyer Parent"), and LECG, LLC, a California limited
liability company ("Buyer").
WHEREAS, Parent owns all of the outstanding shares of capital
stock of Seller and Seller is engaged in the business of providing economic and
financial analysis, expert testimony and litigation support (such business now
being conducted by Seller being referred to as the "Business");
WHEREAS, Buyer Parent owns all of the outstanding membership
interests of Buyer;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, on a going concern basis, substantially all of the assets,
properties and business of Seller, all on the terms and subject to the
conditions set forth herein; and
WHEREAS, Buyer and Buyer Parent were organized by certain of
the consultants who have performed services for Seller since 1988 for purposes
of conducting a management buyout of Seller's business on a going concern basis
and continuing the performance of services on behalf of Seller's clients
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among the parties as
follows:
ARTICLE I.........
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms. Any agreement referred to below shall mean
such agreement as amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by this Agreement.
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
"Agreed Accounting Principles" means the accounting principles
applied in the preparation of the Balance Sheet which are consistent with
generally accepted accounting principles, except as described in the Balance
Sheet and related footnotes or as specified in Schedule 1.1.
"Agreement" means, unless the context otherwise requires, this
Asset Purchase Agreement, together with the Schedules and the Exhibits attached
hereto.
"Allocation Schedule" has the meaning specified in Section
3.2.
"Assumed Liabilities" has the meaning specified in Section
2.3.
"Balance Sheet" means the consolidated statement of net assets
of Seller as of April 30, 2000 included in Schedule 5.4.
"Balance Sheet Date" means April 30, 2000.
"Business" has the meaning specified in the first recital to
this Agreement.
"Buyer" has the meaning specified in the first paragraph of
this Agreement.
"Buyer Ancillary Agreements" means all agreements, instruments
and documents being or to be executed and delivered by Buyer Parent, Buyer or a
Member under this Agreement or in connection herewith, including, without
limitation, the Subordinated Convertible Seller Notes executed and delivered by
Buyer Parent to Parent.
"Buyer Group Member" means Buyer Parent, Buyer, the Members,
each of Buyer's managers and officers and each of their respective Affiliates
and each of their respective successors and assigns.
"Buyer Parent" has the meaning specified in the first
paragraph of this Agreement.
"Claim Notice" has the meaning specified in Section 10.3(a).
"Closing" means the closing of the transactions contemplated
by this Agreement, the Buyer Ancillary Agreements and the Seller Ancillary
Agreements.
"Closing Date" has the meaning specified in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Court Order" means any judgment, order, award or decree of
any foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"Credit Agreement" means the Credit Agreement dated as of
September 29, 2000 by and among LECG Holding Company, LLC, as parent, LECG, LLC,
as borrower, the Lenders who are or may become party thereto, as lenders, First
Union National Bank, as administrative agent and U.S. Bank National Association,
as documentation agent, and shall include, without limitation, and any and all
agreements refinancing, refunding or replacing the Credit Agreement.
"Departed Employee" has the meaning set forth in Section 3.3.
"Dispute" has the meaning specified in Section 11.14.
"Employee Benefit Plan" means all plans, contracts, schemes,
programs, funds, commitments or arrangements providing money, services, property
or other benefits, whether written or oral, formal or informal, qualified or
non-qualified, funded or unfunded (and including any that have been frozen or
terminated), which pertain to any employee, former employee, director, officer,
shareholder, consultant or independent contractor of Seller or its Subsidiaries
and that are listed on Schedule 5.9.
"Encumbrance" means any lien, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement
or defect in title.
"Enforceability Limitations" shall mean (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting or limiting the enforcement of creditors' rights generally and
(ii) the discretion of the appropriate court with respect to specific
performance, injunctive relief or other terms of equitable remedies.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Employee Claims" has the meaning specified in
Section 2.2(g).
"Excluded Expert Fees" has the meaning specified in Section
7.9.
"Excluded Liabilities" has the meaning specified in Section
2.4.
"Expenses" means any and all expenses incurred in connection
with investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).
"Financial Statements" has the meaning specified in Section
5.3.
"Governmental Body" means any foreign, federal, state, local
or other governmental authority or regulatory body.
"HSR Act" shall mean the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning specified in Section 10.3.
"Indemnitor" has the meaning specified in Section 10.3.
"Instrument of Assignment" means the Instrument of Assignment
in the form of Exhibit A.
"Instrument of Assumption" means the Instrument of Assumption
in the form of Exhibit B.
"Intellectual Property" means (a) all trademarks, service
marks, trade dress, logos, trade names, domain names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof, and all applications, registrations and renewals in connection
therewith, (b) all copyrightable works, all copyrights, and all applications,
registrations and renewals in connection therewith, (c) all trade secrets and
confidential business information (including, without limitation, all ideas,
research, techniques, models, databases, specifications, customer and supplier
lists, pricing and cost information, and business and marketing plans and
proposals), (d) all computer software (including data and related
documentation), (e) all other proprietary rights, (f) all copies and tangible
embodiments of Intellectual Property (in whatever form or medium), and (g) any
remedies against infringements thereof and rights to protection of interest
therein under the laws of all jurisdictions (including foreign jurisdictions).
"Knowledge" with respect to (i) Parent or Seller shall mean
the actual knowledge of an executive officer of Parent after an investigation
which consists solely of (A) making inquiries of officers of Parent or Seller
(other than officers who are or will be managers, executive officers or
employees of Buyer) who have primary responsibility for the subject matter of
the applicable representation or warranty and (B) with respect to Section 5.3,
causing the Parent to obtain good standing certificates from the relevant
governmental authorities and causing employees of Seller to conduct a review of
the relevant corporate minute books of Parent, Seller and the Subsidiaries and
(ii) Buyer Parent or Buyer shall mean the actual knowledge of any executive
officer of Buyer Parent or Buyer or the Members after an investigation which
consists solely of making inquiries of officers of Buyer Parent, Buyer and the
Members who have primary responsibility for the subject matter of the applicable
representation or warranty.
"Leases" has the meaning specified in Section 2.1.
"Losses" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines, penalties, damages,
expenses, deficiencies or other charges.
"Material" and "Materially" means, with respect to any Person
or group of one or more Persons, any event or circumstance that would have a
material adverse effect on the business, operations, employee or client
relations, properties, assets (including intangible assets), financial condition
or results of operations of such Person or group of one or more Persons taken as
a whole.
"Members" means collectively all Persons holding membership
interests (of any class) of Buyer or Buyer Parent.
"Parent" has the meaning specified in the first paragraph of
this Agreement.
"Permitted Encumbrances" means (a) liens for taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens which are not Material and which arise in the
ordinary course of business for sums not yet due and payable and (c) other liens
or imperfections on property which are not Material in amount or do not
Materially detract from the value of or Materially impair the existing use of
the property affected by such lien or imperfection.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"Post-Closing Departed Employee" has the meaning set forth in
Section 3.3.
"Purchase Price" has the meaning specified in Section 3.1.
"Purchased Assets" has the meaning specified in Section 2.1.
"Requirements of Laws" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without limitation,
those pertaining to electrical, building, zoning, environmental and occupational
safety and health requirements) or common law.
"Seller" has the meaning specified in the first paragraph of
this Agreement.
"Seller Agreements" has the meaning specified in Section 2.1.
"Seller Ancillary Agreements" means all agreements,
instruments and documents being or to be executed and delivered by Parent or
Seller under this Agreement or in connection herewith.
"Seller Group Member" means Parent and Seller, each of their
directors and officers and each of their respective Affiliates and their
respective successors and assigns.
"Subleases" has the meaning specified in Section 4.3.
"Subsidiaries" means all of the direct or indirect
subsidiaries of the Seller listed on Schedule 5.3.
"Subordination Agreement" means the Subordination Agreement
dated as of September 29, 2000 by and among LECG Holding Company, LLC, LECG,
LLC, Navigant Consulting, Inc. and First Union National Bank, as Administrative
Agent for the benefit of itself and the lenders under the Credit Agreement.
"Tax" means any federal, state, local or foreign net income,
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, transfer, gains, license, excise, employment, payroll, withholding or
minimum tax, or any other tax custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any Governmental Body.
"Tax Return" means any return, report or similar statement
required to be filed with respect to any Taxes (including, without limitation,
any attached schedules), including, without limitation, any information return,
claim for refund, amended return and declaration of estimated Tax.
"Termination Agreements" has the meaning specified in Section
4.3(g).
"Third Party Claim" has the meaning specified in Section 10.4.
"Transferred Permits" has the meaning specified in Section
2.1(j).
"WARN Act" has the meaning specified in Section 6.5.
ARTICLE II........
PURCHASE AND SALE
2.1. Purchased Assets. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, Parent and Seller shall sell, transfer, assign,
convey and deliver to Buyer, and Buyer shall purchase from Parent and Seller, on
a going concern basis, free and clear of all Encumbrances (except for Permitted
Encumbrances), the assets and properties of Seller wherever located, real,
personal or mixed, tangible or intangible, other than Excluded Assets, as the
same shall exist on the Closing Date (herein collectively called the "Purchased
Assets"), including, without limitation, all right, title and interest of Parent
and Seller in, to and under:
(a) all of the assets, other than Excluded Assets, reflected
on the Balance Sheet, except those disposed of after the Balance Sheet
Date in the ordinary course of business consistent with past practice
(including with respect to quantity and frequency);
(b) all notes, accounts receivable and unbilled client work in
process of Seller on the Closing Date;
(c) the real estate leases (the "Leases") listed on Schedule
2.1(c) and all leasehold interests created thereby, all leasehold
improvements, fixtures and fittings owned or held by Seller under the
Leases, and all easements, rights of way and other appurtenants under
the Leases;
(d) the inventories, equipment, vehicles, furniture and other
tangible personal property owned or used by Seller primarily in
connection with the Business and the tangible personal property of
Parent listed on Schedule 2.1(d);
(e) all Intellectual Property owned or used by Seller
primarily in connection with the Business and the goodwill associated
therewith;
(f) the contracts, agreements or understandings, written or
oral, entered into by Seller, including all equipment leases, work
orders, client engagement letters and other agreements or arrangements
relating primarily to the Business (the "Seller Agreements");
(g) all of Seller's deposits under the Leases (including
deposits from subtenants), all of Seller's rights of set-off, rights of
recovery and claims or causes of action against third parties relating
to the assets, properties, business or operations of the Business
arising out of transactions occurring prior to the Closing Date (except
for refunds of Taxes to the extent provided in Section 2.2(d));
(h) all files, documents, correspondence, creative materials,
advertising and promotional materials, studies, reports, books and
records of Seller (including all data and other information stored on
discs, tapes or other media), customer lists, customer or credit data,
computer programs, software, and hardware owned or used by Seller
primarily in connection with the Business; and
(i) all securities (such as the capital stock in the
Subsidiaries), corporate minute books, stock transfer books and
corporate seals of the Subsidiaries in the possession of Parent;
(j) to the extent transferable to Buyer, all franchises,
approvals, permits, licenses, orders, registrations, certificates,
variances and similar rights obtained by Seller from a Governmental
Body (the "Transferred Permits");
(k) all rights of Parent and Seller under all employment,
consulting and noncompete agreements with, and all relationships of
Seller with, the employees listed on Schedule 2.1(k), except to the
extent terminated pursuant to the Termination Agreements;
(l) all general intangibles used primarily in the Business
including without limitation, all good will as a going concern and any
all causes of action or claims of Seller against any Person that arose
or will arise primarily in connection with the Business prior to the
Closing Date, other than Excluded Employee Claims and causes of action
or claims against Parent, Seller or any of their officers, directors,
employees or agents or causes of action or claims as to which Parent,
Seller or their Affiliates may be required to provide indemnification.
(m) cash in an amount equal to $100,000.
2.2. Excluded Assets. Notwithstanding the provisions of Section 2.1, the
Purchased Assets shall not include the following
(herein referred to as the "Excluded Assets"):
(a) all cash and cash equivalents of Seller, other than
$100,000;
(b) all contracts of insurance;
(c) all corporate minute books and stock transfer books and
the corporate seal of Seller; and
(d) all refunds of any Tax for which Seller is liable
pursuant to Section 7.2; and
(e) any contracts, agreements or understandings between
Seller and Parent or Parent's Affiliates (other than the Subsidiaries),
if any;
(f) all securities, shares of capital stock, corporate minute
books, stock transfer books and corporate seals of any subsidiary of
Parent or Seller not listed on Schedule 5.3; and
(g) any claim, demand, rights of recovery, cause of action or
other rights against or with respect to any Departed Employee or
Post-Closing Departed Employee ("Excluded Employee Claims").
2.3. Assumed Liabilities. On the Closing Date, Buyer shall deliver to Seller the
Instrument of Assumption pursuant to which Buyer shall assume and agree to
discharge, in accordance with their respective terms and subject to the
respective conditions thereof, the following obligations and liabilities:
(a) all liabilities reflected on the Balance Sheet, including,
without limitation, all accrued expenses and accounts payable
(including expert fees, other than the Excluded Expert Fees);
(b) all liabilities and obligations of Seller to be paid or
performed after the Closing Date under (i) the Seller Agreements, (ii)
the Leases and (iii) all employment agreements between Seller and its
employees or between Parent and employees of Parent who become
employees of Buyer after the Closing, other than the employees listed
on Schedule 2.3, except to the extent terminated pursuant to the
Termination Agreements;
(c) any liabilities in respect of Taxes for which Buyer is
liable pursuant to Section 7.2; and
(d) all liabilities and obligations of Seller arising out of
any actions or omissions of employees, consultants, independent
contractors and experts arising out of or relating to the performance
of services for clients of Seller prior to the Closing Date;
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities."
2.4. Excluded Liabilities. Notwithstanding anything to the contrary in Section
2.3, Buyer will not assume or be liable for, and Seller will retain and remain
responsible for all of Seller's liabilities and obligations of any nature
whatsoever, other than the Assumed Liabilities, whether accrued, absolute or
contingent, whether known or unknown, whether due or to become due and whether
related to the Purchased Assets or otherwise, and regardless of when asserted
(the "Excluded Liabilities"). Without limiting the preceding sentence, none of
the following shall be Assumed Liabilities for purposes of this Agreement:
(a) any liabilities in respect of Taxes for which Seller is
liable pursuant to Section 7.2;
(b) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(c) the litigation described in Schedule 10.1; or
(d) the obligation to pay the Excluded Expert Fees.
ARTICLE III.......
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased Assets (the "Purchase
Price") shall be equal to up to $55,000,000, consisting of (a) a cash payment
(the "Cash Payment") equal to $37,000,000, plus (i) the aggregate amount of
vacation accrual paid by Parent or Seller to employees of LECG, as set forth on
Schedule 3.1, (ii) the expenditures incurred by Parent or Seller set forth on
Schedule 3.1, and less (x) the accrual of expert fees for the "5% Program" as
set forth on Schedule 3.1 and (y) $500,000 for client fees on account and all
other deposits and deferred revenue not being transferred to Buyer, (b) deferred
payments of up to $10,000,000 (plus interest as set forth in Section 3.3) on the
terms and subject to the provisions of Section 3.3 and (c) the Subordinated
Convertible Seller Notes of Buyer Parent in the aggregate principal amount of
$8,000,000.
Allocation of Purchase Price. Attached hereto as Schedule 3.2
is a preliminary Schedule allocating the Purchase Price among the Purchased
Assets. On or before the Closing, Buyer and Seller shall agree upon and execute
a final allocation schedule (the "Allocation Schedule"), which shall be
reasonable and shall be prepared on a basis consistent with Schedule 3.2 and in
accordance with Section 1060 of the Code and the regulations thereunder.
Promptly following the Closing, Buyer and Seller each agrees to file Internal
Revenue Service Form 8594, and all federal, state, local and foreign Tax
Returns, in accordance with the Allocation Schedule. Buyer and Seller each
agrees to provide the other promptly with any other information required to
complete Form 8594.
Deferred Purchase Price Payments. (a) Subject to the terms and
conditions of the Subordination Agreement and Section 11.15 of the Credit
Agreement, on the first anniversary of the Closing Date Buyer shall (and Buyer
Parent shall cause Buyer to) pay to Seller an amount (the "Payment Amount") in
cash equal to the excess, if any, of $5,000,000 over the sum of (i) any Excluded
Expert Fees which are due but not paid by Seller pursuant to Section 7.9 and
(ii) if on or prior to the first anniversary of the Closing Date any person
listed on Schedule 3.3(a) resigns or terminates their employment, consulting,
contracting and other relationships with Buyer, Parent, Buyer and their
Affiliates (excluding, without limitation, any retirement at normal retirement
age or any termination by Buyer Parent, Buyer or their Affiliates) (any such
person being referred to as a "Post-Closing Departed Employee"), an amount (not
to exceed $5,000,000) equal to the aggregate amount set forth opposite the names
of all such Post-Closing Departed Employees under the column "Discount Amount"
on Schedule 3.3(a). In addition, on such anniversary Buyer shall (and Buyer
Parent shall cause Buyer to) pay to Seller an additional amount equal to
interest on the Payment Amount at an annual rate equal to seven percent (7%)
from the six month anniversary of the Closing Date until the date of payment.
(b) Subject to the terms and conditions of the Subordination
Agreement and Section 11.15 of the Credit Agreement, if, from time to time, on
or prior to the third anniversary of the Closing Date, any person listed on
Schedule 3.3(b) (any such person being referred to as a Departed Employee")
becomes an employee of Buyer Parent, Buyer or any of their Affiliates, or is
otherwise retained by or affiliated with Buyer Parent or Buyer or any of their
Affiliates, as an employee, officer, independent contractor or agent (except to
complete assignments in place as of the Closing Date or to refer such
assignments in the event of a conflict), then within ten days thereafter Buyer
shall (and Buyer Parent shall cause Buyer to) pay to Seller an amount equal to
the amount (not to exceed $5,000,000) set forth opposite the name of such
Departed Employee under the column "Discount Amounts" on Schedule 3.3(b).
(c) If Buyer shall fail to pay when due any payment pursuant
to this Section 3.3, interest shall accrue on the unpaid amount of all such
payments on a quarterly basis on the first day of each calendar quarter, at a
per annum rate equal to the Applicable Rate. As used herein, (i) "Applicable
Rate" means (A) from and after the date such payment was due until the first
anniversary of the date such payment was due, a per annum rate equal to the Base
Rate plus three percent (3%), (B) from and after such first anniversary until
the second anniversary of the date such payment was due, a per annum rate equal
to the Base Rate plus four percent (4%) and (C) from and after such second
anniversary until such payment is made, a per annum rate equal to the Base Rate
plus five percent (5%) and (ii) "Base Rate" means the prime rate announced from
time to time in The Wall Street Journal, Midwest Edition.
ARTICLE IV........
CLOSING
4.1. Closing Date. The Closing shall be consummated at 10:00 A.M., local time,
on the date of this Agreement at the offices of Sidley & Austin, Chicago,
Illinois, or at such other place or at such other time as shall be agreed upon
by Buyer and Seller. The time and date on which the Closing is actually held are
sometimes referred to herein as the "Closing Date."
4.2. Payment on the Closing Date. Subject to fulfillment or waiver of the
conditions set forth in Article VIII, at Closing Buyer shall pay to Seller an
amount equal to the Cash Payment, by wire transfer of immediately available
funds to the account in the United States specified by Seller in writing to
Buyer at least two business days prior to the Closing.
4.3. Buyer Additional Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article VIII, at Closing Buyer Parent and Buyer shall
deliver, or cause to be delivered, to Parent and Seller all the following:
(a) Copies of Buyer's and Buyer Parent's Articles of Organization certified
as of a recent date by the Secretary of State of the State of California;
(b) Certificate of Status of Buyer and Buyer Parent issued as of a recent
date by the Secretary of State of the State of California;
(c) Certificate of an executive officer of Buyer Parent, dated the Closing
Date, in form and substance reasonably satisfactory to Seller, (i) certifying
there have been no amendments to the Articles of Organization of Buyer or Buyer
Parent since formation; (ii) attaching a true and correct copy of the Operating
Agreement of Buyer and Buyer Parent; (iii) attaching a true and correct copy of
the action of the manager of Buyer and Buyer Parent authorizing the execution
and performance of this Agreement and the transactions contemplated hereby; and
(iv) certifying as to the incumbency and signatures of the executive officers of
Buyer Parent and Buyer executing this Agreement and any Buyer Ancillary
Agreement;
(d) An opinion of counsel to Buyer in the form of Exhibit C;
(e) The Instrument of Assumption duly executed by Buyer;
(f) The Transition Services Agreement in the form of Exhibit D duly
executed by Buyer (the "Transition Services Agreement");
(g) A duly executed Termination Agreement between Parent, Seller and each
Member in the form of Exhibit E, duly executed by each Member who is or was an
employee, consultant or expert of Seller or Parent (the "Termination
Agreements"); and
(h) A duly executed sublease agreement for Parent or one of its Affiliates
to sublease from Buyer a portion of the space of each of the Leases for Toronto,
Canada, Los Angeles, California, Seattle, Washington, and Salt Lake City, Utah
in the form of Exhibit F (the "Subleases").
4.4. Parent and Seller Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article IX, at Closing Parent
and Seller shall deliver to Buyer Parent and Buyer all the following:
(a) Copies of the Articles of Incorporation of Parent and Seller, each
certified as of a recent date by the Secretary of State of the state of its
incorporation;
(b) A Certificate of good standing of Parent and Seller, issued as of a
recent date by the Secretary of State of the State of its incorporation;
(c) Certificate of the secretary or an assistant secretary of Parent, dated
the Closing Date, in form and substance reasonably satisfactory to Buyer, (i)
certifying there have been no amendments to the articles of incorporation of
Parent and Seller since a specified date, (ii) attaching true and correct copies
of the by-laws of Parent and Seller; (iii) attaching true and correct copies of
the resolutions of the Board of Directors of Parent and Seller authorizing the
execution and performance of this Agreement and the transactions contemplated
hereby; and (iv) incumbency and signatures of the officers of Parent and Seller
executing this Agreement and any Seller Ancillary Agreement;
(d) An opinion of counsel to Parent in the form of Exhibit H;
(e) The Instrument of Assignment duly executed by Seller;
(f) Certificates of title or origin (or like documents) with respect to any
property included in the Purchased Assets for which a certificate of title or
origin is required in order to transfer title;
(g) The Transition Services Agreement duly executed by Parent;
(h) All certificates representing the securities of the Subsidiaries (or
acceptable substitutes) with appropriate stock power(s) attached and endorsed in
blank;
(i) Such other bills of sale, assignments and other instruments of transfer
or conveyance as Buyer may reasonably request or as may be otherwise necessary
to evidence and effect the sale, assignment, transfer, conveyance and delivery
of the Purchased Assets to Buyer, including, without limitation, any release of
any liens or conveyances from lenders to Parent and Seller relating to the
Purchased Assets; and
(j) The Subleases, duly executed by Parent or its applicable Affiliate.
ARTICLE V.........
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
As an inducement to Buyer Parent and Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, Parent and Seller jointly
and severally represent and warrant to Buyer Parent and Buyer and agree as
follows:
5.1. Organization of Parent and Seller. Each of Parent and Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. Seller has full power and authority to own or
lease and to operate and use the Purchased Assets owned by it and to carry on
the Business as now conducted by it.
True and complete copies of the certificate or articles of incorporation
and all amendments thereto and of the By-laws, as amended to date, of Parent and
Seller have been delivered to Buyer. Parent owns, beneficially or of record, all
shares of capital stock of Seller.
5.2. Authority. Each of Parent and Seller has full power and authority to
execute, deliver and perform this Agreement and all of the Seller Ancillary
Agreements to be executed and delivered by it. The execution, delivery and
performance of this Agreement and each Seller Ancillary Agreement to which each
of Parent and Seller is a party have been duly authorized and approved by each
of Parent and Seller, as applicable, and do not require any further
authorization or consent of Seller or of Parent or its stockholders. This
Agreement has been duly authorized, executed and delivered by each of Parent and
Seller and is the legal, valid and binding obligation of each, enforceable in
accordance with its terms, except as such enforcement may be limited by the
Enforceability Limitations, and each of the Seller Ancillary Agreements has been
duly authorized by each of Parent or Seller to the extent it is a party thereto,
and upon execution and delivery by it will be a legal, valid and binding
obligation of it enforceable in accordance with its terms, except as such
enforcement may be limited by the Enforceability Limitations.
Neither the execution and delivery of this Agreement or any of
the Seller Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
(i) conflict in any Material way with, result in a
Material breach of the terms, conditions or provisions of, or
constitute a Material default, a Material event of default or
an event creating rights of acceleration, termination or
cancellation or a Material loss of rights under, or result in
the creation or imposition of any Encumbrance upon any of the
Purchased Assets, under (1) the articles of incorporation or
By-laws of Parent or Seller, (2) any material note,
instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or
obligation to which Parent or Seller is a party or any of the
Purchased Assets is subject or by which Parent or Seller is
bound, (3) any Court Order to which Parent or Seller is a
party or by which Parent or Seller is bound, or (4) any
Requirements of Laws affecting Parent or Seller or the
Purchased Assets; or
(ii) require the approval, consent, authorization or
act of, or the making by Parent or Seller of any declaration,
filing or registration with, any Person.
5.3. Subsidiaries. Schedule 5.3 sets forth all of the Subsidiaries and their
respective capitalization and jurisdictions of organization. Except as set forth
in Schedule 5.3, Seller owns, legally and beneficially, all of the shares of
capital stock free and clear of any Encumbrance (other than any Permitted
Encumbrance). Since August 19, 1998 and to the Knowledge of Parent, the
Subsidiaries are validly existing and in good standing under Requirements of
Laws of their respective jurisdictions of organization. To the Knowledge of
Parent and Seller, each Subsidiary has the corporate power and authority to
conduct the business in which it is engaged and to own and use the properties
owned and used by it. Other than this Agreement, to the Knowledge of Parent and
Seller, (i) there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that require Seller to sell, transfer or otherwise
dispose of any capital stock of the Subsidiaries or that require a Subsidiary to
sell, transfer, issue or otherwise cause to become outstanding any of its own
capital stock and (ii) there are no voting trusts, proxies or other agreements
or understandings with respect to the voting of any capital stock of any
Subsidiary.
5.4. Financial Statements. Schedule 5.4 contains (i) the consolidated statement
of net assets of Seller as of April 30, 2000 and the consolidated statement of
operations of Seller for the four-month period then ended and (ii) the audited
consolidated statement of net assets of Seller as of December 31, 1999 and the
audited consolidated statements of operations and cash flows of Seller for year
ended December 31, 1999 (collectively, the "Financial Statements"). Except as
set forth therein or in the notes thereto, the Financial Statements have been
prepared in conformity with the Agreed Accounting Principles consistently
applied and such Financial Statements present fairly the financial position and
results of operations of Seller as of their respective dates and for the
respective periods covered thereby. Seller is not subject to any Material
liability, debt or obligation which would be required to be shown on the
Financial Statements and which is not so shown or reserved for in the Financial
Statements, other than liabilities, debts or obligations of the same nature as
those set forth in the Financial Statements and the notes thereto or reasonably
incurred in the ordinary course of business after the Balance Sheet Date. Parent
and Seller have no Knowledge of any reason why the notes and accounts receivable
reflected on the Financial Statements should not be collectible in the ordinary
course of business, subject to the allowance for doubtful accounts on the
Financial Statements.
5.5. Absence of Certain Changes or Events. Since the Balance Sheet Date, Seller
and its Subsidiaries have conducted the Business in the ordinary course and in a
manner consistent with past practice and, since the Balance Sheet Date there has
not been (a) any Material damage, destruction or loss (whether or not covered by
insurance) with respect to Seller or any of the Subsidiaries; (b) any change in
Seller's accounting methods, principles or practices; (c) any increase in
dividends or employee compensation or benefits payable by Seller, except for
increases in compensation or benefits consistent with past practice; or (d) to
the Knowledge of Seller, any agreement and/or understanding entered into which
alters or amends any licensing or contractual arrangement with respect to
Intellectual Property, other than in the ordinary course of business.
5.6. Title to Purchased Assets. Seller has good and marketable title to, or a
valid leasehold interest in, each of the Purchased Assets, free and clear of all
Encumbrances (except for Permitted Encumbrances) and, upon the execution and
delivery by Seller to Buyer of the Instrument of Assignment pursuant to the
terms of this Agreement, Seller will convey to Buyer good and marketable title
to and, as applicable, a valid leasehold interest in, the Purchased Assets, free
and clear of all Encumbrances (except for Permitted Encumbrances).
5.7. No Finder. Except for Lehman Brothers, Inc. in the case of Seller and
Parent, and whose fees and commissions shall be paid by Parent, neither Parent,
Seller nor any Person acting on its or their behalf has paid or become obligated
to pay any fee or commission to any broker, finder or intermediary for or on
account of the transactions contemplated by this Agreement.
5.8. No Proceedings. There is no action, suit, proceeding or Court Order
pending, or to the Knowledge of Parent threatened by any Person or Governmental
Body, against Parent or Seller which questions the legality, or propriety of the
transactions contemplated by this Agreement. There are no suits, legal or
administrative proceedings or investigations pending or to the Knowledge of
Parent or Seller threatened against Seller or the Purchased Assets, at law or in
equity or before any court, municipality or other Governmental Body. Since
August 19, 1998 Seller has not been subject to any Material Court Order,
stipulation or consent decree of or with any Court of Governmental Body.
5.9. Employee Benefit Plans; Employee Matters. Since August 19, 1998, each of
Seller's Employee Benefit Plans has at all times complied in all Material
respects with all applicable laws relating to labor and employee benefits,
including without limitation, all applicable provisions of ERISA and the Code,
any laws relating to wages, termination pay, vacation pay, fringe benefits,
collective bargaining and the payment and/or accrual of the same and all taxes,
insurance and other costs and expenses applicable thereto. Seller and its
Subsidiaries have disclosed to Buyer all their written employee handbooks,
policies and programs. To the Knowledge of Parent and Seller, no key employee or
independent contractor has informed Parent of any plans to terminate their
employment with Seller or its Subsidiaries, including as a result of the
transactions contemplated by this Agreement. Neither Seller nor its Subsidiaries
is a party to or bound by any collective bargaining agreement and neither Seller
nor its Subsidiaries has experienced any Material strikes, grievances, other
collective bargaining disputes or claims of unfair labor practices. Neither
Seller nor its Subsidiaries has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of Seller and its Subsidiaries. To the Knowledge of Parent
and Seller, all persons employed by Seller and its Subsidiaries are employees at
will or otherwise are employed such that Seller and its Subsidiaries may
terminate their employment at any time, with or without cause, without giving
rise to any Material liability of Seller and its Subsidiaries for breach of
contract.
5.10. Intellectual Property. The Purchased Assets include all Intellectual
Property owned or used by Seller primarily in connection with the Business.
Since August 19, 1998, and to the Knowledge of Parent and Seller, (a) there have
been no claims or demands in writing that any of the Intellectual Property of
Seller included in the Purchased Assets infringes or conflicts in any Material
way with the Intellectual Property of any third Person and (b) Seller has made
all Material registrations and filings under applicable Requirements of Laws
with respect to Intellectual Property included in the Purchased Assets.
5.11. Properties. Attached hereto as Schedule 2.1(c) is a list of the Leases.
Also attached hereto as Schedule 5.11 is an inventory of each item of personal
property utilized by the Seller primarily in connection of the Business having a
book or fair market value in excess of $150,000 as of the date hereof. The
Seller and the Parent have delivered to Buyer copies of all the Leases. To the
Knowledge of Parent, the operation of the Purchased Assets and Business in the
manner in which they are now and have been operated does not violate any
Requirements of Laws except for any such violations which would not,
individually or in the aggregate, have a Material adverse effect.
5.12. NO OTHER REPRESENTATIONS; LIMITATIONS. (a) NOTWITHSTANDING ANYTHING TO THE
CONTRARY SET FORTH IN THIS AGREEMENT OR ANY OTHER AGREEMENT, INSTRUMENT OR
DOCUMENT EXECUTED PURSUANT TO THIS AGREEMENT, THE PURCHASED ASSETS AND THE
BUSINESS ARE BEING SOLD "AS IS" AND, EXCEPT AS EXPLICITLY SET FORTH ELSEWHERE IN
THIS ARTICLE V, PARENT AND SELLER MAKE NO, AND HEREBY DISCLAIM AND EXCLUDE ANY,
EXPRESS, ORAL OR IMPLIED REPRESENTATION OR WARRANTY (INCLUDING ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE) WHATSOEVER.
(b) Notwithstanding anything to the contrary contained herein,
(i) any matter which is actually known by any Member or by any executive officer
of Buyer or Buyer Parent prior to the Closing shall not constitute a breach of
any representation or warranty of Parent or Seller herein and (ii) any matter,
event or omission which existed prior to or as of August 19, 1998 relating to
the Business, the Purchased Assets or otherwise shall not constitute a breach of
any representation or warranty of Parent or Seller herein, so long as Parent or
Seller does not have Knowledge of such matter, event or omission prior to the
date hereof.
ARTICLE VI........
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER
As an inducement to Parent and Seller to enter into this
Agreement and to consummate the transactions contemplated hereby, Buyer Parent
and Buyer hereby jointly and severally represent and warrant to Parent and
Seller and agree as follows:
6.1. Organization of Buyer and Buyer Parent. Each of Buyer and Buyer Parent is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of California and has full power and authority to
own or lease and to operate and use its properties and assets and to carry on
its business as now conducted. True and complete copies of the Articles of
Organization and Operating Agreement of Buyer and Buyer Parent have been
delivered to Parent. Buyer Parent owns in the aggregate, beneficially or of
record, all membership interests of Buyer outstanding on the Closing Date.
6.2. Authority of Buyer Parent, Buyer and the Members. (a) Each of Buyer Parent
and Buyer has full power and authority to execute, deliver and perform this
Agreement and all of the Buyer Ancillary Agreements executed and delivered by
it. Each Member has full power, capacity and authority to execute, deliver and
perform all of the Buyer Ancillary Agreements executed and delivered by such
Member. The execution, delivery and performance of this Agreement and each Buyer
Ancillary Agreement have been duly authorized and approved by the Board of
Managers of Buyer and Buyer Parent and do not require any further authorization
or consent of Buyer, Buyer Parent or their respective members. This Agreement
has been duly authorized, executed and delivered by each of Buyer Parent and
Buyer and is the legal, valid and binding agreement of each, enforceable in
accordance with its terms, except as such enforcement may be limited by the
Enforceability Limitations, and each of the Buyer Ancillary Agreements has been
duly authorized by Buyer Parent, Buyer and each Member to the extent it is a
party thereto and upon execution and delivery by it will be a legal, valid and
binding obligation of it enforceable in accordance with its terms, except as
such enforcement may be limited by the Enforceability Limitations.
(b) Neither the execution and delivery of this Agreement or
any of the Buyer Ancillary Agreements or the consummation of any of the
transactions contemplated hereby or thereby nor compliance with or fulfillment
of the terms, conditions and provisions hereof or thereof will:
(i) conflict in any Material way with, result in a Material
breach of the terms, conditions or provisions of, or constitute a
material default, a Material event of default or an event creating
rights of acceleration, termination or cancellation or a Material loss
of rights under (1) the Articles of Organization or Operating Agreement
of Buyer Parent or Buyer, (2) any material note, instrument, agreement,
mortgage, lease, license, franchise, permit or other authorization,
right, restriction or obligation to which Buyer Parent, Buyer or any
Member is a party or any of its on their properties is subject or by
which Buyer or any Member is bound, (3) any Court Order to which Buyer
Parent, Buyer or any Member is a party or by which it is bound or (4)
any Requirements of Laws affecting Buyer Parent, Buyer or any Member;
or
(ii) require the approval, consent, authorization or act of,
or the making by Buyer Parent, Buyer or any Member of any declaration,
filing or registration with, any Person.
6.3. No Finder. Neither Buyer Parent, Buyer, any Member nor any Person acting on
its behalf has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
6.4. No Proceedings. There is no action, suit or proceeding pending, or to the
Knowledge of Buyer threatened, against Buyer Parent, Buyer or any Member which
questions the legality, or propriety of the transactions contemplated by this
Agreement.
6.5. Compliance with WARN Act. Buyer Parent and Buyer assume all
responsibilities for any notices or liability which may be required by or arise
under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss.2101
et seq (the "WARN Act") as a result of the transactions contemplated by this
Agreement; provided that Seller shall not take any action prior to the Closing
Date to cause any employees to be included in an "employment loss" for purposes
of the WARN Act, without the prior written consent of Buyer.
6.6. Antitrust Compliance. As of the Closing, (i) no Person or entity owns 50%
or more of the aggregate membership interests or other equity interests of Buyer
Parent or has the right to 50% or more of Buyer Parent's profits or assets upon
dissolution, (ii) neither Buyer nor Buyer Parent has a regularly prepared
balance sheet or annual statement of income or (iii) the value of all assets
held by Buyer and Buyer Parent (less all cash that will be used as consideration
for the Purchased Assets, and less all cash that will be used for expenses
incidental to the acquisition of the Purchased Assets), is less than
$10,000,000. There is no required filing under the HSR Act, and no applicable
waiting period under the HSR Act , as a result of the transactions contemplated
by this Agreement.
ARTICLE VII.......
ADDITIONAL AGREEMENTS
7.1. Additional Payments. (a) In the event that within one year after the
Closing Date Buyer Parent, Buyer or their respective successors or assigns or
holders of membership interests or other interests in Buyer Parent, Buyer or
their respective successors or assigns consummate or enter into a written
agreement, letter of intent or written understanding with respect to any
transaction involving a public offering of its equity securities, the sale of
all or a substantial portion of its assets, the sale of membership interests or
other equity interests (except as expressly permitted by this Section 7.1), or a
merger, consolidation, recapitalization, reorganization, joint venture,
partnership or other transaction involving the sale or other disposition of the
Business (as operated by Buyer or its successors or assigns after the Closing
Date), (a "Transaction") then, upon the closing of any such Transaction or
Transactions, Buyer shall pay to Seller, simultaneously with such closing, an
amount in cash equal to the excess, if any, of the Buyer Value (as defined
below) over the Purchase Price; provided, however, that the foregoing shall not
restrict in any way Buyer Parent or Buyer from engaging in any discussions prior
to the first anniversary of the Closing Date, and the existence of such
discussions shall not entitle Seller to any payments under this Section 7.1, so
long as no such agreement, letter of intent or understanding is entered into or
reached. As used herein "Buyer Value" shall mean an amount equal to the
aggregate valuation of Buyer or its successors or assigns reflected in the
Transaction or Transactions, including the amount of cash, the assumption of
indebtedness and the fair value of all non-cash consideration received in the
Transaction or Transactions (including, without limitation, all amounts paid or
distributed to holders of membership interests, capital stock or other equity
interests in the Company) less the aggregate purchase price of any acquisitions
made by Buyer after the Closing. Notwithstanding the foregoing, a "Transaction"
shall not include a sale by Buyer Parent of membership interests as part of (i)
a capital raising transaction in which no member of Buyer Parent sells any
membership interests, (ii) a business acquisition by Buyer Parent or Buyer of an
unaffiliated third Person, (iii) transfers of membership interests by individual
members of Buyer Parent to unaffiliated third Persons constituting in the
aggregate less than 10% of Buyer Parent's total membership interest in the
aggregate or (iv) repurchases or redemptions of membership interests pursuant to
that certain Securityholders' Agreement of Buyer Parent dated as of the date
hereof, that certain Buy-Sell Agreement of Buyer Parent dated as of the date
hereof, or that certain Limited Liability Company Agreement of Buyer Parent
dated as of the date hereof. Any payment made pursuant to this Section 7.1 shall
be treated by Parent, Seller, Buyer Parent and Buyer as an increase to the
Purchase Price.
7.2. Taxes. (a) Seller and Parent shall be jointly and severally liable for and
shall pay all Taxes (whether assessed or unassessed) applicable to the Business,
the Purchased Assets and each Subsidiary whose stock is being purchased by Buyer
pursuant to this Agreement, in each case attributable to periods (or portions
thereof) ending on or prior to the Closing Date, including (i) all income Taxes
of Seller or Parent arising in connection with the consummation of the
transactions contemplated by this Agreement and (ii) any liability of Seller for
the unpaid Taxes of any Person under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law) as a transferee or
successor (by contract or otherwise). Buyer Parent and Buyer shall be jointly
and severally liable for and shall pay all Taxes (whether assessed or
unassessed) applicable to the Business, the Purchased Assets and each Subsidiary
whose stock is being purchased by Buyer pursuant to this Agreement, in each case
attributable to periods (or portions thereof) beginning after the Closing Date.
For purposes of this paragraph (a), any period beginning before and ending after
the Closing Date shall be treated as two partial periods, one ending on the
Closing Date and the other beginning after the Closing Date except that Taxes
(such as property Taxes) imposed on a periodic basis shall be allocated on a
daily basis.
(b) Notwithstanding Section 7.2(a), any sales Tax, use Tax,
real property transfer or gains Tax, documentary stamp Tax or similar Tax
attributable to the sale or transfer of the Purchased Assets shall be paid by
Buyer. Seller agrees to timely sign and deliver such certificates or forms as
may be necessary or appropriate to establish an exemption from (or otherwise
reduce), or make a report with respect to, such Taxes.
(c) Seller or Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this Section
7.2. Within a reasonable time prior to the payment of any said Tax, the party
paying such Tax shall give notice to the other party of the Tax payable and the
portion which is the liability of each party, although failure to do so will not
relieve the other party from its liability hereunder.
7.3. Employees and Consultants. Buyer shall offer employment or consultancy to
employees or consultants of Seller (other than the employees listed on Schedule
2.3) on substantially the same terms as Seller currently employs such employee
or consultant; provided that Buyer shall have no continuing obligation after the
Closing Date to offer such employment or consultancy to or to employ or continue
the employment or consultancy of any employee or consultant, or to maintain the
compensation of any employee or consultant, at any particular level. Seller will
retain Anitra Wood and Linda Bonner as employees of Seller and such employees
will retain all benefits of employment, including medical insurance, short and
long term disability and life insurance coverage. At such time as either
employee is eligible to return to active service, Buyer shall extend to such
employee an offer of employment.
7.4. New Members. After the Closing, neither Buyer, Buyer Parent nor any of
their Affiliates shall issue any securities to or admit as a member any person
who is or was an employee, consultant or expert of Seller or Parent (or any of
such Person's Affiliates) unless such Person has duly executed and delivered to
Seller and Parent a Termination Agreement in the form of Exhibit F.
7.5. Change of Name. After the Closing, Seller shall provide an amendment to the
Articles of Incorporation of Seller, certified as of a date within three days
after the Closing Date by the Secretary of State of the state of its
incorporation, that Seller has changed its name from LECG, Inc. to a name not
including "LECG", "Law and Economics" or any similar name.
7.6. Delivery of Funds. (a) If Seller or Parent or any of their Affiliates
receive any funds or other assets that are a part of the Purchased Assets
("Buyer Funds") after the Closing Date, Seller or Parent shall within five
business days deliver such Buyer Funds to Buyer and take all steps necessary to
vest title to such funds and assets in Buyer. The Seller and Parent hereby
designate Buyer as their true and lawful attorney-in-fact, with full power of
substitution, to execute or endorse for the benefit of Buyer any checks, notes
or other documents received by the Seller or Parent in connection with any Buyer
Funds. The Seller and Parent hereby acknowledge and agree that the power of
attorney set forth in the preceding sentence is coupled with an interest, and
further agree to execute and deliver to Buyer from time to time any documents or
instruments reasonably requested by Buyer to evidence such power of attorney.
Further, if Seller or Parent determines (either internally or after notification
from a client) that a client overpaid Seller or Parent on invoices paid by such
client prior to the Closing Date, excluding any accounts receivable or unbilled
client amounts transferred to Buyer at Closing (an "Overpayment"), then, subject
to recovery by Seller of any Excluded Expert Fees paid by Seller with respect to
such invoices pursuant to Section 7.9, Seller or Parent, as the case may be,
will promptly reimburse the client for the Overpayment and the obligation to
repay to the client the Overpayment will be an Excluded Liability for purposes
of Section 2.4 hereof.
(b) If Buyer, Buyer Parent or any of their Affiliates receive
any funds or other assets of Parent or Seller that are part of the Excluded
Assets ("Seller Funds") after the Closing Date, Buyer shall within five business
days deliver such Seller Funds to Parent or Seller, as the case may be, or and
take all steps necessary to vest title to such funds and assets in Parent or
Seller, as the case may be. Buyer and Buyer Parent hereby designate Parent as
their true and lawful attorney-in-fact, with full power of substitution, to
execute or endorse for the benefit of Parent any checks, notes or other
documents received by Buyer or Buyer Parent in connection with any Seller Funds.
Buyer and Buyer Parent hereby acknowledge and agree that the power of attorney
set forth in the preceding sentence is coupled with an interest, and further
agree to execute and deliver to Parent from time to time any documents or
instruments reasonably requested by Seller to evidence such power of attorney.
7.7. Directors and Officers Insurance. Parent shall, for a period of not less
than one year from the Closing Date, continue Parent's current directors and
officers insurance policies and errors and omissions insurance policies (or a
substantially comparable policy or policies) (the "Insurance") or, if such
insurance coverage is not available, the best available coverage; provided,
however, that Parent shall not be required to pay an annual premium for the
Insurance in excess of the last annual premiums paid prior to the date hereof,
but in such case shall purchase as much coverage as possible for such amount.
7.8. Assigned Claims; Cooperation. (a) Buyer Parent and Buyer
hereby assign to Parent and Seller any claim, demand, right of recovery, cause
of action or other right that Buyer Parent or Buyer has or may have against any
Departed Employee arising prior to the Closing or against any Post-Closing
Departed Employee (the "Assigned Claims").
(b) Buyer Parent, Buyer and each of their respective
Affiliates shall assist and cooperate in all reasonable respects with Parent,
Seller and their respective Affiliates to permit Parent and Seller to pursue any
Excluded Employee Claim or any Assigned Claim including, without limitation,
producing relevant documents and making available officers, employees and agents
of Buyer Parent and Buyer as witnesses in connection with any proceeding with
respect thereto. Parent or Seller shall reimburse Buyer Parent and Buyer for
their reasonable and documented out-of-pocket costs incurred pursuant to this
Section 7.8(b).
7.9. Payment of Excluded Expert Fees. Seller shall pay, on
approximately October 8, 2000 (but no later than October 15, 2000), the amounts
due to experts of Seller (and not subject to dispute, although upon resolution
of such dispute Seller shall promptly thereafter make the payment, after
reflecting such resolution), except for Departed Experts, which are due on such
date which arise from and relate specifically to an account receivable of Seller
if (i) such account receivable was billed to a client of Seller prior to the
Closing Date and collected from such client prior to the Closing Date and (ii)
the funds so collected by Seller were retained by Seller as an Excluded Asset
(any such payments being referred to herein as the "Excluded Expert Fees").
7.10. Transfer of Flexible Spending Accounts. Promptly
following the Closing Date, Seller will transfer to Buyer immediately available
funds in an amount representing the net account balances of the flexible
spending accounts of the employees of Buyer after the Closing Date under the
Navigant Consulting, Inc. Flexible Benefits Plan. As soon as practicable Closing
Date, Buyer agrees to (i) establish a successor cafeteria plan, which allows
health care and dependent care flexible spending accounts; (ii) apply such
transferred assets to the appropriate accounts for the benefit of such employees
under such successor plan; and (iii) recognize for purposes of the successor
plan all elections made by such employees with respect to their flexible
spending accounts under the Navigant Consulting, Inc. Flexible Benefits Plan.
7.11. 401(k) Plan. As soon as practicable after the Closing
Date, Seller agrees to take any and all actions necessary to identify Buyer as a
"participating employer" under the Navigant Consulting, Inc. 401(k) Plan
("Seller's Plan"), and to notify the trustee and any other necessary party of
such designation. As a participating employer under Seller's Plan, Buyer shall
assume the responsibility for making contributions due to the Seller's Plan on
behalf of employees of Buyer after the Closing Date in accordance with the terms
of Seller's Plan, until such time as a plan-to-plan transfer of assets occurs in
accordance with this Section 7.11.
Buyer agrees to establish a defined contribution plan which is
qualified under Section 401(a) of the Code ("Buyer's Plan"), effective no later
than December 31, 2000. In accordance with the provisions of this paragraph,
Seller agrees to cause the trustee of Seller's Plan to transfer to the trustee
of Buyer's Plan the Total Transfer Amount (the date of such transfer being
called the "Transfer Date"). The "Total Transfer Amount" shall be an amount
equal to the account balances in Seller's Plan attributable to the participants
in such plan that are employees of Buyer after the Closing Date and their
beneficiaries, as shown on the valuation report for the monthly valuation date
occurring on, or immediately before, the Transfer Date (excluding any amounts
accrued as of such date but not yet contributed to the Seller's Plan, but
including amounts contributed but not yet allocated to the accounts of such
employees). The Total Transfer Amount shall take into consideration any
distributions, in-service withdrawals or participant loans received by such
employees from the Seller's Plan, including any such distributions, withdrawals
or loans received after the Closing Date. The Total Transfer Amount shall be
transferred to the Buyer's Plan entirely (1) in cash or other assets acceptable
to the trustee of Buyer's Plan; and (2) notes which represent the participant
loans of such employees.
Seller shall cause the trustee of the Seller's Plan to make
the plan-to-plan transfer of assets in an amount equal to the Total Transfer
Amount as soon as practicable after (i) Buyer has established the Buyer's Plan
and the trustee of the Buyer's Plan is prepared to accept such transfer, and
(ii) Seller has completed the allocation of investment earnings on, and
reconciliation of the account balances of participants and beneficiaries in the
Seller's Plan as of the monthly valuation date occurring on, or immediately
preceding, the Transfer Date, provided that such Transfer Date shall occur no
later than February 1, 2001.
Seller agrees to prepare and provide to Buyer, as soon as
practicable following the Closing Date, a list of the employees of Buyer after
the Closing Date who were participants in or otherwise entitled to benefits
under the Seller's Plan, as of the Closing Date, together with a list of each
such employee's term of service for eligibility and vesting purposes under the
Seller's Plan, and a listing of such employee's account balance thereunder, and
Buyer and Seller agree to provide one another with such additional information
in the possession of one company and not already in the possession of the other
as may be reasonably requested by either of them and necessary in order for
Buyer to establish and administer the transferred account balances of such
employees. In addition, with respect to any amounts payable prior to the
Transfer Date by such employees on participant loans received from the Seller's
Plan or as salary deferrals to Seller's Plan, Buyer shall execute whatever
actions and make whatever arrangements may be necessary to permit the periodic
repayment of such loan amounts through payroll deduction and the remittance of
the loan payments and salary deferral contributions to the Seller's Plan.
Before the expiration of the remedial amendment period that
applies under Section 401(b) of the Code to the Buyer's Plan for determination
of its initial qualification under Section 401(a) of the Code, Buyer will apply
for a determination by the IRS to the effect that the Buyer's Plan satisfies the
requirements for qualification under Section 401(a) of the Code, and Buyer shall
take all reasonable actions to ensure continued qualification of the Buyer's
Plan under Section 401(a) of the Code.
ARTICLE VIII......
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER PARENT AND BUYER
The obligations of Buyer Parent and Buyer under this Agreement
shall at the option of Buyer be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions:
8.1. No Misrepresentation or Breach of Covenants and Warranties. There shall
have been no Material breach by Parent or Seller in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Parent and Seller contained or referred to herein shall be true and correct
in all Material respects on the Closing Date as though made on the Closing Date,
except for changes therein specifically permitted by this Agreement or resulting
from any transaction expressly consented to in writing by Buyer or any
transaction permitted by Section 7.3.
8.2. No Restraint or Litigation. No action, suit, investigation or proceeding
shall have been instituted or threatened to restrain, prohibit or otherwise
challenge the legality or validity of the transactions contemplated hereby.
8.3. Necessary Governmental Approvals. The parties shall have received all
approvals and actions of or by all Governmental Bodies which are necessary to
consummate the transactions contemplated hereby and which are required to be
obtained prior to the Closing by applicable Requirements of Laws.
8.4. Necessary Consents. Seller shall have received consents, in form and
substance reasonably satisfactory to Buyer, to the transactions contemplated
hereby from the other parties to all contracts, Leases, agreements and permits
to which Seller is a party or by which Seller or any of the Purchased Assets is
affected and which are specified in Schedule 8.4 or are otherwise necessary to
prevent a material adverse change in the Purchased Assets or the Business.
8.5. Delivery of Documents. Parent and Seller will have made the deliveries
required under Section 4.4.
ARTICLE IX........
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND SELLER
The obligations of Parent and Seller under this Agreement
shall, at the option of Parent and Seller, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
9.1. No Misrepresentation or Breach of Covenants and Warranties. There shall
have been no Material breach by Buyer Parent or Buyer in the performance of any
of its covenants and agreements herein; each of the representations and
warranties of Buyer Parent and Buyer contained or referred to herein shall be
true and correct in all Material respects on the Closing Date as though made on
the Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing by
Parent.
9.2. No Restraint or Litigation. No action, suit or proceeding shall have been
instituted or threatened to restrain, prohibit or otherwise challenge the
legality or validity of the transactions contemplated hereby.
9.3. Necessary Governmental Approvals. The parties shall have received all
approvals and actions of or by all Governmental Bodies which are necessary to
consummate the transactions contemplated hereby and which are required to be
obtained prior to the Closing by applicable Requirements of Laws.
9.4. Delivery of Documents. Buyer Parent and Buyer will have made the deliveries
required under Section 4.3.
ARTICLE X.........
INDEMNIFICATION
10.1. Indemnification by Parent and Seller. Each of Parent and Seller jointly
and severally agree to indemnify and hold harmless each Buyer Group Member from
and against any and all Losses and Expense incurred by such Buyer Group Member
in connection with or arising from:
(i) any breach by Parent or Seller of any of its covenants or
agreements in this Agreement or in any Seller Ancillary Agreement;
(ii) any failure by Parent or Seller to perform any of its obligations
in this Agreement or in any Seller Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Parent or Seller contained or referred to in this
Agreement or any Seller Ancillary Agreement or any certificate delivered by
or on behalf of Parent or Seller pursuant hereto;
(iv) the litigation described in Schedule 10.1; and
(v) any failure of Parent or Seller to pay or discharge the excluded
liabilities described in Section 2.4;
provided, however, that (A) Parent and Seller shall be required to indemnify and
hold harmless under clause (iii) of this Section 10.1 only to the extent that
the aggregate amount of such Losses and Expense incurred by Buyer Group Members
exceeds $250,000; and (B) the aggregate amount that Parent and Seller shall be
required to indemnify and hold harmless under clause (iii) of this Section 10.1
shall not exceed $5,000,000.
10.2. Indemnification by Buyer Parent and Buyer. Buyer Parent and Buyer jointly
and severally agree to indemnify and hold harmless each Seller Group Member from
and against any and all Losses and Expense incurred by such Seller Group Member
in connection with or arising from:
(i) any breach by Buyer Parent, Buyer or any Member of any of its
covenants or agreements in this Agreement or in any Buyer Ancillary
Agreement;
(ii) any failure by Buyer Parent, Buyer or any Member to perform any
of its obligations in this Agreement or in any Buyer Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Buyer Parent or Buyer contained or referred to in this
Agreement or any Buyer Ancillary Agreement or in any certificate delivered
by or on behalf of Buyer Parent and Buyer hereto; and
(iv) any failure by Buyer to assume and discharge any Assumed
Liability;
provided, however, that (A) Buyer Parent and Buyer shall be required to
indemnify and hold harmless under clause (iii) of this Section 10.2 (other than
Loss and Expense incurred as a result of inaccuracies of the representations and
warranties contained in Section 6.6) only to the extent that the aggregate
amount of such Losses and Expense incurred by Parent and Seller exceeds
$250,000; and (B) the aggregate amount that Buyer Parent and Buyer shall be
required to indemnify and hold harmless under clause (iii) of this Section 10.2
shall not exceed $5,000,000.
10.3. Notice of Claims. (a) Any Buyer Group Member or Seller Group Member (the
"Indemnified Party") seeking indemnification hereunder shall give to the party
obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim Notice") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; provided, that a Claim Notice in
respect of any action at law or suit in equity by or against a third Person as
to which indemnification will be sought shall be given promptly after the action
or suit is commenced; provided further that failure to give such notice shall
not relieve the Indemnitor of its obligations hereunder except to the extent it
shall have been prejudiced by such failure.
(b) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be entitled under
this Article XI shall be finally determined: (i) by the written agreement
between the Indemnified Party and the Indemnitor or (ii) pursuant to the
provisions of Section 11.14; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The Indemnified Party shall
have the burden of proof in establishing the amount of Loss and Expense suffered
by it.
(c) In calculating any Loss or Expense there shall be deducted
any insurance recovery in respect thereof, whether such recovery is made by
Parent, Seller, Buyer Parent or Buyer.
10.4. Third Person Claims. (a) If any third Person claim, action or suit is
brought as to which indemnification will be sought pursuant to this Agreement (a
"Third Party Claim") and (i) the Third Party Claim is solely for money damages
and such Third Party Claim will have no continuing effect in any material
respect on the business or assets or the Indemnified Party and (ii) the amount
claimed pursuant to such Third Party Claim or the potential liability arising
out of such Third Party Claim (in the judgment of the Indemnified Party) does
not, after taking into account all other indemnification obligations of the
Indemnitor pursuant to this Agreement, exceed the Indemnitor's maximum
indemnification obligations pursuant to this Agreement, then the Indemnitor
shall be entitled to participate in the defense of such Third Party Claim and,
if the Indemnitor so chooses (and provided that the Indemnitor so notifies the
Indemnified Party in writing within ten (10) days after delivery of the Claim
Notice with respect to such Third Party Claim and acknowledges the Indemnitor's
obligation to indemnify the Indemnified Party with respect to such Third Party
Claim), to assume primary responsibility for the defense, compromise or
settlement of such Third Party Claim, with counsel selected by the Indemnitor
and not reasonably objected to by the Indemnified Party. If the Indemnitor
assumes such responsibility as set forth in this paragraph, then (x) in no event
shall the Indemnified Party admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnitor's prior
written consent and (y) the Indemnified Party shall be entitled to participate
in, but not control, the defense of such Third Party Claim with its own counsel
at its own expense. If the Indemnitor does not assume such responsibility as
described above, the Indemnified Party may defend, compromise or settle such
Third Party Claim in such manner as it may deem appropriate (including without
limitation, settling such claim on such terms as the Indemnified Party may deem
appropriate). Notwithstanding the foregoing, the Indemnified Party shall have
the right to defend, compromise or settle any Third Party Claim described in
this Section 11.4(a) if the Indemnified Party waives in writing any right to
indemnification by the Indemnitor with respect to such Third Party Claim.
(b) If any Third Party Claim is brought as to which
indemnification will be sought pursuant to this Agreement (other than a Third
Party Claim described in clauses (i) and (ii) of Section 10.4(a)), the
Indemnified Party shall have the right to defend, compromise or settle such
Third Party Claim, with counsel selected by the Indemnified Party and not
reasonably objected to by the Indemnitor. If the Indemnified Party defends such
Third Party Claim as set forth in this paragraph, then (i) in no event shall the
Indemnitor admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the Indemnified Party's prior written
consent and (ii) the Indemnitor shall be entitled to participate in, but not
control, the defense of such Third Party Claim with its own counsel and at its
own expense. If the Indemnified Party does not defend such Third Party Claim,
the Indemnitor may defend, compromise or settle such Third Party Claim in such
manner as it may deem appropriate (including, without limitation, settling such
Third Party Claim, after giving twenty (20) days prior written notice of such
settlement to the Indemnified Party, on such terms as the Indemnitor may deem
appropriate).
(c) In the event that, pursuant to Section 10.4(b), the
Indemnified Party defends any Third Party Claim and the Indemnified Party
proposes to settle such Third Party Claim for an amount which, after taking into
account all other indemnification obligations of the Indemnitor pursuant to this
Agreement, exceeds the Indemnitor's maximum indemnification obligations pursuant
to this Agreement, then, provided that the Indemnitor has acknowledged its
obligation to indemnify the Indemnified Party, the Indemnified Party shall give
the Indemnitor twenty (20) days prior written notice of such proposed
settlement. The Indemnitor shall notify the Indemnified Party prior to the end
of such twenty (20) day period whether the Indemnitor accepts or rejects such
proposed settlement; provided, however, that notwithstanding anything to the
contrary contained in this Agreement (including any limitation on the liability
of the Indemnitor otherwise provided in this Agreement), if the Indemnitor
rejects such proposed settlement, the Indemnitor shall be liable for, and shall
prior to the expiration of such 20-day period post a performance bond, letter of
credit or other similar security (in any such case containing terms and
conditions acceptable to the Indemnified Party in its sole discretion) in an
amount which equals the amount by which (i) the amount claimed pursuant to such
Third Party Claim or, if greater, the potential liability arising out of such
Third Party Claim (in the good faith judgment of the Indemnified Party) exceeds
(ii) the portion of the proposed settlement that the Indemnified Party would be
required to pay and not be indemnified for pursuant to such proposed settlement.
(d) The party having primary responsibility for the defense of
any Third Party Claim shall at all times keep the other party informed as to the
status of such Third Party Claim. The party not having primary responsibility
for the defense of any Third Party Claim shall cooperate fully with the party
having such responsibility in connection with such defense, including, without
limitation, furnishing such records, information and testimony and attending
such conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested.
10.5. Set-Off. If the amount of indemnification to which an
Indemnified Party shall be entitled to under this Article X shall be finally
determined by (i) written agreement between the Indemnified Party and the
Indemnitor or (ii) a final judgment of a court (after the time for appeal, if
any, shall have expired and no appeal shall have been taken or when all appeals
taken shall have been finally determined), then the Indemnified Party shall be
entitled to set off such amount against any payment it may be obligated to make
to the Indemnitor, to the extent that such payment has not been made by the
Indemnitor.
ARTICLE XI........
GENERAL PROVISIONS
11.1. Survival of Obligations. All representations, warranties, covenants and
obligations contained in this Agreement shall survive the consummation of the
transactions contemplated by this Agreement; provided that no party shall be
entitled to make a claim for indemnification (other than a claim based on
inaccuracies of the representations and warranties contained in Section 6.6 or a
claim based on Section 7.1 or Schedule 10.1) unless such party shall have given
the other parties written notice of such claim prior to the first anniversary of
the Closing Date.
11.2. Confidential Nature of Information. Each party agrees that it will treat
in confidence all documents, materials and other information which it shall have
obtained regarding the other party during the course of the negotiations leading
to the consummation of the transactions contemplated hereby (whether obtained
before or after the date of this Agreement), the investigation provided for
herein and the preparation of this Agreement and other related documents, and,
in the event the transactions contemplated hereby shall not be consummated, each
party will return to the other party all copies of nonpublic documents and
materials which have been furnished in connection therewith. Such documents,
materials and information shall not be communicated to any third Person (other
than, in the case of Buyer Parent and Buyer, to their counsel, accountants,
financial advisors or lenders, and in the case of Parent and Seller, to their
counsel, accountants or financial advisors). No other party shall use any
confidential information in any manner whatsoever except solely for the purpose
of evaluating the proposed purchase and sale of the Purchased Assets; provided,
however, that after the Closing Buyer Parent and Buyer may use or disclose any
confidential information included in the Purchased Assets or otherwise
reasonably related to the Business or the Purchased Assets and Seller and Parent
will be obligated to preserve the confidential information included in the
Purchased Assets and otherwise reasonably related to the Business or the
Purchased Assets as confidential information of Buyer. If a party (the
"Recipient") is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose the confidential information of another party (the
"Disclosing Party"), the Recipient must provide the Disclosing Party with prompt
notice of such request(s) so the Disclosing Party may seek an appropriate
protective order or other appropriate remedy and/or waive compliance with the
confidentiality provisions of this Agreement. In the event that such protective
order or other remedy is not obtained, or the Disclosing Party grants a waiver
hereunder, the Recipient may furnish that portion (and only that portion) of the
confidential information which it is legally compelled to disclose and must
exercise its reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded any confidential information so furnished. The
obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (i) is or
becomes available to such party from a source other than such party, (ii) is or
becomes available to the public other than as a result of disclosure by such
party or its agents, (iii) is required to be disclosed under applicable law or
judicial process, but only to the extent it must be disclosed, or (iv) such
party reasonably deems necessary to disclose to obtain any of the consents or
approvals contemplated hereby. Money damages would be both incalculable and an
insufficient remedy for any breach of this Section 11.2 by a party and any such
breach would cause another party irreparable harm. In the event of any breach or
threatened breach of this Section 11.2, in addition to any other remedies at law
or in equity it may have, a party will be entitled to seek, without the
requirement of posting a bond or other security, equitable relief, including
injunctive relief and specific performance.
11.3. No Public Announcement. No party may issue any press release or make any
public announcement relating to the subject matter of this Agreement prior to
the Closing without the prior written consent of all other parties; provided,
however, that a party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing party will use its best
efforts to advise the other parties prior to making that disclosure).
11.4. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally or when sent by registered or certified mail or by private
courier addressed as follows:
If to Buyer Parent or Buyer, to:
LECG, LLC
2000 Powell Street
Suite 600
Emeryville, CA 94608
Attention: David Teece
with a copies to:
Folger Levin & Kahn, LLP
275 Battery Street, 28th Floor
San Francisco, CA 94111
Attention: Teressa K. Lippert
and
Thoma Cressey Equity Partners
600 Montgomery Street, 27th Floor
San Francisco, CA 94111
Attention: Jeanne Plessinger
If to Parent or Seller, to:
Navigant Consulting, Inc.
615 North Wabash Avenue
Chicago, Illinois 60611
Attention: Philip Steptoe
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Steven Sutherland
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
11.5. Successors and Assigns. (a) Following the Closing, no party may assign any
of its rights hereunder without the prior written consent of the others and, in
any event, any permitted assignment shall not relieve the assigning party of its
obligations hereunder.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the parties and successors and
assigns permitted by this Section 11.5 any right, remedy or claim under or by
reason of this Agreement.
11.6. Access to Records after Closing. For a period of six years after the
Closing Date, Parent and Seller, and their representatives shall have reasonable
access to all of the books and records of Seller transferred to Buyer hereunder
to the extent that such access may reasonably be required by Parent or Seller in
connection with matters relating to or affected by the operations of Seller
prior to the Closing Date. Such access shall be afforded by Buyer upon receipt
of reasonable advance notice and during normal business hours. Parent and Seller
shall be solely responsible for any costs or expenses incurred by them pursuant
to this Section 11.6. If Buyer shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Buyer shall, prior to
such disposition, give Parent and Seller a reasonable opportunity, at their
expense, to segregate and remove such books and records as they may select.
For a period of six years after the Closing Date, Buyer
Parent, Buyer and their representatives shall have reasonable access to all of
the books and records relating to the Business which Parent or Seller may retain
after the Closing Date (including any corporate books and stock transfer books
of Seller) to the extent such access may reasonably be required by Buyer Parent
or Buyer in connection with matters relating to or affected by the operations of
Seller prior to the Closing Date. Such access shall be afforded by Parent or
Seller upon receipt of reasonable advance notice and during normal business
hours. Buyer Parent and Buyer shall be solely responsible for any costs and
expenses incurred by them pursuant to this Section 11.6. If Parent or Seller
shall desire to dispose of any of such books and records prior to the expiration
of such six-year period, it shall, prior to such disposition, give Buyer Parent
and Buyer a reasonable opportunity, at their expense, to segregate and remove
such books and records as they may select.
11.7. Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties hereto with regard to the subject matter contained
herein or therein, and supersedes all prior agreements, understandings or
letters of intent between or among any of the parties hereto, including without
limitation the letter of intent dated May 22, 2000 among Parent, Seller, David
Teece and David Kaplan. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
11.8. Interpretation. Article titles and headings to sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The Schedules and
Exhibits referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein.
11.9. Waivers. Any term or provision of this Agreement may be waived, or the
time for its performance may be extended, by the party or parties entitled to
the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
11.10. Expenses. Each party hereto will pay all costs and expenses incident to
its negotiation and preparation of this Agreement and to its performance and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with, including the fees, expenses and disbursements of
its counsel and accountants.
11.11. Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
11.12. Execution in Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to each of Parent, Buyer, Buyer Parent and Seller.
11.13. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Illinois.
11.14. Dispute Resolution. Any dispute, controversy or claim (including any
dispute arising under Article X of this Agreement), whether based on contract,
tort, statute, fraud, misrepresentation or any other legal theory (a "Dispute")
between Parent or Seller, on the one hand, and Buyer Parent or Buyer, on the
other hand (including their respective Affiliates) arising out of or relating to
this Agreement, any obligations hereunder or the relationship of the parties
under this Agreement shall be resolved first in accordance with the procedures
described in this Section. The parties hereto agree to establish an internal
hierarchy to facilitate resolution of these issues as set forth below:
(a) Upon written request of either Parent or Seller, on the one hand,
or Buyer Parent or Buyer, on the other hand, each will appoint a designated
representative whose task it will be to meet for the purpose of endeavoring to
resolve such Dispute.
(b) The designated representatives shall meet as often as the parties
reasonably deem necessary to discuss the Dispute in an effort to resolve
the Dispute without the necessity of any formal proceeding. During the
discussions, all reasonable requests by a party to another party for
non-privileged information reasonably related to the Dispute shall be
honored in order that each party may be fully advised of the other party's
position.
(c) Formal proceedings in a court of law for the resolution of a
Dispute may not be commenced until the earlier of:
(i) the designated representatives concluding in good faith that
amicable resolution through continued negotiation of the matter does
not appear likely; or
(ii) the expiration of the fifteen (15) day period immediately
following the initial request to negotiate the Dispute;
provided, however, that this Section 11.14 will not be construed to prevent a
party from instituting formal proceedings earlier to avoid the expiration of any
applicable limitations period or to preserve a superior position with respect to
other creditors.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed the day and year first above written.
NAVIGANT CONSULTING, INC.
By ___________________________
Jeffrey H. Stoecklein
Vice President
LECG, INC.
By ___________________________
Philip P. Steptoe
Vice President
LECG HOLDING COMPANY, LLC
By ___________________________
J. Geoffrey Colton
Secretary
LECG, LLC
By: LECG HOLDING COMPANY, LLC
By ___________________________
J. Geoffrey Colton
Secretary
